EXHIBIT 10.5
EMPLOYMENT
AGREEMENT
THIS AGREEMENT (“Agreement”), as
amended and restated, is made this 1st day of October, 2008 by and
between Fox Chase Bancorp, Inc. (the
“Company”), a corporation organized under the laws of
the United States of America, with its principal offices at 4390
Davisville Road, Hatboro, Pennsylvania 19040, Fox Chase Bank
(the “Bank”), a federally chartered stock savings bank
organized under the laws of the United States of America, with its
principal offices at 4390 Davisville Road, Hatboro, Pennsylvania
19040 and Keiron G. Lynch
(“Executive”).
WHEREAS , the parties originally entered into this
Agreement on October 1, 2006; and
WHEREAS , the Company and Bank desire to continue to
assure both entities of the services of Executive as Executive Vice
President and Chief Payments Officer for the period provided for in
this Agreement; and
WHEREAS , Executive and the Board of Directors of both
the Company and Bank desire to enter into an agreement setting
forth the terms and conditions of the employment of Executive and
the related rights and obligations of each of the
parties.
WHEREAS, Executive and the Boards of Directors of the
Company and the Bank desire to enter into an amended and restated
employment agreement setting forth the terms and conditions of the
continuing employment of 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 409A of the Code.
NOW, THEREFORE , in consideration of the promises and mutual
covenants herein contained, it is agreed as follows:
1.
Position and
Responsibilities.
(a)
During the period of
Executive’s employment under this Agreement, Executive agrees
to serve as Executive Vice President and Chief Payments Officer of
the Company and Bank. Executive shall have responsibility for
the general management and control of the business and affairs of
the Company and its subsidiaries, including the Bank, and shall
perform all duties and shall have all powers which are commonly
incident to the offices of Executive Vice President and Chief
Payments Officer or which, consistent with those offices, are
delegated to him by the Board of Directors of the Company and
Bank.
(b)
During the period of
Executive’s employment under this Agreement, except for
periods of absence occasioned by illness, vacation, and reasonable
leaves of absence, Executive shall devote substantially all of his
business time, attention, skill and efforts to the
faithful
performance of his duties under this Agreement,
including activities and services related to the organization,
operation and management of the Company and its subsidiaries,
including the Bank, as well as participation in community,
professional and civic organizations; provided, however, that,
Executive may serve, or continue to serve, on the boards of
directors of, and hold any other offices or positions in, companies
or organizations listed by Executive on his annual conflict of
interest reporting.
(c)
The Bank or the Company (as they
shall determine), will furnish Executive with the working
facilities and staff customary for executive officers with the
titles and duties set forth in this Agreement and as are necessary
for him to perform his duties. The location of such
facilities and staff shall be at the principal administrative
offices of the Bank.
2.
Term of
Employment.
(a)
The term of Executive’s
employment under this Agreement shall be deemed to have commenced
as of October 1, 2008 and shall continue for a period of
thirty-six (36) full calendar months thereafter.
(b)
The Compensation Committees of the
Boards of Directors of the Company and Bank will review the
Agreement and Executive’s performance annually for purposes
of determining whether to extend the Agreement for an additional
year. The Chairman of the Boards of Directors will give
notice to the Executive as soon as possible if the Boards have
decided not to extend the Agreement.
(c)
Notwithstanding anything contained
in this Agreement to the contrary, either Executive, the Company or
the Bank may terminate Executive’s employment at any time
during the term of this Agreement, subject to the terms and
conditions of this Agreement.
3.
Compensation and
Benefits.
(a)
The Bank or the Company (as they
shall determine), shall pay Executive as compensation a salary of
$171,810 per year (“Base Salary”). In addition to
the Base Salary provided in this Section 3(a), the Bank shall
also provide Executive with all such other benefits as are provided
uniformly to permanent full-time employees of the Bank. If
Executive’s Base Salary is increased, such increased Base
Salary shall then constitute the Base Salary for all purposes of
this Agreement. For purposes of Section 4(b) of
this Agreement, Base Salary shall be deemed to include the highest
cash bonus or similar cash incentive compensation paid to or
accrued on behalf of the Executive with respect to the three
(3) taxable years preceding his termination of
employment. For purposes of Section 5(c) of this
Agreement, Base Salary shall be defined as the amount reported in
Box 1 of the Executive’s Form W-2, plus amounts deferred
under the Bank’s 401(k) Plan and/or Section 125
Plan (if any), or deferred at the Executive’s election or on
behalf of the Executive to any non-qualified deferred compensation
plan of the Bank or the Company.
