AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (the "Agreement") is made
effective as of September 30, 2008 (the "Effective Date"), by and between ESSA
Bank & Trust, a Pennsylvania chartered stock savings association with its
principal office in Stroudsburg, Pennsylvania (the "Bank"), ESSA Bancorp, Inc. a
Pennsylvania corporation that owns 100% of the common stock of the Bank (the
"Company"), and Xxxx X. Xxxxx ("Executive"). Any reference to the "Employer"
shall mean both the Company and the Bank.
WHEREAS, the Executive is currently employed as President and Chief
Executive Officer of the Employer pursuant to an employment agreement that was
effective March 31, 2007 (the "Original Agreement"); and
WHEREAS, the Employer desires to amend and restate the Original Agreement
in order to make changes to comply with the final regulations issued under
Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), in
April, 2007; and
WHEREAS, Executive is willing to serve the Employer on the terms and
conditions hereinafter set forth and has agreed to such changes; and
WHEREAS, the Board of Directors of the Employer and the Executive believe
it is in the best interests of the Employer to enter into the Agreement in order
to reinforce and reward the Executive for his service and dedication to the
continued success of the Employer and incorporate the changes required by the
final regulations under Code Section 409A.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive agrees to serve as
President and Chief Executive Officer of the Employer (the "Executive
Position"). Executive shall be responsible for the overall management, and shall
be responsible for establishing the Employer's business objectives, policies and
strategic plans in conjunction with the Board of Directors (the "Board").
Executive shall also be responsible for providing leadership and direction to
all departments or divisions, and shall be the primary contact between the Board
and the staff. As Chief Executive Officer, Executive shall directly report to
the Board. Executive shall also be nominated as a member of the Board, subject
to election by shareholders. Executive also agrees to serve, if elected, as an
officer and director of any affiliate of the Employer.
2. TERM AND DUTIES.
(a) Three Year Contract; Annual Renewal. Executive's period of employment
with the Employer ("Employment Period") shall begin on the Effective Date and
shall renew on each anniversary date thereafter, until the date that the
Employer gives Executive written notice of non-renewal ("Non-Renewal Notice").
The Employment Period shall end on the date that is thirty-six (36) months after
the date of the Non-Renewal Notice, unless the parties agree that the Employment
Period shall end on an earlier date. Notwithstanding the foregoing, all changes
to the Agreement intended to comply with Code Section 409A shall be
retroactively effective to March 31, 2007; and provided further that no
retroactive change shall affect the compensation or benefits previously provided
to the Executive.
(b) Annual Performance Evaluation. On either a fiscal year or calendar year
basis, (consistently applied from year to year), the Employer shall conduct an
annual evaluation of Executive's performance. The annual performance evaluation
proceedings shall be included in the minutes of the Board meeting that next
follows such annual performance review.
(c) Continued Employment Following Termination of Employment Period.
Nothing in this Agreement shall mandate or prohibit a continuation of
Executive's employment following the expiration of the Employment Period upon
such terms and conditions as the Employer and Executive may mutually agree.
(d) Duties; Membership on Other Boards. During the Employment Period,
except for periods of absence occasioned by illness, reasonable vacation
periods, and reasonable leaves of absence approved by the Board, Executive shall
devote substantially all his business time, attention, skill, and efforts to the
faithful performance of his duties hereunder including activities and services
related to the organization, operation and management of the Employer; provided,
however, that, with the approval of the Board, as evidenced by a resolution of
such Board, from time to time, Executive may serve, or continue to serve, on the
boards of directors of, and hold any other offices or positions in, business
companies or business organizations, which, in the Board's judgment, will not
present any conflict of interest with the Employer, or materially affect the
performance of Executive's duties pursuant to this Agreement it being understood
that membership in and service on boards or committees of social, religious,
charitable or similar organizations does not require Board approval pursuant to
this Section 2(d). For purposes of this Section 2(d), Board approval shall be
deemed to have been granted as to service with any such business company or
organization that Executive was serving as of the date of this Agreement.
3. COMPENSATION, BENEFITS AND REIMBURSEMENT.
(a) Base Salary. The compensation specified under this Agreement shall
constitute the salary and benefits paid for the duties described in Section 2.
The Employer shall pay Executive as compensation a salary of not less than
$252,703 per year ("Base Salary"). Such Base Salary shall be payable biweekly,
or with such other frequency as officers and employees are generally paid.
