Exhibit 10.12

 

PROVIDENT BANK

 

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

 

Provident Bank, a Maryland corporation (the “Company”), hereby establishes this
Supplemental Executive Retirement Plan (the “Plan”), effective as of August 1,
2004, for the purpose of attracting high quality executives and promoting in its
key executives increased efficiency and an interest in the successful operation
of the Company. The benefits provided under the Plan shall be provided in
consideration for services to be performed after the effective date of the Plan,
but prior to the executive’s retirement.

 

ARTICLE 1

 

Definitions

 

1.1    Administrator shall mean the person or persons appointed by the Board of
Directors of the Company to administer the Plan pursuant to Article 9 of the
Plan.

 

1.2     Beneficiary shall mean the person(s) or entity designated as such in
accordance with Article 8 of the Plan.

 

1.3     Benefit Percentage shall have the meaning given to such term in the
Participation Agreement with the Participant and may be different for each
Participant

 

1.4     Change in Control shall mean 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     Company shall mean Provident Bank, a Maryland corporation.

 

1.6     Disability shall mean (i) the inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, or (ii) by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, the Participant is receiving income replacement benefits for a
period of not less than 3 months under an accident and health plan covering
employees of the Company. The

 

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Administrator may require that the Participant submit to an examination by a
competent physician or medical clinic selected by the Administrator on an annual
basis to confirm Disability.

 

1.7     Eligible Executive shall mean those senior executives of the Company as
may be designated by the Administrator to be eligible to participate in the
Plan.

 

1.8     ERISA shall mean the Employee Retirement Income Security Act of 1974, as
amended.

 

1.9     Final Average Compensation shall mean 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.

 

1.10     Participant shall mean an Eligible Executive who has begun
participation in the Plan pursuant to Article 2 of the Plan. Participation shall
commence on the first day of the month in which the executive is first
classified as an Eligible Executive by the Administrator.

 

1.11     Participation Agreement shall mean the written agreement by and between
the Company and Participant which specifies the terms under which benefits are
provided to the Participant under the Plan in consideration for services
performed on behalf of the Company.

 

1.12     Plan Year shall mean the calendar year, except that the initial Plan
Year shall commence on August 1, 2004 and shall end on December 31, 2004.

 

1.13     Retirement shall mean Termination of Employment other than by reason of
death, on or after the Retirement Eligibility Date.

 

1.14     Retirement Benefit(s) shall mean the benefits payable pursuant to the
Participant on Retirement pursuant to Section 3.1.

 

1.15     Retirement Eligibility Date shall mean the date on which the
Participant attains age sixty five (65) or such other age as may be specified in
the Participation Agreement.

 

1.16     Settlement Date shall mean the date by which benefit payments shall
commence. Unless otherwise specified, the Settlement Date shall be no later that
the last day of January of the Plan Year following the Termination of Employment
except that the Settlement Date for a “Key Employee” as defined in
Section 416(i) of the Internal Revenue Code (without regard to paragraph (5) of
that Section) shall be no earlier than six (6) months following Termination of
Employment of any reason other than the Participant’s death.

 

1.17     Termination of Employment shall mean 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.

 

1.18     Unreduced Retirement Benefit shall mean, with respect to a Participant,
the Participant’s Retirement Benefit, calculated in accordance with Section 3.1,
but disregarding clauses (2) and (3) thereof.

 

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1.19     Years of Participation shall mean the cumulative consecutive Plan Years
the Participant has participated in the Plan, beginning with the first complete
Plan Year coinciding with or beginning after the Participant is first enrolled
in the Plan pursuant to Article 2 of the Plan.

 

ARTICLE 2

 

Participation

 

2.1     Automatic Enrollment. An Eligible Executive shall automatically be
enrolled in the Plan as of the first day of the month in which he or she is
first designated as an Eligible Executive by the Administrator.

