Document:

exv10wa

 

EXHIBIT
10.A

VIAD CORP

EXECUTIVE SEVERANCE PLAN (TIER I)

AMENDED AND RESTATED

AS OF NOVEMBER 30, 2006

     1. PURPOSE: To provide management continuity by inducing selected Executives to remain in the
employ of Viad Corp (the “Corporation”) or one of its subsidiaries pending a possible Change of
Control of the Corporation.

     2. OBJECTIVES: To ensure in the event of a possible Change of Control of the Corporation, in
addition to the Executive’s regular duties, that he may be available to be called upon to assist in
the objective assessment of such situations, to advise management and the Board of Directors (the
“Board”) of the Corporation as to whether such proposals would be in the best interests of the
Corporation, its, subsidiaries and its shareholders and to take such other actions as management or
the Board might determine reasonably appropriate and in the best interests of the Corporation and
its shareholders.

     3. PARTICIPATION: Participation in this Executive Severance Plan (Tier I) (this “Plan”) will
be limited to selected Executives (each referred to herein as “Executive”) whose importance to the
Corporation during such periods is deemed to warrant good and valuable special consideration by the
Chief Executive Officer of the Corporation. Each such Executive’s participation shall be evidenced
by a certificate (“Certificate”) issued by the Corporation, each of which is incorporated herein by
reference as if set forth in its entirety. In the event an Executive shall become ineligible
hereunder, his Certificate shall be surrendered promptly to the Corporation.

     4. DEFINITION OF CHANGE OF CONTROL: For purposes of this Plan, a “Change of Control” shall
mean any of the following events:

          (a) An acquisition by an individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of either: (1) the then outstanding shares
of Common Stock of the Corporation (the “Outstanding Corporation Common Stock”) or (2) the
combined voting power of the then Outstanding Voting Securities of the Corporation entitled to vote
generally in the election of Directors (the “Outstanding Corporation Voting Securities”);
excluding, however the following: (A) any acquisition directly

 

 

from the Corporation or any entity controlled by the Corporation other than an acquisition by
virtue of the exercise of a conversion privilege unless the security being so converted was itself
acquired directly from the Corporation or any entity controlled by the Corporation, (B) any
acquisition by the Corporation, or any entity controlled by the Corporation, (C) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any
entity controlled by the Corporation or (D) any acquisition pursuant to a transaction which
complies with clauses (1), (2) and (3) of Section 4(c); or

          (b) A change in the composition of the Board such that the individuals who, as of the
effective date of the Plan, constitute the Board (such Board shall be hereinafter referred to as
the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, for purposes of this Section 4(b) that any individual, who becomes a member of
the Board subsequent to the effective date of the Plan, whose election, or nomination for election
by the Corporation’s shareholders, was approved by a vote of at least a majority of those
individuals who are members of the Board and who were also members of the Incumbent Board, (or
deemed to be such pursuant to this proviso) shall be considered as though such individual were a
member of the Incumbent Board; but provided further, that any such individual whose initial
assumption of office occurs as a result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual
or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board
shall not be so considered as a member of the Incumbent Board, or

          (c) Consummation of a reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Corporation (a “Corporate Transaction”) excluding,
however, such a Corporate Transaction pursuant to which (1) all or substantially all of the
individuals and entities who are the beneficial owners, respectively, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting Securities immediately prior to such
Corporate Transaction (the “Prior Shareholders”) beneficially own, directly or indirectly, more
than 60% of, respectively, the outstanding shares of Common Stock and the combined voting power of
the then Outstanding Voting Securities entitled to vote generally in the election of Directors, as
the case may be, of the Corporation or other entity resulting from such Corporate Transaction
(including, without limitation, a corporation or other entity which as a result of such transaction
owns the Corporation or all or

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substantially all of the Corporation’s assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately prior to such Corporate
Transaction, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting
Securities, as the case may be, (2) no Person (other than the Corporation or any entity controlled
by the Corporation, any employee benefit plan (or related trust) of the Corporation or any entity
controlled by the Corporation or such corporation or other entity resulting from such Corporate
Transaction) will beneficially owns, directly or indirectly, 20% or more of, respectively, the
outstanding shares of Common Stock of the Corporation or other entity resulting from such
Corporate Transaction or the combined voting power of the Outstanding Voting Securities of such
Corporation or other entity entitled to vote generally in the election of Directors except to the
extent that such ownership existed prior to the Corporate Transaction and (3) individuals who were
members of the Incumbent Board will constitute at least a majority of the members of the Board of
Directors of the Corporation resulting from such Corporate Transaction; and further excluding any
disposition of all or substantially all of the assets of the Corporation pursuant to a spin-off,
split-up or similar transaction (a “Spin-off”) if, immediately following the Spin-off, the Prior
Shareholders beneficially own, directly or indirectly, more than 80% of the outstanding shares of
Common Stock and the combined voting power of the then Outstanding Voting Securities entitled to
vote generally in the election of directors of both entities resulting from such transaction, in
substantially the same proportions as their ownership, immediately prior to such transaction, of
the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities; provided,
that if another Corporate Transaction involving the Corporation occurs in connection with or
following a Spin-off, such Corporate Transaction shall be analyzed separately for purposes of
determining whether a Change of Control has occurred;

          (d) The approval by the stockholders of the Corporation of a complete liquidation or
dissolution of the Corporation.

     5. DEFINITIONS:

          (a) For purposes of this Plan, “Cause” with respect to an Executive shall mean:

                    (i) The willful and continued failure of the Executive to perform substantially the
Executive’s duties with the Corporation or one of its affiliates (other than any such failure
resulting from incapacity

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due to physical or mental illness), after a written demand for substantial performance improvement
is delivered to the Executive by the Board or the Chief Executive Officer of the Corporation which
specifically identifies the manner in which the Board or Chief Executive Officer believes that the
Executive has not substantially performed the Executive’s duties, or

                    (ii) The willful engaging by the Executive in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Corporation. For purposes of this Section 5(a), no
act or failure to act, on the part of the Executive, shall be considered “willful” unless it is
done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of the Corporation. Any act, or failure
to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the
instructions of the Chief Executive Officer or a senior officer of the Corporation or based upon
the advice of counsel for the Corporation shall be conclusively presumed to be done, or omitted to
be done, by the Executive in good faith and in the best interests of the Corporation. The
cessation of employment of the Executive shall not be deemed to be for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters of the entire membership of the Board (excluding the
Executive, if he is a member of the Board) at a meeting of the Board called and held for such
purpose (after reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board), finding that, in the good-faith
opinion of the Board, the Executive is guilty of the conduct described in subparagraph (i) or (ii)
above, and specifying the particulars thereof in detail.

          (b) For purposes of this Plan, “Good Reason” with respect to an Executive shall mean:

                     (i) The assignment to the Executive of any duties inconsistent in any respect with the
Executive’s position (including status, offices, titles and reporting requirements), authority,
duties or responsibilities immediately prior to the Change of Control, or any other action by the
Corporation or any of its subsidiaries which results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by the Corporation or the applicable subsidiary
promptly after receipt of notice thereof given by the Executive;

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                     (ii) Any reduction of the Executive’s base salary, annual bonus, incentive opportunities,
retirement benefits, welfare or fringe benefits below the highest level enjoyed by the Executive
during the 120-day period prior to the Change of Control;

                     (iii) The Corporation’s or one of its subsidiaries requiring the Executive to be based at any
office or location other than that at which he was based immediately prior to the Change of Control
or the Corporation’s or one of its subsidiaries requiring the Executive to travel to a
substantially greater extent than required immediately prior to the Change of Control;

                     (iv) Any purported termination by the Corporation or one of its subsidiaries of the
Executive’s employment otherwise than as expressly permitted by this Plan; or

                     (v) Any failure by the Corporation to comply with and satisfy Section 11(c) of this Plan.

