EXHIBIT 10.1
POST-RETIREMENT COMPENSATION
AGREEMENT
This Agreement
(“Agreement”) is entered into as of the 7th day of
July, 2009, between PROVIDENT SAVINGS BANK, F.S.B. (the
“Bank”) and DONAVON P. TERNES (the
“Executive”) with reference to the following
facts.
A. The
Executive has been employed by the Bank since November 1, 2000, and
has performed his duties in an exemplary manner resulting in
substantial profits to the Bank.
B.
In recognition of the Executive’s services to the Bank, the
Bank desires to enter into a Post-Retirement Compensation Agreement
with the Executive, pursuant to which the Executive is entitled to
receive certain post-retirement benefits.
NOW, THEREFORE, the parties hereto
agree as follows:
If the Executive experiences a “Separation From
Service” (as defined in Section 409A of the Internal Revenue
Code of 1986 (“Section 409A”), taking into account the
rules and presumptions provided in the regulations under Section
409A) from the Bank after reaching age 62, the Bank shall pay the
Executive a retirement benefit equivalent in value to a monthly
income for the remainder of the Executive’s life equal to
fifty percent (50%) of the Executive’s Final Average Monthly
Salary (“Basic Benefit”). The term
“Final Average Monthly Salary” shall mean the average
gross amount of the Executive’s basic monthly salary
determined in accordance with the Bank’s customary payroll
practices, before tax withholding and other payroll deductions and
including deferred salary compensation when credited rather than
when paid, but excluding bonus or incentive awards, director fees
paid to the Executive by the Bank or its Affiliates and any
accelerated payments of future salary. “Final
Average Monthly Salary” shall be computed based on the
highest paid thirty-six (36) consecutive months of the
Executive’s employment with the Bank.
2.
Distribution of Benefits.
(a)
Time of Distribution. Except as otherwise
provided herein, or required or permitted by Section 409A, the
Executive’s payment shall be made by the 60
th day following the date of the Executive’s
Separation From Service (the “60 th Day”), or if the 60
th Day is not within the calendar year of the
Executive’s Separation From Service, no later than the
15 th
day of the third month following the
Executive’s Separation from Service.
(b)
Form of Benefit . The Bank shall make a lump sum
payment to the Executive in an amount equal to the actuarially
determined discounted present value of the Basic
Benefit. In calculating the actuarially determined
present value of the Basic Benefit, the calculation shall be as of
the date of the Executive’s Separation From Service and shall
be based on the prevailing National Association of Insurance
Commissioners (“NAIC”) standard mortality tables used
as of such date, and the discount rate used shall be the lesser of
the prime rate or the Eleventh District cost of funds.
(a)
Death, Disability or Involuntary Termination: Full Benefits
. If, prior to reaching age sixty-two (62), the
Executive experiences a Separation From Service from the Bank as a
result of death, Disability, or Involuntary Termination prior to or
within 12 months following the effective time of
a Change in Control, the Executive,
or his surviving spouse, if applicable, shall be entitled to a lump
sum benefit equal to the amount that would have become payable to
the Executive pursuant to Section 2(a); provided, however, that
such lump sum benefit shall be reduced by any benefit actually
received by the Executive under a long-term disability policy
maintained by the Bank. The timing of the distribution
of the benefit provided under this Section 3(a) shall be subject to
the provisions of Section 2(a) and subject to Section 4.
(b) For
purposes of Section 3(a), the following definitions shall
apply:
(i) The
term “Involuntary Termination” shall mean the
termination of the employment of Executive (A) by the Bank without
the Executive's express written consent; or (B) by the Executive by
reason of a material diminution of or interference with his duties,
responsibilities or benefits, including (without limitation), if
the termination of employment occurs within 30 days
of any of the following actions unless consented to in
writing by the Executive: (I) a requirement that the Executive be
based at any place other than Riverside, California, or within a
radius of 35 miles from the location of the Bank's administrative
offices as of the initial effective date of this Agreement, except
for reasonable travel on Bank business; (II) a material demotion of
the Executive; (III) a material reduction in the number or
seniority of personnel reporting to the Executive or a material
reduction in the frequency with which, or in the nature of the
matters with respect to which such personnel are to report to the
Executive, other than as part of a Bank-wide reduction in staff;
(IV) a reduction in the Executive's base salary or a material
adverse change in the Executive's perquisites, benefits, contingent
benefits or vacation, other than (1) as part of an overall program
applied uniformly and with equitable effect to all members of the
senior management of the Bank, or (2) as a result of
a material adverse change in the Bank's financial condition and
results of operations, which results in the Bank no longer
qualifying as a “well capitalized” institution pursuant
to applicable regulations, however, such reduced base salary shall
be no less than 100% of Executive’s current base salary; (V)
a material permanent increase in the required hours of work or the
workload of the Executive; or (VI) the failure of the board of
directors of the Bank (“Board of Directors”) (or a
board of directors of a successor of the Bank) to elect the
Executive as Chief Operating Officer of the Bank (or a successor of
the Bank) or any action by the Board of Directors (or a board of
directors of a successor of the Bank) removing the Executive from
such office. The term "Involuntary Termination" does not
include Termination for Cause (as defined herein), Separation from
Service due to death or Disability, retirement or suspension or
temporary or permanent prohibition from participation in the
conduct of the Bank's affairs under Section 8 of the Federal
Deposit Insurance Act ("FDIA").
(ii) The
term "Change in Control" means (A) any "person," as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (other than (I) Provident
Financial Holdings, Inc. (the “Company”), (II) any
subsidiary or subsidiaries of the Company (or its successors) that
are part of the affiliated group (as defined in Section 1504 of the
Internal Revenue Code of 1986, as amended (the "Code"), without
regard to subsection (b) thereof) that includes the Bank, including
but not limited to the Company, (III) any person (as hereinabove
defined) acting on behalf of the Company as underwriter pursuant to
an offering who is temporarily holding securities in connection
with such offering, (IV) any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or (V)
any corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their
ownership of stock of the Company), 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 the Company's then outstanding
securities; (B) individuals who are members of the Board of
Direc
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