UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [x] Filed by a Party other than the Registrant [ ]
[ ] Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under ss. 240.14a-12
REPUBLIC FIRST BANCORP, INC.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
(2) Aggregate number of securities to which transaction applies:
N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
N/A
(4) Proposed maximum aggregate value of transaction:
N/A
(5) Total fee paid:
N/A
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
REPUBLIC FIRST BANCORP
[GRAPHIC OMMITTED]
March 23, 2005
Dear Shareholder:
You are cordially invited to attend the 2005 Annual Meeting of the
Shareholders of Republic First Bancorp, Inc. to be held on Tuesday, April 26,
2005, at 4:00 p.m., Philadelphia time, at the Union League of Philadelphia,
Broad & Sansom Streets, Philadelphia, PA 19102.
It is very important that you be represented at the annual meeting
regardless of the number of shares you own or whether you are able to attend the
meeting in person. We urge you to mark, sign and date your proxy card today and
return it in the envelope provided, even if you plan to attend the annual
meeting. This will not prevent you from voting in person, but will ensure that
your vote is counted if you are unable to attend.
Enclosed with your proxy materials is a copy of our 2004 Annual Report
to shareholders and Form 10-K.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Harry D. Madonna
Harry D. Madonna
Chairman of the Board of Directors
Chief Executive Officer
REPUBLIC FIRST BANCORP, INC.
1608 Walnut Street
Philadelphia, Pennsylvania 19103
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 26, 2005
-----------------------
TO OUR SHAREHOLDERS:
NOTICE IS HEREBY GIVEN THAT the 2005 Annual Meeting of Shareholders
(the "Annual Meeting") of Republic First Bancorp, Inc. (the "Company") will be
held on Tuesday, April 26, 2005, at 4:00 p.m., Philadelphia time, at the Union
League of Philadelphia, Broad & Sansom Streets, Philadelphia, PA 19102 to
consider and act upon:
1. The election of three (3) Class I Directors of the Company;
2. The approval of an amendment to the Company's Amended and
Restated Stock Option Plan and Restricted Stock Plan to extend the term of the
plan for an additional ten year period and to increase the maximum number of
shares which may be issued or awarded under the plan to 1,540,000 shares, plus
an annual increase equal to the number of shares needed to restore the maximum
number of shares that may be available for grant under the plan to 1,540,000
shares; and
3. The transaction of such other business as properly may be
brought before the Annual Meeting or any adjournment or postponement thereof.
Shareholders of record of the Company at the close of business on March
15, 2005, are entitled to notice of and to vote at the Annual Meeting and any
adjournment or postponement thereof.
All shareholders are cordially invited to attend the Annual Meeting.
Whether or not you plan to attend the Annual Meeting, please complete and sign
the enclosed proxy card and return it promptly to the Company in the enclosed
envelope, which requires no postage if mailed in the United States.
March 23, 2005
Sincerely,
/s/ Robert A. Dobie
Robert A. Dobie
Senior Vice President
and Corporate Secretary
IT IS IMPORTANT THAT YOU RETURN YOUR SIGNED PROXY CARD PROMPTLY, REGARDLESS OF
THE NUMBER OF SHARES YOU OWN. PLEASE COMPLETE, SIGN AND MAIL THE ENCLOSED PROXY
CARD IN THE ACCOMPANYING ENVELOPE PROMPTLY, WHETHER OR NOT YOU PLAN TO ATTEND
THE ANNUAL MEETING.
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TABLE OF CONTENTS
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Page
General Information...............................................................................................1
Voting and Revocability of Proxies................................................................................1
Solicitation of Proxies...........................................................................................1
Voting Securities, Quorum and Required Vote.......................................................................2
Shareholder Communications With Directors.........................................................................2
ELECTION OF DIRECTORS.............................................................................................3
Director Nominees.................................................................................................3
Continuing Directors..............................................................................................4
Committees of the Board of Directors..............................................................................5
Meetings of the Board and Attendance..............................................................................6
Executive Officers................................................................................................6
Recommendation of the Board of Directors..........................................................................6
AMENDMENT OF THE COMPANY'S STOCK OPTION PLAN AND RESTRICTED STOCK PLAN............................................7
Recommendation of the Board of Directors.........................................................................10
EXECUTIVE COMPENSATION...........................................................................................10
SUMMARY COMPENSATION TABLE.......................................................................................11
Employment Agreements and Change in Control Agreements...........................................................12
Compensation of Directors........................................................................................13
OPTION GRANTS IN LAST FISCAL YEAR................................................................................13
AGGREGATE OPTION EXERCISES FOR THE YEAR ENDED DECEMBER 31, 2004 AND FISCAL YEAR END OPTION VALUES................14
EQUITY COMPENSATION PLAN INFORMATION.............................................................................15
Compliance with Section 16(a) of the Exchange Act................................................................15
Code of Ethics...................................................................................................15
Stock Performance Graph..........................................................................................16
AUDIT COMMITTEE REPORT TO SHAREHOLDERS...........................................................................17
REPORT OF THE COMPENSATION AND OPTION COMMITTEE..................................................................18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...................................................19
Certain Relationships and Related Party Transactions.............................................................21
Registered Public Accounting Firm................................................................................22
Audit Committee Pre-Approval Procedures..........................................................................22
Shareholder Proposals and Nominations for the 2006 Annual Meeting................................................23
Annual Report And Form 10-K......................................................................................24
Other Matters....................................................................................................24
Amendment of Amended and Restated Stock Option Plan and Restricted Stock Plan...................................A-1
REPUBLIC FIRST BANCORP, INC.
1608 Walnut Street
Philadelphia, Pennsylvania 19103
ANNUAL MEETING OF SHAREHOLDERS
To Be Held on Tuesday, April 26, 2005
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PROXY STATEMENT
----------------------
General Information
This Proxy Statement has been prepared and is being distributed in
connection with the solicitation by the Board of Directors of Republic First
Bancorp, Inc. (the "Company") of proxies in the enclosed form for use at the
2005 Annual Meeting of Shareholders of the Company to be held on Tuesday, April
26, 2005, at 4:00 p.m., Philadelphia time, at the Union League of Philadelphia,
Broad & Sansom Streets, Philadelphia, PA 19102 (such meeting and any
adjournment(s) or postponement(s) thereof are herein referred to as the "Annual
Meeting"). This Proxy Statement is first being given or sent to shareholders of
the Company on or about March 23, 2005.
Voting and Revocability of Proxies
Unless contrary instructions are indicated, all shares represented by
valid proxies received pursuant to this solicitation (and not revoked before
they are voted) will be voted FOR the election of the nominees for Directors
named herein and FOR the approval of the proposed amendment to the Company's
Amended and Restated Stock Option Plan and Restricted Stock Plan. As of the date
of this Proxy Statement, the Board of Directors of the Company (the "Board")
knows of no business that will be presented for consideration at the Annual
Meeting other than that referred to above. If any other business properly comes
before the Annual Meeting, the persons designated in the enclosed proxy will
vote on such business in accordance with their best judgment.
Any shareholder who executes and returns a proxy card may revoke it at
any time before it is voted by delivering to Robert A. Dobie, Senior Vice
President and Corporate Secretary of the Company, at the principal executive
offices of the Company at 1608 Walnut Street, Philadelphia, PA 19103, a written
instrument revoking the proxy, a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person.
Solicitation of Proxies
Your proxy is being solicited by the Board for use in connection with
the Annual Meeting. The cost of such solicitation will be borne by the Company.
Proxies may be solicited in person or by mail, telephone, telegram, mailgram or
other means by directors, officers, and
- 1 -
employees of the Company. Such persons will not receive any fees for such
solicitation. Brokers, nominees, fiduciaries and other custodians have been
requested to forward such soliciting material to the beneficial owners of shares
held of record by them, and such custodians may be reimbursed for their
expenses.
Voting Securities, Quorum and Required Vote
As of the close of business on March 15, 2005, the record date for
voting at the Annual Meeting (the "Record Date"), there were 7,428,681
outstanding shares of common stock, par value $0.01 per share, of the Company.
Holders of shares of the Company's common stock are entitled to one vote per
share on all matters to be voted upon at the Annual Meeting. As of the date
hereof, there are no other classes of the Company's capital stock issued or
outstanding.
The presence in person or by proxy of a majority of the shares of
common stock outstanding on the Record Date will constitute a quorum for the
purpose of conducting business at the Annual Meeting. For the purpose of
determining the votes cast with respect to any matter presented for
consideration at the meeting, only those votes cast "FOR" or "AGAINST" are
included. Abstentions and broker non-votes (shares held by brokers on behalf of
their customers which may not be voted on certain matters because the brokers
have not received specific voting instructions from their customers with respect
to such matters) will be counted solely for the purpose of determining whether a
quorum is present.
The three nominees for directors receiving the highest number of votes
cast by shareholders entitled to vote for the election of directors will be
elected. Approval of the proposal to amend the Company's Amended and Restated
Stock Option Plan and Restricted Stock Plan requires the affirmative vote of a
majority of the votes cast by the shareholders entitled to vote at the Annual
Meeting.
Paul Verdi and Maria Oliveri shall be appointed the lawful proxies,
each with full power of substitution, for and on behalf of the shareholders, to
vote as specified in any appropriately completed proxy card, the shares of the
Company's common stock held of record by the shareholder.
Shareholder Communications With Directors
The Company does not have formal procedures for shareholder
communication with the Board. Any matter intended for the Board, or for any
individual member or members of the Board, should be directed to the Corporate
Secretary at Republic First Bancorp, Inc., 1608 Walnut Street, Philadelphia, PA
19103, with a request to forward the same to the intended recipient. In general,
all shareholder communication delivered to the Corporate Secretary for
forwarding to the Board or specified Board members will be forwarded in
accordance with the shareholder's instructions. However, the Corporate Secretary
reserves the right to not forward to Board members any abusive, threatening or
otherwise inappropriate materials.
The Company encourages all incumbent directors and nominees for
election as director to attend the Annual Meeting. All directors attended the
previous Annual Meeting held in April 2004.
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PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Articles of Incorporation and Bylaws provide for the
classification of directors into three classes, as nearly equal in number as
possible, with approximately one-third of the directors to be elected annually
for three-year terms. The Articles of Incorporation and Bylaws provide that the
Board may consist of not less than five directors and not more than 25
directors.
The Board consists of nine directors divided into three classes.
Currently, the Class I directors are Harry D. Madonna, Kenneth J. Adelberg and
William W. Batoff; the Class II directors are Robert J. Coleman, Lyle W. Hall
Jr. and Harris Wildstein, Esq.; and the Class III directors are Neal I. Rodin,
Barry L. Spevak and Steven J. Shotz.
The Class II directors will hold office until the Company's 2006 annual
meeting and the Class III directors will hold office until the Company's 2007
annual meeting. All directors will hold office until the annual meeting of
shareholders at which their terms expire and the elections and qualification of
their successors.
The Board has nominated Harry D. Madonna, Kenneth J. Adelberg and
William W. Batoff to serve as a Class I directors, each of whose term will
expire in 2008. All of the director nominees have agreed to stand for election.
Assuming election of all nominees, a majority of the Board members will be
independent, as defined by the rules of the Nasdaq Stock Market.
Director Nominees
The following individuals have been nominated for election to the Board
to serve until the end of their respective terms or until his successor is
elected and qualified:
Harry D. Madonna, age 62, has been the Chairman of the Board and Chief
Executive Officer of the Company and chairman of board of directors of Republic
First Bank, a Pennsylvania chartered bank, wholly owned by the Company (the "PA
Bank") since 1988. Since 1999 Mr. Madonna has been chairman of the board of
directors of First Bank of Delaware (the "DE Bank"), a Delaware chartered bank,
which was a wholly owned subsidiary of the Company until it was spun-off by the
Company effective January 31, 2005. Since January 2002, Mr. Madonna also served
as chief executive officer of the DE Bank. Mr. Madonna has been of counsel to
Spector Gadon & Rosen, P.C., a general practice law firm located in
Philadelphia, Pennsylvania, since January 2002, and, prior to that, was a
partner of Blank Rome Comisky & McCauley LLP, a general practice law firm
located in Philadelphia, Pennsylvania, since 1980.
Kenneth J. Adelberg, age 52, has been a Director of the Company and the
PA Bank since 1988 and a director of the DE Bank since 1999. Since 1976 he has
also been the president of HiFi House Group of Companies, a corporation
specializing in audio and video electronics.
William W. Batoff, age 70, has been a Director of the Company and the
PA Bank since 1988 and a director of the DE Bank since 1999. Since 1996, he been
the managing director of William W. Batoff Associates, a government relations
consulting firm. Prior to that, Mr. Batoff
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has been a senior consultant of Cassidy & Associates, a government relations
consulting firm, since 1972, and the sole proprietor of Batoff Enterprise Real
Estate, a real estate brokerage and management company, since 1975.
Each of Messrs. Madonna, Adelberg and Batoff has agreed to be named as
a nominee for Director in this Proxy Statement and has consented to serve as a
Director if elected. The Company expects all nominees to be willing and able to
serve. The Board may designate a substitute nominee to replace any bona fide
nominee who was nominated and who, for any reason, becomes unavailable for
election or service as a Director. If any of the nominees becomes unable to
serve, the persons designated in the enclosed proxy will vote for the election
of such other person or persons as the Board may recommend.
Continuing Directors
The following individuals will continue to serve as directors of the
Company until the end of their respective terms or until his successor is
elected and qualified:
Robert J. Coleman, age 68, has been a Director of the Company since
April 2003. He has also been the chairman and chief executive officer of
Marshall, Dennehey, Warner, Coleman & Goggin, a defense litigation law firm,
since 1974.
Harris Wildstein, Esq., age 59, has been a Director of the Company and
the PA Bank since 1988 and a director of the DE Bank since 1999. Mr. Wildstein
has also been the vice president of R&S Imports, Ltd., an automobile dealership
since 1977 and president of HVW, Inc., an automobile dealership, since 1982.
Neal I. Rodin, age 60, has been a Director of the Company and the PA
Bank since 1988. Mr. Rodin has been the managing director of the Rodin Group, an
international real estate investment company, since 1988, and has been the
president of IFC, an international financing and investing company, since 1975.
Steven J. Shotz, age 60, has been a Director of the Company and the PA
Bank since 1988 and a director of the DE Bank since 1999, and has been the
president of Quantum Group, Inc., a venture capital fund, since 1995.
Barry L. Spevak, age 44, has been a Director of the Company since April
2004. He has also been a partner with Miller Downey Spevak Kaffenberger,
Limited, a certified public accounting firm, since 1991.
Lyle W. Hall, Jr., age 60, has been a Director of the Company since
April 2004. Mr. Hall has been the president of Deilwydd Partners, a real estate
development company, since 1987. Prior to that, Mr. Hall was the executive vice
president and director of Butcher & Company, a real estate investment company.
Mr. Hall is a Certified Public Accountant and a member of the American Institute
of Certified Public Accountants.
- 4 -
Committees of the Board of Directors
The Company's Board of Directors has organized the following standing
committees: the Executive Committee, the Audit Committee, the Nominating
Committee and the Compensation and Option Committee.
Executive Committee. Messrs. Madonna (chair), Rodin, Shotz, Wildstein
and Adelberg serve as members of the Company's Executive Committee. The
Executive Committee is authorized to exercise all of the authority of the Board
in the management of the Company's affairs between Board meetings, unless
otherwise provided by the by-laws or applicable law. The Executive Committee did
not hold any meetings during 2004.
