Exhibit 10.1 Employment Agreement between Annapolis National Bancorp, Inc.
and Xxxx X. Xxxxxxxx, Xx.
EXECUTIVE EMPLOYMENT AGREEMENT
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This agreement ("Agreement") is made this 21st day of February 1997,
between Xxxx X. Xxxxxxxx, Xx.("Xx. Xxxxxxxx") and Annapolis National
Bank, its successors, and assigns ("the Bank").
1. The Bank is a nationally chartered banking company engaged in the
business of a full service commercial bank, whose principal office is located
in Annapolis, Maryland. The Bank is wholly owned by a bank holding company,
Maryland Publick Banks, Inc. ("the Company").
2. Xx. Xxxxxxxx is willing to be employed by the Bank, and the Bank is
willing to employ Xx. Xxxxxxxx on the terms, covenants, and conditions
hereinafter set forth.
For the reasons set forth above and in consideration of the mutual
promises and agreements set forth below, the Bank and Xx. Xxxxxxxx agree as
follows:
SECTION ONE -- EMPLOYMENT
The Bank employs Xx. Xxxxxxxx as its President & Chief Executive
Officer, and Xx. Xxxxxxxx accepts such employment subject to the general
supervision, advice, and direction of the Board of Directors of the Bank. Xx.
Xxxxxxxx will perform such duties as are customarily performed by persons
holding such positions in the banking industry, including but not
limited to management of and responsibility for investments, loans,
marketing, sales, regulatory compliance, and personnel matters, and will render
such other services and perform duties as may be assigned to him by the Board of
Directors of the Bank. At the discretion of the Board of Directors of the
Company, Xx. Xxxxxxxx will serve, during the term of his employment, as a
member of the Board of Directors of the Bank, but will not participate in any
decisions concerning his employment relationship with the Bank.
SECTION TWO -- BEST EFFORTS
Xx. Xxxxxxxx agrees to use his best efforts to perform all duties
required of and from him by the Bank, pursuant to the express and implicit
terms hereof, to the Bank's reasonable satisfaction. Such duties will be
rendered at the Bank's principal office or other places as the interests,
needs, business, or opportunity of the Bank require. Xx. Xxxxxxxx warrants
and represents that he has the training, experience, and knowledge to
perform the duties of his position, and that he is not restricted or
limited in doing so by any contractual obligations, conflicts of interest,
or otherwise.
SECTION THREE -- TERM OF EMPLOYMENT
This Agreement is effective beginning on the date of its execution
by both parties (the "Effective Date") and for five (5) years thereafter,
unless sooner terminated by either party pursuant to Sections 6-8.
SECTION FOUR -- COMPENSATION AND BENEFITS
The Bank will compensate Xx. Xxxxxxxx for all his services
hereunder at an initial minimum salary of One Hundred Thirty-two-Thousand
Five-Hundred Dollars ($132,500.00) per annum, payable
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biweekly so long as he is employed hereunder. This amount will increase on each
anniversary of the Effective Date by an amount determined by multiplying the
then current salary by the annual percentage increase of the most recently
released Consumer Price Index for Urban Consumers ("CPI-U"). The Bank will
provide Xx. Xxxxxxxx with an automobile, and pay all expenses pertaining to
the business use, repair, and maintenance thereof. The Bank will provide Xx.
Xxxxxxxx with non-contributory family health insurance, reimbursement of
reasonable business expenses, group benefits as provided to its other executive
officers, and twenty (20) working days paid vacation annually.
