Exhibit 10.2

 
NATIONAL PENN BANCSHARES, INC.
TARP RESTRICTION AGREEMENT

 
This TARP RESTRICTION AGREEMENT (this “Agreement”) is made and entered into as
of November 2, 2009, by and between NATIONAL PENN BANCSHARES, INC., a
Pennsylvania business corporation having its principal place of business in
Boyertown, Pennsylvania (the “Company”), and Paul W. McGloin (the “Executive”).
 
BACKGROUND
 
1. Executive is currently employed as a Group Executive Vice President and the
Chief Lending Officer of the Company.
 
2. Executive currently has an Executive Agreement with the Company, dated June
22, 2001, as amended by Amendatory Agreements dated January 27, 2002 and June 5,
2006 (as amended, the “Executive Agreement”).
 
3. In December 2008, the Company issued $150 million of senior preferred stock,
and related common stock purchase warrants, to the U.S. Treasury Department
(“Treasury”) under the Troubled Asset Relief Program Capital Purchase Program
(the “TARP Program”), established under the Emergency Economic Stabilization Act
of 2008 (Pub.L. 110-343, Div. A, enacted October 3, 2008), and amended by the
American Recovery and Reinvestment Act of 2009 (Pub.L. 111-5, enacted February
17, 2009) and subsequent Treasury guidance (the “TARP Interim Final Rules”).
 
4. On December 10, 2008, certain Company employees executed a CPP Clawback and
Parachute Restriction Agreement between the Company and such employees (the
“Prior TARP Restriction Agreement”).
 
5. As required to participate in the TARP Program, the Company must adopt the
Treasury standards for executive compensation and corporate governance, for the
period during which Treasury holds equity or debt securities of the Company
issued under this Program (the “TARP Compliance Period”).
 
6. Under the TARP Program, Treasury’s standards apply to the senior executive
officers (the “SEOs”) of the Company and other “most highly compensated
employees” (as such terms are defined under the TARP Interim Final Rules).
 
AGREEMENT
 
NOW, THEREFORE, as required to participate in the TARP Program, and in
consideration of the mutual promises contained herein, and each intending to be
legally bound, Executive and Company agree as follows:
 
1. Background.  The matters set forth in the “Background” section of this
Agreement are incorporated by reference herein.
 
 
 
 

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2. SEO and Top 5.  During any time period in which Executive is classified by
the Company as (i) an SEO or (ii) one of the next 5 “most highly compensated
employees,” as defined in the TARP Interim Final Rules (the “Top 5”), he or she
agrees as follows:
 
(a) Incentive Compensation Recovery.  Executive agrees that Executive shall
repay to the Company any bonus and incentive compensation paid to Executive
during the TARP Compliance Period, if the payments were based on materially
inaccurate financial statements or any other materially inaccurate performance
metric criteria.  This repayment shall not be limited to a specific recovery
period, material inaccuracies in financial reporting statements, or inaccuracies
that result in accounting restatements.  The recovery encompasses all incentive
compensation paid to Executive as a result any determination of achievement of a
performance metric that is later determined to have been based on material
inaccuracies related to financial reporting.  For purposes of this paragraph and
without limiting the foregoing, financial statements or performance metric
criteria are treated as being materially inaccurate with respect to Executive
if, Executive either knowingly engages in providing inaccurate information or
knowingly fails to timely correct inaccurate information relating to those
financial statements or performance metrics;
 
(b) Golden Parachute Restrictions.  Executive agrees to forfeit all “Golden
Parachute” payments, whether Executive is entitled to such payment, or solely
obtains a legally enforceable right to such payment during the TARP Compliance
Period. “Golden Parachute” payments are defined as payments resulting from
Executive’s departure from the Company for any reason (except for services
performed or benefits already accrued), and payments made on account of the
Company’s “change in control” (as defined in 26 CFR 1.280G-1, Q&A-27 through
Q&A-29 or as a change in control event as defined in 26 CFR
1.409A-3(i)(5)(i)).  Such payments shall be determined in a manner that is
consistent with the TARP Interim Final Rules; and
 
(c) Gross-Up Payment Restrictions.  Executive agrees to forfeit all “Gross-Up”
payments or legally enforceable rights to such payments, during the TARP
Compliance Period.  “Gross-up” payments are defined as any reimbursement by the
Company of taxes owed to Executive with respect to any compensation, provided
that such payment does not include a payment under an agreement or other
arrangement that provides payments intended to compensate Executive for some or
all of the excess of the taxes actually imposed by a foreign jurisdiction.
 