Audit Committee. Messrs. Hall (chair), Rodin and Batoff serve as
members of the Audit Committee. Mr. Hall is an "audit committee financial
expert" as that term is defined in Item 401(h) of Regulation S-K, and is
"financially sophisticated," as that term is defined under the rules of the
Nasdaq Stock Market. The Audit Committee provides general financial oversight
over financial reporting and the adequacy of the Company's internal controls
through meetings with the Company's management and its independent auditors. All
members of the Audit Committee are independent, as defined by the rules of the
Nasdaq Stock Market. The Audit Committee held four meetings during 2004, and it
operates under a written charter approved by the Board. A copy of the Audit
Committee charter is available on the Company's website at www.rfbkonline.com.
See "Audit Committee Report to Shareholders."
Compensation and Option Committee. Messrs. Batoff (chair), Hall and
Spevak serve as members of the Compensation and Option Committee. The
Compensation and Option Committee is authorized to grant options, evaluate
executive management's performance and approve compensation arrangements for the
Company's Chief Executive Officer. All members of the Compensation and Option
Committee are independent as defined by the rules of the Nasdaq Stock Market.
The Compensation and Option Committee held two meetings in 2004.
Nominating Committee. Messrs. Spevak (chair), Hall and Batoff serve as
members of the Nominating Committee. All members of the Nominating Committee are
independent, as defined by the Rules of the Nasdaq Stock Market. The Nominating
Committee held one meeting in 2004. A copy of the Nominating Committee's charter
is available on the Company's website at www.rfbkonline.com.
The Nominating Committee oversees the composition and operation of the
Company's Board, including identifying individuals qualified to become Board
members, recommending to the Board director nominees for the next annual meeting
of shareholders, and filling vacancies occurring between annual shareholder
meetings. It identifies director candidates by considering the recommendations
of the Company's directors, executive officers and shareholders, as well as
those of experts and consultants of the Company. The Nominating Committee
evaluates each candidate's background and experience as well as the candidate's
ability to act in the best interest of the Company's shareholders, analyzing
such qualities as the candidate's accomplishments, business experience and
acumen, honesty and integrity.
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The Nominating Committee will consider director nominees recommended by
security holders for nomination for election at the annual meetings of the
Company's shareholders. The procedures for submitting such nominations are
described below under "Shareholder Proposals and Nominations for the 2006 Annual
Meeting."
Meetings of the Board and Attendance
During 2004, the Board held six full Board meetings. All of the
directors attended at least 75% of all of the meetings of the Board and the
meetings of all committees of the Board on which such director served.
Executive Officers
The following sets forth certain information regarding the executive
officers of the Company. Information pertaining to Harry D. Madonna, who is both
a director and executive officer of the Company, may be found in the section
entitled "Election of Directors."
Robert D. Davis, age 57, has been the President, Chief Executive
Officer and Director of the PA Bank since 1999. Prior to that, Mr. Davis served
as the Regional President of Mellon PSFS, a commercial bank, from 1995 until
1999.
Louis J. DeCesare, age 45, has been the Executive Vice President and
Chief Lending Officer of the PA Bank since November 2003. Prior to that, Mr.
DeCesare served as a Vice President of Commercial Lending of Commonwealth Bank
from 1998 until 2002. He was Regional Vice President of Commerce Bank from 1994
to 1998.
Paul Frenkiel, age 51, has been the Chief Financial Officer of the
Company, the PA Bank and the DE Bank since November 2000, and was a Director of
the DE Bank from January 2002 until April 2004. Prior to that, Mr. Frenkiel
served as the Chief Financial Officer JeffBanks Inc., a bank holding company,
from 1987 until April 2000.
Alonzo J. Primus, age 34, has been Executive Vice President of National
Consumer Lending of the DE Bank since April 2004. Mr. Primus served as Senior
Vice President and Chief Accounting Officer of the Company from 2000 until April
2004. From 1998 until 2000, Mr. Primus has served as Assistant Vice President of
Financial Reporting of Summit Bank in Princeton, New Jersey.
Paul A. Verdi, Jr., age 42, has been an Executive Vice President and
Chief Retail Banking Officer of the Company and the DE Bank since September
1994. Prior to that Mr. Verdi served as a vice president/area manager of First
Fidelity Bank since 1986.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE ELECTION OF ALL NOMINEES.
- 6 -
PROPOSAL 2
AMENDMENT OF THE COMPANY'S STOCK OPTION PLAN
AND RESTRICTED STOCK PLAN
The Company's Amended and Restated Stock Option Plan and Restricted
Stock Plan (the "Plan") was adopted by the Board on November 14, 1995. The
purpose of the Plan is to recognize the contributions made to the Company by its
employees, consultants and advisors, to provide these individuals with
additional incentives to devote themselves to the future success of the Company,
and to improve the ability of the Company to attract, retain and motivate
individuals upon whom the sustained growth and financial success of the Company
depends.
The Plan provides for the grant of options ("Options") to purchase
shares of common stock and awards ("Awards") of shares of common stock subject
to risk of forfeiture ("Restricted Shares"). Stock appreciation rights ("SARs")
may also be granted under the Plan in tandem with Options. Currently, Options
and Awards can be granted under the Plan for up to an aggregate of 1,540,000
shares.
Subject to shareholder approval, the Board has approved an amendment to
the Plan to extend the term of the Plan for an additional ten year period and to
increase the maximum number of shares which may be issued or awarded under the
Plan to 1,540,000 shares, plus an annual increase equal to the number of shares
needed to restore the maximum number of shares that may be available for grant
under the Plan to 1,540,000 shares. The Board believes that the amendment may be
an important factor in attracting, motivating and retaining qualified employees
and advisors who are essential to the success of the Company. The Board
therefore seeks shareholder approval to amend the Plan to extend the term of the
Plan for an additional ten year period so that the Plan will terminate on
November 14, 2015, and to increase the maximum number of shares which may be
issued or awarded under the Plan to 1,540,000 shares, plus an annual increase
equal to the number of shares needed to restore the maximum number of shares
that may be available for grant under the Plan to 1,540,000 shares.
The key provisions of the Plan, as amended, are as follows:
Number of Shares. The maximum number of shares which may be
issued or awarded under the Plan will be 1,540,000 shares, plus an annual
increase equal to the number of shares needed to restore the maximum number of
shares that may be available for grant under the Plan to 1,540,000 shares. The
maximum number of shares will be adjusted to reflect certain changes in the
Company's capitalization. If any shares subject to any Option or Award are
forfeited, or an Option is terminated without the issuance of shares, the shares
subject to such Option or Award will again be available pursuant to the Plan.
Administration. The Plan is administered by a committee of the
Board composed of no less than three members each of which shall be a
"Non-Employee Director" (as such term is defined in Rule 16b-3 under the
Securities Exchange Act). The Plan presently is administered by the Compensation
and Option Committee.
- 7 -
Eligibility. All employees (including all executive officers),
directors, consultants and advisors of the Company or its subsidiaries and
affiliates are eligible to receive Options or Awards under the Plan.
Term of the Plan. The Plan became effective November 14, 1995
and provides that no Options, Awards or SARs may be granted after November 14,
2015.
Options, Awards and SARs. From time to time, at its
discretion, the Committee may select eligible recipients to whom Options or
Awards will be granted, determine when each Option or Award will be granted,
determine the number of shares subject to such Option or Award and, subject to
the provisions of the Plan, determine the terms and conditions of each Option,
Award or SAR.
Options. Options granted under the Stock Incentive Plan may be
either incentive stock options ("ISOs") or non-qualified stock options. ISOs are
intended to qualify as "incentive stock options" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). Unless an
Option is specifically designated at the time of grant as an ISO, Options are
non-qualified options. Options are not transferable by the optionee except by
will or by the laws of descent and distribution, except for certain transfers of
nonqualified stock options that may be required under the terms of a "qualified
domestic relations order" (generally, a court order relating to provision of
spousal or dependent support or to division of marital property that meets
certain requirements set forth in the Code). No Option granted under the Plan
may be exercised unless at least six months has elapsed since the date of the
grant.
