EMPLOYMENT AGREEMENT
Exhibit
10.1:
THIS
AGREEMENT,
entered
into this 1st day of January, 2007, by and between Republic First Bancorp,
Inc.,
a Pennsylvania bank holding corporation (“Company”), Republic First Bank, a
Pennsylvania bank (“Bank”), and Xxxxx X. Xxxxxxx (“Executive”).
WHEREAS,
Bank is
a wholly-owned subsidiary of the Company; and
WHEREAS,
the
Company and the Executive are parties to an Employment Agreement dated June
22,
2004, which Agreement was Amended by Agreement dated April 20, 2006 (the "Prior
Employment Agreement"); and
WHEREAS,
the
Company and Bank desire to continue to employ Executive as Chairman of the
Board
of Directors, President and Chief Executive Officer of the Company and Chairman
of the Board of Directors and Chief Executive Officer of the Bank upon the
terms
and conditions set forth in this Employment Agreement; and
WHEREAS,
the
Executive desires to continue to be employed in such capacities by the Company
and the Bank (Bank and Company are sometimes hereinafter referred to jointly
as
“Employer” or "Employers"), subject to the terms and conditions of this
Agreement;
NOW
THEREFORE,
in
consideration of the mutual promises contained herein, and other good and
valuable consideration, receipt and sufficiency of which is hereby acknowledged,
and intending to be legally bound hereby, the parties agree as
follows:
1.
Term.
This
Agreement shall be effective as of January 1, 2007 (“Effective Date”) and shall
continue until terminated as provided for in Paragraph 4 below.
2.
Duties
and Employment. Company
hereby employs Executive as Chairman of the Board of Directors, and President
and Chief Executive Officer of the Company and Chief Executive Officer and
Chairman of the Board of Directors of the Bank, pursuant to the terms hereof.
Executive shall faithfully perform such duties as are customarily required
of a
Chairman, President and Chief Executive Officer and shall devote such time,
energy and attention to those duties and to such other duties as may be
reasonably assigned to him by the Boards pursuant to the terms of this
Agreement; provided that nothing contained herein shall prohibit Executive
from
making personal investments (provided that such investments do not interfere
with his duties hereunder) or participating or engaging in community, charitable
and educational affairs that do not interfere with his duties hereunder, or
simultaneously serving as Chief Executive Officer and Chairman of the Board
of
Directors of First Bank of Delaware.
3. Compensation.
(a) Regular
Compensation.
For all
services rendered by Executive under this Agreement, Employer shall pay
Executive in accordance with the normal payment practices of the Employers
an
annual base salary of Three Hundred Thirty Thousand Dollars ($330,000) until
April 1, 2007, at which time Executive’s base annual salary shall increase by
ten (10) percent and shall further increase by (10) percent April 1st
of the
second and third years of this Agreement (the "Base Salary").
(b) Deferred
Compensation.
In
addition to the Base Salary, Employer shall annually pay Executive deferred
compensation in an amount equal to twenty-five (25) percent of Executives then
Base Salary plus the amount of Executive annual bonus, as Deferred Compensation
pursuant to the terms of the Bank’s Deferred Compensation Plan as that plan may
be changed from time to time.
(c) Stock
and Other Compensation Plans.
Executive shall be eligible to participate in any stock purchase, stock grant,
stock option, retirement, savings, or other compensation plans presently or
hereafter maintained by the Company or the Bank for its senior executives.
Except as set forth in this subsection, eligibility in no way guarantees
Executive’s receipt of any stock grant, stock option or other compensation
pursuant to such stock plans, which shall be in the sole discretion of the
respective Compensation Committees, except that commencing December 29, 2006,
and thereafter, Executive will annually be granted non-qualified options to
purchase a minimum of 12,000 shares of the Companies’ stock at the price at the
close of business on the day that the options are granted, which options shall
not vest for four (4) years from the date of the options (except as otherwise
provided in the options grants or in this Agreement) and which shall continue
for a period of ten (10) years. The Boards, or their designated committees
or
officers, shall consider awarding any other such compensation at least annually.
