EMPLOYMENT AGREEMENT
EXHIBIT
10.62
EMPLOYMENT
AGREEMENT dated as of October 18, 2004, among NATIONAL PENN BANCSHARES, INC.,
a
Pennsylvania business corporation and registered bank holding company (“NPB”);
NATIONAL PENN BANK, a national banking association (“Bank”); and H. Xxxxxxxx
Xxxxxxxxx (“Officer”) (NPB and Bank are sometimes referred to herein
collectively as “Employer”).
BACKGROUND
1. Officer
is an officer, director and shareholder of Xxxxxxxxx, Xxxxxxx, Xxxxxx &
Xxxxxxx, P.C. (“ECM&W”), a law firm headquartered in Wyomissing,
Pennsylvania.
2. ECM&W
provides numerous legal services to NPB and Bank as general counsel, including
advice regarding various Federal and state securities law compliance
issues.
3. In
his
capacity as an attorney with ECM&W, Officer is primarily responsible for
supervising and performing the various legal services involved in connection
with providing NPB and Bank with such securities law legal advice.
4. Given
the
current securities law regulatory environment, NPB and Bank have determined
that
it is in NPB’s and Bank’s best interests to employ a securities law compliance
director to concentrate solely on securities law compliance
matters.
5. NPB
and
Bank desire to employ Officer as Senior Vice President - SEC Compliance Director
and Officer desires to be employed by NPB and Bank as Senior Vice President
-
SEC Compliance Director, 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 Officer agree as
follows:
1. Background.
The
matters set forth in the “Background” section of this Agreement are incorporated
by reference herein.
2. Position,
Duties.
(a) During
the time this Agreement is in effect, NPB and Bank will employ Officer as Senior
Vice President - SEC Compliance Director, or in such other comparable or higher
ranking senior officer position as may from time to time be assigned to Officer
by executive management of NPB or Bank. Officer accepts such employment, with
such powers and duties as may from time to time be determined by an executive
officer of
NPB or
Bank. Officer’s duties shall include compliance with Employer’s Code of Conduct
as in effect from time to time.
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(b) Officer
will devote substantially all his time and attention to, and will use his best
energies and abilities in the performance of, his duties and responsibilities
as
prescribed in this Section 2, and will not engage in consulting work or any
trade or business for his own account or for or on behalf of any other person,
firm or corporation which competes, conflicts, or interferes with the
performance of his duties hereunder in any way.
3. Compensation.
For all
services to be rendered by Officer pursuant to Section 2, Employer will pay
Officer a base salary of One Hundred Fifty Thousand Dollars ($150,000.00) per
year (“Base Salary”). Employer shall pay such salary to Officer 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 Officer. Employer
will evaluate Officer’s performance annually, and Officer may be eligible for
annual merit increases in base salary. A base salary increase shall, when it
takes effect, become the new Base Salary for purposes of this
Agreement.
4. Health
Insurance; Other Benefits.
In
addition to the compensation payable to Officer pursuant to Section 3 hereof,
Officer shall be entitled during the time this Agreement is in effect:
(a) To
participate in all health insurance and benefit plans, group insurance, pension
or profit-sharing plans, or other plan or 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) To
the
receipt of a cell phone 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 $30 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.
5. Bonuses.
As
additional compensation for services rendered hereunder, Officer shall be
entitled during the time this Agreement is in effect:
(a) To
participate as a “Type C Participant” in NPB’s Executive Incentive Plan,
assuming such plan remains in effect, or at an equivalent level in any successor
executive bonus plan covering the officers of NPB or Bank which may be adopted
by NPB or Bank; and
(b) To
receive any discretionary bonus that may be awarded to him under the Executive
Incentive Plan or such successor executive bonus plan.
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Officer
acknowledges that this Section 5 does not preclude NPB’s or Bank’s Board of
Directors, as the case may be, from amending or terminating the Executive
Incentive Plan or any other executive bonus plan in accordance with its
terms.
6. Equity-Based
Compensation Program.
Officer
shall be eligible during the time this Agreement is in effect to participate
in
NPB’s long-term equity-based compensation program as in effect on the date
hereof or as may hereafter be amended or modified from time to time. Any
discretionary terms of grants or awards to Officer under such program (other
than with respect to amount) shall be consistent with grants or awards to other
senior officers generally.