2
(b)
Executive shall be entitled to
participate in or receive benefits under any employee benefit plans
including but not limited to, retirement plans, profit-sharing
plans, or any other employee benefit plan or arrangement made
available by the Bank or Company 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. Executive shall be entitled to incentive
compensation and bonuses as provided in any plan of the Bank or
Company in which Executive is eligible to participate.
Nothing paid to the Executive under any such plan or arrangement
will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement. From time to
time, and as determined by the Boards of Directors of the Company
and the Bank, Executive may be entitled to participate in or
receive benefits under plans relating to stock options and
restricted stock awards that are made available by the Company or
the Bank at any time in the future during the term of this
Agreement, subject to and on a basis consistent with the terms,
conditions and overall administration of such plans.
(c)
The Company or Bank (as they shall
determine) shall also pay or reimburse Executive for all reasonable
travel and other reasonable expenses incurred in the performance of
Executive’s obligations under this Agreement and may provide
such additional compensation in such form and such amounts as the
Board of Directors of the Company or Bank may from time to time
determine.
(d)
Executive shall take vacation at a
time mutually agreed upon by the Company, Bank and Executive.
Executive shall receive his Base Salary and other benefits during
periods of vacation. Executive shall also be entitled to paid legal
holidays in accordance with the policies of the Bank.
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 4 shall apply. Unless Executive otherwise
agrees, 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 Company or Bank of
Executive’s full-time employment for any reason other than a
termination governed by Section 7 of this Agreement; or
(ii) Executive’s resignation from the Bank or Company,
upon, any (A) notice to Executive of non-renewal of the term
of this Agreement (B) failure to reappoint Executive as
Executive Vice President and Chief Payments Officer,
(C) material change in Executive’s functions, duties, or
responsibilities with the Bank, the Company or its subsidiaries,
which change would cause Executive’s position(s) to
become of lesser responsibility, importance, or scope from the
position and attributes thereof described in Section 1 of this
Agreement, (D) material reduction in the benefits and
perquisites provided to Executive from those being provided as of
the effective date of this Agreement, except to the extent such
coverage may be changed in its application to all Bank employees,
(E) liquidation or dissolution of the Company or the Bank, or
(F) breach of this Agreement by the Bank or Company.
Upon the occurrence of any event described in clauses (A), (B),
(C), (D), (E) or (F), above, Executive shall have the right to
terminate his employment under this Agreement by resignation upon
not less than sixty (60) days prior written notice given within six
(6) full calendar months after the event giving rise to
Executive’s right to elect to terminate his
employment.
3
(b)
Upon the occurrence of an Event of
Termination, on the Date of Termination, as defined in
Section 8, the Company and Bank (as they shall determine)
shall be obligated to pay Executive, or, in the event of his
subsequent death, his beneficiary or beneficiaries, or his estate,
as the case may be the value of the Executive’s base salary
for the remaining term of the Agreement plus the value of all
benefits he would have received during the remaining term of the
Agreement under any retirement programs (whether tax-qualified or
non-qualified) in which Executive participated prior to his
termination (with the amount of the benefits determined by
reference to the benefits received by the Executive or accrued on
his behalf under such programs during the twelve (12) months
preceding his termination). Executive shall receive this
payment in a single lump sum within ten (10) days of his
termination of employment. In addition, Executive and his
dependents will continue to participate in any benefit plans of the
Company or the Bank that provide health (including medical and
dental), or life insurance, or similar coverage upon terms no less
favorable than the most favorable terms provided to senior
executives of the Company and the Bank during the remaining term of
the Agreement. In the event that the Company and the Bank are
unable to provide such coverage by reason of Executive no longer
being an employee, the Company and the Bank shall provide Executive
with comparable coverage on an individual policy basis. In
the event the Bank or the Company is not in compliance with its
minimum capital requirements or if such payments pursuant to this
subsection (b) would cause the Company or Bank’s capital
to be reduced below its minimum regulatory capital requirements,
such payments shall be deferred until such time as either the
Company or the Bank or successor thereto is in capital
compliance. No payments under this
Section 4(b) shall be reduced in the event the Executive
obtains other employment following termination of
employment.