As soon as practicable following the Effective Date, the Bank will
provide Xx. Xxxxxxxx non-transferable incentive stock options to purchase up to
ten thousand (10,000) shares of the Company's common stock at an exercise
price of five dollars ($5.00) per share (the "Initial Options"). The Bank
will provide additional non-transferable incentive stock options to Xx. Xxxxxxxx
annually (the "Annual Options") as soon as practicable following the close
of the calendar year. The exercise price per share of all Annual Options
granted will be calculated as 133.334% of the book value per share of the
Company's common stock as of the end of the calendar year just completed. The
number of Annual Options so provided will be calculated as a function of the
Company's return on average equity for the calendar year ("XXX"). XXX is
calculated by dividing net income of the Company for the calendar year, on a
consolidated basis with the Bank, by average stockholders' equity of the
Company for the calendar year. Should the Company's XXX for the calendar year
then ended be calculated at fifteen percent (15.0%) or higher, the amount of
Annual Options to be granted will be calculated as one thousand (1,000) plus
ten (10) additional for each one-hundredth of one percent (0.01%) by which the
Company's XXX exceeds fifteen percent (15.0%) for a said calendar year.
For the calendar year ending December 31, 1997, XXX will be
calculated by dividing the Net Income of the Company during March 1, 1997
through year-end, on a consolidated basis with the Bank, by the average
stockholders' equity of the Company for that period and then annualized for
purposes of determining Xx. Xxxxxxxx'x entitlement to Annual Options. The
Initial Options and Annual Options will be exercisable upon receipt by Xx.
Xxxxxxxx and for ten years thereafter, subject to any applicable incentive
stock option plan.
The Bank will pay an incentive cash bonus to Xx. Xxxxxxxx annually (the
"Annual Bonus") as soon as practicable following the close of calendar year
1997 and each calendar year thereafter, subject to the following conditions.
The amount of each Annual Bonus will be calculated as five percent (5.0%) of
that amount by which the Company's XXX exceeds fifteen percent (15.0%)
during each calendar year. For the calendar year ending December 31, 1997,
XXX, for purposes of determining any entitlement to Annual Bonus, will be
calculated for the period from March 1, 1997 through year-end and annualized as
set forth above.
No Annual Options will be provided and no Annual Bonus will be paid or
due for any calendar year if (i) the Company's XXX is less than fifteen percent
(15.0%) during that year, or (ii) the amount of the Bank's non-performing
assets ((the sum of other real estate owned (at book value) and non-accrual
loans)) exceeds seventy-five hundredths of one percent (0.75%) of its total
assets at the end of the calendar year just completed, or (iii) the amount of
the Bank's allowance for loan losses is less than one hundred and fifty
percent (150%) of its non-accrual loans after deducting any portions thereof
which are government guaranteed. For the calendar year ending December 31,
1997, the net income figure used for determining XXX will be adjusted by
adding back any loan losses or specific reserves for impending loan losses
relative to loans which were in the Bank's loan portfolio prior to March 1,
1997.
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The Annual Options And Annual Bonus XXX calculations presume that
increases in the Company's stockholders' equity will result from net income
and not from an external recapitalization of the Company. If the Company
increases its stockholders' equity by virtue of selling new shares of capital
stock or another method of external recapitalization, the Annual Options
and Annual Bonus incentive calculations will be adjusted to account for the
dilutive effect of such recapitalization on the Company's XXX. All
determinations and valuations under this section will be mutually agreed upon
by the parties, or otherwise made by the respective certified public
accounting firms of the Bank and Company, in accordance with generally
accepted industry guidelines.
SECTION FIVE -- OTHER EMPLOYMENT
In consideration for Xx. Xxxxxxxx having resigned his positions as
Chairman of the Board, President, and Chief Executive Officer of State Capital
Bancorp, Inc. to accept employment by the Bank, the Bank agrees to promptly
reimburse State Capital Bancorp for all documented expenses associated with
its formation and operation up to a maximum of Fifty Thousand Dollars
($50,000.00).
The Bank will be entitled to all benefits, profits, or other issues
arising from or incident to all work, services, and advice of Xx. Xxxxxxxx. Xx.
Xxxxxxxx will devote his full business and productive time, ability, and
attention to his duties for the Bank. Xx. Xxxxxxxx will not, during the term
hereof, be interested directly or indirectly, in any manner, as a compensated
partner, officer, director, advisor, employee, or in any other similar
capacity, in any other business. This provision does not prohibit Xx.
