Document:

EX-10.60

 Exhibit 10.60 

Execution Version 
 SECOND
AMENDMENT TO THE 
 THIRD AMENDED AND RESTATED SHAREHOLDERS AGREEMENT AND 

CONVERSION AGREEMENT 
 This SECOND
AMENDMENT TO THE THIRD AMENDED AND RESTATED SHAREHOLDERS AGREEMENT AND THE CONVERSION AGREEMENT (collectively, this “Amendment”), dated as of January 17, 2014, is by and among (i) Asian Coast Development (Canada) Ltd., a
British Columbia corporation (the “Company”), (ii) Harbinger II S.à r.l., Blue Line ACDL, Inc., Breakaway ACDL, Inc., Credit Distressed Blue Line Master Fund, Ltd., Global Opportunities Breakaway Ltd., Harbinger China
Dragon Intermediate Fund, L.P., Harbinger Capital Partners Master Fund I, Ltd. (as applicable) and Harbinger Capital Partners Special Situations Fund, L.P. (as applicable), (iii) PNK Development 18, LLC, a Delaware limited liability
company and a subsidiary of Pinnacle Entertainment, Inc., a Delaware corporation (such subsidiary, “Pinnacle”) and (iv) PNK Development 31, LLC, a Delaware limited liability company and a subsidiary of Pinnacle
Entertainment, Inc., and is being entered into in order to amend (a) the Third Amended and Restated Shareholders Agreement dated as of May 24, 2013 (the “Shareholders Agreement”), as amended on November 21, 2013,
by and among the parties and (b) the Conversion Agreement (as herein below defined). 
 WHEREAS: 

 

	A.	The Company, Harbinger II S.à r.l. and Global Opportunities Breakaway Ltd. entered into a Convertible Loan Agreement dated as of January 17, 2014 (the “January 2014 Loan Agreement”); and

  

	B.	The parties wish to amend the Shareholders Agreement and the Conversion Agreement to, inter alia, provide Pinnacle with lookback protection with respect to the January 2014 Loan Agreement. 

NOW THEREFORE, in consideration of the mutual covenants and promises contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows: 
  

	1.	Definitions. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Shareholders Agreement. 

 

	2.	Amendments to the Shareholders Agreement. 

  

	(a)	Section 6.1(a)(vi) of the Shareholders Agreement is hereby deleted in its entirety and replaced with the following: 

“(vi) issue or sell any capital stock of any class or series or any other securities of the Company, or issue or grant any warrants,
rights or options, or securities that are exchangeable for, or convertible into, shares of the Company’s capital stock, except for security issuances resulting from rights granted as of the date hereof or contemplated herein (including without
limitation, (A) the grant or exercise of (1) the Pinnacle Option, (2) the Backstop Warrants, (3) the May 2013 Warrants, (4) the Alternate May 2013 Warrants, (5) the November 2013 Warrants, (6) the Alternate
November 2013 Warrants, (7) the January 2014 Warrants, (8) the Alternate January 2014 Warrants or (9) the Pinnacle Backstop Warrants or Alternate Backstop Warrants, (B) top-up issuances pursuant to the 2011 Harbinger Subscription
Agreement or the Pinnacle Subscription Agreement, (C) the issuance, sale, grant, exercise, conversion or exchange of securities pursuant to any Future Funding or Replacement Funding, (D) the exercise of options or warrants 

 outstanding as of the date hereof or (E) the conversion of convertible securities
outstanding as of the date hereof);” 
  

	(b)	Section 6.4(e) (Zero Consideration Issuance Protection Rights) of the Shareholders Agreement is hereby deleted in its entirety and replaced with the following: 

“(e) Zero Consideration Issuance Protection Rights. Harbinger, on behalf of itself and its Entity Affiliates, agrees that any
Harbinger Zero Consideration Rights shall terminate and be of no further force or effect upon (i) the consummation of a Qualified IPO, unless and to the extent that Harbinger and Pinnacle mutually agree in writing that such rights should not be
terminated upon the consummation thereof, or (ii) the conversion of all Series V Preferred Shares and Class VI Preferred Shares in a Qualifying Conversion. Harbinger, on behalf of itself and its Entity Affiliates, further agrees that
(i) neither the issuance nor exercise of the Pinnacle Option, any Pinnacle Backstop Warrant, any Additional Backstop Warrant, any Alternate Backstop Warrant, any May 2013 Warrant, any Alternate May 2013 Warrant, any November 2013 Warrant, any
Alternate November 2013 Warrant, any January 2014 Warrant or any Alternate January 2014 Warrant is a zero consideration issuance and (ii) neither such issuance or such exercise shall give rise to any anti-dilution adjustment, zero consideration
adjustment or other similar anti-dilution or zero consideration equity adjustment or equity issuance rights in favor of Harbinger or any of its Entity Affiliates.” 
  