(c)
During the period commencing on the
effective date of Executive’s termination under
Section 4(a) of this Agreement and ending one
(1) year thereafter (the “Restricted Period”),
Executive shall not, without express prior written consent from the
Company or the Bank, directly or indirectly, own or hold any
proprietary interest in, or be employed by or receive remuneration
from, any corporation, partnership, sole proprietorship of other
entity (collectively, an “entity”) “engaged in
competition” (as defined below) with the Bank or any other
affiliates (“Competitor”). For purposes of the
preceding sentence, the term “proprietary interest”
means direct or indirect ownership of an equity interest in an
entity other than ownership of less than two percent (2%) of any
class of stock in a publicly-held entity. Further, an entity
shall be considered to be “engaged in competition” if
such entity is, or is a holding company for, or a subsidiary of an
entity which is engaged in the business of providing banking, trust
services, asset management advice, or similar financial services to
consumers, businesses, individuals or other entities; and the
entity, holding company or subsidiary maintains physical offices
for the transaction of such business or businesses in any city,
town or county in which the Executive’s normal business
office is located or the Bank has an office or has filed an
application for regulatory approval to establish an office, as
determined on the date of Executive’s termination of
employment.
(d)
During the Restricted Period,
Executive shall not, without express prior written consent of the
Bank or the Company, solicit or assist any other person in
soliciting for the account of any Competitor, any customer or
client of the Bank or any of its subsidiaries.
4
(e)
During the Restricted Period,
Executive shall not, without the express prior written consent of
the Bank, directly or indirectly, (i) solicit or assist any
third party in soliciting for employment any person employed by the
Bank or any of its subsidiaries at the time of the termination of
Executive’s employment (collectively,
“Employees”), (ii) employ, attempt to employ or
materially assist any third party in employing or attempting to
employ any Employee, or (iii) otherwise act on behalf of any
Competitor to interfere with the relationship between the Bank or
any of its affiliates and their respective Employees.
(f)
Executive acknowledges that the
restrictions contained in this Sections (c) through
(e) of this Section 4 are reasonable and necessary to
protect the legitimate interests of the Bank and the Company and
that any breach by Executive of any provision contained in Sections
(c) through (e) of this Section 4 will result in
irreparable injury to the Bank and Company for which a remedy at
law would be inadequate. Accordingly, Executive acknowledges
that the Bank and Company shall be entitled to temporary,
preliminary and permanent injunctive relief against Executive in
the event of any breach or threatened breach by Executive of
Sections (c) through (e) of this Section 4, in
addition to any other remedy that may be available to the Bank or
the Company whether at law or in equity. With respect to
Sections (c) through (e) of this Section 4 finally
determined by a court of competent jurisdiction to be
unenforceable, such court shall be authorized to reform this
Agreement or any provision hereof so that it is enforceable to the
maximum extent permitted by law. If the covenants of Sections
(c) through (e) above are determined to be wholly or
partially unenforceable in any jurisdiction, such determination
shall not be a bar to or in any way diminish the Bank’s or
the Company’s right to enforce such covenants in any other
jurisdiction and shall not bar or limit the enforceability of any
other provisions. The Bank and the Company shall
not be required to post any bond or other security in connection
with any proceeding to enforce Sections (c) through
(e) of this Section 4.
(g)
The parties to this Agreement intend
for the payments to satisfy the short-term deferral exception under
Section 409A of the Code or, in the case of health and welfare
benefits, not constitute deferred compensation (since such amounts
are not taxable to Executive). However, notwithstanding
anything to the contrary in this Agreement, to the extent payments
do not meet the short-term deferral exception of Section 409A
of the Code and, in the event Executive is a “Specified
Employee” (as defined herein) no payment shall be made to
Executive under this Agreement prior to the first day of the
seventh month following the Event of Termination 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 Company
for the calendar year preceding the year in which Executive has an
Event of Termination, 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
occurs the Event of Termination. 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
Section 5 thereof), but an individual shall be a
“Specified Employee” only if
5
the Company is a publicly-traded institution or
the subsidiary of a publicly-traded holding company.
5.
Change in
Control.
(a)
For purposes of this Agreement, a
Change in Control means any of the following events:
i.
Merger : The Bank or the Company merges into or
consolidates with another entity, or merges another entity into the
Bank or the Company, and as a result less than a majority of
th
