**EXHIBIT 10.VV**

 

**EXECUTIVE SEVERANCE AGREEMENT**

 

**AGREEMENT** by andbetween Mercantile Bankshares Corporation (“Mercshares”), and Alexander T.Mason (the “Executive”), effective as of the 5th day of November, 2003.

 

**WHEREAS:**  The Executive has agreed to serve as ViceChairman of Mercshares; and

 

**WHEREAS:**  The Board of Directors of Mercshares (the “Board”),acting upon the recommendation of its Compensation Committee, has determinedthat it is in the best interests of Mercshares and its shareholders to assurethat the Company will have the continued dedication of the Executive as a keyexecutive of Mercshares, notwithstanding the possibility, threat or occurrenceof a Change of Control (as defined below) of Mercshares.  The Board believes it is necessary to diminishthe inevitable distraction of the Executive by virtue of the personaluncertainties and risks created by a pending or threatened Change of Control,to encourage the Executive’s full attention and dedication to the Companycurrently and in the event of any threatened or pending Change of Control(including determinations as to the best interests of Mercshares and itsshareholders should the possibility of a Change of Control of Mercsharesarise), and to provide the Executive with compensation arrangements upon aChange of Control which provide the Executive with individual financialsecurity and which are competitive with those of other corporations and, inorder to accomplish these objectives, the Board has caused Mercshares to enterinto this Agreement.

 

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**NOW, THEREFORE, IT IS HEREBY AGREED ASFOLLOWS**:

 

**1.             CertainDefinitions.**

 

(a)           “Cause” shallmean (i) an act or acts of personal dishonesty taken by the Executive andintended to result in substantial personal enrichment of the Executive at theexpense of the Company, (ii) repeated material violations by the Executive ofhis duties to the Company (as in effect immediately prior to the EffectiveDate) which are demonstrably willful and deliberate on the Executive’s part andwhich are not remedied in a reasonable period of time after receipt of writtennotice from the Company, or (iii) the conviction of the Executive of a felony.

 

(b)           “Change ofControl” shall mean:

 

(i)            The acquisition(other than from Mercshares) by any person, entity or “group”, within themeaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934as in effect on the date hereof (the “Exchange Act”), (excluding, for thispurpose, Mercshares or its subsidiaries, and excluding any acquisition ofsecurities by any employee benefit plan of Mercshares or its subsidiaries whichshall have occurred prior to any other event constituting a Change of Controlhereunder) of beneficial ownership (within the meaning of Rule 13d-3 promulgatedunder the Exchange Act as in effect on the date hereof) of 20% or more ofeither the then outstanding shares of common stock of Mercshares or thecombined voting power of Mercshares’ then outstanding voting securitiesentitled to vote generally in the election of directors (such common stock orthen outstanding voting securities being referred to herein as “VotingSecurities”), calculated on the date of the transaction causing the foregoing20% test to be met, without regard to any limitation upon the voting rights ofany acquiring person under Maryland statutes and without regard to thepotential exercisability of rights, not exercised on such date, pursuant to anyShareholder Protection Rights Agreement of Mercshares then in effect; or

 

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(ii)           Individuals who, asof the date hereof, constitute the Board (as of the date hereof the “IncumbentBoard”) cease for any reason to constitute at least 75% of the members of theBoard, provided that any person becoming a director subsequent to the datehereof whose election, or nomination for election by the shareholders ofMercshares, is approved by a vote of at least a majority of the directors thencomprising the Incumbent Board (other than an election or nomination of anindividual whose initial assumption of office is in connection with an actualor threatened election contest relating to the election of the Directors ofMercshares or other actual or threatened solicitation of proxies by or onbehalf of persons other than the Board) shall be, for purposes of thisAgreement, considered as though such person were a member of the IncumbentBoard; or

 

(iii)          Approval by thestockholders of Mercshares of (A) a reorganization, merger, consolidationor statutory share exchange, in each case, with respect to which persons whoare the holders of the outstanding Voting Securities of Mercshares immediatelyprior to such reorganization, merger, consolidation or statutory share exchangedo not, immediately thereafter, own more than 75% of the combined voting powerentitled to vote generally in the election of directors of the entity resultingfrom such reorganization, merger, consolidation or statutory share exchange, or(B) a liquidation or dissolution of Mercshares or the sale of all orsubstantially all of the assets of Mercshares.

