EXHIBIT 99.3
AMENDED AND RESTATED
SUPPLEMENTAL EXECUTIVE SAVINGS PLAN
OF
THE PROVIDENT BANK
WHEREAS, The Provident Bank (the "Bank") sponsors the Supplemental
Executive Savings Plan (the "Plan") of Provident Bank for the benefit of certain
senior executives whose benefits are limited under The Provident Bank Employee
Savings Incentive Plan, a tax-qualified thrift savings plan (the "Savings Plan")
due to limitations imposed by Sections 401(a)(17), 401(m) and 415 of the
Internal Revenue Code ("Code") (hereinafter, said limitations shall be referred
to collectively as the "Applicable Limitations"); and
WHEREAS, in connection with its conversion to a stock form savings bank
as the wholly-owned subsidiary of Provident Financial Services, Inc. (the
"Company") and initial offering of the common stock of the ("Company Stock"),
the Bank intends to adopt a tax-qualified Employee Stock Ownership Plan ("ESOP")
and to have the ESOP obtain a loan to purchase up to 8% of the shares issued in
the offering; and
WHEREAS, in consideration of the above, the Bank recently amended the
Plan in order to (i) credit the accounts of Participants with supplemental ESOP
benefits to the extent that the Applicable Limitations limit the amount of
benefits to such persons in the tax-qualified ESOP, (ii) revise the definition
of "change in control" to conform to the definition in its other benefit plans
and arrangements, and (iii) for certain other purposes set forth herein; and
WHEREAS, the Bank now desires to amend and restate the Plan to permit
eligible executives to make a special one-time election to invest all or any
portion of their existing account balance in the Plan in Company Stock.
NOW THEREFORE, in consideration of the foregoing, the Supplemental
Executive Savings Plan of The Provident Bank (the "Plan") is hereby amended and
restated effective December 1, 2002 in accordance with the following:
1. Participation. Participation in this Plan shall be limited to a
select group of management or highly compensated employees of the
Bank whose benefits under the Savings Plan and ESOP are affected
by Section 401(a)(17), 401(m), or Section 415 of the Code and who
are designated by the Board of Managers to participate in this
Plan (hereinafter "Employee"). Those Employees who are designated
to participate and who, in fact, participate shall sometimes
hereinafter be referred to as "Participants".
2. A. Supplemental Savings Plan Benefits. The Bank will pay to or in
respect of each Employee an amount equal to the amount which
would have been payable under the terms of the Savings Plan but
for the limitations under Sections 401(a)(17), 401(m), and 415
of the Code less the amount payable under the terms of the
Savings Plan. The Bank will also pay to or in respect of each
Employee an amount equal to the amount which would have been
payable under the terms of the Savings Plan for any deferred
compensation in the form of deferred raises. Such amounts,
which shall be contingent upon the Employee deferring 5% of his
Compensation, on a pre-tax basis, (minus the amount actually
contributed to the Savings Plan) to this Plan, shall be paid
commencing no later than ninety (90) days following termination
of employment, but in no event before age 60, in 180 monthly
installments, provided, however, that if the amount
attributable to the Employee is equal to or less than
Twenty-Five Thousand Dollars ($25,000) (or such other amount as
the Board of Managers may be resolution determine),
the Board of Managers, may in its sole discretion determine that
the Employee's account shall be distributed in a lump sum within
ninety (90) days following termination of employment, irrespective
of the Employee's age at termination. Notwithstanding anything
herein to the contrary, if the Employee has a portion of his
Supplemental Savings benefit invested in Company Stock, as
contemplated under Section 4.B hereof, the amount so invested
shall be distributed in-kind in a lump sum distribution no later
than ninety (90) days following termination of employment and the
remainder of his account shall be paid in 180 monthly installments
as contemplated above.
