EXECUTIVE AGREEMENT
Exhibit
10.2
THIS
AGREEMENT is made as of this 3rd
day of December, 2004, 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 XXXXX
X. XXXX, an individual residing at 000 Xxxx Xxxx Xxxx, Xxxxxxx Xxxxxx,
Xxxxxxxxxxxx ("Executive").
WITNESSETH:
WHEREAS,
Executive is employed by Penn
1st Financial
Services, Inc. as President; and
WHEREAS,
Penn 1st Financial
Services, Inc. is a direct subsidiary of NPBank and an indirect subsidiary
of
NPB; 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 Penn 1st Financial
Services, Inc. without distraction in the face of the potentially disturbing
circumstances arising therefrom.
AGREEMENT
NOW,
THEREFORE, in consideration of the
mutual covenants and promises set forth herein, and each intending to be legally
bound, NPB, Bank and Executive agree as follows:
1. Definitions. The
following terms have the meanings specified below:
a. "Affiliate"
means any corporation which
is included within a "controlled group of corporations"including NPB, as
determined
under
Code Section 1563.
b. "Base
Salary"
means the Executive's annual base salary, established either by contract or
by
theEmployer, prior to any reduction of such salary pursuant to any contribution
to a tax-qualifiedplan under Section 401(k) of the Code.
c. "Cause"
means the
occurrence of either of the following, the result of which is the termination
ofExecutive’s
Employment:
i. Executive's
conviction of, or plea of guilty or nolo contendere to, a felony or a crime
offalsehood or involving moral turpitude; or
ii. the
willful failure by Executive to substantially perform his duties to Employer,
otherthan a failure resulting from Executive's incapacity as a result of the
Executive'sdisability, which willful failure results in demonstrable material
injury and damage toEmployer.
Notwithstanding
the foregoing, Executive's Employment shall not be deemed to have been
terminated for Cause if such termination took place as a result of:
x. questionable
judgment
on the part of Executive;
y. any
act
or omission believed by Executive in good faith, to have been in or
notopposed
to the best interests of the Employer; or
z. any
act
or omission in respect of which a determination could properly be
madethat
Executive met the applicable standard of conduct prescribed forindemnification
or reimbursement or payment of expenses under the By-laws ofNPB
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.
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d. "Change
in Control" means:
i. An
acquisition by any "person" or
"group" (as those terms are defined or used in Section13(d) of the Exchange
Act)
of "beneficial ownership" (within the meaning of Rule 13d-3under the Exchange
Act) of securities of NPB representing 24.99% or more of thecombined voting
power of NPB's securities then outstanding;
ii. A
merger, consolidation or other
reorganization of Bank, except where the resultingentity is controlled, directly
or indirectly, by NPB;
iii. A
merger, consolidation or other
reorganization of NPB, except where shareholders ofNPB immediately prior to
consummation of any such transaction continue to hold atleast a majority of
the
voting power of the outstanding voting securities of the legalentity 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 theEmployer 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 toanother entity, or
a
corporate division involving NPB; or
vi. A
contested proxy solicitation of the
shareholders of NPB that results in the contestingparty obtaining the ability
to
cast 25% or more of the votes entitled to be cast in anelection of directors
of
NPB.
e. "Code"
means the Internal Revenue Code of 1986, as amended, and as the same may be
amendedfrom 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
particulartime.
h. "Exchange
Act" means the Securities Exchange Act of 1934, as amended.
2. Resignation
of
Executive. If a Change in Control shall occur and if within one
hundred eighty (180) days after the effective date of a Change in Control (or
thirty (30) days after the completion of the conversion of the computer systems
if such conversion is later than one hundred eighty (180) days after the
effective date of a Change in Control, in either event, the “Transition Period”)
there shall be:
a. Any
involuntary termination of Executive's employment (other than 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 Base Salary in effect immediately prior to a Change
in
Control, orany failure to provide Executive with benefits at least as favorable
as those enjoyed by Executiveunder any of the pension, life insurance, medical,
health and accident, disability or other employee plans of NPB or an Affiliate
in which Executive participated immediately prior to a Change in Control, or
the
taking of any action that would materially reduce any of such compensation
or
benefits in effect at the time of the Change in Control, unless such reduction
relates to a reduction applicable to all employees generally;
d. Any
reassignment of Executive beyond a thirty (30) mile commute by automobile
fromBoyertown, Pennsylvania; or
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e. Any
requirement that Executive travel in performance of his duties on behalf of
NPB
or anAffiliate for a greater period of time during any year than was required
of
Executive during theyear preceding the year in which the Change in Control
occurred (each of the foregoing, a “Triggering Event”);
then,
at
the option of Executive, exercisable by Executive within one hundred eighty
(180) days of the occurrence of any Triggering Event within the Transition
Period, Executive may resign from Employment (or, if involuntarily terminated,
give notice of intention to collect benefits hereunder) by delivering a notice
in writing to NPB, in which case Executive shall be
entitled to a lump sum cash severance payment equal to 150% of Executive's
Base
Salary in effect immediately prior to a Change in Control, which Employer shall
pay to Executive within fifteen (15) days of Executive's termination of
employment.
