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Exhibit
10.1
EMPLOYMENT
AGREEMENT
EMPLOYMENT AGREEMENT
(“ Agreement ”), dated as of April 2, 2008,
by and between Lakeland Bancorp, Inc., a New Jersey corporation
(“Lakeland Bancorp”), Lakeland Bank, a New Jersey state
chartered bank (“Lakeland Bank” and, collectively with
Lakeland Bancorp, the “ Employer ”) and Thomas
J. Shara, an individual residing at 92 Frost Court, Wyckoff, New
Jersey 07481 (the “ Executive ”).
RECITAL
WHEREAS , the Employer
and the Executive desire to set forth the terms pursuant to which
the Executive will be employed by the Employer as the President and
Chief Executive Officer of Lakeland Bancorp and Lakeland
Bank.
NOW, THEREFORE , the
Employer and the Executive hereby agree as follows:
Section 1.
Employment . The Employer shall employ the Executive,
and the Executive agrees to be employed by the Employer, upon the
terms and conditions hereinafter provided, for a term commencing on
April 2, 2008 (the “ Effective Date ”) and
expiring on April 1, 2011 (the “ Initial
Term ”). The Initial Term shall be automatically extended
for an additional one (1) year period on each anniversary date
of the Effective Date, unless on or before each such anniversary
date either party provides written notice to the other of its (or
his) intent not to extend the then current term, provided, however,
that on and after the fifteenth (15th) anniversary
of the Effective Date, if the Executive remains employed by the
Employer, his employment shall be on an at-will basis. By way
of example, if either party does not want the Initial Term to
extend beyond April 1, 2011, then such party must provide
written notice to the other on or before April 2, 2009.
Further by way of example, if the term of this Agreement has been
extended to April 1, 2012, and either party does not want the
term to be extended beyond such date, then such party must provide
written notice to the other on or before April 2, 2010. The
Initial Term and any renewal period hereunder through the fifteenth
(15th) anniversary of the Effective Date are referred to
herein as the “ Term ”.
(b) The Executive hereby
represents and warrants that the Executive has the legal capacity
to execute and perform this Agreement, that this Agreement is a
valid and binding agreement enforceable against the Executive
according to its terms, and that the execution and performance of
this Agreement by the Executive does not violate the terms of any
existing agreement or understanding to which the Executive is a
party.
Section 2.
Duties . The Executive shall report to the respective
Boards of Directors of Lakeland Bancorp and Lakeland Bank (each, a
“ Board ” and collectively, the “
Boards ”) and have the title of President and Chief
Executive Officer of Lakeland Bancorp and Lakeland Bank. The
Executive shall be nominated for election (i) as a member of
the Lakeland Bank Board at each annual meeting of the sole
shareholder of Lakeland Bank occurring during the Term and
(ii) as a member of the Lakeland Bancorp Board at each annual
meeting of shareholders of Lakeland Bancorp at which the
Executive’s term as a director of Lakeland Bancorp
expires
occurring during the Term. The Executive
initially shall be appointed to the Lakeland Bank Board and the
Lakeland Bancorp Board on April 2, 2008, and shall be
nominated to stand for election at Lakeland Bancorp’s 2008
annual meeting of shareholders for a term of two years. The
Executive shall have such duties as are consistent with the
Executive’s experience, expertise and position as President
and Chief Executive Officer, and as shall be assigned to the
Executive from time to time by the respective Boards. During the
Term, except for vacation in accordance with the provisions of this
Agreement and the Employer’s policies or due to illness or
incapacity, the Executive shall devote all of the Executive’s
business time, attention, skill and efforts exclusively to the
business and affairs of the Employer and its affiliates.
Notwithstanding the foregoing, to the extent that the following
does not impair the Executive’s ability to perform the
Executive’s duties pursuant to this Agreement, nor violate
the terms of the provisions set forth in Section 6 hereof, the
Executive may (1) make personal investments in such form or
manner as will neither require the Executive’s services in
the operation or affairs of the business in which such investments
are made, (2) serve on the board of directors of one or more
charitable organizations and (3) serve on the board of
directors of other companies with the advance written consent of
the Boards.