B. Supplemental ESOP Benefit. Each year, the Bank shall credit the
account (or applicable sub-account) of each Participant, with a
number of units of Phantom Stock, which number shall be determined
in the following manner: the Bank shall determine (in accordance
with such procedures as it may determine) the amount by which the
Participant's maximum contribution under the ESOP exceeds his
actual contribution due to the reductions imposed by the
Applicable Limitations and then shall determine the number of
shares of Stock such amount would have purchased under the ESOP if
it had been contributed to the ESOP for the benefit of the
Participant. The number of shares of Company Stock such amount
would have purchased under the ESOP, shall for these purposes, be
converted into units of Phantom Stock and shall be credited to the
Participant's sub-account. The Bank's determination regarding "the
number of shares of Company Stock such amount would have purchased
under the ESOP" may take into consideration such factors as:
whether the additional amount, if contributed to the ESOP, would
have been used to repay an outstanding ESOP loan, and if so, the
appropriate number of additional shares to be released from the
suspense account and allocated to the Participant's account based
on such ESOP loan payment.
(i) Crediting of Earnings. Phantom Stock credited to a
Participant's account under this Section shall be
credited with dividends at the same time and in the same
manner as is applicable to the Company Stock held in the
Participant's account under the ESOP. Cash dividends
allocated to a Participant's account shall be credited
with interest at a rate determined by the Board of
Managers.
(ii) Stock Dividends and Stock Splits. In the case of a stock
dividend or stock split, additional units of Phantom
Stock shall be credited to each Participant's account
under the Plan.
(iii) Valuation of Sub-Accounts. The value of a Participant's
ESOP sub-account shall be determined as of each
"valuation date" (as determined by the Bank) in the
following manner:
(a) First, the Bank will add the earnings to the
Participant's sub-account in accordance with
Section 2 B(i).
(b) Next, all Bank contributions to the
Participant's ESOP Sub-Account shall be
credited in accordance with Section 2B.
(c) Finally, a Participant's ESOP sub-account shall
be reduced by the amount of any benefits
distributed to or on behalf of the Participant
from said sub- account, if any.
2
(d) Each Participant's ESOP sub-account shall be
valued as of each valuation date or more
frequently, as determined in the sole
discretion of the Bank, and shall again be
valued as of the date that a Participant
receives a payment under the Plan attributable
thereto, in accordance with the procedures
established by the Bank.
(e) All allocations to and deductions from a
Participant's account under this Section
2.B(iii) shall be deemed to have been made on
the applicable valuation date in the order of
priority set forth in this Section, even though
actually determined at a later date.
(iv) Distribution of Supplemental ESOP Benefit. Except to the
extent that a different time or different manner of
distribution is specifically set forth in this Plan, the
supplemental ESOP benefit shall be distributed at the
same time and in the same manner, i.e., lump sum or
installments, as the benefit payable under the ESOP. A
Participant's supplemental ESOP benefit under this Plan
shall be a benefit paid in the form of Company Stock to
the extent of the units of Phantom Stock credited to the
Participant's account. The value of a Participant's
supplemental ESOP benefit at the time of distribution
shall be equal to the number of units of Phantom Stock
allocated to the Participant's Account multiplied by the
fair market value of a share of Company Stock on the date
of distribution plus the dollar value of any earnings
thereon.
3. A. The accounts of Participants who are not employed by The Provident
Bank on or after January 1, 1998 shall be allocated earnings once
a month at the same rate as the Provident prime rate.
B. The Bank shall establish a fund ("Fund") in order to provide for
the payment of the amounts due under this Plan to employees who
are employed by The Provident Bank on or after January 1, 1998.
The Fund shall be held separate and apart from other assets of the
Bank and shall be used exclusively for the uses and purposes
herein set forth. The amounts credited to the benefit of each
Employee under the Fund shall be segregated into sub-accounts
representing the "Supplemental Savings" benefit and the
"Supplemental ESOP" benefit attributable to such Employee.
C. The Employees, their beneficiaries, and the Plan shall not have
any preferred claim on, or any beneficial ownership interest in,
any assets of the Fund prior to the time such assets are to be
paid to the Employee or his beneficiary as set forth in the Plan.
All rights created under the Plan shall be deemed unsecured
contractual rights of the Employees against the Bank until such
time as the Employees or their beneficiaries are entitled to
receipt of their separate account.
