AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT AMONG ESB FINANCIAL CORPORATION, ESB BANK AND ________________
Exhibit
10.4
[Form
for SVPs]
AMENDED
AND RESTATED CHANGE IN CONTROL AGREEMENT AMONG
ESB
FINANCIAL CORPORATION, ESB BANK
AND
________________
This
AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT (this “Agreement”), dated as of
the 20th day of November 2007, is among ESB Financial Corporation (the
“Corporation”), ESB Bank, a Pennsylvania chartered savings bank and a wholly
owned subsidiary of the Corporation (the “Bank”), and ________________________
(the “Executive”). Any reference to the “Employers” shall mean both
the Corporation and the Bank, and any reference to an “Employer” shall mean
either the Corporation or the Bank, as the context requires.
WITNESSETH:
WHEREAS,
the Executive is presently an officer of the Employers, and the Executive
and
the Employers have previously entered into a change in control agreement
dated
November 21, 2006 (the “Prior Agreement”);
WHEREAS,
the Employers desire to amend and restate the Prior Agreement in order to
make
changes to comply with Section 409A of the Internal Revenue Code of 1986,
as
amended (the “Code”), as well as certain other changes;
WHEREAS,
the Employers desire to be ensured of the Executive’s continued active
participation in the business of the Employers; and
WHEREAS,
in order to induce the Executive to remain in the employ of the Employers
and in
consideration of the Executive agreeing to remain in the employ of the
Employers, the parties desire to specify the severance benefits which shall
be
due the Executive in the event that his employment with the Employers is
terminated under specified circumstances;
NOW
THEREFORE, in consideration of the premises and the mutual agreements herein
contained, 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 base
salary and cash bonus paid to the Executive by the Employers or any subsidiary
thereof during any of the three calendar years ending prior to the calendar
year
in which the Date of Termination occurs, provided that the highest base salary
and the highest cash bonus may be paid in separate years.
(b) Cause. Termination
by the Employers of the Executive’s employment for “Cause” shall include
termination because of 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 traffic violations or similar offenses) or final cease-and-desist
order.
(c) Change
in Control. “Change in Control” shall mean a change in the
ownership of the Corporation or the Bank, a change in the effective control
of
the Corporation or the Bank or a change in the ownership of a substantial
portion of the assets of the Corporation or the Bank, in each case as provided
under Section 409A of the Code and the regulations thereunder.
(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 such Notice of Termination.
(f) Disability. “Disability”
shall mean the Executive (i) is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, or (ii) is, by reason of any
medically determinable physical or mental impairment which can be expected
to
result in death or can be expected to last for a continuous period of not
less
than 12 months, receiving income replacement benefits for a period of not
less
than three months under an accident and health plan covering employees of
the
Employers.
(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 the occurrence of any of the following
events:
(i)
(A) a
material diminution in the Executive’s base compensation 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, (B) a material diminution in the
Executive’s authority, duties or responsibilities as in effect immediately prior
to the Change in Control, or (C) a material diminution in the authority,
duties
or responsibilities of the officer (as in effect immediately prior to the
date
of the Change in Control) to whom the Executive is required to report
immediately prior to the Change in Control,
(ii)
any
material breach of this Agreement by the Employers, or
(iii)
any
material change in the geographic location at which the Executive must perform
his services under this Agreement immediately prior to the Change in
Control;
provided,
however, that prior to any termination of employment for Good Reason, the
Executive must first provide written notice to the Employers within ninety
(90)
days of the initial existence of the condition, describing the existence
of such
condition, and the Employers shall thereafter have the right to remedy the
condition within thirty (30) days of the date the Employers received the
written
notice from the Executive. If the Employers remedy the condition
within such thirty (30) day cure period, then no Good Reason shall be deemed
to
exist with respect to such condition. If the Employers do not remedy
the condition within such thirty (30) day cure period, then the Executive
may
deliver a Notice of Termination for Good Reason at any time within sixty
(60)
days following the expiration of such cure period.
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(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 Cause, Disability or Retirement or by the
Executive for Good Reason shall be communicated by a written “Notice of
Termination” to the other party hereto. For purposes of this
Agreement, a “Notice of Termination” shall mean a 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,
(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 7 hereof.
(j) Retirement. “Retirement”
shall mean voluntary termination by the Executive in accordance with the
Employers’ retirement policies, including early retirement, generally applicable
to their salaried employees.