Section 3.
Compensation . For all services rendered by the
Executive in any capacity required hereunder during the Term,
including, without limitation, services as an officer, director, or
member of any committee of the Employer or any parent, subsidiary,
affiliate or division thereof, the Executive shall be compensated
as follows:
(a) The Employer shall pay
the Executive an initial fixed salary (“ Base Salary
”) at a rate of $400,000 per annum from the Effective Date.
Such Base Salary shall be subject to periodic review and may be
increased by the Employer in its discretion. The term “
Base Salary ” as used in this Agreement shall refer to
the Base Salary as it may be increased from time to time. The Base
Salary shall be payable in accordance with the customary payroll
practices of the Employer.
(b) The Executive shall
participate in the executive bonus program as approved annually by
the Lakeland Bancorp Board.
(c) Upon joining the Employer
on April 2, 2008, the Executive shall be granted 60,000
restricted shares (the “ Restricted Shares ”) of
Lakeland Bancorp’s common stock (the “ Common
Stock ”) pursuant to the Lakeland Bancorp, Inc. Amended
and Restated 2000 Equity Compensation Program (the “
Plan ”). A total of 25% of such Restricted Shares
shall vest on each of December 1, 2009, December 1,
2010, December 1, 2011 and December 1, 2012,
provided that the Executive is an employee of the Employer on the
respective vesting date. Except as set forth in Section 5, any
Restricted Shares that have not vested as of the date of the
Executive’s termination of employment shall be forfeited.
Complete terms of the Restricted Shares shall be set forth in a
restricted stock agreement prepared by the Employer.
(d) Except as expressly
modified by this Agreement, the Executive shall be entitled to
participate in all employee benefit plans or programs, including
without limitation the Employer’s 401(k) Plan and Profit
Sharing Plan, and to receive all benefits and perquisites,
including without limitation an automobile, which are approved by
the respective Boards and are generally made available by the
Employer to executive officers of the Employer, to the
extent
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permissible under the general terms and
provisions of such plans or programs and in accordance with the
provisions thereof. Notwithstanding the foregoing, nothing in this
Agreement shall require any particular plan or program to be
continued nor preclude the amendment or termination of any such
plan or program, provided that such amendment or termination is
applicable generally to the executive officers of the
Employer.
(e) The Executive shall be
entitled to five (5) weeks vacation per calendar year during
the Term.
(f) The Executive and the
Employer are entering into a Supplemental Executive Retirement Plan
Agreement (“SERP”) on the date hereof which will
provide the Executive, and his spouse, with the benefits described
therein.
Section 4.
Business Expenses . The Employer shall pay or
reimburse the Executive for all necessary expenses reasonably
incurred by the Executive in connection with the performance of the
Executive’s duties and obligations under this Agreement,
subject to the Executive’s presentation of appropriate
vouchers in accordance with such expense account policies and
approval procedures as the Employer may from time to time
reasonably establish for employees (including but not limited to
prior approval of extraordinary expenses); provided, however, that
in no event shall a reimbursement be made later than
December 31 of the year following the year in which the
expense was incurred.
Section 5.
Effect of Termination of Employment .
(a) Termination
Generally . Notwithstanding anything herein to the contrary,
this Agreement may be terminated by either the Employer or the
Executive, at any time, without “Cause” or “Good
Reason” (each as defined below); provided ,
however , that the party desirous of terminating this
Agreement shall give the other party at least ninety
(90) days’ prior written notice of such termination. The
Employer may, in lieu of the notice period, pay the
Executive’s Base Salary for the notice period, provided,
however, that the Employer shall continue the Executive’s
e-mail, voice mail and secretarial support during such ninety
(90) day period. The date specified in any notice of
termination as the Executive’s final day of employment shall
be referred to herein as the “ Termination Date
.”
