EXHIBIT 10.8

THE TALBOT BANK OF EASTON, MARYLAND
SUPPLEMENTAL DEFERRED COMPENSATION PLAN
 
TRUST AGREEMENT
 
 
Effective as of December 11, 1996

 
 

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THE TALBOT BANK OF EASTON, MARYLAND
SUPPLEMENTAL DEFERRED COMPENSATION PLAN TRUST AGREEMENT
 
Effective as of December 11, 1996

TABLE OF CONTENTS

ARTICLE 1
ESTABLISHMENT OF TRUST

     
1.1
TRUST DEPOSITS
1
1.2
IRREVOCABILITY
1
1.3
GRANTOR TRUST
1
1.4
PLAN ASSETS
2
     

ARTICLE 2
THE PLAN

     
2.1
BENEFIT PROVISIONS
2
2.2
CONFLICTS WITH TRUST
2
2.3
TRUSTEE RELIANCE
2
     

ARTICLE 3
PAYMENTS TO THE PLAN PARTICIPANT OR BENEFICIARIES

     
3.1
PAYMENT SCHEDULE AND TAXES
2
3.2
PAYMENTS BY EMPLOYER
2
3.3
CESSATION OF PAYMENTS: RECOMMENCEMENT
3
     

ARTICLE 4
PAYMENTS TO EMPLOYER

     
4.1
PAYMENTS TO THE EMPLOYER
3
     

ARTICLE 5
INVESTMENT AUTHORITY

     
5.1
TRUSTEE AUTHORITY
3
5.2
TYPES OF INVESTMENTS
3
     

ARTICLE 6
DISPOSITION OF INCOME

     
6.1
DISPOSITION OF INCOME
3
     

ARTICLE 7
RESPONSIBILITY OF THE TRUSTEE

     
7.1
TRUSTEE INDEMNIFICATION
4
7.2
LIMITATION ON POWERS
4
     

ARTICLE 8
FEES AND EXPENSES OF THE TRUSTEE

     
8.1
TRUSTEE EXPENSES AND FEES
4
     

ARTICLE 9
RESIGNATION AND REMOVAL OF THE TRUSTEE

     
9.1
TRUSTEE RESIGNATION
4
9.2
TRUSTEE REMOVAL
4
9.3
TRANSFER OF ASSETS
4
9.4
COURT'S APPOINTMENT OF SUCCESSOR
5
     

ARTICLE 10
APPOINTMENT OF SUCCESSOR

     
10.1
APPOINTMENT OF SUCCESSOR
5
     

ARTICLE 11
AMENDMENT OR TERMINATION

     
11.1
AMENDMENT
5
11.2
TERMINATION
5
     

ARTICLE 12
MISCELLANEOUS

     
12.1
VALIDITY OF PROVISIONS
5
12.2
NO ASSIGNMENT OF BENEFITS
5
12.3
GOVERNING LAW
5
12.4
SUCCESSOR AND ASSIGNS
6
12.5
TRUSTEE'S SUCCESSORS
6
12.6
HEADINGS
6
     

ARTICLE 13
EFFECTIVE DATE

     
13.1
EFFECTIVE DATE
6

 
 
 

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THE TALBOT BANK OF EASTON, MARYLAND
SUPPLEMENTAL DEFERRED COMPENSATION PLAN TRUST AGREEMENT
 
RECITALS
 
THIS TRUST AGREEMENT is made and entered into effective as of the ________ day
of ___________, 1996 by and between The Talbot Bank of Easton, Maryland (the
“Employer”), which sponsors the Talbot Bank of Easton, Maryland, Supplemental
Deferred Compensation Plan (the “Plan”), and Alex. Brown Capital Advisory &
Trust Company, a corporation having trust powers under the laws of the State of
Maryland (the “Trustee”).
 
