EMPLOYMENT AGREEMENT
Exhibit
10.3
THIS
EMPLOYMENT AGREEMENT ("Agreement"), dated September 6, 2005, is made among
NATIONAL PENN BANCSHARES, INC., a Pennsylvania business corporation and
registered bank holding company ("NPB"); NATIONAL PENN BANK, a national banking
association ("Bank"); and XXXX X. XXXXXXXXX ("Executive") (NPB and Bank are
sometimes referred to herein collectively as "Employer").
BACKGROUND
1.
Nittany Financial Corp. (“NF”) is a Pennsylvania business corporation and
registered savings and loan holding company, and Nittany Bank is a wholly-owned
banking subsidiary of NF (“Nittany Bank”).
2.
Executive is presently employed by NF as its Vice President - Retail Banking
pursuant to an Employment Agreement dated as of March 19, 1999, as amended
on
January 1, 2005 (the "Nittany Bank Employment Agreement").
3.
On
September 6, 0000, XXX and NF entered into an Agreement (the "Merger Agreement")
providing, among other things, for the merger of NF with and into NPB (the
"Merger"), to be followed, at the discretion of NPB, by the Bank Merger (as
defined in the Merger Agreement). The Agreement also provides for Bank to
establish, immediately after any such Bank Merger, a new banking division
to be
called the "Nittany Bank Division of National Penn Bank" (the "Nittany Bank
Division").
4.
It is
the desire of the Boards of Directors of NPB and Bank that Executive continue
Executive’s employment from and after the effective date of the Merger (the
“Effective Date”), on the terms and conditions set forth herein, in order that
the experience Executive has gained throughout Executive’s career and the
management ability Executive has demonstrated will continue to be available
to
NPB and Bank, including Nittany Bank or the Nittany Bank Division, if and
when
established. Executive is willing to continue such employment, on the terms
and
conditions set forth herein.
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. Background.
The
matters set forth in the "Background" section of this Agreement are incorporated
by reference herein.
2. Term.
This
Agreement shall be for a term of five (5) years (the "Term"), beginning on
the
Effective Date, subject to termination at any time as provided in Sections
9
through 13.
3. Position,
Duties.
(a) During
the Term, NPB will cause Executive to be employed as Vice President - Retail
Banking of Nittany Bank or the Nittany Bank Division. Executive acknowledges
that Executive’s employment as such officer does not give rise to an obligation
to maintain the Nittany Bank Division beyond that provided in the Merger
Agreement. Executive accepts such employment, with such powers and duties
as may
from time to time be determined by NPB's Chairman or President.
(b) Executive
will devote substantially all of Executive’s time and attention to, and will use
Executive’s best energies and abilities in the performance of, Executive’s
duties and responsibilities as prescribed in this Section 3, and will not
engage
in consulting work or any trade or business for Executive’s own account or for
or on behalf of any other person, firm or corporation which competes, conflicts,
or interferes with the performance of Executive’s duties hereunder in any way.
Notwithstanding the foregoing, Executive may perform community service
consistent with NPB and Bank policy and engage in activities on behalf of
NPB or
Bank or for Executive’s own account, including personal investment activities
(excluding any personal investments in publicly-traded companies (other than
NPB) with voting power equal to five percent or more); provided, however,
that
all such service or activities do not interfere with performance of Executive's
responsibilities under this Agreement.
4. Base
Compensation.
Except
as provided in Section 17, for all services to be performed by Executive
pursuant to Section 3, Employer will pay Executive a base salary of One Hundred
Ten Thousand Dollars ($110,000.00) per year (pro-rated for partial years).
Employer shall pay such salary to Executive in approximately equal installments
during each year on the customary salary payment dates of Employer, and such
salary shall be subject to applicable income tax withholding, deductions
required by law, and other deductions authorized by Executive. Executive
shall
not be entitled to any additional compensation for service as a director
or
committee member of NPB, Bank, the Nittany Bank Division or any other affiliated
company. Employer will evaluate Executive's performance annually, and Executive
shall be eligible for annual merit increases in base salary in the discretion
of
NPB and Bank. A base salary increase (if any) shall, when it takes effect,
become the new minimum base salary required thereafter by this Section
4.