While not legally required to pay or give any such compensation, except as
specifically provided for in this Agreement, the Compensation Committees may
take into account in its determination the performance of the Employers and
the
Executive and the general economic and competitive conditions as well as
Executive’s responsibilities and other pertinent factors.
(d) Bonuses.
Executive
shall also be able to earn an annual bonus based on a percent of his annual
Base
Salary, contingent upon the Bank and the Company, in the sole discretion and
determination of the Compensation Committee, achieving mutually agreed upon
annual budget based criteria, including by way of illustration only for the
Company, net income, stock price, new programs, etc. or, as to the Bank, net
income, core deposits, loan growth, income from loan programs, and such other
criteria as shall be set by the Compensation Committee.
(e) Health,
Disability and Retirement.
Employers shall maintain such medical and disability insurance coverage (in
an
amount equal to at least Executive’s annual bas salary) and such retirement plan
or plans for Executive and his dependents as it maintains for other senior
executives. Executive shall be entitled to four (4) weeks paid vacation per
annum.
(f) Automobile.
During
the term of this Agreement, the Employers shall provide Executive with a luxury
automobile comparable to the one provided by the Company under its prior
Agreement with Executive. Employers shall also pay or reimburse the Executive
for all reasonable expenses associated with the operation, maintenance and
insurance of such automobile, including expenses for parking spaces convenient
to the Employers, and including a mobile telephone and other mobile
communication devices as Executive shall determine are required.
(g) Life
Insurance Policy.
Employers agree to reimburse Executive for the costs of term life insurance
policies in an amount equal to three times Executive’s total annual compensation
and such other terms and conditions as may be accepted by Executive, the
beneficiary of which shall be designated by Executive.
(h)
Travel
Expenses. During
the term of this Agreement, Executive shall be reimbursed for normal and
reasonable travel expenses incurred on behalf of the Company or the
Bank.
(i)
Entertainment
Expenses.
Executive will be reimbursed for all reasonable expenses incurred by Executive
in fulfillment of his duties on behalf of the Company or the Bank, including
entertainment, business meals and the like.
(j) Other
Benefits.
Executive will be reimbursed for initiation fees, annual dues and expenses
of
membership in a lunch club and a golf or country club for himself and his
spouse.
(k)
Approvals.
All
expenses incurred by the Executive under subparagraphs (h) and (i) hereof shall
be approved by the Chief Financial Officer of the Company or his
designee.
4. Term;
Termination.
(a)
Unless
earlier terminated in accordance with the provisions of this Section 4, the
Executive’s employment under this Agreement shall be for a three-year period
commencing on the date first set forth above; provided, however, in the event
neither party shall have given written notice that they desire to terminate
the
Agreement within six (6) months of the termination date, the Agreement shall
automatically continue annually thereafter.
(b)
Executive
may terminate this Agreement upon six (6) months written notice to the
respective Employers.
(c)
This
Agreement shall automatically terminate upon the death of the Executive without
any additional payments of salary or other benefits to Executive except as
may
be required by law and as set forth in this Agreement.
(d) This
Agreement shall automatically terminate upon Executive’s “total disability,”
which shall be defined as total disability under Executive’s disability
insurance policy.
(e)
The
Company may terminate Executive immediately for “Good Reason.” For purposes of
this Agreement, “Good Reason” shall mean (i) breach of a fiduciary duty to
Employers involving personal profit and which causes material harm to the
Employers, (ii) conviction of a felony or willful violation of any banking
law
or regulation or a crime of moral turpitude, and (iii) gross negligent
performance of the duties under this Agreement resulting in a material
impairment of Company’s financial condition.
(f) Executive
may terminate this Agreement for “Good Cause.” For purposes of this Agreement,
“Good Cause” shall mean failure of either Employer to comply in any material
respect with any material provision of this Agreement, which failure has not
been cured within thirty (30) days after a written notice of such noncompliance
has been given by Executive to one or both of Employers, a change in the
substantive duties of Executive, a change in location of business or a Change
of
Control as that term is defined hereinafter.
