This AGREEMENT (“Agreement”) is made this 1st day of October, 2006, effective as of October 1, 2006, 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 James V. Schermerhorn (“Executive”).
WHEREAS , the Bank desires to continue to assure the services of Executive as Executive President and Chief Lending Officer of the Bank 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.
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 President and Chief Lending Officer of the Bank. Executive shall have responsibility for all aspects of commercial and consumer lending for the Bank and shall perform all duties and shall have all powers which are commonly incident to the offices of Executive President and Chief Lending Officer or which, consistent with those offices, are delegated to him by the President and Chief Executive Officer 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 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, 2006 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 shall pay Executive as compensation a salary of $175,000 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 Sections 4(b) and 5(c) 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.
(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. For purposes of the 2006 fiscal year, Executive shall have a bonus opportunity of up to $40,000. The actual amount of the bonus will be determined by the Board of Directors of the Bank in its sole discretion based on such factors relating to the performance of Executive, the Bank and the Company. 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 Bank 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 President and Chief Lending 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.
(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 Executive’s Base Salary for the remaining term of the Agreement paid in one lump sum within ten (10) calendar days of such termination. Also, in such event, Executive shall, for the remaining term of the Agreement, 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 such period. 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.
(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.
(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 paragraphs (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 paragraphs (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 paragraphs (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 paragraphs (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 paragraphs (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 paragraphs (c) through (e) of this Section 4.
5. Change in Control.
(a) For purposes of this Agreement, a Change in Control means any of the following events: