EMPLOYMENT AGREEMENT
EXHIBIT
10.2
Execution
Copy
EMPLOYMENT
AGREEMENT ("Agreement")
dated June 25, 2007, by and among NATIONAL PENN BANCSHARES, INC., a Pennsylvania
business corporation and registered bank holding company ("NPB"); CHRISTIANA
BANK & TRUST COMPANY, a Delaware banking corporation ("Bank"); and XXXXX X.
XXXXXXX ("Executive") (NPB and Bank are sometimes referred to herein
collectively as "Employer").
BACKGROUND
1. Executive
is presently
employed by Bank as its Chief Financial Officer.
2. On
June 25, 0000, XXX and
Bank entered into an Agreement of Reorganization and Merger providing, among
other things, for the merger of an interim, direct wholly owned subsidiary
of
NPB with and into Bank (the “Merger”).
3. It
is the desire of the
Boards of Directors of NPB and Bank that Executive continue Executive’s
employment from and after the effective date of the Merger (the “Effective
Date”), on the terms and conditions set forth herein, in order that the
experience Executive has gained throughout Executive’s career and the management
ability Executive has demonstrated 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
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. Unless
earlier terminated as provided in Sections 9 through 13 hereof, the term of
Executive’s employment pursuant hereto (the “Term”) shall commence on the
Effective Date and shall continue for a period of two (2) years.
3. Position,
Duties.
(a) During
the Term, NPB will cause Executive to be employed as Chief Financial Officer
of
Bank or other comparable position within NPB. Executive accepts such
employment, with such powers and duties as may from time to time be determined
by NPB's President/CEO. During the Term, Employer will employ
Executive (i) within the State of Delaware, (ii) within a thirty (30) mile
radius of any existing Employer
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location
in the state of Delaware, or (iii) within a thirty (30) mile radius of
Collegeville, Pennsylvania.
(b) Executive
will devote substantially all of Executive’s time and attention to, and will use
Executive’s best energies and abilities in the performance of, Executive’s
duties and responsibilities as prescribed in this Section 3, and will not engage
in consulting work or any trade or business for Executive’s own account or for
or on behalf of any other person, firm or corporation which competes, conflicts,
or interferes with the performance of Executive’s duties hereunder in any
way. Notwithstanding the foregoing, Executive may perform community
service consistent with NPB and Bank policy and engage in activities on behalf
of NPB or Bank or for Executive’s own account; provided, however, that all such
service or activities do not interfere with performance of Executive's
responsibilities under this Agreement.
4. Base
Compensation. Except as provided in Section 17, for all services
to be performed by Executive pursuant to Section 3, Employer will pay Executive
a base salary of One Hundred Thirty-One Thousand Dollars ($131,000.00) per
year. Employer shall pay such salary to Executive in approximately
equal installments during each year on the customary 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. Executive’s salary will be reviewed
annually in a process consistent with similarly situated executives of
XXX.
0. 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 plans, group insurance, 401(k) plans,
employee stock purchase plans or other plans (other than pension 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, restricted stock, or other equity awards, commensurate with
Executive’s positions with NPB and Bank, pursuant to NPB's Long-Term Incentive
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.
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6. Bonuses. As
additional compensation for services rendered hereunder, Executive shall be
entitled to participate in an Executive Incentive Plan of
Bank (the “Incentive Plan”), which shall be mutually
agreed upon between Bank and NPB on an annual basis.
7. Other
Benefits. Except as provided in Section 17, as additional
compensation for services rendered hereunder, Executive shall be entitled during
the time this Agreement is in effect:
(a) To
life insurance coverage and long-term disability insurance coverage, at no
expense to Executive, in such amounts (the life insurance not to exceed $200,000
coverage) and on such terms and conditions as are made available to other
employees of Employer in commensurate positions with Executive (Executive shall
be responsible for income taxes on imputed income for life insurance coverage
over $50,000);
(b) To
receipt of a cellular telephone 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 One Hundred Dollars ($100.00) per month; and
(c) To
five (5) weeks vacation per year and reasonable sick leave in accordance with
Employer policy, as the sick leave policy may be revised from time to
time.
