EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT dated as of December 18, 2002, among NATIONAL PENN
BANCSHARES, INC., a Pennsylvania business corporation and registered bank
holding company ("NPB"); NATIONAL PENN BANK, a national banking association
("Bank"); and XXXXX X. XXXXX ("Executive") (NPB and Bank are sometimes referred
to herein collectively as "Employer").
BACKGROUND
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1. Executive is presently employed by NPB as Executive Vice President
and by Bank as President and Chief Operating Officer.
2. It is the desire of the Boards of Directors of NPB and Bank that
Executive continue his employment, on the terms and conditions set forth herein,
in order that the experience he has gained throughout his career and the
management ability he has demonstrated for NPB and Bank will continue to be
available to NPB and Bank. Executive is willing to continue such employment, on
the terms and conditions set forth herein.
AGREEMENT
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NOW, THEREFORE, in consideration of the mutual promises contained
herein, and each intending to be legally bound, NPB, Bank and Executive agree as
follows:
1. Background. The matters set forth in the "Background" section of
this Agreement are incorporated by reference herein.
2. Term. This Agreement shall be for a term of three years, beginning
on December 18, 2002 and ending on December 17, 2005, subject to the following:
(a) This Agreement may be terminated at any time as provided
in Sections 10 through 14.
(b) If this Agreement is not terminated on or before December
17, 2003 or any subsequent December 17, then, on such date, the term of this
Agreement shall be automatically extended by adding one year to the term then
remaining. For example, if this Agreement is still in effect on December 17,
2003, then, on such date, its term shall be automatically extended so as to end
on December 17, 2006. Notwithstanding the foregoing, there shall be no further
extensions of the term of this Agreement beginning with the first December 18
that occurs after Executive shall have reached age 62.
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3. Position, Duties.
(a) During the time this Agreement is in effect, NPB will
employ Executive as Executive Vice President, and Bank will employ Executive as
President and Chief Operating Officer, or, in either case, in such other higher
ranking executive officer positions as may from time to time be assigned to
Executive by the respective Boards of Directors of NPB and Bank. Executive
accepts such employment, with such powers and duties commensurate with
Executive's then existing titles as an executive officer of NPB and Bank as may
from time to time be determined by the respective Boards of Directors of NPB or
Bank. Executive's duties shall include compliance with Employer's Code of
Conduct as in effect from time to time.
(b) Executive's office will be located at the location of the
executive offices of NPB and Bank, wherever maintained from time to time.
(c) During the period of Executive's employment hereunder, the
Board of Directors of NPB will cause NPB, as sole shareholder of Bank, to elect
and annually re-elect Executive to the Board of Directors of Bank (unless it
believes such action would violate its fiduciary duties). Upon any termination
of Executive's employment hereunder for any reason, including without limitation
a termination without cause, Executive will concurrently resign from the Boards
of Directors of NPB, Bank, and all direct or indirect subsidiaries or affiliates
of NPB or Bank on which he is then serving.
(d) Executive will devote substantially all his time and
attention to, and will use his best energies and abilities in the performance
of, his duties and responsibilities as prescribed in this Section 3, and will
not engage in consulting work or any trade or business for his own account or
for or on behalf of any other person, firm or corporation which competes,
conflicts, or interferes with the performance of his duties hereunder in any
way. Notwithstanding the foregoing, Executive may perform community service
consistent with Employer policy and engage in activities on behalf of NPB or
Bank or for his own account, including personal investment activities (excluding
any personal investments in publicly-traded companies (other than NPB) with
voting power equal to five percent or more); provided, however, that all such
service or activities do not interfere with Executive's performance of his
responsibilities under this Agreement.
4. Base Compensation. Except as provided in Section 23, for all
services to be rendered by Executive pursuant to Section 3, Employer will pay
Executive a base salary of at least Two Hundred Eighty-Four Thousand Dollars
($284,000) per year (effective January 1, 2003). Employer shall pay such salary
to Executive in approximately equal installments during each year on the
customary
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salary payment dates of Employer, and such salary shall be subject to applicable
income tax withholding, deductions required by law, and other deductions
authorized by Executive. Executive shall not be entitled to any additional
compensation for service as a director or committee member of NPB, Bank or any
other affiliated company. Employer will evaluate Executive's performance
annually, and Executive shall be eligible for annual merit increases in base
salary in the discretion of the respective Boards of Directors of NPB and Bank.
Except as provided in Section 23, a base salary increase shall, when it takes
effect, become the new minimum base salary required thereafter by this Section
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5. Health Insurance, Benefit Plans, Stock Compensation Plans, etc.
