Exhibit 10.3
PROVIDENT BANK
DEFERRED COMPENSATION PLAN FOR
OUTSIDE DIRECTORS
This revised AGREEMENT is entered
into by and between Provident Bankshares Corporation (the
“Corporation”) and [NAME] (the “Director”)
effective January 1, 2008.
WHEREAS, the Corporation and the
Director entered into an agreement (the “Prior
Agreement”), effective November 1, 2006, under which the
Director elected to defer all or part of the fees payable to him
for services rendered as a director of the Corporation.
WHEREAS, the parties are unable to
locate signed documentation of the Prior Agreement;
WHEREAS, Section 409A of the
Internal Revenue Code and the regulations thereunder require that
certain provisions of the Prior Agreement be revised.
WHEREAS, the Corporation and the
Director desire to enter into this revised Agreement to replace the
Prior Agreement and to comply with Code
Section 409A.
WHEREAS, the Corporation and the
Director agree that no amounts deferred under the Prior Agreement
are “grandfathered” for purposes of Code
Section 409A and that all amounts deferred under the Prior
Agreement and this Agreement are subject to Code
Section 409A.
NOW THEREFORE, it is hereby agreed
as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions .
In this Agreement, the following
terms have the following meanings:
“Account” means the
bookkeeping account established in the name of the Director
pursuant to this Agreement.
“Agreement” means this
Agreement under the Provident Bank Deferred Compensation Plan for
Outside Directors, as set forth herein or as amended.
“Board” means the Board
of Directors of the Corporation.
“Code” means the
Internal Revenue Code.
“Committee” means the
Retirement Benefits Committee.
“Corporation” means
Provident Bankshares Corporation, a Maryland
corporation.
“Election Agreement”
means the form provided by the Executive Vice President on which
the Director makes an election to defer Fees under the Plan. The
Prior Agreement serves as the Election Agreement unless and until a
new Election Agreement is signed.
“Executive Vice
President” means the Executive Vice President, Organizational
Support (or another officer of the Corporation with similar
responsibilities as the Executive Vice President, Organizational
Support), or her designated agent.
“Fees” means fees
payable to the Director for services performed as a member of the
Board.
“Plan” means the
Provident Bank Deferred Compensation Plan for Outside Directors,
the terms of which for the Director are set forth in this
Agreement.
“Separation from
Service” means a cessation of the Director’s services
as a member of the Board; provided that such cessation must
constitute a “separation from service” under Code
Section 409A(a)(2)(A)(i) and the Treasury Regulations
thereunder.
ARTICLE II
DEFERRAL ELECTION
2.1 Deferral
Election . The Director may elect to defer up to 100% of his
Fees earned in a calendar year. The Director must make the election
on an Election Agreement and must submit the completed Election
Agreement to the Executive Vice President not later than the
December 31st preceding the calendar year in which such Fees
are earned. Notwithstanding the preceding sentence, an Election
Agreement already in effect for a calendar year will be deemed to
apply to a future calendar year unless the Director changes or
revokes the Election Agreement not later than the
December 31 st preceding the calendar year for
which he wishes such change or revocation to be
effective.
2.2
Irrevocability of Election . An election (or deemed
election) to defer Fees for a calendar year becomes irrevocable at
the end of the December 31 st preceding the calendar year in
which such Fees are earned. However, any election to defer Fees
will prospectively terminate if the Director receives a
distribution on account of an “unforeseeable emergency”
under Section 4.3 of this Agreement. If the Director’s
election to defer Fees so terminates, any subsequent election to
defer Fees must comply with Section 2.1.
2.3 Vesting . All deferrals
under this Agreement (and earnings thereon) are fully vested at all
times.
ARTICLE III
DEFERRAL ACCOUNTS AND DEEMED
EARNINGS
3.1 Account . All deferrals
under this Agreement will be credited by the Corporation to a
bookkeeping account (the “Account”) in the name of the
Director. In addition to the amounts credited to the
Director’s Account as elective deferrals, the Corporation
will adjust each account monthly to reflect the deemed earnings
credited under Section 3.2.
2
3.2 Deemed Earnings . All
amounts credited to the Director’s Account will be credited
monthly with interest at the “prime rate” published in
The Wall Street Journal in effect on the first day of the
month. Such deemed earnings will be credited until the
Director’s Account has been fully distributed to him or his
Beneficiary.
ARTICLE IV
DISTRIBUTIONS
4.1 Separation from Service .
Upon the Director’s Separation from Service, he will receive
the value of his Account in one lump sum payment of cash within 90
days after Separation from Service.
4.2 Death . Upon the
Director’s death before distribution of his Account is made,
his Beneficiary will receive the Director’s Account in one
lump sum payment of cash within 90 days after the Director’s
death.
4.3 Unforeseeable Emergency .
The Director may receive a distribution from his Account in the
event of an “unforeseeable emergency”. An
“unforeseeable emergency” means a severe financial
hardship to the Director resulting from an illness or accident of
the Director, his Beneficiary, his spouse or his dependent (as
defined in Code Section 152 without regard to Code
Section 152(b)(1), (b)(2) and (d)(1)(B)); loss of the
Director’s property due to casualty (including the need to
rebuild a home following damage to a home not otherwise covered by
insurance, for example, as a result of a natural disaster); or
other similar extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of the Director. A
distribution on account of unforeseeable emergency may not be made
to the extent that such emergency is or may be relieved through
reimbursement or compensation from insurance or otherwise, by
liquidation of the Director’s assets, to the extent such
liquidation would not itself cause severe financial hardship, or by
cessation of the Director’s deferrals under this Agreement.
Distributions because of an unforeseeable emergency must be limited
to the amount reasonably necessary to satisfy the emergency need
(which may include amounts necessary to pay any Federal, state or
local income taxes or penalties reasonably anticipated to result
from the distribution). The Committee will determine whether each
of the criteria for an unforseeable emergency has been met and, if
the Committee so determines, a lump sum payment of cash will be
made within 30 days following the date of determination. Upon
approval of an unforeseeable emergency distribution to the
Director, his deferral election will terminate effective for the
first month beginning after the date of determination.
4.4 Payment upon Income Inclusion
under Section 409A . If any portion of the
Director’s Account becomes taxable to him prior to the time
it would otherwise be payable due to failure of this Agreement to
satisfy Code Section 409A, the Director may apply to the
Committee for a distribution of that portion of his Account that
has become taxable. Within 90 days after the Committee determines
that a portion of the Director’s Account has become taxable,
the Corporation will make a lump sum payment of cash to the
Director equal to the taxable portion of his Account. Any
distribution under this Section 4.4 will reduce the remaining
balance of the Director’s Account.
3
4.5 Withholding . The
Corporation may withhold from any distribution to the Director
o