4. A. The Supplemental Savings accounts in the Supplemental Savings
portion of the Fund shall be invested by the Board of Managers, in
its sole discretion, after consulting with the eligible Employees
(those who are employed by The Provident Bank on or after January
1, 1998) in a portfolio of assets. The portfolio of assets shall
consist of any combination of stocks, bonds, notes, mutual funds,
certificates of deposit, money-market funds, or other cash
equivalent investments. A separate sub-account, referred to as the
3
Investment Account, shall be maintained in the name of each
eligible Employee in the Supplemental Savings portion of the
Fund which account shall reflect the amount of each Employee's
contributions and the Bank's contributions on his behalf and
any distributions to such Employee. From time to time, the
value of each Investment Account shall be adjusted to reflect
its proportionate share of the net increment or decrement in
the portfolio of assets due to all interest, dividends and
other income received, as well as any realized and unrealized
gains and losses. For purposes of making any distribution under
paragraph 2 above the value of an eligible Employee's interest
in the portfolio shall be its value (adjusted as aforesaid) as
of the last day of the month next preceding the month
distribution occurs. Appropriate payroll and other taxes shall
be withheld from all payments made under the terms of this
Plan.
B. Effective December 1, 2002, in connection with the conversion
of the Company to stock form, each eligible Employee shall be
provided with the opportunity to invest all or any portion of
the amount credited to his or her Investment Account (in
increments of $10) in the Supplemental Savings portion of the
Fund in Company Stock on a one-time basis in connection with
the stock offering. Such election shall be irrevocable. Any
eligible Employee who wishes to take advantage of this
opportunity shall execute a special investment election form, a
copy of which is annexed hereto as "Exhibit A". Notwithstanding
any provision of the Plan to the contrary, if an eligible
Employee elects to invest all or a portion of the eligible
Employee's Investment Account under the Plan in Company Stock
(in increments of $10), the amount so invested shall remain
invested in Company Stock for the duration of such eligible
Employee's participation in the Plan. Each eligible Employee
who has directed the investment of all or any portion of his or
her Investment Account under the Plan in Company Stock may
exercise the voting rights appurtenant to such shares of
Company Stock by giving voting instructions to the trustee of
the Fund. If an eligible Employee has elected to invest all or
a portion of his Investment Account in Company Stock, the
common stock so purchased shall be credited to his separate
account in the Fund and shall be segregated from the other
assets or investments credited to the benefit of the Employee.
The Company Stock shall be credited to a Stock Fund Account in
the Supplemental Savings portion of the Fund for the benefit of
such Employee. The value of any Employee's Stock Fund Account
shall be determined by reference to the last reported trading
price of the Company Stock on the applicable valuation date.
Any earnings on such common stock shall be credited to the
Investment Account and invested in accordance with the
procedures for such account.
5. Any benefits payable under this Plan which are attributable to the
Bank's contributions and the earnings on these contributions shall
become vested under the same terms and conditions as the
respective benefits provided under the Savings Plan and ESOP. Any
benefits payable under this Plan which are attributable to the
Employee's contributions and the earnings on these contributions
shall be immediately 100% vested.
6. Hardship Distribution. An eligible Employee, who believes that he
has incurred a Hardship may petition the Board of Managers for a
Hardship distribution. Upon a finding that the Employee has
suffered a Hardship, the Board of Managers may, in its sole
discretion, make distributions from the Employees account prior to
the time specified for payment of benefits. The amount of such
distribution shall be limited to the amount reasonably necessary
to meet
4
the requirements during the financial Hardship. A distribution due
to Hardship shall first be made from assets credited to such
Employee other than Company Stock.
7. The undistributed balance, if any, of each Employee's separate
account shall be distributed to his Beneficiary upon his death.
The Employee's Beneficiary shall be the person who is his
beneficiary in the Savings Plan. The Employee's Beneficiary with
respect to the ESOP benefit under the Plan shall be the same
person who is his beneficiary in the ESOP. Any portion of the
undistributed balance which is invested in Company Stpcl, shall be
distributed in-kind.
