EMPLOYMENT AGREEMENT
Exhibit 10.5
THIS AGREEMENT, is hereby amended and restated in its entirety as of October 1, 2009 by
and between EUREKA BANK (the “Savings Bank”) and XXXX X. XXXXXX (the
“Executive”).
WITNESSETH
WHEREAS, the Savings Bank and Executive entered into an employment agreement as of
October 1, 1998; and
WHEREAS, the Savings Bank desires to continue to assure itself of the services of
Executive for the period provided for in this Agreement; and
WHEREAS, Executive and the Board of Directors of the Savings Bank desire to enter
into an amended and restated employment agreement setting forth the terms and conditions of the
continuing employment of the Executive and the related rights and obligations of each of the
parties and to bring the Agreement into compliance with Section 409A of the Internal Revenue Code
of 1986, as amended (the ‘Code’), and the regulations and guidance issued with respect to Section
409A of the Code;
NOW THEREFORE, in consideration of the premises and the mutual agreements herein
contained, the parties hereby agree as follows:
1. Employment. The Savings Bank hereby employs the Executive in the
capacity of Chief Financial Officer and Secretary. The Executive hereby accepts said employment and
agrees to render such administrative and management services to the Savings Bank and to any
to-be-formed parent holding company (“Parent”) as are currently rendered and as are customarily
performed by persons situated in a similar executive capacity. The Executive shall promote the
business of the Savings Bank and Parent. The Executive’s other duties shall be such as the Board of
Directors for the Savings Bank (the “Board of Directors” or “Board”) may from time to time
reasonably direct, including normal duties as an officer of the Savings Bank.
2. Term of Employment. The initial term of employment of Executive under
this Agreement shall be for the period commencing on October 1, 1998 (the “Effective Date”) and
ending thirty-six (36) months thereafter (the “Term”). Additionally, on, or before, each annual
anniversary date from the Effective Date, the Term of employment under this Agreement shall be
extended for up to an additional period beyond the then effective expiration date upon a
determination and resolution of the Board of Directors that the performance of the Executive has
met the requirements and standards of the Board, and that the Term of such Agreement shall be
extended. As of the date of the restatement of this Agreement the Executive’s term of employment
had been extended through October 1, 2012. References herein to the Term of this Agreement shall
refer both to the initial term and successive terms.
3. Compensation, Benefits and Expenses.
(a) Base Salary. The Savings Bank shall compensate and pay the Executive during the Term of
this Agreement a base salary at the rate of $95,400 per annum (“Base Salary”), payable in
accordance with the normal payroll practices of the Savings Bank; provided, that the rate of such
salary shall be reviewed by the Board of Directors not less often than annually, and the Executive
shall be entitled to receive increases at such percentages or in such amounts as determined by the
Board of Directors. The base salary may not be decreased without the Executive’s express written
consent.
(b) Discretionary Bonus. The Executive shall be entitled to participate in an equitable manner
with all other senior management employees of the Savings Bank in discretionary bonuses that may be
authorized and declared by the Board of Directors to its senior management executives from time to
time. No other compensation provided for in this Agreement shall be deemed a substitute for the
Executive’s right to participate in such discretionary bonuses when and as declared by the Board.
(c) Participation in Benefit and Retirement Plans. The Executive shall be entitled to
participate in and receive the benefits of any plan of the Savings Bank which may be or may become
applicable to senior management relating to pension or other retirement benefit plans,
profit-sharing, stock options or incentive plans, or other plans, benefits and privileges given to
employees and executives of the Savings Bank, to the extent commensurate with his then duties and
responsibilities, as fixed by the Board of Directors of the Savings Bank.
(d) Participation in Medical Plans and Insurance Policies. The Executive shall be entitled to
participate in and receive the benefits of any plan or policy of the Savings Bank which may be or
may become applicable to senior management relating to life insurance, short and long term
disability, medical, dental, eye-care, prescription drugs or medical reimbursement plans.
Additionally, Executive’s dependent family shall be eligible to participate in medical and dental
insurance plans sponsored by the Savings Bank or Parent with the cost of such premiums paid by the
Savings Bank.
(e) Vacations and Sick Leave. The Executive shall be entitled to paid annual vacation leave in
accordance with the policies as established from time to time by the Board of Directors, which
shall in no event be less than four weeks per annum. The Executive shall also be entitled to an
annual sick leave benefit as established by the Board for senior management employees of the
Savings Bank. The Executive shall not be entitled to receive any additional compensation from the
Savings Bank for failure to take a vacation or sick leave, nor shall he be able to accumulate
unused vacation or sick leave from one year to the next, except to the extent authorized by the
Board of Directors.
