Exhibit 10.3
NATIONAL PENN BANK
EMPLOYMENT AGREEMENT
FOR XXXXX X. XXXX
THIS AGREEMENT is made this 24th day of September, 2002, by and between
National Penn Bank, a national banking association located at Philadelphia and
Reading Avenues, Xxxxxxxxx, Xxxxxxxxxxxx 00000 ("Employer") and Xxxxx X. Xxxx,
an individual residing at 000 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxxx
("Employee").
IN CONSIDERATION OF the mutual covenants contained herein and in the
Agreement and Plan of Merger dated as of the date hereof (the "Merger
Agreement") by and among National Penn Bancshares, Inc. ("NPB"), Employer, and
FirstService Bank ("FSB"), Employer and Employee agree, effective as of the
Effective Date (as defined in the Merger Agreement), as follows:
1.) Except as otherwise provided hereinafter, Employer hereby employs
Employee and undertakes the obligations of FSB pursuant to the Employment
Agreement with Employee and the Supplemental Executive Retirement Plan ("SERP")
for Employee, true and correct copies of which are attached hereto and made part
hereof as Exhibit "A."
2.) During the term of Employee's employment with Employer, Employer
will employ Employee as an Executive Vice-President of the FirstService Bank
Division of National Penn Bank (the "FirstService Division"). Employee accepts
such employment, with such powers and duties as may from time to time be
determined by the Board of Directors of Employer, by Employer's Chairman or
President and Chief Operating Officer, or by the Chairman and CEO or the
President of the FirstService Division.
3.) Employee's base annual salary on the Effective Date shall not
exceed $130,000.00.
4.) Employee shall be entitled to participate in NPB's Executive
Incentive Plan (the "Plan") as a Type B Participant, as defined in the Plan. A
copy of the Plan is attached hereto and made a part hereof as Exhibit "B". If,
during Employee's employment with Employer, the Plan is no longer in effect,
Employee shall be entitled to participate in any successor executive bonus plan
covering the officers of NPB or Employer which may be adopted by NPB or
Employer, at a level consistent with his title and responsibilities.
5.) Employer acknowledges that a "takeover" has occurred and a
"takeover" determination has been made by FSB under the SERP.
6.) Employer agrees to provide Employee with a "change in control"
benefit providing a 150% lump-sum cash severance payment and prohibiting
re-assignment beyond a thirty-minute commute from Perkasie, Pennsylvania. The
terms and conditions of the "change in control" benefit provided to Employee
pursuant to this Paragraph 6 shall be the same as provided in Employer's
Executive Agreement with Xxxxxxx X. Xxxxxxxx dated July 23, 1997, as amended by
an Amendatory Agreement dated August 26, 1998, copies of which are attached
hereto and made a part hereof as Exhibit "C". Notwithstanding the foregoing,
nothing in the Executive Agreement attached hereto and made a part hereof is
intended to eliminate or restrict the rights of Employee to severance benefits
under the Employment Agreement, as amended and supplemented by this Agreement,
subject to the limitations on parachute payments under Section 280G of the
Internal Revenue Code of 1986, as amended, as set forth in Section 3(b) of the
Executive Agreement attached hereto and made a part hereof.
7.) In the event that the Merger Agreement is terminated in accordance
with its terms without consummation of the Merger contemplated thereby, this
Agreement shall be terminated at the same time and shall be of no further force
and effect.
8.) If the Employment Agreement referenced in Paragraph 1 of this
Agreement, as amended and supplemented by this Agreement, is not terminated on
or before the anniversary of the Effective Date or any subsequent anniversary of
the Effective Date, then, on such date, the term of this Agreement shall be
automatically extended by adding one year to the term then remaining.
Notwithstanding the foregoing, there shall be no further extensions of the term
of this Employment Agreement, as amended and supplemented by this Agreement,
beginning with the first anniversary of the Effective Date that occurs after
Employee shall have reached age 60 (at which time the term of the Employment
Agreement, as amended and supplemented by this Agreement, and as then extended,
will end when Employee shall have reached age 65).
9.) Pension Plan; Supplemental Executive Retirement Plan.
(a) During the term of Employee's employment with Employer,
Employee will be entitled to participate in NPB's defined benefit pension plan,
assuming such plan remains in effect, and if it does not, to participate in any
subsequent plan covering the employees of NPB or Employer which may hereafter be
adopted by NPB or Employer (the "Pension Plan").
(b) Each payment to be made to Employee or to Employee's
"designated beneficiary" under the SERP shall be reduced, dollar-for-dollar, by
any amount concurrently paid to Employee or to Employee's "designated
beneficiary" pursuant to the Pension Plan or any annuity acquired, or other plan
or arrangement adopted, by NPB or Employer in substitution for benefits vested
under the Pension Plan.
(c) Employee hereby agrees to make an election under the Pension
Plan, or under any annuity acquired, or other plan or arrangement adopted, by
NPB or Employer in substitution for benefits vested under the Pension Plan, to
begin receiving Pension Plan benefits concurrently with the commencement of
payments to Employee under the SERP.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written, each intending to be legally bound.
NATIONAL PENN BANK
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Attest: /s/ Xxxxxx X. Xxxxx
-----------------------------
/s/ Xxxxx X. Xxxx
-----------------------------
Xxxxx X. Xxxx
Exhibit A
FIRST SERVICE BANK
EMPLOYMENT AGREEMENT WITH
XXXXX X. XXXX, EXECUTIVE VICE PRESIDENT
This Agreement is entered into on October 17, 2001 by and between
FirstService Bank, a Pennsylvania State-Chartered Banking Corporation
(hereinafter referred to as "Employer") and XXXXX X. XXXX, of 000 Xxxxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxxxxxx 00000, an individual (hereinafter referred to as
"Employee").
The parties, hereto, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged and agreed to, and intending to be
legally bound, hereby agree as follows:
1. Employment. Employer hereby agrees to employ Employee, and Employee
agrees to serve as an employee of Employer upon the terms and conditions
contained in this Agreement.
2. Term. The term of this Agreement shall be five (5) years from the
date of execution of this Agreement (such period, as the same may be extended or
renewed or shortened in accordance with the terms hereof referred to herein as
the "Period of Employment"). This Agreement and the Period of Employment shall
be automatically extended for additional one year terms, effective as of the end
of each year of employment; it being the intent of the parties that this
Agreement and the Period of Employment shall always have at least five (5) years
to run, unless this Agreement is otherwise terminated in accordance with the
terms hereof.
3. Duties During the Period of Employment. Employee agrees to serve as
Executive Vice President of Employer, performing such duties and
responsibilities as shall be set forth in his job description as approved from
time to time by the Board of Directors, as well as such other reasonable
responsibilities as may be assigned to him by the Board of Directors. Employee
shall devote his full business time, attention and best efforts to the affairs
of the Employer, and its subsidiaries and affiliates (if any) during the Period
of Employment; provided, however, that the Employee may engage in other
activities, such as activities involving charitable, educational, religious and
similar organizations, speaking engagements and similar activities, to the
extent that such other activities do not inhibit or prohibit the performance of
Employee's duties under this Agreement, or conflict in any material way with the
business of Employer, its subsidiaries and affiliates, if any. Employer's Code
of Conduct is incorporated herein by reference and Employee agrees to comply
with it in its present form and as it may be amended from time to time.
