Document:

Exhibit 10.1

Exhibit
10.1

 

[FORM
OF LETTER AGREEMENT]

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

National
Penn Bancshares, Inc.

September
6, 2005

Page
2

 

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 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;

National
Penn Bancshares, Inc.

September
6, 2005

Page
3

 

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.

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.

National
Penn Bancshares, Inc.

September
6, 2005

Page
4

 

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.

[THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

National
Penn Bancshares, Inc.

September
6, 2005

Page
5

 

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:

NATIONAL
PENN BANCSHARES, INC.

By:___________________________

Name:

Title:Exhibit 4.1

                                             September 1, 2005

Mr. Jack Kleinert
Chief Executive Officer
Velocity Asset Management, Inc
3100 Route 138 West
Wall, NJ 07719

         Re:  Business Advisory Agreement

Dear Jack:

This letter confirms our mutual understanding and agreement ("Agreement")
relating to the business advisory fees ("Fees") payable to Lomond International,
Inc. ("LI"), a North Carolina corporation, by Velocity Asset Management, Inc
("Company"), a Delaware corporation, for LI's business advisory services
rendered in connection with any equity and/or debt investment, merger,
acquisition, partnership, joint venture, investment, strategic alliance or any
other business combination (any such transaction is referred to herein as a
"Transaction"), entered into by the Company with a business entity and/or
individual ( "Entity") that was introduced, directly or indirectly, to the
Company by LI.

         LI hereby agrees to provide such business advisory services to the
Company on a "best efforts, non-exclusive" basis for a term ("Term") of 12
months in accordance with the terms and conditions of this Agreement. LI makes
no assurances that the provision of its business advisory services hereunder
will be beneficial to the Company under any circumstances.

         It is further understood and agreed by the parties hereto that the
Company is entering into this Agreement for the purpose of inducing LI to
provide business advisory services in connection with the Company's business
interests with investment banking firms, brokerage firms, investors, financiers,
buyers and/or sellers who may participate in a Transaction with the Company.
While LI represents and warrants to use its best efforts to provide business
advisory services, it is specifically understood that no assurances can be made
as to the benefit to the Company of such services.

         Now, therefore, in consideration of the mutual promises and covenants
made herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto the parties
hereto hereby agree as follows:

         1.  The Company shall pay to LI the business advisory Fees related to
its business advisory services upon the Company consummating a Transaction
during the Term of this Agreement or within two (2) years after the date of the
termination of this Agreement with an Entity introduced by LI to the Company
during the term of this Agreement. The Company acknowledges that during the Term
of this Agreement and the two years that follow, the Company shall have an
affirmative obligation to promptly notify LI when and if it is formally
negotiating with an Entity, entering into a Letter of Intent with an Entity
and/or consummating a Transaction with an Entity.

         2.  LI shall be deemed to have introduced the Entity to the Company if
(a) the Company has no prior knowledge of the interest by the Entity in the
proposed Transaction and/or (b) LI provides an introduction to a representative
of such Entity who is in a position to evaluate the Transaction and whose normal
function is to recommend or commit to such Transactions on behalf of such
Entity.
<PAGE>

         3.  In the event of any equity and/or debt investment, merger,
acquisition, partnership, joint venture or other business combination by and
between the Company and the Entity, in which LI was instrumental in introducing,
directly or indirectly, to the Company, the Company shall pay to LI the business
advisory fee equal to two percent (2%) of the Gross Aggregate Consideration. The
fee shall be paid in either cash or common stock, at the option of the Company
and shall be due and owing on the date and at the time the Transaction is first
consummated. If the Company elects to pay LI's fee in common stock, then the
value of the common stock will be determined by averaging the closing bid price
of the Company's common stock for the 10 trading days prior to the closing of
the Transaction.

         As an inducement to enter into this Agreement, the Company agrees to
sell to Lomond, a warrant to purchase Fifty Thousand (50,000) shares of the
Company's common stock with an exercise price of $2.50 per share, and an
expiration date of March 31, 2009, for an aggregate purchase price of $2,500, at
the time of the signing of this Agreement. All of the other terms of this
warrant will be identical to the $2.50 warrants currently outstanding by the
Company. The Warrant will participate in all forward and reverse stock splits
and stock dividends and will have a one-time piggy-back registration right on
the warrant and the shares of common stock underlying the Warrant. These
warrants have no risk of forfeiture and therefore under GAAP guidelines, the
Company agrees to expense the issuance of these warrants at the time of
issuance, in an amount calculated under the Black-Sholes Method.