 

(c)           “Change ofControl Period” shall mean the period commencing on the date hereof andending on the third anniversary of such date; provided, however,that commencing on the date one year after the date hereof, and on each annualanniversary of such date (such date and each annual anniversary thereofhereinafter referred to as the “Renewal Date”), the Change of Control Periodshall be extended automatically so as to terminate on the third anniversary ofsuch Renewal Date, unless at least 60 days prior to the Renewal Date theCompany shall give notice that the

 

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Change of Control Period shall not be so extended, but no such noticeshall be given by the Company which would cause the Change of Control Period toexpire during the term of any employment agreement between the Company and theExecutive.

 

(d)           “Date ofTermination” shall mean for purposes of this Agreement the date of receiptof the Notice of Termination or any later date specified therein, as the casemay be; provided, however, that if the Executive’s employment isterminated by the Company other than for Cause or Disability, the Date ofTermination shall be the date on which the Company notifies the Executive ofsuch termination.

 

(e)           “Effective Date”shall mean the first date during the “Change of Control Period” on which aChange of Control occurs provided that the Executive is employed by the Companyon such date.  Anything in this Agreementto the contrary notwithstanding, if the Executive’s employment with the Companyhas terminated for any reason prior to the first date on which a Change ofControl occurs, this Agreement shall be null and void as of the date of suchtermination of employment; provided, however, that if it isreasonably demonstrated that such termination (i) was at the request of athird party who has taken steps reasonably calculated to effect a Change ofControl, or (ii) otherwise arose in connection with or anticipation of aChange of Control, then for all purposes of this Agreement the “Effective Date”shall mean the date immediately prior to the date of such termination.

 

(f)            “Good Reason”shall mean any of the following actions which is effected by the Companywithout the consent of the Executive:

 

(i)            The assignment tothe Executive of any duties inconsistent in any respect with the Executive’sposition immediately prior to the Effective Date (including status, offices,titles and reporting requirements, authority, duties or responsibilities) orany other action by the Company that results in a diminution in such positionor in the nature and quality of Executive’s office facilities, secretarial andsupport assistance, excluding for this purpose an isolated, insubstantial andinadvertent

 

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action that is not taken in bad faith and that is remedied by theCompany promptly after receipt of notice thereof given by the Executive;

 

(ii)           Any reduction inExecutive’s compensation or benefits from the levels of compensation andbenefits in effect immediately prior to the Effective Date (whether or not suchreduction would be permitted under any employment agreement), including but notlimited to salary, bonuses (under an annual incentive compensation plan orotherwise), expense allowance, vacation time or other vacation benefits,excusal from performance of duties under Company policies or agreements (byreason of illness, disability or other factors), continuance of all Executive benefitsand benefit plans and preservation of Executive’s levels of participation andbenefits thereunder (including any agreement between the Company and Executive,incentive compensation plan, deferred compensation arrangement, pension orother retirement or profit-sharing plan, thrift and medical reimbursement plan,health insurance or other health or disability plan, life insurance plan,omnibus stock plan, stock option plan, stock purchase plan, stock appreciationright plan, or any other Executive benefit plan or provision for fringebenefits in effect immediately prior to the Effective Date), other than anisolated, insubstantial or inadvertent failure to provide compensation orbenefits that is remedied by the Company promptly after receipt of noticethereof given by the Executive;

 

(iii)          The Company’srequiring the Executive to be based at any office or location other than theCompany’s principal offices within the City of Baltimore, except for travelreasonably required in the performance of the Executive’s responsibilities;

 

(iv)          Any purportedtermination by the Company of the Executive’s employment otherwise than asexpressly contemplated hereunder in the case of Cause, or death pursuant toSection 2(a) of this Agreement, or Disability pursuant to Section 2(b) of thisAgreement; or

 

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(v)           Any failure by theCompany to comply with and satisfy Section 6(c) of this Agreement.