During the period of this Agreement, Executive's Base Salary shall be reviewed
at least annually. Such review may be conducted by a Committee designated by the
Board, and the Employer may increase, but not decrease (except a decrease that
is generally applicable to all employees) Executive's Base Salary (with any
increase in Base Salary to become "Base Salary" for purposes of this Agreement).
(b) Bonus and Incentive Compensation. Executive will be entitled to
incentive compensation and bonuses as provided in any plan of the Employer in
which Executive is eligible to participate. Nothing paid to Executive under any
such plan or arrangement will be deemed to be in lieu of other compensation to
which Executive is entitled under this Agreement.
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(c) Employee Benefits. The Employer will provide Executive with employee
benefit plans, arrangements and perquisites substantially equivalent to those in
which Executive was participating or otherwise deriving benefit from immediately
prior to the beginning of the term of this Agreement, and the Employer will not,
without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder, except as to any changes that are applicable to all
participating employees or as reasonably or customarily available. Without
limiting the generality of the foregoing provisions of this Section 3(c),
Executive will be entitled to participate in or receive benefits under any
employee benefit plans including, but not limited to, retirement plans,
supplemental retirement plans, pension plans, profit-sharing plans,
health-and-accident insurance plans, medical coverage or any other employee
benefit plan or arrangement made available by the Employer in the future to its
senior executives, subject to and on a basis consistent with the terms,
conditions and overall administration of such plans and arrangements.
(d) Paid Time Off. Executive shall be entitled to paid vacation time each
year during the Employment Period (measured on a fiscal or calendar year basis,
in accordance with the Employer's usual practices), as well as sick leave,
holidays and other paid absences in accordance with the Employer's policies and
procedures for senior executives. Any unused paid time off during an annual
period shall be treated in accordance with the Employer's personnel policies as
in effect from time to time.
(e) Expense Reimbursements. During the Employment Period, the Employer
shall pay or reimburse Executive for the full cost of the use of an automobile
that is mutually agreeable to the Employer and Executive. The Employer shall
also pay or reimburse Executive for all reasonable travel, entertainment and
other reasonable expenses incurred by Executive during the course of performing
his obligations under this Agreement, including, without limitation, fees for
memberships in such clubs and organizations as Executive and the Board shall
mutually agree are necessary and appropriate in connection with the performance
of his duties under this Agreement, upon presentation to the Employer of an
itemized account of such expenses in such form as the Employer may reasonably
require. All reimbursements under this Section 3(e) shall be paid as soon as
practicable by the Employer; provided, however, that no payment shall be made
later than March 15 of the year immediately following the year in which the
expense was incurred.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during Executive's term of employment under this Agreement, the provisions of
this section shall apply; provided, however, that benefits shall be provided
either under Section 4 or Section 5 (related to a Change in Control), but not
both, such that to the extent the Executive has received payments under one of
those Sections, the Executive shall not receive payments under the other
Section. As used in this Agreement, an "Event of Termination" shall mean and
include any one or more of the following:
(i) the termination by the Employer of Executive's full-time
employment hereunder for any reason other than a Change in Control, as defined
in Section 5 hereof, a Termination for Cause, as defined in Section 8 hereof, or
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a termination upon Retirement as defined in Section 7 hereof, or a termination
for Disability as set forth in Section 6 hereof; and
(ii) Executive's resignation from the Employer's employ upon any of
the following (which shall be treated as termination of employment for "Good
Reason"), unless consented to by Executive:
(A) failure to appoint Executive to the Executive Position set
forth in Section 1 above, or a material change in Executive's function, duties,
or responsibilities, which change would cause Executive's position to become one
of lesser responsibility, importance, or scope from the position and
responsibilities described in Section 1 above, to which Executive has not agreed
in writing (and any such material change shall be deemed a continuing breach of
this Agreement);
(B) a relocation of Executive's principal place of employment to
a location that is more than 50 miles from the location of the Employer's
principal executive offices as of the date of this Agreement;
(C) a material reduction in the benefits and perquisites,
including Base Salary, to Executive from those being provided as of the
Effective Date (except for any reduction that is part of a reduction in pay or
benefits that is generally applicable to officers or employees);
(D) a liquidation or dissolution of the Company or the Bank other
than liquidations or dissolutions that are caused by reorganizations that do not
affect the status of the Executive; or
(E) a material breach of this Agreement by the Company or the
Bank.
