Exhibit 10.3
PROVIDENT NEW YORK BANCORP
SUPPLEMENTAL EXECUTIVE AGREEMENT
WHEREAS, Xxxxxx X. Xxxxxxxxx ("Executive") and Provident New York
Bancorp (the "Company") desire to enter into this Supplemental Executive
Agreement ("Supplemental Agreement") to supplement the Amended and Restated
Employment Agreement between Executive and Provident Bank (the "Bank"), the
wholly-owned subsidiary of the Company, dated_________, 2006 (the "Employment
Agreement"); and
WHEREAS, tax law provisions relating to "golden parachute payments"
could have the effect of reducing the benefits intended to be provided to
Executive under the Employment Agreement and Executive's supplemental executive
retirement plan as a result of a change in control of the Company or the Bank;
and
WHEREAS, the benefits intended to be provided to the Executive under
the Employment Agreement could also be subject to reduction by reason of the OTS
limitation on severance benefits described in Section 7(e) of the Employment
Agreement; and
WHEREAS, Board believes that it is in the best interests of the Company
and its shareholders that the Employment Agreement provide the Executive with
the benefits intended to be provided thereunder without reduction because of
excise taxes relating to a change in control or because of limits on what might
be deemed appropriate for payment by a federally chartered savings institution;
and
WHEREAS, the Company and Executive desire to enter into this
Supplemental Agreement for the purpose of providing further incentive to
Executive to achieve successful results in the management and operations of the
Company.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereto hereby agree as follows:
1. In the event of a termination of Executive's employment with the
Bank under Section 7(a) of the Employment Agreement (as defined in the
Employment Agreement), Executive shall be entitled to receive, pursuant to this
Supplemental Agreement, an amount payable by the Company, in addition to any
compensation or benefits payable by the Bank pursuant to Section 7(b) of the
Employment Agreement, which amount shall equal the difference, if any, between
(i) the amount that would be paid by the Bank under the Employment Agreement
pursuant to Sections 7(b) without regard to any reduction that may be required
by Section 7(e), and (ii) the amount that is actually paid under the terms of
the Employment Agreement.
2. (a) In the event that any payments or benefits provided or to be
provided to the Executive pursuant to Section 7(b) the Employment Agreement, in
combination with payments or benefits, if any, from other plans or arrangements
maintained by the Company or the Bank, constitute "excess parachute payments"
under Section 280G of the Code and are subject to excise tax under Section 4999
of the Code, the Company shall pay to Executive in cash an additional amount
equal to the amount of the Gross Up Payment as defined herein. The "Gross Up
Payment" shall be the amount needed to ensure that the amount of such payments
and the value of such benefits received by Executive (net of such excise tax and
any federal, state and local tax on the Company's payment to him attributable to
such excise tax) equals the amount of such payments and value of such benefits
as he would receive in the absence of such excise tax and any federal, state and
local tax on the Company's payment to him attributable to such excise tax. For
purposes of determining the amount of the Gross Up Payment, the value of any
non-cash benefits and deferred payments or benefits shall be determined in
accordance with the principles of Section 280G(d)(3) and (4) of the Code.
(b) In the event that, after the Gross Up Payment is made, the amount
of the excise tax described is determined to be less than the amount calculated
in the determination of the actual Gross Up Payment made by the Company,
Executive shall repay to the Company, at the time that such reduction in the
amount of excise tax is finally determined, the portion of the Gross Up Payment
attributable to such reduction, plus interest on the amount of such repayment at
the applicable federal rate under Section 1274 of the Code from the date of the
Gross Up Payment to the date of the repayment. The amount of the reduction of
the Gross Up Payment shall reflect any subsequent reduction in excise taxes
resulting from such repayment.
(c) In the event that, after the Gross Up Payment is made, the amount
of the excise tax is determined to exceed the amount anticipated at the time the
Gross Up Payment was made, the Company shall pay to the Executive, in
immediately available funds, at the time that such additional amount of excise
tax is finally determined, an additional payment ("Additional Gross Up Payment")
equal to such additional amount of excise tax and any federal, state and local
taxes thereon, plus all interest and penalties, if any, owed by the Executive
with respect to such additional amount of excise and other tax.
(d) The Company shall have the right to challenge, on Executive's
behalf, any excise tax assessment against him as to which Executive is entitled
to (or would be entitled if such assessment is finally determined to be proper)
a Gross Up Payment or Additional Gross Up Payment, provided that all costs and
expenses incurred in such a challenge shall be borne by the Company and the
Company shall indemnify the Executive and hold him harmless, on an after-tax
basis, from any excise or other tax (including interest and penalties with
respect thereto) imposed as a result of such payment of costs and expenses by
the Company.
3. Any payments made to the Executive pursuant to this Agreement or
otherwise, are subject to and conditioned upon compliance with all applicable
banking laws and regulations, including, without limitation, 12 U.S.C. Section
1828(k) and any regulations promulgated thereunder.
IN WITNESS WHEREOF, Provident New York Bancorp has caused this
Supplemental Agreement to be executed, and Executive has signed this
Supplemental Agreement, as of the ____ day of _______________, 2006.
ATTEST: PROVIDENT NEW YORK BANCORP
By: /s/ Xxxxxx Xxxxxxxxx
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Secretary Xxxxxx Xxxxxxxxx
WITNESS: EXECUTIVE
By:
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