 

For purposes of this Agreement, any good faith determination of “GoodReason” made by the Executive shall be conclusive.

 

(g)           “Notice ofTermination” shall mean a written notice (from the Executive to theCompany, or from the Company to the Executive, as the case may be) that (i)indicates the specific basis for termination of employment, (ii) sets forth inreasonable detail the facts and circumstances claimed to provide the basis fortermination of the Executive’s employment, and (iii) if the Date of Terminationis other than the date of receipt of such notice, specifies the terminationdate (which date shall be not more than 15 days after the giving of suchnotice).  The failure by the Executive toset forth in a Notice of Termination any fact or circumstance that contributesto a showing of Good Reason shall not waive any right of the Executivehereunder or preclude the Executive from asserting such fact or circumstance inenforcing his rights hereunder.

 

**2.             Obligationsof the Company upon Termination.**

 

(a)           Death.  If the Executive’s employment is terminatedby reason of the Executive’s death prior to the delivery (i) by the Executiveto the Company of a Notice of Termination for Good Reason or (ii) by theCompany to the Executive of any notification of termination of the Executive’semployment other than for Cause or Disability, then this Agreement shallterminate without further obligations to the Executive’s legal representativesunder this Agreement.

 

(b)           Disability.  If the Executive’s employment is terminatedby reason of the Executive’s Disability, this Agreement shall terminate withoutfurther obligations to the Executive under this Agreement.  For purposes of this Agreement, “Disability”shall mean termination of the Executive’s employment on account of disabilityas determined under any governing agreement between the Executive and the

 

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Company or, if there is no such agreement or such agreement does notprovide a definition of “disability,” then “Disability” shall mean disabilityas defined under the Company’s long-term disability insurance plan.

 

(c)           Cause; Other Thanfor Good Reason.  If the Executive’semployment shall be properly terminated for Cause or if the Executiveterminates employment other than for Good Reason, this Agreement shallterminate without further obligations to the Executive under this Agreement.

 

(d)           Good Reason;Other Than for Cause or Disability. If, at any time during the period beginning with the Effective Date andending on the third anniversary of such date, the Company shall terminate theExecutive’s employment other than for Cause, Disability or death, or if theExecutive shall terminate his employment with the Company for Good Reason, theCompany shall pay to the Executive in a lump sum in cash within 30 days afterthe Date of Termination a severance payment, the value of which is three timesthe Executive’s base amount of compensation (as defined in Section 280G(b)(3)of the Internal Revenue Code of 1986 (the “Code”)) including, but not limitedto, such items as salary, bonus, fringe benefits, and deferred compensation,less one dollar ($1.00), subject, however, to Section 3(b) of this agreement.

 

**3.             Non-Exclusivityof Rights.**

 

(a) Nothing in this Agreement shall prevent or limit the Executive’scontinuing or future participation in any benefit, bonus, incentive or otherplans, programs, policies or practices, including those of the types identifiedin Section 1(f)(ii) hereof, provided by Mercshares and for which the Executivemay qualify, nor shall anything herein limit or otherwise affect such rights asthe Executive may have under any employment agreement, stock option or otheragreements with the Company or any subsidiaries of Mercshares.  Amounts which are vested benefits or whichthe Executive is otherwise entitled to receive under any plan, policy, practiceor program of Mercshares or

 

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any subsidiary at or subsequent to the Date of Termination shall bepayable in accordance with such plan, policy, practice or program.

 

(b) If any benefit in the form of continued or additional salary orbonus, or both, following termination of employment, is provided for theExecutive under any employment agreement with the Company (“Alternate BaseBenefit”), the aggregate amount thereof shall be computed upon the Date ofTermination, and the cash payment to the Executive under Section 2(d) of thisAgreement shall be the greater of the Alternate Base Benefit or the amount setforth in said Section 2(d), and such payment shall satisfy the Company’sobligation with respect to the Alternate Base Benefit.