5. Payments
to Executive Upon Termination.
(a) In
the
event of the termination of Executive’s employment for any reason, including a
merger or sale of the Company or the Bank or sale or transfer of a majority
of
the stock of the Bank or the Company (any one of which shall be a “Change of
Control”) or failure of the Employers to continue Executive’s employment at the
termination of this Agreement or any subsequent employment agreement, but
excluding Executive’s death or resignation by Executive without cause, or
termination of Executive for Good Reason as set forth in Section 4(e), as
consideration for Executive’s services to Employers prior to Executive’s
termination,
Employers
shall pay to Executive a sum equal to three times the amount of Executive’s
annual Base Salary in effect immediately prior to his termination plus three
(3)
times the average bonus paid to Executive over the prior three years. For a
period of three (3) years after termination of his employment Employers shall
also pay to Executive in cash additional amounts that correspond to the amounts
the Employers would have paid in premiums for the life insurance policy covering
Executive, and shall provide, at no cost to Executive, continuation of his
health and life insurance benefits in effect immediately prior to his
termination. In the event such continuation of benefits is not permitted under
the terms of the insurance contracts applicable to such benefits, shall pay
to
Executive in cash the amount that would have been paid for such benefits. In
addition, Employers shall purchase a new automobile comparable to the one then
made available to Executive free of all liens, costs, liabilities, or
encumbrances, plus such funds to reimburse Executive for all fees and costs
involved in the transfer of title and all federal and state income taxes
assessed to Executive for such transfer. Upon such termination, all stock
options, annuities, deferred compensation and pensions held by or for Executive
shall fully vest. The total benefits set forth in this Section 5(a) shall
hereinafter be referred to as “Severance Benefits”.
(b) In
the
event of a Change of Control, Executive, in his sole discretion, may require
the
Employers to pay the entire Severance Benefits to Executive at the date of
the
Change of Control. In all other events, the Severance Benefits, at the sole
discretion of the Company, may be paid in equal monthly payments over thirty-six
(36) months after termination of Executive’s employment; provided that in the
event Executive shall die during the period he is receiving Severance Benefits,
his estate shall be entitled to receive such benefits.
(c)
In
the event that the amounts and benefits payable under this section (the
“Termination Payments”), are such that Employee becomes subject to the excise
tax provisions of Section 4999 of the Internal Revenue Code of 1986, as amended
(the “Code”), the Bank shall pay him such additional amount (the “Gross-Up
Payments”) as will provide Employee with a net amount which, after the payment
of all federal, state and local excise, employment, and income taxes with
respect to both the Termination Payments and the Gross-Up Payments will equal
the net amount Employee would have retained had the initially-calculated
Termination Payments been subject only to income and employment taxation
(and
not to excise taxes under section 4999). For purposes of determining the
amount
of Gross-Up Payments, the Employee's income shall be deemed to be taxable
at the
highest marginal federal, state, local and (if relevant) foreign tax rates
in
effect for the year in which the Gross-Up Payments are made.
All
calculations required to be made under the preceding paragraph shall be made
by
the Bank’s independent certified public accountants within thirty (30) days of
the Termination of Employee's employment, subject to the right of Employee’s
representative to review the same. The entire amount of Gross-Up Payments shall
be paid no later than thirty (30) days following confirmation of such amount
by
the Bank’s independent certified public accountants.
In
the
event that any amounts paid by the Bank hereunder are subsequently determined
to
be in excess of the amounts owed, whether because estimates were required or
otherwise ("Excess Amount"), Employee will, upon written notice from the Bank,
setting forth the calculation of the Excess Amount by Bank’s independent
certified public accountants (and subject to the right of Employee's
representatives to review same), pay to Bank the Excess Amount, together with
interest thereon at the applicable federal rate (as determined under Code
Section 1274 for the period of time such Excess Amount remained outstanding
and
unreimbursed).
