EMPLOYMENT AGREEMENT
Exhibit
10.1
THIS AGREEMENT, entered into
this 1st day of January, 2010, 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 January 10, 2007, which
Agreement was Amended by Agreement dated December 18, 2008 (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, Chief Executive Officer and President 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, 2010 (“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, educational and other business activities that do not materially
interfere with his duties hereunder, or simultaneously serving as executive
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 Four Hundred and
Twenty-Five Thousand Dollars ($425,000) (the "Base Salary"). The Base
Salary may be increased at the sole discretion of the Compensation Committee of
the Board of Directors (the “Compensation Committee”).
(b) Deferred
Compensation. In addition to the Base Salary, Employer may, at
the sole discretion of the Compensation Committee, from time to time, credit for
the benefit of Executive additional 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
base salary) and such retirement plan or plans for Executive and his dependents
as it maintains for other senior executives, provided, however, if Executive
shall receive such benefits from another employer, Employer shall reimburse such
employer for one half of the costs of it providing such benefits to
Executive. 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 an
automobile comparable to the one currently provided to Executive; provided,
however, that if Executive shall receive such benefits from another employer,
Employer shall reimburse such employer for one half of the costs of providing
such benefit to 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; provided, however, that if Executive shall
receive such benefits from another employer, Employer shall reimburse such
employer for one half of such expense.
(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, or if
Executive is not elected as a member of the Board of Directors (individually, a
“Termination Event”), 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 able to be provided by Employers’ group insurance plans or
policies, the Employer shall pay to Executive in cash an amount which will
permit Executive to purchase comparable insurance policies. Upon the
occurrence of a Termination Event, 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”. All Severance
Benefits from a Termination Event under the Section 5(a) shall be paid to
Executive within thirty (30) days of occurrence of the Termination
Event.
(b)
In the event that the amounts and benefits payable under this Section 5
(the “Termination Payments”), when aggregated with any other payments to
Executive that are in the nature of compensation and that are considered to be
contingent on a change in the ownership or effective control of the Company, or
in the ownership of a substantial portion of the assets of the Company (as those
terms are used for purposes of Code Section 280(i), are such that Executive
becomes subject to the excise tax provisions of Code Section 4999, the Employer
shall reduce the payments otherwise required hereunder to the extent necessary
so that Executive shall not be subject to such excise tax
provisions. In interpreting this Section 5(b), the Employer’s
obligations to make Termination Payments are considered to be binding on the
Employer and this Section 5(b) shall not apply to any such Termination Payments
that may be grandfathered out of any modifications made to Code Section 4999 (or
Code Section 280G) subsequent to the date hereof.
All calculations required to be made under the preceding
paragraph shall be made by the Employer’s independent certified public
accountants within thirty (30) days of the Termination of Executive’s
employment, subject to the right of Executive’s representative to review the
same.
In the event that any amounts paid by the Employer
hereunder are subsequently determined to be in excess of the amounts owed,
whether because estimates were required or otherwise ("Excess Amount"),
Executive will, upon written notice from the Employer, setting forth the
calculation of the Excess Amount by Employer’s independent certified public
accountants (and subject to the right of Executive’s representatives to review
same), pay to Employer 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 Employer 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 Employer will, within thirty (30) days of such determination, pay to
Executive the Deficiency Amount, together with interest at the greater of the
above-referenced rate or the interest he may be required to pay to the
respective taxing authorities. Prior to its payment of the Deficiency
Amount, the Employer shall be entitled to documentation (with supporting
calculations made by the Executive’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.
(c) Notwithstanding the preceding
provisions of this Section 5, in the event that (and to the extent that) the
payment and benefit provisions 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 Executive shall be
entitled to elect which payments and benefits shall be reduced and in what
manner, subject to recommendation by
the Compensation Committee, and 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:
Two Liberty Place
00 X. 00xx
Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx,
XX 00000
Attention: Chairman of the
Board
If to
Executive:
Xxxxx X. Xxxxxxx
0000 Xxxxxxx Xxxx Xxxx
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, 2009.
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. In
addition, any amounts that are payable to Executive as a reimbursement shall be
paid consistent with the requirements of Treasury Regulation Section 1.409A-3,
including the requirement that such reimbursement be made on or before the last
day of the calendar year following the calendar year in which the expense was
incurred.
(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.
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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REPUBLIC
FIRST BANK
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By: Xxxxx X.
Xxxxxxxxx
Xxxxx X. Xxxxxxxxx
Senior Vice President
and
Chief Financial
Officer
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By: Xxxxx X.
Xxxxxxxxx
Xxxxx X. Xxxxxxxxx
Senior Vice President
and
Chief Financial
Officer
|
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By: Xxxxx X.
Xxxxxxx
XXXXX X. XXXXXXX
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