Exhibit 10.2
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT is dated this day of 2002,
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between Provident Financial Services, Inc. (the "Company"), a Delaware
corporation, and the holding company of The Provident Bank (the "Bank"), and
(the "Executive"). The Company and the Bank are sometimes
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collectively referred to as the "Employers".
WITNESSETH
WHEREAS, the Executive is presently an officer of the Bank;
WHEREAS, the Company desires to be ensured of the Executive's continued
active participation in the business of the Bank and the Company; and
WHEREAS, in order to induce the Executive to remain in the employ of the
Bank and to provide further incentive to achieve the financial and performance
objectives of the Bank and the Company, the parties desire to specify the
severance benefits which shall be due the Executive in the event that his
employment with the Bank or the Company is terminated under specified
circumstances.
NOW THEREFORE, in consideration of the mutual agreements herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. Definitions. The following words and terms shall have the meanings set
forth below for the purposes of this Agreement:
(a) Annual Compensation. The Executive's "Annual Compensation" for
purposes of this Agreement shall be deemed to mean the highest level of
aggregate base salary and other cash compensation paid to the Executive
(including cash compensation deferred at the election of the Executive) by the
Employers or any subsidiary thereof (i) during the calendar year in which the
Date of Termination occurs (determined on an annualized basis), or (ii) either
of the two calendar years immediately preceding the calendar year in which the
Date of Termination occurs, whichever is greater.
(b) Cause. Termination of the Executive's employment for "Cause" shall
mean termination because of personal dishonesty, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order. For purposes of
this paragraph, no act or failure to act on the Executive's part shall be
considered "willful" unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that the Executive's action or omission
was in the best interests of the Employers. Executive's employment shall not be
terminated for "Cause" in accordance with this paragraph for any act or action
or failure to act which is undertaken or omitted in accordance with a resolution
of the Company's board of directors ("Board of Directors") or upon advice of the
Company's counsel.
(c) Change in Control. "Change in Control" shall mean the occurrence
of any of the following events:
(i) approval by the shareholders of the Company of a transaction
that would result and does result in the reorganization, merger or consolidation
of the Company, with one or more other persons, other than a transaction
following which:
(A) at least 51% of the equity ownership interests of the
entity resulting from such transaction are beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended ("Exchange Act")) in substantially the same relative proportions by
persons who, immediately prior to such transaction, beneficially owned (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of
the outstanding equity ownership interests in the Company; and
(B) at least 51% of the securities entitled to vote
generally in the election of directors of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) in substantially the same relative proportions by
persons who, immediately prior to such transaction, beneficially owned (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of
the securities entitled to vote generally in the election of directors of the
Company;
(ii) the acquisition of all or substantially all of the assets of
the Company or beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of the outstanding securities
of the Company entitled to vote generally in the election of directors by any
person or by any persons acting in concert, or approval by the shareholders of
the Company of any transaction which would result in such an acquisition;
(iii) a complete liquidation or dissolution of the Company or the
Bank, or approval by the shareholders of the Company of a plan for such
liquidation or dissolution;
(iv) the occurrence of any event if, immediately following such
event, members of the Company's Board of Directors who belong to any of the
following groups do not aggregate at least a majority of the Company's Board of
Directors:
(A) individuals who were members of the Company's Board of
Directors on the Effective Date of this Agreement; or
(B) individuals who first became members of the Company's
Board of Directors after the Effective Date of this Agreement either:
(1) upon election to serve as a member of the Company's
Board of Directors by the affirmative vote of three-quarters of the members of
such Board, or of a nominating committee thereof, in office at the time of such
first election; or
(2) upon election by the shareholders of the Company to
serve as a member of the Company's Board of Directors, but only if nominated for
election by the affirmative vote of three-quarters of the members of such Board,
or of a nominating
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committee thereof, in office at the time of such first nomination; provided that
such individual's election or nomination did not result from an actual or
threatened election contest or other actual or threatened solicitation of
proxies or consents other than by or on behalf of the Company's Board of
Directors; or
(v) any event which would be described in Section 1(c)(i), (ii),
(iii) or (iv) if the term "Bank" were substituted for the term "Company" therein
and the term "Bank's Board of Directors" were substituted for the term
"Company's Board of Directors" therein. In no event, however, shall a Change in
Control be deemed to have occurred as a result of any acquisition of securities
or assets of the Company, the Bank or a subsidiary of either of them, by the
Company, the Bank, any subsidiary of either of them, or by any employee benefit
plan maintained by any of them. For purposes of this Section 1(c), the term
"person" shall include the meaning assigned to it under Sections 13(d)(3) or
14(d)(2) of the Exchange Act.