4. Compensation. In consideration for his services as Executive Vice
President, Employer will pay to Employee during the Period of Employment a base
annual salary equal to One Hundred Fifteen Thousand Dollars ($115,000.00) during
the
year. An annual review of his compensation and performance shall be undertaken
by the Board of Directors during June of each year this Agreement is in effect.
Commencing with the next succeeding month, and for each year thereafter,
Employee's salary shall be in an amount mutually agreed by and between the
Employer and the Employee. Upon the aforementioned annual review, the Board of
Directors may, in its discretion, increase (but not decrease) the Employee's
base annual salary.
5. Incentive Compensation. During the Period of Employment, Employee
shall participate, with respect to each calendar year of the Employer, in
Employer's incentive compensation program or programs, if any, for corporate
executives, and any amount awarded to Employee under such plan shall be paid to
Employee in accordance with the provisions of such program, subject to the prior
review and approval by the Board of Directors.
6. Other Employee Benefits.
A. Vacation. Employee shall be entitled to a paid annual vacation
of not less than four (4) weeks during each calendar year in the Period of
Employment.
B. Regular Reimbursed Business Expenses. Employer shall reimburse
Employee for all expenses and disbursements reasonably incurred by Employee in
the performance of his duties during the Period of Employment.
C. Employee Benefit Plans or Arrangements. In addition to the cash
compensation provided for in Sections 4 and 5 hereof, and subject to applicable
eligibility requirements, the Employee shall be entitled to participate in all
employee benefit plans or arrangements of Employer as presently in effect or as
they may be modified or added to by Employer from time to time, which provide
benefits to officers or employees of Employer, including but not limited to the
Employer's medical insurance plan(s) to benefit Employee and his family, any
sick leave, disability plans, retirement/pension benefits, professional
association memberships and dues and deferred compensation plans.
D. Employer shall include Employee as a named insured in its
Director and Officer, General Liability and all other pertinent insurance
coverages and shall indemnify him to the same extent as elected members and
officers of its Board of Directors for acts taken by him in good faith in his
capacity as Executive Vice President.
E. Employer shall furnish for the use of Employee, an automobile
acceptable both to Employer and Employee, either leased or purchased, at the
beginning of every third fiscal year. Employer shall be responsible for all
expenses associated with the operation of said vehicle, except that fuel costs
for the use of the vehicle for purely personal travel outside of the broad
geographical region generally served by Employer.
7. Termination Without Cause.
A. The Board of Directors may, at its discretion, terminate
Employee's duties and responsibilities as Executive Vice President. Such action
shall require a majority vote of the entire Board of Directors, and shall be
effective immediately upon
delivery to Employee of written notice of this action by the Board of Directors,
or at such other time as may be agreed upon by both parties to this contract.
Following such termination of this contract, all rights, obligations and duties
of both parties relative to this Agreement shall cease, except that, for the
month in which his duties were terminated and for the then current five (5) year
Period of Employment, the Employer shall continue to pay Employee his then
current salary and shall continue his family medical and disability insurance
coverage. Such continuation of pay and medical and disability insurance shall
constitute an agreed upon termination payment to Employee and shall be made in
all instances in which there is a "termination without cause" under this
Paragraph 7A. Throughout this period, Employee shall not be required to perform
any duties for the Employer, or report to work. Employee shall, however,
demonstrate good faith in cooperating and assisting with the transitioning of
projects and communication of information concerning endeavors with which he had
been involved on behalf of the Employer. In the event that Employee secures
other satisfactory full-time employment prior to the expiration of this
termination payment, said termination payment shall terminate coincident with
that date upon which such other employment commences, except that the
difference, if any, between his former rate of compensation and that rate which
is applicable to the new position shall continue to be paid to Employee until
the conclusion of this Period of Employment.
In the event that Employer exercises this provision, it shall also
demonstrate good faith in affording Employee reasonable assistance with his
effort to secure alternative employment. Such assistance shall include, but
shall not be limited to: the granting of references; providing reasonable
secretarial support and making available to Employee the reasonable use of
business equipment (e.g. telefacsimile, photocopying, computer, internet and
word processing) . These services are to be provided, at the discretion of the
Board, either at an Employer site or off-site. If off-site, Employer will
reimburse Employee for reasonable expenses to a maximum of $15,000 upon
presentation of bills and/or statements during the period as stated above.
Employer shall have no other obligations to Employee hereunder.
B. Should Employee, at his discretion, elect to terminate this
contract for any reason, he shall provide to the Chairman of the Board of
Directors at least ninety (90) days written notice of his decision to so
terminate this contract. Employee shall continue to render his services and be
paid his current base annual salary during the period up to the date of
termination. At the conclusion of that ninety (90) day period of notice, all
rights, duties and obligations under this contract shall terminate.
8. Termination with Cause. Employer shall have the right at any time to
terminate this Agreement for cause in the event that Employee shall: (i)
willfully fail to perform his duties and obligations under this Agreement, other
than due to incapacity as provided under Paragraph 9 hereof; (ii) engage in acts
of fraud, dishonesty, incompetence, misconduct or negligence in connection with
the business of Employer; (iii) have been convicted by any federal, state or
local authority for, or shall have plead guilty or nolo contendere to, an act
constituting felony; (iv) have habitually abused any substance (such as a
narcotic or alcohol); or (v) have done anything, engaged in any act, or
activity, or failed to have done anything that the Employee should have done,
whether within the scope of the Employee's employment hereunder, or outside the
scope of the Employee's employment hereunder, whether in the Employee's
business, professional or
personal affairs, which results in or causes adverse or negative publicity to
the Employer and which the Board of Directors of the Employer determines, in its
sole judgment, discretion and determination, to have a material adverse impact
upon the Employer's image, reputation in the community, public perception,
business or otherwise.
The Board of Directors of the Employer shall have the sole right
to make the determination that any of the events specified above in this
Paragraph 8 has occurred, and the determination of the Board of Directors shall
be final, absolute and conclusive and may be made in the Board of Directors'
sole judgment. The Employee, if then a director, shall not be entitled to vote
in the event any such determination is made by the Board of Directors.
The determination by the Board of Directors shall be final and
absolute, and shall not be appealable to any third party or to any court or
tribunal whatsoever. Any action taken by the Employer in the context of this
Paragraph 8 shall not be subject to equitable or injunctive relief by any court
or tribunal whatsoever. In the event that the Employer terminates the employment
relationship of Employee pursuant to this Paragraph 8, Employer shall give
written notice of such action to the Employee and Employee shall immediately and
without delay vacate the offices of Employer, and all obligations of Employer
hereunder shall automatically terminate and cease, and no severance allowance
shall be paid to Employee by Employer.
9. Termination Due to Disability. Upon Employee being disabled for a
period of at least four (4) consecutive months, with such disability
compromising him to the extent that he is unable to effectively fulfill his
duties and responsibilities as Executive Vice President, the Board of Directors
may, in its discretion, terminate Employee's employment.
10. Salary and Benefit Termination. If termination with cause or due to
disability is effected as outlined herein, Paragraph 7A shall be void, and all
rights, duties and obligations noted within that paragraph shall be viewed as
having expired.
11. Restrictive Covenants By Employee
(a) Non-Competition.
In consideration of employment with Employer, Employee hereby
agrees that during his employment with Employer and for a period of two (2)
years after employment, if the Employee leaves the employ of the Employer by his
own request or at the request of the Employer, Employee shall not engage, either
directly or indirectly, as an owner, independent contractor, employee,
Consultant, agent, partner, joint venture, shareholder or otherwise, nor have
any direct or indirect interest in, any business, firm or entity competitive
with that carried on by Employer during the term of this Agreement, operating
within a radius of 50 miles from the principal business location of Employer.
