Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT, is entered into as of February 28, 2011 by and between EUREKA
FINANCIAL CORP., a Maryland corporation (the “Corporation”) and EDWARD F.
SESERKO (the “Executive”).
WITNESSETH
WHEREAS, the Executive serves in positions of substantial responsibility with
the Corporation; and
WHEREAS, the Corporation of the Executive wishes to set forth the terms of the
Executive’s continued employment in these positions; and
WHEREAS, the Executive is willing and desires to serve in these positions with
the Corporation.
NOW THEREFORE, in consideration of the premises and the mutual agreements herein
contained, and other good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree as follows:
1. Employment. The Corporation hereby employs the Executive in the capacity of
President and Chief Executive Officer. The Executive hereby accepts said
employment and agrees to render administrative and management services to the
Corporation 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 Corporation. The Executive’s other duties shall be such as
the Board of Directors for the Corporation (the “Board of Directors” or “Board”)
may from time to time reasonably direct, including normal duties as an officer
of the Corporation.
2. Term of Employment. The initial term of employment of the Executive under
this Agreement shall be for the period commencing on February 28, 2011 (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 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 of Directors, and that the Term
shall be extended. References in this Agreement 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 Corporation shall compensate and pay the Executive during
the Term of this Agreement a base salary at the rate of $137,354 per annum
(“Base Salary”), payable in accordance with the normal payroll practices of the
Corporation; provided, that the rate of 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.

 

 

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(b) Discretionary Bonus. The Executive shall be entitled to participate in an
equitable manner with all other senior management employees of the Corporation
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 discretionary bonuses when and as declared
by the Board of Directors.
(c) Participation in Benefit and Retirement Plans. The Executive shall be
entitled to participate in and receive the benefits of any plan of the
Corporation 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 Corporation, to the extent commensurate with his then duties
and responsibilities, as fixed by the Board of Directors.
(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 Corporation 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, the
Executive’s dependent family shall be eligible to participate in medical and
dental insurance plans sponsored by the Corporation with the cost of such
premiums paid by the Corporation.
(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 of Directors for senior management employees of the
Corporation. The Executive shall not be entitled to receive any additional
compensation from the Corporation 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 Corporation 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 Corporation, including, but not by
way of limitation, automobile and traveling expenses, and all reasonable
entertainment expenses, subject to reasonable documentation and other
limitations as may be established by the Board of Directors of the Corporation.
If the expenses are paid in the first instance by the Executive, the Corporation
shall reimburse the Executive for those expenses.
(g) Changes in Benefits. The Corporation shall not make any changes in 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 the
change occurs pursuant to a legal requirement or a program applicable to all
executive officers of the Corporation 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 Corporation. Nothing paid to
the 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
the Executive pursuant to Section 3(a) hereof.

 

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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 Eureka Bank (the
“Bank”) or the Corporation.
(b) Nothing contained in this Section 4 shall be deemed to prevent or limit the
right of the Executive to invest in the capital stock or other securities of any
business dissimilar from that of the Corporation, 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 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 the 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 of Directors may within its sole discretion, acting in good faith,
terminate the Executive for Just Cause and shall notify the Executive
accordingly. Termination for “Just Cause” shall include termination because of
the Executive’s personal dishonesty, 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.
(c) Except as provided pursuant to Section 9 hereof, in the event the
Executive’s employment under this Agreement is terminated by the Board of
Directors without Just Cause, the Corporation shall be obligated to continue to
pay the Executive the base salary provided pursuant to Section 3(a) herein, up
to the date of the end of the then remaining Term of this Agreement, but in no
event for a period of less than twelve months, and the cost of the Executive
obtaining all health, life, disability, and other benefits which the Executive
would be eligible to participate in through that date based upon the benefit
levels substantially equal to those being provided the Executive at the date of
termination of employment.

 

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(d) Notwithstanding the foregoing, in the event the Executive is a “Specified
Employee” (as defined herein) no payment shall be made to the 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 the
Executive’s annualized compensation based upon the annual rate of pay for
services provided to the Corporation for the calendar year preceding the year in
which the 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 Internal Revenue Code of 1986, as amended (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 the 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 Corporation 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
Corporation 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 termination.
7. Regulatory Exclusions. 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, the 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. The benefits described 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 the Bank or
the Corporation. Thereafter, the Executive shall be eligible to receive benefits
provided by the Corporation under the provisions of disability insurance
coverage in effect for Corporation 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 resumption of his 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.