(a) In addition to the compensation payable to Executive
pursuant to Section 4 hereof, Executive shall be entitled during the time this
Agreement is in effect to participate in all health insurance and benefit plans,
group insurance, pension or profit-sharing plans, or other plan or plans
providing benefits applicable generally to employees of NPB or Bank which are
presently in force or which may hereafter be adopted by NPB or Bank.
(b) Executive shall also be eligible during the time this
Agreement is in effect for receipt of stock options or restricted stock
commensurate with his positions with NPB and Bank, pursuant to NPB's Officers'
and Key Employees' Stock Compensation Plan or any successor or additional stock
option plan or stock compensation plan which may hereafter be adopted by NPB for
officers and other key employees of NPB and its subsidiaries. Any discretionary
terms of grants or awards to Executive (other than with respect to amount) shall
be consistent with grants or awards to other senior officers generally.
6. Bonuses. As additional compensation for services rendered hereunder,
Executive shall be entitled during the time this Agreement is in effect:
(a) To participate as a "Type A Participant" in NPB's
Executive Incentive Plan, assuming such plan remains in effect, or at an
equivalent level in any successor executive bonus plan covering the officers of
NPB or Bank which may be adopted by NPB or Bank; and
(b) To receive any discretionary bonus that may be awarded to
him under the Executive Incentive Plan or such successor executive bonus plan.
Executive acknowledges that this Section 6 does not preclude NPB's or Bank's
Board of Directors, as the case may be, from amending or terminating the
Executive Incentive Plan or any other executive bonus plan in accordance with
its terms.
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7. Other Benefits. Except as provided in Sections 14 and 23, as
additional compensation for services rendered hereunder, Executive shall be
entitled during the time this Agreement is in effect:
(a) To payment by NPB or Bank of, or reimbursement by NPB or
Bank for, 100% of Executive's regular membership dues and assessments at
Stonewall Links, L.P. and Bellewood Golf Club, or similar quality replacement
club or clubs, and all eligible business expenses related thereto;
(b) To life insurance coverage and long-term disability
insurance coverage at no expense to Executive, in at least such amounts and on
such terms and conditions as are such insurance coverages for Executive that are
in effect on the date of this Agreement;
(c) To the receipt of an automobile allowance, in such amount
as shall be determined by Employer from time to time, in Employer's sole
discretion, but in no event less than $850 per month; and
(d) To reasonable vacation and sick leave in accordance with
Employer policy, as the same may be revised from time to time.
8. Supplemental Retirement Benefits.
(a) Except as provided in Sections 9, 12, 13, 14 and 15
hereof, Employer shall make monthly payments to Executive (or to Executive's
"Designated Beneficiary" (defined in Section 8(b)) as follows:
(1) Each such payment shall be in an amount equal to
sixty-five percent (65%) of Executive's "Average Monthly Salary Base" (defined
in Section 8(a)(2)), multiplied by a fraction:
(i) the numerator of which is the number (not in excess
of 21) of full years of Executive's employment by NPB and Bank (including
Executive's employment by Elverson National Bank prior to Elverson National
Bank's merger into Bank) from March 1, 1995 [the date of Executive's
commencement of employment with Elverson National Bank] through the date of
termination of his employment; and
(ii) the denominator of which is the number 21 [the
number of years until Executive would reach age 65 from the date of his
commencement of employment with Elverson National Bank].
(2) "Average Monthly Salary Base" means the total of
Executive's monthly Salary (defined in Section 8(a)(3)) from Employer (or
Elverson National Bank, as appropriate) for the 60
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months immediately preceding the month in which Executive's employment
terminates divided by the number 60.
(3) "Salary" means Executive's base salary established
pursuant to the terms of this Agreement, excluding payments for bonuses,
commissions and other payments, prior to any reduction of such salary pursuant
to any contribution to a tax-qualified plan under Section 401(k) of the Internal
Revenue Code of 1986, as amended ("Code").
(4) Such payments shall commence on the date on which
payments commence to the Executive under NPB's defined benefit pension plan (the
"NPB Pension Plan") or under any annuity acquired, or other plan or arrangement
adopted, by NPB in substitution for benefits vested under the NPB Pension Plan.
Notwithstanding the foregoing, Executive may (subject to the prior approval of
NPB's Board of Directors, which approval shall not be unreasonably withheld)
designate a later date as the commencement date for such payments. Any such
Board-approved designation shall be set forth on a "Beneficiary Designation
Form" duly completed, signed and filed as provided in Section 8(b) hereof. In
such event, payments shall commence on such later-designated date. Such payments
shall be made for one hundred twenty (120) consecutive months.
(5) If Executive chooses, in accordance with Section
8(a)(4), to designate a commencement date later than the date on which payments
commence under the NPB Pension Plan, then for each full year of deferral, such
payments shall be increased by an amount calculated using the interest rate for
one-year U.S. treasury bills in effect at the beginning of each year, compounded
annually. For example, if a payment would have been $1,000 if made without any
deferral, and instead Executive elects to defer payments for two years, then,
assuming a one-year treasury xxxx interest rate of 3.5% in effect at the
beginning of the first year and a one-year treasury xxxx interest rate of 4% in
effect at the beginning of the second year, the payment would be increased to
$1,076.40 [$1,000 times 1.035 equals $1,035; $1,035 times 1.04 equals
$1,076.40].
(b) If payments shall have commenced to Executive under
Section 8(a) and Executive shall die before receiving all the payments that he
is entitled to receive, then Employer shall make the remaining payments to
Executive's Designated Beneficiary. "Designated Beneficiary" means,
collectively, the persons or entities (e.g., the United Way) designated by
Executive as his beneficiary or beneficiaries on the "Beneficiary Designation
Form" (the form of which is attached hereto as Exhibit "A") duly completed,
signed and filed by Executive with NPB's Corporate Secretary. Executive may at
any time, and from time to time, revoke or amend such designation by duly
completing, signing and filing a new "Beneficiary Designation Form" with the
Corporate
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Secretary. Should Executive die without a completed, signed "Beneficiary
Designation Form" on file with the Corporate Secretary, payments will be made to
Executive's heirs at law.
(c) (1) If Executive shall die while still employed by
Employer, then, for purposes of Section 8(a), the date of death shall be deemed
to be the date of Executive's termination of employment.
(2) If Executive shall die prior to the commencement of
payments to Executive under Section 8(a), then payments to be made to
Executive's Designated Beneficiary pursuant to this Section 8 shall commence on
the date on which payments commence to Executive's Designated Beneficiary under
the NPB Pension Plan or under any annuity acquired, or other plan or arrangement
adopted, by NPB in substitution for benefits vested under the NPB Pension Plan,
as soon as practicable after Executive's death, whether or not Executive had
waived the survivor's benefit under the NPB Pension Plan. Notwithstanding the
foregoing, if Executive shall have designated a later date as the commencement
date for such payments on a "Beneficiary Designation Form" duly completed,
signed and filed as provided in Section 8(b) hereof, then payments shall
commence on such later date. Such payments shall be made for one hundred twenty
(120) consecutive months.
(d) Each payment to be made to Executive or to Executive's
Designated Beneficiary under this Section 8 shall be reduced, dollar-for-dollar,
by the maximum benefit payable to Executive, regardless of the form of benefit
elected by Executive, pursuant to the NPB Pension Plan or any annuity acquired,
or other plan or arrangement adopted, by NPB in substitution for vested pension
benefits. For purposes of this Section 8, this maximum benefit shall be computed
as an amount equal to the amount that would have been payable to Executive had
he retired at age 65 and elected to receive a single life annuity with equal
monthly installments payable to Executive for his lifetime.
(e) No payments to be made to Executive or to Executive's
Designated Beneficiary under this Section 8 shall be deemed salary or other
compensation to Executive for the purpose of computing benefits to which he may
be entitled under the NPB Pension Plan or any other pension plan or other
arrangement of NPB or Bank adopted for the benefit of their respective
employees.
9. Change in Control.
(a) If a Change in Control (defined in Section 9(b)) shall
occur during the time this Agreement is in effect, then, at the option of
Executive, exercisable by Executive at any time within three years after a
Change in Control occurs, Executive may resign from employment (or, if
involuntarily terminated from
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employment, give notice of intention to collect benefits hereunder) by
delivering a notice in writing to Employer, in which case Executive shall be
entitled to a lump sum cash severance payment equal to 299% of Executive's Base
Amount (defined in Section 9(c)), which Employer shall pay to Executive within
fifteen (15) days of Executive's termination of employment.
Notwithstanding the foregoing or any other provision of this Agreement
to the contrary, in no event shall the lump sum payment to Executive pursuant to
this Section 9(a) be greater than an amount equal to an amount ("X") determined
pursuant to the following formula:
X = (2.99A - B) x (1 + C)D.
For purposes of the foregoing formula:
A= Executive's Base Amount on the date of the Change
in Control;
B= The present value of all other amounts which
qualify as parachute payments under Code Section
280G(b)(2)(A) or (B) (without regard to the
provisions of Code Section 280G(b)(2)(A)(ii)), such
present value to be determined pursuant to the
provisions of Code Section 280G;
C= 120% times 0.5 times the lowest of the semiannual
applicable federal rates (determined pursuant to
Code Section 1274(d)) in effect on the date of the
Change in Control; and
D= The number of whole semiannual periods plus any
fraction of a semiannual period from the date of the
Change in Control to the date of termination of the
Executive's employment.
(b) "Change in Control" means:
(1) An acquisition by any "person" or "group" (as those
terms are defined or used in Section 13(d) of the Securities Exchange Act of
1934 (the "Exchange Act")) of "beneficial ownership" (within the meaning of Rule
13d-3 under the Exchange Act) of securities of NPB representing 24.99% or more
of the combined voting power of NPB's securities then outstanding;
(2) A merger, consolidation or other reorganization of
Bank, except where the resulting entity is controlled, directly or indirectly,
by NPB;
(3) A merger, consolidation or other reorganization of
NPB, except where shareholders of NPB, immediately prior to
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consummation of any such transaction, continue to hold at least sixty-one
percent (61%) of combined voting power of the outstanding voting securities of
the legal entity resulting from or existing after any such transaction and at
least sixty-one percent (61%) of the members of the Board of Directors of the
legal entity resulting from or existing after any such transaction are former
members of NPB's Board of Directors;
(4) A sale, exchange, transfer or other disposition of
substantially all of the assets of Bank to another entity, except to an entity
controlled, directly or indirectly, by NPB;
(5) A sale, exchange, transfer or other disposition of
substantially all of the assets of NPB to another entity, or a corporate
division involving NPB; or
(6) A contested proxy solicitation of the shareholders of
NPB which results in the contesting party obtaining the ability to cast 25% or
more of the votes entitled to be cast in an election of directors of NPB.
(c) "Base Amount" means Executive's average annualized taxable
compensation from Employer (or Elverson National Bank, as appropriate) for the
five years prior to the year in which a Change in Control occurs, determined in
accordance with the provisions of Code Section 280G.
(d) Executive shall not be required to mitigate the amount of
any payment provided for in Section 9(a) by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in
Section 9(a) be reduced by any compensation earned by Executive as the result of
employment by another employer or by reason of Executive's receipt of or right
to receive any retirement or other benefits after the date of termination of
employment or otherwise.
(e) If, after a Change in Control:
(1) Executive terminates his employment in accordance with
Section 9(a) above, or
(2) Executive's employment is terminated without cause in
accordance with Section 14,
in calculating the payments to which Executive is entitled pursuant to Section
8(a), the fraction referred to in Section 8(a)(1) shall be the greater of the
fraction calculated by the terms of subsections 8(a)(1)(i) and (ii) or the
fraction 15/21. Notwithstanding the immediately preceding sentence, any increase
in Executive's otherwise vested supplemental retirement benefit by reason of the
application of such sentence shall be limited to no more that the value
determined as reasonable compensation for his
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agreement to refrain from performing competitive services under Section 15 if,
at the time of termination of Executive's employment, such an agreement would
not, in the opinion of counsel mutually acceptable to NPB and Executive (which
can be NPB's outside corporate counsel), constitute a "parachute payment" under
Code Section 280G. In the event that Executive elects to invoke the provisions
of Section 17 following a Change in Control, appropriate adjustment shall be
made, if necessary, to his supplemental retirement benefit so that the value of
any increase in his vested benefit occurring by reason of the application of
this Section 9(e) does not exceed an amount equal to the redetermined value of
his agreement to refrain from performing competitive services. All valuations
required under this Section 9(e) shall be made by a mutually agreed upon
nationally or regionally recognized independent public accounting firm or other
professional organization with expertise in such matters. The cost of such
valuations shall be borne by NPB.
10. Termination--Disability. Employer may terminate Executive's
employment at any time if Executive shall be "disabled" for a period of 180
consecutive days. "Disability" means that, because of Executive's injury or
sickness, Executive cannot perform each of the material duties of his regular
occupation, as determined by Employer in good faith. In such event:
(a) This Agreement shall remain in effect for the remainder of
its term, as then extended, and terminate at the end of such term;
(b) Employer shall continue to pay Executive the compensation
set forth in Section 4 for the remainder of the term of this Agreement, at the
times set forth in Section 4; and
(c) Employer shall pay to Executive the payments to which
Executive is entitled pursuant to Section 8(a) at the times and in the manner
set forth in Section 8(a), notwithstanding termination of this Agreement.