(f) Expenses. The Savings Bank shall reimburse the Executive or otherwise provide for or pay
for all reasonable expenses incurred by the Executive in furtherance of, or in connection with the
business of the Savings Bank, including, but not by way of limitation, automobile and traveling
expenses, and all reasonable entertainment expenses, subject to such reasonable documentation and
other limitations as may be established by the Board of Directors of
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the Savings Bank. If such expenses are paid in the first instance by the Executive, the Savings
Bank shall reimburse the Executive therefor.
(g) Changes in Benefits. The Savings Bank shall not make any changes in such plans, benefits
or privileges previously described in Section 3(c), (d) and (e) which would adversely affect the
Executive’s rights or benefits thereunder, unless such change occurs pursuant to a program
applicable to all executive officers of the Savings Bank and does not result in a proportionately
greater adverse change in the rights of, or benefits to, the Executive as compared with any other
executive officer of the Savings Bank. Nothing paid to Executive under any plan or arrangement
presently in effect or made available in the future shall be deemed to be in lieu of the salary
payable to Executive pursuant to Section 3(a) hereof.
4. Loyalty; Noncompetition.
(a) The Executive shall devote his full time and attention to the performance of his
employment under this Agreement. During the term of the Executive’s employment under this
Agreement, the Executive shall not engage in any business or activity contrary to the business
affairs or interests of the Savings Bank or Parent.
(b) Nothing contained in this Section 4 shall be deemed to prevent or limit the right of
Executive to invest in the capital stock or other securities of any business dissimilar from that
of the Savings Bank or Parent, or, solely as a passive or minority investor, in any business.
5. Standards. During the term of this Agreement, the Executive shall perform his
duties in accordance with such reasonable standards expected of executives with comparable
positions in comparable organizations and as may be established from time to time by the Board of
Directors.
6. Termination and Termination Pay. The Executive’s employment under this Agreement
shall be terminated upon any of the following occurrences:
(a) The death of the Executive during the term of this Agreement, in which event the
Executive’s estate shall be entitled to receive the compensation due the Executive through the last
day of the calendar month in which Executive’s death shall have occurred.
(b) The Board of Directors may terminate the Executive’s employment at any time, but any
termination by the Board of Directors other than termination for Just Cause, 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 benefits for any period after termination for Just
Cause. The Board may within its sole discretion, acting in good faith, terminate the Executive for
Just Cause and shall notify such Executive accordingly. Termination for “Just Cause” shall include
termination because of the Executive’s 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, or material breach of any provision of the Agreement.
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(c) Except as provided pursuant to Section 9 hereof, in the event Executive’s employment under
this Agreement is terminated by the Board of Directors without Just Cause, the Savings Bank shall
be obligated to continue to pay the Executive the salary provided pursuant to Section 3(a) herein,
up to the date of termination of the remaining Term of this Agreement, but in no event for a period
of less than twelve months, and the cost of Executive obtaining all health, life, disability, and
other benefits which the Executive would be eligible to participate in through such date based upon
the benefit levels substantially equal to those being provided Executive at the date of termination
of employment.
(d) Notwithstanding the foregoing, in the event Executive is a ‘Specified Employee’ (as
defined herein) no payment shall be made to Executive under sub-section 6(c) prior to the first day
of the seventh month following the Executive’s termination of employment in excess of the
‘permitted amount’ under Section 409A of the Code. For these purposes the ‘permitted amount’ shall
be an amount that does not exceed two times the lesser of: (A) the sum of Executive’s annualized
compensation based upon the annual rate of pay for services provided to the Savings Bank for the
calendar year preceding the year in which Executive terminates his employment, or (B) the maximum
amount that may be taken into account under a tax-qualified plan pursuant to Section 401(a)(17) of
the Code for the calendar year in which termination of employment occurs. The payment of the
‘permitted amount’ shall be made within sixty (60) days of the occurrence of the event of
termination. Any payment in excess of the permitted amount shall be made to Executive on the first
day of the seventh month following the event of termination. ‘Specified Employee’ shall be
interpreted to comply with Section 409A of the Code and shall mean a key employee within the
meaning of Section 416(i) of the Code (without regard to paragraph 5 thereof), but an individual
shall be a ‘Specified Employee’ only if the Savings Bank or Parent is a publicly-traded institution
or the subsidiary of a publicly-traded holding company.
(e) In the event the Executive voluntarily terminates his employment with the Bank during the
term of this Agreement, the Executive shall be entitled to receive only the compensation, vested
rights, and all employee benefits due up to the date of such termination.
