EXHIBIT 10.35
EXECUTIVE AGREEMENT
THIS AGREEMENT is made as of this 26th day of August, 1998, among
NATIONAL PENN BANCSHARES, INC., a Pennsylvania business corporation having its
principal place of business in Boyertown, Pennsylvania ("NPB"), NATIONAL PENN
BANK, a national banking association having its principal place of business in
Boyertown, Pennsylvania ("Bank"), and XXXXX X. XXXXXX, an individual residing in
Allentown, Pennsylvania ("Executive").
W I T N E S S E T H :
- - - - - - - - - - -
WHEREAS, Executive is employed by Bank as an Executive Vice President
and as President of Bank's Lehigh Valley Division; and
WHEREAS, the Boards of Directors of NPB and Bank deem it advisable to
provide Executive with certain additional benefits in the event of certain
changes in control of NPB or Bank so that Executive will continue to attend to
the business of NPB and Bank without distraction in the face of the potentially
disturbing circumstances arising therefrom.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises
set forth herein, and each intending to be legally bound, NPB, Bank and
Executive agree as follows:
1. Definitions. The following terms have the meanings specified below:
a. "Affiliate" means any corporation which is included within
a "controlled group of corporations" including NPB, as determined under
Code Section 1563.
b. "Base Amount" means Executive's average annualized taxable
compensation for the five (5) years prior to the year in which a Change
in Control occurs, determined in accordance with the provisions of Code
Section 280G and regulations promulgated thereunder.
c. "Cause" has the meaning set forth in Section 4 hereof.
d. "Change in Control" means:
i. An acquisition by any "person" or "group" (as
those terms are defined or used in Section 13(d) of the
Exchange Act) of "beneficial ownership" (within the
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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;
ii. A merger, consolidation or other reorganization
of Bank, except where the resulting entity is controlled,
directly or indirectly, by NPB;
iii. A merger, consolidation or other reorganization
of NPB, except where shareholders of NPB immediately prior to
consummation of any such transaction continue to hold at least
a majority of the voting power of the outstanding voting
securities of the legal entity resulting from or existing
after any transaction and a majority 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;
iv. A sale, exchange, transfer or other disposition
of substantially all of the assets of the Employer to another
entity, except to an entity controlled, directly or
indirectly, by NPB;
v. 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
vi. A contested proxy solicitation of the
shareholders of NPB that 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.
e. "Code" means the Internal Revenue Code of 1986, as amended,
and as the same may be amended from time to time.
f. "Employer" means Bank, NPB or any Affiliate which employs
Executive at any particular time.
g. "Employment" means Executive's employment by Bank, NPB or
any Affiliate at any particular time.
h. "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
i. "Salary" means the Executive's annual base salary,
established either by contract or by the Board of Directors of
Employer, prior to any reduction of such salary pursuant
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to any contribution to a tax-qualified plan under Section
401(k) of the Code.
2. Resignation of Executive. If a Change in Control shall occur and if
thereafter, at any time, there shall be:
a. Any involuntary termination of Executive's employment
(other than for Cause);
b. Any reduction in Executive's title, responsibilities or
authority, including such title, responsibilities or authority as such
may be increased from time to time;
c. Any reduction in Executive's Salary in effect immediately
prior to a Change in Control, or any failure to provide Executive with
benefits at least as favorable as those enjoyed by Executive under any
of the pension, life insurance, medical, health and accident,
disability or other employee plans of NPB or an Affiliate in which
Executive participated immediately prior to a Change in Control, or the
taking of any action that would materially reduce any of such
compensation or benefits in effect at the time of the Change in
Control, unless such reduction relates to a reduction applicable to all
employees generally;
d. Any reassignment of Executive beyond a thirty (30) minute
commute by automobile from Boyertown, Pennsylvania; or
e. Any requirement that Executive travel in performance of his
duties on behalf of NPB or an Affiliate for a greater period of time
during any year than was required of Executive during the year
preceding the year in which the Change in Control occurred;
then, at the option of Executive, exercisable by Executive within one hundred
eighty (180) days of the occurrence of any of the foregoing events, the
Executive may resign from employment (or, if involuntarily terminated, give
notice of intention to collect benefits hereunder) by delivering a notice in
writing (the "Notice of Termination") to NPB, and the Continuing Compensation
and Benefits' provisions of this Agreement shall apply.
3. Continuing Compensation and Benefits.
a. At the time of termination of Executive's employment in
accordance with Section 2 hereof, Employer shall make a lump-sum cash
payment to Executive no later than thirty (30) days following the date
of such termination in an amount equal to 200% of Executive's Base
Amount.