11. Termination--Death. If Executive's employment is terminated because
of Executive's death:
(a) This Agreement shall terminate at that time;
(b) Within 30 days of the date of death, Employer shall pay to
Executive's Designated Beneficiary, in one lump sum, an amount equal to the
total amount of compensation remaining to be paid to Executive pursuant to
Section 4 through what would have been the remaining term of the Agreement but
for its termination under subparagraph 11(a) above or the amount payable to
Executive pursuant to Section 9(a); and
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(c) Employer shall pay to Executive's Designated Beneficiary
the payments to which Executive was entitled to receive pursuant to Section 8(a)
at the times set forth in Section 8(a), notwithstanding termination of this
Agreement.
12. Voluntary Termination. Executive may terminate his employment with
Employer at any time. In such event:
(a) This Agreement shall terminate at that time; and
(b) Employer shall not be obligated to pay Executive any
further compensation pursuant to Section 4 or otherwise, except that the
following shall remain due and payable by Employer to Executive notwithstanding
termination of this Agreement:
(1) Section 4 compensation, if any, accrued and unpaid
through the date of voluntary termination;
(2) Section 8 supplemental retirement benefits, at the
times and in the manner set forth in Section 8, but only if Executive shall have
reached age 58 at or before the date of his termination of employment; and
(3) The amount payable to Executive pursuant to Sections
9(a) and 9(e), if any.
13. Termination--Cause. Nothing contained in this Agreement shall be
construed to prevent Employer from terminating the employment of Executive
hereunder at any time for "cause".
(a) "Cause" means the occurrence of either of the following:
(1) Executive's conviction of, or plea of guilty or nolo
contendere to, a felony or a crime of falsehood or involving moral turpitude; or
(2) The willful failure by Executive to substantially
perform his duties to Employer, other than a failure resulting from Executive's
incapacity as a result of the Executive's disability, which willful failure
results in demonstrable material injury and damage to Employer, and which
willful failure continues uncured after thirty (30) days notice containing
specific written instructions relating to the matter.
Notwithstanding the foregoing, Executive's Employment shall
not be deemed to have been terminated for cause if such termination took place
as a result of:
(1) Questionable judgment on the part of Executive;
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(2) Any act or omission believed by Executive in good
faith, to have been in or not opposed to the best interests of Employer; or
(3) Any act or omission in respect of which a
determination could properly be made that Executive met the applicable standard
of conduct prescribed for indemnification or reimbursement or payment of
expenses under the Bylaws of NPB or Bank or the laws of the Commonwealth of
Pennsylvania, or the directors and officers' liability insurance of NPB or Bank,
in each case as in effect at the time of such act or omission.
(b) If Employer proposes to terminate Executive's employment
for cause, Employer shall give Executive written notice specifying the exact
circumstances relating to cause and an opportunity for Executive to appear
before a joint meeting of the Boards of Directors of NPB and the Bank, with his
counsel, if he so desires.
(c) If Employer terminates Executive's employment for cause:
(1) Employer shall give Executive a written notice of
termination effective on the date specified by Employer in said notice, which
notice shall contain a full statement of the facts and reasons for such
termination;
(2) This Agreement shall terminate at such time; and
(3) Employer shall not be obligated to pay Executive any
further compensation pursuant to Sections 4, 8(a) or otherwise, except for
Section 4 compensation, if any, accrued and unpaid through the date of
termination.
14. Termination--Without Cause. Employer may terminate Executive's
employment at any time without cause (defined in Section 13(a)). In such event:
(a) This Agreement shall remain in effect for the remainder of
its term, as then extended, and terminate at the end of such term;
(b) Employer shall continue to pay Executive the compensation
set forth in Section 4 for the remainder of the term of this Agreement, as then
extended, at the times set forth in Section 4;
(c) Employer shall reimburse Executive for the cost of "COBRA"
health care continuation coverage for the remainder of the term of this
Agreement, as then extended;
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(d) Employer shall continue to provide Executive with the
following benefits for one year from the date of termination of employment:
(1) Payment by NPB or Bank of, or reimbursement by NPB or
Bank for, 100% of Executive's regular membership dues and assessments at
Stonewall Links, L.P. or similar quality replacement club;
(2) Life insurance coverage and long-term disability
insurance coverage at no expense to Executive, in at least such amounts and on
such terms and conditions as are such insurance coverages for Executive that are
in effect on the date of this Agreement; and
(3) The receipt of an automobile allowance, in such amount
as shall be determined by Employer from time to time, in Employer's sole
discretion, but in no event less than $850 per month.