5. Health
Insurance, Benefit Plans, Stock Compensation Plans, etc.
(a) In
addition to the compensation payable to Executive pursuant to Section 4 hereof,
Executive shall be entitled during the time this Agreement is in effect to
participate in all health insurance and benefit plans, group insurance, salary
reduction (401(k)) plans, employee stock purchase plans or other plans (other
than pension plans) providing benefits applicable generally to employees
of NPB
or Bank which are presently in force or which may hereafter be adopted by
NPB or
Bank.
(b) Executive
shall also be eligible during the time this Agreement is in effect for receipt
of stock options, restricted stock, or other equity awards, commensurate
with
Executive’s positions with NPB and Bank, pursuant to NPB's Long-Term Incentive
Compensation Plan or any successor or additional stock option plan or stock
compensation plan which may hereafter be adopted by NPB for officers and
other
key employees of NPB and its subsidiaries. Any discretionary terms of grants
or
awards to Executive (other than with respect to amount) shall be consistent
with
grants or awards to other senior officers generally.
6. Bonuses.
As
additional compensation for services rendered hereunder, Executive shall
be
entitled to participate in such Financial Performance Incentive Plan as NPB
may
establish from time to time for the Nittany Bank Division (the “Nittany
Incentive Plan”).
7. Other
Benefits.
Except
as provided in Section 17, as additional compensation for services rendered
hereunder, Executive shall be entitled during the time this Agreement is
in
effect:
(a) To
life
insurance coverage and long-term disability insurance coverage at no expense
to
Executive, in amounts available to others in commensurate positions with
Employer;
(b) To
receipt of a cellular telephone allowance, in such amount as shall be determined
by Employer from time to time, in Employer’s sole discretion, but in no event
less than $60.00 per month; and
(c) To
reasonable vacation and sick leave in accordance with Employer policy, as
the
same may be revised from time to time.
8. Change
in Control.
(a) If
a
Change in Control (as defined in Section 8(b)) shall occur, and if thereafter,
there shall be:
(1)
At
any time, any involuntary termination of Executive's employment (other than
for
Cause);
(2)
At
any time, any reduction in Executive's title, responsibilities or authority,
including such title, responsibilities or authority as such may be increased
from time to time;
(3)
At
any time, 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
Employer 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;
(4)
At
any time, any reassignment of Executive beyond a fifty (50) mile radius from
Executive's home address set forth on the signature page hereto; or
(5)
At
any time, any requirement that Executive travel in performance of Executive’s
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 election of Executive, exercisable by Executive within one hundred eighty
(180) days of the occurrence of any of the foregoing events, Executive may
resign from employment (or, if involuntarily terminated, give notice of
intention to collect benefits hereunder) by delivering a notice in writing
to
Employer, in which case Executive shall be entitled to a lump sum cash severance
payment of $110,000, which Employer shall pay to Executive within fifteen
(15)
days of Executive's termination of employment.
Notwithstanding
the foregoing or any other provision of this Agreement to the contrary, in
no
event shall the lump sum payment to Executive pursuant to this Section 8(a)
be
greater than an amount equal to an amount ("X") determined pursuant to the
following formula:
X
=
(2.99A - B) x (1 + C)D.
For
purposes of the foregoing formula:
A
=Executive's Base Amount on the date of the Change in Control;
B
=The
present value of all other amounts which qualify as parachute payments under
Code Section 280G(b)(2)(A) or (B) (without regard to the provisions of Code
Section 280G(b)(2)(A)(ii)), such present value to be determined pursuant
to the
provisions of Code Section 280G;
C
=60%
times the lowest of the semiannual applicable federal rates (determined pursuant
to Code Section 1274(d)) in effect on the date of the Change in Control;
and
D
=The
number of whole semiannual periods plus any fraction of a semiannual period
from
the date of the Change in Control to the date of termination of the Executive's
employment.