 

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9. Change in Control.
(a) Notwithstanding any provision herein to the contrary, in the event of the
involuntary termination of the Executive’s employment during the term of this
Agreement following any Change in Control of the Bank or the Corporation, or
within 24 months thereafter of the Change in Control, absent Just Cause, the
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 Code and the
regulations promulgated thereunder. This amount shall be paid in equal
installments over a 36-month period commencing within ten (10) days of the
Executive’s termination of employment and shall be in lieu of any payments
otherwise due under Section 6 of this Agreement. Notwithstanding the forgoing,
all sums payable hereunder shall be reduced in a manner and to the extent so
that no payments made hereunder when aggregated with all other payments to be
made to the Executive by the Bank or the Corporation 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 a change in ownership, change in effective control or
change in ownership of a substantial portion of assets, as determined for
purposes of Section 409A of the Code and the regulations promulgated thereunder.
(b) Notwithstanding any other provision of this Agreement to the contrary, the
Executive may voluntarily terminate his employment during the term of this
Agreement following a Change in Control of the Bank or the Corporation, or
within twelve months following a Change in Control, and the 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 the 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 Corporation, the
Executive would be required to report to a person or persons other than the
Board of Directors of the Corporation; (iii) if the Corporation should fail to
maintain the Executive’s base compensation in effect as of the date of the
Change in Control and the existing employee benefits plans, including material
fringe benefit, stock option and retirement plans; (iv) if the Executive would
be assigned duties and responsibilities other than those normally associated
with his position as referenced at Section 1, herein; (v) if the Executive’s
responsibilities or authority have in any way been materially diminished or
reduced; or (vi) if the Executive would not be reelected to the Board of
Directors.
(c) The Executive must give notice to the Corporation 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 Corporation 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.

 

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(d) Notwithstanding the foregoing, in the event the Executive is a “Specified
Employee” (as defined herein) no payment shall be made to the 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 the
Executive’s annualized compensation based upon the annual rate of pay for
services provided to the Corporation for the calendar year preceding the year in
which the 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 the 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 Corporation is a publicly-traded institution or the subsidiary of a
publicly-traded holding company.
10. Withholding. All payments required to be made by the Corporation hereunder
to the Executive shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as the Corporation 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 Corporation which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Corporation.
(b) Since the Corporation 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
Corporation.
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 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 another 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
Corporation 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 Corporation hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Corporation.

 

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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 Corporation, 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
the issue. Further, the settlement of the dispute to be approved by the Board of
Directors of the Corporation may include a provision for the reimbursement by
the Corporation to the Executive for all reasonable costs and expenses,
including reasonable attorneys’ fees, arising from the dispute, proceedings or
actions, or the Board of Directors of the Corporation may authorize such
reimbursement of such reasonable costs and expenses by separate action upon a
written action and determination of the Board of Directors following settlement
of the dispute. The reimbursement shall be paid within ten (10) days of the
Executive furnishing to the Corporation evidence, which may be in the form,
among other things, of a canceled check or receipt, of any costs or expenses
incurred by the Executive.
18. Confidential Information. The Executive acknowledges that during his
employment he will learn and have access to confidential information regarding
the Bank, the Corporation 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
Confidential Information, unless or until the Bank or the Corporation consents
to such disclosure or use or such information becomes common knowledge in the
industry 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 Bank, the Corporation 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 Bank
and the Corporation. The Executive shall not otherwise knowingly act or conduct
himself (a) to the material detriment of the Bank or the Corporation, or its
subsidiaries, or affiliates, or (b) in a manner which is inimical or contrary to
the interests of the Bank or the Corporation. The Executive acknowledges and
agrees that the existence of this Agreement and its terms and conditions
constitutes Confidential Information of the Bank or the Corporation, and the
Executive agrees not to disclose the Agreement or its contents without the prior
written consent of the Corporation. Notwithstanding the foregoing, the
Corporation 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 18 may result in
the immediate termination of the Agreement within the sole discretion of the
Corporation, disciplinary action against the Executive taken by the Corporation,
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.

 

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19. Source of Payments. Notwithstanding any provision in this Agreement to the
contrary, to the extent payments and benefits, as provided for under this
Agreement, are paid or received by the Executive under an employment agreement
in effect between the Executive and the Bank, the payments and benefits paid by
the Bank will be subtracted from any amount or benefit due simultaneously to the
Executive under similar provisions of this Agreement. Payments will be allocated
in proportion to the level of activity and the time expended by the Executive on
activities related to the Corporation and the Bank, respectively, as determined
by the Corporation and the Bank.
20. 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.
[Signature page follows]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement on February 28,
2011.

                          EUREKA FINANCIAL CORP.    
 
               
ATTEST:
      By:   /s/ Robert J. Malone    
 
               
/s/ Barbara A. Rota
                                 
Secretary
               
 
               
 
      By:   /s/ Edward F. Seserko    
 
               
WITNESS:
          Edward F. Seserko    
/s/ Rose Ann Mathas
                                 

 

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