 

ARTICLE 3

 

Calculation of Retirement and Termination Benefit

 

3.1     Retirement Benefit. The Retirement Benefit shall be an annual amount,
commencing after Retirement, payable over the lifetime of the Participant, but
for no less than fifteen (15) years, equal to:

 

(1) the product of (i) the Participant’s Benefit Percentage and (ii) the
Participant’s Final Average Compensation, minus

 

(2) the annual amount payable to the Participant under the normal form of
distribution under the Company’s qualified defined benefit plan, minus

 

(3) the annual amount of the normal Social Security benefit payable to the
Participant.

 

3.2     Termination Benefit. The Termination Benefit shall be an annual amount,
commencing after the Participant attains age 65, payable over the lifetime of
the Participant, but no less than fifteen (15) years, determined in the same
manner as the Retirement Benefit, except that each Participant’s Participation
Agreement may provide for a reduced Benefit Percentage in the event that the
Participant Terminates Employment prior to attaining age 65 with less than a
stated number of Years of Participation. Notwithstanding the forgoing, each
Participant shall be entitled to receive a benefit using the maximum Benefit
Percentage set forth in the Participation Agreement, regardless of the
Participant’s Years of Participation, 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. In the event of the Participant’s Retirement, the
Participant shall be entitled to receive a Retirement Benefit, in an amount
calculated in accordance with Section 3.1. The benefit shall be paid in annual
installments over the lifetime of

 

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the Participant, but not less than fifteen (15) years, unless the Participant
makes a timely election to receive actuarially adjusted benefits (based on
reasonable actuarial assumptions established in advance by the Administrator
pursuant to Section 11.5 of the Plan) payable over the joint lives of the
Participant and his or her spouse. Payments shall begin on the Settlement Date
following Retirement. An election to change the form of benefit payout may be
made at any time prior to Retirement by submitting to the Administrator the form
provided for such purpose but elections shall not be effective unless made no
less than thirteen (13) calendar months prior to Termination of Employment.

 

4.2     Termination Benefit. In the event of the Participant’s Termination of
Employment prior to the Retirement Eligibility Date (other than by reason of
Disability or death), the Participant shall be entitled to receive a Termination
Benefit, in an amount calculated in accordance with Section 3.2. The benefit
shall be paid in annual installments over the lifetime of the Participant, but
no less than fifteen (15) years, unless the Participant makes a timely election
to receive actuarially adjusted benefits (based on reasonable actuarial
assumptions established in advance by the Administrator pursuant to Section 11.5
of the Plan) payable over the joint lives of the Participant and his or her
spouse. Payments shall begin on the Settlement Date following the Participant’s
Retirement Eligibility Date. An election to change the form of benefit payout
may be made at any time prior to Termination of Employment by submitting to the
Administrator the form provided for such purpose but elections shall not be
effective unless made no less than thirteen (13) calendar months prior to
Termination of Employment.

 

ARTICLE 5

 

Death Benefits

 

5.1     Survivor Benefit Before Benefits Commence. If the Participant dies prior
to commencement of benefits under Article 4 or 6, the Company shall pay to the
Participant’s Beneficiary a death benefit equal to the Participant’s accrued
benefit as of the date of death based on reasonable actuarial and mortality
assumptions which have been selected at the discretion of the Administrator. The
death benefit shall be paid in a single lump sum on the Settlement Date
following the date the Participant’s death is established by reasonable
documentation.

 

5.2     Survivor Benefit After Benefits Commence. If the Participant dies after
benefits have commenced under Article 4 or 6 but prior to completion of the
minimum (15) year payout period and the Participant has not elected to receive
the benefits in the form of a joint annuity, benefit payments shall continue to
be paid to the Survivor over the balance of the fifteen (15) year minimum
benefit payout period. If the Participant has elected to receive the benefit in
the form of a joint annuity, no death benefit shall be payable upon the death of
the Participant unless that Participant predeceases the other person who’s life
has been covered under the joint annuity, in which case the benefits shall be
payable to the joint annuitant over the balance of his or her life.

