EXHIBIT 10.3
EMPLOYMENT AGREEMENT
by and between
PROVIDENT BANK
And
___________________
____________________________________
Made and Entered Into As Of
__________, 1998
EMPLOYMENT AGREEMENT
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This Employment Agreement ("Agreement") is made and entered into as of the
____ day of _________, 1998, by and between PROVIDENT BANK, a savings bank
organized and existing under the laws of the United States of America and
having its executive offices at 000 Xxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxx Xxxx 00000
("Bank"), and ____________________ ("Executive"). Provident Bancorp, Inc.
("Company") is a party to this Agreement for the sole purpose of guaranteeing
the Bank's performance hereunder.
WITNESSETH:
WHEREAS, Executive is currently serving as _____________________________of
the Bank; and
WHEREAS, the Board of Directors of the Bank ("Board") considers the
continued availability of Executive's services to be important to the successful
management and conduct of the Bank's business and desires to secure for itself
the continued availability of his or her services; and
WHEREAS, for purposes of securing Executive's services for the Bank, the
Board has approved and authorized the execution of the Agreement with Executive
on the terms and conditions set forth herein; and
WHEREAS, Executive is willing to continue to make his or her services
available to the Bank on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and obligations hereinafter set forth, the Bank and Executive hereby agree as
follows:
SECTION 1. EMPLOYMENT
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The Bank hereby agrees to continue the employment of the Executive and the
Executive hereby agrees to continue such employment, during the period and upon
the terms and conditions set forth in this Agreement.
SECTION 2. EMPLOYMENT PERIOD
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(a) Except as otherwise provided in this Agreement to the contrary, the
terms and conditions of this Agreement shall be and remain in effect during the
period of employment ("Employment Period") established under this Section 2. The
Employment Period shall be for a term commencing on the date of this Agreement
and ending on the [second] anniversary of the date of this Agreement; provided,
however, that on each day after the date of this Agreement, the Agreement shall
automatically renew so that the remaining term shall be [twenty-four (24)]
months, and provided, further that commencing on each annual anniversary of the
date of this Agreement (the
date of each annual anniversary hereof shall be hereinafter referred to as the
"Anniversary Date"), unless the Employment Period has been previously
terminated, the Board shall, at least 60 days prior to each such Anniversary
Date, conduct a comprehensive performance evaluation and review of the Executive
for purposes of determining whether to extend the Agreement and the results
thereof shall be included in the minutes of the Board meeting. The Board shall
give the Executive notice of its decision whether or not to extend the
Employment Period at least 60 days prior to the Anniversary Date, and if such
notice is that the Employment Period shall not be extended (a "Non-Renewal
Notice"), the Employment Period shall not be extended. In such case, the
Executive's employment shall cease at the end of [twenty-four (24)] months
following such Anniversary Date.
(b) Notwithstanding anything herein contained to the contrary: (i) the
Executive's employment with the Bank may be terminated by the Bank or the
Executive during the Employment Period, subject to the terms and conditions of
this Agreement; and (ii) nothing in this Agreement shall mandate or prohibit a
continuation of the Executive's employment following the expiration of the
Employment Period upon such terms and conditions as the Board and the Executive
may mutually agree.
(c) If the Executive's employment with the Bank is terminated under
circumstances described in Section 8(a), the term "unexpired Employment Period"
in Section 8(b) shall mean the period of time commencing on the date of such
termination and ending on the last day of the Employment Period.
(d) Notwithstanding anything continued in this Section 2 to the contrary,
in the event of a Change in Control of the Bank as defined in Section 10, the
Employment Period shall be extended until the third anniversary of the Change in
Control Date; provided, however, that commencing on the date one year after the
Change in Control Date and on each anniversary of such date (such date and each
annual anniversary thereof shall also be hereinafter referred to as the
"Anniversary Date"), unless the Employment Period has been previously
terminated, the Board shall, at least 60 days prior to each Anniversary Date,
review and determine whether or not to approve a one-year extension of the
Employment Period so that the Employment Period terminates three years from such
Anniversary Date, and the Bank shall give the Executive notice of the Board's
decision whether or not to extend the Employment Period at least 60 days prior
to the Anniversary Date, and if such notice is that the Employment Period shall
not be extended (a "Non-Renewal Notice"), the Employment Period shall not be
extended.