8. Termination--Disability. Employer
may terminate Executive's employment at any time if Executive shall be
"disabled." "Disability" means that Executive is unable to engage in
substantial gainful activity by reason of any medically determinable physical
or
mental impairment that can be expected to result in death or can be expected
to
last for a continuous period of not less than one (1) year. In such
event:
(a) This
Agreement shall remain in effect for the remainder of the Term 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, at the times set forth in Section 4; and
(c) Employer
shall continue to pay Executive the compensation set forth in Section 6, if
any,
at the times and for the duration set forth in the Incentive Plan.
9. Termination--Death. If
Executive's employment is terminated because of Executive's death:
(a) This
Agreement shall terminate at that time; and
(b) Within
thirty (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
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compensation
remaining to be paid to Executive pursuant to Section 4 through the remaining
Term of the Agreement and Section 6 for the remaining period set forth in the
Incentive Plan.
10. Voluntary
Termination. Executive may terminate Executive’s employment with
Employer at any time. In such event:
(a) This
Agreement shall terminate at that time;
(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; and
(2) The
remaining amount payable to Executive pursuant to Section 6, if any, in
accordance with the Incentive Plan.
11. 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 Employer's good faith reasonable belief that the Executive committed
(1) fraud, theft or embezzlement, (2) falsified corporate records,
(3) disseminated confidential information concerning customers, NPB, Bank,
any NPB or Bank subsidiary or any of its or their employees, (4) had
documented unsatisfactory job performance under NPB's dismissal policy, or
(5) violated NPB's Code of Conduct. The foregoing definition of
"Cause" is the definition of "Cause" used by NPB, Bank and their subsidiaries
in
the ordinary course of business.
(b) 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
Section 4 or otherwise, except for (A) Section 4 compensation, if any, accrued
and unpaid through the date of termination and (B) the remaining amount payable
to Executive pursuant to Section 6, if any, in accordance with the Incentive
Plan.
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12. Termination--Without
Cause. Employer may terminate Executive's employment at any time
without Cause. In such event:
(a) This
Agreement shall remain in effect for the remainder of its Term and terminate
at
the end of the Term;
(b) Employer
shall continue to pay Executive the compensation set forth in Section 4 for
the
remainder of the Term, at the times set forth in Section 4;
(c) Employer
shall continue to pay Executive the compensation set forth in Section 6, if
any,
at the times and for the duration set forth in the Incentive Plan;
(d) For
the remainder of the Term, Employer shall reimburse Executive for the cost
of
continuing his currently-elected health care coverages pursuant to "COBRA;"
and
(f) 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.
13. Non-Competition
and Non-Solicitation. Executive acknowledges that NPB is a
registered bank holding company engaged principally in the commercial and retail
banking business as well as the trust and asset management and insurance agency
businesses through its ownership, support, operation and management of its
subsidiaries, including Bank.
(a) During
the Term, and for a period of one (1) year thereafter, or if Executive shall
voluntarily terminate employment with Employer pursuant to Section 10 hereof
within one (1) year following the Effective Date, for a period of one (1) year,
or if Executive shall voluntarily terminate employment with Employer pursuant
to
Section 10 hereof on or following the first (1st) anniversary
of
the Effective Date, for a period of six (6) months, or in the case of such
voluntary termination following any Change in Control (defined below) of NPB,
such restrictions shall not apply, after the termination of Executive's
employment, Executive shall not, directly or indirectly, acting alone or in
conjunction with others:
(1) Engage
as a director, officer, employee, partner, shareholder, consultant, agent or
in
any other capacity, in a commercial or retail banking business that has on
a
consolidated basis less than $5 billion in assets, or in a trust business that
has on a consolidated basis less than $1 billion in assets under administration
or management, in competition with NPB, Bank or any other entity in the NPB
“controlled group” (the “NPB Controlled Group”) as determined under Section 1563
of the of the Internal Revenue Code of 1986, as amended (the “Code”), at that
time in any location within fifty (50) miles of Greenville, New Castle County,
Delaware (which area shall be
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reduced
to a twenty-five (25) mile radius around Greenville, Delaware after a Change
in
Control (defined below)); or
(2) Request
any customers of NPB, Bank or any other entity in the NPB Controlled Group
at
that time to curtail or cancel their business with NPB, Bank, or any other
such
NPB entity, excluding himself and any customer who is a relative of
Executive.
Personal
investments in publicly-traded
companies with voting power less than five percent (5%) shall not be deemed
an
activity prohibited by this Section 13.