Officer
acknowledges that this Section 6 does not preclude NPB’s Board of Directors from
amending or terminating NPB’s long-term equity compensation program at any
time.
7. Change
in Control.
(a) If
a
Change in Control (defined in Section 7(b)) shall occur during the time this
Agreement is in effect
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:
(i) Any
involuntary termination of Officer’s Employment (defined in Section 7(c)) (other
than for Cause (defined in Section 8(c));
(ii) Any
reduction in Officer’s title, responsibilities or authority, including such
title, responsibilities or authority as such may be increased from time to
time;
(iii) Any
reduction in Officer’s Base Salary in effect immediately prior to a Change in
Control, or any failure to provide Officer with benefits at least as favorable
as those enjoyed by Officer under any of the pension, life insurance, medical,
health and accident, disability or other employee plans of NPB or Bank in which
Officer 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;
(iv) Any
reassignment of Officer beyond a thirty (30) mile commute by automobile from
Boyertown, Pennsylvania; or
(v) Any
requirement that Officer travel in performance of his duties on behalf of NPB
or
Bank for a greater period of time during any year than was required of Officer
during the year preceding the year in which the Change in Control occurred
(each
of the foregoing, a “Triggering Event”);
3
then,
at
the option of Officer, exercisable by Officer within one hundred eighty (180)
days of the occurrence of any Triggering Event within the Transition Period,
Officer 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 Officer shall be entitled to a lump sum cash severance
payment equal to 100% of Officer’s Base Salary in effect immediately prior to a
Change in Control, which Employer shall pay to Officer within fifteen (15)
days
of Officer’s termination of Employment.
(b) “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
Bank 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.
(c) “Employment”
means
Officer’s employment by NPB and Bank at any particular time in the capacity
described in Section 2 of this Agreement, or in such other comparable or higher
ranking senior officer position.
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(d) Officer
shall not be required to mitigate the amount of any payment provided for in
Section 7(a) by seeking other employment or otherwise, nor shall the amount
of
any payment or benefit provided for in Section 7(a) be reduced by any
compensation earned by Officer as the result of employment by another employer
or by reason of Officer’s receipt of or right to receive any retirement or other
benefits after the date of termination of employment or otherwise.
8. Term.
(a) This
Agreement shall be for a term of three years, beginning on October 18, 2004
and
ending on October 17, 2007, subject to earlier termination in the event of
default by either party, or the sickness, disability, incapacity or other
inability on the part of Officer to provide all or a substantial portion of
the
services pursuant to Section 2 hereof.
(b) Officer
may terminate his employment with Employer at any time. In such
event:
(i) This
Agreement shall terminate at that time; and
(ii) Employer
shall not be obligated to pay Officer any further compensation pursuant to
Section 3, any further benefits pursuant to Sections 4 or 6, or any further
bonuses pursuant to Section 5, in any case except for such compensation,
benefits or bonuses, if any, accrued and unpaid through the date of
termination.
(c) Nothing
contained in this Agreement shall be construed to prevent Employer from
terminating this Agreement, and thus the Employment of Officer hereunder, at
any
time for “Cause.”
As
used
in this Agreement, “Cause” means the occurrence of either of the
following:
(i) Officer’s
conviction of, or plea of guilty or nolo contendere to, a felony or a crime
of
falsehood or involving moral turpitude; or
(ii) The
willful failure by Officer to substantially perform his duties to Employer,
other than a failure resulting from Officer’s incapacity as a result of the
Officer’s disability, which willful failure results in demonstrable material
injury and damage to Employer.
Notwithstanding
the foregoing, Officer’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 Officer;
(ii) Any
act
or omission believed by Officer in good faith, to have been in or not opposed
to
the best interests of Employer; or
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(iii) Any
act
or omission in respect of which a determination could properly be made that
Officer met the applicable standard of conduct prescribed for indemnification
or
reimbursement or payment of expenses under the Bylaws of NPB or Bank or the
laws
of the Commonwealth of Pennsylvania, or the directors and officers’ liability
insurance of NPB or Bank, in each case as in effect at the time of such act
or
omission.