(b) Non-Solicitation.
During the term of this Agreement and for the period of two (2)
years from and after the date of the termination of his employment with Employer
for any
reason whatsoever, Employee covenants and agrees that Employee will not at any
time, directly or indirectly, as an owner, independent contractor, employee,
consultant, agent, partner, joint venture, shareholder or otherwise for the
benefit of any person communicate with or solicit (or encourage any person to
communicate with or solicit) any person who is at the termination of his
employment, or at any time within twelve (12) months prior to such termination,
was a client, supplier, employee, agent or representative of Employer in any
manner which interferes or might interfere with such person's relationship with
Employer.
(c) Non-disclosure.
Employee further covenants and agrees that:
(i) the identity of the Employer's clients, suppliers, personnel
records, financial statements, tax returns, business procedures and methods of
operations are of a confidential nature and are unique, valuable and special
assets of the Employer's business and the Employee will not, during his
employment and at any time following termination of his employment with Employer
for any reason whatsoever, disclose such identity, information, procedures,
operations or any part thereof, other than as required in the performance of his
duties to the Employer or by law.
(ii) all papers and records, including all memoranda, notes, data
or other documents, and any and all copies thereof, whether made by Employee or
not, relating in any manner to any business of the Employer, are the sole and
exclusive property of the Employer. Nothing in this Agreement shall be deemed to
give the Employee the right to remove, including without limitation by
photocopying or other means of reproduction, from the Employer's premises any
such written information concerning the Employer's business.
(d) Remedies for Breach.
Employee agrees that Employer's remedies at law for a breach of
any of the restrictions contained in this Addendum will be inadequate and that,
in connection with any such breach, Employer will be entitled, in addition to
any other available remedies, to temporary and permanent injunctive relief
without the necessity of proven actual damage or immediate or irreparable harm,
or of posting a bond.
(e) Miscellaneous Provisions.
(i) The parties hereto believe that the restrictive covenants
contained in this Addendum are reasonable. However, if at any time it shall be
determined by any court of competent jurisdiction that this paragraph or any
portion of it as written is unenforceable because the restrictions are
unreasonable, the parties hereto specify that such portions as shall have been
determined to be unreasonably restrictive shall thereupon be deemed so amended
as to make such restrictions reasonable in the determination of such court and
the said covenants, as so modified, shall be enforceable between the parties to
the same extent as if such amendments had been made prior to the date of any
alleged breach of said covenants.
(ii) Each of the covenants contained in this Addendum shall be
construed as covenants independent of any other provision in the Employment
Agreement or any other agreements between the parties; and the existence of any
claim or cause of action by the Employee against the Employer, whether
predicated on the Employment Agreement, this Addendum or otherwise, shall not
constitute a defense to the enforcement by the Employer of these restrictive
covenants. Regardless of whether the Employee leaves the employ of the Employer
by his own request or at the request of the Employer and regardless of how or in
what manner the Employee xxxxxx his relationship with the Employer, each of the
independent covenants contained in this Addendum shall remain in full force and
effect as independent covenants, regardless of any other covenants, terms or
conditions and regardless of the manner of their breach.
(iii) The provisions of this Addendum shall survive the expiration
or termination of the Employment Agreement and of Employee's employment
thereunder.
12. Governing Law. This Agreement is governed by and is to be construed
and enforced in accordance with the laws of the Commonwealth of Pennsylvania.
If, under such law, any portion of this Agreement is at any time deemed to be in
conflict with any applicable statute, rule, regulation or ordinance, such
portion shall be deemed to be modified or altered to conform thereto or, if that
is not possible, to be omitted from this Agreement; and the invalidity of any
such portion shall not affect the force, effect and validity of the remaining
portion hereof.
13. Notices. All notices under this Agreement shall be in writing and
shall be deemed effective when delivered in person (in the Employer's case, to
its Secretary) or twenty-four (24) hours after deposit thereof in the U.S.
mails, postage prepaid, for delivery as certified mail -- addressed, in the case
of Employee, to him at his residential address, and in the case of Employer, to
its corporate headquarters, attention of the Secretary, or to such other address
as Employer and Employee may designate in writing at any time or from time to
time to the other party.
14. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or any breach thereof, shall be settled by arbitration in the
appropriate jurisdiction as determined by Employer, in accordance with the rules
of the American Arbitration Association then in effect. Judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof. Each party shall pay his or its own expenses, including legal fees and
shall share equally in all other costs of the arbitration. In the event that
Employee prevails, or substantially prevails, in such arbitration, Employer will
pay or reimburse Employee for his reasonable expenses, as determined by the
arbitrators incurred in connection with such arbitration.
15. Survival. The respective obligations of and benefits afforded to
Employee and Employer in this Agreement shall survive termination of the Period
of Employment and this Agreement.
16. Waiver of Obligation. The failure of either party to insist in any
one or more instances upon performance of any of the terms or conditions of this
contract shall not be construed as a waiver of any right granted herein or the
future performance of any term or condition hereof.
17. Miscellaneous. This Agreement constitutes the entire understanding
between Employer and Employee relating to the employment of Employee by Employer
and cancels all prior written and oral agreements and understandings with
respect to the subject matter of this Agreement. This Agreement may be amended
only by a subsequent written agreement of Employee and Employer.
This Agreement shall be binding upon and shall inure to the benefit of
Employee, his heirs, executors, administrators, beneficiaries and assigns and to
the benefit of and be binding upon the Employer and its successors and assigns.
Specifically, this Agreement is intended by the parties to be binding on any and
all financial institutions merging with, acquiring, succeeding or in any way
controlling the Employer bank in the future.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
"Employer" FirstService Bank
By: /s/ Xxxx X. Xxxxx (SEAL)
President
Attest: /s/ A. Xxx Xxxxxxx (SEAL)
Secretary
"Employee"
/s/ Xxxxx X. Xxxx
(SEAL)
Xxxxx X. Xxxx
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR
XXXXX X. XXXX
INTENDING TO BE LEGALLY BOUND, FIRSTSERVICE BANK ("Bank") and XXXXX X.
XXXX ("Participant") agree:
ARTICLE 1
PURPOSES
ss.1.1) This Agreement sets forth a "Supplemental Executive Retirement
Plan" (the "Plan") to provide supplemental retirement and other benefits for
certain employees of the Bank including Participant. It is part of an integrated
executive compensation program which is intended to assist the Bank in
motivating and retaining a select group of management and highly compensated
executives of superior ability, industry and loyalty within the meaning of
Sections 201(2), 301(a) (3) and 401(a) (1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). A most important provision relates
to what happens in the event of a possible "takeover" of the Bank.
ss.1.2) The Plan is intended to be unfunded. While the Bank may
purchase a Bank-owned life insurance policy ("BOLI"), the Participant shall not
be deemed to be an owner or beneficiary of it and shall have no rights with
respect to it. The Bank shall be fully liable to provide the benefits set forth
herein, notwithstanding whatever happens to that policy.
