EXECUTIVE AGREEMENT
THIS AGREEMENT is made as of this 1st
day of February, 2008, 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 Xxxxxxx
X. Xxxxxxxxx, an individual residing at 0000 Xxxxxxxxx Xxxxx, Xxxxxxxxxxx,
Xxxxxxxxxxxx ("Executive").
W I T N E S S E T H :
WHEREAS, Executive is employed by NPB
and Bank as Executive Vice President of Bank’s Insurance 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 "controlledgroup of
corporations" including NPB, as determined under Code Section1563.
b. "Base
Salary" means the Executive's annual base salary, establishedeither by contract
or by the Employer, prior to any reduction of such salarypursuant to any
contribution to a tax-qualified plan under Section 401(k) of the
Code.
c. "Cause"
means the occurrence of either of the following, the result of which is
the termination of Executive’s Employment:
i. Executive's
conviction of, or plea of guilty or nolo contendere to, afelony or a crime of
falsehood or involving moral turpitude; or
ii. the
willful failure by Executive to substantially perform his duties toEmployer,
other than a failure resulting from Executive's incapacityas a result of the
Executive's disability, which willful failure results indemonstrable material
injury and damage to Employer.
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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:
x. questionable
judgment on the part of Executive;
y. 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
z. 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.
d. "Change
in Control" means:
i. An acquisition by any "person" or
"group" (as those terms aredefined or used in Section 13(d) of the Exchange Act)
of "beneficialownership" (within the meaning of Rule 13d-3 under the
ExchangeAct) 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, exceptwhere the resulting entity is controlled, directly
or indirectly, byNPB;
iii. A merger, consolidation or other
reorganization of NPB, exceptwhere shareholders of NPB immediately prior to
consummation ofany such transaction continue to hold at least a majority of
thevoting 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 ofthe assets of the Employer to another entity,
except to an entitycontrolled, directly or indirectly, by NPB;
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v. A sale, exchange, transfer or other
disposition of substantially all ofthe assets of NPB to another entity, or a
corporate divisioninvolving NPB; or
vi. A contested proxy solicitation of the
shareholders of NPB thatresults in the contesting party obtaining the ability to
cast 25% ormore of the votes entitled to be cast in an election of directors
ofNPB.
e. "Code"
means the Internal Revenue Code of 1986, as amended, and asthe same may be
amended from time to time.
f. "Employer"
means Bank, NPB or any Affiliate which employs Executive atany particular
time.
g. "Employment"
means Executive's employment by Bank, NPB or anyAffiliate at any particular
time.
h. "Exchange
Act" means the Securities Exchange Act of 1934, as amended.
2. Resignation of
Executive. If a Change in Control shall occur and if within
onehundred eighty (180) days after the effective date of a Change in Control
(orthirty (30) days after the completion of the conversion of the computer
systems if such conversion is later than one hundred eighty (180) days after the
effective date of a Change in Control, in either event, the “Transition Period”)
there shall be:
a. Any
involuntary termination of Executive's employment (other than
forCause);
b. Any
reduction in Executive's title, responsibilities or authority, includingsuch
title, responsibilities or authority as such may be increased from timeto
time;
c. Any
reduction in Executive's Base Salary in effect immediately prior to aChange in
Control, or any failure to provide Executive with benefits atleast 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) mile commute byautomobile from
Boyertown, Pennsylvania; or
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e. Any
requirement that Executive travel in performance of his duties onbehalf of NPB
or an Affiliate for a greater period of time during any yearthan was required of
Executive during the year preceding the year in which the Change in Control
occurred (each of the foregoing, a “Triggering Event”);
then, at the option of Executive,
exercisable by Executive within one hundred eighty(180) days of the occurrence
of any Triggering Event within the Transition Period,Executive may resign from
Employment (or, if involuntarily terminated, give notice of intention to collect
benefits hereunder) by delivering a notice in writing to
NPB, in which case Executive shall be entitled to a lump sum cash
severance payment equal to 150% of Executive's Base Salary in effect immediately
prior to a Change in Control, which Employer shall pay to Executive within
fifteen (15) days of Executive's termination of employment.