2. Benefits
Upon Termination. If the Executive’s employment by the
Employers shall be terminated within eighteen (18) months subsequent to a
Change
in Control by (i) the Employers other than for Cause, Disability or Retirement
or as a result of the Executive’s death, or (ii) the Executive for Good Reason,
then the Employers shall, subject to the provisions of Section 3 hereof,
if
applicable:
(a) pay
to the Executive, in a lump sum as of the Date of Termination, a cash amount
equal to 1.5 times the Executive’s Annual Compensation; and
(b) maintain
and provide for a period ending at the earlier of (i) eighteen (18) months
after
the Date of Termination or (ii) the date of the Executive’s full-time employment
by another employer (provided that the Executive is entitled under the terms
of
such employment to benefits substantially similar to those described in this
subparagraph (b)), at no cost to the Executive, the Executive’s continued
participation in all group insurance, life insurance, health and accident
insurance, and disability insurance in which the Executive was participating
immediately prior to the Date of Termination; provided that any insurance
premiums payable by the Employers or any successors pursuant to this Section
2(b) shall be payable at such times and in such amounts (except that the
Employers shall also pay any employee portion of the premiums) as if the
Executive was still an employee of the Employers, subject to any increases
in
such amounts imposed by the insurance company or COBRA, and the amount of
insurance premiums required to be paid by the Employers in any taxable year
shall not affect the amount of insurance premiums required to be paid by
the
Employers in any other taxable year; and provided further that if the
Executive’s participation in any group insurance plan is barred, the Employers
shall either arrange to provide the Executive with insurance benefits
substantially similar to those which the Executive was entitled to receive
under
such group insurance plan or, if such coverage cannot be obtained, pay a
lump
sum cash equivalency amount within thirty (30) days following the Date of
Termination based on the annualized rate of premiums being paid by the Employers
as of the Date of Termination; and
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(c) pay
to the Executive, in a lump sum as of the Date of Termination, a cash amount
equal to the projected cost to the Employers of providing benefits to the
Executive for a period of eighteen (18) months pursuant to any other employee
benefit plans, programs or arrangements offered by the Employers in which
the
Executive was entitled to participate immediately prior to the Date of
Termination (other than retirement plans, stock compensation plans or cash
compensation plans of the Employers), with the projected cost to the Employers
to be based on the costs incurred for the calendar year immediately preceding
the year in which the Date of Termination occurs and with any automobile-related
costs to exclude any depreciation on Bank-owned automobiles.
(d) The
payment to the Executive hereunder shall be paid by the Corporation and the
Bank
in the same proportion as the time and services actually expended by the
Executive on behalf of each respective Employer, and no payments shall be
duplicated.
3. Limitation
of Benefits under Certain Circumstances. If the payments and
benefits pursuant to Section 2 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, then the payments and benefits pursuant to Section 2 hereof shall be
reduced by the minimum amount necessary to result in no portion of the payments
and benefits under Section 2 being non-deductible to either of the Employers
pursuant to Section 280G of the Code and subject to the excise tax imposed
under
Section 4999 of the Code. If the payments and benefits under Section
2 are required to be reduced, the cash severance shall be reduced first,
followed by a reduction in the fringe benefits. The determination of
any reduction in the payments and benefits to be made pursuant to Section
2
shall be based upon the opinion of independent tax counsel selected by the
Employers and paid for by the Employers. Such counsel 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 in this
Section 3 shall result in a reduction of any payments or benefits to which
the Executive may be entitled upon termination of employment other than pursuant
to Section 2 hereof, or a reduction in the payments and benefits specified
in
Section 2 below zero.
4. 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, nor shall the amount of any such
benefits be reduced by any compensation earned by the Executive as a result
of
employment by another employer after the Date of Termination or otherwise,
except as set forth in Section 2(b) above.
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(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.
5. 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.
6. Assignability. The
Employers may assign this Agreement and their rights hereunder in whole,
but not
in part, to any corporation, bank or other entity with or into which the
Employers may hereafter merge or consolidate or to which the Employers may
transfer all or substantially all of their respective assets, if in any such
case said corporation, bank or other entity shall by operation of law or
expressly in writing assume all obligations of the Employers hereunder as
fully
as if it had been originally made a party hereto, but may not otherwise assign
this Agreement or their rights hereunder. The Executive may not
assign or transfer this Agreement or any rights or obligations
hereunder.
7. 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 Employers:
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ESB Financial Corporation and ESB Bank | |
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000
Xxxxxxxx Xxxxxx
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Xxxxxxx
Xxxx, Xxxxxxxxxxxx 00000
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| To the Executive: | ||
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At
the address last appearing on the
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personnel
records of the Employers
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8. Amendment;
Waiver. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to
in writing signed by the Executive and such officer or officers as may be
specifically designated by the Boards of Directors of the Employers 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. In addition, notwithstanding anything in this
Agreement to the contrary, the Employers may amend in good faith any terms
of
this Agreement, including retroactively, in order to comply with Section
409A of
the Code.