 

**4.             FullSettlement.**

 

(a)           The Company’sobligation to make the payments provided for in this Agreement and otherwise toperform its obligations hereunder shall not be affected by any set-off,counterclaim, recoupment, defense or other claim, right or action that theCompany may have against the Executive or others.  In no event shall the Executive be obligatedto seek other employment or take any other action by way of mitigation of theamounts payable to the Executive under any of the provisions of thisAgreement.  The Company agrees to pay, tothe full extent permitted by law, all legal fees and expenses that theExecutive may reasonably incur as a result of any contest (regardless of theoutcome thereof) by the Company or others of the validity or enforceability of,or liability under, any provision of this Agreement or any guarantee ofperformance thereof (including as a result of any contest by the Executiveabout the amount of any payment pursuant to Section 5 of this Agreement), plusin each case, interest at the applicable Federal rate provided for in Section7872(f)(2) of the Code.

 

(b)           If there shall beany dispute between the Company and the Executive (i) in the event of anytermination of the Executive’s employment by the Company, whether suchtermination was for Cause, or (ii) in the event of any termination ofemployment by the Executive, whether Good Reason existed, then, unless anduntil

 

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there is a final, nonappealable judgment by a court of competentjurisdiction declaring that such termination was for Cause or that thedetermination by the Executive of the existence of Good Reason was not made ingood faith, the Company shall pay all amounts, and provide all benefits to theExecutive that the Company would be required to pay or provide pursuant to thisAgreement as though such termination were by the Company without Cause, or bythe Executive with Good Reason; provided, however, that the Company shall notbe required to pay any disputed amount pursuant to this paragraph except uponreceipt of an undertaking by or on behalf of the Executive to repay all suchamounts to which the Executive is ultimately adjudged by such court not to beentitled.

 

**5.             CertainTax Matters.**

 

(a)           Anything in thisAgreement to the contrary notwithstanding, in the event it shall be determinedthat any payment or distribution by the Company to or for the benefit of theExecutive (whether paid or payable or distributed or distributable pursuant tothe terms of this Agreement or otherwise, but determined without regard to anyadditional payments required under this Section 5) (a “Payment”) would besubject to the excise tax imposed by Section 4999 of the Code or any interestor penalties are incurred by the Executive with respect to such excise tax(such excise tax, together with any such interest and penalties, arehereinafter collectively referred to as the “Excise Tax”), payment (a “Gross-UpPayment”) shall be made to the Executive in an amount such that after paymentby the Executive of all taxes (including any interest or penalties imposed withrespect to such taxes), including, without limitation, any income taxes (andany interest and penalties imposed with respect thereto) and Excise Tax imposedupon the Gross-Up Payment, the Executive retains an amount of the Gross-UpPayment equal to the Excise Tax imposed upon the Payments.

 

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(b)           Subject to theprovisions of Section 5(c), all determinations required to be made under thisSection 5 including whether and when a Gross-Up Payment is required and theamount of such Gross-Up Payment and the assumptions to be utilized in arrivingat such determination, shall be made by PricewaterhouseCoopers, LLP, or suchother firm as shall be serving as independent public accountants for Mercsharesimmediately prior to the Effective Date (the “Accounting Firm”) which shallprovide detailed supporting calculations both to the Company and the Executive within15 business days of the receipt of notice from the Executive that there hasbeen a Payment, or such earlier time as is requested by the Company.  In the event that the Accounting Firm isserving as accountant or auditor for the individual, entity or group effectingthe Change of Control, the Executive may appoint another nationally recognizedaccounting firm to make the determinations required hereunder (which accountingfirm shall then be referred to as the Accounting Firm hereunder).  All fees and expenses of the Accounting Firmshall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 5, shall bepaid by the Company to the Executive within five days of the receipt of theAccounting Firm’s determination.  If theAccounting Firm determines that no Excise Tax is payable by the Executive, itshall furnish the Executive with a written opinion that failure to report theExcise Tax on the Executive’s applicable federal income tax return would notresult in the imposition of a negligence or similar penalty.  Any determination by the Accounting Firmshall be binding upon the Company and the Executive.  As a result of the uncertainty in the applicationof Section 4999 of the Code at the time of the initial determination by theAccounting Firm hereunder, it is possible that Gross-Up Payments which will nothave been made by the Company should have been made (“Underpayment”),consistent with the calculations required to be made hereunder.  In the event that the Company exhausts itsremedies pursuant to Section 5(c) and the Executive thereafter is required tomake a payment of any Excise Tax, the Accounting Firm shall determine theamount of the

 

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Underpayment that has occurred and any such Underpayment shall bepromptly paid by the Company to or for the benefit of the Executive.