(b) "Change
in Control" means:
(1) An
acquisition by any "person" or "group" (as those terms are defined or used
in
Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act"))
of
"beneficial ownership" (within the meaning of Rule 13d-3 under the Exchange
Act)
of securities of NPB representing 24.99% or more of the combined voting power
of
NPB's securities then outstanding;
(2) A
merger,
consolidation or other reorganization of Bank, except where the resulting
entity
is controlled, directly or indirectly, by NPB;
(3) A
merger,
consolidation or other reorganization of NPB, except where shareholders of
NPB,
immediately prior to consummation of any such transaction, continue to hold
at
least a majority of the voting power of the outstanding voting securities
of the
legal entity resulting from or existing after any such 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;
(4) A
sale,
exchange, transfer or other disposition of substantially all of the assets
of
Bank to another entity, except to an entity controlled, directly or indirectly,
by NPB;
(5) A
sale,
exchange, transfer or other disposition of substantially all of the assets
of
NPB to another entity, or a corporate division involving NPB; or
(6) The
following individuals cease for any reason to constitute a majority of the
number of directors then serving: individuals
who were directors of NPB on the Effective Date, together with individuals
elected as directors by not less than a majority of the individuals who were
directors of NPB on the Effective Date, shall cease to constitute a majority
of
the members of the board of directors of NPB.
(c)
"Affiliate" means any corporation which is included within a "controlled
group
of corporations" including NPB, as determined under Code Section
1563.
(d)
"Base
Amount" means Executive's average annualized taxable compensation from Employer
for the five years prior to the year in which a Change in Control occurs,
determined in accordance with the provisions of Code Section 280G.
(e)
"Code" means the Internal Revenue Code of 1986, as amended, and as the same
may
be amended from time to time.
(f)
"Employer" includes, for purposes of Section 8 only, NPB or any Affiliate
which
employs Executive at any particular time.
(g)
"Salary" means 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.
(h) Executive
shall not be required to mitigate the amount of any payment provided for
in
Section 8(a) by seeking other employment or otherwise, nor shall the amount
of
any payment or benefit provided for in Section 8(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.
9. Termination--Disability.
Employer may terminate Executive's employment at any time if Executive shall
be
"disabled" for a period of 180 consecutive days. "Disability" means that,
because of Executive's injury or sickness, Executive cannot perform each
of the
material duties of Executive’s regular occupation, as determined by Employer in
good faith. In such event:
(a) This
Agreement shall remain in effect for the remainder of the Term and terminate
at
the end of such Term;
(b) Employer
shall continue to pay Executive the compensation set forth in Section 4 for
the
remainder of the Term, at the times set forth in Section 4;
(c) Employer
shall continue to pay Executive the compensation set forth in Section 6,
if any,
at the times and for the duration set forth in the Nittany Incentive Plan;
and
(d) Employer
shall continue to pay Executive any amounts due to him pursuant to Section
26
hereof, at the times set forth in Section 26.
10. Termination--Death.
If
Executive's employment is terminated because of Executive's death:
(a) This
Agreement shall terminate at that time; and
(b) Within
30
days of the date of death, Employer shall pay to Executive's designated
beneficiary, in one lump sum, an amount equal to the total amount of
compensation remaining to be paid to Executive pursuant to Section 4 through
the
remaining Term of the Agreement and Section 6 for the remaining period set
forth
in the Nittany Incentive Plan, plus any amounts still due pursuant to Section
26.
11. Voluntary
Termination.
Executive may terminate Executive’s employment with Employer at any time. In
such event:
(a) This
Agreement shall terminate at that time; and
(b) Employer
shall not be obligated to pay Executive any further compensation pursuant
to
Section 4 or otherwise, except that the following shall remain due and payable
by Employer to Executive notwithstanding termination of this
Agreement:
(1) Section
4
compensation, if any, accrued and unpaid through the date of voluntary
termination;
(2) The
remaining amount payable to Executive pursuant to Section 6, if any, in
accordance with the Nittany Incentive Plan; and
(3) The
amount payable to Executive pursuant to Section 8, if any.