The Employer has established the Plan which is intended to be a “top hat plan”
(i.e., an unfunded plan of deferred compensation maintained for members of a
select group of management or highly compensated employees) under sections
201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act
of 1974 (“ERISA”). The Plan has been created for the sole benefit of the
Employer's President and Chief Executive Officer.
 
The Plan provides for the Employer to pay all Plan benefits from its general
revenues and assets. The Employer wishes to establish an irrevocable trust fund
for the purpose of providing a source from which to pay benefits under the Plan,
such trust fund being subject to the claims of the Employer's creditors in the
event of the Employer's bankruptcy or insolvency. Contributions to the trust
fund shall be held by the Trustee and invested, reinvested and distributed in
accordance with the provisions of this Trust Agreement.
 
The Trust established by this Trust Agreement is intended to be a “grantor
trust,” with the result that the corpus and income of the trust are treated for
tax purposes as assets and income of the Employer.
 
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
Employer and the Trustee, intending to be legally bound, declare and agree as
follows:
 
ARTICLE 1
 
ESTABLISHMENT OF TRUST
 
1.1  TRUST DEPOSITS. The Employer shall deposit with the Trustee, in trust,
certain funds as required under the Plan, which funds shall be held and disposed
of by the Trustee as provided in this Trust Agreement.
 
1.2  IRREVOCABILITY. The Trust shall be irrevocable.
 
1.3  GRANTOR TRUST. The Trust is intended to be a grantor trust, of which the
Employer is the grantor, within the meaning of sub-part E, part I, subchapter J,
chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and
shall be construed accordingly.
 
 
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1.4  PLAN ASSETS. The principal of the Trust, and any earnings thereon, shall be
held separate and apart from other funds of the Employer and shall be used
exclusively for the uses and purposes of the Plan and general insolvency
creditors of the Employer as herein set forth. Any assets held by the Trust will
be subject to the claims of the Employer's general creditors under federal and
state law.
 
ARTICLE 2
 
THE PLAN
 
2.1  BENEFIT PROVISIONS. The terms of the Plan shall govern the amount, form and
timing of benefit payments under a Plan to which the Plan Participant or a
Beneficiary is entitled.
 
2.2  CONFLICTS WITH TRUST. Notwithstanding any other provision of this Trust or
the Plan to the contrary, in the event any provision of the Plan is inconsistent
with any provision of this Trust, the terms of this Trust shall control.
 
2.3  TRUSTEE RELIANCE. Any direction received by the Trustee from the Employer
concerning the Trustee's receipt, holding, disposition, investment, or other
treatment of the assets of the Trust shall conclusively be deemed to be in
accordance with the terms of the Plan, and the Trustee shall be entitled to
rely, and shall be held harmless by the Employer in relying, on the propriety of
such direction.
 
ARTICLE 3
 
PAYMENTS TO THE PLAN PARTICIPANT OR BENEFICIARIES
 
3.1  PAYMENT SCHEDULE AND TAXES. The Employer shall deliver to the Trustee a
schedule (the “Payment Schedule”) that indicates the amounts payable in respect
of the Plan Participant upon his becoming entitled to receive a distribution
from the Plan and that provides the form in which such amounts are to be paid
(as provided for and available under the Plan) and the time of commencement for
the payment of such amounts. The Trustee shall make payments to the Plan
Participant or his Beneficiaries in accordance with such Payment Schedule. The
Employer shall make provision for the reporting and withholding of any federal,
state or local taxes that may be required to be withheld with respect to the
payment of benefits pursuant to the terms of the Plan and shall pay amounts
withheld to the appropriate taxing authorities. The Trustee will have no
responsibilities of any kind with respect to any such withholding, but shall
provide to the Employer any information concerning the Trust in the possession
of the Trustee which reasonably is requested by the Employer with respect to the
Employer's withholding obligations under the Plan and this Trust. The Employer
will indemnify and hold harmless the Trustee for any liability incurred by the
Trustee with respect to such withholding.
 