SECTION 3. DUTIES
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The Executive shall: (a) devote his or her full business time and attention
(other than during weekends, holidays, vacation periods, and periods of illness,
disability or approved leave of absence) to the business and affairs of the Bank
and use his or her best efforts to advance the Bank's interests; (b) if duly
appointed or elected, serve as [______________________________________] of the
Bank; and (c) perform such duties not inconsistent with his or her title and
office as may be assigned to him or her by or under the authority of the Board.
The Executive shall have such authority as is
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necessary or appropriate to carry out his or her assigned duties. The Executive
shall be entitled to a minimum of four weeks of vacation time each year during
the Employment Period.
SECTION 4. COMPENSATION
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In consideration for the services rendered by the Executive under this
Agreement, the Bank shall pay to the Executive a salary at an annual rate equal
to the greatest of:
(a) $__________;
(b) such higher annual rate as may be prescribed by or under the
authority of the Board;
(c) for each calendar year that begins on or after the date on which
a change in Control Date, as defined in Section 10, occurs, the
product of the Executive's annual rate of salary in effect
immediately prior to such calendar year, multiplied by the
greatest of:
(i) 1.06; or
(ii) the quotient of (A) the average annual rate of salary,
determined as of the first day of such calendar year, of the
officers of the Bank (other than the Executive ) who are
assistant vice presidents or more senior officers, divided
by (B) the average annual rate of salary, determined as of
the first day of the immediately preceding calendar year, of
the officers of the Bank (other than the Executive) who are
assistant vice presidents or more senior officers;
provided, however, that in no event shall the Executive's annual rate of salary
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under this Agreement in effect at a particular time be reduced without the
Executive's prior written consent. The annual rate of salary payable under this
Section 4 shall be paid in approximately equal installments in accordance with
the Bank's customary payroll practices.
SECTION 5. EMPLOYEE BENEFIT PLANS AND PROGRAMS
-----------------------------------
Except as otherwise provided in this Agreement, the Executive shall, during
the Employment Period, be treated as an employee of the Bank, and be entitled to
participate in and receive benefits under the Bank's Defined Benefit Pension
Plan, 401(k) Plan, Management Incentive Program, Supplemental Executive
Retirement Plan, group life, health (including hospitalization, medical and
major medical), prescription drug, dental, short and long term disability
insurance plans, and such other employee benefit plans and programs, including
but not limited to any other incentive compensation plans or programs (whether
or not employee benefit plans or programs), stock option plans and stock award
plans, if any, as the Bank may maintain from time to time, in accordance with
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the terms and conditions of such employee benefit plans and programs and
compensations plans and programs and in accordance with the Bank's customary
practices to the extent maintained by the Bank, provided that he or she is a
member of the class of employees authorized to participate in such plans or
programs.
SECTION 6. OUTSIDE ACTIVITIES AND BOARD MEMBERSHIPS
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During the term of this Agreement, the Executive shall not, directly or
indirectly, provide services on behalf of any competitive financial
institutions, any insurance company or agency, any mortgage or loan broker or
any other competitive entity or on behalf of any subsidiary or affiliate of any
such competitive entity, as an employee, consultant, independent contractor,
agent, sole proprietor, partner, joint venturer, corporate officer or director;
nor shall the Executive acquire by reason of purchase during the term of this
Agreement the ownership of more than 5% of the outstanding equity interest in
any such competitive entity. In addition, during the term of this Agreement,
the Executive shall not, directly or indirectly, acquire a beneficial interest,
or engage in any joint venture in real estate with the Bank. Subject to the
foregoing, and to the Executive's right to continue to serve as an officer
and/or director or trustee of any business organization as to which he or she
was so serving on the effective date of this Agreement, the Executive may serve
on boards of directors of unaffiliated corporations, subject to Board approval,
which shall not be unreasonably withheld, and such services shall be presumed
for these purposes to be for the benefit of the Bank. Except as specifically set
forth herein, the Executive may engage in personal business and investment
activities, including real estate investments and personal investments in the
stocks, securities and obligations of other financial institutions.
Notwithstanding the foregoing, in no event shall the Executive's outside
activities, services, personal business and investments materially interfere
with the performance of his or her duties under this Agreement.