ARTICLE 2
VESTING
ss.2.1) The Participant's interests in the Plan are fully vested upon
the execution of this Agreement but are subject to divestment, meaning all
interests and benefits of the Plan are forfeited and lost, only if: the
Participant's employment is terminated for "cause" by the current management of
the Bank or if the Participant voluntarily terminates his employment and takes
employment with an employer providing products or services or both competitive
to those provided by Bank in any geographic area (within the Counties of Bucks,
Xxxxxxxxxx, Xxxxxxx, Delaware, Lehigh and Philadelphia and the county or
principal geographical area of any bank or other business entity hereafter
acquired by the Bank, any of its subsidiaries or parent) where the Bank is then
providing services within two (2) years of termination of employment. The Bank's
Board of Directors shall be the sole judge and make the final determination as
to whether or not "cause" exists for termination or whether the Participant has
taken employment with an employer in competition with the Bank. In the event of
a possible "takeover" of the Bank as described below, the Participant's
interests shall be fully vested, not subject to divestment for "cause" or by
taking employment with a competitor.
ss.2.2) The term "cause" shall have the same meaning as that used in
the Participant's employment agreement with the Bank, if any, and shall also
include (a) an act of dishonesty, by the Participant constituting a felony
resulting or intended to result in
gain to or personal enrichment of the Participant at the expense of the Bank or
its patrons, or (b) the willful engaging by the Participant in misconduct which
is injurious to the Bank of (c) the deliberate and intentional refusal of the
Participant to perform substantially his duties for the Bank or any combination
of the foregoing.
ARTICLE 3
BENEFIT ENTITLEMENTS
ss.3.1) The Participant shall be entitled to certain accrued retirement
benefits (the "Accrued Benefits") which are to be paid upon retirement but not
before the Participant reaches age sixty-two (62). The Accrued Benefits shall be
a monthly single life annuity equal to sixty percent (60%) of his compensation
divided by twelve (12). Compensation shall mean only Participant's annual
payroll salary as fixed by the Board of Directors of the Bank for the calendar
year preceding retirement excluding bonuses, fringe benefits, stock options and
the like. Payment to the Participant shall commence to be paid on the first day
of the month following his actual retirement date which is the last day the
Participant received compensation from the Bank. The Accrued Benefits shall be
paid monthly with the final payment to be made on the first day of the month in
which the Participant's death occurs.
ss.3.2) The amount of the Accrued Benefits above, which have been in
pay status for at least a full. calendar year, shall not be decreased, but shall
be increased up to a maximum of four percent (4%) annually each February 1 by
the increase for the month of December from the previous year's December in the
Consumer Price Index -All Urban Consumer (the "CPI-U") for the prior calendar
year applicable for the area which includes Philadelphia, Pennsylvania as
published by the Department of Labor, Bureau of Labor Standards or such
successor Consumer Price Index as most closely corresponds to CPI-U if that
index is no longer published.
ss.3.3) If the Participant retires on account of disability, the
Accrued Benefits shall be modified to an amount which when added to the payments
the Participant receives as a benefit under the Bank's long--term disability
plan aggregates to a sum equal to what the Participant would have received but
for the disability. In other words, the Participant is not entitled to both full
long term disability plan benefits and full Accrued Benefits under this Plan. If
the payments under the disability plan cease for any reason, the full Accrued
Benefits payments shall commence immediately. For example, if the disability
plan provides that its payments cease when the Participant reaches age
sixty-five (65), the full Accrued Benefits become payable monthly, beginning
the first month after the disability payments cease. If a Participant dies while
receiving payments under a disability plan and that plan makes no provision of
continuing disability payments for a spouse and the Participant has designated a
spouse to receive spousal benefits, the spouse shall receive eighty percent
(80%) of the Accrued Benefits as if the Participant had not been receiving
disability benefits.
ss.3.4) If the Participant's employment terminates before attaining age
sixty-two (62) and Participant's interests have not been divested, the
Participant shall be entitled to receive the monthly benefit provided for above
commencing as of the first day of the month following the date the Participant
attained age sixty-two (62) which shall be deemed Participant's "retirement
date."
ss.3.5) If the Participant dies and was married at Participant's death
and has designated Participant's spouse as a beneficiary under the Plan, then,
regardless of Participant's age at Participant's death, Participant's spouse
shall be entitled to a "spousal benefit" which shall be a monthly single life
annuity equal to eighty percent (80%) of what Participant's Accrued Benefits of
sixty percent (60%) as would have been had the Participant retired on the date
of Participant's death. It shall be paid on the first day of the month following
the month in which the Participant dies and monthly thereafter until the death
of the spouse. If otherwise permissible legally, the Participant may terminate
the designation of a Spouse and, in this event, at Participant's death no
further benefits of any kind are payable to anyone.
ss.3.6) There are no other death benefits and no health insurance
benefits under the Plan.
ARTICLE 4
COMMITTEE
ss.4.1) Unless the Bank's Board of Directors otherwise determines, the
Board's Executive Committee shall constitute the Committee which shall govern
the operation of the Plan for the Bank. Neither the Committee, nor its
individual members, nor Bank shall be deemed a fiduciary with respect to the
Plan.
ss.4.2) The Committee shall have the power and duty to do all things
necessary to see the Plan's purposes are performed including provide rules and
regulations of the management, operation and administration of the Plan,
interpret it and correct any defect, supply any Omissions or reconcile any
inconsistency in the Plan, subject at all times to the final determination of
the Board of Directors of the Bank. The Committee shall promulgate rules for
calculating the Accrued Benefits are increased based on CPI-U changes.
ss.4.3) No member of the Committee shall be directly or indirectly
responsible or under any liability by reason of any action or default by such
person as a member of the Committee, or the exercise of or failure to exercise
any power or discretion as such member except for such member' s own fraud or
willful misconduct. No member of the Committee shall be liable in any way for
the acts of defaults of any other member of the Committee, or any of its
advisors, agents or representatives. The Bank- shall indemnify and save harmless
each member of the Committee against any and all expenses and liabilities
arising out of the member's own membership on the Committee, except expenses and
liabilities arising out of a Committee member's own fraud or willful misconduct.
ss.4.4) Members of the Committee who are employees of the Bank shall
receive no compensation for their services rendered as members of the Committee.
Any other members of the Committee who are not employees of the Bank shall
receive such reasonable compensation for their services as may be authorized
from time to time by the Bank. Members of the Committee shall be entitled to
receive their reasonable expenses incurred in administering the Plan. Any such
compensation and expenses, as well as extraordinary expenses authorized by the
Bank, shall be paid by the Bank.
ss.4.5) The Bank shall furnish to the Committee in writing all
information the Bank deems appropriate for the Committee to exercise its powers
and duties in administration of the Plan. Such information shall be conclusive
for all purposes of the Plan and the Committee shall be entitled to rely thereon
without any investigation thereof; provided, however, that the Committee may
correct any errors discovered in any such information.
ss.4.6) The Committee shall make available to the Participant, or the
Participant's beneficiary, for examination at the principal office of the Bank
(or at such other location as may be determined by the Committee), a copy of the
Plan and such of its records, or copies thereof, as may pertain to any benefits
of such Participant, joint or contingent annuitant and beneficiary under the
Plan.
ARTICLE 5
TAKEOVER
ss.5.1) The Bank, in its Articles of Incorporation and Bylaws, has
extensive provisions relating to "takeovers," or changes in control of the Bank.