Xxxxxxxx from:
a. making passive investments;
b. engaging in religious, charitable or other community or nonprofit activities
that do not impair his ability to fulfill his duties and responsibilities
under this Agreement; and
c. serving with the Bank's approval, on the board of directors of a company,
subject to the prohibitions set forth in Sections 9 and 10, and provided that
Xx. Xxxxxxxx will not render any material services with respect to the
operations or affairs of any such company.
SECTION SIX -- TERMINATION
Either party may terminate the employment relationship at any time
with or without cause. For the purposes of this Agreement, "cause" will be
defined as:
a. personal dishonesty or misappropriation in connection with the Bank or Bank
duties;
b. possession, use, or being under the influence of illegal drugs on Bank
property or on Bank business;
c. being under the influence of alcohol on Bank property or on Bank business;
d. conviction of a felony, crime of moral turpitude, or of violating banking
regulations;
e. breach of Sections 9 or 10 of this Agreement;
f. sexual or other harassment of employees or other employment discrimination
prohibited by law; and
g. failure to perform material duties or responsibilities after written notice
thereof and failure to remedy within thirty (30) days.
Xx. Xxxxxxxx may terminate his employment relationship upon providing
thirty (30) days
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advance written notice of resignation to the Bank. In the event that Xx.
Xxxxxxxx resigns or is terminated for cause within the first year of employment,
he will be required to promptly pay the Bank an amount equal to that paid by the
Bank under Section 5 to reimburse State Capital Bancorp, and Xx. Xxxxxxxx hereby
authorizes the Bank to deduct up to said amount from any moneys due Xx. Xxxxxxxx
upon his resignation.
This Agreement may be terminated by the Bank with no liability to Xx.
Xxxxxxxx except for rights earned through the date of termination upon: (i) his
discharge for cause (as defined herein), or (ii) his death or resignation.
Unless termination is for cause, or due to Xx. Xxxxxxxx'x death,
disability, or resignation, the Bank agrees to pay him an amount equal to the
base salary which was paid to him during the twelve (12) month period
immediately preceding termination of this Agreement by the Bank. Said
amount will be paid in equal monthly payments over the subsequent twelve (12)
month period.
SECTION SEVEN -- CHANGE OF CONTROL
In the event of a change of control of the Company (as herein
defined), Xx. Xxxxxxxx will have the option, exercisable within six (6)
months from the date of said change of control, to elect either (i) to continue
his employment under the terms of this Agreement with the consent of the Bank,
(ii) to execute a new employment agreement as President or Chief Executive
Officer of the Bank on terms mutually agreeable, or (iii) to resign his
employment with thirty (30) days written notice and receive equal monthly
payments over the subsequent twelve (12) month period totaling one and
one-half (1.5) times the base salary and cash bonus paid to Xx. Xxxxxxxx
during the twelve (12) month period immediately preceding said change of
control of the Company ("Change of Control Payments"). If the Bank terminates
Xx. Xxxxxxxx without cause within six (6) months from a change of control of
the Company, the Bank will provide him with Change of Control Payments. If
Xx. Xxxxxxxx'x termination of employment within six (6) months of a change of
control of the Company is for cause, or due to his death, the Bank will have
no obligation to him under the terms of this Agreement.
In the event that Xx. Xxxxxxxx remains employed by the Bank under the
terms of this Agreement for more than six (6) months following a change of
control of the Company, the provisions of Section 6 will apply to any
subsequent termination. This section does not apply in the event that Xx.
Xxxxxxxx becomes disabled and therefore subject to the terms of Section 8.
For purposes of this Agreement, a "change of control of the Company" is
defined as (i) a transaction or series of transactions in which any one
person (other than Xxxxxxxx X. Xxxxxx or any member or members of his family),
or more than one person acting as a group (excluding for this purpose Xxxxxxxx
X. Xxxxxx or any member or members of his family, to the extent they
participate in such a group), acquires during any twelve (12) month period
more than fifty percent (50%) of the total voting power of the Company's
stock, or (ii) a merger, consolidation, or other reorganization where the
Company is not the surviving entity and Xxxxxxxx X. Xxxxxx or any member or
members of his family do not individually or as a group own more than fifty
percent (50%) of the total voting power of the surviving entity's stock.