7. Regulatory Exclusions.
(a) If the Executive is suspended and/or temporarily prohibited from participating in the
conduct of the Savings Bank’s affairs by a notice served under Section 8(e)(3) or (g)(1) of the
FDIA (12 X.X.X 0000(x)(0) and (g)(1)), the Savings Bank’s obligations under the Agreement shall be
suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in
the notice are dismissed, the Savings Bank may within its discretion (i) pay the Executive all or
part of the compensation withheld while its contract obligations were suspended and (ii) reinstate
(in whole or in part) any of its obligations which were suspended.
(b) If the Executive is removed and/or permanently prohibited from participating in the
conduct of the Savings Bank’s affairs by an order issued under Sections 8(e)(4) or 8(g)(1) of the
Federal Deposit Insurance Act (“FDIA”) (12 U.S.C. 1818(e)(4) and (g)(l)), all
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obligations of the Savings Bank under this Agreement shall terminate, as of the effective date of
the order, but the vested rights of the contracting parties shall not be affected.
(c) If the Savings Bank is in default (as defined in Section 3(x)(1) of FDIA) all obligations
under this Agreement shall terminate as of the date of default, but this paragraph shall not affect
any vested rights of the contracting parties.
(d) All obligations under this Agreement shall be terminated, except to the extent determined
that continuation of this Agreement is necessary for the continued operation of the Savings Bank:
(i) by the Director of the Office of Thrift Supervision (“Director of OTS”), or his or her
designee, at the time that the Federal Deposit Insurance Corporation (“FDIC”) enters into an
agreement to provide assistance to or on behalf of the Savings Bank under the authority contained
in Section 13(c) of FDIA; or (ii) by the Director of the OTS, or his or her designee, at the time
that the Director of the OTS, or his or her designee approves a supervisory merger to resolve
problems related to operation of the Savings Bank or when the Savings Bank is determined by the
Director of the OTS to be in an unsafe or unsound condition. Any rights of the parties that have
already vested, however, shall not be affected by such action.
(e) Notwithstanding anything herein to the contrary, any payments made to the Executive
pursuant to the Agreement, or otherwise, shall be subject to and conditioned upon compliance with
12 USC 1828(k) and FDIC regulation C.F.R. Part 359 Golden Parachute and Indemnification Payments.
8. Disability. If the Executive shall become disabled or incapacitated to the extent
that he is unable to perform his duties hereunder, by reason of medically determinable physical or
mental impairment, as determined by a doctor engaged by the Board of Directors, Executive shall
nevertheless continue to receive the compensation and benefits provided under the terms of this
Agreement as follows: 100% of such compensation and benefits for a period of 12 months, but not
exceeding the remaining term of the Agreement, and 65% thereafter for the remainder of the term of
the Agreement. Such benefits noted herein shall be reduced by any benefits otherwise provided to
the Executive during such period under the provisions of disability insurance coverage in effect
for Savings Bank employees. Thereafter, Executive shall be eligible to receive benefits provided by
the Savings Bank under the provisions of disability insurance coverage in effect for Savings Bank
employees. Upon returning to active full-time employment, the Executive’s full compensation as set
forth in this Agreement shall be reinstated as of the date of commencement of such activities. In
the event that the Executive returns to active employment on other than a full-time basis, then his
compensation (as set forth in Section 3(a) of this Agreement) shall be reduced in proportion to the
time spent in said employment, or as shall otherwise be agreed to by the parties.
9. Change in Control.
(a) Notwithstanding any provision herein to the contrary, in the event of the involuntary
termination of Executive’s employment during the term of this Agreement following any Change in
Control of the Savings Bank or Parent, or within 24 months thereafter of such Change in Control,
absent Just Cause, Executive shall be paid an amount equal to the product of 2.999 times the
Executive’s “base amount” as defined in Section 280G(b)(3) of the Internal
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Revenue Code of 1986, as amended (the “Code”) and regulations promulgated thereunder.