These are all incorporated herein by reference. In order to achieve one of the
purposes of the Plan, namely retaining Participant as an employee it is vital to
assure Participant that in the event of a possible change in control of the Bank
or a "takeover," the Participant's benefits under this Agreement will not be
lost by a capricious determination Participant should be fired for "cause" and
Participant's divested. Thus, it is hereby specified and agreed that if there is
a possible change in control of the Bank or a "takeover," Participant's benefits
and interests under this plan are fully vested and may never be divested. The
Participant may not be terminated for "cause." The Participant may obtain
employment with a competitor all without forfeiting or losing Participant's
benefits under the Plan.
ss.5.2) A change in control in the Bank or a "takeover" shall be
deemed to be possible or to have occurred notwithstanding the "Super-Majority"
Approvals required for a "Business Combination" in the Articles of Incorporation
when an entity ("acquirer") is about to or takes over de facto control of the
Bank. A change in control or "takeover" shall also be deemed to be possible or
have occurred under any or all of the following circumstances:
A) An acquirer obtains sufficient voting power by acquiring the
stock of the Bank (or any parent of the Bank in the nature of a bank holding
company or the like) to elect one or more directors whether or not such power is
actually used.
B) The Board of Directors of the Bank, as presently constituted or
however it may change, determines formally or informally to sell, merge,
consolidate or otherwise disposes of substantially all of the assets of the Bank
not in the ordinary course of business.
C) An acquirer publicly announces it will attempt to take over the
Bank and begins acquiring the voting stock of the Bank (or its parent, if any)
where the
acquirer has the apparent financial ability to acquire the Bank regardless of
whether the proposed "takeover" is "friendly" or "hostile."
D) Any other similar occurrence or series of occurrences that
could lead reasonable persons familiar with events in the financial business
world to conclude that a change in control or "takeover" of the Bank is
contemplated by an acquirer with the apparent ability to succeed and therefor
"possible."
ss.5.3) The persons who constitute the present Board of Directors of
the Bank are hereby designated as a permanent arbitration panel (the "Panel") to
make all factual and legal determinations under this Article by a simple
majority vote. Each shall serve until adjudication of incapacity or death
without regard to whether or not they are still Directors of the Bank and
without regard to age. The Panel is hereby empowered to make a determination
that a change in control or "takeover" is possible and such a determination
shall automatically mean without further action that Participant's interests and
benefits under the Plan are fully vested, not subject to being divested and that
Participant may not be terminated for "cause" and that Participant may seek
employment with a competitor. The person on the Panel then available who is
senior in age and service to the Bank shall be chairperson of the Panel, convene
a meeting at the request of one or more Participants, and determine if a change
in control or "takeover" is possible or has happened and any other relevant
matters not inconsistent with the Plan.
ss.5.4) If the Panel has determined there is a possible change in
control or "takeover" of the Bank and Participant's benefits are vested, then,
thereafter, if Participant's employment is terminated for any reason prior to
age sixty-two (62), Participant's base salary shall be deemed to increase at
three percent (3%) per annum for the year of termination and each year
thereafter until Participant attains age sixty-two (62). Termination shall be
deemed to include a reduction in base salary and any failure by the Bank to
increase it at the rate of at least three percent (3%) per annum after the
determination by the Panel of possible change in control or "takeover."
ARTICLE 6
EFFECTIVE DATE, TERMINATION AND AMENDMENT
Participation in this Plan by the Participant shall become effective as
of the date hereof, and shall continue until such time as it or the Plan is
terminated by the Bank. This Plan may be terminated at any time and amended from
time to time by the Bank provided that neither the termination nor any amendment
of the Plan may, without the written consent of the Participant, reduce the
Participant's Accrued Benefits or the benefits payable to the Participant's
beneficiary in the absence of such amendment or the termination of the Plan.
ARTICLE 7
MISCELLANEOUS PROVISIONS
ss.7.1) No benefit payable under the Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge, or
encumbrance and any attempt to anticipate, alienate, sell, transfer, assign,
pledge or encumber such benefit shall be void.
ss.7.2) The Participant or the beneficiary of the Participant shall
rely solely upon the unsecured promise of the Bank, as set forth herein, for the
payment of benefits under the terms of the Plan, and nothing herein contained
shall be construed to give to or vest in the Participant or any other person now
or at any time in the future, any right, title, interest, or claim in or to any
specific asset, fund, reserve, account, insurance or annuity, policy or
contract, or other property of any kind whatever owned by the Bank, or in which
the Bank may have any right, title, or interest, now or at any time in the
future. Any insurance policy or other assets acquired by the Bank to fund, in
whole or in part, the Bank's liabilities under the Plan shall not be deemed to
be held as security for the performance of the obligations of the Bank
hereunder.
ss.7.3) Except as provided above in Section 3.3, it is agreed and
understood that any benefits accrued under this Plan are in addition to any and
all employee benefits to which Participant may otherwise be entitled under any
other contract, arrangement, or voluntary pension, profit sharing or other
compensation plan of the Bank, whether funded or unfunded, and that this Plan
shall not affect or impair the rights or obligations of the Bank or the
Participant under any other such contract, arrangement, or voluntary pension,
profit sharing or other compensation plan.
ss.7.4) If any term or condition of the Plan shall be invalid or
unenforceable to any extent or in any application, then the remainder of the
Plan, with the exception of such invalid or unenforceable provision, shall not
be affected thereby, and shall continue in effect and application to its fullest
extent.
ss.7.5) Neither the establishment of the Plan, any provisions of the
Plan, nor any action of the Committee shall be held or construed to confer upon
the Participant the right to a continuation of employment by the Bank. Subject
to the terms of any applicable employment contract, the Bank reserves the right
to dismiss any employee, or otherwise deal with any employee to the same extent
as though the Plan had not been adopted.
ss.7.6) If the Committee determines that the Participant or beneficiary
is unable to care for the Participant's or the beneficiary's affairs because of
illness or accident, or is a minor, any benefit due the Participant or
beneficiary may be paid to the Participant's or the beneficiary's spouse, child,
parent, or any other person deemed by the Committee to have incurred expense for
the Participant or beneficiary (including a duly appointed guardian, committee
or other legal representative), and any such payment shall be a complete
discharge of the Bank's obligation hereunder.
ss.7.7) The Plan shall be construed, administered and enforced
according to the laws of the Commonwealth of Pennsylvania, except to the extent
that such laws are preempted by the Federal laws of the United States of
America.
ss.7.8) If, pursuant to the provisions of the Plan, the Bank denies the
claim of the Participant or the Participant's beneficiary for benefits under the
Plan, the Bank shall provide written notice, within ninety (90) days after
receipt of the claim, setting forth in a manner calculated to be understood by
the claimant:
(a) the specific reasons for such denial;
(b) the specific reference to the Plan provisions on which the
denial is based;
(c) a description of any additional material or information
necessary to perfect the claim and an explanation of why such material or
information is needed; and
(d) an explanation of the Plan's claim review procedure and the
time limitations of this subsection applicable thereto.
The Participant or the Participant's beneficiary whose claim for
benefit has been denied may request review by the Bank of the denied claim by
notifying the Bank in writing within sixty (60) days after receipt of the
notification of claim denial. As part of said review procedure, the claimant or
the claimant's authorized representative may review pertinent documents and
submit issues and comments to the Bank in writing.
The Bank shall render its decision to the claimant in writing in a
manner calculated to be understood by the claimant not later than sixty (60)
days after receipt of the request for review, unless special circumstances
require an extension of time, in which case decision shall be rendered as soon
after the sixty-day period as possible, but not later than one hundred and
twenty (120) days after receipt of the request for review. The decision on
review shall state the specific reasons therefore and the specific Plan
reference on which it is based.
ss.7.9) The Bank and any successor the Bank shall be obligated to pay
all benefits payable under the Plan, without regard to the sufficiency of any
funds or other assets reserved for this purpose, except as is specifically
provided herein.
ss.7. 10) The Bank has adopted this Plan the date the Board of
Directors approved it which was August 15, 2001.
