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EXHIBIT 10.6
FORM OF
PROVIDENT BANK OF MARYLAND
DEFERRED COMPENSATION PLAN FOR OUTSIDE DIRECTORS
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THIS AGREEMENT made this ______ day of _________, 199__ by and between
Provident Bank of Maryland (the "Corporation") and _______________________ (the
"Director").
WHEREAS, the Corporation values the efforts, abilities and accomplishments
of the Director and values his future services, the Corporation hereby
establishes and maintains the Provident Bank of Maryland Deferred Compensation
Plan for Outside Directors (the "Plan") under which Directors of the Corporation
who are not full-time employees of the Corporation may elect at the beginning of
any calendar quarter or other such date as administratively determined by the
Corporation to defer all or part of the compensation payable to them for
services rendered as a director. A deferral shall apply to compensation that is
payable to the Director for services rendered after the completion and effective
date of this deferral agreement.
NOW THEREFORE, it is mutually agreed that the Director hereby agrees to
defer percentage (___%) from his compensation as a Director. The Director
further requests that payment of the Deferred Cash Benefit to which he may be
entitled commence in accordance with ARTICLE 1 of the Plan.
ARTICLE 1
A. AMOUNT OF BENEFITS. In the event the Director ceases to be a director of the
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Corporation on or after attaining the retirement age of 65 or upon the
occurrence of a Change in Control as defined in ARTICLE 10, he shall be entitled
to receive from the Corporation a benefit equal to
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that amount which will be accumulated on the date of the Director's change in
status as a Director in a bookkeeping account established by the Corporation and
which is based on the assumption that the amount the Director deferred will earn
interest at the Prime rate as specified below.
B. INTEREST RATE. The interest rate for each month will be set at the Prime rate
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of interest in effect as of the first day of the calendar month. As of each
Valuation Date (Valuation Date is described as monthly) the account of each
Director shall be credited to reflect the amount of this interest.
C. BENEFIT SCHEDULE. The benefit set forth in ARTICLE 1(A) shall be paid to the
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Director by the Corporation either in a lump sum or in approximately equal
monthly installments beginning not later than one month after retirement for a
period of fifteen (15) years (or in such other manner or over such other period
as the Corporation in its sole discretion may determine, following the date of
such retirement). However, as the election of the given participant, all
monetary payments within a given tax year can be accelerated into a single
payment within that tax year.
The amount of any installment payments payable to the Director shall be
adjusted annually to reflect appreciation or depreciation of assets held in the
bookkeeping account, plus interest
ARTICLE 2
A. DEATH AFTER RETIREMENT. If the Director should die after retirement and
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during the 15-year payment period (or during such other period as the
Corporation may determine to pay this benefit), THE Corporation shall continue
to pay such monthly installments until the expiration of
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said 15-year period, or other period initially determined by the Corporation, to
the individual or individuals the Director has designated in writing filed with
the Corporation or, in the absence of such designation, to the estate of the
Director. Payments shall not continue beyond the expiration of said period.
B. DEATH BEFORE RETIREMENT. If the Director dies while a Director of the
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Corporation, the Corporation shall pay to the individual or individuals the
Director has designated in writing filed with the Corporation or, in the absence
of such designation, to the estate of the Director a benefit calculated and paid
in the same manner as set forth in ARTICLE 1(A), and assuming the Director's
date of death was his retirement date. This benefit shall be paid by the
Corporation in a lump sum, or in such other manner or over such other period as
the Corporation in its sole discretion may determine.
ARTICLE 3
CHANGE IN STATUS
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In the event the Director ceases being a Director for reasons other than
death or retirement, he shall be entitled to receive from the Corporation a
severance benefit calculated in the same manner as set forth in ARTICLE 1(A),
and assuming his change in status date is his retirement date. Such benefit
shall be paid by the Corporation in a lump sum one (1) month after the Director
ceases performing services as a Director, or in such other manner, including
approximately equal monthly installments, beginning not later than one (1) month
after his severance, for a period of fifteen (15) years, following the date of
change in status, or until his death, whichever first occurs. At death, the
balance remaining in the bookkeeping account shall be paid as provided in
ARTICLE 2(A).
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ARTICLE 4
AMENDMENT AND TERMINATION OF AGREEMENT
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Either the Director or the Corporation may elect to terminate this
Agreement with respect to fees for services not already earned by providing
thirty (30) days written notice of intent to terminate.
