ex10-3.htm


    EXHIBIT
      10.3

    


    NATIONAL
      PENN BANCSHARES, INC.

    


    LONG-TERM
      INCENTIVE COMPENSATION PLAN

    


    


    


    RESTRICTED
      STOCK UNIT AGREEMENT

    BETWEEN

    NATIONAL
      PENN BANCSHARES, INC.

    


    AND

    


    _______________

    (the
      Grantee)

    


    


    


    


    Date
      of
      Grant:                                           
                   _______________

    


    


    Number
      of Restricted

    Stock
      Units:                                   
                 
                  _____
      RSUs

    


    


    End
      of Restricted Period

    (Vesting
      Period):                                                             January
      24, 2008

    


    


    


    


    


    


    


    
      
        
        

      

      
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    NATIONAL
      PENN BANCSHARES, INC.

    LONG-TERM
      INCENTIVE COMPENSATION PLAN

    


    


    RESTRICTED
      STOCK UNIT AGREEMENT

    


    


    This
      Restricted Stock Unit Agreement
      dated as of ____________, between National Penn Bancshares, Inc. (the
      "Corporation") and ___________________ (the "Grantee"),

     

    WITNESSETH:

    


    1.           Grant
      of Restricted Stock Units

    


    Pursuant
      to the National Penn
      Bancshares, Inc. Long-Term Incentive Compensation Plan (the "Plan"), this
      Agreement confirms the Corporation's grant to the Grantee, subject to the terms
      and conditions of the Plan and to the terms and conditions set forth herein,
      of
      an aggregate of _____ restricted stock units, each unit being the right to
      receive in the future one share of common stock (without par value) of the
      Corporation (“RSUs”).

    


    2.           Terms
      and Conditions

    


    It
      is understood and agreed that the
      grant of RSUs is subject to the following terms and conditions:

    


    (a)           Restricted
      (Vesting) Period.  The restricted period of time is from the date
      of this Agreement through January 24, 2008 (the “Restricted
      Period”).  The time period restrictions will lapse, and the RSUs will
      vest, on January 24, 2008, but only if the Grantee remains in office as a
      director of the Corporation or its subsidiary, National Penn Bank (the “Bank”),
      through the end of the Restricted Period.

    


    (b)           Performance
      Restrictions. In addition to the time restrictions set forth in Section
      2(a), the RSUs are issued subject to the following earnings per share
      performance goals for the Corporation for 2007, as adjusted for the 3% stock
      dividend issued September 30, 2007 (the “Performance Restrictions”), and shall
      only vest if and to the extent that the Performance Restrictions are
      satisfied.  Performance results shall be determined at the end of the
      Restricted Period and shall be interpolated as necessary between the various
      targets to determine vesting at that time:

    


    
      	
              ·  

            	
              Threshold
                - $1.29 per
                share                                                                                                    400

            


    

    


    
      	
              ·  

            	
              Market/Budget
                Target - $1.34 per
                share                                                                              900

            


    

    


    
      	
              ·  

            	
              Stretch
                Target - $1.40 per
                share                                                                                          1,000

            


    

    


    
      	
              ·  

            	
              Optimum
                - $1.45 per
                share                                                                                                   1,100

            


    

     

     

     

    
      
        
        

      

      
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    In
      the
      event of any further stock dividend or stock split affecting the Corporation’s
      common stock, the aforesaid Performance Restrictions shall be adjusted
      appropriately and equitably, as shall be determined by the
      Committee.

    


    (c)           Crediting
      of RSUs to Account.  The RSUs will be credited to an account in
      the name of the Grantee.  Neither the account nor any RSUs credited to
      the account may be sold, transferred, pledged, assigned or otherwise alienated,
      hypothecated or disposed of.  Prior to actual payment of the RSUs in
      shares of the Corporation’s common stock pursuant to Section 2(f), the RSUs
      shall represent an unsecured obligation of the Corporation payable, if at all,
      from the general assets of the Corporation.

    


    (d)           Dividend
      and Voting Rights.  The RSUs shall be entitled to receive
      equivalents of all dividends and other distributions paid with respect to shares
      of the Corporation’s common stock during the Restricted Period and thereafter
      until actual payment is made to the Grantee of the RSUs as issued shares of
      common stock.  Dividend equivalents shall be deemed invested in
      additional RSUs on each dividend payment date, based on the fair market value
      of
      the Corporation’s common stock on the dividend payment date.  RSUs
      shall have no voting rights.