(d) Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(e) Date of Termination. "Date of Termination" shall mean (i) if the
Executive's employment is terminated for Cause, the date on which the Notice of
Termination is given, and (ii) if the Executive's employment is terminated for
any other reason, the date specified in the Notice of Termination.
(f) Disability. Termination by the Employers of the Executive's
employment based on "Disability" shall mean termination because of any physical
or mental impairment which qualifies the Executive for disability benefits under
the applicable long-term disability plan maintained by the Employers or any
subsidiary or, if no such plan applies, which would qualify the Executive for
disability benefits under the Federal Social Security System.
(g) Good Reason. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive following a
Change in Control based on:
(i) Without the Executive's express written consent, the
assignment by the Company or the Bank to the Executive of any duties which are
materially inconsistent with the Executive's positions, duties, responsibilities
and status with the Employers immediately prior to a Change in Control, or a
material change in the Executive's reporting responsibilities, titles or offices
as an officer and employee and as in effect immediately prior to such a Change
in Control, or any removal of the Executive from or any failure to re-elect the
Executive to any of such responsibilities, titles or offices, except in
connection with the termination of the Executive's employment for Cause,
Disability or Retirement or as a result of the Executive's death or by the
Executive other than for Good Reason;
(ii) Without the Executive's express written consent, a reduction
in the Executive's base salary as in effect immediately prior to the date of the
Change in Control or as the same may be increased from time to time thereafter
or a reduction in the package of fringe benefits provided to the Executive as in
effect immediately prior to the date of the Change in Control;
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(iii) A change in the Executive's principal place of employment
by a distance in excess of 25 miles from its location immediately prior to the
Change in Control;
(iv) Any purported termination of the Executive's employment for
Disability or Retirement which is not effected pursuant to a Notice of
Termination satisfying the requirements of paragraph (i) below; or
(v) The failure by the Company to obtain the assumption of and
agreement to perform this Agreement by any successor as contemplated in Section
10 hereof.
(h) IRS. IRS shall mean the Internal Revenue Service.
(i) Notice of Termination. Any purported termination of the
Executive's employment by the Employers for any reason, including without
limitation for Cause, Disability or Retirement, or by the Executive for any
reason, including without limitation for Good Reason, shall be communicated by
written "Notice of Termination" to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a dated notice which (i)
indicates the specific termination provision in this Agreement relied upon, (ii)
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated, and (iii) specifies a Date of Termination, which [shall be not less
than thirty (30) nor more than ninety (90) days] after such Notice of
Termination is given, except in the case of the Employers' termination of the
Executive's employment for Cause, which shall be effective immediately; and (iv)
is given in the manner specified in Section 11 hereof.
(j) Retirement. "Retirement" shall mean termination of Executive's
employment at age 65 or in accordance with any retirement policy established
with Executive's consent with respect to him. Upon termination of Executive upon
Retirement, no amounts or benefits shall be due Executive under this Agreement,
and the Executive shall be entitled to all benefits under any retirement plan of
the Bank and other plans to which Executive is a party.
2. Term of Agreement. The term of this Agreement shall be for thirty-six
(36) months, commencing on the date of this Agreement (the "Effective Date").
Commencing on the first anniversary of the Effective Date, on each annual
anniversary thereafter, the term of this Agreement shall extend for an
additional twelve (12) months, unless the Boards of Directors of the Employers
gives notice in accordance with Section 11 hereof of a determination not to
extend the term of this Agreement. Such written notice of the election not to
extend must be given not less than thirty (30) days prior to any such
anniversary date. If any party gives timely notice that the term will not be
extended as of any annual anniversary date, then this Agreement shall terminate
at the conclusion of its remaining term. References herein to the term of this
Agreement shall refer both to the initial term and successive terms.