12. Termination--Cause.
Nothing
contained in this Agreement shall be construed to prevent Employer from
terminating the employment of Executive hereunder at any time for
"cause".
(a) "Cause"
means the Employer's good faith reasonable belief that the Executive committed
(1) fraud, theft or embezzlement, (2) falsified corporate records,
(3) disseminated confidential information concerning customers, NPB, Bank,
any NPB or Bank subsidiary or any of its or their employees, (4) had
documented unsatisfactory job performance under NPB's dismissal policy, or
(5) violated NPB's Code of Conduct. The foregoing definition of "cause" is
the definition of "cause" used by NPB, Bank and their subsidiaries in the
ordinary course of business.
(b) If
Employer terminates Executive's employment for cause:
(1) Employer
shall give Executive a written notice of termination effective on the date
specified by Employer in said notice, which notice shall contain a full
statement of the facts and reasons for such termination;
(2) This
Agreement shall terminate at such time, and such date of termination shall
constitute the last date of the Term; and
(3) Employer
shall not be obligated to pay Executive any further compensation pursuant
to
Section 4 or otherwise, except for (A) Section 4 compensation, if any, accrued
and unpaid through the date of termination and (B) the remaining amount payable
to Executive pursuant to Section 6, if any, in accordance with the Nittany
Incentive Plan.
13. Termination--Without
Cause.
Employer may terminate Executive's employment at any time without cause (defined
in Section 12(a)). In such event:
(a) This
Agreement shall remain in effect for the remainder of the Term and shall
terminate thereafter;
(b) Employer
shall continue to pay Executive the compensation set forth in Section 4 for
the
remainder of the Term at the times set forth in Section 4;
(c) Employer
shall continue to pay Executive the compensation set forth in Section 6,
if any,
at the times and for the duration set forth in Nittany Incentive
Plan;
(d) Employer
shall reimburse Executive for the cost of "COBRA" health care continuation
coverage for the remainder of the Term;
(e) If
a
Change in Control (defined in Section 8(b)) shall occur prior to the end
of the
Term, Employer shall pay to Executive the payment to which Executive is entitled
pursuant to Section 8;
(f) Employer
shall continue to pay Executive any amounts due to him pursuant to Section
26
hereof, at the times set forth in Section 26;
(g) if
applicable, during the Tail Period described in Section 14(b)(5) or Section
14(b)(6) below, Employer shall make cash payments to Executive at a rate
of
Fifty-Two Thousand Dollars ($52,000) per year (pro-rated for partial years),
in
approximately equal installments during such Tail Period on the customary
salary
payment dates of Employer, subject to applicable income tax withholding and
other deductions required by law; and
(h) Executive
shall not receive any other employee benefits, including the benefits described
in Section 7 of this Agreement, or be entitled to participate in any other
plan
or plans providing benefits generally to employees of Employer which are
presently in effect or which may hereafter be adopted by Employer, for the
remainder of the Term.
14. Non-Competition.
(a) Executive
acknowledges that NPB is a registered bank holding company engaged principally
in the commercial and retail banking business through its ownership, support,
operation and management of its subsidiaries, including Bank. During the
Term
and thereafter for the applicable Tail Period (as defined in Section 14(b)
below), if any, Executive shall not, directly or indirectly, acting alone
or in
conjunction with others:
(1) Engage
as
a director, officer, employee, partner, shareholder, consultant, agent or
in any
other capacity, in the commercial or retail banking business in competition
with
NPB, Bank or any other future NPB banking subsidiary, in any location whether
or
not within the Commonwealth of Pennsylvania that is within either fifty (50)
miles of Boyertown, Berks County, Pennsylvania, or within fifty (50) miles
of
State College, Centre County, Pennsylvania;
(2) Request
any customers of NPB, Bank or any other future NPB banking subsidiary, to
curtail or cancel their business with NPB, Bank, or any other future NPB
banking
subsidiary, excluding himself and any customer who is a relative of Executive;
or
(3) Induce,
or attempt to influence, any employee of NPB, Bank, or any other future NPB
banking subsidiary to terminate employment with NPB, Bank, or any other future
NPB banking subsidiary, or to enter into any employment or other business
relationship with any other person (including Executive), firm or
corporation.