SECTION 7. WORKING FACILITIES AND EXPENSES
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The Executive's principal place of employment shall be at the Bank's
principal executive office at the address first above written, or at such other
office of the Bank in Rockland County as the Board shall, in its sole
discretion, deem to be in the best interest of the Bank, or at such other
location upon which the Board and the Executive may mutually agree. The Bank
shall reimburse the Executive for his or her ordinary and necessary business
expenses and travel and entertainment expenses, incurred in connection with the
performance of his or her duties under this Agreement, upon presentation to the
Bank of an itemized account of such expenses in such form as the Bank may
reasonably require.
SECTION 8. TERMINATION OF EMPLOYMENT WITH BANK LIABILITY
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(a) In the event that the Executive's employment with the Bank shall
terminate during the Employment Period on account of:
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(i) The Executive's voluntary resignation from employment with the
Bank within one year following:
(A) the failure of the Bank's President or the Bank's Board to
re-appoint the Executive to the position set forth under
Section 3;
(B) a material change in Executive's functions, duties, or
responsibilities, which change would cause Executive's
position to become one of lesser responsibility, importance,
or scope, which the Bank fails to cure within 30 days
following written notice thereof from the Executive;
(C) liquidation or dissolution of the Bank or the Company other
than liquidations or dissolutions that are caused by
reorganizations that do not affect the status of the
Executive;
(D) a material breach of this Agreement by the Bank, which the
Bank fails to cure within 30 days following written notice
thereof from the Executive; or
(E) a Change in Control Date of the Bank as defined in Section
10; or
(ii) the discharge of the Executive by the Bank for any reason other
than for "Cause" as defined in Section 9(a); or
(iii) the termination of the Executive's employment with the Bank as a
result of the Executive's "total and permanent disability"
which, for purposes of this Agreement, shall apply only if a
majority of the members of the Board acting in good faith
determine that, based upon competent and independent medical
evidence presented by a physician or physicians agreed upon by
the parties, the Executive's physical or mental condition is
such that he or she is totally and permanently incapable of
engaging in any substantial gainful employment based upon his or
her education, training and experience;
then the Bank shall provide the benefits and pay to the Executive the amounts
provided for under Section 8(b).
(b) Upon the termination of the Executive's employment with the Bank under
circumstances described in Section 8(a) of this Agreement, the Bank shall pay
and provide or credit to the Executive (or, in the event of his or her death, to
his or her surviving spouse or such other beneficiary as the Executive may
designate in writing, or if there is neither, to his or her estate):
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(i) his earned but unpaid salary as of the date of the termination
of his or her employment with the Bank;
(ii) the benefits, if any, to which he or she is entitled as a former
employee under the Bank's employee benefit plans and programs
and compensation plans and programs;
(iii) continued group, life, health (including hospitalization,
medical and major medical), prescription drug, dental, short and
long term disability insurance benefits, in addition to those
provided pursuant to Section 8(b)(ii), if and to the extent
necessary to provide the Executive for the remaining unexpired
Employment Period, coverage equivalent to the coverage to which
he or she would have been entitled if he or she had continued
working for the Bank during the remaining unexpired Employment
Period at the highest annual rate of salary achieved during the
Employment Period;
(iv) within thirty (30) days following his or her termination of
employment with the Bank, a lump sum payment, as liquidated
damages, in an amount equal to the present value of the salary
that the Executive would have earned (but offset by any payments
made under any short-term or long-term disability plan or
program maintained by the Bank) if he or she had continued
working for the Bank for the remaining unexpired Employment
Period at the highest annual rate of salary achieved during the
Employment Period, where such present value shall be determined
using a discount rate of 6%, and shall be paid in lieu of all
other payments of salary provided for under this Agreement in
respect of the period following any such termination and to be
payable without proof of damages and without regard to the
Executive's efforts, if any, to mitigate damages;
(v) within 60 days (or within such shorter period to the extent that
information can reasonably be obtained) following his or her
termination of employment with the Bank, a lump sum payment in
an amount equal to the excess, if any, of: (A) the present value
of the benefits to which he or she would be entitled under the
Bank's Defined Benefit Pension Plan if he or she had the
additional years of service that he or she would have had if he
or she were 100% vested thereunder and had continued working for
the Bank during the remaining unexpired Employment Period
following his or her termination earning the salary that would