In
such
event:
(i) Employer
shall give Officer a written notice of termination effective on the date
specified by Employer in such notice, which notice shall contain a full
statement of the facts and reasons for such termination;
(ii) This
Agreement shall terminate on the effective date specified in such notice;
and
(iii) Employer
shall not be obligated to pay Officer any further compensation pursuant to
Section 3, any further benefits pursuant to Sections 4 or 6, or any further
bonuses pursuant to Section 5, in any case except for such compensation,
benefits or bonuses, if any, accrued and unpaid through the date of
termination.
(d) Employer
may terminate Officer’s employment without “Cause” at any time. In such
event:
(i) This
Agreement shall remain in effect for the remainder of the term set forth in
subsection 8(a);
(ii) Employer
shall continue to pay Officer the compensation set forth in Section 3 for the
remainder of the term of this Agreement, at the times set forth in Section
3;
(iii) Employer
shall continue to provide Officer with the health insurance benefits then being
provided to Officer pursuant to Section 4(a) of this Agreement; and
(iv) If
a
Change in Control (defined in Section 7(b)) shall occur prior to the end of
the
term of this Agreement, Employer shall pay to Officer the payment to which
Officer would otherwise be entitled pursuant to Section 7(a).
For
purposes of this subsection 8(d), a termination of Officer’s employment due to
his death or total disability shall be treated as if Officer was terminated
without “Cause”, and Employer shall pay to Officer’s spouse the amounts that
would be payable to Officer pursuant to subsections 8(d)(ii) and (iii) at the
times set forth in such subsections. For purposes of this Section 8,
“Disability” means that, because of Officer’s injury or sickness, Officer cannot
perform each of the material duties of his regular occupation, as determined
by
Employer in good faith.
6
9. Non-Competition.
Officer
acknowledges that NPB is a registered bank holding company and financial
services company engaged principally in the commercial and retail banking
business through its ownership, support, operation and management of its banking
subsidiary, Bank, and its other direct and indirect non-bank subsidiaries.
Officer also acknowledges that NPB is a publicly traded company whose shares
are
listed on the National
Market tier of The Nasdaq Stock Market. Officer acknowledges that his primary
responsibilities for Employer as SEC Compliance Director include responsibility
for ensuring that NPB remains compliant with the rules and regulations of the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
and the Securities Exchange Act of 1934, as amended (the “Restricted Business”).
Accordingly, during
the longer of
| (i) |
the
time this Agreement is in effect,
and
|
| (ii) |
if
Officer’s employment with Employer is voluntarily terminated by
Officer
|
and
for a
period of twenty four months thereafter, Officer shall not, directly or
indirectly, acting alone or in conjunction with others:
(a) Engage
as
a director, officer, employee, partner, member, five percent (5%) or more
shareholder, agent, consultant or in any other capacity in the Restricted
Business for any business that is in the financial services industry in any
location that is within fifty (50) miles of Wyomissing, Berks County,
Pennsylvania (it being understood that nothing in this Section 9(a) shall
prevent Officer from becoming a director, officer, employee, partner, member,
five percent (5%) or more shareholder, agent, consultant or engaging in any
other capacity of or for an established law firm providing legal advice in
the
Restricted Business to financial service companies during the twenty four month
period referenced above);
(b) Request
any customers of NPB or Bank to curtail or cancel their business with NPB or
Bank;
(c) Solicit,
canvass or accept any business or transaction for any other person, firm,
corporation, partnership or business similar to that of NPB or
Bank;
(d) Induce,
or attempt to influence, any employee of NPB or Bank to terminate employment
with NPB or Bank, or to enter into any employment or other business relationship
with any other person (including Officer), firm, corporation or partnership;
or
(e) Act
or
conduct himself in any manner which he shall have reason to believe is inimical
or contrary to the best interests of NPB or Bank.
7
Employer
may enforce the provisions of this Section 9 by suit for damages, injunction,
or
both. Officer agrees that Employer would be irreparably injured by the breach
of
any provision of this Section 9, and money damages alone would not be an
appropriate measure of the harm to Employer from such continuing breach.