A
“Change
in Control” for purposes of
this Section 13 means:
(1) A
merger, consolidation or other reorganization of Bank, except where the
resulting entity is controlled, directly or indirectly, by NPB;
(2) 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 such
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;
(3) 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; or
(4) A
sale, exchange, transfer or other disposition of substantially all of the assets
of NPB to another entity, or a corporate division involving NPB.
Notwithstanding
the foregoing, if
Employer terminates Executive’s employment without Cause pursuant to Section 12
hereof, Executive shall not be bound by the terms of this Section
13(a).
(b) During
the Term, and for a period of two (2) years thereafter, or if Executive shall
voluntarily terminate employment with Employer pursuant to Section 10 hereof,
for a period of two (2) years after the termination of Executive's employment,
Executive shall not, directly or indirectly, acting alone or in conjunction
with
others, induce, or attempt to influence, any employee of NPB, Bank, or any
other
entity in the NPB Controlled Group during the Term or at the time of termination
of employment, to terminate employment with NPB, Bank, or any other such NPB
entity, 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 13 and,
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accordingly,
Executive hereby 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 Executive’s
experience and capabilities are such that Executive can obtain employment in
business without breaching the terms and conditions of this Section 13, and
the
enforcement hereof by injunction or otherwise will not prevent Executive from
earning a livelihood.
14. Non-Disclosure. During
the Term and for an indefinite period thereafter, 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, 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 14.
Employer
may enforce the provisions of
this Section 14 by suit for damages, injunction, or both. Executive
agrees that Employer would be irreparably injured by the breach of any provision
of this Section 14, and money damages alone would not be an appropriate measure
of the harm to Employer from such continuing breach. Therefore,
Executive acknowledges and agrees that Employer may seek equitable relief,
including specific performance of the provisions of this Section 14, by
injunction to remedy a breach of the provisions of this Section
14. This Section 14 shall remain in full force and effect in
accordance with its provisions following any termination of this
Agreement.
15. 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, limited liability company or other
entity which may be or become the legal employer of all of NPB's and Bank's
current employees in which case both NPB and Bank shall be guarantors of the
due
performance of all obligations set forth herein and the term "Employer" used
herein shall include such assignee. This Agreement shall also 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 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.
(b) This
Agreement shall be binding upon and inure to the benefit of Executive,
Executive’s personal and legal representatives, heirs, distributees, devisees
and assigns.
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Notwithstanding
the foregoing, the obligations and duties of Executive hereunder shall be
personal and not assignable or delegable by Executive in any manner
whatsoever.
16. Exception
for Across-the-Board Actions. If, during the Term, the Boards of
Directors of NPB and Bank shall determine, acting in good faith and with a
reasonable basis, that it is in the best interests of NPB, Bank 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.
17. Engagement
After Term; Survival of Provisions. Upon expiration of the
Term:
(a) should
Executive continue as an employee, his employment status shall convert to "at
will" employment; and
(b) the
provisions of Sections 13 and 14 relating to non-competition and non-disclosure
shall remain in full force and effect in accordance with their respective
provisions.
18. Notices. All
notices or other communications hereunder shall be in writing and shall be
deemed given upon delivery if delivered personally or two (2) business days
after mailing if mailed by prepaid, registered or certified mail, return receipt
requested, addressed as follows:
If
to NPB or Bank, to:
Xxxxx
X. Xxxxx
President
and Chief Executive
Officer
National
Penn Bancshares,
Inc.
Reading
and Xxxxxxxxxxxx
Xxxxxxx
Xxxxxxxxx,
XX 00000
If
to Executive, at the address set
forth on the signature page hereto.
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.
19. 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 subject matter hereof. This Agreement
supersedes any and all prior agreements, understandings, negotiations and
discussions of the parties, whether oral or written.
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20. 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.
21. Governing
Law. This Agreement shall be governed by and construed in
accordance with the domestic internal law of the Commonwealth of
Pennsylvania.
22. 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 13 are not
reasonable, then such provision(s) shall be reformed to reflect such period
of
time or geographical areas as the court shall determine to be reasonable and
enforceable.
23. Captions. The
captions contained in this Agreement are for reference purposes only and are
not
part of this Agreement.
24. Joint
and Several Obligations. All obligations of NPB and Bank herein
shall be joint and several obligations.
25. Delay
of Certain Payments.