have been paid during the remaining unexpired Employment Period,
determined as if the plan had continued in effect without change
in accordance with its terms as of the day prior to his or her
actual date of termination and as if such benefits were payable
beginning on the first day of the month coincident with or next
following the actual date of his or her termination, over
(B) the present value of the benefits to which he or she
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is actually entitled under the Bank's Defined Benefit Pension
Plan as of the date of his or her termination, where such
present value is to be determined using a discount rate of 6%
and the mortality tables prescribed under Section 72 of the
Internal Revenue Code of 1986 ("Code") and provided that the
lump sum payment determined above shall be increased by an
amount necessary to satisfy any federal, state and local income
taxes and Medicare taxes which become due as a result of such
payment, in accordance with Section 8(e) below;
(vi) within 60 days (or within such shorter period to the extent that
information can be reasonably be obtained) following his or her
termination of employment with the Bank, a lump sum payment in
an amount equal to the present value of the Bank's contributions
that would have been made on his or her behalf under the Bank's
401(k) Plan and Employee Stock Ownership Plan (and any other
defined contribution plan maintained by the Bank) if he or she
had continued working for the Bank for the remaining unexpired
Employment Period following his or her termination earning the
salary that would have been achieved during the remaining
unexpired Employment Period and making the maximum amount of
employee contributions permitted, if any, under such plan or
plans, where such present values are to be determined using a
discount rate of 6% and provided that the lump sum payment
determined above shall be increased by an amount necessary to
satisfy any federal, state and local income taxes and Medicare
taxes which become due as a result of such payment, in
accordance with Section 8(e) below;
(vii) within 60 days (or within such shorter period to the extent
that information can be reasonably be obtained) following his or
her termination of employment with the Bank, a lump sum payment
in an amount equal to the excess, if any, of (A) the present
value of the benefits to which he or she would be entitled under
the Supplemental Executive Retirement Plan (and any other excess
benefit plan within the meaning of Section 3(36) of the
Employment Retirement Income Security Act of 1974, as amended,
or any deferred compensation plan for management or highly
compensated employees that are maintained by the Bank), if he or
she had continued working for the Bank for the remaining
unexpired Employment Period following his or her termination
earning the salary that would have been achieved during the
remaining unexpired Employment Period, determined as if each
such plan had continued in effect without change in accordance
with its terms as of the day prior to his or her actual date of
termination and as if such benefits were payable beginning on
the first day of the month coincident with or next following his
or her actual date of termination, over (B) the present value of
the benefits to which he or she is actually entitled under any
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such plan, as of the date of his or her termination of
employment with the Bank, where such present values are to be
determined using a discount rate of 6% and the mortality tables
prescribed under Section 72 of the Code and provided that the
lump sum payment determined above shall be increased by an
amount necessary to satisfy any federal, state and local income
taxes and Medicare taxes which become due as a result of such
payment, in accordance with Section 8(e) below;
(viii) within 60 days (or within such shorter period to the extent
that information can reasonably be obtained) following his or
her termination of employment with the Bank, a lump sum payment
in an amount equal to [two times] the average of the prior two
years incentive compensation earned or received by him or her
under all incentive compensation plans or programs adopted and
maintained by the Bank, including but not limited to, the
Management Incentive Program; and
(ix) if a stock option plan and management recognition plan are
adopted one year or more after the date on which the Bank
converts from mutual to stock form, then the lesser of [two (2)]
additional years of vesting or the vesting of all remaining
options awarded to Executive under any stock option plan and/or
stock awards under any management recognition plan adopted by
the Bank or the Company. If a stock option plan and management
recognition plan are adopted within one year of the date on
which the Bank converts from mutual to stock form this
Subsection 8(b)(ix) shall be null and void.
(c) Notwithstanding the foregoing, upon the termination of the Executive's
employment with the Bank under circumstances described in Section 8(a)(i)(E) of
this Agreement, the Bank shall pay and provide or credit to the Executive (or in
the event of his or her death, to his or her surviving spouse or such other
beneficiary as the Executive may designate in writing, or if there is neither,
to his or her estate), a benefit under Sections 8(b)(iii) through 8(b)(ix) above
as if the "remaining unexpired Employment Period" under the Agreement is
[thirty-six] rather than [twenty-four] months.
