ex10-2.htm


    Exhibit
      10.2

    


    EXECUTIVE
      AGREEMENT

    


    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 JORGE
      A. LEON, an individual residing at 636 Golf Club Road, Newtown Square,
      Pennsylvania ("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.

     

    
      	
              NATIONAL
                PENN BANCSHARES, INC.

            	
              NATIONAL
                PENN BANK

            
	 	 
	 	 
	 	 
	
              By:  /s/
                Glenn E. Moyer

            	
              By:   /s/
                Glenn E. Moyer

            
	
              Name:  Glenn
                E. Moyer

            	
              Name:  Glenn
                E. Moyer

            
	
              Title:    President

            	
              Title:     President
                & CEO

            
	 	 
	 	 
	 	 
	
              Attest:  /s/
                Sandra L. Spayd

            	
              Attest:  /s/
                Sandra L. Spayd

            
	
              Name:
                Sandra L. Spayd

            	
              Name:  Sandra
                L. Spayd

            
	
              Title:  GEVP

            	
              Title:     GEVP

            
	 	 
	 	 
	
              Witness:

            	 
	 	 
	 	 
	
              /s/
                Michael R. Reinhard

            	
               /s/
                Jorge A. Leon

            
	
                   Michael
                R. Reinhard

            	
               JORGE
                A. LEON

            


    

    


     

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