          For purposes of this Plan, any good-faith determination of “Good Reason” made by an Executive shall
be conclusive with respect to that Executive.

          (c) For purposes of this Plan, “Window Period” means the 30-day period following the first
anniversary of the Change of Control.

     6. ELIGIBILITY FOR BENEFITS: Benefits as described in Section 7 shall be provided in the
event the Executive’s employment with the Corporation or any of its subsidiaries is terminated:

          (a) Involuntarily by the Corporation or the applicable subsidiaries without Cause (a “Without
Cause Termination”); or

(b) By the Executive for Good Reason (a “Good Reason Termination”) or

          (c) By the Executive’s own election for any reason during the Window Period; provided, in the
case of a Without Cause Termination or a Good Reason Termination, that such termination occurs
within thirty-six months after a Change of Control; and provided, further, that in no event shall a
termination as a consequence of an Executive’s death, disability, or Retirement (as defined in the
next sentence) entitle the Executive to benefits under this Plan. “Retirement” shall mean the
Executive’s voluntary retirement at or after his normal retirement date under the Corporation’s or
a subsidiary’s retirement plan or, if the Executive does not participate in any such plan that
provides for a normal retirement date, at or after age 65.

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     7. BENEFIT ENTITLEMENTS:

          (a) Lump Sum Payment: On or before the Executive’s last day of employment with the
Corporation or any of its subsidiaries, the Corporation or the applicable subsidiary will pay to
the Executive as compensation for services rendered a lump sum cash amount (subject to any
applicable payroll or other taxes required to be withheld) equal to the sum of (i) Executive’s
highest annual salary fixed during the period Executive was an employee of the Corporation or any
of its subsidiaries, plus (ii) the target bonus under the Corporation’s Management Incentive Plan
for the fiscal year in which the Change of Control occurs, multiplied by:

                     (i) Three times a fraction, the numerator of which is 36 minus the number of full months from
the date of the Change of Control through the last day of the Executive’s employment, and the
denominator of which is 36, in the case of a Without Cause Termination or a Good Reason
Termination, or

                     (ii) Two if the termination is voluntary during the Window Period.

          (b) Employee Plans: The Executive’s participation in life, accident, health, compensation
deferral, automobile, club membership, and financial counseling plans of the Corporation, or the
applicable subsidiary, if any, provided to the Executive immediately prior to the Change of Control
or his termination, shall be continued, or equivalent benefits provided, by the Corporation or the
applicable subsidiary at no direct cost or tax cost to the Executive in excess of the costs that
would be imposed on the Executive, if he remained an employee, for a period (the “Severance
Period”) of:

                     (i) Three years times a fraction, the numerator of which is 36 minus the number of full months
from the date of the Change of Control through the last day of the Executive’s employment, and the
denominator of which is 36, in the case of a Without Cause Termination or a Good Reason
Termination, or

                     (ii) Two years if the termination is voluntary during the Window Period, in each case from the
date of termination (or until his death or normal retirement date, whichever is sooner). The
Executive’s participation in any applicable qualified or nonqualified retirement and/or pension
plans and any deferred compensation or bonus plan of the Corporation or any of its subsidiaries, if
any, shall continue only through the last day of employment. Any terminating distributions and/or
vested rights under such plans shall be governed by the terms of the respective plans. For
purposes of determining the eligibility of the Executive for any post-

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retirement life and health benefits, the Executive shall be treated as having attained an
additional three years of age and service credit (in the case of a Without Cause Termination or a
Good Reason Termination) or two years of age and service credit (if the termination is voluntary
during the Window Period), in each case as of the last day of the Executive’s employment.

          (c) Special Retirement Benefits: If the Executive is, immediately prior to his termination of
employment, an active participant accruing benefits under any qualified and/or nonqualified defined
benefit retirement plans (collectively, the “Retirement Plans”), then the Executive or his
beneficiaries shall be paid Special Retirement Benefits as and when the Executive or such
beneficiaries become entitled to receive benefits under the Retirement Plans (as defined below),
equal to the excess of (i) the retirement benefits that would be payable to the Executive or his
beneficiaries under the Retirement Plans if the Executive’s employment had continued during the
Severance Period, all of his accrued benefits under the Retirement Plans (including those
attributable to the Severance Period) were fully vested, and his final average compensation is
equal to the Deemed Final Average Compensation, as defined below, over (ii) the total qualified and
unqualified benefits actually payable to the Executive or his beneficiaries under the Retirement
Plan. The “Deemed Final Average Compensation” means the Executive’s final average compensation
computed in accordance with the Retirement Plans, except that the amount specified in Section 7(a)
shall be considered as having been paid to the Executive as “compensation” in equal monthly
installments during the Severance Period. All Special Retirement Benefits shall be unfunded and
payable solely from the general assets of the Corporation or its appropriate subsidiary, and are
not intended to meet the qualification requirements of Section 401 of the Internal Revenue Code.
The amount of the Special Retirement Benefits shall be determined using actuarial assumptions no
less favorable to the Executive than those used in the qualified Retirement Plan immediately prior
to the Change of Control.

          (d) Outplacement: The Executive shall be provided with outplacement benefits in accordance
with those offered to Executives immediately prior to the Change of Control.

          (e) Minimum Benefit Entitlement: Notwithstanding anything to the contrary in this Section 7,
and except as provided in Section 8(a), in no event shall an Executive’s severance benefits under
this

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Plan be less than the benefits (if any) such Executive would have received in accordance with the
severance policy of the Corporation or applicable subsidiary in effect immediately prior to the
Change of Control.

     8. TAXES: (a) Anything in this Plan to the contrary notwithstanding, and except as set
forth below, in the event it shall be determined that any of an Executive’s Payment(s) would be
subject to the Excise Tax, then the Executive shall be entitled to receive an additional payment
(the “Gross-Up Payment”) in an amount such that, after payment by the Executive of all taxes (and
any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed
upon such Executive’s Payments. Notwithstanding the foregoing provisions of this Section 8(a), if
it shall be determined that the Executive is entitled to the Gross-Up Payment, but that the
Parachute Value of all Payments does not exceed 110% of the Executive’s Safe Harbor Amount, then no
Gross-Up Payment shall be made to the Executive and the amounts payable under this Plan shall be
reduced so that the Parachute Value of all of such Executive’s Payments, in the aggregate, equals
the Executive’s Safe Harbor Amount. The reduction of the amounts payable hereunder, if applicable,
shall be made by first reducing the Executive’s Payments under Section 7(a), unless an alternative
method of reduction is elected by the Executive, and in any event shall be made in such a manner as
to maximize the Value of all Payments actually made to the Executive. For purposes of reducing the
Payments to the Safe Harbor Amount, only amounts payable under this Plan (and no other Payments)
shall be reduced. If the reduction of the amounts payable under this Plan would not result in a
reduction of the Parachute Value of all Payments to the Executive’s Safe Harbor Amount, no amounts
payable to such Executive under this Plan shall be reduced pursuant to this Section 8(a) and the
Gross-Up Payment shall be made to the Executive. The Corporation’s obligation to make Gross-Up
Payments under this Section 8 shall not be conditioned upon the Executive’s termination of
employment.