EXECUTED on September 11, 2001.
FIRSTSERVICE BANK
By: /s/ Xxxx X. Xxxxx
Attest: /s/ A. Xxx Xxxxxxx
PARTICIPANT
/s/ Xxxxx X. Xxxx
Xxxxx X. Xxxx
Exhibit B
NATIONAL PENN BANCSHARES, INC.
EXECUTIVE INCENTIVE PLAN
AMENDMENT AND RESTATEMENT - 2002
The National Penn Bancshares, Inc. Executive Incentive Plan is hereby
amended and restated in its entirety as follows:
Since formation, National Penn Bancshares, Inc. ("NPB"), as a holding
company for National Penn Bank ("NPBank"), has maintained in effect the
executive incentive plan originally adopted by NPBank on July 26, 1978. NPB now
desires to formalize the terms of the plan in a written document as set forth
herein.
The National Penn Bancshares, Inc. Executive Incentive Plan (the
"Plan") is an unfunded deferred compensation arrangement for selected employees.
The purpose of the Plan is to motivate executives to meet and exceed established
financial goals and to promote a superior level of performance relative to
competitive banking institutions. Through payment of incentive compensation
beyond a salary, the Plan provides reward for meeting and exceeding the
established financial goals as well as recognition of individual achievements
for certain employees.
1. Definitions. The following terms have the meanings specified below,
unless the context in which they are used otherwise requires:
(a) "Affiliate" means any corporation which is included within a
"controlled group of corporations" including NPB, as determined under Section
1563 of the Internal Revenue Code of 1986, as amended.
(b) "CEO" means the Chief Executive Officer of NPB.
(c) "Change in Control or Ownership" means:
(i) 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) of
"beneficial ownership" (within the meaning of Rule 13d-3 under such 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
NPBank, 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.
(d) "Committee" means the Compensation Committee of the Board of
Directors of NPB.
(e) "Employer" means NPB or the Affiliate which employs the
Participant.
(f) "Fund" means the pool of funds generated, based on the formula
established by the Committee, to be distributed to Plan Participants.
(g) "Mandatory Deferral" means twenty-five percent (25%) of the
award received by a Type A or Type B Participant under this Plan.
(h) "Participant" means an eligible officer or employee of NPB or
an Affiliate who is designated by the CEO and approved by the Committee for
participation in the Plan for the relevant Plan Year, or a person who was such
at the time of his retirement, death, disability or resignation and who retains,
or whose beneficiaries obtain, benefits under the Plan in accordance with its
terms.
(i) "Plan Year" means the calendar year.
(j) "Tax Deferral" means that portion of the award received by a
Type A or Type B Participant under the Plan which the Participant elects,
pursuant to Schedule C attached hereto and made a part hereof, to receive as a
deferred payment.
2. Plan Participation.
(a) To be eligible for an award under this Plan, a Participant
must be in the active full-time service of NPB or an Affiliate at the close of
the Plan Year.
(b) Effective January 1, 1985, prior to January 31 of each Plan
Year, the CEO shall recommend to the Committee, in writing, those employees who
are eligible to participate in the Plan for such Plan Year. The Committee shall
meet as soon as practicable thereafter and act upon the recommendations of the
CEO. Those employees approved by the Committee shall be entitled to participate
in the Plan for such Plan Year.
(c) At the Committee's discretion, the Committee may act upon the
recommendation of the CEO with respect to participation of an employee whose
employment with NPB or an Affiliate commences after January 1 but prior to July
1 of a Plan Year. Upon approval by the Committee, such Participant may
participate in the Plan based on his or her earnings for such Plan Year.
(d) Each year, the Committee shall classify the Participants into
Type A, Type B or Type C, as specified on Schedule A attached to this plan
document, and shall specify different award formulae for each category. The
Committee also shall specify the method by which the amount to be allocated for
the benefit of each Participant from the Fund shall be determined. Participants,
as classified into Type A, Type B or Type C, each year will be listed on
Schedule A attached to this plan document. This schedule will be revised each
year, as appropriate.
(e) At the Committee's discretion, the Committee may act upon the
recommendation of the CEO with respect to participation by a Participant whose
classification changes among Type A, Type B or Type C after January 1 but prior
to July 1 of a Plan Year. Upon approval by the Committee, such Participant may
participate in the Plan in the new classification based on his or her earnings
for such Plan Year.
3. Performance Goals.
(a) Effective January 1, 1985, performance goals and appropriate
financial thresholds shall be established each Plan Year by the Committee prior
to January 31 of that Plan Year. The established goals shall relate to the
financial performance of NPB or an Affiliate or unit thereof.
(b) Each year, the performance goals for the year will be shown on
Schedule B attached to this plan document. This schedule shall be revised each
year, as appropriate.
(c) An award to a Participant may be conditioned on the
performance of such Participant, as determined by the Committee.
4. Calculation of Awards.
If both the internal and external performance goals set forth in
Schedule B are met, the Fund shall be distributed among Participants as follows:
(a) 50% of the Fund shall be allocated to the Type A Participants
and shall be divided equally between (i) the Chairman and CEO of NPB, and (ii)
the President of NPBank; provided, however, that the amount distributed to any
individual shall not exceed 50% of such individual's base salary. To the extent
that any amount allocated to the Type A Participants is not distributed to them,
such amount shall be added to the amount to be allocated to and divided among
the Type B and Type C Participants as provided in subparagraph (2) below.
(b) 50% of the Fund shall be allocated to and divided among the
Type B and Type C Participants; provided, however, that no Type B Participant
shall receive an
award in excess of 35% of base salary and no Type C Participant shall receive an
award in excess of 25% of base salary.
5. Distribution of Awards.
(a) (i) The Committee shall cause an aggregate account to be
established on the Employer's books for all of the Type A and Type B
Participants (the "Mandatory Deferral Account") and shall credit annually the
Mandatory Deferral Account with an amount equal to the Mandatory Deferral of all
Type A and Type B Participants. The Mandatory Deferral Account shall be
credited, as of the last day of each calendar quarter, with interest calculated
at the rate paid on the Investors Trust Company Money Market account for such
quarter.
(ii) The human resources department of the Employer shall
maintain individual accounts which shall reflect the share of each Participant
in the Mandatory Deferral Account (each referred to as an "Individual Mandatory
Deferral Account"). Interest credited to the Mandatory Deferral Account shall be
allocated among the Participants in the respective proportions that the balance
in each Participant's Individual Mandatory Deferral Account bears to the total
balance in the Mandatory Deferral Account on the date that such interest is
credited.
(iii) The human resources department of the Employer shall
maintain records which shall reflect the amounts in each Participant's
Individual Mandatory Deferral Account attributable to each Plan Year, i.e., for
each Plan Year for which a Participant receives an award, such records shall
show the amount of such award plus the interest earned thereon through the most
recent date interest was credited thereon (for each Plan Year, such amount is
referred to herein as the "Plan Year Balance"). The sum of all Plan Year
Balances shall equal the total balance in a Participant's Individual Mandatory
Deferral Account.
(iv) If, at the end of the fifth Plan Year following the Plan
Year for which a particular award was made to a Participant, such Participant is
still employed by NPB or an Affiliate or has retired at age 60 or later or has
died on or before the last day of such Plan Year, such Participant's Individual
Mandatory Deferral Account shall be credited by the Employer with an additional
amount equal to the Plan Year Balance relating to the Plan Year of five years
before (the "Matching Contribution").
