CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is made as of this 9th day of
December, 2003 between NATIONAL PENN BANK, a national banking association
located at Philadelphia and Xxxxxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxxxxxx ("NPB") and
XXXX X. XXXXX, an individual residing at 00 Xxxxxxxx Xxxxx, Xxxxxxxx,
Xxxxxxxxxxxx ("Xxxxx").
Recitals
WHEREAS ,concurrently with the execution of an agreement and plan of merger
among National Penn Bancshares, Inc., a Pennsylvania business corporation and
parent holding company of NPB ("NPBC"), NPB and FirstService Bank ("FSB") dated
as of September 24, 2002, NPB and Xxxxx entered into an Employment Agreement
whereby NPB agreed to employ Xxxxx in various positions, including as Chairman
and CEO of the FirstService Bank Division of National Penn Bank ("Employment
Agreement"), all effective as of the effective date of the merger of FSB with
and into NPB (the "Effective Date"). A true and correct copy the Employment
Agreement is attached hereto and made part hereof as Exhibit "A".
WHEREAS, on the Effective Date, NPB, pursuant to the Employment Agreement,
assumed FSB's obligations under the employment agreement ("FSB Employment
Agreement") and the Supplemental Executive Retirement Plan ("SERP") previously
executed between FSB and Xxxxx. True and correct copies of these agreements are
attached hereto and made part hereof as Exhibit "A" to the Employment Agreement.
WHEREAS, NPB and Xxxxx mutually desire to terminate the Employment
Agreement and change the relationship between the parties from an employment
relationship to a consulting relationship on the terms set forth herein.
In consideration of the terms, conditions and covenants contained herein,
and intending to be legally bound, the parties hereby agree as follows:
1. Engagement.
NPB hereby engages Xxxxx, and Xxxxx hereby agrees to provide NPB with
advisory and consulting services, upon the terms and conditions set forth
herein. Xxxxx shall be an independent contractor of NPB for all purposes.
2. Termination of Employment Agreement.
NPB and Xxxxx agree to terminate the Employment Agreement effective March
1, 2004 and each party shall have no further obligations thereunder, except as
expressly provided for herein.
3. Term.
The term of this Agreement shall commence on March 1, 2004 and shall
terminate on March 1,2006 ("Term"). In the event of the death of Xxxxx during
the Term of this Agreement, NPB shall continue to pay the balance due under
paragraph 5 below to Xxxxx'x estate within thirty (30) days of the date of
Xxxxx'x death.
4. Services.
Xxxxx agrees to make himself available to render, and shall render at the
request of the NPB from time to time, general advising and consulting services
to NPB.
Xxxxx further agrees to render such services conscientiously and to devote
his reasonable efforts and abilities thereto, at such time during the term
hereof, and in such reasonable manner, as NPB and Xxxxx shall mutually agree, it
being acknowledged that, subject to the provisions of Paragraph 9 hereof,
Xxxxx'x services shall be on a nonexclusive basis and shall be performed at such
places and at such times as determined by Xxxxx.
NPB agrees to indemnify and hold harmless Xxxxx from any claims, loss or
liability relating to consulting performed for NPB, except for any claim, loss
or liability resulting from Xxxxx'x xxxxx negligence or willful misconduct.
Xxxxx agrees to indemnify and hold harmless NPB from any claims, loss or
liability relating to consulting performed for NPB, except for NPB's gross
negligence or willful misconduct.
5. Compensation.
NPB agrees to pay Xxxxx as compensation for the performance of services
hereunder, and in consideration for the termination of the Employment Agreement,
the following:
a) $396,000, payable in twenty four monthly installments of $16,500 on
the first day of each month, commencing on March 1, 2004 and ending
on February 1, 2006;
b) $98,000, which represents the amount of Xxxxx'x 2003 performance
bonus, payable in one lump sum on or before February 15, 2004;
c) reimbursement to Xxxxx of Xxxxx'x full cost of family health insurance
coverage with Keystone Health Plan East (or comparable health
insurance coverage) under the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") or otherwise, for the Term of
this Agreement; and
d) membership at Saucon Valley Country Club, not to exceed $10,000
annually, for Xxxxx and his spouse for calendar years 2004 and 2005,
to
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be paid in two lump sums by January 31, 2004 and January 31, 2005,
respectively. NPB acknowledges that the 2004 dues for said membership
are $8,280.