          (b) Determination By Accountant. Subject to the provisions of Section 8(c)ii, all
determinations required to be made under this Section 8, including whether and when a Gross-Up
Payment to any Executive is required, the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by the Corporation’s auditor or another
nationally recognized accounting firm appointed by the Corporation (the “Accounting Firm”). In the
event that the Accounting Firm is serving as

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accountant or auditor for the individual, entity or group effecting the Change of Control, the
Executive may appoint another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the Accounting Firm
hereunder). The Accounting Firm shall provide detailed supporting calculations both to the
Corporation and the Executive within 15 business days of the receipt of notice from the Executive
that there has been a Payment or such earlier time as is requested by the Corporation. All fees
and expenses of the Accounting Firm shall be borne solely by the Corporation. Any Gross-Up
Payment, as determined pursuant to this Section 8, shall be paid by the Corporation to the
applicable Executive within five days of the receipt of the Accounting Firm’s determination. Any
determination by the Accounting Firm shall be binding upon the Corporation and the applicable
Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder it is possible that Gross-Up
Payments that will not have been made by the Corporation should have been made (the
“Underpayment”), consistent with the calculations required to be made hereunder. In the event the
Corporation exhausts its remedies pursuant to Section 8(c) and the Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid by the Corporation
to or for the benefit of the Executive.

          (c) Notification Required. The Executive shall notify the Corporation in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment by the Corporation
of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than
10 business days after the Executive is informed in writing of such claim. The Executive shall
apprise the Corporation of the nature of such claim and the date on which such claim is requested
to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which the Executive gives such notice to the Corporation (or such shorter
period ending on the date that any payment of taxes with respect to such claim is due). If the
Corporation notifies the Executive in writing prior to the expiration of such period that it
desires to contest such claim, the Executive shall:

                     (i) Give the Corporation any information reasonably requested by the Corporation
relating to such claim,

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                     (ii) Take such action in connection with contesting such claim as the Corporation
shall reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney reasonably
selected by the Corporation,

                     (iii) Cooperate with the Corporation in good faith in order to effectively contest
such claim, and

                     (iv) Permit the Corporation to participate in any proceedings relating to such claim;
provided, however, that the Corporation shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax
or income tax, (including interest and penalties) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the foregoing
provisions of this Section 8(c)ii, the Corporation shall control all proceedings taken in
connection with such contest and, at its sole discretion, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the applicable taxing
authority in respect of such claim and may, at its sole discretion, either direct the
Executive to pay the tax claimed and sue for a refund, or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Corporation shall determine; provided, however, that if the
Corporation directs the Executive to pay such claim and sue for a refund, the Corporation
shall pay the amount of such payment to the Executive, and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax, (including
interest or penalties) imposed with respect to such payment or with respect to any imputed
income in connection with such payment; and provided, further that any extension of the
statute of limitations relating to payment of taxes for the taxable year of the Executive
with respect to which such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Corporation’s control of the contest shall be limited
to issues with respect to which a the Gross-Up Payment would be payable hereunder and the
Executive shall be entitled

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to settle or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

          (d) Repayment. If, after the receipt by the Executive of a Gross-Up Payment or an amount paid
by the Corporation pursuant to Section 8(c), the Executive becomes entitled to receive any refund
with respect to the Excise Tax to which such Gross-Up Payment relates or with respect to such
claim, the Executive shall (subject to the Corporation’s complying with the requirements of Section
8(c), if applicable,) promptly pay to the Corporation the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount paid by the Corporation pursuant to Section 8(c), a determination is made
that the Executive shall not be entitled to any refund with respect to such claim and the
Corporation does not notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of 30 days after such determination, then the Executive shall not be
required to repay such amount to the Corporation, but the amount of such payment shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be paid.

          (e) Withholding. Notwithstanding any other provision of this Section 8, the Corporation may,
in its sole discretion, withhold and pay over to the Internal Revenue Service or any other
applicable taxing authority, for the benefit of each Executive, all or any portion of any Gross-Up
Payment.

          (f) Definitions: The following terms shall have the following meanings for purposes of this
Section 8.

          “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any
interest or penalties imposed with respect to such excise tax.

          “Parachute Value” of a Payment shall mean the present value as of the date of the change of
control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a
“parachute payment” under Section 280G(b)(2), as determined by the Accounting Firm for purposes of
determining whether and to what extent the Excise Tax will apply to such Payment.

          A “Payment” shall mean any payment or distribution in the nature of compensation (within the
meaning of Section 280G(b)(2) of the Code) to or for the benefit of an Executive, whether paid or
payable pursuant to this Plan or otherwise.

          The “Safe Harbor Amount” of an Executive means 2.99 times the Executive’s “base amount,”
within the meaning of Section 280G(b)(3) of the Code.

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          “Value” of a Payment shall mean the economic present value of a Payment as of the date of the
change of control for purposes of Section 280G of the Code, as determined by the Accounting Firm
using the discount rate required by Section 280G(d)(4) of the Code.

     9. INDEMNIFICATION: If litigation is brought to enforce or interpret any provision contained
herein, the Corporation or applicable subsidiary, to the extent permitted by applicable law and the
Corporation’s or subsidiary’s Articles of Incorporation, as the case may be, shall indemnify each
Executive who is a party thereto for his reasonable attorneys’ fees and disbursements incurred in
such litigation, regardless of the outcome thereof, and shall pay interest on any money judgment
obtained by the Executive calculated at the Citibank, N.A. prime interest rate in effect from time
to time from the date that payment(s) to him should have been made under this Plan until the date
the payment(s) is made. Such attorneys’ fees and disbursements shall be paid promptly as incurred
by the Executive.

     10. PAYMENT OBLIGATIONS ABSOLUTE: Except as expressly provided in Section 13 and 14, the
Corporation’s or subsidiary’s obligation to pay the Executive the benefits hereunder and to make
the arrangements provided herein shall be absolute and unconditional and shall not be affected by
any circumstances, including, without limitation, any set-off, counter-claim, recoupment, defense
or other right which the Corporation or any of its subsidiaries may have against him or anyone
else. All amounts paid or payable by the Corporation or one of its subsidiaries hereunder shall be
paid without notice or demand. Each and every payment made hereunder by the Corporation or
subsidiary shall be final and the Corporation or subsidiary will not seek to recover all or any
part of such payment(s) from the Executive or from whosoever may be entitled thereto, for any
reason whatsoever. No Executive shall be obligated to seek other employment in mitigation of the
amounts payable or arrangements made under any provision of this Plan, and the obtaining of any
such other employment shall in no event effect any reduction of the Corporation’s or subsidiary’s
obligations to make the payments and arrangements required to be made under this Plan. The
Corporation or applicable subsidiary may at the discretion of the Chief Executive Officer of the
Corporation enter into an irrevocable, third-party guarantee or similar agreement with a bank or
other institution with respect to the benefits payable to an Executive hereunder, which would
provide for the unconditional payment of such benefits by such third party upon presentment by an
Executive of his Certificate (and on such other conditions deemed necessary or desirable by the
Corporation or such subsidiary) at some

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specified time after termination of employment. Such third-party guarantor shall have no liability
for improper payment if it follows the instructions of the Corporation or such subsidiary as
provided in such Certificate and other documents required to be presented under the agreement,
unless the Corporation or such subsidiary, in a written notice, has previously advised such
third-party guarantor of the determination by its Board of Directors of ineligibility of the
Executive in accordance with Section 15.

