SETTLEMENT AGREEMENT
EXHIBIT
10.4
Execution
Copy
This
Settlement Agreement (the “Agreement”) is entered into as of June 25, 2007 by
and among Xxxxxx Xxxxxxx (the “Executive”), National Penn Bancshares, Inc. (the
“NPB”), a Pennsylvania business corporation and registered bank holding company,
and Christiana Bank & Trust Company, a Delaware bank and trust company (the
“Bank”).
WITNESSETH:
WHEREAS,
NPB and Bank are entering into an Agreement of Reorganization and Merger, dated
as of June 25, 2007 (the “Merger Agreement”); and
WHEREAS,
the NPB, Bank, and the
Executive desire to enter into this Agreement, which shall entitle Executive
to
certain amounts and benefits in lieu of any and all of the amounts and benefits
payable to the Executive under the Change in Control Agreement, dated July
20,
2006, by and between Bank and Executive (the “Change in Control
Agreement”);
NOW
THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the
Executive, NPB, and the Bank agree as follows:
1. Lump
Sum Payment.
(a) In
the event that (i) the Effective Date of the Merger is prior to January 1,
2008,
(ii) the Executive’s employment with the Bank is terminated prior to January 1,
2008, but on or after such Effective Date and (iii) the Executive has not
revoked the release contained in Section 4 hereof, Bank shall pay the Executive
an amount, at such time and in such form as provided under the Change in Control
Agreement, equal to the amount calculated under Section 4(iv)(B) of the Change
of Control Agreement (after any required withholding, excise tax or any
reduction pursuant to Section 5 below, if applicable) (the “Payment”),
determined as if the date of Executive’s termination in (ii) above is the
Executive’s “Date of Termination” as defined in the Change of Control Agreement,
in full satisfaction of all amounts and benefits payable to the Executive under
the Change in Control Agreement, and the terms of Section 1(b) below shall
not
apply.
(b) In
the event that the Executive has not revoked the release contained in Section
4
and (i) the Effective Date of the Merger is on or after January 1, 2008, or
(ii)
the Effective Date of the Merger is prior to January 1, 2008, and Executive
remains employed with Employer through January 1, 2008, Bank shall pay the
Executive the Payment, determined as if the applicable date described in (x)
or
(y) below is the Executive’s “Date of Termination” as defined in the Change of
Control Agreement, as soon as practicable after the later of (x) January 1,
2008, or (y) the Effective Date, but in no event later than the fifth (5th) business
day
following such date, in full satisfaction of all amounts and benefits payable
to
the Executive under the Change in Control Agreement.
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2. Assistance
Following the Closing Date. Executive acknowledges that his services
following the Closing Date will be important to NPB and as a condition to NPB
entering into this Agreement Executive will continue to work for CBT following
the closing on the same terms and conditions as currently apply to his
employment until (A) the earlier of (i) the 30th day following
the
conversion of the applicable CBT computer system to NPB’s computer system if
conversion is what the integration team determines is the appropriate action
or
(ii) the 30th
day following the determination by the integration team that NPB will not
convert the applicable CBT system in the foreseeable future or (B) a date
mutually agreed between Executive and XXX.
0. Payment
of Fringe Benefits. NPB agrees to provide the Executive with
continued health, dental, life and disability coverage pursuant to the policies
currently offered by Bank (or comparable policies offered to similarly-situated
employees of NPB) until the earlier of eighteen (18) calendar months following
the date on which Executive’s employment with CBT is terminated or the
Executive’s commencement of full-time employment with a new employer, subject to
the terms and conditions of such policies, with NPB paying all premiums and
with
the Executive responsible for paying the same copayments or deductibles as
if he
was an employee, except as set forth below in this Section 3. The health and
dental coverage shall include any dependents of the Executive who are covered
as
of the date of this Agreement and who remain covered as of the Effective Date
of
the Merger. In the event the Executive’s participation in any such
plan is barred, NPB shall arrange to provide the Executive with benefits
substantially similar to those which the Executive would otherwise have received
under such plans from which his continued participation is barred or provide
their economic equivalent. In addition, notwithstanding the
foregoing, if the provision of any of the benefits covered by this Section
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would trigger the 20% tax and interest penalties under Section 409A of the
Code,
then the benefit(s) that would trigger such tax and interest penalties shall
not
be provided (collectively, the “Excluded Benefits”), and in lieu of the Excluded
Benefits NPB shall pay to the Executive, in a lump sum within 30 days following
termination of employment or within 30 days after such determination should
it
occur after termination of employment, a cash amount equal to the economic
equivalent of such Excluded Benefits.