Upon such termination, no further amounts shall be credited to the
Director's bookkeeping account. The Director upon such termination shall be
entitled to receive a benefit equal only to the severance benefit set forth in
ARTICLE 3. The Corporation shall determine the time and manner of payment of
this benefit in its sole discretion, but commencement of payment of this benefit
shall not be delayed beyond one (1) month after the Director ceases to perform
services as a director.
ARTICLE 5
CLAIMS PROCEDURE
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If any benefits become payable under this Agreement, the Director (or
designated beneficiary in the case of the Director's death) shall file a claim
for benefits by notifying the Corporation in writing. If the claim is wholly or
partially denied, the Corporation shall provide a written notice within ninety
(90) days specifying the reason for the denial, the plan provisions on which the
denial is based and additional material or information necessary to receive
benefits, if any. Also, such written notice shall indicate the steps to be taken
if a review of the denial is desired.
If a claim is denied and a review is desired, the Director (or designated
beneficiary in the
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case of the Director's death) shall notify the Corporation in writing within
sixty (60) days. In requesting a review, the Director of beneficiary may review
plan documents and submit any written issues and comments he or she feels are
appropriate. The Corporation shall then review the claim and provide a written
decision within sixty (60) days. This decision shall state the specific
provisions on which the decision is based.
ARTICLE 6
HARDSHIP WITHDRAWAL
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In the event that the Director suffers an immediate and heavy financial
need which cannot reasonably be met from other sources, the Director shall be
permitted to withdraw from the bookkeeping account established on his behalf an
amount equal to the amount needed to meet the immediate and heavy financial
need. The Director must first submit a written withdrawal request to the
Corporation explaining the nature of the hardship and the amount required to
meet the financial need. The Director must certify that the need cannot be
reasonably met from other sources, as specified by the Internal Revenue
Service in Regulations applicable to Section 401(k) of the Internal Revenue
Code. The determination of hardship and lack of availability of funds from other
sources to meet the hardship will be made by the Corporation in a
non-discriminatory manner pursuant to the rules for granting hardship
withdrawals from time-to-time under the Corporation's qualified Plan.
ARTICLE 7
NONASSIGNABLE RIGHTS
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Neither the Director nor any designated beneficiary shall have any right
to sell, assign, transfer or otherwise convey the right to receive any payment
hereunder. Any attempt to sell,
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assign, transfer or other convey any payment shall result in the forfeiture of
that payment.
ARTICLE 8
INDEPENDENCE OF BENEFITS
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Any payments under this Plan shall be independent of, and in addition to,
those under any other plan, program or agreement which may be in effect between
the parties hereto, or any other compensation payable to the Director or the
Director's designated beneficiary by the Corporation. This Agreement shall not
be construed as a contract of employment, nor does it restrict the right of the
Corporation to discharge the Director for proper cause or the right of the
Director to cease providing services as a director.
ARTICLE 9
NONSECURED PROMISE
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The rights of the Director, any designated beneficiary(ies) of the
Director or any other person claiming through the Director under the Plan, shall
be solely those of an unsecured general creditor of the Corporation. The
Director, or the designated beneficiary(ies) of the Director, shall have the
right to receive those payments specified under the Plan only from the
Corporation, and has no right to look at any general or specific asset or assets
of the Corporation, or any specific or special property separate from the
Corporation, to satisfy a claim for benefit payments.
The Director agrees that he, his designated recipient(s) or any other
person claiming through the Director, shall have no rights or beneficial
ownership interest whatsoever in any general asset or assets the Corporation may
acquire to use to help support its financial obligations under the Plan. Any
such general asset or assets used or acquired by the Corporation in
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connection with the liabilities it has assumed under the Plan shall not be
deemed to be held under any trust for the benefit of the Director or his
designated beneficiary(ies). Nor shall any such general asset or assets be
considered security for the performance of the obligations of the Corporation.
Any such asset or assets shall remain general, unpledged and unrestricted assets
oif the Corporation.
The Director also understands and agrees that his participation in the
acquisition of any such general asset for the Corporation shall not constitute a
representation to the Director, his designated beneficiary(ies) or any person
claiming through or under the Director that any of them has a special or
beneficial interest in such general asset or assets.
The Corporation shall be under no obligation whatever to purchase or
maintain any contract, account, policy or other asset to provide the benefits
under this Agreement, and any reference to a contract, account or other asset is
made solely for the purpose of computing the value of benefits.