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SECTION EIGHT -- TERMINATION FOR DISABILITY
Notwithstanding anything in this Agreement to the contrary, the
Bank may terminate Xx. Xxxxxxxx'x employment if he becomes disabled, as
determined by a licensed physician in accordance with the definition of
that term under the Bank's long term disability insurance policy. The
parties will cooperate in obtaining a physician's determination. During the
first ninety (90) days of Xx. Xxxxxxxx'x disability and after he has fully
utilized and exhausted all accrued vacation and sick leave, the Bank will
continue to compensate Xx. Xxxxxxxx at his full base salary level with
benefits (excluding unearned Annual Options and Annual Bonus). Thereafter,
Xx. Xxxxxxxx will be entitled to any disability benefits for which he
qualifies under the Bank's disability insurance policy and the Bank will have no
further obligation to him.
SECTION NINE -- CONFIDENTIAL INFORMATION
Without the Bank's written consent, Xx. Xxxxxxxx will not disclose or
use at any time during or after his employment confidential and proprietary
information of which he is informed during employment, whether or not
developed by him, including but not limited to research and plans for new
business development, new products or acquisitions, customer lists, pricing
information, non-public financial statements and data, employee lists,
compensation data, personnel file data, and any other information not
generally known outside the Bank and which would provide an economic advantage
if known by its competitors. Provided, however, that this paragraph will not
restrict such disclosures or use as is required in the performance of Xx.
Xxxxxxxx'x duties hereunder.
Upon termination of his employment, Xx. Xxxxxxxx will promptly deliver
to the Bank all software, process documentation, manuals, customer lists,
employee lists, agent lists, letters, notes, notebooks, reports, and any other
materials containing confidential and/or proprietary information and which
are in his possession or control.
SECTION TEN -- NON-COMPETITION
If Xx. Xxxxxxxx resigns his employment or is terminated without cause
during the five (5) year term of this Agreement, he will not without the
Bank's written consent, participate in or be connected with, as an officer,
employee, partner, agent, sole proprietor, owner, consultant, licensor, or
otherwise, any bank, savings and loan association, credit union, lending
institution, or similar competitive entity that has offices or is actively
doing business in Xxxx Arundel County, Maryland. Said restriction will be
in effect only during the remaining period of the five (5) year term, not to
exceed one (1) year if he resigns, and not to exceed eight (8) months if he is
terminated without cause, except that if Xx. Xxxxxxxx resigns within the six
(6) month period following a change in control under Section 7, or resigns due
to a constructive termination, the non-competition restriction will not apply.
For purposes of this Agreement, "constructive termination" is defined as (i) a
failure to nominate Xx. Xxxxxxxx to the Board of Directors of the Bank, or
(ii) a material change in the functions or duties of his position to
materially and substantially diminish its responsibilities in importance or
scope from the position described in Section 1. In the event that Xx.
Xxxxxxxx intends to resign due to a constructive termination, he must give
the Bank thirty (30) days prior notice specifying the particular reasons
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therefor and a reasonable opportunity to rectify the situation.
Xx. Xxxxxxxx will be permitted to engage in such employment or
activity described above if he furnishes to the Bank evidence, including
assurances from him and his new employer, that the fulfillment of his duties in
such proposed employment or activity would not cause him to compete with the
Bank in Xxxx Arundel County, and such evidence is found satisfactory by the Bank
in its sole judgment and discretion.
SECTION ELEVEN -- INJUNCTIVE RELIEF AND DAMAGES
Xx. Xxxxxxxx recognizes that if he breaches Section 9 or 10 of this
Agreement, it will not be possible to calculate resulting damages and the Bank
will suffer immediate, substantial, and irreparable harm. Therefore, in such
a case, the Bank will be entitled to obtain an injunction in any competent court
restraining his further breach of said Sections, and will be entitled to
collect from Xx. Xxxxxxxx its reasonable attorneys' fees and costs if it
is successful in obtaining any injunctive relief. The parties agree to
jurisdiction and venue in and service by the Federal District Court of
Maryland and the Circuit Court of Xxxx Arundel County, Maryland.