(d) If the Bank gives Executive a Non-Renewal Notice, or if the Bank does
not extend the Employment Period at least 60 days prior to any Renewal Date as
described in Section 2 of the Agreement, Executive may resign from the
employment of the Bank at any time after such an event. In such case, (i) the
Bank shall pay to Executive severance benefits in a lump sum in cash within 30
days after such resignation equal to the amounts described in Section 8(b) of
the Agreement, and (ii) the Bank shall provide the benefits described in Section
8(b)(ii), (iii) and (iv).
(e) In the event that the Executive becomes entitled to a benefit under
Sections 8(b)(v), (vi) or (vii) (collectively, the "Retirement Plan Replacement
Benefit"), the Bank shall pay the Executive an additional payment under such
Sections, as set forth therein, in order to compensate for the additional income
and Medicare taxes that become due and owing as a result of such
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Retirement Plan Replacement Benefit. The additional amount, subject to
applicable withholding requirements under state or federal law, shall equal:
(i) the sum of the highest marginal federal, state and local income
tax rate and Medicare tax rate multiplied by the Retirement Plan
Replacement Benefit, and
(ii) such additional amount (tax allowance) as may be necessary to
compensate the Executive for the payment by the Executive of
federal, state and local income taxes and Medicare taxes on the
payment provided under Clause (i) and on any payments under this
Clause (ii). In computing such tax allowance, the payments to be
made under Clause (i) shall be multiplied by the "gross up
percentage" ("GUP"). The GUP shall be determined as follows:
Tax Rate
GUP = ------------------
1 - Tax Rate
The "Tax Rate" for purposes of computing the GUP shall be the
highest marginal federal, state and local income tax rate and the highest
Medicare tax rate, applicable to the Executive in the year in which the
payment made under Clause (i) is made.
(f) Notwithstanding the foregoing, to the extent required by regulations or
interpretations of the Office of Thrift Supervision, all payments under the
Agreement shall not exceed three times the Executive's average annual
compensation over the most recent five taxable years. The Bank and the
Executive hereby stipulate that the damages which may be incurred by the
Executive following any such termination of employment are not capable of
accurate measurement as of the date first written and that such liquidated
damages constitute reasonable damages under the circumstances.
SECTION 9. TERMINATION WITHOUT ADDITIONAL BANK LIABILITY
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(a) "The Bank's Board may terminate the Executive's employment at anytime,
but any termination by the Bank's Board other than termination for "cause," as
defined herein, shall not prejudice the Executive's right to compensation or
other benefits under the Agreement. The Executive shall have no right to
receive compensation or other benefits for any period after termination for
"cause." Termination for "cause" shall include termination because of the
Executive's personal dishonesty, incompetence, 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 routine
traffic violations or similar offenses) or final cease-and-desist order,
or material breach of any provision of the contract.
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"Termination for "cause" shall require the affirmative vote of a majority
of the member's of the Bank's Board, acting in good faith with respect to such
termination, provided however, that on or after the earliest date on which a
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Change in Control Date as defined in Section 10 occurs, such a determination
shall require the affirmative vote of at least three fourths of the members of
the Board acting in good faith and such vote shall not be made prior to the
expiration of a 60 day period following the date on which the Board shall by
written notice to the Executive, furnish to him or her a statement of its
grounds for proposing to make such determination, during which period the
Executive shall be afforded a reasonable opportunity to make oral and written
presentations to the members of the Board, and to be represented by his or her
legal counsel at such presentations, or to refute the grounds for the proposed
determination;
"For purposes of this Section 9, no act or failure to act, on the part of
the Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company and the
Bank. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the written advice of counsel
for the Company or the Bank shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Company and the Bank. The cessation of employment of the Executive shall
not be deemed to be for "Cause" within the meaning of Section 9(a) unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of three-fourths of the members of the
Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board), finding that
in the good faith opinion of the Board, the Executive is guilty of the conduct
described in Section 9(a) above, and specifying the particulars thereof in
detail."
(b) In the event that the Executive's employment with the Bank shall
terminate during the Employment Period on account of:
(i) The Executive's voluntary resignation from employment with the
Bank for reasons other than those specified in Section 8(a)(i)
or 8(c); or
(ii) The Executive's death;
then the Bank shall have no further obligations under this Agreement, other than
the payment to the Executive of his or her earned but unpaid salary as of the
date of the termination of his or her employment, and the provision of such
benefits, if any, to which he or she is entitled as a former employee under the
Bank's employee benefit plans and programs and compensation plans and programs.