 

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ARTICLE 6

 

Disability

 

6.1     Disability. In the event of Termination of Employment by reason of
Disability prior to the Retirement Eligibility Date, the Participant shall be
entitled to receive the Retirement Benefit provided under Sections 3.1, except
that (i) the annual payments shall begin on the Settlement Date following
Termination of Employment by reason of Disability; and (ii) the annual payments
shall be paid over fifteen (15) years and not in the form of a single or joint
life annuity.

 

ARTICLE 7

 

Amendment or Termination of Plan

 

7.1     Amendment or Termination of Plan. The Company may, at any time, direct
the Administrator to amend or terminate the Plan, except that no such amendment
or termination may reduce a Participant’s accrued benefit. If the Company
terminates the Plan, the date of such termination shall be treated as a
Termination of Employment for the purpose of calculating Plan benefits and the
Company shall pay to each Participant the benefits such Participant would be
entitled to receive under Section 4.1 of the Plan over the same period such
benefits would otherwise have been payable under the terms of the Plan.

 

ARTICLE 8

 

Beneficiaries

 

8.1     Beneficiary Designation. The Participant shall have the right, at any
time, to designate any person or persons as Beneficiary (both primary and
contingent) to whom payment under the Plan shall be made in the event of the
Participant’s death. The Beneficiary designation shall be effective when it is
submitted in writing to and acknowledged by the Administrator during the
Participant’s lifetime on a form prescribed by the Administrator.

 

8.2     Revision of Designation. The submission of a new Beneficiary designation
shall cancel all prior Beneficiary designations. Any finalized divorce or
marriage (other than a common law marriage) of a Participant subsequent to the
date of a Beneficiary designation shall revoke such designation, unless in the
case of divorce the previous spouse was not designated as Beneficiary and unless
in the case of marriage the Participant’s new spouse has previously been
designated as Beneficiary.

 

8.3     Successor Beneficiary. If the primary Beneficiary dies prior to complete
distribution of the benefits provided in Article 5, the remaining Account
balance shall be paid to the contingent Beneficiary elected by the Participant
in the form of a lump sum payable no later than the last day of the month
following the month in which the primary Beneficiary’s death is established.

 

8.4     Absence of Valid Designation. If a Participant fails to designate a
Beneficiary as provided above, or if the Beneficiary designation is revoked by
marriage, divorce,

 

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or otherwise without execution of a new designation, or if every person
designated as Beneficiary predeceases the Participant or dies prior to complete
distribution of the Participant’s benefits, then the Administrator shall direct
the distribution of such benefits to the Participant’s estate.

 

ARTICLE 9

 

Administration/Claims Procedures

 

9.1     Administration. The Plan shall be administered by the Administrator,
which shall have the exclusive right and full discretion (i) to interpret the
Plan, (ii) to decide any and all matters arising hereunder (including the right
to remedy possible ambiguities, inconsistencies, or admissions), (iii) to make,
amend and rescind such rules as it deems necessary for the proper administration
of the Plan and (iv) to make all other determinations and resolve all questions
of fact necessary or advisable for the administration of the Plan, including
determinations regarding eligibility for benefits payable under the Plan. All
interpretations of the Administrator with respect to any matter hereunder shall
be final, conclusive and binding on all persons affected thereby. No member of
the Administrator shall be liable for any determination, decision, or action
made in good faith with respect to the Plan. The Company will indemnify and hold
harmless the members of the Administrator from and against any and all
liabilities, costs, and expenses incurred by such persons as a result of any
act, or omission, in connection with the performance of such persons’ duties,
responsibilities, and obligations under the Plan, other than such liabilities,
costs, and expenses as may result from the bad faith, willful misconduct, or
criminal acts of such persons.

 

9.2     Notice of Right to Claim Benefits. The Administrator shall be the “named
fiduciary” and shall notify the Participant and, where appropriate, the
Beneficiary, of a right to claim benefits under the Plan, shall make forms
available for filing of such claims, and shall provide the name of the person or
persons with whom such claim should be filed.

