|
Exhibit
10.5
EMPLOYMENT
AGREEMENT
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.
2
(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
3
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
4
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:
| |
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 the
combined voting power of the resulting entity immediately after the
merger or consolidation is held by persons who were shareholders of
the Bank or the Company immediately before the merger or
consolidation; |
| |
ii. |
Change in Board Composition : During any period of two
consecutive years, individuals who constitute the Boards of
Directors of the Bank or the Company at the beginning of the
two-year period cease for any reason (other than as required by the
Order to Cease and Desist dated June 6, 2005 entered into by
the Bank with the Office of Thrift Supervision) to constitute at
least a majority of the Boards of Directors of the Bank or the
Company; provided, however, that for purposes of this clause (iii),
each director who is first elected by the board (or first nominated
by the board for election by the members) by a vote of at least
two-thirds (2/3) of the directors who were directors at the
beginning of the two-year period shall be deemed to have also been
a director at the beginning of such period; or |
| |
iii. |
Acquisition of Significant Share Ownership : There is
filed, or required to be filed, a report on Schedule 13D or another
form or schedule (other than Schedule 13G) required under Sections
13(d) or 14(d) of the Securities Exchange Act of 1934, if the
schedule discloses that the filing person or persons acting in
concert has or have become the beneficial owner(s) of 20% or more
of a class of the Bank’s or the Company’s voting
securities, however this clause (iii) shall not apply to
beneficial ownership of Bank or Company voting shares held in a
fiduciary capacity by an entity of which the Bank or the Company
directly or indirectly beneficially owns 50% or more of its
outstanding voting securities. |
5
| |
iv. |
Sale of Assets : The Bank or the Company sells to a
third party all or substantially all of its assets. |
| |
v. |
Proxy Statement Distribution : An individual or company
(other than current management of the Company) solicits proxies
from stockholders of the Company seeking stockholder approval of a
plan of reorganization, m |
|