4. Releases. Upon
payment of the amount set forth in Section 1 hereof, the Executive, for himself
and for his heirs, successors and assigns, does hereby release completely and
forever discharge NPB and the Bank, their respective affiliates and successors
and the current and former directors, officers, employees and agents of each
of
them (any and all of which are referred to below as the “Releasees”) from any
obligation under the Change in Control Agreement (other than the obligations
of
NPB to provide benefits pursuant to Section 3 above which shall continue for
the
period specified therein). This Agreement shall not release NPB or the Bank
from
any of the following: (a) obligations to pay to the Executive wages earned
up to
the Effective Date of the Merger; (b) the payment of any of the Executive’s
vested benefits, or honoring any of the Executive’s rights under the Employee
Programs of the Company (including any benefits under a supplemental executive
retirement program covering the Executive), excluding any Change in Control
Agreement or other severance agreement, (c) the payment of the Merger
Consideration with respect to the Executive’s common stock of Bank or stock
options with respect to the common stock of Bank, or (d) the obligations of
NPB
and/or Bank under the indemnity provisions of the Merger Agreement.
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5. Section
280G Cut-Back. Notwithstanding anything in this Agreement to the
contrary, in no event shall any payments be made or benefits provided under
this
Agreement, when combined with all other payments and benefits to the Executive,
be allowed to render any such payment or benefit nondeductible under Section
280G of the Code or to trigger an excise tax under Section 4999 of the Code.
In
such event, the payments and/or benefits to be provided under this Agreement
shall be reduced, but not below zero, such that the aggregate benefits to be
provided to the Executive do not exceed 2.99 multiplied by the Executive’s “base
amount” (as such term is defined in Section 280G of the
Code). If any reduction is to be made under this Section 4, the
Executive may specify by written notice which payments and benefits shall be
reduced (i.e., the Executive may elect whether to have reductions made from
either Section 1 or Section 3 hereof).
6. General.
(a) Heirs,
Successors and Assigns. The terms of this
Agreement shall be binding upon the parties hereto and their respective heirs,
successors and assigns.
(b) Final
Agreement. This Agreement represents the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior understandings, written or oral. The terms of this
Agreement may be changed, modified or discharged only by an instrument in
writing signed by each of the parties hereto.
(c) Withholdings. Bank
and NPB may withhold from any amounts payable under this Agreement such federal,
state, or local taxes as may be required to be withheld pursuant to applicable
law or regulation.
(d) Governing
Law. This Agreement shall be construed, enforced and
interpreted in accordance with and governed by the laws of the State of
Pennsylvania, without reference to its principles of conflicts of law, except
to
the extent that federal law shall be deemed to preempt such state
laws.
(e) Defined
Terms. Any capitalized terms not defined in this
Agreement shall have as their meaning the definitions contained in the Merger
Agreement.
(f) Voluntary
Action and Waiver. The Executive acknowledges that by
his free and voluntary act of signing below, the Executive agrees to all of
the
terms of this Agreement and intends to be legally bound thereby. The Executive
acknowledges that he has been advised to consult with an attorney prior to
executing this Agreement.
(g) Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original but all of which together shall constitute one and
the
same instrument.
7. Effectiveness. Notwithstanding
anything to the contrary contained herein, this Agreement shall be subject
to
consummation of the Merger in accordance with the terms of the Merger Agreement,
as the same may be amended by the parties thereto in accordance with its
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terms.
In
the event the Merger Agreement is terminated for any reason, this Agreement
shall be deemed null and void with respect to all actions not yet taken pursuant
to this Agreement.
IN
WITNESS WHEREOF, NPB and the Bank
have each caused this Agreement to be executed by their duly authorized
officers, and the Executive has signed this Agreement, effective as of the
date
first above written.
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WITNESS:
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EXECUTIVE:
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/s/
Xxxxx X. Xxxxxxx
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/s/
Xxxxxx Xxxxxxx
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Name:
Xxxxx X. Xxxxxxx
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Name: Xxxxxx
Xxxxxxx
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ATTEST:
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Christiana
Bank & Trust Company
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/s/
Xxxxxx X. Xxxxxxxx
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By:
/s/ Xxxxxxxx X. Xxxxxxxxxxxx
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Name:
Xxxxxx X. Xxxxxxxx
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Name: Xxxxxxxx
X. Xxxxxxxxxxxx
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Title: President
& CEO
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ATTEST:
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National
Penn Bancshares, Inc.
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/s/
Xxxxxx X. Xxxxx
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By:
/s/ Xxxxx X. Xxxxx
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Name:
Xxxxxx X. Xxxxx
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Name: Xxxxx
X. Xxxxx
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GE
VP and Secretary
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Title: President
& CEO
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