(e) Employer shall pay to Executive the payments to which
Executive is entitled pursuant to Section 8(a) at the times and in the manner
set forth in Section 8(a), notwithstanding termination of this Agreement; in
calculating such payments, the fraction referred to in Section 8(a)(1) shall be
the greater of the fraction calculated by the terms of subsections 8(a)(1)(i)
and (ii) or the fraction 15/21;
(f) If a Change in Control (defined in Section 9(a)) shall
occur prior to the end of the term of this Agreement, as then extended, Employer
shall pay to Executive the payment to which Executive is entitled pursuant to
Sections 9(a) and 9(e); and
(g) Except as described in Section 14(d), Executive shall not
receive any other employee benefits, including the benefits described in Section
7 of this Agreement, or be entitled to participate in any other plan or plans
providing benefits generally to employees of Employer which are presently in
effect or which may hereafter be adopted by Employer, for the remainder of the
term of this Agreement, as then extended.
15. Non-Competition. Executive acknowledges that NPB is a registered
bank holding company engaged principally in the commercial and retail banking
business through its ownership, support, operation and management of its banking
subsidiaries which, as of the date hereof, are Bank and Panasia Bank, N.A.
("Panasia"). During the time this Agreement is in effect, and if Executive shall
voluntarily terminate his employment pursuant to Section 12 hereof, for the
remainder of the term of this Agreement in effect immediately prior to such
termination, Executive shall not, directly or indirectly, acting alone or in
conjunction with others:
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(a) Engage as a director, officer, employee, partner,
shareholder, consultant, agent or in any other capacity, in the commercial or
retail banking business in competition with NPB, Bank, Panasia, or any other
future NPB banking subsidiary, in any location within the Commonwealth of
Pennsylvania that is:
(1) During such time as the executive offices of NPB and
Bank are located in Boyertown, Berks County, Pennsylvania----Within fifty (50)
miles of Boyertown, Berks County, Pennsylvania;
(2) If the executive offices of NPB and Bank are moved
from Boyertown, Berks County, Pennsylvania to a new location, and if Executive
is employed by Employer on the date of such move, then during such time as the
executive offices of NPB and Bank are located at such new location (but not
beyond the time period provided in the first paragraph of this Section
15)----Within fifty (50) miles of the new location of the executive offices of
NPB and Bank, wherever that may be;
(3) If the executive offices of NPB and Bank are moved
from a successor-to-Boyertown location to a new location, and if Executive is
employed by Employer on the date of such move, then during such time as the
executive offices of NPB and Bank are located at such new location (but not
beyond the time period provided in the first paragraph of this Section
15)----Within fifty (50) miles of the new location of the executive offices of
NPB and Bank, wherever that may be; it being understood that Section 15(a)(3)
shall apply to any further relocation or relocations that may occur within the
time period provided in the first paragraph of this Section 15; and it being
further understood that the geographic limitation relating to the Commonwealth
of Pennsylvania set forth in this Section 15(a) shall not apply if the executive
offices of NPB and Bank are ever relocated outside of the Commonwealth of
Pennsylvania;
(b) Request any customers of NPB, Bank, Panasia, or any other
future NPB banking subsidiary, to curtail or cancel their business with NPB,
Bank, Panasia, or any other future NPB banking subsidiary, excluding himself and
any customer who is a relative of Executive; or
(c) Induce, or attempt to influence, any employee of NPB,
Bank, Panasia, or any other future NPB banking subsidiary to terminate
employment with NPB, Bank, Panasia, or any other future NPB banking subsidiary,
or to enter into any employment or other business relationship with any other
person (including Executive), firm or corporation.
Executive recognizes that immediate and irreparable damage will result
to Employer if Executive breaches any of the terms and conditions of this
Section 15 and, accordingly, Executive hereby
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consents to the entry by any court
of competent jurisdiction of an injunction against him to restrain any such
breach, in addition to any other remedies or claims for money damages which
Employer may seek. Executive represents and warrants to Employer that his
experience and capabilities are such that he can obtain employment in business
without breaching the terms and conditions of this Section 15, and the
enforcement hereof by injunction or otherwise will not prevent him from earning
a livelihood.
Notwithstanding anything in this Agreement to the contrary, if
Executive files a lawsuit challenging any provision of this Section 15,
Executive shall forfeit any and all rights to receive any further compensation
pursuant to Section 8(a) of this Agreement.
16. Non-Disclosure. During the time this Agreement is in effect and
thereafter for a period of three (3) years, Executive shall not, directly or
indirectly, acting alone or in conjunction with others, disclose to any person,
firm or corporation any of the following information: any trade secret, any
details of organization or business affairs, any names of past or present
customers, consumers or employees, or any other proprietary data or confidential
information, of NPB, Bank, Panasia or of any of NPB's other direct or indirect,
present or future, subsidiaries or affiliates; provided, however, that
disclosure of such information within the scope of Executive's employment,
disclosure of such information as is required by law, and disclosure of such
information already in the public domain through no fault of Executive, shall
not be prohibited by this Section 16.
