EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT dated as of January 22, 2003, 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. XXXXXXX ("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 Chairman, President and
Chief Executive Officer, and by Bank as Chairman and Chief Executive 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 January 22, 2003 and ending on January 21, 2006, 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 January 21,
2004 or any subsequent January 21, 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 January 21,
2004, then, on such date, its term shall be automatically extended so as to end
on January 21, 2007. Notwithstanding the foregoing, there shall be no further
extensions of the term of this Agreement beginning with the first January 22
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 Chairman, President and Chief Executive Officer, and Bank will
employ Executive as Chairman and Chief Executive Officer. Executive accepts such
employment, with such powers and duties commensurate with Executive's 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 Three Hundred Fifty-Five Thousand Dollars
($355,000) per year (effective January 1, 2003). 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
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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 4.
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.
7. Other Benefits. Except as provided in Sections 14 and 23, as
additional compensation for services rendered hereunder,
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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 Berkshire
Country Club and Moselem Springs 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) Normal Retirement. If Executive's employment continues until he
attains the age of sixty-five (65) and Executive retires at age sixty-five (65),
then Employer shall pay to Executive monthly payments, each in an amount equal
to sixty-five percent (65%) of the "Average Monthly Salary Base" (defined
below), for a period of one hundred eighty (180) months, commencing on the
"Normal Retirement Date" (defined below). If Executive dies before he has
received or commenced to receive all of such one hundred eighty (180) monthly
payments, then the provisions of subsection 8(d) hereof shall apply.
(b) Later Retirement. If Executive's employment continues until he
attains the age of sixty-five (65) and, at the request of the Board of Directors
of Employer, Executive chooses to continue to perform services thereafter, for
such compensation as may be mutually agreed upon at that time or from time to
time, and if thereafter Executive's employment shall terminate for any reason,
other than termination for Cause, then Employer shall pay to Executive monthly
payments, each in an amount equal to sixty-five percent (65%) of the "Adjusted
Average Monthly Salary Base" (defined below), for a period of one hundred eighty
(180) months, commencing on the first day of the first calendar month following
Executive's termination of employment. If Executive dies before he has received
or commenced to receive all of the payments to which he is entitled pursuant to
this subsection 8(b), then the provisions of subsection 8(d) hereof shall apply.
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(c) Early Retirement. If Executive elects to retire early between
the ages of sixty (60) and sixty-five (65), then Employer shall pay to Executive
monthly payments, each in an amount equal to sixty-five percent (65%) of the
Average Monthly Salary Base, reduced by an amount equal to one-quarter percent
(1/4%) thereof for each month by which the date that benefit payments are to
commence under this subsection 8(c) precedes Executive's Normal Retirement Date,
for a period of one hundred eighty (180) months, commencing on the first day of
the first calendar month following Executive's early retirement. If Executive
dies before he has received or commenced to receive all of the payments to which
he is entitled pursuant to this subsection 8(c), then the provisions of
subsection 8(d) hereof shall apply.
(d) Continuation of Payments. If Executive shall become entitled to
payments under the provisions of this Section 8 and shall die before receiving
all of the payments that he is entitled to receive, then the remaining payments
shall be made to Executive's "Designated Beneficiary" (defined below).
(e) Special Payments. If Executive shall die while employed by
Employer at a time when he was eligible to have previously retired pursuant to
subsections 8(b) or (c) hereof, then for purposes of this Section 8, the date of
Executive's death shall be deemed to be the date of an election by Executive to
retire from, or voluntarily terminate his, employment. In such event, Employer
shall pay to the Designated Beneficiary monthly payments as provided in
subsections 8(b) or 8(c), as the case may be.
(f) Pension Plan. The payments to be made under this Section 8
shall be reduced by any amount concurrently payable to Executive or to the
Designated Beneficiary pursuant to the Bank Retirement Plan. Accordingly, if
Executive elects to defer the receipt of payments pursuant to the Bank
Retirement Plan until Executive reaches age 70 1/2, the payments to be made
under this Section 8 shall not be reduced by any amount until Executive begins
receiving payments pursuant to the Bank Retirement Plan at age 70 1/2.