 

9.3     Claims Procedures. Any Participant, former Participant or Beneficiary
may file a written claim with the Administrator setting forth the nature of the
benefit claimed, the amount thereof, and the basis for claiming entitlement to
such benefit. The Administrator shall determine the validity of the claim and
communicate a decision to the claimant promptly and, in any event, not later
than ninety (90) days after the date of the claim. The claim may be deemed by
the claimant to have been denied for purposes of further review described below
in the event a decision is not furnished to the claimant within such ninety
(90) day period. If additional information is necessary to make a determination
on a claim, the claimant shall be advised of the need for such additional
information within forty-five (45) days after the date of the claim. The
claimant shall have up to one hundred and eighty (180) days to supplement the
claim information, and the claimant shall be advised of the decision on the
claim within forty-five (45) days after the earlier of the date the supplemental
information is supplied or the end of the one hundred and eighty (180) day
period. Every claim for benefits which is denied shall be denied by written
notice setting forth in a manner calculated to be understood by the claimant
(i) the specific reason or reasons for the denial, (ii) specific reference to
any provisions of the Plan (including any internal rules, guidelines, protocols,
criteria, etc.) on which the denial is based, (iii) description of any
additional material or information that is necessary to process the claim,

 

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and (iv) an explanation of the procedure for further reviewing the denial of the
claim (including applicable time limits and a statement of the claimant’s right
to bring a civil action under section 502(a) of ERISA following an adverse
determination on review).

 

9.4     Review Procedures. Within sixty (60) days after the receipt of a denial
on a claim, a claimant or his/her authorized representative may file a written
request for review of such denial. Such review shall be undertaken by the
Administrator and shall be a full and fair review. The claimant shall have the
right to review all pertinent documents. The Administrator shall issue a
decision not later than sixty (60) days after receipt of a request for review
from a claimant unless special circumstances, such as the need to hold a
hearing, require a longer period of time, in which case a decision shall be
rendered as soon as possible but not later than one hundred twenty (120) days
after receipt of the claimant’s request for review. The decision on review shall
be in writing and shall include specific reasons for the decision written in a
manner calculated to be understood by the claimant with specific reference to
any provisions of the Plan on which the decision is based.

 

ARTICLE 10

 

Conditions Related to Benefits

 

10.1     Nonassignability. The benefits provided under the Plan may not be
alienated, assigned, transferred, pledged or hypothecated by any person, at any
time, or to any person whatsoever. Those benefits shall be exempt from the
claims of creditors or other claimants of the Participant or Beneficiary and
from all orders, decrees, levies, garnishment or executions to the fullest
extent allowed by law.

 

10.2     No Right to Company Assets. The benefits paid under the Plan shall be
paid from the general funds of the Company, and the Participant and any
Beneficiary shall be no more than unsecured general creditors of the Company
with no special or prior right to any assets of the Company for payment of any
obligations hereunder.

 

10.3     Protective Provisions. The Participant shall cooperate with the Company
by furnishing any and all information requested by the Administrator, in order
to facilitate the payment of benefits hereunder, taking such physical
examinations as the Administrator may deem necessary and taking such other
actions as may be requested by the Administrator. If the Participant refuses to
so cooperate, the Company shall have no further obligation to the Participant
under the Plan.

 

10.4     Withholding. The Participant shall make appropriate arrangements with
the Company for satisfaction of any federal, state or local income tax
with-holding requirements and Social Security or other employee tax requirements
applicable to the payment of benefits under the Plan. If no other arrangements
are made, the Company may provide, at its discretion, for such withholding and
tax payments as may be required, including, without limitation, by the reduction
of other amounts payable to the Participant.

 

10.5     Assumptions and Methodology. The Administrator shall establish the
actuarial assumptions and method of calculation used in determining the present
or future value

 

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of benefits, earnings, payments, fees, expenses or any other amounts required to
be calculated under the terms of the Plan. The Administrator shall also
establish reasonable procedures regarding the form and timing of installment
payments. Such assumptions and methodology shall be outlined in detail in
procedures established by the Administrator and made available to Participants
and may be changed from time to time by the Administrator.