3.2  PAYMENTS BY EMPLOYER. The Employer may make payment of benefits directly to
the Plan Participant or his Beneficiaries as they become due under the terms of
the Plan. The Employer shall notify the Trustee of the Employer's decision to
make payment of benefits directly prior to the time amounts are payable to the
Plan Participant or his Beneficiaries.
 
 
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3.3  CESSATION OF PAYMENTS: RECOMMENCEMENT. Upon notice from the Employer, the
Trustee shall suspend or, if applicable, recommence payments in accordance with
the terms of such notification.
 
ARTICLE 4
 
PAYMENTS TO EMPLOYER
 
4.1  PAYMENTS TO THE EMPLOYER. Except as provided herein, the Employer shall not
have any right or power to direct the Trustee to return to the Employer or to
divert to others any of the Trust assets before all payments of benefits have
been made to Plan Participants or his Beneficiaries pursuant to the terms of the
Plan.
 
ARTICLE 5
 
INVESTMENT AUTHORITY
 
5.1  TRUSTEE AUTHORITY. All rights associated with assets of the Trust shall be
exercised by the Trustee or the person designated by Trustee, and shall in no
event be exercisable by or rest with the Plan Participant or the Employer.
 
5.2  TYPES OF INVESTMENTS. The Trustee shall invest and reinvest the principal
and income of the Trust Fund and keep the Trust Fund invested without
distinction between principal and income in Institutional Shares of the
following Flag Investor Mutual Funds managed by Alex. Brown Incorporated (or its
affiliates):
 
Intermediate -Term Income Fund, Inc.
Equity Partners Fund, Inc.
Value Builder Fund, Inc.
 
Investments of the aforesaid mutual funds are subject to the Annual Fund
Operating Expenses associated with each such mutual fund.
 
The Employer and the Trustee can agree from time to time to alter, amend or
modify the aforesaid form of investments.
 
ARTICLE 6
 
DISPOSITION OF INCOME
 
6.1  DISPOSITION OF INCOME. During the term of this Trust, all income received
by the Trust shall be accumulated and reinvested.
 
 
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ARTICLE 7
 
RESPONSIBILITY OF THE TRUSTEE
 
7.1  TRUSTEE INDEMNIFICATION.
 
(a)  If the Trustee undertakes or defends any litigation arising in connection
with this Trust, the Employer agrees to indemnify the Trustee against the
Trustee's costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments.
 
(b)  The Employer agrees to hold harmless and indemnify the Trustee, to the
fullest extent permitted under applicable law, for any and all liabilities of
any kind incurred by the Trustee in connection with the Trust (i) relating to
periods of time prior to the Trustee's becoming Trustee or (ii) relating to
periods of time while the Trustee is Trustee but not related to the Trustee's
gross negligence, willful misconduct, or breach of its duties hereunder.
 
7.2  LIMITATION ON POWERS. Notwithstanding any powers granted to the Trustee
pursuant to this Trust Agreement or to applicable law, the Trustee shall not
have any power that could give this Trust the objective of carrying on a
business and dividing the gains therefrom, within the meaning of section
301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant
to the Internal Revenue Code.
 
ARTICLE 8
 
FEES AND EXPENSES OF THE TRUSTEE
 
8.1  TRUSTEE EXPENSES AND FEES. The Employer shall pay all expenses of
administering the Trust and all Trustee's fees and expenses with respect to
which the Trustee is entitled to compensation or reimbursement.
 
ARTICLE 9
 
RESIGNATION AND REMOVAL OF THE TRUSTEE
 
9.1  TRUSTEE RESIGNATION. The Trustee may resign at any time by written notice
to the Employer, which shall be effective thirty (30) days after receipt of such
notice unless the Employer and the Trustee agree otherwise.
 
9.2  TRUSTEE REMOVAL. The Trustee may be removed by the Employer, on thirty (30)
days notice or upon shorter notice accepted by the Trustee.
 