     11. CONTINUING OBLIGATIONS: It shall be a condition to the entitlement of an Executive to any
benefits under this Plan that he agree to retain in confidence any confidential information known
to him concerning the Corporation and its subsidiaries and their respective businesses as long as
such information is not publicly disclosed, except as required by law.

     12. SUCCESSORS:

          (a) The benefits provided under this Plan are personal to the Executives and without the prior
written consent of the Corporation shall not be assignable by any Executive otherwise than by will
or the laws of descent and distribution. This Plan shall inure to the benefit of and be
enforceable by the Executive’s legal representatives.

          (b) This Plan shall inure to the benefit of and be binding upon the Corporation and its
successors and assigns.

          (c) The Corporation will 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
the Corporation to assume expressly and agree to perform this Plan in the same manner and to the
same extent that the Corporation would be required to perform it if no such succession had taken
place. As used in this Plan, Corporation shall mean the Corporation as hereinbefore defined and
any other person or entity which assumes or agrees to perform this Plan by operation of law, or
otherwise.

          13. SEVERABILITY: Any provision in this Plan which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition
or unenforceability without invalidating or affecting the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.

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          14. OTHER PLANS AND AGREEMENTS: Notwithstanding any provision herein to the contrary, in the
event the Executive’s employment with the Corporation or applicable subsidiary terminates and the
Executive is entitled to receive termination, separation or other like amounts from the Corporation
or any of its subsidiaries pursuant to any contract of employment, generally prevailing separation
pay policy, or other program of the Corporation or applicable subsidiary, all such amounts shall be
applied to and set off against the Corporation’s or applicable subsidiary’s obligation set forth in
Sections 7 and 8 of this Plan. Nothing in this Section 14 is intended to result in set-off of
pension benefits, supplemental executive retirement benefits, disability benefits, retiree benefits
or any other plan benefits not directly provided as termination or separation benefits.

          15. AMENDMENT AND TERMINATION: This Plan may be amended or terminated by action of the Board.
This Plan shall terminate with respect to an Executive if the Chief Executive Officer of the
Corporation determines that the Executive is no longer a key executive to be provided a severance
agreement and so notifies the Executive by certified mail at least thirty (30) days before
participation in this Plan shall cease. Notwithstanding the foregoing, no such amendment,
termination or determination may be made, (and if made, shall have no effect during the period of
thirty-six months following any Change of Control or (ii) during any period of time when the
Corporation has knowledge that any third person has taken steps reasonably calculated to effect a
Change of Control, until such third person has abandoned or terminated his efforts to effect a
Change of Control as determined by the Board in good faith, but in its sole discretion.

          16. GOVERNING LAW: This Plan shall be governed by and construed in accordance with the laws
of the State of Delaware, without reference to principles of conflict of laws. The captions of
this Plan are not part of the provisions hereof and shall have no force or effect.

          17. By acceptance of participation in this Plan, an Executive agrees to give a minimum of four
(4) weeks’ notice to the Corporation in the event of his voluntary resignation.

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VIAD CORP

EXECUTIVE SEVERANCE PLAN (TIER II)

AMENDED AND RESTATED

AS OF NOVEMBER 30, 2006

     1. PURPOSE: To provide management continuity by inducing selected Executives to
remain in the employ of Viad Corp (the “Corporation”) or one of its subsidiaries pending a possible
Change of Control of the Corporation.

     2. OBJECTIVES: To ensure in the event of a possible Change of Control of the
Corporation, in addition to the Executive’s regular duties, that he may be available to be called
upon to assist in the objective assessment of such situations, to advise management and the Board
of Directors (the “Board”) of the Corporation as to whether such proposals would be in the best
interests of the Corporation its subsidiaries and its shareholders, and to take such other actions
as management or the Board might determine reasonably appropriate and in the best interests of the
Corporation and its shareholders.

     3. PARTICIPATION: Participation in this Executive Severance Plan (Tier II) (this
“Plan”) will be limited to selected Executives (each referred to herein as “Executive”) whose
importance to the Corporation during such periods is deemed to warrant good and valuable special
consideration by the Chief Executive Officer of the Corporation. Each such Executive’s
participation shall be evidenced by a certificate (“Certificate”) issued by the Corporation, each
of which is incorporated herein by reference as if set forth in its entirety. In the event an
Executive shall become ineligible hereunder, his Certificate shall be surrendered promptly to the
Corporation.

     4. DEFINITION OF CHANGE OF CONTROL: For purposes of this Plan, a “Change of Control”
shall mean any of the following events:

          (a) An acquisition by an individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of either: (1) the then outstanding shares
of common stock of the Corporation (the “Outstanding Corporation Common Stock”) or (2) the combined
voting power of the then Outstanding Voting Securities of the Corporation entitled to vote
generally in the election of Directors (the “Outstanding Corporation Voting Securities”);
excluding, however, the following: (A) any acquisition directly

15

 

from the Corporation or any entity controlled by the Corporation other than an acquisition by
virtue of the exercise of a conversion privilege unless the security being so converted was itself
acquired directly from the Corporation or any entity controlled by the Corporation, (B) any
acquisition by the Corporation or any entity controlled by the Corporation, (C) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any
entity controlled by the Corporation or (D) any acquisition pursuant to a transaction which
complies with clauses (1), (2) and (3) of Section 4(c); or

          (b) A change in the composition of the Board such that the individuals who, as of the
effective date of the Plan, constitute the Board (such Board shall be hereinafter referred to as
the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, for purposes of this section 4(b), that any individual who becomes a member of
the Board subsequent to the effective date of the Plan, whose election or nomination for election
by the Corporation’s shareholders was approved by a vote of at least a majority of those
individuals who are members of the Board and who were also members of the Incumbent Board (or
deemed to be such pursuant to this proviso) shall be considered as though such individual were a
member of the Incumbent Board; but provided further, that any such individual whose initial
assumption of office occurs as a result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual
or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board
shall not be so considered as a member of the Incumbent Board, or

          (c) Consummation of a reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Corporation (a “Corporate Transaction”) excluding,
however, such a Corporate Transaction pursuant to which (1) all or substantially all of the
individuals and entities who are the beneficial owners, respectively, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting Securities immediately prior to such
Corporate Transaction (the “Prior Shareholders”) beneficially own, directly or indirectly, more
than 60% of, respectively, the outstanding shares of Common Stock and the combined voting power of
the then Outstanding Voting Securities entitled to vote generally in the election of Directors, as
the case may be, of the Corporation or other entity resulting from such Corporate Transaction
(including, without limitation, a corporation or other entity which as a result of such transaction
owns the Corporation or all or

16

 

substantially all of the Corporation’s assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately prior to such Corporate
Transaction, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting
Securities, as the case may be, (2) no Person (other than the Corporation or any entity controlled
by the Corporation, any employee benefit plan (or related trust) of the Corporation or any entity
controlled by the Corporation or such corporation or other entity resulting from such Corporate
Transaction) will beneficially own, directly or indirectly, 20% or more of, respectively, the
outstanding shares of Common Stock of the Corporation or other entity resulting from such
Corporate Transaction or the combined voting power of the Outstanding Voting Securities of such
Corporation or other entity entitled to vote generally in the election of Directors except to the
extent that such ownership existed prior to the Corporate Transaction and (3) individuals who were
members of the Incumbent Board will constitute at least a majority of the members of the Board of
Directors of the Corporation resulting from such Corporate Transaction; and further excluding any
disposition of all or substantially all of the assets of the Corporation pursuant to a spin-off,
split-up or similar transaction (a “Spin-off”) if, immediately following the Spin-off, the Prior
Shareholders beneficially own, directly or indirectly, more than 80% of the outstanding shares of
Common Stock and the combined voting power of the then Outstanding Voting Securities entitled to
vote generally in the election of directors of both entities resulting from such transaction, in
substantially the same proportions as their ownership, immediately prior to such transaction, of
the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities; provided,
that if another Corporate Transaction involving the Corporation occurs in connection with or
following a Spin-off, such Corporate Transaction shall be analyzed separately for purposes of
determining whether a Change of Control has occurred;

          (d) The approval by the shareholders of the Corporation of a complete liquidation or
dissolution of the Corporation.