Upon the occurrence of any event described in clause (ii) above, Executive shall
have the right to elect to terminate his employment under this Agreement by
resignation within 90 days after the event giving rise to said right to elect,
which termination by Executive shall be an Event of Termination. The Employer
shall have at least 30 days to remedy an event set forth in clauses (ii)(A)
through (E) above; provided, however, that the Employer shall be entitled to
waive such period and make an immediate payment hereunder. If the Employer
remedies the condition within such 30 day cure period, then no Good Reason shall
be deemed to exist with respect to such event. If the Employer does not remedy
the event within such 30 day cure period, then the Executive may deliver a
Notice of Termination, as defined in Section 10(c), for Good Reason at any time
within 60 days following the expiration of such cure period.
No payments or benefits shall be due to Executive under this Agreement upon
the termination of Executive's employment except as provided in Section 4 or 5
hereof.
(b) Within 30 days following the occurrence of an Event of Termination, the
Employer shall pay Executive, or, in the event of his subsequent death, his
beneficiary or beneficiaries, or his estate, as the case may be, as severance
pay or liquidated damages, or both, a lump sum cash amount equal to three times
the sum of (i) the highest annual rate of Base Salary paid to Executive at any
time under the Agreement, plus (ii) the highest bonus paid to Executive with
respect to the three completed fiscal years prior to the Event of Termination.
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Such payments shall not be reduced in the event Executive obtains other
employment following termination of employment.
(c) Within 30 days following the occurrence of an Event of Termination, the
Employer shall pay Executive, or in the event of his subsequent death, his
beneficiary or beneficiaries, or his estate, as the case may be, a lump sum
equal to the excess, if any, of the present value of the benefit that Executive
would have been entitled to under the Employer's defined benefit pension plan if
Executive had continued working for the Employer for 36 months after the
effective date of such Event of Termination, over the present value of the
benefits to which Executive was actually entitled as of the effective date of
such Event of Termination.
(d) Upon the occurrence of an Event of Termination, the Employer will
provide at the Employer's expense, life insurance and non-taxable medical and
dental coverage substantially comparable, as reasonably or customarily
available, to the coverage maintained by the Employer for Executive prior to his
termination, except to the extent such coverage may be changed in its
application to all Employer employees. Such coverage shall cease 36 months
following the Event of Termination. In the alternative, the Employer may elect
to pay to Executive a cash amount equal to Executive's cost of obtaining such
benefits on his own, adjusted for any federal or state income taxes Executive
has to pay on the cash amount within 30 days following the occurrence of an
Event of Termination.
(e) Notwithstanding the foregoing, in the event the Executive is a
Specified Employee (as defined herein), solely to the extent necessary to avoid
penalties under Code Section 409A, payment of the Executive's benefit pursuant
to Sections 4(b), 4(c) and 4(d), if applicable, shall be made to the Executive
on the first day of the seventh month following the Executive's Event of
Termination. "Specified Employee" shall be interpreted to comply with Code
Section 409A and shall mean a key employee within the meaning of Code Section
416(i) (without regard to paragraph 5 thereof), but an individual shall be a
"Specified Employee" only if the Company, the Bank, or any affiliate is a
publicly traded company.
(f) For purposes of Section 4, Event of Termination shall be construed to
require a "Separation from Service" as defined in Code Section 409A and the
Treasury Regulations promulgated thereunder, such that the Employer and
Executive reasonably anticipate that the level of bona fide services Executive
would perform after termination would permanently decrease to a level that is
less than 50% of the average level of bona fide services performed (whether as
an employee or an independent contractor) over the immediately preceding
36-month period.
5. CHANGE IN CONTROL.
(a) Any payment made under this Section 5 is in lieu of any payments that
may otherwise be owed to the Executive under Section 4, such that the Executive
shall either receive payments under Section 4 or under Section 5, but not under
both Sections.