In
the
event the amounts paid by the Bank hereunder are subsequently determined, for
any reason, to be less than the amounts which should have been paid (as properly
calculated hereunder)("Deficiency Amount"), the Bank will, within thirty (30)
days of such determination, pay to the Employee the Deficiency Amount, together
with (i) interest at the greater of the above-referenced rate or the interest
he
may be required to pay to the respective taxing authorities; plus (ii) any
penalties assessed against him by such authorities. Prior to its payment of
the
Deficiency Amount, the Bank shall be entitled to documentation (with supporting
calculations made by the Employee’s accountant or, in the case of tax
assessments, copies of such assessments) supporting the Deficiency Amount and
any interest or penalties imposed by the assessing authorities.
The
parties recognize that the actual implementation of the provisions of this
subsection are complex and agree to deal with each other in good faith to
resolve any questions or disagreements arising
hereunder.
(d) Notwithstanding
the preceding provisions of this Section 5, in the event that (and to the extent
that) the payment and benefit provisions (including the Gross-Up Payment) are
determined to be contrary to (and in excess of) those permitted under any
applicable federal or state banking authority law, rule or regulation, then
the
benefits provided under this Section 5 shall be reduced by such amount (but
no
more than such amount) as may be required to comply with such law, rule or
regulation. The Employee shall be entitled to elect which payments and benefits
shall be reduced and in what manner, subject to reasonable approval of the
Board
and to the extent permitted by such federal or state banking authority law,
rule
or regulation.
6.
Confidentiality.
Executive acknowledges that, in the course of his employment by Employers,
he
will have access to confidential information, trade secrets, and unique business
procedures
which are the valuable property of Employers. Executive agrees not to disclose
for any reason, directly or indirectly, any confidential, trade secret or other
proprietary information, as determined by Employers in their reasonable
discretion, at any time, during or after the period Executive is employed by
Employers, for any purpose other than to perform his assigned duties on behalf
of Employers.
7.
Remedy.
Employers and Executive acknowledge and agree that any breach of Paragraph
6 of
this Agreement would cause irreparable injury to Employers as the case may
be,
and that Employers’ remedy at law for any breach of any of Executive’s
obligations under Paragraph 6 hereof would be inadequate, and Executive agrees
and consents that temporary and permanent injunctive relief may be granted
in
any proceeding which may be brought to enforce any provision of Paragraph 6
hereof without the necessity of proof that Employers’ remedy at law is
inadequate and Employers shall have the right, in their sole discretion to,
in
addition to any other remedy it may be entitled to under law or in equity,
set
off any amounts due Executive under this Agreement or otherwise as partial
damages for violations of such paragraph by Executive.
8. Indemnification.
Employers
shall indemnify Executive to the full extent permitted by law and by the by-laws
or certificates of incorporation of the Company and the Banks for the benefit
of
its respective officers or directors as in effect on the date
hereof.
9.
Notices.
Any and
all notices, designations, consents, offers, acceptances, or any other
communications provided for herein shall be given in writing by registered
or
certified mail, return receipt requested to the addresses set forth below or
as
may be changed by the parties:
If
to
Company or Bank:
0000
Xxxxxx Xxxxxx
Xxxxxxxxxxxx,
XX 00000
Attention:
Chairman of the Board
If
to
Executive:
Xxxxx
X.
Xxxxxxx
0000
Xxxxx Xxxxxxx Xxxxx
Xxxxxxxx,
XX 00000-0000
or
to
such other or additional person or persons or such other addresses as either
party may designate to the other party in writing or by like
notice.
10.
Invalid
Provisions.
The
invalidity or unenforceability of any particular provision of this Agreement
shall not affect the other provisions hereof, and the Agreement shall be
construed in all respects as if such invalid or unenforceable provisions were
omitted.
11.
Modification.
No
change
or modification of this Agreement shall be enforceable against any party unless
the same be in writing and signed by the party against whom enforcement is
sought.
12.
Entire
Agreement.
This
Agreement represents the entire agreement between the parties with respect
to
the subject matter hereof, and supersedes all prior agreements and
understandings with respect thereto. The Prior Employment Agreement is hereby
terminated effective midnight on December 31, 2006.