The exercise price of the Options is determined by the
Committee, provided that the exercise price of an ISO must be at least 100% of
the fair market value of a share of common stock on the date the Option is
granted, or at least 110% of the fair market value if the recipient owns shares
possessing more than 10% of the total combined voting power of all classes of
stock of the Company. The term of each Option is fixed by the Committee. The
aggregate fair market value, determined as of the time of grant, of the shares
with respect to which an ISO is exercisable for the first time by the recipient
during any calendar year (under all incentive stock option plans of the Company)
may not exceed $100,000.
Termination of Options. All Options terminate on the earliest
of:
o The expiration of the term specified in the Option, which
shall not exceed ten years from the date of grant or five
years from the date of grant of an ISO if the recipient owns
shares possessing more than 10% of the total combined voting
power of all classes of stock of the Company;
o The expiration of 90 days from the date the optionee's
employment or service with the Company terminates for any
reason other than disability, death or as otherwise described
below;
o The expiration of one year from the date the optionee's
employment or service with the Company terminates due to the
optionee's death or disability; or
- 8 -
o Within 10 days after a notice is given by the Company to the
optionees of the occurrence of a merger or a sale of all or
substantially all of the Company's assets.
Payment for Options. An optionee may pay for shares in cash or
such other mode of payment as the Committee may approve, including payment in
shares held by the optionee. The optionee may, subject to the Committee's
exclusive discretion, pay for the shares acquired by the optionee in cash or
certified check in an amount equal to the par value of the common stock, with
the remainder of the amount satisfied by issuance of an interest bearing
promissory note in a form and under terms satisfactory to the Board.
Awards. The Committee will determine the period, during which
the grantee may not sell, transfer, pledge or assign Restricted Shares (the
"Restrictions"). Restrictions may lapse in installments, as determined by the
Committee. The Committee may, at its sole discretion, waive any Restrictions in
whole or in part. The Committee will determine the rights that grantees have
with respect to Restricted Shares, including the right to vote Restricted Shares
and the right to receive dividends paid with respect to Restricted Shares. In
the event a grantee terminates employment with the Company for any reason other
than death or disability, all Restricted Shares remaining subject to
Restrictions will be forfeited by the grantee and canceled by the Company.
Provisions Relating to a Change of Control of the Company.
Notwithstanding any other provision of the Plan, in the event of a Change of
Control of the Company, all Options shall be immediately exercisable, and all
Restrictions on transfer of shares which were not forfeited under the terms of
the Awards shall lapse.
A "Change of Control" will occur if: (a) any person (as used
in Sections 13(d) or 14(d) of the Exchange Act) will become the beneficial owner
of shares representing thirty percent (30%) or more of the combined voting power
of the Company; (b) the Company is dissolved or liquidated; (c) subject to
certain exceptions, an agreement to sell or dispose of substantially all of the
assets of the Company is approved or an agreement to merge or consolidate the
Company with or into another corporation is approved; or (d) a majority of the
Board of Directors is comprised of persons who were not nominated by the Board
for election as directors.
Amendment and Termination. The Board may amend the Plan at any
time, provided the Board may not, without shareholders' approval: (a) materially
increase the benefits accruing to eligible participants under the Plan; (b)
increase the maximum number of shares as to which Options and Awards may be
granted; (c) materially modify the requirements as to the eligibility for
participation in the Plan; or (d) modify the provisions for determining the fair
market value of a share of common stock. No outstanding Option or Award will be
adversely affected by any such amendment without the consent of the optionee or
grantee.
- 9 -
Stock Appreciation Rights. The Committee may grant SARs to any
eligible participant in tandem with any Option. Each SAR will entitle the
optionee to receive a payment upon exercise equal to the excess of the fair
market value of a specified number of shares of common stock, determined as of
the date the SAR is exercised, over the purchase price specified in the grant
document applicable to the SAR. The SAR may be exercisable in whole or in part,
and at such times and under such circumstances as are set forth in the grant
document applicable to the SAR. The exercise of the SAR will result in a
cancellation of the Option to the same extent as the SAR is exercised, and the
exercise of the Option will result in a cancellation of the SAR to the same
extent as the Option is exercised, and the terms and conditions, including the
number of shares of Common Stock subject to the SAR, the "purchase price" (which
will be equal to the Option exercise price) and the times and circumstances in
which the SAR may be exercised, will be the same as are applicable to the
Option. Payment of the SAR "purchase price" may be made either in shares of
Common Stock or in cash or in any combination thereof. The grant document
applicable to the Option shall include provisions indicating the SAR rights.
SAR's will be exercisable only at such times and by such individuals as the
related Option may be exercised under the Plan and applicable grant document.
New Plan Benefits. The Company cannot currently determine the
number of shares that will be purchased by eligible participants under the Plan.
On March 14, 2005, the closing price of the Company's common stock on the Nasdaq
National Market was $14.10 per share.
The Board of Directors approved the above described amendments to the
Plan on February 15, 2005. Approval of the amendment to the Plan requires the
affirmative vote of a majority of the votes cast by holders of common stock.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR THE AMENDMENT OF THE PLAN.
The full text of the proposed resolution amending the Plan is attached
to this proxy statement as Appendix A.
EXECUTIVE COMPENSATION
The following table shows the annual compensation of the Chief
Executive Officer of the Company and the Company's other most highly compensated
executive officers for the fiscal years 2004, 2003 and 2002.
Certain of the Company's officers also serve as officers of the DE
Bank. After effectiveness of the spin-off, certain officers continue to perform
services for both the Company and the DE Bank. Mr. Madonna will continue to
serve as Chairman and Chief Executive Officer and is anticipated to spend
approximately 50% of his time on his work
- 10 -
for the DE Bank. Mr. Frenkiel will continue to serve as Chief Financial Officer
with approximately 25% of his time anticipated to be spent on his work for the
DE Bank. Mr. DeCesare will continue to serve as Chief Lending Officer with
approximately 15% of his time anticipated to be spent on his work for the DE
Bank. Mr. Verdi will continue to serve as Chief Retail Banking Officer with
approximately 11% of his time anticipated to be spent on his work for the DE
Bank. Following the spin-off, all of the Company's employees were transferred to
BSC Services Corporation, a wholly owned subsidiary of the DE Bank. The
employment agreements with Messrs. Madonna and Davis were assigned to BSC
Services Corporation. The Company has agreed to reimburse BSC Services
Corporation for compensation expenses related to those officers. Such
reimbursements will be made by the Company pro rata in accordance with the
agreed upon time allocations. See "Certain Relationships and Related Party
Transactions."
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
------------------- -----------------------
Securities
Restricted Underlying
Name & Principal Position Year Salary ($) Bonus ($) Stock Awards # Options (#)(1)
----------------------------- ---- ---------- --------- -------------- --------------
Harry D. Madonna
Chief Executive Officer and
President of the Company and
the DE Bank 2004 $362,619 150,000 -- --
2003 330,000 82,500 -- 18,700
2002 300,000 -- -- 17,600
Robert D. Davis 2004 308,857 100,000 -- 12,834
Chief Executive Officer and
President of the PA Bank
2003 269,870 68,063 -- 12,834
2002 245,423 35,000 -- 12,834
Louis J. DeCesare 2004 158,149 50,000 -- --
Executive Vice President and
Chief Lending Officer of the PA
Bank
2003 117,500 20,000 -- 15,950
2002 91,115 7,500 -- 3,300
Paul Frenkiel 2004 167,800 32,000 -- --
Executive Vice President and
Chief Financial Officer of the
PA Bank
2003 162,923 8,000 -- --
2002 140,000 20,000 -- --
Alonzo J. Primus 2004 134,136 100,000 -- 16,500
Senior Vice President and Chief
Accounting Officer of the
Company(2)
2003 95,000 22,000 -- 9,900
2002 85,000 16,000 -- 3,300
Paul A. Verdi, Jr. 2004 125,000 25,000 -- --
Executive Vice president and
Chief Retail Banking Officer of
the Company and the DE Bank
2003 110,000 22,000 -- 8,250
2002 106,000 20,000 -- 3,300
(1) As adjusted to reflect a 10% stock dividend distributed on August 24,
2004.