Executive
shall not be required to
mitigate the amount of any payment provided for in the preceding paragraph
by
seeking other employment or otherwise, nor shall the amount of any payment
or
benefit provided for in the preceding paragraph be reduced by any compensation
earned by Executive as the result of employment by another employer or by reason
of Executive's receipt of or right to receive any retirement or other benefits
after the date of termination of employment or otherwise, except as otherwise
provided therein.
3. Out-Placement
Services. If a Change in Control occurs and Executive exercises
the option to resign from Employment (or is involuntarily terminated) as
described in Section 2, Employer shall provide Executive with the services
of a
professional out-placement firm, if Executive so requests, for the period not
to
exceed one year from the date of Executive’s resignation (or termination), at
Employer’s sole cost and expense, up to a maximum amount of Seven Thousand Five
Hundred Dollars ($7,500).
4. No
Implied Rights; Rights on Termination of Employment.
a. No
Right to Continued Employment. Nothing in this Agreement shall
confer upon Executive anyright with respect to continuance of Employment by
Employer, nor shall it interfere with or limitin any way the right of Employer
to terminate Executive’s Employment at any time.
b. Voluntary
Termination of Employment. If Executive terminates Executive’s
Employment withEmployer at any time prior to a Change in Control, this Agreement
shall terminate at that time andEmployer shall have no further liability
hereunder.
c. Termination--Cause. If
Employer terminates Executive's Employment at any time for Cause, thisAgreement
shall terminate at that time and Employer shall have no further liability
hereunder.
d. Termination—Without
Cause. Employer may terminate Executive’s Employment at any
timewithout Cause. If Employer terminates Executive's employment at
any time without Cause prior to aChange in Control, and if no event has been
publicly announced that with the passing of time would constitute a Change
in
Control, this Agreement shall terminate at that time and Employer shall have
no
further liability hereunder. If Employer terminates Executive’s
Employment at any time prior to a Change in Control but subsequent to the
occurrence of an event that has been publicly announced that with the passing
of
time would constitute a Change in Control, the provisions of Sections 2 and
3 of
this Agreement shall apply to same extent as if Executive’s Employment had been
involuntarily terminated subsequent to a Change in Control.
5. Arbitration. Any
dispute or controversy arising out of or relating to 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, this Agreement shall terminate at that time and Employer shall have
no
further liability hereunder.
7. Notices. Any
notice required or permitted to be given under this Agreement 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 attention of the President at the principal
office of Bank, in the case of any notice to the Employer.
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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
theirrespective successors and assigns. Each of NPB and Bank shall
require any successor (whetherdirect or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business and/or
assets of NPB or Bank to expressly assume and agree to perform this Agreement
in
the same manner and to the same extent that NPB or Bank would be required to
perform it if no such succession had taken place. Failure to obtain
such assumption and agreement prior to the effectiveness of any such succession
shall constitute a breach of this Agreement and the provisions of Sections
2 and
3 of this Agreement shall apply. As used in this Agreement, "NPB" or
"Bank" shall mean NPB or Bank as defined previously and any successor to the
business and/or assets of NPB or Bank as aforesaid which assumes and agrees
to
perform this Agreement by operation of law or otherwise.
b. This
Agreement shall be binding upon and inure to the benefit of and be enforceable
byExecutive'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.
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.
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NATIONAL
PENN BANCSHARES, INC.
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NATIONAL
PENN BANK
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By: /s/
Xxxxx X. Xxxxx
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By: /s/
Xxxxx X. Xxxxx
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Name: Xxxxx
X. Xxxxx
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Name: Xxxxx
X. Xxxxx
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Title: President
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Title: President
& CEO
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Attest: /s/
Xxxxxx X. Xxxxx
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Attest: /s/
Xxxxxx X. Xxxxx
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Name:
Xxxxxx X. Xxxxx
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Name: Xxxxxx
X. Xxxxx
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Title: GEVP
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Title: GEVP
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Witness:
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/s/
Xxxxxxx X. Xxxxxxxx
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/s/
Xxxxx X. Xxxx
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Xxxxxxx
X. Xxxxxxxx
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XXXXX
X. XXXX
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