Executive shall not be required to
mitigate the amount of any payment providedfor in the preceding paragraph by
seeking other employment or otherwise, norshall the amount of any payment or
benefit provided for in the preceding paragraph 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.
3. Out-Placement
Services. If a Change in Control occurs and Executive
exercisesthe option to resign from Employment (or is involuntarily terminated)
as described inSection 2, Employer shall provide Executive with the services of
a professional out-placement firm, if Executive so requests, for the period not
to exceed one year from the date of Executive’s resignation (or termination), at
Employer’s sole cost and expense, up to a maximum amount of Seven Thousand Five
Hundred Dollars ($7,500).
4. No Implied Rights; Rights on
Termination of Employment.
a. No Right to Continued
Employment. Nothing in this Agreement shallconfer upon
Executive any right with respect to continuance ofEmployment by Employer, nor
shall it interfere with or limit in any way theright of Employer to terminate
Executive’s Employment at any time.
b. Voluntary Termination of
Employment. If Executive terminates Executive’sEmployment with
Employer at any time prior to a Change in Control, thisAgreement shall terminate
at that time and Employer shall have no further liability
hereunder.
c. Termination--Cause. If
Employer terminates Executive's Employment at anytime for Cause, this Agreement
shall terminate at that time and Employershall have no further liability
hereunder.
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d. Termination—Without
Cause. Employer may terminate Executive’sEmployment at any
time without Cause. If Employer terminates Executive'semployment at
any time without Cause prior to a Change in Control, and if no event has been
publicly announced that with the passing of time would constitute a Change in
Control, this Agreement shall terminate at that time and Employer shall have no
further liability hereunder. If Employer terminates Executive’s
Employment at any time prior to a Change in Control but subsequent to the
occurrence of an event that has been publicly announced that with the passing of
time would constitute a Change in Control, the provisions of Sections 2 and 3 of
this Agreement shall apply to same extent as if Executive’s Employment had been
involuntarily terminated subsequent to a Change in Control.
5. Arbitration. Any
dispute or controversy arising out of or relating to thisAgreement and any
controversy as to a termination for Cause shall be settledexclusively 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,
whichpayment and the right thereto are expressly declared to be non-assignable
and non-transferrable. In the event of any attempted assignment or
transfer, this Agreement shall terminate at that time and Employer shall have no
further liability hereunder.
7. Notices. Any
notice required or permitted to be given under this Agreement shallbe properly
given if in writing and if mailed by registered or certified mail,
postageprepaid with return receipt requested, to Executive's residence in the
case of any notice to Executive, or to the attention of the President at 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 thesubject matter hereof and may not be modified, amended or changed
orally butonly 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 andBank and
their respective successors and assigns. Each of NPB andBank 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 Sections 2 and
3 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.
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b. This
Agreement shall be binding upon and inure to the benefit of and beenforceable 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
inaccordance with the domestic internal law (but not the law of conflicts of
law) ofthe Commonwealth of Pennsylvania.
11. Headings. The
headings of the sections and subsections hereof are forconvenience only and
shall not control or affect the meaning or construction orlimit the scope or
intent of any of the sections or subsections of this Agreement.
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.
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NATIONAL
PENN BANCSHARES, INC.
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NATIONAL PENN BANK | |||
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By:
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/s/ Xxxxx X.
Xxxxx
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By:
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Xxxxx X. Xxxxx
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Name:
Xxxxx
X. Xxxxx
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Name:
Xxxxx
X. Xxxxx
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Title:
President
& CEO
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Title:
Chairman
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Attest:
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/s/ Xxxxxx X.
Xxxxx
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Attest:
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/s/ Xxxxxx X.
Xxxxx
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Name:
Xxxxxx
X. Xxxxx
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Name:
Xxxxxx
X. Xxxxx
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Title:
GEVP
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Title:
GEVP
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Witness:
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/s/ Xxxxx X.
Xxxxx
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/s/ Xxxxxxx X.
Xxxxxxxxx
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Xxxxxxx
X. Xxxxxxxxx
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