(2) Mr. Primus resigned his position with the Company in April 2004 to
become Executive Vice President of National Consumer lending of the DE
Bank. Mr. Primus' salary and bonus for 2004 includes amounts paid by
the DE Bank.
- 11 -
Employment Agreements and Change in Control Agreements
Harry D. Madonna. Mr. Madonna currently serves as the Chairman of the
Board and President and Chief Executive Officer of the Company under the terms
of an agreement (the "Madonna Agreement") which was extended for three years
effective January 1, 2005, at an annual base salary of $400,000. The annual base
salary will increase 10% during the second and third year of the Madonna
Agreement on the anniversary date of commencement of Mr. Madonna's employment.
Pursuant to the terms agreed among the Company, the PA Bank and the DE Bank, the
costs of Mr. Madonna's employment will be allocated between the PA Bank and the
DE Bank. The Company and Mr. Madonna may terminate the Madonna Agreement at any
time for cause. Mr. Madonna is also eligible to receive an annual bonus of at
least 25% of his then annual base compensation in the sole discretion and
determination of the Board, upon achieving mutually agreed upon criteria. Mr.
Madonna will be provided an automobile and reimbursed for operation, maintenance
and insurance expenses of the automobile. Upon the occurrence of any one of the
events described in the Company's change in control policy, which results in Mr.
Madonna terminating his employment with the Company, Mr. Madonna will receive a
severance payment equal to two times his annual base salary in the year of the
occurrence of such event. Upon a change in control, Mr. Madonna will also
receive his base annual salary and continuous funding under the life insurance
policy covering executives and under his 401(k) plan for the period commencing
upon termination of Mr. Madonna's employment and ending one year after the date
on which the Madonna Agreement was to expire. In addition, upon such termination
of employment, Mr. Madonna will receive title to the automobile provided to him
by the Company. The Madonna Agreement provides for the non-disclosure by Mr.
Madonna of confidential information acquired by him in the context of his
employment with the Company and the DE Bank.
Robert D. Davis. Mr. Davis currently serves as President and Chief
Executive Officer of the PA Bank, under the terms of an employment agreement
(the "Davis Agreement") which was extended by three years effective February 1,
2004, at an annual base salary of $330,000. The Davis Agreement provides that
the base salary will increase 10% per year. The Davis Agreement may be
terminated by either Davis or the PA Bank if six months' advance notice is given
by either of Mr. Davis or the PA Bank of their desire not the renew the Davis
Agreement. Mr. Davis may also terminate the Davis Agreement with six months'
advance notice. The Company may terminate the Davis Agreement at any time for
cause. Mr. Davis is also eligible to receive an annual bonus of at least 25% of
his annual base compensation in the sole discretion and determination of the
Board upon achieving mutually agreed upon budget criteria. Upon the occurrence
of any one of the events described in the Company's change in control policy,
which results in Mr. Davis terminating his employment with the Bank, Mr. Davis
will receive a severance payment equal to two times his annual base salary in
the year of the occurrence of such an event. Upon a change in control, Mr. Davis
will also receive his base annual salary and continuous funding under the life
insurance policy covering executives and under his 401(k) plan for the period
commencing upon termination of Mr. Davis' employment and ending one year after
the date on which the Davis Agreement was to expire. The Davis Agreement
provides for the non-disclosure by Mr. Davis of confidential information
acquired by him in the context of his employment with the PA Bank and the
Company.
- 12 -
Other Executives. The Company has adopted a change in control policy
according to which, upon the occurrence any one of the events described therein
as resulting in a change in control, each senior officer of the Company will
receive a payment equal to 2 time such officer's annual base salary, in the
event that he determines not to continue their employment after such event.
Compensation of Directors
Employee Directors receive no additional compensation for their
participation in Board meetings. Non-employee directors currently receive a
$4,000 quarterly retainer and $500 for each board or committee meeting attended,
except that Audit Committee members receive an additional $3,750 quarterly
retainer and $1,000 for each meeting attended, and the Audit Committee chairman
receives $5,000 quarterly retainer and $1,500 for each meeting attended.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning the awards of
options to purchase common stock made to the named executive officers during
fiscal year 2004, as adjusted to reflect the exercise price of such options
determined in accordance with the terms of the spin-off. All options were
originally granted at an exercise price equal to the closing market price of the
Company's common stock on the date of grant. All options have a ten-year term,
subject in certain cases to earlier expiration following termination of
employment.
Number of Securities Percent of Total Options Exercise Grant Date
Underlying Options granted to Employees in Price Expiration Present
Name Granted (#)(1) Fiscal Year $/Share(2) Date Value ($)(3)
------------------------- ----------------------- -------------------------- ------------- ------------ --------------
Harry D. Madonna -- -- -- -- --
Robert D. Davis 12,834 29% 11.03 1/1/14 51,593
Louis J. DeCesare -- -- -- -- --
Paul Frenkiel -- -- -- -- --
Alonzo J. Primus (4) 16,500 38% 11.49 1/1/14 66,330
Paul A. Verdi, Jr. -- -- -- -- --
(1) As adjusted to reflect a 10% stock dividend distributed on August 24,
2004.
(2) As adjusted to reflect the exercise price determined in accordance with
the terms of the spin-off.
(3) The present value is computed using the Black-Scholes option pricing
model, which is a method of calculating the hypothetical value of the
options on the date of grant. The following assumptions were used in
calculating the Black-Scholes values: expected time of exercise of 5
years; risk-free interest rate of 3.24%; assumed annual volatility of
underlying shares of 35.29%; dividend yield of 0% and vesting of all
shares.
(4) Options granted to Mr. Primus are subject to a three-year vesting
period so that one-third of the options vest on April 14, 2005, April
14, 2006 and April 14, 2007, respectively.
- 13 -
AGGREGATE OPTION EXERCISES FOR THE YEAR ENDED
DECEMBER 31, 2004 AND FISCAL YEAR END OPTION VALUES
The following table sets forth information concerning the exercise of
stock options during fiscal year 2004 by each of the named executive officers
and the number and value of unexercised stock options held by those officers at
the end of the fiscal year 2004:
No. of Securities Underlying Value of Unexercised,
Unexercised Options at In-the-Money Options Held at
Shares Fiscal Year End (#)(1) Fiscal Year End ($)(2)(3)
Name Acquired on Value --------------------------------------------------------------
---- Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
----------- ----------- ----------- ------------- ----------- -------------
Harry D. Madonna -- -- 224,038 -- 2,423,957 --
Robert D. Davis -- -- 108,901 -- 1,126,345 --
Louis J. DeCesare -- -- 17,316 5,224 121,182 $27,372
Paul Frenkiel -- -- 33,000 -- 398,100 --
Alonzo Primus -- -- 7,239 22,461 55,420 91,201
Paul A. Verdi, Jr. -- -- 12,557 4,493 123,355 24,209
(1) As adjusted to reflect a 10% stock dividend distributed on August 24,
2004.
(2) Based upon a price of $15.30 per share, the closing price per share on
December 31, 2004.
(3) As adjusted to reflect the exercise price determined in accordance with
the terms of the spin-off.
- 14 -
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information as of December 31, 2004,
with respect to the shares of common stock that may be issued under the
Company's existing equity compensation plans.