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b. Notwithstanding the foregoing or any other provision of
this Agreement to the contrary, in no event shall any payment to
Executive pursuant to Subsection 3.a. above 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 (determined pursuant to
Internal Revenue Code Section 280G(b)(3)(A)) 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.
c. Executive shall not be required to mitigate the amount of
any payment provided for in Subsection 3.a. by seeking other employment
or otherwise, nor shall the amount of any payment or benefit provided
for in subsection 3.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,
except as otherwise provided therein.
4. Termination for Cause. The Employer may terminate Executive's
Employment for "Cause". For purposes of this Agreement, "Cause" means the
occurrence of either of the following:
a. Executive's conviction of, or plea of guilty or nolo
contendere to, a felony or a crime of falsehood or involving moral
turpitude; or
b. the willful failure by Executive to substantially perform
his duties to the Employer, other than a failure
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resulting from Executive's incapacity as a result of the Executive's
disability, which willful failure results in demonstrable material
injury and damage to the Employer. 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:
i. questionable judgment on the part of Executive;
ii. any act or omission believed by Executive in good
faith, to have been in or not opposed to the best interests of
the Employer; or
iii. 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 By-laws of
NPB or the laws of the Commonwealth of Pennsylvania, or the
directors and officers' liability insurance of NPB or any
Employer, in each case as in effect at the time of such act or
omission.
If Executive's Employment is terminated for Cause, all rights of
Executive under this Agreement shall cease as of the effective date of such
termination, except that Executive (i) shall be entitled to receive accrued
Salary through the date of such termination and (ii) shall be entitled to
receive the payments and benefits to which he is then entitled under the
employee benefit plans of the Employer or any affiliate thereof as of the date
of such termination.
5. Arbitration. Any dispute or controversy arising out of or relating
to this Agreement and any controversy as to a termination for Cause shall be
settled exclusively by arbitration, conducted before a panel of three
arbitrators, in Reading, Pennsylvania, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrators' award in any court having jurisdiction.
6. Exclusive Benefit. Executive shall have no right to commute, sell,
assign, transfer or otherwise convey the right to receive any payments
hereunder, which payment and the right thereto are expressly declared to be
non-assignable and non- transferrable. In the event of any attempted assignment
or transfer, Employer shall have no further liability hereunder.
7. Notices. Any notice required or permitted to be given under this
Agreement shall be properly given if in writing and if mailed by registered or
certified mail, postage prepaid with
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return receipt requested, to Executive's residence in the case of any notice to
Executive, or to the principal office of Bank, in the case of any notice to the
Employer.
8. Entire Agreement. This Agreement contains the entire agreement
relating to the subject matter hereof and may not be modified, amended or
changed orally but only by an agreement in writing, consented to in writing by
NPB, and signed by the party against whom enforcement of any modification,
amendment or change is sought.
9. Benefits.
a. This Agreement shall be binding upon and inure to the
benefit of NPB and Bank and their respective successors and assigns.
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 and the
provisions of Section 2 of this Agreement shall apply. As used in this
Agreement, "NPB" or "Bank" shall mean NPB or Bank as defined previously
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.
b. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by Executive's personal or legal
representatives, executors, administrators, heirs, distributees,
devisees and legatees.
10. Applicable Law. This Agreement shall be governed by and construed
in accordance with the domestic internal law (but not the law of conflicts of
law) of the Commonwealth of Pennsylvania.
11. Headings. The headings of the sections and subsections hereof are
for convenience only and shall not control or affect the meaning or construction
or limit the scope or intent of any of the sections or subsections of this
Agreement.
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12. Termination of Employment Agreement. Effective concurrently with
the execution and delivery of this Agreement, the Employment Agreement dated
February 3, 1997 between Bank and Executive, as amended by the Amendatory
Agreement dated February 25, 1998 between Bank and Executive, is terminated and
is of no further force and effect.
IN WITNESS WHEREOF, NPB and Bank have each duly caused this Agreement
to be executed on its behalf by its duly authorized officers, and Executive has
hereunto set his hand and seal, as of the day and year first above written.
NATIONAL PENN BANCSHARES, INC.
(SEAL) By: /s/Xxxxxxxx X. Xxxx, Xx.
------------------------
Title: Chairman and Chief
Executive Officer
Attest: /s/Xxxxxx X. Xxxxx
------------------------
Title: Senior Vice President
and Corporate Secretary
NATIONAL PENN BANK
(SEAL) By: /s/Xxxxx X. Xxxxxxx
------------------------
Title: President and Chief
Executive Officer
Attest: /s/Xxxxxx X. Xxxxx
------------------------
Title: Senior Vice President
and Corporate Secretary
Witness:
/s/Xxxxxx X. Xxxxxxxxxxxx /s/Xxxxx X. Xxxxxx (SEAL)
------------------------- ------------------------
Xxxxx X. Xxxxxx
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