 

(c)           The Executive shallnotify the Company in writing of any claim by the Internal Revenue Servicethat, if successful, would require the payment by the Company of the Gross-UpPayment.  Such notification shall begiven as soon as practicable but no later than ten business days after theExecutive is informed in writing of such claim and shall apprise the Company ofthe nature of such claim and the date on which such claim is requested to bepaid.  The Executive shall not pay suchclaim prior to the expiration of the 30-day period following the date on whichit gives such notice to the Company (or such shorter period ending on the datethat any payment of taxes with respect to such claim is due).  If the Company notifies the Executive inwriting prior to the expiration of such period that it desires to contest suchclaim, the Executive shall:

 

(i)            give the Companyany information reasonably requested by the Company relating to such claim,

 

(ii)           take such action inconnection with contesting such claim as the Company shall reasonably requestin writing from time to time, including, without limitation, accepting legalrepresentation with respect to such claim by an attorney reasonably selected bythe Company,

 

(iii)          cooperate with theCompany in good faith in order effectively to contest such claim, and

 

(iv)          permit the Companyto participate in any proceedings relating to such claim;

 

provided, however, that the Company shall bear and pay directly allcosts and expenses (including additional interest and penalties) incurred inconnection with such contest and shall indemnify and hold the Executiveharmless, on an after-tax basis, for any Excise Tax or income tax (includinginterest and penalties with respect thereto) imposed as a result of suchrepresentation and payment of costs and expenses.  Without limitation on

 

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the foregoing provisions of this Section 5(c), the Company shallcontrol all proceedings taken in connection with such contest and, at its soleoption, may pursue or forgo any and all administrative appeals, proceedings,hearings and conferences with the taxing authority in respect of such claim andmay, at its sole option, either direct the Executive to pay the tax claimed andsue for a refund or contest the claim in any permissible manner, and theExecutive agrees to prosecute such contest to a determination before anyadministrative tribunal, in a court of initial jurisdiction and in one or moreappellate courts, as the Company shall determine; provided, however, that ifthe Company directs the Executive to pay such claim and sue for a refund, theCompany shall advance the amount of such payment to the Executive, on aninterest-free basis and shall indemnify and hold the Executive harmless, on anafter-tax basis, from any Excise Tax or income tax (including interest orpenalties with respect thereto) imposed with respect to such advance or withrespect to any imputed income with respect to such advance; and furtherprovided that any extension of the statute of limitations relating to paymentof taxes for the taxable year of the Executive with respect to which suchcontested amount is claimed to be due is limited solely to such contestedamount.  Furthermore, the Company’scontrol of the contest shall be limited to issues with respect to which aGross-Up Payment would be payable hereunder and the Executive shall be entitledto settle or contest, as the case may be, any other issue raised by theInternal Revenue Service or any other taxing authority.

 

(d)           If, after thereceipt by the Executive of an amount advanced by the Company pursuant toSection 5(c), the Executive becomes entitled to receive any refund with respectto such claim, the Executive shall (subject to the Company’s complying with therequirements of Section 5(c)) promptly pay to the Company the amount of suchrefund (together with any interest paid or credited thereon after taxes applicablethereto).  If, after the receipt by theExecutive of an amount advanced by the Company pursuant to Section 5(c), adetermination is made that the Executive shall not

 

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be entitled to any refund with respect to such claim and the Companydoes not notify the Executive in writing of its intent to contest such denialof refund prior to the expiration of 30 days after such determination, thensuch advance shall be forgiven and shall not be required to be repaid and theamount of such advance shall offset, to the extent thereof, the amount ofGross-Up Payment required to be paid.