3. Benefits Upon Termination. If the Executive's employment by the Company
or the Bank is terminated subsequent to a Change in Control and during the term
of this Agreement by (i) the Company or Bank for other than Cause, Disability,
Retirement or the Executive's death or (ii) the Executive for Good Reason, then
the Company shall:
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(a) pay to the Executive, in a lump sum as of the Date of Termination,
a cash severance amount equal to three (3) times the Executive's Annual
Compensation, and
(b) provide, for a period ending at the expiration of the remaining
term of this Agreement as of the Date of Termination, at no cost to the
Executive, coverage of Executive (and family, if applicable) under all group
insurance, life insurance, health and accident insurance and disability
insurance and other insurance programs or arrangements offered by the Bank in
which the Executive was entitled to participate immediately prior to the Date of
Termination; provided that in the event that the Executive's participation in
any insurance plan, program or arrangement as to which Executive was
participating prior to a Date of Termination is prohibited, or during such
period any such plan, program or arrangement is discontinued or the benefits
thereunder are materially reduced, the Employers shall arrange to provide the
Executive with benefits substantially similar to those which the Executive was
entitled to receive under such plans, programs and arrangements immediately
prior to the Date of Termination. In the alternative, the Company shall pay to
the Executive a cash amount equal to the Executive's cost of obtaining such
benefits on his own, adjusted for any federal or state income taxes the
Executive has to pay on the cash amount.
4. Limitation of Benefits under Certain Circumstances. If the payments and
benefits pursuant to Section 3 hereof, either alone or together with other
payments and benefits which the Executive has the right to receive from the
Employers, would constitute a "parachute payment" under Section 280G of the
Code, the payments and benefits payable by the Employers pursuant to Section 3
hereof shall be reduced, in the manner determined by the Executive, by the
amount, if any, which is the minimum necessary to result in no portion of the
payments and benefits payable by the Employers under Section 3 being
non-deductible to the Employers pursuant to Section 280G of the Code and subject
to the excise tax imposed under Section 4999 of the Code. The determination of
any reduction in the payments and benefits to be made pursuant to Section 3
shall be based upon the opinion of independent counsel selected by the
Employers' independent public accountants and paid by the Employers. Such
counsel shall be reasonably acceptable to the Employers and the Executive; shall
promptly prepare the foregoing opinion, but in no event later than thirty (30)
days from the Date of Termination; and may use such actuaries as such counsel
deems necessary or advisable for the purpose. Nothing contained herein shall
result in a reduction of any payments or benefits to which the Executive may be
entitled upon termination of employment under any circumstances other than as
specified in this Section 4, or a reduction in the payments and benefits
specified in Section 3 below zero.
5. No Mitigation; Exclusivity of Benefits.
(a) The Executive shall not be required to mitigate the amount of any
benefits hereunder by seeking other employment or otherwise. The amount of
severance to be provided pursuant to Section 3(a) hereof shall not be reduced by
any compensation earned by the Executive as a result of employment by another
employer after the Date of Termination or otherwise.
(b) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employers pursuant to employee benefit plans
of the Employers or otherwise.
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6. Withholding. All payments required to be made by the Employers hereunder
to the Executive shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as the Employers may reasonably
determine should be withheld pursuant to any applicable law or regulation.
7. Nature of Employment and Obligations.
(a) Nothing contained herein shall be deemed to create other than a
terminable at will employment relationship between the Employers and the
Executive, and the Employers may terminate the Executive's employment at any
time, subject to providing any payments specified herein in accordance with the
terms hereof.
(b) Nothing contained herein shall create or require the Employers to
create a trust of any kind to fund any benefits which may be payable hereunder,
and to the extent that the Executive acquires a right to receive benefits from
the Employers hereunder, such right shall be no greater than the right of any
unsecured general creditor of the Employers.
8. Source of Payments. It is intended by the parties hereto that all
payments provided in this Agreement shall be paid in cash or check from the
general funds of the Company.
9. No Attachment.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
the Executive, the Bank, the Company and their respective successors and
assigns.