     5. DEFINITIONS:

          (a) For purposes of this Plan, “Cause” with respect to an Executive shall mean:

                     (i) The willful and continued failure of the Executive to perform substantially the
Executive’s duties with the Corporation or one of its affiliates (other than any such failure
resulting from incapacity

17

 

due to physical or mental illness), after a written demand for substantial performance improvement
is delivered to the Executive by the Board or the Chief Executive Officer of the Corporation which
specifically identifies the manner in which the Board or Chief Executive Officer believes that the
Executive has not substantially performed the Executive’s duties, or

                     (ii) The willful engaging by the Executive in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Corporation. For purposes of this Section 5(a), no
act or failure to act, on the part of the Executive, shall be considered “willful” unless it is
done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of the Corporation. Any act, or failure
to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the
instructions of the Chief Executive Officer or a senior officer of the Corporation or based upon
the advice of counsel for the Corporation shall be conclusively presumed to be done, or omitted to
be done, by the Executive in good faith and in the best interests of the Corporation. The
cessation of employment of the Executive shall not be deemed to be for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters of the entire membership of the Board (excluding the Executive
if he is a member of the Board) at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an opportunity, together
with counsel, to be heard before the Board), finding that, in the good-faith opinion of the Board,
the Executive is guilty of the conduct described in subparagraph (i) or (ii) above, and specifying
the particulars thereof in detail.

          (b) For purposes of the Plan, “Good Reason” with respect to an Executive shall mean:

                     (i) The assignment to the Executive of any duties inconsistent in any respect with the
Executive’s position (including status, offices, titles and reporting requirements), authority,
duties or responsibilities immediately prior to the Change of Control, or any other action by the
Corporation or any of its subsidiaries which results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by the Corporation or the applicable subsidiary
promptly after receipt of notice thereof given by the Executive;

18

 

                     (ii) Any reduction of the Executive’s base salary, annual bonus, incentive opportunities,
retirement benefits, welfare or fringe benefits below the highest level enjoyed by the Executive
during the 120-day period prior to the Change of Control;

                     (iii) The Corporation’s or one of its subsidiaries requiring the Executive to be based at any
office or location other than that at which he was based immediately prior to the Change of Control
or the Corporation’s or one of its subsidiaries requiring the Executive to travel to a
substantially greater extent than required immediately prior to the Change of Control;

                     (iv) Any purported termination by the Corporation or one of its subsidiaries of the
Executive’s employment otherwise than as expressly permitted by this Plan; or

                     (v) Any failure by the Corporation to comply with and satisfy Section 11(c) of this Plan.

For purposes of this Plan, any good faith determination of “Good Reason” made by an Executive
shall be conclusive with respect to that Executive.

     6. ELIGIBILITY FOR BENEFITS: Benefits as described in Section 7 shall be provided
in the event the Executive’s employment with the Corporation or any of its subsidiaries is
terminated:

          (a) Involuntarily by the Corporation or the applicable subsidiaries without Cause (a “Without
Cause Termination”); or

          (b) By the Executive for Good Reason (a “Good Reason Termination”)
provided that such termination occurs within eighteen months after a Change of Control; and
provided, further, that in no event shall a termination as a consequence of an Executive’s death,
disability, or Retirement (as defined in the next sentence) entitle the Executive to benefits under
this Plan. “Retirement” shall mean the Executive’s voluntary retirement at or after his normal
retirement date under the Corporation’s or a subsidiary’s retirement plan or, if the Executive does
not participate in any such plan that provides for a normal retirement date, at or after age 65.

     7. BENEFIT ENTITLEMENTS:

          (a) Lump Sum Payment: On or before the Executive’s last day of employment with the
Corporation or any of its subsidiaries, the Corporation or the applicable subsidiary will pay to
the Executive as

19

 

compensation for services rendered a lump sum cash amount (subject to any applicable payroll or
other taxes required to be withheld) equal to (i) two times the sum of (x) Executive’s highest
annual salary fixed during the period Executive was an employee of the Corporation or any of its
subsidiaries, plus (y) the target bonus under the Corporation’s Management Incentive Plan for the
fiscal year in which the Change of Control occurs.

          (b) Employee Plans: The Executive’s participation in life, accident, health,
compensation deferral, automobile, club membership, and financial counseling plans of the
Corporation, or the applicable subsidiary, if any, provided to the Executive immediately prior to
the Change of Control or his termination, shall be continued, or equivalent benefits provided, by
the Corporation or the applicable subsidiary at no direct cost or tax cost to the Executive in
excess of the costs that would be imposed on the Executive if he remained an employee for a period
(the “Severance Period”) of two years times a fraction, the numerator of which is 24 minus the
number of full months from the date of the Change of Control through the last day of the
Executive’s employment, and the denominator of which is 24. The Executive’s participation in any
applicable qualified or nonqualified retirement and/or pension plans and any deferred compensation
or bonus plan of the Corporation or any of its subsidiaries, if any, shall continue only through
the last day of employment. Any terminating distributions and/or vested rights under such plans
shall be governed by the terms of the respective plans. For purposes of determining the
eligibility of the Executive for any post-retirement life and health benefits, the Executive shall
be treated as having attained an additional two years of age and service credit, in each case as of
the last day of the Executive’s employment.

          (c) Special Retirement Benefits: If the Executive is, immediately prior to his
termination of employment, an active participant accruing benefits under any qualified and/or
nonqualified defined benefit retirement plans (collectively, the “Retirement Plans”), then the
Executive or his beneficiaries shall be paid Special Retirement Benefits as and when the Executive
or such beneficiaries become entitled to receive benefits under the Retirement Plans (as defined
below), equal to the excess of (i) the retirement benefits that would be payable to the Executive
or his beneficiaries under the Retirement Plans if the Executive’s employment had continued during
the Severance Period, all of his accrued benefits under the Retirement Plans (including those
attributable to the Severance Period) were fully vested, and his final average compensation is
equal to the Deemed Final Average

20

 

Compensation, as defined below, over (ii) the total qualified and unqualified benefits actually
payable to the Executive or his beneficiaries under the Retirement Plan. The “Deemed Final Average
Compensation” means the Executive’s final average compensation computed in accordance with the
Retirement Plans, except that the amount specified in Section 7(a) shall be considered as having
been paid to the Executive as “compensation” in equal monthly installments during the Severance
Period. All Special Retirement Benefits shall be unfunded and payable solely from the general
assets of the Corporation or its appropriate subsidiary, and are not intended to meet the
qualification requirements of Section 401 of the Internal Revenue Code. The amount of the Special
Retirement Benefits shall be determined using actuarial assumptions no less favorable to the
Executive than those used in the qualified Retirement Plan immediately prior to the Change of
Control.