For purposes of this Section 9, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company and the
Bank. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the written advice of counsel
for the Company
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or the Bank shall be conclusively presumed to be done, or omitted to be done, by
the Executive in good faith and in the best interests of the Company and the
Bank. The cessation of employment of the Executive shall not be deemed to be for
"Cause" within the meaning of Section 9(a) unless and until there shall have
been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of three-fourths of the members of the Board at a meeting of
the Board called and held for such purpose (after reasonable notice is provided
to the Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, the Executive is guilty of the conduct described in Section 9(a)
above, and specifying the particulars thereof in detail.
SECTION 10. CHANGE IN CONTROL
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(a) For purposes of this Agreement, the term "Change in Control" shall mean
a change in control of a nature that: (i) would be required to be reported in
response to Item 1(a) of the current report on Form 8-K, as in effect on the
date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of
0000 (xxx "Xxxxxxxx Xxx"); or (ii) results in a Change in Control of the Bank or
the Company within the meaning of the Home Owners Loan Act, as amended ("HOLA"),
and applicable rules and regulations promulgated thereunder, as in effect at the
time of the Change in Control; or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (a) any "person" (as
the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner"(as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 25% or more of
the combined voting power of Company's outstanding securities except for any
securities purchased by the Bank's employee stock ownership plan or trust; or
(b) individuals who constitute the Board on the date hereof (the "Incumbent
Board") cease for any reason to constitute at least a majority thereof, provided
that any person becoming a director subsequent to the date hereof whose election
was approved by a vote of at least three-quarters of the directors comprising
the Incumbent Board, or whose nomination for election by the Company's
stockholders was approved by the same Nominating Committee serving under an
Incumbent Board, shall be, for purposes of this clause (b), considered as though
he or she were a member of the Incumbent Board; or (c) a plan of reorganization,
merger, consolidation, sale of all or substantially all the assets of the Bank
or the Company or similar transaction in which the Bank or Company is not the
surviving institution occurs; or (d) a proxy statement soliciting proxies from
stockholders of the Company, by someone other than the current management of the
Company, seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Company or similar transaction with one or more
corporations as a result of which the outstanding shares of the class of
securities then subject to the plan are to be exchanged for or converted into
cash or property or securities not issued by the Company; or (e) a tender offer
is made for 25% or more of the voting securities of the Company and the
shareholders owning beneficially or of record 25% or more of the outstanding
securities of the Company have tendered or offered to sell their shares pursuant
to such tender offer and such tendered shares have been accepted by the tender
offeror.
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(b) For purposes of this Agreement, the term "Change in Control Date"
shall mean the first date during the Employment Period on which a Change in
Control occurs. Anything in this Agreement to the contrary notwithstanding,
if the Executive's employment with the Bank is terminated and if it is
reasonably demonstrated by the Executive that such termination of Employment
(i) was at the request of a third party who has taken steps reasonably
calculated to effect a Change in Control or (ii) otherwise arose in connection
with or anticipation of a Change in Control, then for all purposes of this
Agreement the "Change in Control Date" shall mean the date immediately prior
to the date such termination of employment.
SECTION 11. COVENANT NOT TO COMPETE
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The Executive hereby covenants and agrees that for a period of one (1) year
following the date of his or her termination of employment with the Bank, if
such termination occurs prior to the end of the Employment Period, he or she
shall not, without the written consent of the Board, become an officer,
employee, consultant, director, independent contractor, agent, sole proprietor,
partner or trustee of any savings bank, savings and loan association, savings
and loan holding company, bank or bank holding company, insurance company or
agency, any mortgage or loan broker or any other entity competing with the Bank
or its affiliates if such position entails working in (or providing services in)
Rockland or Orange Counties; provided, however, that this Section 11 shall not
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apply if the Executive's employment is terminated for the reasons set forth in
Section 8(a) or 8(d).
SECTION 12. ADDITIONAL TERMINATION AND SUSPENSION PROVISIONS
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(a) If the Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act, as amended
(12 U.S.C. 1818(e)(3) and (g)(1)), all obligations of the Bank under this
Agreement shall be suspended as of the date of service unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the Bank
may in its discretion (i) pay the Executive all of the compensation withheld
while the Bank's obligations under this Agreement were suspended and
(ii) reinstate (in whole) any of the Bank's obligations which were suspended,
and in exercising such discretion, the Bank shall consider the facts and make
a decision promptly following such dismissal of charges and act in good faith
in deciding whether to pay any withheld compensation to the Executive and to
reinstate any suspended obligations of the Bank.