Employer may enforce the provisions of this Section 16 by suit for
damages, injunction, or both. Executive agrees that Employer would be
irreparably injured by the breach of any provision of this Section 16, and money
damages alone would not be an appropriate measure of the harm to Employer from
such continuing breach. Therefore, equitable relief, including specific
performance of the provisions of this Section 16 by injunction, would be an
appropriate remedy for the breach of these provisions.
17. Release of Non-Competition Covenant. Notwithstanding Section 15 of
this Agreement, if Employer terminates Executive's employment without cause
pursuant to Section 14 of this Agreement, Executive may, at his option, at any
time prior to termination of this Agreement pursuant to Section 14(a), elect to
accept a position with another firm otherwise prohibited by Section 15(a) of
this Agreement, in which case:
(a) Executive shall concurrently give Employer written notice
of such election;
(b) This Agreement shall terminate immediately, including
without limitation Section 15 hereof;
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(c) Employer shall immediately cease making any payments
pursuant to Sections 14(b) and 14(c) of this Agreement; and
(d) All other provisions of Section 14 shall remain
unaffected.
18. No Disparagement. During the time this Agreement is in effect and
thereafter indefinitely, Executive shall not, directly or indirectly, acting
alone or in conjunction with others, disparage or criticize NPB, Bank, Panasia,
or any other future NPB banking subsidiary, or any of their respective present
or future directors, officers, employees, agents or attorneys (collectively, the
"NPB Parties"), and the NPB Parties shall not, directly or indirectly, acting
alone or in conjunction with others, disparage or criticize Executive.
19. Binding Effect, Assignment.
(a) This Agreement shall be binding upon and inure to the
benefit of NPB and Bank, and it shall be assignable to any corporation, bank or
other entity which may acquire NPB's or Bank's business or all or substantially
all of the assets of NPB or Bank, or with or into which NPB or Bank may be
merged or consolidated, as provided in Section 19(b).
(b) Each of NPB and Bank shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of NPB or Bank to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that NPB or Bank would be required to perform it if no such succession
had taken place. Failure to obtain such assumption and agreement prior to the
effectiveness of any such succession shall constitute a breach of this
Agreement, in which case a "Change in Control" (as defined in Section 9(b))
shall be deemed to have occurred and Executive shall have the immediate right to
take the actions and receive the payments provided in Sections 8 and 9 hereof.
As used in this Agreement, "NPB" and "Bank" shall mean NPB and Bank as
previously defined and any successor to the business and/or assets of NPB or
Bank as aforesaid which assumes and agrees to perform this Agreement by
operation of law or otherwise.
(c) This Agreement shall be binding upon and inure to the
benefit of Executive, his personal and legal representatives, heirs,
distributees, devisees and assigns. Notwithstanding the foregoing, the
obligations and duties of Executive hereunder shall be personal and not
assignable or delegable by him in any manner whatsoever.
20. Exclusive Benefit. Neither Executive, his spouse nor any other
Designated Beneficiary shall have the right to commute, sell, assign, transfer
or otherwise convey the right to receive any
15
payments hereunder, which payment and the right thereto are expressly declared
to be non-assignable and non-transferable. If there is any attempted assignment
or transfer, neither NPB nor Bank shall have any further liability hereunder.
The interest of any beneficiary in any benefits hereunder shall not be subject
to attachment, execution or sequestration for any debts, contracts, obligations
or liabilities of any beneficiary and shall not be subject to pledge,
assignment, conveyance or attachment.
21. Unsecured General Creditor. If NPB or Bank shall acquire an
insurance policy or any other asset in connection with its liabilities
hereunder, neither Executive, his spouse nor any other Designated Beneficiary
shall have any right with respect to, or claimed against, such policy or other
asset. Executive shall remain at all times an unsecured general creditor with
respect to any amount payable hereunder.
22. Legal Fees and Expenses. Employer shall pay all reasonable legal
fees and related expenses (including the costs of experts, evidence and counsel
and expenses included in connection with an arbitration or in other litigation
or appeal) incurred by the Executive as a result of his seeking to obtain or
enforce any right or benefit provided by any provision of this Agreement, but
only if Executive's efforts in seeking to obtain or enforce any such right or
benefit are successful, and in the case of any provision of this Agreement other
than Section 9, not to exceed $10,000 in the aggregate in any calendar year.