Except as otherwise required by law, NPB shall not withhold any sums from
the payments to be made to Xxxxx under this Paragraph 5 for any federal, state
or local tax liabilities or contributions, and all withholdings, liabilities and
contributions with respect to Xxxxx shall be solely the responsibility of Xxxxx.
All payments to be made to Xxxxx pursuant to this Paragraph 5 shall be made by
direct deposit into NPB account #015000037 or into such other account as Xxxxx
shall direct. Xxxxx shall not be entitled to participate, and shall not
participate, in any employee benefit or welfare plan providing benefits to NPB
employees, whether presently in force or hereafter adopted.
NPB shall reimburse Xxxxx for all reasonable business expenses incurred by
Xxxxx during the term of this Agreement on behalf of NPB in connection with his
performance of services hereunder. Xxxxx shall itemize requests for
reimbursement of such expenditures supported by sufficient documentation of the
expenditures and explanation of their purpose.
6. Default.
a) Time is of the essence in this Agreement.
b) A breach by NPB of its obligations to pay Xxxxx the amounts set forth
in paragraph 5 hereof on the dates listed above shall constitute a
default by NPB under this Agreement. In the event of a default by NPB
as described in this paragraph, then in addition to any other remedies
available to Xxxxx at law or in equity, Xxxxx shall have the immediate
option to declare the entire balance of payments to be made. by NPB
pursuant to paragraph 5 hereof immediately due and payable.
c) A breach by Xxxxx of his non-competition obligations pursuant to
Paragraph 9 of this Agreement shall constitute a default by Xxxxx
under this Agreement. In the event of a default by Xxxxx as described
in this paragraph, then in addition to any other remedies available to
NPB at law or in equity, NPB shall immediately terminate all payments
remaining to be paid to Xxxxx under Paragraph 5 of this Agreement.
7. Reaffirmation of Obligations under Supplemental Executive Retirement Plan.
NPB hereby reaffirms that it has assumed all of FSB's obligations under
the SERP agreement entered into between FSB and Xxxxx on September 11, 2001 and
that the SERP agreement shall remain in full force and effect and is legally
binding upon NPB.
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8. Other Conditions.
Xxxxx represents and warrants to NPB that he possess the skill, knowledge,
background and experience necessary to perform the services to be provided
hereunder and that no training or instructions are necessary. NPB shall not
provide any training or any instructions.
9. Non-Competition.
Xxxxx agrees that, during the Term of this Agreement, he shall not assume
any position of employment with any "financial institution" (defined below) nor
shall he perform as a consultant for or enter into any consulting agreement,
directly or indirectly, with any other financial institution. Any and all
previous non-competition agreements, including without limitation section 11 of
the FSB Employment Agreement, are hereby null and void and shall have no force
or effect. Nothing herein shall be construed to restrict Xxxxx'x right to assume
any employment for any non-financial institution or to act as a consultant for
any non-financial institution. In the event that NPB breaches any term of this
Agreement or in the event that NPB or NPBC is merged with or purchased by
another entity hereafter, the non-competition clause in this section shall be
immediately null and void.
For the purposes of this paragraph, "financial institution" shall mean and
refer to any savings bank, commercial bank, trust company, savings and loan
association, building and loan association, cooperative bank, credit union,
insurance company or asset management company or any other organization in the
financial services industry as determined from time to time by the Board of
Governors of the Federal Reserve System.
10. Non-Disclosure; Trade Secrets and Confidential Information; Code of
Conduct.
a) Xxxxx agrees that the non-disclosure obligations set forth in Section
11 (a) of the FSB Employment Agreement remain in full force and
effect.
b) Xxxxx, during the term of this Agreement and at any time thereafter,
will not, without the express written consent of NPB, directly or
indirectly, communicate or divulge to, or use for his own benefit or
the benefit of any other person, firm, association, corporation,
partnership, limited liability company or limited liabIlity
partnership, any of NPB's trade secrets, proprietary data or other
confidential information, which trade secrets, proprietary data and
other confidential information were communicated to or otherwise
learned or acquired by Xxxxx in the course of the relationship
provided by this Agreement or his prior employment with NPB, except
that Xxxxx may disclose such matters to the extent that disclosure is
required by a Court or other governmental agency of competent
jurisdiction. As long as such matters remain trade secrets,
proprietary data or other confidential information, Xxxxx will not use
such trade secrets, proprietary data or other confidential information
in any way or in any capacity other than as an independent contractor
of NPB and to further NPB's interests.