 

10.6     Trust. The Company shall be responsible for the payment of all benefits
under the Plan. At its discretion, the Company may establish one or more grantor
trusts for the purpose of providing for payment of benefits under the Plan. Such
trust or trusts may be irrevocable, but the assets thereof shall in all events
be subject to the claims of the Company’s general creditors. Benefits paid to
the Participant from any such trust or trusts shall be considered paid by the
Company for purposes of meeting the obligations of the Company under the Plan.

 

ARTICLE 11

 

Miscellaneous

 

11.1     Successors of the Company. The rights and obligations of the Company
under the Plan shall inure to the benefit of, and shall be binding upon, the
successors and assigns of the Company.

 

11.2     Employment Not Guaranteed. Nothing contained in the Plan nor any action
taken hereunder shall be construed as a contract of employment or as giving any
Participant any right to continued employment with the Company.

 

11.3     Gender, Singular and Plural. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, or neuter, as the identity
of the person or persons may require. As the context may require, the singular
may be read as the plural and the plural as the singular.

 

11.4     Captions. The captions of the articles, paragraphs and sections of the
Plan are for convenience only and shall not control or affect the meaning or
construction of any of its provisions.

 

11.5     Validity. In the event any provision of the Plan is held invalid, void
or unenforceable, the same shall not affect, in any respect whatsoever, the
validity of any other provisions of the Plan.

 

11.6     Waiver of Breach. The waiver by the Company of any breach of any
provision of the Plan shall not operate or be construed as a waiver of any
subsequent breach by that Participant or any other Participant.

 

11.7     Notice. Any notice or filing required or permitted to be given to the
Company or the Participant under this Agreement shall be sufficient if in
writing and hand-delivered, or sent by registered or certified mail, in the case
of the Company, to the principal office of the Company, directed to the
attention of the Administrator, and in the case of the Participant, to the last
known address of the Participant indicated on the employment records of

 

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the Company. Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the receipt
for registration or certification. Notices to the Company may be permitted by
electronic communication according to specifications established by the
Administrator.

 

11.8     Errors in Benefit Statement or Distributions. In the event an error is
made in a benefit statement, such error shall be corrected on the next benefit
statement following the date such error is discovered. In the event of an error
in a distribution, the Participant’s Account shall, immediately upon the
discovery of such error, be adjusted to reflect such under or over payment and,
if possible, the next distribution shall be adjusted upward or downward to
correct such prior error. If the remaining amounts payable to a Participant
under this Plan are insufficient to cover an erroneous overpayment, the Company
may, at its discretion, offset other amounts payable to the Participant from the
Company (including but not limited to salary, bonuses, expense reimbursements,
severance benefits or other employee compensation benefit arrangements, as
allowed by law) to recoup the amount of such overpayment(s).

 

11.9     Inability to Locate Participant or Beneficiary. It is the
responsibility of a Participant to apprise the Administrator of any change in
address of the Participant or Beneficiary. In the event that the Administrator
is unable to locate a Participant or Beneficiary for a period of three
(3) years, the Participant’s Account shall be forfeited to the Company.

 

11.10     ERISA Plan. The Plan is intended to be an unfunded plan maintained
primarily to provide deferred compensation benefits for a select group of
“management or highly compensated employees” within the meaning of Sections 201,
301 and 401 of ERISA and therefore to be exempt from Parts 2, 3 and 4 of Title I
of ERISA and shall be construed in a manner consistent therewith.

 

11.11     Applicable Law. The Plan shall be governed and construed in accordance
with federal law. To the extent that any issue should arise with respect to the
Plan in a context where state law is not preempted by ERISA, the laws of the
State of Maryland shall govern.

 

IN WITNESS WHEREOF, the Company has caused this Plan to be executed this
                     day of                     , 2004.

 

PROVIDENT BANK,

a Maryland corporation

By

    

Title

    

 

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