EXECUTION VERSION
September 6, 2005
National Penn Bancshares, Inc.
Philadelphia and Reading Avenues
Boyertown, Pennsylvania 19512
Ladies and Gentlemen:
National Penn Bancshares, Inc. ("NPB") and Nittany Financial Corp. ("NFC")
are considering entering into a Merger Agreement dated September 6, 2005 (the
"Agreement").
Pursuant to the proposed Agreement, and subject to the terms and conditions
set forth therein: (a) NPB will acquire NFC by a merger of NFC with and into
NPB; (the "Merger") (b) shareholders of NFC will receive shares of NPB common
stock and/or cash in exchange for their shares of NFC common stock owned on the
closing date; and (c) holders of NFC options will receive stock options
exercisable for common stock of NPB in exchange for options exercisable for
common stock of NFC outstanding on the closing date (the foregoing,
collectively, the "Transactions").
I have been advised that I may be deemed to be an "affiliate" of NFC for
purposes of certain rules issued by the Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933.
I understand that NPB is requiring, as a condition to its execution and
delivery to NFC of the Agreement, that I execute and deliver to NPB this Letter
Agreement.
Intending to be legally bound hereby, I irrevocably agree and represent as
follows:
1. I agree to vote or cause to be voted for approval of the Transactions
all shares of NFC common stock over which I exercise sole or shared voting
power, excluding any such shares that I am acting over as a fiduciary other than
those which are held in IRAs for my benefit.
2. Through the earlier of (a) the receipt of the requisite approval of the
Transactions by the shareholders of NFC or (b) the termination of the Agreement
pursuant to Article VII thereof, I agree not to offer, sell, transfer or
otherwise dispose of, or to permit the offer, sale, transfer or other
disposition of, any shares of NFC common stock over which I exercise sole or
shared voting power or any options that I hold to acquire shares of NFC common
stock; provided, however, that I may make a bona fide gift of shares prior to
that date as long as the recipient agrees to vote such shares for approval of
the
National Penn Bancshares, Inc.
September 6, 2005
Page 2
Transactions and agrees, in writing, to be bound by all the terms hereof as if
an original signatory hereto.
3. I agree, if I am an optionholder, to exchange my options to acquire
shares of common stock of NFC for options to acquire such number of shares of
common stock of NPB, and at such per share exercise price, as is provided in
Section 2.08 of the Agreement, and otherwise on the same terms and conditions as
the exchanged NFC options (unless I shall have exercised, with the prior written
consent of NPB, any such option prior to the Transactions).
4. I have sole or shared voting power over the number of shares of NFC
common stock, and hold stock options for the number of shares of NFC common
stock, if any, set forth below opposite my signature line. NPB recognizes that
with respect to any such shares which have been pledged to a third party (which
are specifically identified below), I will not be able to control the voting or
disposition of such shares in the event of a default.
5. I agree, if I am an optionholder, not to exercise any options to acquire
shares of NFC common stock prior to the closing of the Transactions without the
prior written consent of NPB.
6. I hereby waive the right to assert dissenters rights under the
Pennsylvania Business Corporation Law of 1988, as amended, and any other
applicable law or regulation.
7. I agree not to offer, sell, transfer or otherwise dispose of any shares
of NPB common stock received pursuant to the Transactions, except:
(a) at such time as a registration statement under the Securities Act of
1933, as amended ("Securities Act"), covering sales of such NPB common stock is
effective and a prospectus is made available under the Securities Act;
(b) within the limits, and in accordance with the applicable provisions of,
Rule 145 under the Securities Act ("Rule 145") or upon expiration of all
restrictions set forth in Rule 145 applicable to me; or
(c) in a transaction which, in an opinion of counsel satisfactory to NPB or
as described in a "no-action" or interpretive letter from the staff of the SEC,
is not required to be registered under the Securities Act;
and I acknowledge and agree that NPB is under no obligation to register the
sale, transfer or other disposition of NPB common stock by me or on my behalf,
or to take any other action necessary to make an exemption from registration
available.
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September 6, 2005
Page 3
8. NPB shall take all steps necessary to ensure that NPB is in compliance
with all those requirements of Rule 145 and Rule 144 with which NPB must comply
in order for the resale provisions of Rule 145(d) to be available to me. In
addition, NPB shall cause its Director of SEC Compliance (in his/her absence,
outside-counsel selected by NPB) to respond promptly to any requests from NPB's
transfer agent for the issuance of an opinion that any transfer by me that
complies with the requirements of Rule 145 and 144 may be made provided such
counsel receives customary representation letters and all other information and
documentation reasonably required by NPB from me.
9. I agree that neither NFC nor NPB shall be bound by any attempted sale of
any shares of NFC common stock or NPB common stock, respectively, and NFC's and
NPB's transfer agents shall be given appropriate stop transfer orders and shall
not be required to register any such attempted sale, unless the sale has been
effected in compliance with the terms of this Letter Agreement; and I further
agree that (a) any certificate representing shares of NPB common stock received
by me pursuant to the Merger may be endorsed with a restrictive legend
consistent with the terms of this Letter Agreement; and (b) any shares of NPB
common stock received by me pursuant to the Merger in the form of book-entry
shares may be subject to a stop order consistent with the terms of this Letter
Agreement. I understand that upon expiration of the restrictions set forth in
Rule 145 and applicable to me, upon my request, NPB shall cause its Director of
SEC Compliance (in his/her absence, outside-counsel selected by NPB) to promptly
issue an opinion to the transfer agent or provide other documentation reasonably
acceptable to the transfer agent so as to cause such stop orders to be lifted.
If at any point in time I hold certificates representing shares of NPB common
stock received by me in the Merger and such certificates bear a restrictive
legend, upon expiration of the restrictions set forth in Rule 145 and applicable
to me, upon my request, NPB shall cause its Director of SEC Compliance (in
his/her absence, outside-counsel selected by NPB) to promptly issue an opinion
to the transfer agent or provide other documentation reasonably acceptable to
the transfer agent so as to cause such certificates to be reissued without such
restrictive legend.
10. I represent that I have no present plan or intention to offer, sell,
exchange, or otherwise dispose of any shares of NPB common stock to be received
in the Transactions.
11. I represent that I have the capacity to enter into this Letter
Agreement and that it is a valid and binding obligation enforceable against me
in accordance with its terms, subject to bankruptcy, insolvency and other laws
affecting creditors' rights and general equitable principles.
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September 6, 2005
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I am signing this Letter Agreement in my capacity as a shareholder of NFC,
and as an optionholder if I am an optionholder, and not in any other capacity
(including as a director).
This Letter Agreement shall be effective upon acceptance by NPB.
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September 6, 2005
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This Letter Agreement shall terminate concurrently with, and automatically
upon, any termination of the Agreement in accordance with its terms, except that
any such termination shall be without prejudice to NPB's rights arising out of
any willful breach of any covenant or representation contained herein.
Very truly yours,
Number of shares held:
Sole voting power: ________
Shared voting power: ________
Number of shares subject
to stock options: ________
Number of pledged
shares: ________
_____________________________________ ___________________________
Witness: [Name]
Accepted:
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NATIONAL PENN BANCSHARES, INC.
By: ___________________________
Name:
Title: