Exhibit 10.5
PROVIDENT BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT
PLAN
(Section 409A
Restatement)
Provident Bank, a Maryland
corporation (the “Company”), previously established
this Supplemental Executive Retirement Plan (the
“Plan”) effective January 1, 2005, to provide
specified benefits to a select group of management and highly
compensated employees of the Company. The Plan is intended to be a
“top hat plan” described in ERISA
Section 201(2).
The Plan supersedes any agreement
providing supplemental retirement benefits that was entered into
between an executive and the Company before January 1,
2005.
The original documentation of the
Plan was prepared before final regulations under Code
Section 409A were issued. This Section 409A Restatement
is adopted to comply with those final regulations. No benefits
under the Plan are “grandfathered” for purposes of
Section 409A.
ARTICLE 1
Definitions
1.1 Actuarial Equivalent
means a benefit of equivalent value using the actuarial assumptions
for similar purposes in effect under the Provident Bank Pension
Plan as of the date of determination.
1.2 Beneficiary means the
person(s) or entity designated as such in accordance with Article
11 of the Plan.
1.3 Benefit Percentage means
the percentage of Final Average Compensation specified in the
Participation Agreement.
1.4 Change in Control means
either: (i) the dissolution or liquidation of the Company;
(ii) a reorganization, merger or consolidation of the Company
with one or more corporations as a result of which the Company is
not the surviving corporation; (iii) approval by the
stockholders of the Company of any sale, lease, exchange or other
transfer (in one or a series of transactions) of all or
substantially all of the assets of the Company; (iv) approval
by the stockholders of the Company of any merger or consolidation
of the Company in which the holders of voting stock of the Company
immediately before the merger or consolidation will not own fifty
percent (50%) or more of the voting shares of the continuing
or surviving corporation immediately after such merger or
consolidation; or (v) a change of fifty percent
(50%) (rounded to the next whole person) in the membership of
the Board of Directors of the Company within a twelve
(12) month period, unless the election or nomination for
election by stockholders of each
new director within such period was approved by
the vote of two-thirds (2/3) (rounded to the next whole
person) of the directors then still in office who were in office at
the beginning of the twelve (12) month period.
1.5 Code means the Internal
Revenue Code.
1.6 Company means Provident
Bank, a Maryland corporation.
1.7 Committee — the
Retirement Benefits Committee of the Company.
1.8 Compensation Committee
means the Compensation Committee of the Board of Directors of
Provident Bankshares Corporation.
1.9 Disability – A
Participant is considered to have a Disability if he has been
determined to be disabled under his Company-provided group
long-term disability plan.
1.10 Disability Benefit means
the benefit payable to the Participant upon his Termination of
Employment by reason of Disability under
Section 6.1.
1.11 Disability Benefit
Eligibility Date means the later of (i) the
Participant’s Retirement Eligibility Date, or (ii) the
date of cessation of benefits under the Participant’s
Company-provided group long-term disability plan.
1.12 Eligible Executive means
those senior executives of the Company as may be designated by the
Compensation Committee to be eligible to participate in the
Plan.
1.13 ERISA means the Employee
Retirement Income Security Act of 1974, as amended.
1.14 Final Average
Compensation means the average annual base salary paid by the
Company to the Participant during the thirty-six (36) month
period ending immediately prior to the Participant’s
Termination of Employment.
1.15 Fifteen Year Certain and
Continuous Annuity means level annual payments over the
lifetime of a Participant, with payments guaranteed to be made for
at least fifteen (15) years.
1.16 Participant means an
Eligible Executive who has begun participation in the Plan pursuant
to Article 2.
1.17 Participation Agreement
means the written agreement between the Company and Participant
which specifies the terms under which benefits are provided to the
Participant under the Plan and which is incorporated by reference
herein. The Participation Agreements as of January 1, 2005 are
attached hereto as Exhibits A1-A3.
1.18 Retirement means
Termination of Employment, other than by reason of death, on or
after the Participant’s Retirement Eligibility
Date.
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1.19 Retirement Benefit means
the benefit payable under Section 3.1 to a Participant whose
Termination of Employment is on or after his Retirement Eligibility
Date.
1.20 Retirement Eligibility
Date means the age specified in the Participant’s
Participation Agreement.
1.21 Termination Benefit
means the benefit payable under Section 3.2 to a Participant
whose Termination of Employment precedes his Retirement Eligibility
Date.
1.22 Termination of
Employment means the date of the cessation of the
Participant’s employment with the Company for any reason
whatsoever, whether voluntary or involuntary, including as a result
of the Participant’s Retirement, death or Disability;
provided that such cessation constitutes a “separation from
service,” as defined under Code Section 409A and the
Treasury regulations thereunder.
1.23 Years of Service means
the Participant’s period of employment with the Company
commencing with his most recent date of hire, rounded (if
necessary) to the next lowest whole number.
ARTICLE 2
Participation
2.1 Participation . Upon
execution of a Participation Agreement by an Eligible Executive and
the Company, the Eligible Executive becomes a Participant as of the
effective date specified in his Participation Agreement.