(c)
(a) (b) Number of securities
Number of securities to Weighted-average remaining available for
be issued upon exercise exercise price of future issuance (excluding
of outstanding options, outstanding options, securities reflected in
Plan category warrants and rights warrants and rights column (a))
------------------------------------- ------------------------- ---------------------- -------------------------------
Equity compensation plans approved 768,498 $ 5.07 0
by security holders: Amended and
Restated Stock Option Plan and
Restricted Stock Plan
Equity compensation plans not 58,300 $ 9.90 0
approved by security holders:
Incentive to acquire new employees (1)
Total 826,798 $ 5.77 0
(1) Issued at market price of the stock on grant date, with 10-year terms
and various vesting schedules.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires the Company's officers and
directors and persons who own more than 10% of a registered class of the
Company's equity securities (collectively, the "Reporting Persons") to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission and to furnish the Company with copies of these reports. Based on the
Company's review of the copies of the reports filed by such persons, the Company
believes that all filings required to be made by Reporting Persons for the
period from January 1, 2004 through December 31, 2004 were made on a timely
basis.
Code of Ethics
The Company has adopted a Code of Ethics that applies to its principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. The Company's Code of
Ethics is designed to deter wrongdoing and promote: (i) honest and ethical
conduct, including the ethical handling of actual or apparent conflicts of
interest between personal and professional relationships; (ii) full, fair,
accurate, timely and understandable disclosure in reports and documents that a
registrant files with, or submits to, the SEC and in other public communications
made by the Company; (iii) compliance with applicable governmental laws, rules
and regulations; (iv) the prompt internal reporting of violations of the code to
an appropriate person or persons identified in the code; and (v) accountability
for adherence to the code.
- 15 -
A copy of the Company's Code of Ethics is available on the Company's
website at www.rfbkonline.com.
Stock Performance Graph
The following line graph compares the yearly percentage change in the
cumulative stockholder return on the Company's common stock to the NASDAQ Market
Index and the SNL Bank Index over the five-year period beginning December 31,
1999, and ending December 31, 2004. Cumulative stockholder return has been
measured on a weighted-average basis based on market capitalizations of the
component companies comprising the peer group index at the close of trading on
the last trading day preceding the beginning of each year assuming an initial
investment of $100 and reinvestment of dividends.
[GRAPHIC OMMITTED]
Period Ending
----------------------------------------------------------------------
Index 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
------------------------------------------------------------------------------------------------------------
Republic First Bancorp, Inc. 100.00 72.29 95.23 125.32 234.99 324.43
NASDAQ Composite 100.00 60.82 48.16 33.11 49.93 54.49
SNL Bank Index(1) 100.00 118.10 119.29 109.38 147.55 165.34
(1) Represents banks traded on the New York, Nasdaq and American Stock
Exchanges.
- 16 -
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act or the Exchange Act that
might incorporate future filings, including this proxy statement, in whole or in
part, the stock performance graph set forth above and the following reports by
the Audit Committee and the Compensation and Option Committee, shall not be
incorporated by reference into any such filings nor shall they be deemed to be
soliciting material or deemed to be filed with the SEC under the Securities Act
of 1933, as amended, or the Exchange Act of 1934, as amended.
AUDIT COMMITTEE REPORT TO SHAREHOLDERS
The Audit Committee of the Company's Board of Directors (the "Audit
Committee") is responsible for providing independent, objective oversight of the
Company's accounting functions and internal controls. The Audit Committee is
composed of three directors, each of whom is independent as defined by Rule
4200(15) of the Nasdaq Stock Market. The Audit Committee operates under a
written charter approved by the Board of Directors. A copy of the Audit
Committee charter is available on the Company website at www.rfbkonline.com.
Management is responsible for the Company's internal controls and
financial reporting process. The independent accountants are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with generally accepted auditing standards and to issue
a report thereon. The Audit Committee's responsibility is to monitor and oversee
these processes.
In connection with these responsibilities, the Audit Committee has
reviewed and discussed the Company's audited financial statements for the fiscal
year ended December 31, 2004 with management and the independent accountant and
reviewed the Annual Report on Form 10-K. The Audit Committee has discussed with
the independent accountant the matters required to be discussed by Statement on
Auditing Standards No. 61 (Codification of Statements on Auditing Standards).
The Audit Committee received the written disclosures and letter from the
independent accountants required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees) and discussed with the
independent accountant the independent accountant's independence.
Based upon the Audit Committee's discussions with management and the
independent accountants, and the Audit Committee's review of the disclosures and
representations of management and the independent accountants, the Audit
Committee recommended to the Board that the Company's audited consolidated
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2004, for filing with the Securities and
Exchange Commission.
Respectfully submitted,
Lyle W. Hall
Neal I. Rodin
William W. Batoff
- 17 -
REPORT OF THE COMPENSATION AND OPTION COMMITTEE
The Compensation Committee and Option Committee (the "Committee") is
responsible for reviewing the Company's compensation philosophy and programs and
exercises oversight with respect to the payment of annual salary, bonuses, and
stock-based incentives to directors and officers, and also exercises authority
with respect to the administration of the stock incentive plans of the Company.
Compensation Philosophy and Practice
The Committee believes that leadership and motivation of the Company's
employees is critical to the continued success of the Company. In support of
this philosophy, the Committee structures its compensation programs to achieve
the following objectives:
o offer compensation opportunities that attract and retain
exceptionally talented individuals, motivate individuals to
perform at their highest levels, and reward achievements that
further the business strategy of the Company;
o link a significant portion of an executive's total
compensation to the annual and long term financial performance
of the Company and the creation of stockholder value; and
o encourage executives to manage from the perspective of persons
with ownership interests in the Company.
The Committee utilizes a formal executive incentive program under which
achievement of specific net income, profit, quality and growth of assets are set
early in the year and are considered when making compensation decisions. In
reviewing the performance of executive officers whose compensation is detailed
in this proxy statement other than Harry D. Madonna, the Company's Chief
Executive Officer, the Committee also takes into account the views of Mr.
Madonna. The Committee determines the compensation of the Chief Executive
Officer without his participation.
Executive Officer Compensation Program
Base Salary. Base salary compensation is generally set within the
ranges of salaries of executive officers with comparable qualifications,
experience and responsibilities at other companies of similar size, complexity,
revenues and growth potential taking into account the caliber and level of
experience of management.
Annual Bonus Compensation. The Company's executive officers are
eligible for an annual cash bonus. Early in the year, the Committee establishes
Company performance standards. During the past fiscal year, the corporate
performance standards were based on growth in net income, commercial loans and
increasing the quality of the Company's assets.
Management Stock Ownership. Under the Company's Amended and Restated
Stock Option Plan and Restricted Stock Plan, stock options and shares of
restricted stock may be granted to the executive officers and other key
employees of the Company. The Committee
- 18 -
believes that it is important for the Company's executive officers to hold
significant levels of stock ownership in order to align the interests and
objectives for the executive officers with those of the Company's other
stockholders. Furthermore, the Committee believes that awards under the Amended
and Restated Stock Option Plan and Restricted Stock Plan provide incentives for
improving the long-term performance of the Company and help retain superior
talent in the Company's senior management. The Committee awards stock options
and restricted shares, and determines the size of stock option and restricted
share awards based on similar factors as are used to determine the base salaries
and annual bonus amounts, including comparative compensation data.
Chief Executive Officer Compensation
In determining the compensation of the Company's Chairman and Chief
Executive Officer, Harry D. Madonna, the Committee considered the demonstrated
leadership he brings to the Company and the performance of the Company during
the last fiscal year as measured against the Company performance standards
established by the Committee and other factors deemed relevant by the Committee.
Specifically, the Committee considered the Company's short-term loan program,
the reduction in the amount of classified assets, the collection of problem
loans, the retention of key personnel, the development of a quality senior
management team, the growth in the dollar amount of commercial loans, the
increasing shareholder value and the achievement of the net income target of the
DE Bank. After comparing the Company's performance against the foregoing
criteria, the Committee concluded that Mr. Madonna will receive a bonus in the
amount of $150,000.