3. SEO and Top 20.  During any time period in which Executive is classified by
the Company as (i) an SEO or (ii) one of the next 20 “most highly compensated
employees,” as defined in the TARP Interim Final Rules (the “Top 20”), he or she
agrees as follows:
 
(a) Executive shall comply with the Incentive Compensation Recovery provision in
this Agreement, as described under Section (2)(a) above; and
 
(b) Executive shall comply with the Gross-Up Payment Restrictions provision in
this Agreement, as described under Section (2)(c) above.
 
 
 
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4. Most Highly Compensated Employees.  During any time period in which Executive
is classified by the Company as one the five “most highly compensated employees”
of the Company, as defined in the TARP Interim Final Rules (the “5 Most Highly
Compensated Employees”), he or she shall forfeit the payment or accrual of any
bonuses or retention awards accrued after June 15, 2009, except for restricted
stock, which vests no earlier than in 25% vesting tranches conditioned on 25% of
total senior preferred stock being repurchased from Treasury, until the final
preferred stock is repurchased (as provided in the TARP Interim Final Rules)
during the TARP Compliance Period, and has a value of no more than one-third of
Executive’s total “annual compensation” (as defined under the TARP Interim Final
Rules) for that fiscal year (as valued using grant-date fair market
value).  Notwithstanding the foregoing, any bonus accrued before June 15, 2009
shall be payable within 30 days following the earlier of (i) March 15th of the
first year in which such employee is not a 5 Most Highly Compensated Employee or
(ii) the end of the TARP Compliance Period.
 
5. Consulting and Noncompetition Agreement.  If Executive is voluntarily or
involuntarily terminated, and Executive executes and does not revoke a Release
in the form attached hereto as Exhibit A, at the option of the Executive, the
Company hereby agrees that Executive and the Company shall enter into a
Consulting and Noncompetition Agreement, substantially in the form set forth as
Exhibit B hereto.
 
6. Governing Law.  This Agreement shall be governed by and construed in
accordance with the domestic internal law of the Commonwealth of Pennsylvania.
 
7. Termination of this Agreement.  The Agreement shall automatically terminate
and become null and void upon the expiration of the TARP Compliance Period.
 
8. Termination of the Prior TARP Restriction Agreement.  Effective concurrently
with the execution and delivery of this Agreement, any Prior TARP Restriction
Agreement dated December 10, 2008 between the Company and Executive is hereby
rescinded and is of no further force and effect.
 
 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
 

 
NATIONAL PENN BANCSHARES, INC.
       
By:
/s/ Glenn E. Moyer
 
 
Name:  Glenn E. Moyer
Title:    President & CEO
     

 
WITNESS:
 
/s/ Virginia R. Sherry
/s/ Paul W. McGloin
 
PAUL W. MCGLOIN

 

 
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EXHIBIT A

NATIONAL PENN BANCSHARES, INC.
CONFIDENTIAL RELEASE AND WAIVER OF CLAIMS AGREEMENT (“Release”)

1.  
Release of Claims.  In exchange for the benefits described in paragraph 2, I,
Paul W. McGloin (“Executive”), hereby release and forever discharge National
Penn Bancshares, Inc., a Pennsylvania corporation, its subsidiaries and
affiliates (the “Company” or “National Penn”), any and all of their respective
employee benefit plans, fringe benefit plans or programs, and any and all of
their respective present and past officers, directors, shareholders, employees,
agents and representatives, and the successors and assigns of each from any and
all manner of claims, suits, demands, actions, causes of action, administrative
claims, liability, claims for damages, class action claims or other claims made
on my behalf whatsoever that I, my heirs, representatives, agents, successors,
guardians, trustees or assigns ever had, have now or may have including, but not
limited to, any claims arising from or relating to my employment with the
Company, any pending applications for employment with the Company, or the
termination of my employment with the Company including, but not limited to:
Title VII of the Civil Rights Act of 1964 and the Civil Rights Act of 1991; the
Americans With Disabilities Act; the Pennsylvania Human Relations Act; the Age
Discrimination in Employment Act; the Older Workers Benefit Protection Act
(“OWBPA”); the Family and Medical Leave Act; Sections 1981 through 1988 of Title
42 of the United States Code; the Employee Retirement Income Security Act of
1974; and all other federal, state or local laws of a similar nature to any of
the foregoing enumerated laws and any amendments to the foregoing statutes or
any other federal, state or local law; any common law claim; breach of contract
claim; claim for personal injury, wrongful discharge, public policy, negligence,
infliction of emotional distress, whistleblower, retaliation, negligent hiring
or retention, or any form of tort, whether negligent, reckless or intentional,
and any claim for attorneys’ fees and costs, arising in law or equity, whether
known, suspected or unknown, and however originating or existing, from the
beginning of time to the date of my execution of this Release.  As required
under OWBPA, I acknowledge that I have received the information relating to
other employees that have been terminated in connection with a group
termination, attached hereto as Exhibit A.