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c) During the term of this Agreement, and at any time thereafter, as
applicable, Xxxxx acknowledges and agrees that he will be bound by the
terms and provisions of the National Penn Bancshares, Inc., Code of
Conduct that apply to agents and independent contractors of NPB, a
copy of which is attached to this Agreement as Exhibit "B".
11. Enforcement.
Xxxxx recognizes that immediate and irreparable damage will result to NPB
if Xxxxx breaches any of the terms and conditions of Paragraphs 9 or 10, and,
accordingly, Xxxxx hereby consents to the entry by any court of competent
jurisdiction of an injunction against him to restrain any such breach, in
addition to any other remedies or claims for money damages which NPB may seek.
Xxxxx represents and warrants that his experience and capabilities are such that
he can obtain employment in business without breaching the terms and conditions
of Paragraphs 9 and 10, and the enforcement thereof by injunction or otherwise
will not prevent him from earning a livelihood.
12. Attorney's Fees.
a) NPB agrees to pay all legal fees incurred by Xxxxx in connection with
the preparation of this Agreement, up to a maximum of $5,000.
b) In the event a court of competent jurisdiction finds a breach of this
Agreement, in addition to the award for the underlying damages, the
Court shall award the prevailing party all costs and reasonable
attorney's fees incurred in enforcing this Agreement.
13. Public Announcement.
Concurrently with the execution of this Agreement, the parties agree to
release a public announcement substantially in the form attached hereto as
Exhibit "C".
14. Assignment.
This Agreement shall be binding upon NPB's successors and assigns,
including but not limited to, the compensation obligations to Xxxxx set forth in
paragraph 5 above. The services to be performed by Xxxxx set forth in paragraph
4 hereof are personal between NPB and Xxxxx, and Xxxxx may not assign or
delegate these duties to any other person or entity without the prior written
consent of XXX.
00. Further Assurances.
The parties hereto agree to perform any further acts and to execute and
deliver any further documents which may be necessary or appropriate to carry out
the purposes of this Agreement.
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16. Severability.
If any provision of this Agreement is held to be unenforceable, invalid or
illegal by any court of competent jurisdiction, such unenforceable, invalid or
illegal provisions shall not affect the remainder of this Agreement.
17. Entire Agreement.
This instrument, together with the provisions of Paragraph 11 (a) of the
FSB Employment Agreement, contains the entire agreement of the parties. It may
not be changed orally but only in writing signed by the party against whom
enforcement of any waiver, charge, modification, extension or discharge is
sought.
18. Laws.
The validity of this Agreement and the interpretation and performance of
all of its terms shall be governed by the substantive laws of Pennsylvania, and
any legal action arising from this Agreement shall be brought only in the Bucks
County, Pennsylvania Court of Common Pleas and/or the United States District
Court for the Eastern District of Pennsylvania.
19. Waiver.
Failure of either party hereto to insist upon strict compliance with any of
the terms, covenants and conditions hereof shall not be deemed a waiver or
relinquishment of any similar right or power hereunder at any subsequent time or
of any other provision hereof.
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20. Survival.
Paragraphs 10 and 11 of this Agreement shall survive any termination of
this Agreement.
IN WITNESS WHEREOF, the NPB has caused this Agreement to be signed by its
corporate officer thereunto duly authorized, and Xxxxx has signed this
Agreement, all as of the date first above written.
NATIONAL PENN BANK:
By: /s/ Xxxxx X. Xxxxxxx
--------------------
Xxxxx X. Xxxxxxx
Chairman & CEO
--------------------
Print name and Title
XXXX X. XXXXX
/s/ Xxxx X. Xxxxx
-------------------
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EXHIBIT A
The Employment Agreement dated as of September 24, 2002 between National Penn
Bank and Xxxx X. Xxxxx, including all exhibits, is intentionally omitted. This
Agreement, including all exhibits, is Exhibit 10.1 to National Penn's
Pre-Effective Amendment No.1 to Registration Statement No. 333-101689 on Form
S-4, as filed with the Securities and Exchange Commission on December 31, 2002.
