EXHIBIT 10(g)
AGREEMENT AMONG
ESB FINANCIAL CORPORATION
AND ESB BANK, F.S.B.
AND XXXXXXX X. XXXXXXXX
AGREEMENT, dated this 1st day of December 1998, among ESB Financial
Corporation (the "Corporation"), and ESB Bank, F.S.B., a Federally chartered
savings and loan association and a wholly owned subsidiary of the Corporation
and Xxxxxxx X. Xxxxxxxx (the "Executive"). Hereinafter, any reference to the
"Employers" shall mean both the Corporation and ESB Bank and any reference to an
"Employer" shall mean either the Corporation or ESB Bank.
WITNESSETH:
WHEREAS, the Executive is presently an officer of the Employers; and
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's 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.
(b) CAUSE. Termination by the Employers of the Executive's employment for
"Cause" shall mean 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. For purposes of this paragraph, no act or failure to act
on the Executive's part shall be considered "willful" unless done, or omitted to
be done, by the Executive not in good faith and without reasonable belief that
the Executive's action or omission was in the best interest of the Employers.
(c) CHANGE IN CONTROL OF THE EMPLOYER. "Change in Control of the Employer
shall mean a change in control of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act"), or any successor
thereto, whether or not any security of the Employer is registered under
Exchange Act; provided that, without limitation, such a change in control shall
be deemed to have occurred if (i) any "person" (as such term is used in Section
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 Employer representing 25% or more of the combined voting power
of the Employer's then outstanding securities; or (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of the Employer cease for any reason to constitute at
least a majority thereof unless the election, or the nomination for election by
stockholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period.
(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 or for Disability, the date
specified in the Notice of Termination, and (ii) if the Executive's employment
is terminated for any other reason, the date on which a Notice of Termination is
given or as specified in such Notice.
(f) DISABILITY. Termination by the Employer of the Executive's employment
based on "Disability" shall mean termination because of any physical or mental
impairment which qualifies the Executive for disability benefits under the
applicable long-term disability plan maintained by the Employers or any
subsidiary or, if no such plan applies, which would qualify the Executive for
disability benefits under the Federal Social Security System.
(g) GOOD REASON. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive based on:
(i) Without the Executive's express written consent, the
assignment by the Employer to the Executive of any duties which are
materially inconsistent with the Executive's positions, duties,
responsibilities and status with the Employer immediately prior to a
Change in Control of the Employer, or a material change in the
Executive's reporting responsibilities, titles or offices as an
employee and as in effect immediately prior to such a Change in
Control, or any removal of the Executive from or any failure to re-
elect the Executive to any of such responsibilities, titles or
offices, except in connection with the termination of the Executive's
employment for Cause, Disability or Retirement or as a result of the
Executive's death or by the Executive other than for Good Reason;
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(ii) Without the Executive's express written consent, a
reduction by the Employers in the Executive's base salary as in effect
on the date of the Change in Control of the Employer or as the same
may be increased from time to time thereafter or a reduction in the
package of fringe benefits provided to the Executive;
(iii) Any purported termination of the Executive's employment
for Cause, Disability or Retirement which is not effected pursuant to
a Notice of Termination satisfying the requirements of paragraph (i)
below; or
(iv) The failure by the Employer to obtain the assumption of and
agreement to perform this Agreement by any successor as contemplated
in Section 6 hereof.
(h) IRS. IRS shall mean the Internal Revenue Service.
(i) NOTICE OF TERMINATION. Any purported termination by the Employer for
Cause, Disability or Retirement or by the Executive for Good Reason shall be
communicated by 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 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 Employer's termination of Executive's
employment for Cause, and (iv) is given in the manner specified in Section 7
hereof.
(j) RETIREMENT. Termination by the Employer of the Executive's employment
based on "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 subsequent to a Change in Control of the Employer
by (i) the Employer other than for Cause, Retirement, or as a result of the
Executive's death, or (ii) the Executive for Good Reason, then the Employer
shall, subject to the provisions of Section 3 hereof, if applicable:
(a) pay to the Executive, in 18 equal monthly installments beginning with
the first business day of the month following 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,
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disability and other employee benefit plans, programs and arrangements in which
the Executive was entitled to participate immediately prior to the Date of
Termination (other than retirement plans or stock compensation plans of the
Employers), provided that in the event that the Executive's participation in any
plan, program or arrangement as provided in this subparagraph (b) is barred, or
during such period any such plan, program or arrangement is discontinued or the
benefits thereunder are materially reduced, the Employers range to provide the
Executive with benefits substantially similar to those which the Executive was
entitled to receive under such plans, programs and arrangements immediately
prior to the Date of Termination.