          (d) Outplacement: The Executive shall be provided with outplacement benefits in
accordance with those offered to Executives immediately prior to the Change of Control.

          (e) Minimum Benefit Entitlement: Notwithstanding anything to the contrary
in this Section 7, and except as provided in Section 8(a), in no event shall an Executive’s
severance benefit under this Plan be less than the benefits (if any) such Executive would have
received in accordance with the severance policy of the Corporation or applicable subsidiary in
effect immediately prior to the Change of Control.

     8. TAXES: (a) Anything in this Plan to the contrary notwithstanding, and except as
set forth below, in the event it shall be determined that any of an Executive’s Payment(s) would be
subject to the Excise Tax, then the Executive shall be entitled to receive an additional payment
(the “Gross-Up Payment”) in an amount such that, after payment by the Executive of all taxes (and
any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed
upon such Executive’s Payments. Notwithstanding the foregoing provisions of this Section 8(a), if
it shall be determined that the Executive is entitled to the Gross-Up Payment, but that the
Parachute Value of all Payments does not exceed 110% of the Executive’s Safe Harbor Amount, then no
Gross-Up Payment shall be made to the Executive and the amounts payable under this Plan shall be
reduced so that the Parachute Value of all of such Executive’s Payments, in the aggregate, equals
the Executive’s Safe Harbor Amount. The reduction of the amounts payable hereunder, if applicable,
shall be made by first reducing the Executive’s

21

 

Payments under Section 7(a), unless an alternative method of reduction is elected by the Executive,
and in any event shall be made in such a manner as to maximize the Value of all Payments actually
made to the Executive. For purposes of reducing the Payments to the Safe Harbor Amount, only
amounts payable under this Plan (and no other Payments) shall be reduced. If the reduction of the
amounts payable under this Plan would not result in a reduction of the Parachute Value of all
Payments to the Executive’s Safe Harbor Amount, no amounts payable to such Executive under this
Plan shall be reduced pursuant to this Section 8(a) and the Gross-Up Payment shall be made to the
Executive. The Corporation’s obligation to make Gross-Up Payments under this Section 8 shall not
be conditioned upon the Executive’s termination of employment.

          (b) Determination By Accountant. Subject to the provisions of Section 8(c)ii, all
determinations required to be made under this Section 8, including whether and when a Gross-Up
Payment to any Executive is required, the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by the Corporation’s auditor or another
nationally recognized accounting firm appointed by the Corporation (the “Accounting Firm”). In the
event that the Accounting Firm is serving as accountant or auditor for the individual, entity or
group effecting the Change of Control, the Executive may appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). The Accounting Firm shall provide detailed
supporting calculations both to the Corporation and the Executive within 15 business days of the
receipt of notice from the Executive that there has been a Payment or such earlier time as is
requested by the Corporation. All fees and expenses of the Accounting Firm shall be borne solely
by the Corporation. Any Gross-Up Payment, as determined pursuant to this Section 8, shall be paid
by the Corporation to the applicable Executive within five days of the receipt of the Accounting
Firm’s determination. Any determination by the Accounting Firm shall be binding upon the
Corporation and the applicable Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder
it is possible that Gross-Up Payments that will not have been made by the Corporation should have
been made (the “Underpayment”), consistent with the calculations required to be made hereunder. In
the event the Corporation exhausts its remedies pursuant to Section 8(c) and the Executive
thereafter is required to make a payment of any

22

 

Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Corporation to or for the benefit of the
Executive.

          (c) Notification Required. The Executive shall notify the Corporation in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment by the Corporation
of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than
10 business days after the Executive is informed in writing of such claim. The Executive shall
apprise the Corporation of the nature of such claim and the date on which such claim is requested
to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which the Executive gives such notice to the Corporation (or such shorter
period ending on the date that any payment of taxes with respect to such claim is due). If the
Corporation notifies the Executive in writing prior to the expiration of such period that it
desires to contest such claim, the Executive shall:

                     (i) Give the Corporation any information reasonably requested by the Corporation
relating to such claim,

                     (ii) Take such action in connection with contesting such claim as the Corporation
shall reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney reasonably
selected by the Corporation,

                     (iii) Cooperate with the Corporation in good faith in order to effectively contest
such claim, and

                     (iv) Permit the Corporation to participate in any proceedings relating to such claim;
provided, however, that the Corporation shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax
or income tax, (including interest and penalties) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the foregoing
provisions of this Section 8(c)ii, the Corporation shall control all proceedings taken in
connection with such contest and, at its sole discretion, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the applicable taxing
authority in

23

 

respect of such claim and may, at its sole discretion, either direct the Executive to pay
the tax claimed and sue for a refund, or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the
Corporation shall determine; provided, however, that if the Corporation directs the
Executive to pay such claim and sue for a refund, the Corporation shall pay the amount of
such payment to the Executive, and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax, (including interest or penalties)
imposed with respect to such payment or with respect to any imputed income in connection
with such payment; and provided, further that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Corporation’s control of the contest shall be limited to issues with
respect to which a the Gross-Up Payment would be payable hereunder and the Executive shall
be entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.

          (d) Repayment. If, after the receipt by the Executive of a Gross-Up Payment or an amount paid
by the Corporation pursuant to Section 8(c), the Executive becomes entitled to receive any refund
with respect to the Excise Tax to which such Gross-Up Payment relates or with respect to such
claim, the Executive shall (subject to the Corporation’s complying with the requirements of Section
8(c), if applicable,) promptly pay to the Corporation the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount paid by the Corporation pursuant to Section 8(c), a determination is made
that the Executive shall not be entitled to any refund with respect to such claim and the
Corporation does not notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of 30 days after such determination, then the Executive shall not be
required to repay such amount to the Corporation, but the amount of such payment shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be paid.

24

 

          (e) Withholding. Notwithstanding any other provision of this Section 8, the Corporation may,
in its sole discretion, withhold and pay over to the Internal Revenue Service or any other
applicable taxing authority, for the benefit of each Executive, all or any portion of any Gross-Up
Payment.

          (f) Definitions: The following terms shall have the following meanings for purposes of this
Section 8.

          “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any
interest or penalties imposed with respect to such excise tax.

          “Parachute Value” of a Payment shall mean the present value as of the date of the change of
control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a
“parachute payment” under Section 280G(b)(2), as determined by the Accounting Firm for purposes of
determining whether and to what extent the Excise Tax will apply to such Payment.

          A “Payment” shall mean any payment or distribution in the nature of compensation (within the
meaning of Section 280G(b)(2) of the Code) to or for the benefit of an Executive, whether paid or
payable pursuant to this Plan or otherwise.

          The “Safe Harbor Amount” of an Executive means 2.99 times the Executive’s “base amount,”
within the meaning of Section 280G(b)(3) of the Code.

          “Value” of a Payment shall mean the economic present value of a Payment as of the date of the
change of control for purposes of Section 280G of the Code, as determined by the Accounting Firm
using the discount rate required by Section 280G(d)(4) of the Code.