 
In addition, with the exception of unemployment and worker's compensation
claims, I waive any right to any individual monetary or economic recovery or
equitable relief against the Company in any administrative proceeding or in any
action, lawsuit, hearing or other proceeding instituted by any agency, person or
entity, from the beginning of time to the date of my execution of this
Release.  Notwithstanding the foregoing, this Release excludes (and I shall
retain any benefits to which I am entitled) under the Company’s Executive
Incentive Plan, Long-Term Incentive Compensation Plan, Defined Benefit Pension
Plan or Defined Contribution (401(k)) Capital Accumulation Plan.
 
Notwithstanding the foregoing, this Section shall not limit Executive’s right to
challenge the enforceability of the waiver and release contained herein under
OWBPA with respect to claims under the Age Discrimination in Employment Act or
from filing a charge of discrimination with the United States Equal Employment
Opportunity Commission (“EEOC”), but Executive will not be entitled to any
monetary or other relief from the EEOC or from any Court as a result of
litigation brought on the basis of or in connection with such charge except if
and to the extent that the release and waiver contained in this Section is held
to be invalid or unenforceable (in which event, National Penn will be entitled
to restitution or set off for the amounts paid to Executive hereunder, as and to
the extent determined by the court).  Executive acknowledges and agrees that,
but for providing this waiver and release, Executive would not be receiving the
amount being provided to Executive under paragraph 2 of this Release.
 
 
 
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2.  
Release Consideration.  In consideration for my execution of this Release, the
Company agrees to make payments to me and/or make benefits available to me
pursuant to the Company’s Consulting and Noncompetition Agreement (the
“Consulting Agreement”), at the time and in the form set forth in the Consulting
Agreement.

 
I acknowledge that in the absence of my execution of this Release, I would not
be entitled to certain of the benefits described in this paragraph 2.  I
acknowledge further that such benefits are adequate and satisfactory
consideration to me for entering into this Release.
 
3.  
Successors and Assigns.  The Company’s rights under this Release shall inure to
the benefit of and shall be binding upon the successors and assigns of the
Company.  I shall not be entitled to assign any of my rights or obligations
under this Release.

 
4.  
Governing Law.  This Release is made and entered into in the accordance with the
laws of the Commonwealth of Pennsylvania and shall in all respects be
interpreted, enforced and governed under the laws of the Commonwealth of
Pennsylvania.

 
5.  
Entire Agreement.  This Release contains the entire agreement of the parties
with respect to the subject matter hereof and merges all prior negotiations,
agreements and understandings, if any.  No modification, release, discharge or
waiver of any provision of this Release shall be of any force or effect unless
made in writing and signed by me and the Director of Human Resources of the
Company and specifically identified as a modification, release or discharge of
this Release.  If any term, clause or provision of this Release shall for any
reason be adjudged invalid, unenforceable or void, the same shall not impair or
invalidate any of the other provisions of this Release, all of which shall be
performed in accordance with their respective terms.

 
6.  
Acknowledgments.  By signing this Release, I acknowledge and agree that:

 
(a)  
I have carefully read and understood all of the provisions and terms of this
Release;

 
(b)  
I have signed this Release knowingly and voluntarily;

 
(c)  
the Company has advised me in writing to consult with counsel prior to signing
this Release;

 
(d)  
the Company has provided me at least forty-five (45) days (“Consideration
Period”) to consider this Release and I have not been pressured or coerced to
waive this Consideration Period;

 
 
 
 
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(e)  
I understand that I have seven (7) days (“Revocation Period”) after I sign this
Release to elect to revoke the Release and acknowledge that I have not been
pressured or coerced to waive this Revocation Period;

 
(f)  
I understand that this Release is made in compromise of any disputed claims in
order to avoid the expense and inconvenience of litigation and does not
constitute an admission of liability by the Company with regard to the violation
of any law, statute, regulation, or ordinance;

 
(g)  
In signing this Release, I have not relied on any representations or statements,
whether oral or written, other than the express language contained herein; and

 
(h)  
I acknowledge that I have had the right to negotiate over the terms of this
Release and that this Release shall not be construed as drafted solely by any
member of the Company; rather, this Release shall be construed as mutually
agreed upon terms which were the product of good faith and arms length
negotiations between equal parties, and this Release is not unconscionable,
unfair, the product of unfair bargaining power or a contract of adhesion.