(b) Except for payments that are subject to Code Section 409A, for purposes
of this Agreement, the term "Change in Control" shall mean:
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(i) a change in control of a nature that would be required to be
reported in response to Item 5.01(a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); or
(ii) a change in control of the Bank or the Company within the meaning
of the Home Owners Loan Act, as amended ("HOLA"), and applicable rules and
regulations promulgated thereunder, as in effect at the time of the Change in
Control; or
(iii) any of the following events, upon which a Change in Control
shall be deemed to have occurred:
(A) any "person" (as the term is used in Sections 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
Company representing 25% or more of the combined voting power of Company's
outstanding securities except for any securities purchased by the Bank's
employee stock ownership plan or trust; or
(B) individuals who constitute the Board on the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the date
hereof whose election was approved by a vote of at least three-quarters of the
directors comprising the Incumbent Board, or whose nomination for election by
the Company's stockholders was approved by the same Nominating Committee serving
under an Incumbent Board, shall be, for purposes of this subsection (B),
considered as though he were a member of the Incumbent Board; or
(C) a sale of all or substantially all the assets of the Bank or
the Company, or a plan of reorganization, merger, consolidation, or similar
transaction occurs in which the security holders of the Company immediately
prior to the consummation of the transaction do not own at least 50.1% of the
securities of the surviving entity to be outstanding upon consummation of the
transaction; or
(D) a proxy statement is issued soliciting proxies from
stockholders of the Company by someone other than the current management of the
Company, seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Company or similar transaction with one or more
corporations as a result of which the outstanding shares of the class of
securities then subject to the plan are to be exchanged for or converted into
cash or property or securities not issued by the Company; or
(E) a tender offer is made for 25% or more of the voting
securities of the Company and the shareholders owning beneficially or of record
25% or more of the outstanding securities of the Company have tendered or
offered to sell their shares pursuant to such tender offer and such tendered
shares have been accepted by the tender offeror.
(c) With respect to any payments hereunder that are subject to Code Section
409A, "Change in Control" shall mean (i) a change in the ownership of the Bank
or the Company, (ii) a change in the effective control of the Bank or Company,
or (iii) a change in the ownership of a substantial portion of the assets of the
Bank or Company, as described below.
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(i) A change in ownership occurs on the date that any one person, or
more than one person acting as a group (as defined in Final Treasury Regulations
section 1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the Bank or
Company that, together with stock held by such person or group, constitutes more
than 50% of the total fair market value or total voting power of the stock of
such corporation.
(ii) A change in the effective control of the Bank or Company occurs
on the date that either (i) any one person, or more than one person acting as a
group (as defined in Final Treasury Regulations section 1.409A-3(i)(5)(vi)(D))
acquires (or has acquired during the 12-month period ending on the date of the
most recent acquisition by such person or persons) ownership of stock of the
Bank or Company possessing 30% or more of the total voting power of the stock of
the Bank or Company, or (ii) a majority of the members of the Bank's or
Company's board of directors is replaced during any 12-month period by directors
whose appointment or election is not endorsed by a majority of the members of
the Bank's or Company's board of directors prior to the date of the appointment
or election, provided that this subsection 5(c)(ii) is inapplicable where a
majority shareholder of the Bank or Company is another corporation.
(iii) A change in a substantial portion of the Bank's or Company's
assets occurs on the date that any one person or more than one person acting as
a group (as defined in Final Treasury Regulations section
1.409A-3(i)(5)(vii)(C)) acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or persons)
assets from the Bank or Company that have a total gross fair market value equal
to or more than 40% of the total gross fair market value of (i) all of the
assets of the Bank or Company, or (ii) the value of the assets being disposed
of, either of which is determined without regard to any liabilities associated
with such assets. For all purposes of this subsection 5(c), the definition of
Change in Control shall be construed to be consistent with the requirements of
Final Treasury Regulations section 1.409A-3(i)(5), except to the extent that
such final regulations are superseded by subsequent guidance.
(d) Within 30 days following the effective date of a Change in Control,
Executive, or, in the event of his death following a Change in Control, his
beneficiary or beneficiaries, or his estate, as the case may be, shall receive
as severance pay or liquidated damages, or both, a lump sum payment equal to
three times the sum of (i) Executive's highest annual rate of Base Salary plus
(ii) the highest rate of bonus awarded to Executive during the prior three
years.
(e) Within 30 days following the termination of the Executive's employment
(other than for Cause) following a Change in Control, the Employer shall pay
Executive, or in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, a lump sum equal to the
excess, if any, of the present value of the benefit that Executive would have
been entitled to under the Employer's defined benefit pension plan if Executive
had continued working for the Employer for thirty-six (36) months after the
effective date of such termination of employment, over the present value of the
benefits to which Executive was actually entitled as of the effective date of
such termination of employment.