9. Governing
Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United
States
where applicable and otherwise by the substantive laws of the Commonwealth
of
Pennsylvania.
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10. 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.
11. Term
of Agreement. This Agreement shall terminate three (3) years
after December 1, 2007; provided that on or prior to December 1, 2008 and
each
subsequent December 1st, the Boards of Directors of the Employers shall consider
(with appropriate corporate documentation thereof, and after taking into
account
all relevant factors, including the Executive’s performance as an employee)
renewal of the term of this Agreement for an additional one (1) year, and
the
term of this Agreement shall be so extended as of such December 1st unless
the
Boards of Directors of the Employers do not approve such renewal and provide
written notice to the Executive, or the Executive gives written notice to
the
Employers, at least thirty (30) days prior to such December 1st, of such
party’s
or parties’ election not to extend the term beyond its then scheduled expiration
date; and provided further that, notwithstanding the foregoing to the contrary,
this Agreement shall be automatically extended for an additional one (1)
year
upon a Change in Control.
12. 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.
13. Validity. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
14. Changes
in Statutes or Regulations. If any statutory or regulation provision
referenced herein is subsequently changed or re-numbered, or is replaced
by a
separate provision, then the references in this Agreement to such statutory
or
regulatory provision shall be deemed to be a reference to such section as
amended, re-numbered or replaced.
15. 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.
16. Regulatory
Prohibition. 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 FDIA (12 U.S.C. §1828(k)) and 12 C.F.R. Part 359.
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17. Regulatory
Actions. The following provisions shall be applicable to the parties to
the extent that they are required to be included in agreements between a
savings
association and its employees pursuant to Section 563.39(b) of the Regulations
Applicable to All Savings Associations, 12 C.F.R. §563.39(b), or any successor
thereto, and shall be controlling in the event of a conflict with any other
provision of this Agreement.
(a) If
the Executive is suspended from office and/or temporarily prohibited from
participating in the conduct of the Employers’ affairs pursuant to notice served
under Section 8(e)(3) or Section 8(g)(1) of the Federal Deposit Insurance
Act
(“FDIA”)(12 U.S.C. §§1818(e)(3) and 1818(g)(1)), the Employers’ obligations
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
Employers may, in their discretion: (i) pay the Executive all or part of
the
compensation withheld while their obligations under this Agreement were
suspended, and (ii) reinstate (in whole or in part) any of their obligations
which were suspended.
(b) If
the Executive is removed from office and/or permanently prohibited from
participating in the conduct of the Employers’ affairs by an order issued under
Section 8(e)(4) or Section 8(g)(1) of the FDIA (12 U.S.C. §§1818(e)(4) and
(g)(1)), all obligations of the Employers under this Agreement shall terminate
as of the effective date of the order, but vested rights of the Executive
and
the Employers as of the date of termination shall not be affected.
(c) If
the Bank is in default, as defined in Section 3(x)(1) of the FDIA (12 U.S.C.
§1813(x)(1)), all obligations under this Agreement shall terminate as of the
date of default, but vested rights of the Executive and the Employers as
of the
date of termination shall not be affected.
(d) All
obligations under this Agreement shall be terminated pursuant to 12 C.F.R.
§563.39(b)(5), except to the extent that it is determined that continuation
of
the Agreement for the continued operation of the Employers is necessary:
(i) by
the Director of the OTS, or his/her designee, at the time the Federal Deposit
Insurance Corporation (“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
FDIA (12 U.S.C. §1823(c)); or (ii) by the Director of the OTS, or his/her
designee, at the time the Director or his/her designee approves a supervisory
merger to resolve problems related to operation of the Bank or when the Bank
is
determined by the Director of the OTS to be in an unsafe or unsound condition,
but vested rights of the Executive and the Employers as of the date of
termination shall not be affected.
18. Entire
Agreement. This Agreement embodies the entire agreement between the
Employers and the Executive with respect to the matters agreed to
herein. All prior agreements between the Employers and the Executive
with respect to the matters agreed to herein, including without limitation
the
Prior Agreement between the Employers and the Executive, are hereby superseded
and shall have no force or effect.
[Signature
page follows]
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IN
WITNESS WHEREOF, this Agreement has
been executed as of the date first written above.
| Attest: | ESB FINANCIAL CORPORATION | ||
| By: | |||
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Xxxxxxxxx
X. Xxxxxxxx
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President
and Chief Executive Officer
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| Attest: | ESB BANK | ||
| By: | |||
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Xxxxxxxxx
X. Xxxxxxxx
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President
and Chief Executive Officer
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| Attest: | |||
| By: | |||
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