ARTICLE 3
Calculation of Retirement and
Termination Benefit
3.1 Retirement Benefit . The
Retirement Benefit is an annual amount, commencing after
Retirement, payable as a Fifteen Year Certain and Continuous
Annuity, equal to:
(a) the product of (1) the
Participant’s Benefit Percentage and (2) the
Participant’s Final Average Compensation,
minus
(b) the annual amount that would be
payable to the Participant under the Provident Bank Pension Plan if
he began receiving benefits under the Pension Plan upon Retirement
in the form of a single life annuity, minus
(c) the annual amount of the Social
Security old age benefit that would be payable to the Participant
if he began receiving Social Security benefits upon Retirement (and
disregarding any cost-of-living adjustments for future years). If
the Participant’s Retirement precedes the earliest date on
which he could receive Social Security old age retirement
benefits,
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then the Retirement Benefit will be reduced,
starting in the year in which the Participant could first begin
receiving Social Security old age retirement benefits, by the
annual amount of the Social Security old age retirement benefit
that would be payable to the Participant if he began receiving
Social Security benefits in that year (and disregarding any
cost-of-living adjustments for future years). The determination of
the Social Security old age benefit is based on the Social Security
Act and benefit levels in effect at Retirement and assuming the
Participant earns no wages subject to Social Security after
Retirement.
3.2 Termination Benefit . The
Termination Benefit is an annual amount, commencing upon the
Participant’s Retirement Eligibility Date, payable as a
Fifteen Year Certain and Continuous Annuity, determined in the same
manner as the Retirement Benefit under Section 3.1, except
that (i) “Retirement Eligibility Date” is
substituted for “Retirement” in Section 3.1(b) and
(c); (ii) “Termination Benefit” is substituted for
“Retirement Benefit” in Section 3.1(c); and
(iii) the determination of the Social Security old age benefit
that would be payable at the Participant’s Retirement
Eligibility Date assumes that, between his Termination of
Employment date and his Retirement Eligibility Date, the
Participant earns the same amount of annual wages he was earning in
the last full calendar year prior to (or ending with) his
Termination of Employment date. Notwithstanding the preceding
sentence, a Participant’s Participation Agreement may provide
for a reduced Benefit Percentage if the Participant has a
Termination of Employment before attaining his Retirement
Eligibility Date with less than a stated number of Years of
Service. However, such a Participant will receive a benefit using
the maximum Benefit Percentage set forth in the Participation
Agreement, regardless of the Participant’s Years of Service,
in the event of Termination of Employment (i) by reason of the
Participant’s Retirement, Disability or death, or
(ii) after a Change in Control.
ARTICLE 4
Payment of Retirement and
Termination Benefits
4.1 Retirement Benefit . Upon
Retirement, a Participant will receive a Retirement Benefit, in an
amount calculated in accordance with Section 3.1. The benefit
will be paid in the form of a Fifteen Year Certain and Continuous
Annuity, unless the Participant makes a timely election to receive
an optional form of payment under Section 4.3. The initial
payment will be made within ninety (90) days following the
Participant’s Retirement, and subsequent payments will be
made within ninety (90) days following each anniversary of his
Retirement. Notwithstanding the preceding sentence, if the
Participant is a “Key Employee” as of the date of
Retirement, the initial payment will not be made until the thirty
(30) day period starting on the date that is six months after
the date of Retirement. A Participant is a “Key
Employee” for the 12-month period beginning on any
April 1 if the Participant is described in Code
Section 416(i) (using the definition of compensation under T.
Reg. §1.415(c)-2(d)(4)) at any time during the 12-month period
ending on the preceding December 31.
4.2 Termination Benefit .
Upon Termination of Employment prior to a Participant’s
Retirement Eligibility Date (other than by reason of Disability or
death), the Participant will receive a Termination Benefit, in an
amount calculated in accordance with Section 3.2. The benefit
will be paid in the form of a Fifteen Year Certain and
Continuous
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Annuity, unless the Participant makes a timely
election to receive an optional form of payment under
Section 4.3. The initial payment will be made within ninety
(90) days following the Participant’s Retirement
Eligibility Date, and subsequent payments will be made within
ninety (90) days following each anniversary of the Retirement
Eligibility Date. Notwithstanding the preceding sentence, if the
Participant is a “Key Employee” (as defined in
Section 4.1) as of his Termination of Employment date, the
initial payment will not be made until the thirty (30) day
period starting on the date that is six months after the
Participant’s Termination of Employment date.
4.3 Optional Forms of Payment
. An election to have benefits paid in an optional form of payment
(or a change in an election already made) will be considered timely
if the form provided for such purpose is submitted to the
Administrator before the first payment is made. The following
optional forms of payment are available under the Plan:
Joint and 50% Survivor
Annuity . Level annual
payments will be made to the Participant over the
Participant’s lifetime and, upon the Participant’s
death, level annual payments equal to 50% of the annual payments
made to the Participant will be made to the Participant’s
Beneficiary over the Beneficiary’s lifetime if such
Beneficiary survives the Participant.
Joint and 100% Survivor
Annuity . Level annual
payments will be made to the Participant over the
Participant’s lifetime and, upon the Participant’s
death, level annual payments in the same a