(b) Accrued
Obligations . Except as set forth in this Section 5, in
the event that Executive’s employment hereunder is terminated
for any reason, then Executive shall be entitled to no compensation
or other benefits of any kind whatsoever, other than
(i) payment of Executive’s unpaid Base Salary under
Section 3(a) and unpaid bonus under Section 3(b) for the
preceding year in accordance with Employer’s standard payroll
practices, (ii) payment of any unpaid accrued vacation or
business expenses, (iii) payment of any other unpaid amounts
due and owing under any benefit, fringe or equity plans, and
(iv) the opportunity to continue health coverage under the
Employer’s group health plan in accordance with
“COBRA” (“ COBRA Coverage ”) (the
foregoing payments and benefits are collectively referred to herein
as “ Accrued Obligations ”).
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(c) Termination Without
Cause, Resignation for Good Reason; Termination Following a Change
in Control .
(1) In the event that the
Employer terminates Executive’s employment hereunder during
the Term without “Cause” (defined below) or the
Executive resigns during the Term for “Good Reason”
(defined below), then the Executive shall be entitled to no
compensation or other benefits of any kind whatsoever, other than:
(i) the Accrued Obligations, (ii) the No Change in
Control Severance Amount (defined below) payable over a period of
twelve (12) months in accordance with the Employer’s
normal payroll practices, and (iii) all of the
Executive’s Restricted Shares and stock options (to the
extent not already vested) shall become fully vested, and the
Executive shall be permitted to exercise any such option for the
period specified in the Plan as in effect at such time. In
addition, the Executive shall be entitled to purchase group health
insurance under the Employer’s policy as then in effect, at
the Employer’s group rates, for a period of three
(3) years after the Executive’s termination of
employment, provided that the Employer’s then group health
insurance carrier permits such purchase under the then applicable
plan. The first eighteen (18) months of any such coverage
shall be under COBRA.
(2) Notwithstanding the
foregoing, if, within ninety (90) days following a
“Change in Control” (defined below), the
Executive’s employment is terminated by the Employer without
Cause or the Executive resigns for Good Reason, then the Executive
shall receive (i) the Accrued Obligations, (ii) the
Change in Control Severance Amount (defined below) payable within
thirty (30) days following the Executive’s Termination
Date, subject to Section 20 hereof and (iii) all of the
Executive’s Restricted Shares and stock options (to the
extent not already vested) shall become fully vested, and the
Executive shall be permitted to exercise any such option for the
period specified in the Plan as in effect at such time. In
addition, the Executive shall be entitled to purchase group health
insurance under the Employer’s policy as then in effect, at
the Employer’s group rates, for a period of three
(3) years after the Executive’s termination of
employment, provided that the Employer’s then group health
insurance carrier permits such purchase under the then applicable
plan. The first eighteen (18) months of any such coverage
shall be under COBRA.
(3) Notwithstanding anything
contained in this Agreement to the contrary, in the event it shall
be determined that any payment or benefit made or provided by the
Employer or its affiliated companies to or for the benefit of the
Executive pursuant to the terms of this Agreement or otherwise
(determined without regard to any additional payment required under
this Section 5(c)(3)) (the “Total Payments”) would
be subject to the excise tax (the “Excise Tax”) imposed
by Section 4999 of the Internal Revenue Code of 1986, as
amended (the “Code”), then the Executive shall be
entitled to receive an additional payment from the Employer (a
“Gross-Up Payment”) such that the net amount received
by the Executive after deduction of such Excise Tax and any
federal, state and local income tax, penalties, interest and Excise
Tax upon the Gross-Up Payment provided by this Section 5(c)(3)
(including FICA and FUTA taxes), shall be equal to the Total
Payments. Such Gross-Up Payment shall be made by the Employer to
the Executive as soon as practical following the Executive’s
Termination Date, but in no event later than thirty (30) days
following such Termination Date. For purposes of determining the
amount of the Gross-Up Payment, the Executive shall be deemed to
pay federal income taxes at the highest applicable marginal rate of
federal income taxation for the calendar year in which
the
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Gross-Up Payment is to be made, and to
pay state and local income taxes at the highest applicable marginal
rate of taxation in the state and locality of the Executive’s
residence on the Executive’s Termination Date for the
calendar year in which the Gross-Up Payment is to be made, net of
the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes.