Respectfully submitted,
Lyle W. Hall
Barry L. Spevak
William W. Batoff
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 15, 2005, information with
respect to the securities holdings of all persons which the Company, pursuant to
filings with the Securities and Exchange Commission and the Company's stock
transfer records, has reason to believe may be deemed the beneficial owners of
more than five percent (5%) of the Company's outstanding common stock. The
following table also sets forth, as of such date, the beneficial ownership of
the Company's common stock by each Director and nominee for Director of the
Company, by the Company's Chief Executive Officer, by each of the Company's four
other most highly compensated executive officers in 2004, and by all of the
Company's officers and directors as a group. Each of the persons named in the
table below as beneficially owning the shares set forth therein has sole voting
power and sole investment power with respect to such shares, unless otherwise
indicated.
- 19 -
Amount and Nature of Percentage of
Name and Address of Beneficial Owner(1) Beneficial Ownership(2) Class(2)
--------------------------------------- ----------------------- --------------
Harry D. Madonna 487,375(3) 6.4%
Kenneth J. Adelberg 347,026(4) 4.6%
William W. Batoff 86,433(5) 1.2%
Robert J. Coleman 110,000 1.5%
Neal I. Rodin 134,729(6) 1.8%
Steven J. Shotz 278,356(7) 3.7%
Harris Wildstein, Esq. 573,846(8) 7.7%
Robert D. Davis 115,511(9) 1.5%
Louis J. DeCesare 21,543(10) *
Paul Frenkiel 78,476(11) 1.0%
Lyle W. Hall, Jr. 22,395 *
Barry L. Spevak 3,570 *
Alonzo J. Primus 13,053(12) *
Paul A. Verdi 12,677(13) *
All directors and executive officers as a group (14 persons) 2,284,990 28.7%
---------------------
* Represents less than 1% of the issued and outstanding shares.
(1) Unless otherwise indicated, the address of each beneficial owner is c/o
Republic First Bancorp, Inc., 1608 Walnut Street, Philadelphia, PA
19103.
(2) The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended. As of
March 15, 2005 there were 7,428,681 shares of the Company's common
stock outstanding.
(3) Includes 75,900 shares of common stock subject to options which are
currently exercisable.
(4) Includes 65,252 shares of common stock issuable upon exercise of
options which are currently exercisable.
(5) Includes 11,110 shares of common stock issuable upon the exercise of
options which are currently exercisable.
(6) Includes 10,010 shares of common stock issuable upon exercise of
options which are currently exercisable.
(7) Includes 135,146 shares of common stock issuable upon exercise of
options which are currently exercisable.
(8) Includes 62,150 shares of common stock issuable upon exercise of
options which are currently exercisable.
(9) Includes 108,901 shares of common stock issuable upon exercise of
options which are currently exercisable.
(10) Includes 17,316 shares of common stock issuable upon exercise of
options which are currently exercisable.
(11) Includes 33,000 shares of common stock issuable upon exercise of
options which are currently exercisable.
(12) Includes 7,239 shares of common stock issuable upon exercise of options
which are currently exercisable.
(13) Includes 12,557 shares of common stock issuable upon exercise of
options which are currently exercisable.
- 20 -
Certain Relationships and Related Party Transactions
Certain of the directors of the Company and/or their affiliates have
loans outstanding from the PA Bank. All such loans were made in the ordinary
course of the PA Bank's business, were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with unrelated persons and, in the opinion of
management, do not involve more than the normal risk of collectability or
present other unfavorable features.
Mr. Madonna, the Chairman and Chief Executive Officer of the Company
and the DE Bank, is also "Of Counsel" to the law firm of Spector Gadon & Rosen,
P.C., Philadelphia, PA (the "Law Firm"). Mr. Madonna receives a salary from the
Law Firm. In addition, the Company and the PA Banks utilize the services of the
Law Firm for certain legal matters. In 2004, the Company paid $1,250,432 in
legal fees to the Law Firm, primarily for loan workout and collection matters.
Certain of the Company's directors continue to serve as directors of
the DE Bank following the spin-off. The following important intercompany
agreements between the Company and the DE Bank have remained in force following
the spin-off:
o Financial Accounting and Reporting Services Agreement dated
July 31, 2004;
o Compliance Services Agreement dated July 31, 2004;
o Operation and Data Processing Services Agreement dated July
31, 2004; and
o Human Resources and Payroll Services Agreement dated July 31,
2004.
The agreements set forth above provide for data processing, accounting,
human resources and compliance services. Following the spin-off, such services
are provided by BSC Services Corporation, a subsidiary of the DE Bank. The PA
Bank and the DE Bank reimburse BSC Services Corporation for actual costs
incurred in connection with the provision of such services.
Other intercompany agreements which are currently in effect between the
PA Bank and the DE Bank are:
o an agreement dealing with the PA Bank's participation in tax
anticipation loans made by the DE Bank. Tax anticipation loans
short-term, small amount loans repayable out of the tax refund
paid to the borrower, primarily from the U.S. Treasury. The
agreement provides for the purchase by the PA Bank of such
loans made by the DE Bank, which, due to its size, is more
limited in the amount of such loans it can retain. The DE Bank
retains a $3 servicing fee for each tax anticipation loan sold
to the PA Bank.
o a sponsorship agreement pursuant to which the PA Bank acts as
sponsor for the DE Bank Visa(R) and Mastercard(R) credit
cards. Due to the limited asset size of the DE Bank, the DE
Bank requires sponsorship from an institution with a larger
- 21 -
asset base in order to provide credit card services. The DE
Bank pays the PA Bank $50,000 a year for such sponsorship.
In addition, a wholly owned subsidiary of the DE Bank was formed after
and pursuant to the spin-off and employs all the staff service employees,
including the executive officers, which service the PA Bank and the DE Bank.
Registered Public Accounting Firm
The following table presents fees for professional audit services by
Grant Thornton LLP for the audit of the Company's annual financial statements
for 2004 and 2003, and fees billed for other services rendered by Grant Thornton
LLP.
2004 2003
---- ----
Audit Fees: $162,732 $105,144
Audit-Related Fees: -- --
Tax Fees: 32,481 28,528
All Other Fees: 8,081 --
----------------------- ---------------------
Total Fees $203,294 $133,672
======================= =====================
Audit Fees consist of fees billed for professional services rendered
for the audit of the Company's consolidated financial statements and review of
the interim consolidated financial statements included in quarterly reports and
services that are normally provided by Grant Thornton LLP in connection with
statutory and regulatory filings or engagements.
Audit-Related Fees consist of fees billed for assurance and related
services that are reasonably related to the performance of the audit or review
of the Company's consolidated financial statements and are not reported under
"Audit Fees."
Tax Fees consist of fees billed for professional services for tax
compliance, tax advice and tax planning. These services include assistance
regarding federal and state tax compliance, tax audit defense, customs and
duties, and mergers and acquisitions.
All Other Fees consist of fees billed for products and services
provided by the principal accountant, other than those services described above.
Representatives of Grant Thornton LLP are expected to be present at the
Annual Meeting, they will have the opportunity to make a statement if they
desire to do so, and they will be available to respond to appropriate questions.
Audit Committee Pre-Approval Procedures
The Audit Committee meets with the Company's independent auditors to
approve the annual scope of accounting services to be performed and the related
fee estimates. The Audit
- 22 -
Committee also meets with the Company's independent auditors, on a quarterly
basis, following completion of its quarterly reviews and annual audit and prior
to the Company's earnings announcements, to review the results of the auditors'
work. During the course of the year, the chairman of the Audit Committee has the
authority to pre-approve requests for services that were not approved in the
annual pre-approval process. The chairman reports any interim pre-approvals at
the following quarterly meeting. At each of the meetings, management and the
Company's independent auditors update the Audit Committee with material changes
to any service engagement and related fee estimates as compared to amounts
previously approved. During fiscal year 2004, all audit and non-audit services
performed by Grant Thornton LLP for the Company were pre-approved by the Audit
Committee in accordance with the foregoing procedures.