(v) For purposes of this subparagraph 5(a), a Participant
shall be deemed to be still employed by NPB or an Affiliate as of the last day
of any Plan Year on which a balance exists in such Participant's Individual
Mandatory Deferral Account if such Participant is no longer then performing
services on behalf of NPB or such Affiliate as a result of such Participant's
disability.
(b) (i) Type A and Type B Participants may elect to have the
payment of all or a portion of the balance of their awards deferred, i.e., the
Tax Deferral amount. Effective January 1, 1985, such election shall be made
before the beginning of the relevant Plan Year or, in the case of a new employee
or a newly classified Type A or Type B Participant, prior to his or her
commencement of employment or new classification as a Type A or Type B
Participant, and shall be in the form of Schedule C attached to this plan
document. The aggregate amount of the Tax Deferral for the Type A and Type B
Participants shall be credited to an account on the Employer's books (the "Tax
Deferral Account"). The Tax Deferral Account shall be credited, as of the last
day of each calendar quarter, with interest calculated at the rate paid on the
Investors Trust Company Money Market account for such quarter.
(ii) The human resources department of the Employer shall
maintain individual accounts which shall reflect the share of each Participant
in the Tax Deferral Account (each referred to as an "Individual Tax Deferral
Account"). Interest credited to the Tax Deferral Account shall be allocated
among the Participants in the respective proportions that the balance in each
Participant's Individual Tax Deferral Account bears to the total balance in the
Tax Deferral Account on the date that such interest is credited.
(c) Awards to Type A and Type B Participants not deferred pursuant
to Subparagraph (b) above and all awards to Type C Participants shall be payable
in cash as soon as practicable after the close of the Plan Year.
(d) In the event of a Participant's death prior to receipt of his
or her award earned hereunder (including amounts allocated to such Participant's
Individual Mandatory Deferral Account and Individual Tax Deferral Account), the
award shall be paid, within thirty (30) days of the last day of the calendar
quarter during which the Participant's death occurred, to the Participant's
designated beneficiary under the Employer's group life insurance plan or, in the
absence of a valid designation, to the Participant's estate.
6. Manner of Payment of Mandatory and Tax Deferral Amounts.
(a) Prior to the end of the fifth Plan Year following the Plan
Year for which an award was made to a Type A or Type B Participant, such
Participant may elect to have the balance on the last day of such fifth Plan
Year in such Participant's Individual Mandatory Deferral Account, after the
addition of the Matching Contribution (in the aggregate, the "Total Balance"),
transferred and credited to such Participant's Individual Tax Deferral Account,
if any, for distribution in accordance with the Participant's irrevocable
election pursuant to Schedule C. Such an election shall be in the form of
Schedule D attached to this plan document. If the Participant does not elect to
transfer the Total Balance to the Participant's Individual Tax Deferral Account,
or if the Participant does not have an Individual Tax Deferral Account, the
Total Balance shall be paid in cash to the Participant as soon as practicable
after the close of the Plan Year.
(b) The amount credited to a Participant's Individual Tax Deferral
Account, including amounts transferred pursuant to subparagraph (a) immediately
above, shall be paid to such Participant in one lump sum or in annual
installments. The actual manner of distribution will be in accordance with the
Participant's irrevocable election, the form of which is attached hereto as
Schedule C; provided, however, that if the Participant selects a distribution in
annual installments, such installment will be paid in a manner which complies
with any applicable rules, regulations or laws.
7. Funding.
(a) Deferred award obligations under the Plan shall be paid from
the general assets of NPB or an Affiliate.
(b) NPB, or an Affiliate, in its sole discretion, may earmark
assets or other means to meet the deferred award obligations provided under the
Plan. Any assets which may be earmarked to meet NPB's or an Affiliate's deferred
award obligations provided under the Plan shall continue for all purposes to be
part of the general funds of NPB or an Affiliate and no person other than NPB or
the Affiliate shall by virtue of the provisions of the Plan have any interest in
such assets. To the extent a Participant or his beneficiary acquires a right to
receive deferred award payments from NPB or an Affiliate under the Plan, such
right shall be no greater than the right of any unsecured general creditor of
NPB or an Affiliate.
(c) Nothing contained in the Plan and no action taken pursuant to
the provisions of the Plan shall create or be construed to create a trust of any
kind, or a fiduciary relationship between NPB or an Affiliate and a Participant
or any other person.
8. Plan Administration.
(a) The Committee shall, with respect to the Plan, have full power
and authority to construe, interpret and manage, control and administer the
Plan, and to pass and decide upon cases in conformity with the objectives of the
Plan under such rules as the Board of Directors of NPB may establish.
(b) Any decision made or action taken by the Board of Directors of
NPB or the Committee arising out of, or in connection with the administration,
interpretation, and effect of the Plan shall be at their absolute discretion and
shall be conclusive and binding on all parties.
(c) The members of the Committee and the members of the Board of
Directors of NPB shall not be liable for any act or action, whether of omission
or commission, made in connection with the interpretation and administration of
the Plan and which results in a loss, damage, expense or depreciation, except
when due to their own gross negligence or willful misconduct.
9. Amendment and Termination.
NPB reserves the right to amend the Plan from time to time and to
terminate the Plan at any time. All amendments, including any amendment to
terminate the Plan, shall be adopted by the Board of Directors of XXX.
00. Change in Control or Ownership.
(a) Subject to the further terms and provisions of this Paragraph
10, the Plan shall automatically terminate on the date that a Change in Control
or Ownership shall occur, without necessity of any action by the Board of
Directors of NPB.
(b) If a Change in Control or Ownership shall occur, each
Participant's Individual Mandatory Deferral Account shall be credited, as of the
day immediately
preceding the date on which such Change in Control or Ownership occurred, with
additional amounts as follows: An amount equal to each Plan Year Balance shall
be credited by the Employer to such Participant's Individual Mandatory Deferral
Account (such additional amounts are referred to herein as "Change in Control
Matching Contributions").
(c) If a Change in Control or Ownership shall occur, the Employer
shall pay each Participant a cash amount equal to the total amounts credited, as
of the date such Change in Control or Ownership occurred, to (i) such
Participant's Individual Mandatory Deferral Account (including all Change in
Control Matching Contributions made pursuant to subparagraph (b) hereof) and
(ii) such Participant's Individual Tax Deferral Account, if any. The Employer
shall pay such total amounts to the Participants within thirty (30) days of the
termination of the Plan (as provided in subparagraph (a) hereof).
11. Effective Date.
The initial effective date of the Plan shall be January 1, 1984.
12. Miscellaneous Provisions.
(a) The Plan does not constitute a contract of employment, and
participation in the Plan shall not give any Participant the right to be
retained in the service of NPB or an Affiliate or any right or claim to a
benefit under the Plan unless such right or claim has specifically accrued under
the terms of this plan document.
(b) NPB or an Affiliate reserves the right to withhold from any
deferred award payments payable hereunder, any amounts required to be withheld
under the federal income tax laws.
(c) The captions of the several paragraphs and subparagraphs of
this Plan are inserted for convenience of reference only and shall not be
considered in the construction hereof.
(d) Whenever any word is used herein in the singular form, it
shall be construed as though it were used in the plural form, as the context
requires, and vice versa.