Said sum shall be paid in equal installments over a 36-month period commencing within ten (10) days
of the Executive’s termination of employment. Such payments shall be in lieu of any other future
payments which the Executive would be otherwise entitled to receive under Section 6 of this
Agreement. Notwithstanding the forgoing, all sums payable hereunder shall be reduced in such manner
and to such extent so that no such payments made hereunder when aggregated with all other payments
to be made to the Executive by the Savings Bank or the Parent shall be deemed an “excess parachute
payment” in accordance with Section 280G of the Code and be subject to the excise tax provided at
Section 4999(a) of the Code. The term “Change in Control” shall refer to (i) the control of voting
proxies whether related to stockholders or mutual members by any person, other than the Board of
Directors of the Savings Bank, to direct more than 25% of the outstanding votes of the Savings
Bank, the control of the election of a majority of the Savings Bank’s directors, or the exercise of
a controlling influence over the management or policies of the Savings Bank by any person or by
persons acting as a group within the meaning of Section B(d) of the Exchange Act, (ii) an event
whereby the OTS, FDIC or any other department, agency or quasi-agency of the federal government
cause or bring about, without the consent of the Savings Bank, a change in the corporate structure
or organization of the Savings Bank; (iii) an event whereby the OTS, FDIC or any other agency or
quasi-agency of the federal government cause or bring about, without the consent of the Savings
Bank, a taxation or involuntary distribution of retained earnings or proceeds from the sale of
securities to depositors, borrowers, any government agency or organization or civic or charitable
organization; or (iv) a merger or other business combination between the Savings Bank and another
corporate entity whereby the Savings Bank is not the surviving entity. In the event
that the Savings Bank shall convert in the future from mutual-to-stock form, the term “Change in
Control” shall also refer to: (i) the sale of all, or a material portion, of the assets of the
Savings Bank or the Parent; (ii) the merger or recapitalization of the Savings Bank or the Parent
whereby the Savings Bank or the Parent is not the surviving entity; (iii) a change in control of
the Savings Bank or the Parent, as otherwise defined or determined by the Office of Thrift
Supervision or regulations promulgated by it; or (iv) the acquisition, directly or indirectly, of
the beneficial ownership (within the meaning of that term as it is used in Section B(d) of the
Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder) of
twenty-five percent (25%) or more of the outstanding voting securities of the Savings Bank or the
Parent by any person, trust, entity or group. The term “person” means an individual other than the
Executive, or a corporation, partnership, trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of entity not specifically listed
herein.
(b) Notwithstanding any other provision of this Agreement to the contrary, Executive may
voluntarily terminate his employment during the term of this Agreement following a Change in
Control of the Savings Bank or Parent, or within 12 months following such Change in Control, and
Executive shall thereupon be entitled to receive the payment described in Section 9(a) of this
Agreement, upon the occurrence, or within 120 days thereafter, of any of the following events,
which have not been consented to in advance by the Executive in writing: (i) if Executive would be
required to move his personal residence or perform his principal executive functions more than
thirty-five (35) miles from the Executive’s primary office as of the signing of this Agreement;
(ii) if in the organizational structure of the Savings Bank, Executive would be required to report
to a person or persons other than the Board of Directors or the President of the Savings Bank; ;
(iii) if the Savings Bank should fail to maintain Executive’s base compensation in effect as of the
date of
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the Change in Control and the existing employee benefits plans, including material fringe
benefit, stock option and retirement plans; (iv) if Executive would be assigned duties and
responsibilities other than those normally associated with his position as referenced at Section 1,
herein; or (v) if Executive’s responsibilities or authority have in any way been materially
diminished or reduced.
(c) The Executive must give notice to the Savings Bank of the existence of one or more of the
events described in subsection (b) within sixty (60) days after the initial existence of the event,
and the Savings Bank or Parent shall have thirty (30) days thereafter to remedy the event. In
addition, the Executive’s voluntary termination because of the existence of one or more of the
events described in subsection (b) must occur within six (6) months after the initial existence of
the event.
(d) Notwithstanding the foregoing, in the event Executive is a ‘Specified Employee’ (as
defined herein) no payment shall be made to Executive under this Section 9 prior to the first day
of the seventh month following the Executive’s termination of employment in excess of the
‘permitted amount’ under Section 409A of the Code. For these purposes the ‘permitted amount’ shall
be an amount that does not exceed two times the lesser of: (A) the sum of Executive’s annualized
compensation based upon the annual rate of pay for services provided to the Savings Bank for the
calendar year preceding the year in which Executive terminates his employment, or (B) the maximum
amount that may be taken into account under a tax-qualified plan pursuant to Section 401(a)(17) of
the Code for the calendar year in which termination of employment occurs. The payment of the
‘permitted amount’ shall be made within sixty (60) days of the occurrence of the event of
termination. Any payment in excess of the permitted amount shall be made to Executive on the first
day of the seventh month following the event of termination. ‘Specified Employee’ shall be
interpreted to comply with Section 409A of the Code and shall mean a key employee within the
meaning of Section 416(i) of the Code (without regard to paragraph 5 thereof), but an individual
shall be a ‘Specified Employee’ only if the Savings Bank or Parent is a publicly-traded institution
or the subsidiary of a publicly-traded holding company.