(a) Notwithstanding
anything to the contrary, to the extent any payment pursuant to Sections 8,
10,
11 and 12 of this Agreement (a "Severance Payment") exceeds two (2) times the
maximum amount that may be taken into account under a qualified plan pursuant
to
Section 401(a)(17) of the Code, for the year in which Executive terminates
employment (the “Initial Severance Limit”), then the Severance Payment shall be
paid as follows: (1) a lump sum payment equal to the Initial Severance Limit
at
the time set forth in Sections 8, 10, 11 and 12 of this Agreement, as applicable
to such Severance Payment, and (2) a lump sum payment equal to the excess of
the
Severance Payment over the Initial Severance Payment on the first (1st) business
day
following the six (6) month anniversary of Executive’s termination of
employment. If the Severance Payment is less than the Initial
Severance Payment, then the Severance Payment shall be paid in a lump sum at
the
time set forth in Subsection (1) of the preceding sentence.
(b) In
addition, in no event shall this Agreement be construed to cause a payment
of
deferred compensation (as defined for purposes of Section 409A of the
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Code
and
any guidance or regulations promulgated thereunder) to be made on any date
(or
upon the occurrence of any event) which would cause the imposition of an excise
tax under Section 409A of the Code. In the event that this Agreement
purports to provide that such a payment is to be made on any date (or upon
the
occurrence of any event) which would cause the imposition of an excise tax
under
Section 409A of the Code, such payment shall not be made until the earliest
date
on which (or upon the occurrence of the next event upon which) such payment
can
be made without causing the imposition of such an excise tax.
26. Termination
of Prior Agreement, Pay-Out of Change-in-Control Benefit.
(a) In
the event that (i) the Merger closes prior to January 1, 2008, and (ii)
Executive’s employment with Employer is terminated prior to January 1, 2008, but
on or after such Effective Date, Employer shall pay Executive an amount, at
such
time and in such form as provided under the Change in Control Agreement, dated
July 20, 2006, by and between Bank and Executive (the “Change in Control
Agreement”), equal to the amount calculated under Section 4(iv)(B) of the Change
of Control Agreement (after any required withholding, excise tax or any
reduction pursuant to Section 26(c) below, if applicable) (the “Payment”),
determined as if the date of Executive’s termination in (ii) above is
Executive’s “Date of Termination” as defined in the Change of Control Agreement,
in full satisfaction of all amounts and benefits payable to Executive under
the
Change in Control Agreement, and the terms of Section 26(b) below shall not
apply.
(b) In
the event that (i) the Merger closes on or after January 1, 2008, or (ii) the
Merger closes prior to January 1, 2008, and Executive remains employed with
Employer through January 1, 2008, Executive, or Executive’s estate or heirs if
Executive shall be deceased at the time of payment, shall be paid the Payment,
determined as if the applicable date described in (x) or (y) below is
Executive’s “Date of Termination” as defined in the Change of Control Agreement,
as soon as practicable after the later of (x) January 1, 2008, or (y) the
Effective Date, but in no event later than the fifth (5th) business
day
following such date, in full satisfaction of all amounts and benefits payable
to
Executive under the Change in Control Agreement.
(c) The
reduction applicable to any Payment made pursuant to Sections 26(a) and 26(b)
above shall be calculated as follows: if the aggregate present value of (i)
the
Payment and (ii) any other payments to Executive by the Company that are
contingent upon a change of control (the "Total Payment") constitutes a
"parachute payment" under Section 280G of the Code, then the Payment shall
be
automatically reduced by the sum of (x) the aggregate present value of the
amount that the Total Payment exceeds three (3) times Executive's "base amount",
as such term is defined in Section 280G of the Code, and (y) One Dollar
($1.00).
Signature
Page Follows]
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first written above.
NATIONAL
PENN BANCSHARES,
INC.
By: /s/
Xxxxx X. Xxxxx
Name:
Xxxxx X. Xxxxx
Title:
President &
CEO
CHRISTIANA
BANK & TRUST
COMPANY
By: /s/
Xxxxxxxx X. Xxxxxxxxxxxx
Name:
Xxxxxxxx X.
Xxxxxxxxxxxx
Title:
President &
CEO
Witness:/s/
Xxxxxx
Xxxxxxx /s/
Xxxxx X.
Xxxxxxx
Xxxxx
X.
Xxxxxxx
Address:
_____________________________
_____________________________
_____________________________
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