23. Exception for Across-the-Board Actions. If, during the term of this
Agreement, the Boards of Directors of NPB and NPBank shall determine, acting in
good faith and with a reasonable basis, that it is in the best interests of NPB,
NPBank and NPB's shareholders to implement one or more broad, across-the-board
cost-cutting measures for all members of senior management, then,
notwithstanding Sections 4 and 7, Executive's base compensation and other
benefits may be reduced in accordance with such cost-cutting measures in a
manner consistent with any such reductions in base compensation and/or other
benefits for other senior officers generally.
24. Notices. All notices or other communications hereunder shall be in
writing and shall be deemed given upon delivery if delivered personally or two
business days after mailing if mailed by prepaid, registered or certified mail,
return receipt requested, addressed as follows:
If to NPB, to:
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Xxxxx X. Xxxxxxx
Chairman, President and Chief Executive Officer
National Penn Bancshares, Inc.
Reading and Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
If to Bank, to:
Xxxxx X. Xxxxxxx
Chairman and Chief Executive Officer
National Penn Bank
Reading and Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
If to Executive, to:
Xxxxx X. Xxxxx
000 Xxxxxxxx Xxxx
Xxxxxxx, XX 00000
or to such other address as may have been previously furnished by the party to
the other by notice given in the manner provided herein.
25. Entire Agreement. This Agreement is intended by the parties to
constitute and does constitute the entire agreement between NPB, Bank and
Executive with respect to the employment of Executive by NPB and Bank. This
Agreement supersedes any and all prior agreements, understandings, negotiations
and discussions of the parties, whether oral or written.
26. Amendment. This Agreement may be amended, modified, waived,
discharged or terminated only by an instrument in writing signed by Executive,
an authorized officer of NPB or an authorized officer of Bank, as the case may
be, against whom or which enforcement of the amendment, modification, waiver,
discharge or termination is sought.
27. Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic internal law of the Commonwealth of Pennsylvania.
28. Interpretation of Provisions. Wherever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement. Without limiting
the generality of the foregoing, if a court of competent jurisdiction shall
determine that the time or geography provisions of Section 15 are not
reasonable, then such
17
provision(s) shall be reformed to reflect such period of time or geographical
areas as the court shall determine to be reasonable and enforceable.
29. Captions. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
30. Joint and Several Obligations. All obligations of NPB and Bank
herein shall be joint and several obligations.
31. Survival. Notwithstanding any termination of this Agreement, the
provisions of Sections 8, 9, 10, 11, 12, 14, 15, 16, 18 and 22 shall, except as
otherwise expressly provided herein, survive such termination and remain in full
force and effect.
32. Termination of Executive Agreement. Effective concurrently with the
execution and delivery of this Agreement, the Executive Agreement dated January
4, 1999 among NPB, Bank and Executive is terminated and of no further force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
NATIONAL PENN BANCSHARES, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chairman CEO President
NATIONAL PENN BANK
By:/s/ Xxxxx X. Xxxxxxx
-------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chairman/ CEO
Witness: /s/ Xxxxxx X. Xxxxx /s/ Xxxxx X. Xxxxx
-------------------- ---------------------------
Xxxxx X. Xxxxx
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EXHIBIT "A"
-----------
BENEFICIARY DESIGNATION FORM
----------------------------
I hereby designate the following person(s) and/or entity(ies) as my
"Designated Beneficiary" (as defined in Section 8 of that certain Employment
Agreement dated as of December 18, 2002, among National Penn Bancshares, Inc.,
National Penn Bank and Xxxxx X. Xxxxx (the "Agreement")):
Name, Address and Social
Security No. (or Tax I.D. No.) Percent Interest
------------------------------ ----------------
_____________________________ ____________
_____________________________
_____________________________
_____________________________ ____________
_____________________________
_____________________________
_____________________________ ____________
_____________________________
_____________________________
_____________________________ ____________
_____________________________
_____________________________
[ ] I hereby elect for payments to commence under Section 8 later than
the date on which payments shall commence under the NPB Pension Plan (as defined
in Section 8(a)(4) of the Agreement) or under any annuity acquired, or other
plan or arrangement adopted, by NPB in substitution for benefits vested under
the NPB Pension Plan, to wit: _____________________________. Note: This election
is subject to the prior approval of NPB's Board of Directors (not to be
unreasonably withheld).
[ ] I do not elect for later payments.
-------------------------- -----------------------------------
Date Xxxxx X. Xxxxx
--------------------------------------------------------------------------------
TO BE COMPLETED BY CORPORATE SECRETARY'S OFFICE ONLY
-------------------------- -----------------------------------
Date filed with Corporate Authorized Signature
Secretary's Office
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