(b) If the Executive is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, as amended (12
U.S.C. 1818 (e)(4) or (g)(1)), all obligations of the bank under this Agreement
shall terminate as of the effective date of the order, but vested rights of the
parties shall not be affected.
(c) If the Bank is in default, as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, as amended (12 U.S.C. 1813 (x)(1)), all
obligations under this Agreement shall terminate as of the date of default, but
this provision shall not affect any vested rights of the parties.
12
(d) All obligations under this Agreement shall be terminated, except to
the extent determined that continuation of this Agreement is necessary for the
continued operation of the Bank, (i) by the Director of the OTS (the "Director")
or his or her designee, at the time the FDIC enters into an agreement to provide
assistance to or on behalf of the Bank under the authority contained in Section
13(c) of the Federal Deposit Insurance Act, as amended; or (ii) by the Director
or his or her designee, at the time the Director or his or her designee approves
a supervisory merger to resolve problems related to operation of the Bank or
when the Bank is determined by the Director to be in an unsafe or unsound
condition. Any rights of the parties that have already vested, however, shall
not be affected by such action.
(e) If any regulation applicable to the Bank shall hereafter be adopted,
amended or modified, or if any new regulation applicable to the Bank and
effective after the date of this Agreement:
(i) shall require the inclusion in this Agreement of a provision not
presently included in this Agreement, then the foregoing
provisions of this Section 12 shall be deemed amended to the
extent necessary to give effect in this Agreement to any such
amended, modified or new regulation; and
(ii) shall permit the exclusion of a limitation in this Agreement on
the payment to the Executive of an amount or benefit provided for
presently in this Agreement, then the foregoing provisions of
this Section 12 shall be deemed amended to the extent permissible
to exclude from this Agreement any such limitation previously
required to be included in this Agreement by a regulation prior
to its amendment, modification or repeal.
SECTION 13. NO EFFECT ON EMPLOYEE BENEFIT PLANS OR PROGRAMS
-----------------------------------------------
Except as expressly provided in this Agreement, the termination of the
Executive's employment during the term of this Agreement or thereafter, whether
by the Board or by the Executive, shall have no effect on the rights and
obligations of the parties hereto under the Bank's Defined Benefit Pension Plan,
401(k) Plan, Supplemental Executive Retirement Plan, Management Incentive
Program, group life, health (including basic hospitalization and major medical),
prescription drug, dental, short and long term disability insurance plans or
such other employee benefit plans or programs, including but not limited to any
incentive compensation plans or program (whether or not employee benefit plans
or programs) as the Bank may maintain from time to time.
SECTION 14. SUCCESSORS AND ASSIGNS
----------------------
This Agreement will inure to the benefits of and be binding upon the
Executive, his or her legal representatives and estate and intestate
distributees, and the Bank, its successors and assigns, including any successor
by merger or consolidation or conversion to stock form or a statutory receiver
or any other person or firm or corporation to which all or substantially all of
the assets and business of the Bank may be sold or otherwise transferred. Any
such successor of the Bank shall be deemed to have assumed this Agreement and to
have become obligated hereunder to the same extent as the Bank, and the
Executive's obligations hereunder shall continue in favor of such successor.
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SECTION 15. NOTICES
-------
Any communication to a party required or permitted under this
Agreement, including any notice, direction, designation, consent, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is delivered personally or received by overnight carrier, or
five days after mailing if mailed, postage prepaid, by registered or certified
mail, return receipt requested, addressed to such party at the address listed
below or at such other address as one such party may by written notice specify
to the other party:
If to the Executive:
[to come]
If to the Bank:
Provident Bank
000 Xxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Attention: President.
With a copy to:
Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx, LLP
0000 Xxxxxxxxx Xxxxxx, XX, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxx, Esq.
SECTION 16. SETTLEMENT, INDEMNIFICATION AND ATTORNEY'S FEES
-----------------------------------------------
(a) The Bank's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and such amounts shall not be reduced whether
or not the Executive obtains other employment.
14
(b) Unless it is determined that a claim made by the Executive was either
frivolous or made in bad faith, the Bank agrees to pay as incurred, to the full
extent permitted by law, all legal fees and expenses which the Executive may
reasonably incur as a result of or in connection with his or her consultation
with legal counsel or arising out of any action, suit, proceeding or contest
(regardless of the outcome thereof) by the Bank, the Executive or others
regarding the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Code.
