EMPLOYMENT AGREEMENT
Exhibit
10.2:
THIS
AGREEMENT,
entered
into this 1st day of January, 2007, by and between Republic First Bank, a
Pennsylvania bank (“Company” or “Employer”), and Xxxxx X. XxXxxxxx
(“Executive”).
WHEREAS,
the
Company desires to employ Executive as President and Chief Operating Officer
of
the Company 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,
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 President and Chief Operating Officer of the
Company, pursuant to the terms hereof. Executive shall faithfully perform such
duties as are customarily required of a President and Chief Operating Officer
and shall devote his full time, energy and attention to those duties and to
such
other duties as may be reasonably assigned to him by the Board 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.
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 Employer an
annual base salary of Two Hundred Fifty Thousand Dollars ($250,000), which
base
salary shall further increase by (10) percent on the annual anniversary dates
of
this Agreement (the "Base Salary").
(b) Deferred
Compensation.
In
addition to the Base Salary, Company shall annually pay Executive deferred
compensation in an amount equal to twenty (20) percent of Executive’s then Base
Salary plus the amount of Executive annual bonus, as Deferred Compensation
pursuant to the terms of the Company’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 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 Compensation Committee,
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
Board, or its 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 Committee may take into account in its determination
the performance of the Employer 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 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, 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.
Employer
shall maintain such medical and disability insurance coverage (in an amount
equal to at least Executive’s annual base salary) and such retirement plan or
plans for Executive and his dependents as it maintains for other senior
executives. Executive shall be entitled to twenty-four (24) paid time off days
per annum.
(f) Automobile.
During
the term of this Agreement, the Employer shall pay Executive a monthly
automobile allowance of One Thousand Two Hundred and Fifty Dollars ($1,250).
Employer shall also pay or reimburse the Executive for all
reasonable
expenses associated with the operation, maintenance and insurance of such
automobile, including expenses for a parking space convenient to the Employer,
and including a mobile telephone and other mobile communication devices as
Executive shall determine are required.
(g) Life
Insurance Policy.
Employer
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.
(i)
Entertainment
Expenses.
Executive will be reimbursed for all reasonable expenses incurred by Executive
in fulfillment of his duties on behalf of the Company, 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), (i) and (j) hereof
shall be approved by the Chief Executive Officer of the Company or his
designee.
| 4. |
Term;
Termination.
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(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
Employer.
(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
Employer involving personal profit and which causes material harm to the
Employer, (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 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 Employer, 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.
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(a) In
the
event of the termination of Executive’s employment for any reason, including a
merger or sale of the Company or Republic First Bancorp, Inc. or sale or
transfer of a majority of the stock of the Company or Republic First Bancorp,
Inc. (any one of which shall be a “Change of Control”) or failure of the Company
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 Employer
prior to Executive’s termination, Employer 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, Employer shall also pay to Executive in cash
additional amounts that correspond to the amounts the Employer 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. 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
Employer 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 Employer, he
will have access to confidential information, trade secrets, and unique business
procedures which are the valuable property of Employer. Executive agrees not
to
disclose for any reason, directly or indirectly, any confidential, trade secret
or other proprietary information, as determined by Employer in its reasonable
discretion, at any time, during or after the period Executive is employed by
Employer, for any purpose other than to perform his assigned duties on behalf
of
Employer.
7.
Restrictive
Covenant.
(a) During
the term of this Agreement and for a period of one (1) year after termination
of
his employment, Executive shall not:
(i) Directly
or indirectly own an interest in, nor be an employee or independent contractor
of, or consultant for any company which owns or is affiliated with a commercial
bank which operates a branch or affiliate in the Commonwealth of Pennsylvania
or
directly or indirectly own an interest in, or be an employee or independent
contractor of, or consultant to company which owns or is affiliated with any
company which is directly or indirectly involved in a program similar to
programs operated by the Company or any of its affiliates;
(ii) Solicit
any of Company’s customers or direct any current or prospective customer to
anyone or any other entity other than Company for goods or services which
Company or any of its affiliates (the “Affiliates”) provide;
(iii) Directly
or indirectly influence any of Company’s or any affiliates’ employees to
terminate their employment with such entity or accept employment with any of
Company’s or its Affiliates’ competitors; or
(iv) Interfere
with any Company or any of its Affiliates’ business relationships, including
without limitation those with customers, suppliers, consultants, attorneys,
and
other agents, whether or not evidenced by written or oral
agreements.
(b) These
covenants and the provisions of Sections 6 and 7 hereof on the part of the
Executive shall be construed as an agreement, independent of any other provision
of this Agreement. The existence of any claim or cause of action of Executive
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of this restrictive
covenant by equitable, injunctive and compensatory relief. If a court deems
any
of these restrictive covenants too restrictive or otherwise unenforceable due
to
its present terms, then it shall be reduced to a time period as deemed equitable
by the court and extended for one (1) year beyond final ruling by the
Court.
(c) Executive
acknowledges that he had the opportunity and funds to confer with an attorney
before signing this Agreement, that there were other employment opportunities
for Executive besides this Agreement with the Company, and that without the
Executive’s agreement to abide by the confidentiality and restrictive covenants
set forth in Sections 6 and 7, Company would not have executed this
Agreement.
(d) If
the
Company attempts to enforce the restrictive covenants or confidentiality section
in a court of law, except if a court shall rule completely in favor of
Executive, the Company’s legal fees, costs, loss of profits/time of the
Company’s personnel and other damages shall be paid to the Company by
Executive.
8. Indemnification.
Employer
shall indemnify Executive to the full extent permitted by law and by the by-laws
or certificates of incorporation of the Company 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:
0000
Xxxxxx Xxxxxx
Xxxxxxxxxxxx,
XX 00000
Attention:
Chairman of the Board
If
to
Executive:
Xxxxx
X.
XxXxxxxx
0
Xxxxxxxxx Xxxxx
Xxxxxxxxxx,
XX 00000
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.
13.
Representation
of Employer.
The
Employer represents and warrants that the execution of this Agreement by the
Employer has been duly authorized by resolution of its 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.
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 17 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 17 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 17, any payment that constitutes
a
nonqualified deferred compensation payment for purposes of Code Section 409A
that would, but for this Paragraph 17, 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 17,
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.
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 BANK
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By:
/s/
Xxxxx X. Xxxxxxx
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Its
Chairman and CEO
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/s/
Xxxxx X. XxXxxxxx
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