Therefore, equitable relief, including specific performance of the provisions
of
this Section 9 by injunction, would be an appropriate remedy for the breach
of
these provisions.
10. Non-Disclosure.
During
the longer of
| (i) |
the
time this Agreement is in effect,
and
|
| (ii) |
the
period of Officer’s employment with
Employer
|
and
for a
period of twenty four months thereafter, Officer shall not, directly or
indirectly, acting alone or in conjunction with others, disclose to any person,
firm or corporation any of the following information which is not otherwise
in
the public domain: any trade secret, any details of organization or business
affairs, any names of past or present customers or employees of NPB, Bank or
any
other entity controlled by NPB or Bank, or any other information relating to
the
business of NPB, Bank or any other entity controlled by NPB or Bank.
Employer
may enforce the provisions of this Section 10 by suit for damages, injunction,
or both. Officer agrees that Employer would be irreparably injured by the breach
of any provision of this Section 10, and money damages alone would not be an
appropriate measure of the harm to Employer from such continuing breach.
Therefore, equitable relief, including specific performance of the provisions
of
this Section 10 by injunction, would be an appropriate remedy for the breach
of
these provisions.
11.
Release
of Non-Competition Covenant.
Notwithstanding Section 9 of this Agreement, if Employer terminates Officer's
employment without cause pursuant to Section 8(d) of this Agreement, Officer
may, at his option, at any time prior to termination of this Agreement pursuant
to Section 8(a), elect to accept a position in the Restricted Business with
another business that is in the financial services industry otherwise prohibited
by Section 9(a) of this Agreement, in which case:
(a) Officer
shall concurrently give Employer written notice of such election;
(b) This
Agreement shall terminate immediately, including without limitation Section
9
hereof; and
(c) Employer
shall immediately cease making any payments or providing any health insurance
benefits pursuant to Sections 8(d)(2), (3) or (4) of this
Agreement.
8
12. 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, 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 12(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 7(b)) shall be deemed to have occurred and
Officer shall have the immediate right to take the actions and receive the
payments provided in Section 7 hereof. 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 Officer, his
personal and legal representatives, heirs, distributees, devisees and assigns.
Notwithstanding the foregoing, the obligations and duties of Officer hereunder
shall be personal and not assignable or delegable by him in any manner
whatsoever.
13. 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
|
|
9
| If to Officer, to: | |
|
H.
Xxxxxxxx Xxxxxxxxx
|
|
|
00
Xxxxxxxxxx Xxxxxxxxx
|
|
|
Xxxxxxxxxx,
XX 00000
|
|
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.
14. Entire
Agreement.
This
Agreement is intended by the parties to constitute and does constitute the
entire agreement between NPB, Bank and Officer with respect to the employment
of
Officer by NPB and Bank. This Agreement supersedes any and all prior agreements,
understandings, negotiations and discussions of the parties, whether oral or
written.
15. Amendment.
This
Agreement may be amended, modified, waived, discharged or terminated only by
an
instrument in writing signed by Officer, 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.
16. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the domestic
internal law of the Commonwealth of Pennsylvania.
17. 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.
18. Captions.
The
captions contained in this Agreement are for reference purposes only and are
not
part of this Agreement.
19. Joint
and Several Obligations.
All
obligations of NPB and Bank herein shall be joint and several
obligations.
[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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20. Survival.
Notwithstanding any termination of this Agreement, the provisions of Sections
7,
9 and 10 shall, except as otherwise expressly provided herein, survive such
termination and remain in full force and effect.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first above written.
|
NATIONAL
PENN BANCSHARES, INC.
|
|
|
By:
/s/
Xxxxx X. Xxxxxxx
|
|
|
Name:
Xxxxx X. Xxxxxxx
|
|
|
Title:
Chairman/CEO
|
|
|
NATIONAL
PENN BANK
|
|
|
By:
/s/
Xxxxx X. Xxxxx
|
|
|
Name:
Xxxxx X. Xxxxx
|
|
|
Title:
President/CEO
|
|
|
Witness:
/s/
Xxxxxx X. Xxxxx
|
/s/
X. Xxxxxxxx Xxxxxxxxx
|
|
X.
Xxxxxxxx Xxxxxxxxx
|
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