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 Executive has the right to receive from the
Employers would constitute a "parachute payment" under Section 280G of the Code,
the payments and benefits pursuant to Section 2 hereof shall be reduced, in the
manner determined by the Executive, by the amount, if any, which is the minimum
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. 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' independent public accountants and paid for by the Employers.
Such counsel shall be reasonably acceptable to the Employers and the Executive;
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. In the event that the
Employers and/or the Executive do not agree with the opinion of such counsel,
(i) the Employers shall pay to the Executive the maximum amount of payments and
benefits pursuant to Section 2, as selected by the Executive, which such opinion
indicates that there is a high probability that does not result in any of such
payments and benefits being non-deductible to the Employers and subject to the
imposition of the excise tax imposed under Section 4999 of the Code and (ii) the
Employers may request, and Executive shall have the right to demand that the
Employers request, a ruling from the IRS as to whether the disputed payments and
benefits pursuant to Section 2 hereof have such consequences. Any such request
for a ruling from the IRS shall be promptly prepared and filed by the Employers,
but in no event later than thirty (30) days from the date of the opinion of
counsel referred to above, and shall be subject to Executive's approval prior to
filing, which shall not be unreasonably withheld. The Employers and Executive
agree to be bound by any ruling received from the IRS and to make appropriate
payments to each other to reflect any such rulings, together with interest at
the applicable federal rate provided for in Section 7872(f)(2) of the Code.
Nothing contained herein 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
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any compensation earned by the Executive as a result of employment by another
employer after the Date of Termination or otherwise.
(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 either of the Employers may hereafter merge or consolidate or
to which either of 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 its 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:
To the Employers: ESB Financial Corporation and ESB Bank, F.S.B.
000 Xxxxxxxx Xxxxxx
Xxxxxxx Xxxx, Xxxxxxxxxxxx 00000
To the Executive: Xx. Xxxxxxx X. Xxxxxxxx
0000 Xxxxxxxx Xxxxx
Xxx Xxxxxx, Xxxxxxxxxxxx 00000
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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.
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 the substantive laws of the Commonwealth of
Pennsylvania.
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 the date first above written; provided that on or prior to the first
anniversary of the date first above written and each anniversary thereafter, the
Boards of Directors of the Employers shall consider (with appropriate corporate
documentation thereof, and after taking into account all relevant factors,
including 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 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, thirty (30) days prior to the date of any such
anniversary, 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 of the Employer.
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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
provisions of this Agreement, which shall remain in full force and effect.
14. 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.
15. REGULATORY PROHIBITION. Notwithstanding any other provision of this
Agreement to the contrary, the obligations of the Employers hereunder shall be
suspended in the event that the FDIC prohibits or limits, by regulation or
order, any payment hereunder pursuant to Section 18(k) of the FDIA (12 U.S.C.
(S) 1828(k)).
16. 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. (S)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 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. (S)(S)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 Executive all or part
of the compensation withheld while its obligations under this Agreement were
suspended, and (ii) reinstate (in whole or in part) any of its obligations which
were suspended.
(b) If 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. (S)(S)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 ESB Bank is in default, as defined in Section 3(x)(1) of the FDIA
(12 U.S.C. (S)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.
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(d) All obligations under this Agreement shall be terminated pursuant to 12
C.F.R. (S)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 Office of Thrift Supervision ("OTS"), or
his/her designee, at the time the Federal Deposit Insurance Corporation ("FDIC")
or Resolution Trust Corporation enters into an agreement to provide assistance
to or on behalf of ESB bank under the authority contained in Section 13(c) of
the FDIA (12 U.S.C. (S)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 ESB Bank or when ESB 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.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
ESB FINANCIAL CORPORATION
By: /s/ Xxxxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxxxx X. Xxxxxxxx
President and Chief Executive Officer
ESB BANK, F.S.B.
By: /s/ Xxxxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxxxx X. Xxxxxxxx
President and Chief Executive Officer
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxx
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