10. Withholding. All payments required to be made by the Savings Bank hereunder to the
Executive shall be subject to the withholding of such amounts, if any, relating to tax and other
payroll deductions as the Savings Bank may reasonably determine should be withheld pursuant to any
applicable law or regulation.
11. Successors and Assigns.
(a) This Agreement shall inure to the benefit of and be binding upon any corporate or other
successor of the Savings Bank or Parent which shall acquire, directly or indirectly, by merger,
consolidation, purchase or otherwise, all or substantially all of the assets or stock of the
Savings Bank or Parent.
(b) Since the Savings Bank is contracting for the unique and personal skills of the Executive,
the Executive shall be precluded from assigning or delegating his rights or duties hereunder
without first obtaining the written consent of the Savings Bank.
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12. 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 Board of Directors
of the Savings Bank to sign on its 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.
13. 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.
14. Nature of Obligations. Nothing contained herein shall create or require the
Savings Bank 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 Savings Bank
hereunder, such right shall be no greater than the right of any unsecured general creditor of the
Savings Bank.
15. 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.
16. Severability. The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision of this Agreement shall not affect the validity or
enforceability of the other provisions of this Agreement, which shall remain in full force and
effect.
17. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration in accordance with the rules then
in effect of the district office of the American Arbitration Association (“AAA”) nearest to the
home office of the Savings Bank, and judgment upon the award rendered may be entered in any court
having jurisdiction thereof, except to the extent that the parties may otherwise reach a mutual
settlement of such issue. Further, the settlement of the dispute to be approved by the Board of the
Savings Bank may include a provision for the reimbursement by the Savings Bank to the Executive for
all reasonable costs and expenses, including reasonable attorneys’ fees, arising from such dispute,
proceedings or actions, or the Board of the Savings Bank or the Parent may authorize such
reimbursement of such reasonable costs and expenses by separate action upon a written action and
determination of the Board following settlement of the dispute. Such reimbursement shall be paid
within ten (l0) days of Executive furnishing to the Savings Bank or Parent evidence, which may be
in the form, among other things, of a canceled check or receipt, of any costs or expenses incurred
by Executive.
18. Confidential Information. The Executive acknowledges that during his or her
employment he or she will learn and have access to confidential information
regarding the Savings Bank and the Parent and its customers and businesses (“Confidential
Information”). The Executive agrees and covenants not to disclose or use for his or her own
benefit, or the benefit of any other person or entity, any such Confidential Information, unless or
until the Savings Bank or the Parent consents to such disclosure or use or such information becomes
common knowledge in the industry
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or is otherwise legally in the public domain. The Executive shall not knowingly
disclose or reveal to any unauthorized person any Confidential Information relating to the Savings
Bank, the Parent, or any subsidiaries or affiliates, or to any of the businesses operated by them,
and the Executive confirms that such information constitutes the exclusive property of the Savings
Bank and the Parent. The Executive shall not otherwise knowingly act or conduct himself (a) to the
material detriment of the Savings Bank or the Parent, or its subsidiaries, or affiliates, or (b) in
a manner which is inimical or contrary to the interests of the Savings Bank or the Parent.
Executive acknowledges and agrees that the existence of this Agreement and its terms and conditions
constitutes Confidential Information of the Savings Bank, and the Executive agrees not to disclose
the Agreement or its contents without the prior written consent of the Savings Bank.
Notwithstanding the foregoing, the Savings Bank reserves the right in its sole discretion to make
disclosure of this Agreement as it deems necessary or appropriate in compliance with its regulatory
reporting requirements. Notwithstanding anything herein to the contrary, failure by the Executive
to comply with the provisions of this Section may result in the immediate termination of the
Agreement within the sole discretion of the Savings Bank, disciplinary action against the Executive
taken by the Savings Bank, including but not limited to the termination of employment of the
Executive for breach of the Agreement and the provisions of this Section, and other remedies that
may be available in law or in equity.
19. Entire Agreement. This Agreement together with any understanding or modifications
thereof as agreed to in writing by the parties, shall constitute the entire agreement between the
parties hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement on October 1,2009.
| EUREKA BANK |
||||
| ATTEST: | By: | /s/ Xxxx Xxxxxx | ||
| Xxxx Xxxxxx | ||||
| /s/ Xxxxxxx X. Xxxx | ||||
| Secretary | ||||
| WITNESS: | By: | /s/ Xxxx X. Xxxxxx | ||
| Xxxx X. Xxxxxx | ||||
| /s/ Xxxxx Xxxxx | ||||
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