(c) The Bank shall indemnify, hold harmless and defend the Executive for
all acts or omissions taken or not taken by him or her in good faith while
performing services for the Bank to the same extent and upon the same terms and
conditions as other similarly situated officers and directors of the Bank. If
and to the extent that the Bank maintains, at any time during the Employment
Period, an insurance policy covering the other officers and directors of the
Bank against lawsuits, the Bank shall use its best efforts to cause the
Executive to be covered under such policy upon the same terms and conditions as
other similarly situated officers and directors.
SECTION 17. SEVERABILITY
------------
A determination that any provision of this Agreement is invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.
SECTION 18. WAIVER
------
Failure to insist upon strict compliance with any terms, covenants or
conditions hereof shall not be deemed a waiver of such term, covenant or
condition. A waiver of any provision of this Agreement must be made in writing,
designated as a waiver, and signed by the party against whom its enforcement is
sought. Any waiver or relinquishment or any right or power hereunder at any one
or more times shall not be deemed a waiver or relinquishment of such right or
power at any other time or times.
SECTION 19. COUNTERPARTS
------------
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, and all of which shall constitute one and the same
Agreement.
SECTION 20. GOVERNING LAW
-------------
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York, without reference to
conflicts of law principles, except to the extent governed by federal law in
which case federal law shall govern.
SECTION 21. HEADINGS AND CONSTRUCTION
-------------------------
The headings of sections in this Agreement are for convenience of reference
only and are not intended to qualify the meaning of any Section. Any reference
to a Section number shall refer to a Section of this Agreement, unless otherwise
specified.
15
SECTION 22. ARBITRATION
-----------
Any dispute or controversy arising out of, under, in connection with, or
relating to this Agreement and any amendment hereof shall be submitted to
binding arbitration before three arbitrators in Rockland County in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
for expedited arbitration, and any judgement upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
SECTION 23. ENTIRE AGREEMENT: MODIFICATIONS
-------------------------------
This instrument contains the entire agreement of the parties relating to
the subject matter hereof, and supercedes in its entirety any and all prior
agreements, understandings or representations relating to the subject matter
hereof. No modifications of this Agreement shall be valid unless made in
writing and signed by the parties hereto.
SECTION 24. SOURCE OF PAYMENTS
------------------
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Bank. The Company, however, guarantees
payment and provision of all amounts and benefits due hereunder to Executive
and, if such amounts and benefits due from the Bank are not timely paid or
provided by the Bank, such amounts and benefits shall be paid or provided by the
Company.
SECTION 25. COMPLIANCE WITH LAW
-------------------
Any payments made to the Executive pursuant to this Agreement, or otherwise
are subject to and conditioned upon their compliance with 12 U.S.C. 1828(i) and
any regulations promulgated thereunder.
[Remainder of Page Intentionally Blank]
16
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed
and the Executive has hereunto set his or her hand, all as of the day and year
first above written.
WITNESS EXECUTIVE
---------------------------------- ---------------------------------------
(Name) (Name)
ATTEST: PROVIDENT BANK
By: By:
------------------------------- ------------------------------------
Secretary President
[Seal]
ATTEST: PROVIDENT BANCORP, INC.
By: By:
------------------------------- ------------------------------------
Secretary President
17
state of new york )
: ss.:
county of rockland )
On this ____day of __________, 1998, before me personally came
______________, to me known, and known to me to be the individual described in
the foregoing instrument, who, being by me duly sworn, did depose and say that
he or she resides at the address set forth in said instrument, and that he or
she signed his or her name to the foregoing instrument.
---------------------------------------
Notary Public
state of new york )
: ss.:
county of rockland )
On this ____day of __________, 1998, before me personally came
______________, to me known, who, being by me duly sworn, did depose and say
that he or she resides at _________________________________________; that he
or she is a member of the Board of Directors of PROVIDENT BANK, the savings
bank described in and which executed the foregoing instrument; that he or she
knows the seal of said savings bank; that the seal affixed to said instrument
is such seal; that it was so affixed by authority of the Board of Directors of
said savings bank; and that he or she signed his or her name thereto by like
authority.
----------------------------------------
Notary Public
18