9.3  TRANSFER OF ASSETS. Upon resignation or removal of the Trustee, all assets
shall subsequently be transferred to the successor Trustee, which transfer shall
be completed no later than sixty (60) days after such resignation or removal.
 
 
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9.4  COURT'S APPOINTMENT OF SUCCESSOR. If the Trustee resigns or is removed, a
successor shall be appointed, in accordance with the following section, by the
effective date of resignation or removal. If no such appointment has been made,
the Trustee may apply to a court of competent jurisdiction for appointment of a
successor or for instructions. All expenses of the Trustee in connection with
the proceeding shall be paid by the Employer.
 
ARTICLE 10
 
APPOINTMENT OF SUCCESSOR
 
10.1  APPOINTMENT OF SUCCESSOR. If the Trustee resigns or is removed in
accordance with Sections 9.1 or 9.2 hereof, the Employer may appoint any third
party, such as a bank trust department or other party that may be granted
corporate trustee powers under state law, as a successor to replace the Trustee
upon resignation or removal. The appointment shall be effective when accepted in
writing by the new trustee, who shall have all of the rights and powers of the
former trustee, including ownership rights in the Trust assets. The former
trustee shall execute any instrument reasonably necessary to evidence the
transfer.
 
ARTICLE 11
 
AMENDMENT OR TERMINATION
 
11.1  AMENDMENT. This Trust Agreement may be amended by a written instrument
executed by the Trustee and the Employer. Notwithstanding the foregoing, no such
amendment shall make the Trust revocable after it has become irrevocable in
accordance herewith.
 
11.2  TERMINATION. The Trust shall not terminate until the date on which the
Plan Participant and his Beneficiaries no longer are entitled to benefits
pursuant to the terms of Article 3 hereof. Upon termination of the Trust, any
assets remaining in the Trust shall be returned to the Employer.
 
ARTICLE 12
 
MISCELLANEOUS
 
12.1  VALIDITY OF PROVISIONS. Any provision of this Trust Agreement prohibited
by law shall be ineffective to the extent of any such prohibition, without
invalidating the remaining provisions hereof
 
12.2  NO ASSIGNMENT OF BENEFITS. Benefits payable on behalf of a Plan
participant and his or her beneficiaries under this Trust Agreement may not be
anticipated, assigned (either at law or in equity), alienated, pledged,
encumbered or subjected to attachment, garnishment, levy, execution or other
legal or equitable process.
 
12.3  GOVERNING LAW. This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland.
 
 
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12.4  SUCCESSOR AND ASSIGNS. This Agreement shall be binding upon and inure to
the benefit of the Employer and the Trustee and their respective successors and
assigns.
 
12.5  TRUSTEE'S SUCCESSORS. Any corporation into which the Trustee may be merged
or with which it may be consolidated, or any corporation resulting from any
merger, reorganization or consolidation to which the Trustee may be a party, or
any corporation to which all or substantially all of the trust business of the
Trustee may be transferred, shall be the successor of the Trustee hereunder
without the execution or filing of any instrument or the performance of any act.
 
12.6  HEADINGS. Headings of the Sections and Articles of this Agreement are
included for convenience only and shall not control the meaning or
interpretation of any provision of this Agreement.
 
ARTICLE 13
 
EFFECTIVE DATE
 
13.1  EFFECTIVE DATE. The effective date of this Trust Agreement is December 11,
1996.
 

 
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IN WITNESS WHEREOF, this Trust Agreement has been duly executed under seal by
the parties hereto, effective as of the day and year first above written.
 

ATTEST/WITNESS:     THE TALBOT BANK OF EASTON, MARYLAND                 /s/     
/s/ 

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Print Name:    
Print Name:  Jerome M. McConnell
Date:
(SEAL)

 

ATTEST/WITNESS:     ALEX, BROWN CAPITAL ADVISORY & TRUST COMPANY, TRUSTEE      
          /s/      /s/ 

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Print Name:    
Print Name:
Date:
(SEAL)

 
 
 
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