 

**6.             Successors.**

 

(a)           This Agreement ispersonal to the Executive and without the prior written consent of the Companyshall not be assignable by the Executive otherwise than by will or the laws ofdescent and distribution.  This Agreementshall inure to the benefit of and be enforceable by the Executive’s legalrepresentatives.

 

(b)           This Agreement shallinure to the benefit of and be binding upon the Company and its successors andassigns.

 

(c)           The Company shallrequire any successor (whether direct or indirect, by purchase, merger,consolidation, share exchange or otherwise) to all or substantially all of thebusiness and/or assets of the Company to assume expressly and agree to performthis Agreement in the same manner and to the same extent that the Company wouldbe required to perform it if no such succession had taken place.  As used in this Agreement, “Company” shallmean the Company as hereinbefore defined and any successor to its businessand/or assets as aforesaid which assumes and agrees to perform this Agreementby operation of law or otherwise.

 

**7.             Miscellaneous.**

 

(a)           This Agreement shallbe governed by and construed in accordance with the laws of the State ofMaryland, without reference to principles of conflict of laws.  The captions of this Agreement are not partof the provisions hereof and shall have no force or effect.  This Agreement may not be amended or modifiedotherwise than by a written agreement executed by the parties hereto or theirrespective successors and legal representatives.

 

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(b)           All notices andother communications hereunder shall be in writing and shall be given by handdelivery to the other party or by registered or certified mail, return receiptrequested, postage prepaid, addressed as follows:

 

If to the Executive:

 

Alexander T. Mason

Mercantile-Safe Deposit and Trust Company

2 Hopkins Plaza

Baltimore, Maryland  21201

 

If to the Company:

 

Mercantile Bankshares Corporation

2 Hopkins Plaza

Baltimore, Maryland  21201

Attention:  Corporate Secretary

 

or to such other address as either party shall have furnished to theother in writing in accordance herewith. Notice and communications shall be effective when actually received bythe addressee.

 

(c)           The invalidity orunenforceability of any provision of this Agreement shall not affect thevalidity or enforceability of any other provision of this Agreement.

 

(d)           The Company maywithhold from any amounts payable under this Agreement such Federal, state orlocal taxes as shall be required to be withheld pursuant to any applicable lawor regulation.

 

(e)           The Executive’sfailure to insist upon strict compliance with any provision hereof shall not bedeemed to be a waiver of such provision or any other provision thereof.

 

(f)            This Agreementcontains the entire understanding of the Company and the Executive with respectto the subject matter hereof, preserving,

 

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however, the rights and obligations of any party under any employmentagreement or other agreements or benefit plans. Notwithstanding any contraryprovision of any other agreement, following any termination of Executiveoccurring after the Effective Date, whether for Cause, Good Reason or any otherreason, Executive shall be free to engage in any activity competitive with anyactivity of the Company or any affiliate of the Company, through employment byor ownership of securities of any other entity or otherwise.  Upon and following the Effective Date, thedefinition of “Cause” in Section 1(a) of this Agreement shall supercede andreplace any definition of “cause” or “good cause” for termination of employmentin any employment agreement between the Executive and the Company.

 

**IN WITNESS WHEREOF,**the Executive has hereunto set his hand and, pursuant to the authorization fromits Board of Directors, Mercshares has caused these presents to be executed inits name and on its behalf, all as of the day and year first above written.

 

**WITNESS:**

 

 
|          |                      |                          |   |
|---------------|---------------------------|-------------------------------|--------|
|          | **ALEXANDER T. MASON**    |
|          |                      |
|          |                      |
| **ATTEST:**   | **MERCANTILE BANKSHARES** |
|          | **CORPORATION**           |
|          |                      |
|          |                      |
|          |                      | By:                           |   |   |
| JOHN L. UNGER |                      | EDWARD J. KELLY, III          |
| Secretary     |                      | Chairman, President and Chief |
|          |                      | Executive Officer             |
|               |                           |                               |        |  |  |  |

 

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