Exhibit 10.2
EMPLOYMENT AGREEMENT
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THIS AGREEMENT, entered into as of this 22nd day of June 2004, by and
between First Bank of Delaware, a Delaware banking corporation ("Company") and
Harry D. Madonna ("Executive").
WHEREAS, the Company desires to employ Executive as Chairman of the
Board of Directors, President and Chief Executive Officer of the Company; and
WHEREAS, Executive desires 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, 2005
("Effective Date") and shall continue until terminated as provided for in
Paragraph 4 below.
2. Duties and Employment. Company hereby employ Executive as Chairman,
President and Chief Executive Officer of the Company 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
his time, energy and attention to those duties and to such other duties as may
be reasonably assigned to him by the Board; provided that Executive may be
employed by a law firm in an "of counsel" or similar capacity and in that
capacity may bill clients of such law firm for up to twenty-five (25) billable
hours per month, and 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.
Executive may also serve as Chairman, President and Chief Executive Officer of
Republic First Bancorp, Inc. and Chairman of the Board of Directors of Republic
First Bank.
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 Company an annual salary of Two Hundred Thousand
Dollars ($200,000), which base annual compensation shall increase by ten (10)
percent each year during the second and third years of this Agreement on the
anniversary date of the commencement of Executive's employment.
(b) Stock and Deferred Compensation Plans. Executive shall be eligible
to participate in stock purchase, stock grant, stock option, deferred
compensation, retirement, savings, or other compensation plans presently or
hereafter maintained by the Company or the Banks for their senior executives.
Eligibility in no way guarantees Executive's receipt of any stock grant, stock
option or other compensation pursuant to such plans, which shall be in the sole
discretion of the respective Boards. The Board, or its designated committee or
officer, shall consider awarding any such bonus at least annually. While not
legally required to pay or give any such compensation, except as specifically
provided for in this Agreement, the Board may take into account in its
determinations 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.
(c) Bonuses. Executive shall also be able to earn an annual bonus based
on a percent of his annual base salary of a minimum of twenty-five (25) percent
of his then annual base salary, contingent upon the Company and/or the Del Bank,
in the sole discretion and determination of their respective Boards, achieving
mutually agreed upon annual budget based criteria, including by way of
illustration only for the Company, net income, stock price, new programs, etc.
and for Del Bank, net income, core deposits, loan growth, income from loan
programs, and such other criteria as shall be set by the respective Boards.
(d) 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. Executive shall
be entitled to four weeks paid vacation per annum.
(e) Automobile. During the term of this Agreement, the Employers shall
provide Executive with a luxury automobile comparable to the one provided by
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 car telephone, as
long as such telephone is used primarily for business use.
(f) Life Insurance Policy. Employers agree to purchase a life insurance
policy on Executive's life in an amount equal to at least twice the annual base
salary of Executive and such other terms and conditions as may be accepted by
Executive.
(g) Sale or Take-Over Protection. In the event of a sale of assets or
stock or a merger of the Company or any other change of control of the Company
approved by the Board and/or shareholders (a "Sale") or through a hostile Change
of Control as defined in the Company's existing "Change of Control" policy (the
"Policy"), a copy of which is attached, which Policy may not be terminated or
changed in a manner which could be detrimental to Executive, Executive will
receive a severance payment equal to two (2) times Executive's annual base
salary in the year the Sale or Change of Control occurs and in addition, such
Sale or Change of Control shall be considered a breach of Section 4(f) of this
Employment Agreement and Executive shall also receive as additional severance
the benefits provided under Section 5(a) of this Agreement.
(h) Travel Expense. During the term of this Agreement, Executive shall
be reimbursed for normal and reasonable travel expenses incurred on behalf of
the Company or the Banks.
(i) Entertainment Expense. Executive will be reimbursed for all
reasonable expenses incurred by Executive in fulfillment of his duties on behalf
of the Company or the Banks, including entertainment, business meals and the
like.
(j) Other Benefits. Executive will be reimbursed for expenses of one
Center City lunch club and the annual dues for a golf club approved by the Board
of the Company or its designated compensation committees or any committee
performing a similar function.
(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.
(l) Deferred Compensation. Employers and Executive shall use their best
efforts to develop a senior officer deferred compensation plan in which
Executive will be eligible to participate.
4. Term; Termination.
(a) This Agreement shall terminate on the day before the third
anniversary of the date Executive commences employment (the "Termination Date")
unless extended pursuant to the terms hereof. This Agreement shall be renewed
automatically for additional one year terms from year to year after the
Termination Date unless Employers or Executive give written notice at least 180
days prior to such anniversary of their or his intention not to renew.
(b) Executive may terminate this Agreement upon six (6) months written
notice to the Employers.
(c) This Agreement shall automatically terminate upon the death of
Executive without additional payments of salary or other benefits to Executive
except as may be required bylaw.
(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 cause."
For purposes of this Agreement, "good cause" shall mean (i) breach of a
fiduciary duty to Employers involving personal profit or 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, (iii) gross negligent
performance of the duties under this Agreement resulting in a material
impairment of Company's financial condition, (iv) an order from any regulatory
authority to terminate the Executive for breach of any law or regulations, or
(v) a failure of the Executive to comply with a lawful direct order of the Board
of the Company.
(f) Executive may terminate this Agreement for "good reason." For
purposes of this Agreement, "good reason" 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 in the Policy.