 
Any notice of revocation must be addressed and timely delivered to the Director
of Human Resources of the Company.
 
I HAVE CAREFULLY READ THIS ENTIRE RELEASE.  I UNDERSTAND THAT BY SIGNING THIS
RELEASE, I AM WAIVING ALL CLAIMS AGAINST THE COMPANY RELATING TO MY EMPLOYMENT
WITH THE COMPANY AND THE TERMINATION OF MY EMPLOYMENT WITH THE COMPANY.
 

IN WITNESS WHEREOF, and intending to be legally bound hereby, I have executed
the foregoing Release effective this ___ day of ___________________.

WITNESS:
 
________________________________
_______________________________
 
PAUL W. MCGLOIN
             
NATIONAL PENN BANCSHARES, INC.
         
____________________________
 
Name:
 
Title:

 
 

 
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EXHIBIT A

EMPLOYEES ELIGIBLE FOR RELEASE

Job Title
Age
# Selected
# Not Selected
                                                               

 

 
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EXHIBIT B

NATIONAL PENN BANCSHARES, INC.
CONSULTING AND NONCOMPETITION AGREEMENT

This Consulting and Noncompetition Agreement (this “Agreement”) is being entered
into as of as of ___________ ___, 20__, by and between National Penn Bancshares,
Inc., a Pennsylvania corporation (“National Penn”), and Paul W. McGloin (the
“Consultant”).

RECITALS:
WHEREAS, the Consultant desires to provide the services described herein subject
to the terms and conditions set forth below:

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:

1. Consultancy.  During the period beginning on the date on which Consultant’s
employment with National Penn is terminated (the “Termination Date”) and for a
period of twelve (12) months thereafter (the “Consulting Period”), the
Consultant shall undertake to provide his personal advice and counsel to
National Penn and its subsidiaries and affiliates in connection with the
business of National Penn and its subsidiaries, including, but not limited to:
 
(a) providing continued services in the same manner as when he was employed on a
permanent basis as necessary to ensure a proper transition of his former job
function to his replacement;
 
(b) consulting with National Penn regarding the operations and customer
relationships of National Penn and its subsidiaries;
 
(c) providing introductions to customers and providing personal services similar
to those the Consultant is currently providing National Penn; (collectively the
“Consulting Services”), subject to the terms and conditions which are set forth
herein.  The Consultant shall provide such Consulting Services as may be
requested from time to time by either the President and Chief Executive Officer
or Senior Executive Vice President and Chief Operating Officer of National
Penn.  During the Consulting Period, the Consultant shall be available to devote
up to 30 hours per week of his business time, attention, skills and efforts
(other than during holidays, vacations and periods of illness) to the business
and affairs of National Penn and its subsidiaries and affiliates and shall use
his reasonable best efforts to promote the interests of National Penn and its
subsidiaries and affiliates.  Such Consulting Services may be provided in
person, telephonically, electronically or by correspondence as reasonably
determined by National Penn.  The Consultant shall be available for meetings at
the principal executive offices of National Penn at such times as National Penn
shall reasonably require.
 
 
 
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(d) During the Consulting Period, the Consultant shall be treated as an
independent contractor and shall not be deemed to be an employee of National
Penn or any subsidiary or affiliate of National Penn.
 
(e) The obligations of National Penn under this Agreement are subject to and
contingent upon the Consultant continuing to be employed by National Penn from
the date hereof until the Termination Date.
 
2. Non-Disclosure of Confidential Information. Except in the course of
performing the Consulting Services hereunder, and in the pursuit of the business
of National Penn or any of its affiliates, the Consultant shall not, except as
required by law, at any time during or following the Consulting Period, disclose
or use any confidential information or proprietary data of National Penn or any
of its affiliates or predecessors, unless such confidential information or
proprietary data become publicly known through no fault of the
Consultant.  Without limiting the generality of the foregoing, the Consultant
agrees that all information concerning the identity of the customers of National
Penn and its affiliates and the relations of such entities with their customers
is confidential information.  This Section 2 shall survive the termination or
expiration of the Consulting Period.
 