Shareholder Proposals and Nominations for the 2006 Annual Meeting
Any shareholder who intends to present a proposal for consideration at
the Company's 2006 annual meeting of shareholders must submit her or his
proposal to the Company no later than November 27, 2005 in order to have the
Company consider the inclusion of such proposal in the Company's 2006 proxy and
proxy statement relating to the 2006 annual meeting. Reference is made to Rule
14a-8 under the Securities Exchange Act of 1934, as amended, for information
concerning the content and form of such proposal and the manner in which such
proposal must be made.
Any shareholder who intends to present a proposal for consideration at
the Company's 2006 annual meeting of shareholders must deliver written notice to
the Company's corporate secretary no later than November 27, 2005. These
requirements are separate from and in addition to the SEC's requirements that a
stockholder must meet in order to have a stockholder proposal included in the
Company's proxy statement.
Nominations for election to the Board at the 2006 annual meeting may be
made only in writing by a shareholder entitled to vote at the 2006 annual
meeting of shareholders. Such nominations must be addressed as follows: Robert
A. Dobie, Corporate Secretary, Republic First Bancorp, Inc., 1608 Walnut Street,
Philadelphia, PA 19103. Nominations for the 2006 annual meeting must be received
by the Corporate Secretary no later than November 27, 2005 and must be
accompanied by the following information: (i) the name and address of the
shareholder who intends to make the nomination; (ii) a representation that the
shareholder is a holder of record of stock entitled to vote at the meeting and
intends to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice; (iii) a description of all arrangements or
understandings between the shareholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the shareholder; (iv) such other information
regarding each nominee proposed by such shareholder as would have been required
to be included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission had each nominee been nominated or intended
to be nominated by the Board; and (v) the consent of each nominee to serve as a
director of the Company if so elected. The chairman of any meeting of
shareholders held to elect directors and the Board may refuse to recognize the
nomination of any person not made in compliance with such provisions.
- 23 -
Annual Report And Form 10-K
The Company will provide without charge to each shareholder of the
Company, upon receipt of a written request, a full copy of the Company's Annual
Report and Form 10-K for the year ended December 31, 2004, including all
materials filed as an exhibit or schedule thereto. A request for such copy
should be delivered to Robert A. Dobie, Corporate Secretary, Republic First
Bancorp, Inc., 1608 Walnut Street, Philadelphia, PA 19103. Such request shall
also set forth a good faith representation that as of March 15, 2005, the
requesting party was a beneficial owner of the Company's common stock.
Other Matters
Management does not know of any other matters to come before the
meeting. However, if any other matters properly come before the meeting, it is
the intention of the persons designated as proxies to vote in accordance with
their best judgment on such matters. The Shareholders, present and voting at the
Annual Meeting, may extend by adjournment the Annual Meeting as provided in the
Bylaws.
IT IS IMPORTANT THAT YOU RETURN YOUR SIGNED PROXY CARD PROMPTLY,
REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE COMPLETE, SIGN AND MAIL THE
ENCLOSED PROXY CARD IN THE ACCOMPANYING ENVELOPE PROMPTLY, WHETHER OR NOT YOU
PLAN TO ATTEND THE ANNUAL MEETING.
By Order of the Board of Directors,
/s/ Robert A. Dobie
Robert A. Dobie,
Senior Vice President
and Corporate Secretary
March 23, 2005
- 24 -
Appendix A
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Amendment of Amended and Restated Stock Option Plan and Restricted Stock Plan
REPUBLIC FIRST BANCORP, INC.
The Amended and Restated Stock Option Plan and Restricted Stock Plan of
Republic First Bancorp, Inc. (the "Plan") is hereby amended as follows:
1. Section 3(a) of the Plan shall be, and hereby is, deleted in its
entirety and replaced by a new Section 3(a) reading as follows:
"The maximum number of shares of Common Stock, par value $0.01, which
may be issued or awarded under the Plan is 1,540,000 shares, plus an annual
increase equal to the number of shares needed to restore the maximum number of
shares that may be available for grant under the Plan to1,540,000 shares. Such
shares may be authorized but unissued shares or reacquired shares. If and to the
extent that options granted under the Plan terminate, expire or are cancelled
without having been exercised (including shares cancelled as part of exchange of
Grants), or if any shares of restricted stock are forfeited, the shares subject
to such Grant shall again be available for subsequent Grants under the Plan."
2. The number "1,540,000" appearing in the fourth sentence of Section 4
of the Plan shall be deleted and replaced with the following text:
"the maximum number of shares of Common Stock then available for Grants
under Section 3(a) of the Plan."
3. The termination date of the Plan referred to in Section 19(b) of the
Plan shall be November 14, 2015.
4. Unless inconsistent with the foregoing, all other terms, conditions
and provisions of the Plan shall continue in effect without change.
A-1
Mark your votes as indicated in this example [X]
REVOCABLE PROXY
REPUBLIC FIRST BANCORP, INC. COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Republic First Bancorp, Inc. (the
"Company") hereby constitutes and appoints Paul A. Verdi and Maria L. Oliveri,
or either of them the lawful attorneys and proxies of the undersigned both with
full power of substitution, for and on behalf of the undersigned, to vote as
specified on the reverse side, all of the shares of the Company's common stock
held of record by the undersigned on March 15, 2005 at the Annual Meeting of
Shareholders of the Company to be held on Tuesday, April 26, 2005, at 4:00 p.m.,
Philadelphia Time, at The Union League of Philadelphia, Broad & Sansom Streets,
Philadelphia, PA 19102 and at any adjournments or postponements thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED ON THE
REVERSE SIDE. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED "FOR"
PROPOSALS (1) AND (2). IF ANY OTHER MATTERS ARE VOTED ON AT THE ANNUAL MEETING,
THIS PROXY WILL BE VOTED BY THE PROXYHOLDERS ON SUCH MATTER IN THEIR SOLE
DISCRETION. THIS PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS EXERCISED.
(1) Election of Directors:
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY [ ] For all Except
Harry D. Madonna
Kenneth J. Adelberg
William W. Batoff
(Instruction: to withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's name in the space provided below):
(2) The approval of an amendment to the Company's Amended and Restated Stock
Option Plan and Restricted Stock Plan to extend the term of the plan for an
additional ten year period and to increase the maximum number of shares which
may be issued or awarded under the plan to 1,540,000 shares, plus an annual
increase equal to the number of shares needed to restore the maximum number of
shares that may be available for grant under the plan to 1,540,000 shares, as
set forth in the form of resolution attached to the Company's Proxy Statement as
Appendix A.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Please complete, date and sign this proxy on the reverse side and mail
without delay in the enclosed envelope.
NOTE: Joint owners must EACH sign. Please sign EXACTLY as your name(s)
appear(s) on this card. Signature(s) should agree with name(s) on proxy form.
Executors, administrators, trustees, and other fiduciaries, and persons signing
on behalf of corporations or partnerships, should so indicate when signing. When
signing as attorney, trustee, executor, administrator, guardian or corporate
officer, please give your FULL title.
Receipt of the Company's Annual Report and Notice of Meeting and Proxy
Statement, dated March 23, 2005 is hereby acknowledged.
Please be sure to sign and date this Proxy Date _____________________
in the box below.
Stockholder sign above__________ Co-holder (if any) sign above________
--------------------------------------------------------------------------------
Detach above card, sign, date and mail in postage paid envelope provided.
REPUBLIC FIRST BANCORP, INC.
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PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY.
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IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
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