(b) “Tail
Period” shall have the following meaning, as the case may be:
(1) If,
following any Change in Control, either Executive or Employer terminates
Executive’s employment for any reason, whether voluntarily or involuntary,
whether pursuant to Section 8(a) or otherwise (but excluding the reasons
set
forth in clause (7) below), then the Tail Period shall be a period of one
year
from the date of such termination.
(2)
If
Executive terminates his employment pursuant to Section 11 hereof (other
than
following a Change of Control), then the Tail Period shall be a period of
two
years from the date of such termination.
(3) If
Employer terminates Executive’s employment pursuant to Section 12 hereof (other
than following a Change of Control), then the Tail Period shall be a period
of
one year from the date of such termination.
(4) If
Employer terminates Executive’s employment pursuant to Section 13 hereof (other
than following a Change of Control) and there shall be two years or more
remaining in the Term, then there shall be no Tail Period.
(5) If
Employer terminates Executive’s employment pursuant to Section 13 hereof (other
than following a Change of Control) and there shall be less than two years
but
more than one year remaining in the Term, then the Tail Period shall be such
period of time which, when added to the remainder of the Term, would equal
a
period of two years.
Examples:
|
If
Employer terminates Executive’s
employment
pursuant to Section 13 hereof
(other
than following a Change of Control):
|
Then
the Tail Period in such case will be:
|
|
|
Three
(3) years and one (1) month after the Effective Date
|
One
(1) year and eleven (11) months after the end of the
Term
|
|
|
Three
(3) years and six (6) months after the Effective Date
|
One
(1) year and six (6) months after the end of the Term
|
|
|
Three
(3) years and eleven (11) months after the Effective Date
|
One
(1) year and one (1) month after the end of the
Term
|
(6) If
Employer terminates Executive’s employment pursuant to Section 13 hereof (other
than following a Change of Control) and there shall be one year or less
remaining in the Term, then the Tail Period shall be a period of one year
from
the end of the Term.
(7) If
Employer terminates Executive’s employment pursuant to Section 9 hereof, or upon
the expiration of the Term, then regardless of whether a Change of Control
shall
have previously occurred, there shall be no Tail Period.
(c) Executive
recognizes that immediate and irreparable damage will result to Employer
if
Executive breaches any of the terms and conditions of this Section 14 and,
accordingly, Executive hereby consents to the entry by any court of competent
jurisdiction of an injunction against him to restrain any such breach, in
addition to any other remedies or claims for money damages which Employer
may
seek. Executive represents and warrants to Employer that Executive’s experience
and capabilities are such that Executive can obtain employment in business
without breaching the terms and conditions of this Section 14, and the
enforcement hereof by injunction or otherwise will not prevent Executive
from
earning a livelihood. This Section 14 shall remain in full force and effect
in
accordance with its provisions following any termination of this
Agreement.
15. Non-Disclosure.
During
the Term and for an indefinite period thereafter, Executive shall not, directly
or indirectly, acting alone or in conjunction with others, disclose to any
person, firm or corporation any of the following information: any trade secret,
any details of organization or business affairs, any names of past or present
customers, consumers or employees, or any other proprietary data or confidential
information, of NPB, Bank, or of any of NPB's other direct or indirect, present
or future, subsidiaries or affiliates; provided, however, that disclosure
of
such information within the scope of Executive's employment, disclosure of
such
information as is required by law, and disclosure of such information already
in
the public domain through no fault of Executive, shall not be prohibited
by this
Section 15.
Employer
may enforce the provisions of this Section 15 by suit for damages, injunction,
or both. Executive agrees that Employer would be irreparably injured by the
breach of any provision of this Section 15, and money damages alone would
not be
an appropriate measure of the harm to Employer from such continuing breach.