3. Non-Competition Provisions.  The Consultant agrees that during the Consulting
Period, the Consultant will not (i) without the prior written consent of
National Penn (which consent may be given at National Penn’s discretion, but not
unreasonably withheld), directly or indirectly, engage in, become interested in,
or become associated with, in the capacity of employee, consultant, director,
officer, owner, principal, agent, trustee or in any other capacity whatsoever,
any proprietorship, partnership, corporation, enterprise or entity located
within a fifty (50) mile radius from Boyertown, PA, which proprietorship,
partnership, corporation, enterprise or other entity is, or may be deemed to be
by National Penn, competitive with any business carried on by National Penn or
its affiliates including but not limited to entities which lend money and take
deposits (in each case, a “Competing Business”), provided, however, that this
provision shall not prohibit the Consultant from owning bonds, voting and
non-voting preferred stock or up to five percent (5%) of the outstanding common
stock of any Competing Business if such common stock is publicly traded, (ii)
solicit or induce, or cause others to solicit or induce, any employee of
National Penn or any of its affiliates to leave the employment of such entities,
or (iii) without the prior written consent of National Penn (which consent may
be given at National Penn’s discretion, but not unreasonably withheld)solicit
(whether by mail, telephone, personal meeting or any other means, excluding
general solicitations of the public that are not based in whole or in part on
any list of customers of National Penn or any of its affiliates) any customer of
National Penn or any of its affiliates to transact business with any other
entity, whether or not a Competing Business, or to reduce or refrain from doing
any business with National Penn or its subsidiaries, or interfere with or damage
(or attempt to interfere with or damage) any relationship between National Penn
or its affiliates and any such customers.
 
4. Compensation.  In consideration of the obligations and commitments of the
Consultant under this Agreement, including Sections 1, 2 and 3 hereof, National
Penn shall pay to the Consultant twelve equal installment payments in amounts
equal to $19,583.33 per month on the last business day of each month during the
Consulting Period.
 
 
 
 
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5. Benefits.  If Consultant was participating in medical and dental coverage
under a Company-sponsored plan immediately prior to the Termination Date,
Consultant will receive such medical and dental benefits during the Consulting
Period, commencing as of the Termination Date, subject to Consultant’s continued
payment of the applicable monthly premiums at active Company employee
rates.  Health benefits to which Consultant is entitled by law under the
Consolidated Omnibus Budget Reconciliation Act, as amended (“COBRA”) will
commence immediately upon the cessation of the Consulting Period.
 
6. Successors and Assigns.
 
(a) During the Consulting Period, National Penn will require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of its business and/or assets, by
agreement in form and substance satisfactory to the Consultant, expressly,
absolutely and unconditionally to assume and agree to perform this Agreement in
the same manner and to the same extent that National Penn would be required to
perform it if no such succession or assignment had taken place.  Any failure of
National Penn to obtain such agreement prior to the effectiveness of any such
succession or assignment during this twelve-month period shall be a material
breach of this Agreement.
 
(b) This Agreement and all rights of the Consultant shall inure to the benefit
of and be enforceable by the Consultant’s personal or legal representatives,
estate, executors, administrators, heirs and beneficiaries.  In the event of the
Consultant’s death, any amounts accrued and unpaid through the date of death
shall be paid to the Consultant’s estate, heirs and representatives.  Except as
provided in this Section 6, no party may assign this Agreement or any rights,
interests, or obligations hereunder without the prior written approval of the
other party.  Subject to the preceding sentence, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
 
7. Enforcement.  This Agreement shall be construed, enforced and interpreted in
accordance with and governed by the laws of the Commonwealth of Pennsylvania,
without reference to its principles of conflict of laws, except to the extent
that federal law shall be deemed to preempt such state laws.
 
8. Amendment.  This Agreement may be amended or modified at any time by a
written instrument executed by the parties.
 
9. Waiver. Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition.  A waiver of any provision of this Agreement must be made
in writing, designated as a waiver, and signed by the party against whom its
enforcement is sought.  Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
 
10. Counterparts.  This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, and all of which shall constitute one
and the same Agreement.
 
 
 
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11. Headings and Construction.  The headings of sections in this Agreement are
for convenience of reference only and are not intended to qualify the meaning of
any section.  Any reference to a section number shall refer to a section of this
Agreement, unless otherwise stated.
 
12. Entire Agreement. This instrument contains the entire agreement of the
parties relating to the subject matter hereof, and supersedes in its entirety
any and all prior agreements, understandings or representations relating to the
subject matter hereof, except that the Executive Agreement shall remain in
effect as amended by this Agreement.
 
IN WITNESS WHEREOF, National Penn has caused this Agreement to be executed by
its duly authorized officer, and the Consultant has signed this Agreement, all
as of the date first written above.

 
NATIONAL PENN BANCSHARES, INC.
     
________________________________
 
Name:
 
Title:
       
WITNESS:
 
_______________________________
_________________________________
 
PAUL W. MCGLOIN

 

 
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