         Not withstanding any other provisions in the Agreement, LI has
introduced the Company to a business opportunity in California. The Company
agrees that if a Transaction or series of Transactions are contemplated, prior
to the consummation of any Transaction, the Company and LI will negotiate in
good faith, a fee payable to LI, based on a percentage of the gross operating
profit derived from the Transaction for a period in the future to be determined.

         4.   The Term "Gross Aggregate Consideration" as used in this Agreement
and the appended Schedule A means:

         (a)  in the event of a purchase of the Company's assets, the price paid
              for the assets acquired and the interest bearing indebtedness
              assumed by an Entity;
         (b)  in the event of a purchase of the Company's stock or a merger with
              an Entity, the price paid to the selling stockholders plus the
              interest bearing indebtedness assumed by the Company or Entity;
         (c)  in the event of an investment in an Entity, the total investment
              in the Entity by the Company; or
         (d)  in the event of an investment by an Entity in the Company of any
              and all currency, full fair market value of securities, and any
              other assets received from any combination of the above accepted
              by the Company.

         In determining the Gross Aggregate Consideration paid in shares of
stock or other property, such stock or property shall be valued at its fair
market value as determined in good faith by the Company. .

         5.  LI agrees that it will use its best efforts to assist the Company
with its business advisory services. However, LI is not an agent of the Company.
Rather, LI is an independent contractor and business advisor who is doing
business with the Company as a non-exclusive, independent business advisor. Both
the Company and LI recognize and acknowledge that LI has no authority to execute
any agreements on behalf of the Company.

         6.  If the Company was aware of an Entity from a source other than LI
prior to the date that LI provides an introduction or otherwise makes the
Company aware of the Entity's interest, the Company must provide LI with proof
of this fact within 15 business days. If the Company does not provide such proof
within this time period, the Company will be deemed to have expressly waived any
objection it has to paying LI the business advisory Fees in accordance with this
Agreement. If, however, the Company does provide such proof within the time
specified, the Company will have no obligation to LI to pay the business
advisory Fees with respect to the introduction of that particular Entity.
<PAGE>

         7.  During the Term of this Agreement, LI shall be reimbursed by the
Company for its reasonable expenses, which are related to the rendering of the
business advisory services pursuant to this Agreement, including, but not
limited to expenses for business advisory services, due diligence, travel and
communications, provided such expenses have been approved in advance by the
Company. All requests for expenses shall be reimbursed to LI within 30 days of
itemized statement presentation to the Company upon the closing of a
Transaction. LI is responsible for its own legal, accounting and related costs
and expenses.

         8.  Either party hereto may terminate this Agreement at any time upon
30 days written notice, without any liability or continuing obligation, except
that the termination of this Agreement shall not affect the business advisory
Fees payable to LI as provided in paragraph 1 herein, nor shall it affect the
Company's obligation to reimburse LI its reasonable expenses as identified in
paragraph 7 herein.

         9.  This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, the jurisdiction of incorporation of the
Company. This Agreement is the sole and entire agreement between the parties
hereto pertaining to its subject matter and supersedes all prior oral and
written agreements, representations and understandings of the parties hereto. No
modifications of the Agreement shall be binding unless agreed to in writing by
the parties hereto. This Agreement shall be binding on and inure to the benefit
of the successors and assigns of the parties hereto provided that neither this
Agreement nor any of LI's rights hereunder may be assigned by LI without the
prior written consent of the Company.

                                               Very truly yours,

                                               /s/ MARTIN A. SUMICHRAST
                                               ------------------------

                                               Martin A. Sumichrast
                                               Managing Director

AGREED AND ACCEPTED:

VELOCITY ASSET MANAGEMENT, INC.

By: /s/ JOHN C. KLEINERT                    Dated: 9/1/2005
    --------------------                           --------
    Jack Kleinert
    Chief Executive Officer

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