(f) Upon the termination of the Executive's employment (other than for
Cause) following a Change in Control, the Employer will provide at the
Employer's expense, life insurance and non-taxable medical and dental coverage
substantially comparable, as reasonably or customarily available, to the
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coverage maintained by the Employer for Executive prior to his termination,
except to the extent such coverage may be changed in its application to all
Employer employees. Such coverage shall cease thirty-six (36) months following
the Executive's termination of employment.
(g) Notwithstanding the preceding paragraphs of this Section, in the event
that the aggregate payments or benefits to be made or afforded to Executive in
the event of a Change in Control would be deemed to include an "excess parachute
payment" under Section 280G of the Code or any successor thereto, then at the
election of Executive, (i) such payments or benefits shall be payable or
provided to Executive over the minimum period necessary to reduce the present
value of such payments or benefits to an amount which is one dollar ($1.00) less
than three times Executive's "base amount" under Section 280G of the Code or
(ii) the payments or benefits to be provided under this Section 5 shall be
reduced to the extent necessary to avoid treatment as an excess parachute
payment with the allocation of the reduction among such payments and benefits to
be determined by Executive. Notwithstanding the foregoing, in the event if it is
determined that such election by the Executive shall be in violation of Code
Section 409A, then the cash severance payable pursuant to Section 5 hereof shall
be reduced by the minimum amount necessary to result in no portion of the
payments and benefits payable by the Employer under Section 5 being
non-deductible pursuant to Code Section 280G and subject to excise tax imposed
under Code Section 4999.
(h) Notwithstanding the foregoing, in the event the Executive is a
Specified Employee, solely to the extent necessary to avoid penalties under Code
Section 409A, payment of the Executive's benefit pursuant to Sections 5(e) and
5(f) if applicable, shall be made to the Executive on the first day of the
seventh month following the Executive's termination of employment following a
Change in Control.
(i) For purposes of this Section 5, termination of employment shall be
construed to require a "Separation from Service" as defined in Code Section 409A
and the Treasury Regulations promulgated thereunder, such that the Employer and
Executive reasonably anticipate that the level of bona fide services Executive
would perform after termination would permanently decrease to a level that is
less than 50% of the average level of bona fide services performed (whether as
an employee or an independent contractor) over the immediately preceding
36-month period.
6. TERMINATION FOR DISABILITY OR DEATH.
(a) Termination of Executive's employment based on "Disability" shall be
construed to comply with Code section 409A and shall be deemed to have occurred
if (i) the Executive 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 last for a continuous period of not less than 12
months; (ii) by reason of any medically determinable physical or mental
impairment which can be expected to result in death, or last for a continuous
period of not less than 12 months, the Executive is receiving income replacement
benefits for a period of not less than three months under an accident and health
plan covering employees of the Employer; or (iii) the Executive is determined to
be totally disabled by the Social Security Administration. The provisions of
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paragraph 6(b) and (c) shall apply upon the termination of the Executive's
employment for Disability.
(b) The Executive shall be entitled to receive benefits under any short or
long term disability plan maintained by the Employer. To the extent such
benefits are less than the Executive's Base Salary, the Employer will pay
Executive an amount equal to the difference between such disability plan
benefits and the amount of Executive's Base Salary for the longer of (i) the
remaining term of the Agreement or (ii) one year following his termination of
employment due to Disability. Any payments required hereunder shall be payable
in monthly installments and shall commence within 30 days following the date on
which Executive is determined to be Disabled.
(c) The Employer will cause to be continued life insurance and non-taxable
medical and dental coverage substantially comparable, as reasonable or
customarily available, to the coverage maintained by the Employer for Executive
prior to his termination for Disability, except to the extent such coverage may
be changed in its application to all Employer employees or not available on an
individual basis to an employee terminated for Disability. This coverage shall
cease upon the earlier of (i) the date Executive returns to the full-time
employment of the Employer; (ii) Executive's full-time employment by another
employer; (iii) Executive attaining the age of 65; or (iv) Executive's death.