     9. INDEMNIFICATION: If litigation is brought to enforce or interpret any provision contained
herein, the Corporation or applicable subsidiary, to the extent permitted by applicable law and the
Corporation’s or subsidiary’s Articles of Incorporation, as the case may be, shall indemnify each
Executive who is a party thereto for his reasonable attorneys’ fees and disbursements incurred in
such litigation, regardless of the outcome thereof, and shall pay interest on any money judgment
obtained by the Executive calculated at the Citibank, N.A. prime interest rate in effect from time
to time from the date that payment(s) to him should have been made under this Plan until the date
the payment(s) is made. Such attorneys’ fees and disbursements shall be paid promptly as incurred
by the Executive.

     10. PAYMENT OBLIGATIONS ABSOLUTE: Except as expressly provided in Section 13 and 14,
the Corporation’s or subsidiary’s obligation to pay the Executive the benefits hereunder and to
make the arrangements provided herein shall be absolute and unconditional and shall not be affected
by any circumstances, including, without limitation, any set-off, counter-claim, recoupment,
defense or other right which the Corporation

25

 

or any of its subsidiaries may have against him or anyone else. All amounts paid or payable by the
Corporation or one of its subsidiaries hereunder shall be paid without notice or demand. Each and
every payment made hereunder by the Corporation or subsidiary shall be final and the Corporation or
subsidiary will not seek to recover all or any part of such payment(s) from the Executive or from
whosoever may be entitled thereto, for any reason whatsoever. No Executive shall be obligated to
seek other employment in mitigation of the amounts payable or arrangements made under any provision
of this Plan, and the obtaining of any such other employment shall in no event effect any reduction
of the Corporation’s or subsidiary’s obligations to make the payments and arrangements required to
be made under this Plan. The Corporation or applicable subsidiary may at the discretion of the
Chief Executive Officer of the Corporation enter into an irrevocable, third-party guarantee or
similar agreement with a bank or other institution with respect to the benefits payable to an
Executive hereunder, which would provide for the unconditional payment of such benefits by such
third party upon presentment by an Executive of his Certificate (and on such other conditions deemed
necessary or desirable by the Corporation or such subsidiary) at some specified time after
termination of employment. Such third-party guarantor shall have no liability for improper payment
if it follows the instructions of the Corporation or such subsidiary as provided in such
Certificate and other documents required to be presented under the agreement, unless the
Corporation or such subsidiary, in a written notice, has previously advised such third-party
guarantor of the determination by its Board of Directors of ineligibility of the Executive in
accordance with Section 15.

     11. CONTINUING OBLIGATIONS: It shall be a condition to the entitlement of an
Executive to any benefits under this Plan that he agree to retain in confidence any confidential
information known to him concerning the Corporation and its subsidiaries and their respective
businesses as long as such information is not publicly disclosed, except as required by law.

     12. SUCCESSORS:

          (a) The benefits provided under this Plan are personal to the Executives and without the
prior written consent of the Corporation shall not be assignable by any Executive otherwise than by
will or the laws of

26

 

descent and distribution. This Plan shall inure to the benefit of and be enforceable by the
Executive’s legal representatives.

          (b) This Plan shall inure to the benefit of and be binding upon the Corporation and its
successors and assigns.

          (c) The Corporation will 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
the Corporation to assume expressly and agree to perform this Plan in the same manner and to the
same extent that the Corporation would be required to perform it if no such succession had taken
place. As used in this Plan, Corporation shall mean the Corporation as hereinbefore defined and
any other person or entity which assumes or agrees to perform this Plan by operation of law, or
otherwise.

     13. SEVERABILITY: Any provision in this Plan which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating or affecting the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

     14. OTHER PLANS AND AGREEMENTS: Notwithstanding any provision herein to the contrary,
in the event the Executive’s employment with the Corporation or applicable subsidiary terminates
and the Executive is entitled to receive termination, separation or other like amounts from the
Corporation or any of its subsidiaries pursuant to any contract of employment, generally prevailing
separation pay policy, or other program of the Corporation or applicable subsidiary, all such
amounts shall be applied to and set off against the Corporation’s or applicable subsidiary’s
obligation set forth in Section 7 of this Plan. Nothing in this Section 14 is intended to result
in set-off of pension benefits, supplemental executive retirement benefits, disability benefits,
retiree benefits or any other plan benefits not directly provided as termination or separation
benefits.

     15. AMENDMENT AND TERMINATION: This Plan may be amended or terminated by action of
the Board. This Plan shall terminate with respect to an Executive if the Chief Executive Officer
of the Corporation determines that the Executive is no longer a key executive to be provided a
severance agreement and so notifies the Executive by certified mail at least thirty (30) days
before participation in this Plan shall cease. Notwithstanding

27

 

the foregoing, no such amendment, termination or determination may be made, (and if made, shall
have no effect) (i) during the period of thirty-six months following any Change of Control or (ii)
during any period of time when the Corporation has knowledge that any third person has taken steps
reasonably calculated to effect a Change of Control, until such third person has abandoned or
terminated his efforts to effect a Change of Control as determined by the Board in good faith, but
in its sole discretion.

     16. GOVERNING LAW: This Plan shall be governed by and construed in accordance with
the laws of the State of Delaware, without reference to principles of conflict of laws. The
captions of this Plan are not part of the provisions hereof and shall have no force or effect.

     17. ACCEPTANCE: By acceptance of participation in this Plan, an Executive agrees to
give a minimum of four (4) weeks’ notice to the Corporation or any of its subsidiaries in the event
of his voluntary resignation.

28Exhibit 10.1

    EXHIBIT
      10.1

    

    NATIONAL
      PENN BANCSHARES, INC.

    

    LONG-TERM
      INCENTIVE COMPENSATION PLAN

    

    (APPROVED
      BY SHAREHOLDERS, APRIL 25, 2005)

    

    

    STOCK
      OPTION AGREEMENT

    BETWEEN

    NATIONAL
      PENN BANCSHARES, INC.

    

    AND

    

    «Optionee»

    (the
      Optionee)

    

    

    

    

    
      	
              Date
                of Grant:

            	
              December
                4, 2006

            
	 	 
	 	 
	
              Number
                of Shares:

            	
              «NumberofShares»
                shares

            
	 	 
	 	 
	
              Purchase
                Price:

            	
              $20.57
                per share

            
	 	 
	 	 
	
              Option
                Expires:

            	
              January
                4, 2017

            
	 	 

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    NATIONAL
      PENN BANCSHARES, INC.

    LONG-TERM
      INCENTIVE COMPENSATION PLAN

    

    NON-QUALIFIED

    STOCK
      OPTION AGREEMENT

    

    

    This
      Stock Option Agreement dated December 4, 2006, between National Penn Bancshares,
      Inc. (the "Corporation") and «Optionee»
      (the
      "Optionee"),

    

    WITNESSETH:

    

    1. Grant
      of Option

    

    Pursuant
      to the National Penn Bancshares, Inc. Long-Term Incentive Compensation Plan
      (the
      "Plan"), this Agreement confirms the Corporation's grant to the Optionee,
      subject to the terms and conditions of the Plan and subject further to the
      terms
      and conditions herein set forth, of the right and option to purchase from the
      Corporation all or any part of an aggregate of «NumberofShares»
      common
      shares (without par value) of the Corporation at the purchase price of $20.57
      per share, such option to be exercised as hereinafter provided.

    

    2. Terms
      and Conditions

    

    It
      is
      understood and agreed that the option evidenced hereby is subject to the
      following terms and conditions:

    

    (a) Expiration
      Date.
      Subject
      to the provisions of Paragraph 2(d), the option evidenced hereby shall expire
      on
      January 4, 2017 [10 years and one month from the date of grant].