Therefore, Executive acknowledges and agrees that Employer may seek equitable
relief, including specific performance of the provisions of this Section
15, by
injunction to remedy a breach of the provisions of this Section 15. This
Section
15 shall remain in full force and effect in accordance with its provisions
following any termination of this Agreement.
16. Binding
Effect, Assignment.
(a) This
Agreement shall be binding upon and inure to the benefit of NPB and Bank,
and it
shall be assignable to any corporation, limited liability company or other
entity which may be or become the legal employer of all of NPB's and Bank's
current employees in which case both NPB and Bank shall be guarantors of
the due
performance of all obligations set forth herein and the term "Employer" used
herein shall include such assignee. This Agreement shall also be assignable
to
any corporation, bank or other entity which may acquire NPB's or Bank's business
or all or substantially all of the assets of NPB or Bank, or with or into
which
NPB or Bank may be merged or consolidated, as provided in Section
16(b).
(b) Each
of
NPB and Bank shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all
of the
business and/or assets of NPB or Bank to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that NPB or Bank
would
be required to perform it if no such succession had taken place. Failure
to
obtain such assumption and agreement prior to the effectiveness of any such
succession shall constitute a breach of this Agreement, in which case a "Change
in Control" (as defined in Section 8(b)) shall be deemed to have occurred
and
Executive shall have the immediate right to take the actions and receive
the
payments provided in Section 8. As used in this Agreement, "NPB" and "Bank"
shall mean NPB and Bank as previously defined and any successor to the business
and/or assets of NPB or Bank as aforesaid which assumes and agrees to perform
this Agreement by operation of law or otherwise.
(c) This
Agreement shall be binding upon and inure to the benefit of Executive,
Executive’s personal and legal representatives, heirs, distributees, devisees
and assigns. Notwithstanding the foregoing, the obligations and duties of
Executive hereunder shall be personal and not assignable or delegable by
Executive in any manner whatsoever.
17. Exception
for Across-the-Board Actions.
If,
during the Term, the Boards of Directors of NPB and Bank shall determine,
acting
in good faith and with a reasonable basis, that it is in the best interests
of
NPB, Bank and NPB's shareholders to implement one or more broad,
across-the-board cost-cutting measures for all members of senior management
of
NPB and its subsidiaries, then, notwithstanding Sections 4 and 7, Executive's
base compensation and other benefits may be reduced in accordance with such
cost-cutting measures in a manner consistent with any such reductions in
base
compensation and/or other benefits for other senior officers
generally.
18.
Employment
After Term; Survival of Provisions.
Upon
expiration of the Term, as it may be extended from time to time and Executive's
employment status shall convert to "at will" employment status and the
provisions of Section 15 relating to non-disclosure shall remain in full
force
and effect in accordance with its provisions.
19. Notices.
All
notices or other communications hereunder shall be in writing and shall be
deemed given upon delivery if delivered personally or two business days after
mailing if mailed by prepaid, registered or certified mail, return receipt
requested, addressed as follows:
If
to
NPB, to:
Xxxxx
X.
Xxxxxxx
Chairman
and Chief Executive Officer
National
Penn Bancshares, Inc.
Reading
and Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxx,
XX 00000
If
to
Bank, to:
Xxxxx
X.
Xxxxx
President
and Chief Executive Officer
National
Penn Bank
Reading
and Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxx,
XX 00000
If
to
Executive, at the address set forth on the signature page hereto;
or
to
such other address as may have been previously furnished by the party to
the
other by notice given in the manner provided herein.
20. Entire
Agreement.
This
Agreement is intended by the parties to constitute and does constitute the
entire agreement between NPB, Bank and Executive with respect to the subject
matter hereof. This Agreement supersedes any and all prior agreements,
understandings, negotiations and discussions of the parties, whether oral
or
written.
21. Amendment.
This
Agreement may be amended, modified, waived, discharged or terminated only
by an
instrument in writing signed by Executive, an authorized officer of NPB or
an
authorized officer of Bank, as the case may be, against whom or which
enforcement of the amendment, modification, waiver, discharge or termination
is
sought.
22. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the domestic
internal law of the Commonwealth of Pennsylvania.
23. Interpretation
of Provisions.