(e) A masculine, feminine or neuter pronoun, whenever used herein,
shall be construed to include all genders as the context requires.
(f) This plan document may be executed in any number of
counterparts, each of which shall be deemed one and the same instrument which
may be sufficiently evidenced by any one counterpart.
(g) Except to the extent pre-empted by federal law, this plan
document shall be construed, administered and enforced in accordance with the
domestic internal law of the Commonwealth of Pennsylvania.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
SCHEDULE A
----------
Participants for the ____ Plan Year consist of Types A, B, and C as
defined in the Plan document.
It is anticipated that the following named persons will meet the
eligibility requirements for participation as of December 31, ____. It is
expected that there could be additional individuals whose eligibility could be
determined later in the year, who would be named a participant as of December
31, ____.
Named participants are classified accordingly:
TYPE A (2 persons) (name and grade level)
[CHAIRMAN AND CEO OF NPB]
[PRESIDENT OF NPBANK]
TYPE B (__ persons) (name and grade level)
[INSERT NAMES AND GRADE LEVELS]
TYPE C (__ persons) (name and grade level)
[INSERT NAMES AND GRADE LEVELS]
SCHEDULE B
----------
NATIONAL PENN BANCSHARES, INC.
EXECUTIVE INCENTIVE PLAN
____ PERFORMANCE GOALS
[SUBJECT TO CHANGE]
Awards pursuant to the Plan will not be made unless the internal and
external performance goals set forth below are met.
INTERNAL PERFORMANCE GOALS FOR THE PLAN YEAR
-------------------------------------------------
The net operating income of NPB before securities transactions for ____ must
exceed the net operating income of NPB before securities transactions for ____.
EXTERNAL PERFORMANCE GOALS FOR THE PLAN YEAR
-------------------------------------------------
The net operating income of NPB before securities transactions on realized
return on average common equity for ____ must exceed the average of the net
operating income before securities transactions on realized return on average
common equity for ____ for the banks or bank holding companies in the peer group
set forth on Schedule B-2 A.
SCHEDULE B-1
------------
PAY OUT FORMULA
1. Obtaining an operating return on average equity
triggers an incentive pay out as follows:
100% of peer group $0
100.1% of peer group .___% of average assets
130% of peer group .___% of average assets
Interpolation is required between 100.1% and 130%.
2. Obtaining #1 in return on equity triggers an added
pay out of $______.
SCHEDULE B-2
------------
The ____ banking companies which form the peer group are:
[INSERT PEER GROUP]
SCHEDULE C
----------
NATIONAL PENN BANCSHARES, INC.
EXECUTIVE INCENTIVE PLAN
DEFERRAL ELECTION LETTER
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TO THE COMMITTEE:
In accordance with the National Penn Bancshares, Inc. Executive
Incentive Plan, as amended and restated in 1998, I hereby request to defer
receipt of that portion of any award earned by me (to the extent provided in
Paragraph 2 below) for services rendered as an eligible Participant in the Plan
during the calendar year specified below and eligible to be received in cash.
This election shall be governed by all of the provisions of the Plan.
1. This request shall be effective beginning with calendar year
____.
2. This request shall apply to _____________________of my award.
(Expressed as "all" or a designated dollar or percentage
limitation.)
3. My deferred award and the interest thereon shall become
payable on the January 1 next following the date I retire or
otherwise cease to be employed by NPB or an Affiliate of NPB.
4. I irrevocably elect that, when payable, my deferred award and
the interest thereon shall be paid to me as indicated below:
( ) In one lump sum.
( ) In a series of five annual installments.
( ) In a series of ten annual installments.
I agree that such terms and conditions shall be binding upon my
beneficiaries, distributees, and personal representatives. Unless noted below,
my beneficiaries shall be the same as designated for my group life insurance.
_________________________ ________________________________
Date Signature of Participant
Approved By:
_________________________ ________________________________
Date Signature of the Chairman of the
Committee
SCHEDULE D
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NATIONAL PENN BANCSHARES, INC.
EXECUTIVE INCENTIVE PLAN
TRANSFER ELECTION LETTER
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TO THE COMMITTEE:
In accordance with the National Penn Bancshares, Inc. Executive
Incentive Plan, as amended and restated in 1998, I hereby request to transfer
the balance in the Individual Mandatory Deferral Account established in my name
for the award earned by me for services rendered as an eligible Participant in
the Plan during the calendar year specified below, eligible to be received in
cash, to the Individual Tax Deferral Account established in my name for the
award earned by me for services rendered as an eligible Participant in the Plan.
This election shall be governed by all of the provisions of the Plan.
1. This request shall be for the Individual Mandatory Deferral Account
established in my name for the award earned by me for calendar year
____.
2. Payment of the award transferred and deferred pursuant hereto shall be
in accordance with the election made for the Tax Deferral amount
voluntarily deferred pursuant to deferral election letter dated
_______________________.
______________________________ ______________________________
Date Signature of Participant
Approved By:
______________________________ ______________________________
Date Signature of Chairman of the
Committee
Exhibit C
EXECUTIVE AGREEMENT
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THIS AGREEMENT is made as of this 23rd day of July, 1997, 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. Xxxxxxxx, an individual
residing in Kutztown, Pennsylvania ("Executive").
W I T N E S S E T H :
---------------------
WHEREAS, Executive is employed by [NPB][Bank] as a Senior Vice
President; 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:
I. 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 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 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 each and every 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 150% of Executive's Base
Amount.
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:
D
X = (2.99A - B) x (1 + C) .
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 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 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 requires 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.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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.
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: President and CEO
Attest: /s/Xxxxxx X. Xxxxx
--------------------------------
Title:Corporate Secretary
NATIONAL PENN BANK
(SEAL) By: /s/Xxxxx X. Xxxxxxx
------------------------------------
Title: President and CEO
Attest: /s/Xxxxxx X. Xxxxx
--------------------------------
Title:Corporate Secretary
Witness:
7/23/97 Xxxxxxx X. Xxxxxxxx (SEAL)
----------- --------------------
[Executive]
AMENDATORY AGREEMENT
--------------------
AMENDATORY AGREEMENT dated August 26, 1998, among NATIONAL PENN
BANCSHARES, INC., a Pennsylvania business corporation ("NPB"), NATIONAL PENN
BANK, a national banking association ("Bank"), and Xxxxxxx X. Xxxxxxxx
("Executive").
BACKGROUND
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1. NPB, Bank and Executive entered into a certain Executive Agreement
dated as of July 23, 1997 (the "Agreement").
2. NPB, Bank and Executive desire to amend the Agreement as hereinafter
set forth.
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. Amendment. The final paragraph of Section 2 of the Agreement
captioned "Resignation of Executive" is hereby amended to delete the words "each
and every of the foregoing events" and to insert in lieu thereof the words "any
of the foregoing events".
2. Ratification. As amended hereby, the Agreement is hereby ratified,
confirmed and approved.
3. Governing Law. This Amendatory Agreement shall be governed by and
construed in accordance with the domestic internal law of the Commonwealth of
Pennsylvania.
IN WITNESS WHEREOF, the parties hereto have executed this Amendatory
Agreement on the date first above written.
NATIONAL PENN BANCSHARES, INC.
By: /s/Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
NATIONAL PENN BANK
By: /s/Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President and CEO
Witness:/s/Xxxxxx X. Xxxxxxxxxxxx /s/Xxxxxxx X. Xxxxxxxx
--------------------------- -----------------------------
Xxxxxxx X. Xxxxxxxx