8. Notwithstanding any other provision of this Plan, the
undistributed balance of each Participant's separate account,
including the Participant's separate supplemental Savings Plan
account and supplemental ESOP account, shall be distributed to him
within 60 days after the date of a "Change in Control" as
hereafter defined. For purposes hereof, a "Change in Control"
shall mean the occurrence of any of the following events:
(a) approval by the shareholders of Provident Financial
Services, Inc. (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:
(i) 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
(ii) 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;
(b) 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;
(c) 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;
5
(d) 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:
(i) individuals who were members of the Company's
initial Board of Directors; or
(ii) individuals, other than members of the Company's
initial Board of Directors who first became members of the
Company's Board of Directors:
(A) 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
(B) 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
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
(e) any event which would be described in Paragraph 8(a), (b),
(c) or (d) if the term "Bank" were substituted for the term
"Company" therein and the term "Bank's Board of Managers"
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
Paragraph 8, the term "person" shall include the meaning
assigned to it under Sections 13(d)(3) or 14(d)(2) of the
Exchange Act.
9. The Board of Managers may amend the Plan at any time and from time
to time in such manner as it shall determine and any amendment may
be given retroactive effect, except that no amendment may reduce
or eliminate any benefit which accrued to any Employee under the
Plan prior to the date of the amendment without the consent of the
affected Employee. The supplemental Savings Plan component of the
Plan shall terminate upon the termination of the Savings Plan,
unless sooner terminated by the Board of Managers and the
supplemental ESOP component of the Plan shall terminate upon the
termination of the ESOP component of the Plan, unless sooner
terminated by the Board of Managers.
10. Except as otherwise provided by law, the right of any Employee to
any benefit or payment hereunder is expressly made subject to the
condition and limitation that it shall not be subject to
alienation, assignment, attachment, execution, or other process.
6
11. If the Board of Managers determines that an eligible member (or
the designated beneficiary of an eligible member) is unable to
manage his affairs, it may, in its sole discretion, pay any amount
due to such person to the individual or institution then providing
for the care, maintenance and support of such person, unless prior
to such payment claim shall be made therefore by a duly appointed
guardian, committee or other legal representative designated to
receive such payment on behalf of such person.
12. The interpretation and construction of the Plan by the Board of
Managers, and any action taken hereunder, shall be binding and
conclusive upon the eligible member and any other person claiming
any rights hereunder. The Board of Managers may from time to time
delegate to such person or persons or to such committee as it
shall designate any one or more of its administrative duties under
the Plan.
13. In the event that any claim for benefits, which must initially be
submitted in writing to the Board of Managers, is denied (in whole
or in part) hereunder, the claimant shall receive from the Bank
notice in writing, written in a manner calculated to be understood
by the claimant, setting forth the specific reasons for the
denial, with specific reference to pertinent provisions of this
Plan. The interpretations and construction hereof by the Board of
Managers shall be binding and conclusive on all persons and for
all purposes. Any disagreements about such interpretations and
construction shall be submitted to an arbitrator subject to the
rules and procedures established by the American Arbitration
Association. No member of the Board of Managers shall be liable to
any person for any action taken hereunder except those actions
undertaken with lack of good faith.
14. Whenever used herein, the term "Board of Managers" shall mean the
Board of Managers of The Provident Bank in its mutual form and the
Board of Directors of The Provident Bank in its stock form.
Wherever the context shall require, the masculine gender shall be
construed to include the feminine and the singular number the
plural.
15. Whenever used hereto, the term "Compensation" shall mean, for any
applicable period, the total earnings of a Participant and shall
include deferred compensation in the form of deferred raises.
However, compensation shall exclude bonuses, commissions,
severance pay, reimbursements for expenses and any other fringe
benefits.
16. The provisions of this Plan shall bind and inure to the benefit of
the Bank and its successors and assigns. The term "successors" as
used herein shall include any corporate or other business entity
which shall, whether by merger, consolidation, purchase or
otherwise acquire all or substantially all of the business and
assets of the Bank, and successors of any such corporation or
other business entity.
17. The Plan shall be interpreted and construed in accordance with the
laws of the State of New Jersey.
Approved by:
/s/ Paul M. Pantozzi
---------------------------
7
Authorized Officer
DATED: December 13, 2002
-------------------------
8