10. Assignability. The Company may assign this Agreement and its rights and
obligations hereunder in whole, but not in part, to any corporation, bank or
other entity with or into which either of the Employers may hereafter merge or
consolidate or to which either of the Employers may transfer all or
substantially all of its respective assets, if in any such case said
corporation, bank or other entity shall expressly in writing assume all
obligations of the Company hereunder as fully as if it had been originally made
a party hereto, but may not otherwise assign this Agreement or their rights and
obligations hereunder. The Executive may not assign or transfer this Agreement
or any rights or obligations hereunder.
11. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:
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To the Company:
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To the Bank:
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To the Executive:
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12. Amendment; Waiver. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Company to sign on
their behalf. No waiver by any party hereto at any time of any breach by any
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
13. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Delaware.
14. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. Miscellaneous Provisions.
(a) The Employers may terminate the Executive's employment at any
time, but any termination by the Employers, other than termination for Cause,
shall not prejudice the Executive's right to compensation or other benefits
under this Agreement. The Executive shall not have the right to receive
compensation or other benefits for any period after termination for Cause as
defined in Section 1(b) hereof.
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(b) Notwithstanding any other provision of this Agreement to the
contrary, any payments made to the Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with Section
18(k) of the Federal Deposit Insurance Act (12 U.S.C.(S)1828(k)) and the
regulations promulgated thereunder, including 12 C.F.R. Part 359.
18. Reinstatement of Benefits Under Section 17(b). In the event the
Executive is suspended and/or temporarily prohibited from participating in the
conduct of the Bank's affairs by a notice described in Section 17(b) hereof (the
"Notice") during the term of this Agreement and a Change in Control, as defined
herein, occurs, the Employers will assume their obligation to pay and the
Executive will be entitled to receive all of the termination benefits provided
for under Section 2 of this Agreement upon the Bank's receipt of a dismissal of
charges in the Notice.
19. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration, conducted
before a panel of three arbitrators sitting in a location selected by the
Company within fifty (50) miles from the location of the Company's main office,
in accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to seek
specific performance of his right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under or in connection
with this Agreement, other than in the case of a termination for Cause.
20. Payment of Costs and Legal Fees. All reasonable costs and legal fees
paid or incurred by the Executive pursuant to any dispute or question of
interpretation relating to this Agreement shall be paid or reimbursed by the
Bank (which payments are guaranteed by the Company pursuant to Section 8 hereof)
if the Executive is successful on the merits pursuant to a legal judgment,
arbitration or settlement.
21. Confidentiality. Executive recognizes and acknowledges that the
knowledge of the business activities and plans for business activities of the
Company and affiliates thereof, as it may exist from time to time, is a
valuable, special and unique asset of the business of the Company. Executive
will not, during or after the term of his employment, disclose any knowledge of
the past, present, planned or considered business activities of the Company or
affiliates thereof to any person, firm, corporation, or other entity for any
reason or purpose whatsoever (except for such disclosure as may be required to
be provided to the New Jersey Department of Banking and Insurance, the Federal
Deposit Insurance Corporation, or other bank regulatory agency with jurisdiction
over the Bank or Executive). Notwithstanding the foregoing, Executive may
disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas which are not solely and exclusively derived from the business
plans and activities of the Company, and Executive may disclose any information
regarding the Company or the Company which is otherwise publicly available or
which exercise is otherwise legally required to disclose. In the event of a
breach or threatened breach by the Executive of the provisions of this Section
21, the Company will be entitled to an injunction restraining Executive from
disclosing, in whole or in part, the knowledge of the past, present, planned or
considered business activities of the Company or affiliates thereof, or from
rendering any services to any person, firm, corporation, other entity to whom
such knowledge, in whole or in part, has been
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disclosed or is threatened to be disclosed. Nothing herein will be construed as
prohibiting the Company from pursuing any other remedies available to the
Company for such breach or threatened breach, including the recovery of damages
from Executive.
22. Entire Agreement. This Agreement embodies the entire agreement between
the Company and the Executive with respect to the matters agreed to herein. All
prior agreements between the Company and the Executive with respect to the
matters agreed to herein are hereby superseded and shall have no force or
effect, except that this Agreement shall not affect or operate to reduce any
benefit or compensation inuring to Executive of a kind elsewhere provided. No
provision of this Agreement shall be interpreted to mean that Executive is
subject to receiving fewer benefits than those available to him without
reference to this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
Attest:
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By:
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Attest:
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By:
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Attest: EXECUTIVE
By:
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