Wherever possible, each provision of this Agreement shall be interpreted
in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law,
such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement. Without limiting the generality of the foregoing, if a
court
of competent jurisdiction shall determine that the time or geography provisions
of Section 14 are not reasonable, then such provision(s) shall be reformed
to
reflect such period of time or geographical areas as the court shall determine
to be reasonable and enforceable.
24. Captions.
The
captions contained in this Agreement are for reference purposes only and
are not
part of this Agreement.
25. Joint
and Several Obligations.
All
obligations of NPB and Bank herein shall be joint and several
obligations.
26. Termination
of Prior Agreement, Pay-Out of Change-in-Control Benefit.
Effective concurrently with the closing of the Merger, the Nittany Bank
Employment Agreement is terminated and of no further force and effect, and
in
exchange for consent to such agreement termination, the Executive shall be
paid
the amount calculated under Section 9(a) of the Nittany Bank Employment
Agreement without regard to the occurrence of the conditions precedent to
such
payments
less the
sum of any other payments that would constitute parachute payments under
section
280G of the Code with respect to the Merger (“Cancellation Payment”),
such
Cancellation Payment to be paid to Executive (after any required withholding
or
excise tax, if applicable), as follows: one-half shall be paid within five
(5)
business days following the Effective Date and the remainder shall be placed
in
an interest bearing escrow account at Bank (the “Escrow Account”) that would
earn interest at the “National Penn Investors Trust Company” money market
account rate. Monies held in the Escrow Account shall be paid to Executive
in 3
installments as follows: (i) one-fifth (1/5) of the escrowed amount, plus
accrued interest thereon, within five (5) business days following the 1st
anniversary of the Effective Date; (ii) one-fifth (1/5) of the escrowed amount,
plus accrued interest thereon, within five (5) business days following the
2nd
anniversary of the Effective Date; and (iii) three-fifths (3/5) of the escrowed
amount, plus accrued interest thereon, within five (5) business days following
the 3rd anniversary of the Effective Date. Notwithstanding the foregoing,
if
Executive is eligible for payment under Section 8(a) and exercises his option
to
receive such payment in accordance with such Section, then all monies in
the
Escrow Account, together with accrued but unpaid interest on those monies,
shall
be paid to Executive concurrently with the payment being made under Section
8(a). If Executive terminates employment pursuant to Section 11 hereof or
Employer terminates employment of Executive pursuant to Section 12 hereof,
all
monies in the Escrow Account, together with all accrued and unpaid interest
thereon, shall be paid to NPB within thirty (30) days following either of
those
events.
27. Deferred
Compensation.
Notwithstanding
anything herein to the contrary, in no event shall this Agreement be construed
to cause a payment of deferred compensation (as defined for purposes of Section
409A of the Code and any guidance or regulations promulgated thereunder)
to be
made on any date (or upon the occurrence of any event) which would cause
the
imposition of an excise tax under Section 409A of the Code. In the event
that
this Agreement purports to provide that such a payment is to be made on any
date
(or upon the occurrence of any event) which would cause the imposition of
an
excise tax under Section 409A of the Code, such payment shall not be made
until
the earliest date on which (or upon the occurrence of the next event upon
which)
such payment can be made without causing the imposition of such an excise
tax.
28. Effective
Date.
This
Agreement shall terminate and be of no further force and effect if for any
reason the Merger Agreement is terminated prior to a Merger.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first above written.
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NATIONAL
PENN BANCSHARES, INC.
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By:
/s/
Xxxxx X. Xxxxxxx
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Name:
Xxxxx X. Xxxxxxx
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Title:
Chairman/CEO
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NATIONAL
PENN BANK
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By:
/s/
Xxxxx X. Xxxxx
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Name:
Xxxxx X. Xxxxx
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Title:
President/CEO
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Witness:
/s/ Xxxx X. Xxxxxxxx
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/s/
Xxxx X. Xxxxxxxxx
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Xxxx
X. Xxxxxxxxx
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Address:
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_____________________________
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_____________________________
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_____________________________
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