(d) In the event of Executive's death during the term of the Agreement, his
estate, legal representatives or named beneficiaries (as directed by executive
in writing) shall be paid Executive's Base Salary as defined in paragraph 3(a)
at the rate in effect at the time of Executive's death for a period of one (1)
year from the date of Executive's death, and the Employer will continue to
provide non-taxable medical, dental and other insurance benefits normally
provided for Executive's family (in accordance with its customary co-pay
percentages) for one (1) year after Executive's death. Such payments are in
addition to any other life insurance benefits that the Executive's beneficiaries
may be entitled to receive under any employee benefit plan maintained by the
Employer for the benefit of the Executive, including, but not limited to, the
Employer's tax-qualified retirement plans and the Executive Salary Continuation
Agreement (SERP).
7. TERMINATION UPON RETIREMENT.
Termination of Executive's employment based on "Retirement" shall mean
termination of Executive's employment at age 65 or in accordance with any
retirement policy established by the Board with Executive's consent with respect
to him. Upon termination of Executive based on Retirement, no amounts or
benefits shall be due Executive under this Agreement, and Executive shall be
entitled to all benefits under any retirement plan of the Employer and other
plans to which Executive is a party.
8. TERMINATION FOR CAUSE.
(a) The Employer may terminate the Executive's employment at any time, but
any termination other than Termination for Cause, as defined herein, shall not
prejudice the Executive's right to compensation or other benefits under the
Agreement. The Executive shall have no right to receive compensation or other
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benefits for any period after Termination for Cause. Termination for Cause shall
include termination because of the Executive's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, material breach of the Employer's Code of Ethics, material violation of
the Xxxxxxxx-Xxxxx requirements for officers of public companies that in the
reasonable opinion of the Board will likely cause substantial financial harm or
substantial injury to the reputation of the Employer, willfully engaging in
actions that in the reasonable opinion of the Board will likely cause
substantial financial harm or substantial injury to the business reputation of
the Employer, intentional failure to perform stated duties, willful violation of
any law, rule or regulation (other than routine traffic violations or similar
offenses) or final cease-and-desist order, or material breach of any provision
of the Agreement.
(b) For purposes of this Section 8, no act or failure to act, on the part
of the Executive, shall be considered "willful" unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Employer. Any
act, or failure to act, based upon the direction of the Board or based upon the
advice of counsel for the Employer shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Employer.
9. RESIGNATION FROM BOARDS OF DIRECTORS
In the event of Executive's termination of employment for any reason,
Executive's service as a director of the Bank, the Company and any affiliate
shall immediately terminate. This Section of the Agreement shall constitute a
resignation notice for such purposes.
10. NOTICE.
(a) Any purported termination by the Employer for Cause shall be
communicated by Notice of Termination to Executive. If, within 30 days after any
Notice of Termination for Cause is given, Executive notifies the Employer that a
dispute exists concerning the termination, the parties shall promptly proceed to
arbitration, as provided in Section 20 below. Notwithstanding the pendency of
any such dispute, the Employer shall discontinue paying Executive's compensation
until the dispute is finally resolved in accordance with this Agreement. If it
is determined that Executive is entitled to compensation and benefits under
Sections 4 or 5 of this Agreement, the payment of such compensation and benefits
by the Employer shall commence immediately following the date of resolution by
arbitration, with interest due Executive on the cash amount that would have been
paid pending arbitration (at the prime rate as published in The Wall Street
Journal from time to time).
(b) Any other purported termination by the Employer or by Executive shall
be communicated by a Notice of Termination to the other party. If, within 30
days after any Notice of Termination is given, the party receiving such Notice
of Termination notifies the other party that a dispute exists concerning the
termination, the parties shall promptly proceed to arbitration as provided in
Section 20 below. Notwithstanding the pendency of any such dispute, the Employer
shall continue to pay Executive his Base Salary, and other compensation and
benefits in effect when the notice giving rise to the dispute was given (except
as to termination of Executive for Cause); provided, however, that such payments
and benefits shall not continue beyond the date that is 36 months from the date
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the Notice of Termination is given. In the event the voluntary termination by
Executive of his employment is disputed by the Employer, and if it is determined
in arbitration that Executive is not entitled to termination benefits pursuant
to this Agreement, he shall return all cash payments made to him pending
resolution by arbitration, with interest thereon at the prime rate as published
in The Wall Street Journal from time to time if it is determined in arbitration
that Executive's voluntary termination of employment was not taken in good faith
and not in the reasonable belief that grounds existed for his voluntary
termination. If it is determined that the Executive is entitled to receive
severance benefits under this Agreement, then any continuation of Base Salary
and other compensation and benefits made to the Executive under this Section 10
shall offset the amount of any severance benefits that are due to the Executive
under this Agreement.