    

    (b) Exercise
      of Option.
      The
      Optionee shall have a cumulative vested interest in the right to exercise an
      option granted hereby, determined by reference to his or her continuous
      employment with the Corporation and/or a subsidiary following the date of grant
      of the option, as follows:

    

    
      	
              Period
                of Continuous

            	
              Cumulative
                Vested

            
	
              Employment
                Following Grant

            	
              Percentage

            
	
              Less
                than 1 year

            	
              -0-
                

            
	
              1
                year or more

            	
                20.0

            
	
              2
                years or more

            	
               
                40.0

            
	
              3
                years or more

            	
               
                60.0

            
	
              4
                years or more

            	
               
                80.0

            
	
              5
                years or more

            	
              100.0

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    To
      the
      extent the application of the above vesting schedule would at any time result
      in
      the right to acquire a fractional share, the right to acquire such fractional
      share shall be deferred to the next vesting period.

    

    This
      option may be exercised, to the extent exercisable by its terms, in whole or
      from time to time in part at any time prior to the expiration hereof. Any
      exercise shall be accompanied by a written notice to the Corporation specifying
      the number of shares as to which the option is being exercised.

    

    (c) Payment
      of Purchase Price Upon Exercise.
      The
      option exercise price for the shares as to which this option shall be exercised
      shall be paid in cash or as otherwise permitted by the Plan and the
      Committee.

    

    (d) Exercise
      Upon Death, Disability, Retirement or other Termination of
      Employment.

    

    (1) If
      the
      Optionee's employment with the Corporation or a subsidiary terminates due to
      death, Disability (as defined in the Plan) or Retirement (as defined in the
      Plan
      and also including a voluntary termination of employment at age 60 or more),
      or
      if the Company or a subsidiary terminates the Optionee’s employment not for
      Cause (as defined in the Plan), this option (whether or not exercisable by the
      Optionee immediately prior to ceasing to be an employee) will be exercisable
      at
      any time prior to the expiration date of this option or within five years after
      the date of termination of employment, whichever is the shorter
      period.

    

    (2) If
      the
      Optionee voluntarily terminates employment not qualifying as Retirement (as
      provided in Paragraph 2(d)(1)) hereof), this option, if and to the extent not
      yet exercisable, will terminate, and if and to the extent then exercisable,
      may
      be exercised by the Optionee at any time prior to the expiration date of this
      option or within three months after the date of termination of employment,
      whichever is the shorter period.

    

    (3) If
      the
      Corporation or a subsidiary terminates the Optionee’s employment for Cause (as
      defined in the Plan), this Option, including any unexercised vested portion,
      shall immediately lapse and be cancelled. Any lapse occurring under this
      subsection of this Agreement shall be final, and no person or corporation shall
      be liable to the Optionee therefor.

    

    (e) Transferability.
      This
      option shall be transferable by Will or by the laws of descent and distribution.
      During the lifetime of the Optionee, this option may be transferred to the
      extent permitted by, and subject to the conditions imposed by, the Plan and
      the
      Committee.

    

    (f) Adjustment
      and Substitution of Shares.
      If any
      merger, reorganization, consolidation, recapitalization, separation,
      liquidation, stock dividend, split-up, share combination, or other change in
      the
      corporate structure of the Corporation affecting the Corporation’s common shares
      shall occur, the number and class of shares subject to this option and the
      price
      per share thereof (but not the total price) shall be adjusted or substituted
      for, as the case may be, as shall be determined by the Committee to be
      appropriate and equitable to prevent dilution or enlargement of rights, and
      provided that the number of shares shall always be a whole number. Any
      adjustment or substitution so made shall be final and binding upon the
      Optionee.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

    (g) No
      Rights as Shareholder.
      The
      Optionee shall have no rights as a shareholder with respect to any common shares
      subject to this option prior to the date of issuance to him or her of a
      certificate or certificates for such shares or the book-entry registration
      of
      such shares in his or her name.

    

    (h) No
      Right To Continued Employment.
      This
      option shall not confer upon the Optionee any right to continue as an employee
      of the Corporation or any subsidiary, nor shall it interfere in any way with
      the
      right of his or her employer to terminate his or her employment at any
      time.

    

    (i) Compliance
      with Law and Regulations.
      This
      option and the obligation of the Corporation to sell and deliver shares
      hereunder shall be subject to all applicable federal and state laws, rules
      and
      regulations and to such approvals by any government or regulatory agency as
      may
      be required. The Corporation shall not be required to issue or deliver any
      certificates for common shares prior to (1) the effectiveness of a registration
      statement under the Securities Act of 1933, as amended, with respect to such
      shares, if deemed necessary or appropriate by counsel for the Corporation,
      (2)
      the listing of such shares on any stock exchange on which the common shares
      may
      then be listed, or upon the Nasdaq Stock Market if the common shares are then
      listed thereon, and (3) compliance with all other applicable laws, regulations,
      rules and orders which may then be in effect.

    

    (j) Change-in-Control.
      If any
      "Change-in-Control" (as defined in the Plan) occurs, this option shall become
      immediately and fully exercisable whether or not otherwise then
      exercisable.

    

    3. Investment
      Representation

    

    The
      Committee may require the Optionee to furnish to the Corporation, prior to
      the
      issuance of any shares upon the exercise of all or any part of this option,
      an
      agreement (in such form as such Committee may specify) in which the Optionee
      represents that the shares acquired by him or her upon exercise are being
      acquired for investment and not with a view to the sale or distribution
      thereof.

    

    4. Optionee
      Bound by Plan

    

    The
      Optionee hereby acknowledges receipt of a copy of the Plan and agrees to be
      bound by all the terms and provisions of the Plan, as in effect on the date
      hereof and as it may be amended from time to time in accordance with its terms,
      all of which terms and provisions are incorporated herein by reference. If
      there
      shall be any inconsistency between the terms and provisions of the Plan, as
      in
      effect from time to time, and those of this Agreement, the terms and provisions
      of the Plan, as in effect from time to time, shall control.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
    

     

    
      
        5.
          Committee

      

    

    

    All
      references herein to the “Committee” mean the Compensation Committee of the
      Board of Directors of the Corporation (or any successor committee designated
      by
      the Board of Directors to administer the Plan).

    

    6. Withholding
      of Taxes

    

    The
      Corporation will require as a condition precedent to the exercise of this option
      that appropriate arrangements be made for the withholding of any applicable
      Federal, state and local taxes.

    

    7. Notices

    

    Any
      notice hereunder to the Corporation shall be addressed to it at its office,
      Philadelphia and Reading Avenues, Boyertown, Pennsylvania 19512, Attention:
      Corporate Secretary, and any notice hereunder to Optionee shall be addressed
      to
      him or her at the address below, subject to the right of either party to
      designate at any time hereafter in writing some other address.

    

    IN
      WITNESS WHEREOF, National Penn Bancshares, Inc. has caused this Agreement to
      be
      executed by a duly authorized officer and the Optionee has executed this
      Agreement, both as of the day and year first above written.

    
 

    
      	
              NATIONAL
                PENN BANCSHARES, INC.

            	 	
              OPTIONEE

            
	 	 	 	 
	 	 	 	 
	
              By:

            	 	 	 
	 	
              WAYNE
                R. WEIDNER

            	 	
              (Signature)

            
	 	
              Chairman
                & CEO

            	 	 
	 	 	 	 
	 	 	 	
              (Print
                Name)

            
	 	 	 	 
	 	 	 	 
	 	 	 	
              (Print
                Address)

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