ARTICLE 10
CHANGE IN CONTROL
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The Director may make a one time irrevocable election, on a form provided
by Provident, to receive a lump sum benefit equal to the amount of benefits due
under this Plan if such benefits become due following a Change in Control.
If benefits due under this Plan are wrongfully denied following a Change
of Control, Provident or its successor shall pay to Director or his beneficiary
an amount equal to the court costs and reasonable attorney's fees expended to
recover such benefits.
For purposes of this Plan, a "Change of Control" of the Corporation or
Provident
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Bankshares Corporation (the "Holding Company") shall mean an event of a nature
that: (i) would be required to be reported in response to Item 1(a) of the
current report on Form 8-K, as in effect on the date hereof, pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"); or (ii)
results in a Change in Control of the Corporation or the Holding Company within
the meaning of the Change in Bank Control Act and the Rules and Regulations
promulgated by the Federal Deposit Insurance Corporation ("FDIC") at 12 C.F.R.
Section 303.4(a) with respect to the Corporation, and the Board of Governors of
the Federal Reserve System ("FRB") at 12 C.F.R. Section 225.41(b) with respect
to the Holding Company, as in effect on the date hereof; or (iii) without
limitation such a Change in Control shall be deemed to have occurred at such
time as (A) any "person" (as the term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation or the Holding Company representing 10% or more of the Corporation's
or the Holding Company's outstanding securities except for any securities of the
Corporation purchased by the Holding Company or any securities of the
Corporation or the Holding Company purchased by any employee benefit plan of the
Corporation or the Holding Company, or (B) individuals who constitute the Board
on the date hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election was approved by a vote of at least
75% of the Directors comprising the Incumbent Board, or whose nomination for
election by the Holding Company's stockholders was approved by the same
Nominating Committee serving under an Incumbent Board, shall be, for purposes of
this clause (B), considered as though he were a member of the Incumbent Board,
or (C) a plan of
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reorganization, merger, consolidation, sale of all or substantially all the
assets of the Corporation or Holding Company or similar transaction occurs in
which the Corporation or Holding Company is not the resulting entity, or (D) a
solicitation of stockholders of the Holding Company, by someone other than the
current management of the Holding Company, seeking stockholder approval of a
plan of reorganization, merger or consolidation of the Holding Company or
Corporation with one or more corporations, a result of which the outstanding
shares of the class of securities then subject to such plan or transaction are
exchanged for or converted into cash or property or securities not issued by the
Corporation or the Holding Company, or (E) a tender offer is made for 20% or
more of the voting securities of the Corporation or Holding Company then
outstanding.
ARTICLE 11
CORPORATION'S AGREEMENT
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The Corporation agrees that it will not merge, consolidate or combine with
any other business entity unless and until the succeeding or continuing
corporation or business entity expressly assumes and confirms in writing the
obligations of the Corporation under this Agreement.
This Agreement may not be altered, amended or revoked except by a written
agreement signed by the Corporation and the Director.
ARTICLE 12
PLAN ADMINISTRATION
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The Plan shall be administered by the Corporation. The Corporation shall
establish the forms and procedures by which a Director may make deferral
elections under this Plan, and the
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Corporation shall have the complete authority and discretion according to its
determination of what is in the best interests of both the Corporation and the
Directors. No Director shall have any power to direct how the Corporation shall
exercise its discretion. All decisions of the Corporation concerning the
administration and interpretation of this Plan shall be final, conclusive and
binding.
ARTICLE 13
GENDER
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Where appropriate in this Agreement, words used in the singular shall
include the plural and words used in the masculine shall include the feminine.
ARTICLE 14
EFFECTIVE DATE
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This Agreement shall be effective as of the date written above and is in
substitution and replacement of any previous agreement between the parties. This
Agreement shall be binding upon the Corporation and its successors, and upon the
Director, his widow, his heirs and designated beneficiaries and their executors.
This Agreement shall be effective until modified or terminated.
ARTICLE 15
CONSTRUCTION
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This Plan is created, adopted and maintained pursuant to and in accordance
with the laws of the State of Maryland, except to the extent that those laws are
superseded by, or in conflict with, the laws of the United States of America.
The headings and captions appearing in this document are only for convenience
and are not intended to have substantive meaning. If a
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provision of this Plan is at any time determined by a court of law having
jurisdiction to be unenforceable, such unenforceability shall not affect any
other provision of the Plan.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first hereinabove written.
ATTEST: PROVIDENT BANK OF MARYLAND
BY:
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WITNESS:
(SEAL)
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DIRECTOR
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