Any payments to be made under this Section 8 shall not be deemed Salary
or other compensation to Executive for the purpose of computing benefits to
which he may be entitled under any pension plan or other arrangement of Employer
or any Affiliate thereof for the benefit of their employees.
(g) Definitions. For purposes of this Section 8, the following
words and phrases shall have the following meanings:
(1) "Adjusted Average Monthly Salary Base" means the greater
of (i) the total of Executive's monthly Salary for the sixty (60) months prior
to his attainment of age sixty-five (65) or (ii) the total of Executive's
monthly Salary for the sixty (60)
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months prior to his termination of employment, divided by the number sixty (60).
(2) "Average Monthly Salary Base" means the total of
Executive's monthly Salary for the sixty (60) months immediately prior to the
month in which (i) he attains the age of sixty-five (65), (ii) he elects early
retirement, or (iii) his employment is terminated by Employer at any time prior
to a Change in Control other than for Cause, as the case may be, divided by the
number sixty (60).
(3) "Bank Retirement Plan" means the defined benefit pension
plan maintained now or in the future for employees of the Bank or NPB.
(4) "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 Secretary. Should
Executive die without a completed, signed "Beneficiary Designation Form" on file
with the Corporate Secretary, "Designated Beneficiary" shall mean Executive's
heirs at law.
(5) "Normal Retirement Date" means the first day of the first
calendar month following Executive's 65th birthday.
(6) "Salary" means Executive's base salary established
annually by the Board of Directors of Employer, 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.
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 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.
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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 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;
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(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 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.
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 at the times and in the manner set forth in
Section 8, 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;
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(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
(c) Employer shall pay to Executive's Designated Beneficiary the
payments to which Executive was entitled to receive pursuant to Section 8 at the
times set forth in Section 8, 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; and
(3) The amount payable to Executive pursuant to Section 9(a),
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.
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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:
(1) Questionable judgment on the part of Executive;
(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 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
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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;
(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 Berkshire
County Club 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 at the times and in the manner set forth in
Section 8, notwithstanding termination of this Agreement;
(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 Section
9(a); 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
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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:
(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
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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 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 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:
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(a) Executive shall concurrently give Employer written notice of
such election;
(b) This Agreement shall terminate immediately, including without
limitation Section 15 hereof;
(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
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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 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:
15
If to NPB, to:
Board of Directors
National Penn Bancshares, Inc.
Reading and Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: Chairman, Executive Committee
If to Bank, to:
Board of Directors
National Penn Bank
Reading and Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: Chairman, Executive Committee
If to Executive, to:
Xxxxx X. Xxxxxxx
00 Xxxxxx Xxxx
Xxxx, 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
16
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 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 Supplemental Benefit Agreement. Effective
concurrently with the execution and delivery of this Agreement, the Executive
Supplemental Benefit Agreement dated December 27, 1989, as amended on February
23, 1994 and February 26, 1998, 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/ Xxxxxxx X. Xxxxxxxx
--------------------------
Xxxxxxx X. Xxxxxxxx,
Chairman, Executive Committee
NATIONAL PENN BANCSHARES, INC.
By:/s/ Xxxxxxx X. Xxxxxxxx
--------------------------
Xxxxxxx X. Xxxxxxxx,
Chairman, Executive Committee
Witness: /s/Xxxxxx X. Xxxxx By:/s/ Xxxxx X. Xxxxxxx
--------------------- -----------------
Xxxxxx X. Xxxxx Xxxxx X. Xxxxxxx
17
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 January 22, 2003, among National Penn Bancshares, Inc.,
National Penn Bank and Xxxxx X. Xxxxxxx (the "Agreement")):
Name, Address and Social
Security No. (or Tax I.D. No.) Percent Interest
------------------------------ ----------------
_______________________ __________
_______________________
_______________________
_______________________ __________
_______________________
_______________________
______________________ __________
_______________________
_______________________
_______________________ __________
_______________________
_______________________
-------------------------- -----------------------------------
Date Xxxxx X. Xxxxxxx
--------------------------------------------------------------------------------
TO BE COMPLETED BY CORPORATE SECRETARY'S OFFICE ONLY
-------------------------- -----------------------------------
Date filed with Corporate Authorized Signature
Secretary's Office