(c) For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated and "Date of Termination" shall mean
the date of the Notice of Termination.
11. POST-TERMINATION OBLIGATIONS.
(a) The Executive hereby covenants and agrees that, for a period of one
year following his termination of employment with the Employer, he shall not,
without the written consent of the Employer, either directly or indirectly:
(i) solicit, offer employment to, or take any other action intended
(or that a reasonable person acting in like circumstances would expect) to have
the effect of causing any officer or employee of the Bank, the Company or any of
their respective subsidiaries or affiliates to terminate his or her employment
and accept employment or become affiliated with, or provide services for
compensation in any capacity whatsoever to, any business whatsoever that
competes with the business of the Bank or the Company or any of their direct or
indirect subsidiaries or affiliates or has headquarters or offices within 50
miles of the locations in which the Bank or the Company has business operations
or has filed an application for regulatory approval to establish an office;
(ii) become an officer, employee, consultant, director, independent
contractor, agent, sole proprietor, joint venturer, greater than 5% equity-owner
or stockholder, partner or trustee of any savings bank, savings and loan
association, savings and loan holding company, credit union, bank or bank
holding company, insurance company or agency, any mortgage or loan broker or any
other entity competing with the Employer or its affiliates in the same
geographic locations where the Employer or its affiliates has material business
interests; provided, however, that this restriction shall not apply if the
Executive's employment is terminated following a Change in Control; or
(iii) solicit, provide any information, advice or recommendation or
take any other action intended (or that a reasonable person acting in like
circumstances would expect) to have the effect of causing any customer of the
Bank or the Company to terminate an existing business or commercial relationship
with the Bank or the Company.
11
(b) Executive shall, upon reasonable notice, furnish such information and
assistance to the Bank and/or the Company, as may reasonably be required by the
Bank and/or the Company, in connection with any litigation in which it or any of
its subsidiaries or affiliates is, or may become, a party; provided, however,
that Executive shall not be required to provide information or assistance with
respect to any litigation between the Executive and the Bank, the Company or any
of its subsidiaries or affiliates.
(c) All payments and benefits to the Executive under this Agreement shall
be subject to the Executive's compliance with this Section. The parties hereto,
recognizing that irreparable injury will result to the Employer, its business
and property in the event of the Executive's breach of this Section 11, agree
that, in the event of any such breach by the Executive, the Employer will be
entitled, in addition to any other remedies and damages available, to an
injunction to restrain the violation hereof by the Executive and all persons
acting for or with the Executive. The Executive represents and admits that the
Executive's experience and capabilities are such that the Executive can obtain
employment in a business engaged in other lines and/or of a different nature
than the Employer, and that the enforcement of a remedy by way of injunction
will not prevent the Executive from earning a livelihood. Nothing herein will be
construed as prohibiting the Employer and the Company from pursuing any other
remedies available to them for such breach or threatened breach, including the
recovery of damages from the Executive.
12. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Bank. The Company, however, guarantees
payment and provision of all amounts and benefits due hereunder to Executive,
and if such amounts and benefits due from the Bank are not timely paid or
provided by the Bank, such amounts and benefits shall be paid or provided by the
Company.
13. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Employer or any
predecessor of the Employer and Executive, except that this Agreement shall not
affect or operate to reduce any benefit or compensation inuring to Executive of
a kind elsewhere provided. No provision of this Agreement shall be interpreted
to mean that Executive is subject to receiving fewer benefits than those
available to him without reference to this Agreement.
14. NO ATTACHMENT; BINDING ON SUCCESSORS.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Employer and their respective successors and assigns.
12
15. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
16. REQUIRED PROVISIONS.
(a) The Employer may terminate Executive's employment at any time, but any
termination by the Employer's Board other than Termination for Cause as defined
in Section 8 hereof shall not prejudice Executive's right to compensation or
other benefits under this Agreement. Executive shall have no right to receive
compensation or other benefits for any period after Termination for Cause.
(b) If Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the Employer's affairs by a notice served
under Section 8(e)(3) [12 U.S.C. ss.1818(e)(3)] or 8(g)(1) [12 U.S.C.
ss.1818(g)(1)] of the Federal Deposit Insurance Act, the Employer's 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
Employer may in its discretion (i) pay Executive all or part of the compensation
withheld while its Agreement obligations were suspended and (ii) reinstate (in
whole or in part) any of its obligations which were suspended.