13.
Representation
of Employers.
The
Employers represent and warrant that the execution of this Agreement by the
Employers has been duly authorized by resolution of their respective
Compensation Committees.
14.
Headings.
Any
heading preceding the text of the several paragraphs hereof are inserted solely
for the convenience of reference and shall not constitute a part of this
Agreement, nor shall they affect its meaning, construction or
effect.
15.
Successors;
Assigns. This
Agreement shall inure to the benefit of, and be binding upon, the parties
hereto, and their respective heirs, executors, administrators, successors and,
to the extent permitted herein, assigns. Notwithstanding the foregoing, no
party
hereto may assign its rights or obligations hereunder.
16.
Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the Commonwealth of Pennsylvania.
17.
Disputes.
In the
event any dispute shall arise between the Executive and the Company or the
Bank
as to the terms or interpretation of this Agreement, whether instituted by
formal legal proceedings or otherwise, including any action taken by the Company
or the Bank, the Company and the Bank shall reimburse Executive for all costs
and expenses, including reasonable attorneys’ fees, arising from such dispute,
proceedings, or actions, notwithstanding the ultimate outcome thereof. Such
reimbursement shall be paid within ten (10) days of Executive furnishing to
the
Company and the Bank written evidence, which may be in the form, among other
things, of a cancelled check or receipt, of any costs or expenses incurred
by
Executive. Any such request for reimbursement by Executive shall be made no
more
frequently than at thirty (30) day intervals.
18. Intent
To Comply With Code Section 409 A.
With
respect to any amounts payable under this Agreement to which Section 409A of
the
Internal Revenue Code of 1986, as amended (the “Code”) is determined to be
applicable, and notwithstanding anything in this Agreement to the contrary,
such
payments shall be made only at a time and in a manner that complies with all
applicable provision of Code Section 409A. This Agreement is intended to comply
with Code Section 409A and applicable Treasury Regulations or other guidance
as
may be issued by the Treasury Department or the Internal Revenue Service
interpreting Code Section 409A so as to avoid the imposition of tax on Executive
under Code Section 409A, including any transitional rules that may be set out
in
Internal Revenue Service notices, regulations or other guidance, and shall
in
all instances be interpreted in a manner consistent with such intent. The
provisions of this Paragraph 18 are intended to be applicable only to payments
under this Agreement that are treated as nonqualified deferred compensation
subject to the provisions of Code Section 409A. This Paragraph 18 as included
in
this Agreement shall, therefore, be without effect as to any payments that
are
not nonqualified deferred compensation payments for purposes of Code Section
409A.
(a) In
connection with the intent of this Paragraph 18, any payment that constitutes
a
nonqualified deferred compensation payment for purposes of Code Section 409A
that would, but for this Paragraph 18, be in violation of the rule set forth
in
Code Section 409A(a)(2)(B)(i) (prohibiting payments to any “specified employee”
before the date which is six months after such employee’s separation from
service) shall be paid to Executive as soon as practicable following the six
month anniversary of Executive’s termination of employment.
(b)
In
addition, any payment that constitutes a nonqualified deferred compensation
payment for purposes of Code Section 409A that, but for this Paragraph 18,
may
be made either in a series of payments or in a single lump sum, shall in all
events be made only in the form of a lump sum payment which payment shall be
made to Executive as soon as practicable on or after the first date as of which
such payment may be made without violating the rules of Code Section
409A.
[CONTINUED
ON NEXT PAGE]
IN
WITNESS WHEREOF,
the
undersigned have hereunto set their hands and seals the date and year above
first written.
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REPUBLIC
FIRST BANCORP, INC.
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By:
/s/
Xxxx Xxxxxxxx
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Its
CFO
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PaulFrenkiel
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[Print
Name]
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REPUBLIC
FIRST BANK
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By:
/s/
Xxxx Xxxxxxxx
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Its
CFO
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Xxxx
Xxxxxxxx
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[Print
Name]
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| /s/ Xxxxx X. Xxxxxxx |