    


    (e)           Forfeiture.   Notwithstanding
      any contrary provision of this Agreement, the balance of the RSUs that do not
      vest at the end of the Restricted Period pursuant to Section 2(a) and 2(b)
      will
      thereupon be forfeited and automatically cancelled at no cost to the
      Corporation.

    


    (f)           Payment
      of RSUs as Stock.   All RSUs that become vested pursuant to
      Section 2(a) and 2(b) shall be paid to the Grantee in actual shares of the
      Corporation’s common stock (one share for each RSU), upon the Grantee’s
      termination of service as a director of the Corporation or the
      Bank.

    


    (g)           Death
      or Disability.   If the Grantee's service as a director of
      the Corporation or the Bank terminates due to death or Disability (as defined
      in
      the Plan), any remaining Restricted Period shall automatically terminate and
      lapse immediately, but the Performance Restrictions shall remain in full force
      and effect.

    


    (h)           Retirement.    If
      the Grantee's service as a director of the Corporation or the Bank terminates
      due to Retirement (as defined in the Plan, including a resignation in accordance
      with the mandatory retirement provisions of the Corporation’s or Bank’s Bylaws),
      any remaining Restricted Period shall automatically terminate and lapse
      immediately, but the Performance Restrictions shall remain in full force and
      effect. RSUs that would otherwise vest under the Performance Restrictions shall
      only vest, pro rata, for that period of time preceding the Grantee’s termination
      of service as a director due to Retirement.

    


    (i)           Transferability.
      All rights with respect to the RSUs shall be exercisable during the Grantee’s
      lifetime only by the Grantee. Prior to the payment of the RSUs in actual shares
      pursuant to Section 2(f), the RSUs shall be transferable only by Will or by
      the
      laws of descent and distribution.

     

     

    
      
        
        

      

      
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    (j)           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 shares of common stock shall occur, the
      number and class of RSUs 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 Grantee.

    


    (k)           No
      Right To Continued Directorship.  This grant of RSUs shall not
      confer upon the Grantee any right to continue as a director of the Corporation,
      the Bank or any other subsidiary, nor shall it interfere in any way with the
      rights of the shareholders of the Corporation or the Board of Directors to
      elect
      and remove directors.

    


    (l)           No
      Rights As Shareholder.  This grant of RSUs shall not confer upon
      the Grantee any rights as a shareholder of the Corporation, and the Grantee
      shall acquire such rights only upon the payment of the RSUs in actual shares
      pursuant to Section 2(f).

    


    (m)           Compliance
      with Law and Regulations.  This grant of RSUs 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.

    


    (n)           Change-in-Control.  If
      any "Change-in-Control" (as defined in the Plan) occurs, the Restricted Period
      shall immediately lapse and the Performance Restrictions shall be deemed
      immediately satisfied in full.

    


    3.           Investment
      Representation

    


    The
      Committee may require the Grantee
      to furnish to the Corporation, prior to the issuance of any shares of common
      stock in payment of the RSUs, an agreement (in such form as such Committee
      may
      specify) in which the Grantee represents that the shares acquired by him or
      her
      are being acquired for investment and not with a view to the sale or
      distribution thereof.

    


    4.           Grantee
      Bound by Plan

    


    The
      Grantee 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.

     

     

    
      
        
        

      

      
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    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 may require as a
      condition precedent to the issuance of any shares of common stock in payment
      of
      the RSUs 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 Grantee 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 and the Grantee has
      executed this Agreement, both as of the day and year first above
      written.

    


    
      
        	
                NATIONAL
                  PENN BANCSHARES, INC.

              	
                GRANTEE

              
	 	 
	
                By:
                  _______________________________

              	
                 ______________________________

              
	
                    J.
                  Ralph Borneman, Jr.

              	
                (Signature)

              
	
                    Chairman,
                  Compensation Committee

              	
                ______________________________

              
	 	
                (Print
                  Name)

              
	 	
                ______________________________

              
	 	
                (Print
                  Address)

              


      

    

     

     

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