SECTION TWELVE -- ARBITRATION OF DISPUTES
a. Except as provided in Sections 9-11, any and all disputes arising under this
Agreement, or concerning the application or interpretation of its terms,
or related to Xx. Xxxxxxxx'x employment, including all statutory claims, are
subject to exclusive and binding arbitration in Annapolis, Maryland under
the applicable procedures of the American Arbitration Association. Either
party must file its arbitration claim within one year after the dispute
arises or cause of action occurs. Failure to do so will cause the party to
relinquish its right to challenge the disputed action in any manner or
forum;
b. Arbitration Remedies -- the arbitrator's authority as to claims or disputes
for which remedies are specified herein is exclusively limited to awarding
or not awarding the compensation, benefits, or moneys owed as provided for
in this Agreement, plus reasonable attorneys' fees and all costs, including
arbitration expenses, to the prevailing party as determined by the
arbitrator;
c. All arbitration decisions will be confidential.
SECTION THIRTEEN -- INDEMNIFICATION
The Bank will provide Xx. Xxxxxxxx with coverage under a standard
directors' and officers' liability insurance policy at its expense, or in lieu
thereof, will indemnify Xx. Xxxxxxxx to the fullest extent permitted under
Maryland law against all expenses and liabilities reasonably incurred by him
in connection with or arising out of any action, suit, or proceeding in
which he may be involved by reason of having been a director or officer of the
Bank (whether or not he continues to be a director or officer at the time
of incurring such expenses or liabilities), such expenses and liabilities
to include, but not limited to, judgments, court costs and attorneys'
fees, and the cost of reasonable settlements.
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SECTION FOURTEEN -- ENFORCEABILITY
If any portion or provision of this Agreement is declared illegal,
invalid, overbroad or unenforceable by a court of competent jurisdiction,
then the remainder of this Agreement will not be affected thereby, and each
portion and provision of this Agreement will be valid and enforceable to the
fullest extent permitted by law. In addition, if any portion or provision,
including but not limited to Section 12, is found to be illegal,
invalid, overbroad, or unenforceable by a court, it will be reformed to the
least extent possible in order to correct the defect. Sections 9- 11 remain in
effect regardless of any claimed breach of this Agreement and survive its
termination.
SECTION FIFTEEN -- WAIVER AND AMENDMENTS
No waiver of any provision hereof will be effective unless made in
writing and signed by the waiving party. The failure of either party to
require the performance of any term or obligation of this Agreement, or the
waiver by either party of any breach of this Agreement, will not prevent
any subsequent enforcement of such term or obligation or be deemed a waiver of
any subsequent breach. This Agreement may be amended or modified only by a
written instrument signed by both parties.
SECTION SIXTEEN -- GOVERNING LAW
This Agreement will be construed under and be governed in all
respects by the laws of Maryland, including but not limited to the
Arbitration and Award provisions of the Maryland Code, Courts and Judicial
Proceedings.
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SECTION SEVENTEEN -- ENTIRE AGREEMENT
This Agreement may be executed in counterparts and supersedes
all prior agreements and understandings between the parties. It constitutes
the entire agreement between the parties, and may not be modified or
terminated orally; provided that Xx. Xxxxxxxx is subject to the Bank's
written policies and procedures which are in effect and may be modified at
its discretion to the extent they do not materially diminish his rights
hereunder.
In witness whereof, the parties hereto have set their hands and seals on
this 21 day of February 1997.
Attest: Annapolis National Bank
/s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxx Xxxxxxxx
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Corporate Seal Xxxxxx Xxxxxxxx
Chairman
Date: Feb. 21, 1997
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Witness:
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxx X. Xxxxxxxx, Xx.
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Xxxx X. Xxxxxxxx, Xx.
Date: 2/21/97
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