(c) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Employer's affairs by an order issued under
Section 8(e)(4) [12 U.S.C. ss.1818(e)(4)] or 8(g)(1) [12 U.S.C. ss.1818(g)(1)]
of the Federal Deposit Insurance Act, all obligations of the Employer under this
Agreement shall terminate as of the effective date of the order, but vested
rights of the contracting parties shall not be affected.
(d) If the Employer is in default as defined in Section 3(x)(1) [12 U.S.C.
ss.1813(x)(1)] of the Federal Deposit Insurance Act, all obligations of the
Employer under this Agreement shall terminate as of the date of default, but
this paragraph shall not affect any vested rights of the contracting parties.
(e) All obligations under this Agreement shall be terminated, except to the
extent determined that continuation of the Agreement is necessary for the
continued operation of the Employer, (i) by the Director of the OTS or his or
her designee, at the time the FDIC enters into an agreement to provide
assistance to or on behalf of the Employer under the authority contained in
Section 13(c) [12 U.S.C. ss.1823(c)] of the Federal Deposit Insurance Act; or
(ii) by the Director or his or her designee at the time the Director or his or
her designee approves a supervisory merger to resolve problems related to
operation of the Employer or when the Employer is determined by the Director to
13
be in an unsafe or unsound condition. Any rights of the parties that have
already vested, however, shall not be affected by such action.
(f) Notwithstanding anything herein contained to the contrary, any payments
to Executive by the Company, whether pursuant to this Agreement or otherwise,
are subject to and conditioned upon their compliance with Section 18(k) of the
Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations
promulgated thereunder in 12 C.F.R. Part 359.
17. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
18. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
19. GOVERNING LAW.
This Agreement shall be governed by the laws of the Commonwealth of
Pennsylvania but only to the extent not superseded by federal law.
20. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the Executive within
twenty-five miles of Stroudsburg, Pennsylvania in accordance with the rules of
the American Arbitration Association then in effect. Judgment may be entered on
the arbitrator's award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of his right to be paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
21. INDEMNIFICATION.
(a) The Executive shall be provided with coverage under a standard
directors' and officers' liability insurance policy, and shall be indemnified
for the term of the Agreement and for a period of six years thereafter to the
fullest extent permitted under applicable law against all expenses and
liabilities reasonably incurred by him in connection with or arising out of any
action, suit or proceeding in which he may be involved by reason of his having
been a director or officer of the Employer or any affiliate (whether or not he
continues to be a director or officer at the time of incurring such expenses or
liabilities), such expenses and liabilities to include, but not be limited to,
judgments, court costs and attorneys' fees and the cost of reasonable
settlements (such settlements must be approved by the Board), provided, however,
the Executive shall not be indemnified or reimbursed for legal expenses or
14
liabilities incurred in connection with an action, suit or proceeding arising
from any illegal or fraudulent act committed by Executive. Any such
indemnification shall be made consistent with Section 545.121 of the OTS
Regulations and Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C.
ss.1828(k), and the regulations issued thereunder in 12 C.F.R. Part 359.
(b) Any indemnification by the Employer shall be subject to compliance with
any applicable regulations of the OTS.
22. 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 Company: ESSA Bancorp, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
To the Bank: ESSA Bank & Trust
000 Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
To Executive: Xxxx X. Xxxxx
0000 Xxxxxx Xxxxxxxx Xxxx
Xxxxxxxxxxx XX 00000
15
SIGNATURES
IN WITNESS WHEREOF, the Employer has caused this Agreement to be executed
by their duly authorized representatives, and Executive has signed this
Agreement, on the date first above written.
ESSA BANCORP, INC.
9/30/2008 /s/ Xxxx X. Xxxxxx
------------------------------- By: -----------------------------
Date Xxxx X. Xxxxxx,
Chairman of the Board
ESSA BANK & TRUST
9/30/2008 /s/ Xxxx X. Xxxxxx
------------------------------- By:------------------------------
Date Xxxx X. Xxxxxx,
Chairman of the Board
EXECUTIVE:
9/30/2008 /s/ Xxxx X. Xxxxx
------------------------------ ---------------------------------
Date Xxxx X. Xxxxx