5. Payments to Executive Upon Termination.
(a) In the event of the termination of Executive's employment pursuant
to Paragraph 4(a) or 4(f), as consideration for Executive's services to
Employers prior to Executive's termination, Employers shall continue to pay to
Executive for the duration of the Severance Period (hereinafter defined), his
base annual salary in the year of the termination, the funding under any life
insurance policy covering Executive, and under his 401(k) plan and for his
health/life insurance benefits. "Severance Period" shall mean the period between
the effective date of the termination under Paragraph 4(a) or 4(f) and the
Termination Date of this Agreement, as that date may be extended by renewals of
the Agreement, plus one year. In addition, Employers shall transfer the title to
the automobile 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, and
pensions held by or for Executive shall fully vest.
(b) Under no circumstances shall Employers be obligated to pay any
compensation to Executive following termination pursuant to paragraphs 4(b),
(c), (d) or (e) hereof.
(c) Employers shall have the option to accelerate payment of the sum(s)
due during the Severance Period and to pay such sum(s) in such lump payment(s)
as Employers shall deem appropriate provided that all such payments shall be
made during the Severance Period and the amount of such payments shall not be
lesser than would have resulted from payment in accordance with Employers'
standard practices or as otherwise provided in this Agreement.
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 this 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
paragraphs 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 their 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 Del Bank:
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1608 Walnut Street
Philadelphia, P A 19103
Attention: Chairman of the Board
If to Executive:
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Harry D. Madonna
1320 North Avignon Drive
Gladwyne, PA 19035
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 Employers. The Employers represent and warrant
that the execution of this Agreement by the Employers has been duly authorized
by resolution of their respective Boards of Directors.
14. Headings. Any headings 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 either the Company or Del Bank as to the terms or interpretation
of this Agreement, whether instituted by formal legal proceedings or otherwise,
including any action taken by Executive to enforce the terms of this Agreement
or in defending against any action taken by the Company or Del Bank, the Company
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 written evidence,
which may be in the form, among other things, of a canceled 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.
[CONT'D ON NEXT PAGE]
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals the date and year above first written.
Attest: FIRST BANK OF DELAWARE
By: /s/ Paul Frenkiel
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Paul Frenkiel
Its: Chief Financial Officer
/s/ Harry D. Madonna
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HARRY D. MADONNA
Exhibit A
Board of Directors
Resolution
Whereas, the Board of Directors of the Corporation has
determined that it is in the best interest of the Corporation to implement a
policy providing Senior Executive Officers of the Corporation and its
wholly-owned subsidiary, First Republic Bank (the "Bank"), with a right to
terminate employment with the Corporation and the Bank and receive severance
upon the occurrence of certain defined changes in control of the Corporation.
Now, therefore, it is resolved:
From and after January 1, 1999, all "Senior Executive
Officers" of the Corporation and the Bank shall have a right to terminate their
employment with the Corporation and the Bank and receive a severance payment
upon the occurrence of a "Change in Control" of the Corporation (as such terms
are defined below); provided, however, that to the extent any Senior Executive
Officer's employment by the Corporation or the Bank is pursuant to an employment
agreement that explicitly covers the subject matter hereof, the terms and
conditions of that employment agreement shall control.
1. Senior Executive Officer shall mean the President,
Executive Vice President and Senior Vice Presidents, and Vice Chairman,
Commercial Lending.
2. Unless approved by the majority of the Incumbent Board, a
Change of Control of the Corporation shall have occurred if:
(a) (i) the "beneficial ownership" (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of
securities representing more than thirty-five percent (35%) of the
combined voting power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of directors of
the Corporation (the "Voting Securities") is acquired by a person,
entity, or group of persons or entities other than any (a) trustee or
other fiduciary holding securities under any employee benefit plan of
the Corporation or (b) corporation owned, directly or indirectly, by
the shareholders of the Corporation in substantially the same
proportions as their ownership of stock of the Corporation);
(ii) the direct or indirect beneficial ownership (as
defined in Rule 13d-3) of fifty percent (50%) or more of the Voting
Securities of the Corporation is acquired by any bank or bank holding
company or any entity, person or group of persons or entities
controlled by, controlling or under common control with a bank or bank
holding company;
(b) individuals who, as of January 1, 1999,
constitute the Board of the Corporation (the "Incumbent Board") cease
for any reason to constitute at least fifty percent (50%) of the Board;
provided, however, that any individual becoming a director subsequent
to January 1, 1999 whose nomination for election by the Corporation's
shareholders was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a person other
than one nominated by the Board;
(c) the Corporation is a party to a merger,
consolidation, reorganization, or other form of business combination,
or a sale or other disposition of all or substantially all of the
assets of the Corporation; provided, however, that a merger or
consolidation effected to implement a recapitalization of Corporation
(or similar transaction) in which no person acquires more than ten
percent of the combined voting power of Corporation's then outstanding
securities shall not constitute a Change in Control; or
(d) shareholders of the Corporation adopt a plan of
complete or substantial liquidation or dissolution of the Corporation
or an agreement providing for the distribution of all or substantially
all of its assets.
3. In the event of a "Change of Control" of the Corporation,
Senior Executive Officers of the Corporation and the Bank shall have the right,
for a period of ninety (90) days following the date the Change of Control
occurs, to terminate their employment by sending written notice to such effect
to the Corporation and/or the Bank, as the case may be. A termination under this
paragraph shall be effective ten (10) days after the mailing of such notice to
the Corporation and/or the Bank, as the case may be. If a Senior Executive
Officer terminates his or her employment as a result of a Change in Control,
each such Officer shall be entitled to a severance payment equal to the two
times Officer's base annual salary for the preceding fiscal year to be paid
within fifteen (15)
days of such termination and all Stock Options previously granted to such
Officer shall become fully vested on the date of such termination.