(d) Death or
Disability . The Executive’s employment with the Employer
shall terminate upon Executive’s death or
“Disability” (defined below), in which case the
Executive (or his estate and heirs) shall be entitled to no
compensation or other benefits of any kind whatsoever under this
Agreement for any period after the Executive’s date of
termination other than the Accrued Obligations. In addition, the
Executive (or his estate and heirs) shall be permitted to exercise
any stock options (to the extent vested as of the date of
Executive’s termination of employment) for up to twelve
(12) months following such date of termination.
(e) Termination Due to
Non-Renewal . If the Executive’s employment with the
Employer terminates due to the Employer’s notice of
non-renewal of the Term in accordance with Section 1(a), then
the Executive shall be entitled to no compensation or other
benefits of any kind whatsoever, other than the Accrued
Obligations. Any options held by the Executive at such time (to the
extent vested as of the Termination Date) shall be exercisable for
the period specified in the Plan as in effect at such time. All
unvested Restricted Shares held by the Executive as of the
Termination Date shall be forfeited.
(f) Release . Payment
of any amounts under this Section 5 (other than the Accrued
Obligations) shall be contingent upon Executive executing a general
release of claims in favor of the Employer, its subsidiaries and
affiliates, and their respective officers, directors, shareholders,
partners, members, managers, agents or employees, which release
shall be provided to the Executive within five (5) business
days following the Termination Date, and which must be executed by
the Executive and become effective within thirty (30) days
thereafter. Severance payments under this Section 5 that are
contingent upon such release shall commence within ten
(10) days after such release becomes effective.
(g) Termination With
Cause . The Employer may terminate this Agreement immediately
for “Cause” by giving written notice to the Executive.
In the event that this Agreement is terminated pursuant to this
Section 5(g), the Executive shall be entitled to no
compensation or other benefits of any kind whatsoever for any
period after the Termination Date set forth in the notice given by
the Employer to the Executive, except for the Accrued Obligations.
All unexercised stock options and unvested Restricted Shares held
by the Executive as of the Termination Date shall be
forfeited.
(h) Definitions
.
(i) “ Cause
” shall mean: (1) the Executive’s gross negligence
in the performance of the material responsibilities of his office
or position; (2) the Executive’s gross or willful
misconduct in the performance of the material responsibilities of
his office or position; (3) material failure or refusal by the
Executive to perform his duties, as such may be reasonably assigned
to him from time to time, other than by reason of his disability,
or other acts or omissions constituting material neglect or
dereliction of his duties; (4) any conviction by a
court
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of law of, or entry of a pleading of
guilty or nolo contendre by Executive with respect to a
felony; (5) the Executive’s embezzlement or intentional
misappropriation of any property of the Employer (other than good
faith expense account disputes); (6) the Executive’s
breach of Section 6 of this Agreement; (7) fraud,
dishonesty or other acts or omissions by the Executive that
constitute a willful breach of his fiduciary duty to the Employer;
(8) the Executive’s use of alcohol or drugs which
materially interferes with the performance of his duties hereunder;
or (9) the Executive’s use of alcohol or drugs which
materially compromises the integrity and reputation of the
Employer, or that of its employees, services or products. For
purposes of this definition, an act or failure to act shall be
considered “willful” only if done or omitted to be done
without a good faith reasonable belief that such act or failure to
act was in the best interests of the Employer. The Executive shall
be given notice of the termination of his employment for Cause. If
the Executive shall be terminated pursuant to clause (1), (2), (3),
(6) or (8) above, the Executive shall be given thirty
(30) days to cure the matter (if curable). In all other cases,
termination shall be effective as of the date notice is
given.
(ii) “Change in Control
Event” shall be deemed to have occurred if any of the
following events occur:
(a) the
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