	(c)	Section 6.7 (Related Provisions) of the Shareholders Agreement is hereby deleted in its entirety and replaced with the following: 

“(a) In case the Company shall propose (i) to pay any dividend, make any interest payment or other payment or distribution in respect
of any Backstop Advances, Additional Backstop Warrants, May 2013 Advances, May 2013 Warrants, November 2013 Advances, November 2013 Warrants, January 2014 Advances, January 2014 Warrants, Common Shares or Class VII Non-Voting Shares, in cash or in
any form other than additional Securities (excluding interest accruals contemplated by the Backstop Loan Agreement, the May 2013 Loan Agreement, the November 2013 Loan Agreement and the January 2014 Loan Agreement), (ii) any repurchase,
retirement, redemption, refinancing, exchange, conversion or other similar action with respect to any Backstop Advances, Additional Backstop Warrants, May 2013 Advances, May 2013 Warrants, November 2013 Advances, November 2013 Warrants, January 2014
Advances, January 2014 Warrants, Common Shares or Class VII Non-Voting Shares, (iii) to effect any reclassification or capital reorganization, (iv) to effect any consolidation, merger or sale, organic change, transfer or other disposition
of all or substantially all of its property, assets or business, or (v) to effect the liquidation, dissolution or winding up of the Company, then in each such case, at least twenty (20) Business Days before such action, the Company shall
deliver to Pinnacle a written notice of such proposed action, which shall specify the date on which a record is to be taken for the purposes of such dividend, interest or other payment or distribution or rights, or the date on which such repurchase,
retirement, redemption, exchange, conversion or other similar action, refinancing, reclassification, reorganization, consolidation, merger, sale, organic change, transfer, disposition, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of any Backstop Advances, Additional Backstop Warrants, May 2013 Advances, May 2013 Warrants, November 2013 Advances, November 2013 Warrants, January 2014 Advances, January 2014 Warrants, Common Shares or
Class VII Non-Voting Shares, if any such date is to be fixed, and shall also set forth such facts with respect thereto as shall be reasonably necessary to indicate the effect of such action on any Backstop Advances, Additional Backstop Warrants, May
2013 Advances, May 2013 Warrants, November 2013 Advances, November 2013 Warrants, January 2014 Advances, January 2014 Warrants, Common Shares or Class VII Non-Voting Shares. 

(b) In case Harbinger or its Entity Affiliates shall propose to sell, transfer or otherwise dispose of all or a portion of its Backstop
Advances, Additional Backstop Warrants, May 2013 Advances, May 2013 Warrants, November 2013 Advances, November 2013 Warrants, January 2014 Advances or January 2014 Warrants, then in each such case, at least twenty-five (25) Business Days before
such action, Harbinger shall deliver to Pinnacle a written notice of such proposed action. This twenty-five (25) Business Day 

  
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 notice period shall run concurrently with the time periods set forth in the various Transfer
related provisions set forth in Article 3. 
 (c) The Company shall take all such action as may reasonably be required to give
effect to any assignment undertaken in accordance with this Section 6.7, the Backstop Loan Agreement, the relevant Additional Backstop Warrants, the May 2013 Loan Agreement, the relevant May 2013 Warrants, the November 2013 Loan
Agreement, the relevant November 2013 Warrants, the January 2014 Loan Agreement and the relevant January 2014 Warrants. 
 (d) For purposes
of clarity, Pinnacle’s right to acquire Backstop Assets, May 2013 Assets, November 2013 Assets and January 2014 Assets from Harbinger and its Entity Affiliates shall be governed by Section 6.5, Section 6.6,
Section 6.7, Section 6.8 (in the case of Backstop Assets), Section 6.11 and Section 6.12, and not Section 6.2 of this Agreement.” 

 

	(d)	The following section is added to Article 6 (Consent Rights and Additional Covenants) of the Shareholders Agreement as the new section 6.12 (January 2014 Loan Agreement Lookback Protection):

 “Section 6.12 January 2014 Loan Agreement Lookback Protection 

(a) During the January 2014 Lookback Period, Pinnacle (together with its Entity Affiliates) shall have the right to require each January 2014
Subscriber to assign to Pinnacle up to the January 2014 Proportionate Amount of all January 2014 Advances made by, or for and on behalf of, such January 2014 Subscriber as calculated below: 

(i) up to but not including the First January 2014 Anniversary, Pinnacle (together with its Entity Affiliates) shall have
the right, by delivering written notice to the Harbinger Agent, to require each January 2014 Subscriber to assign to Pinnacle up to the January 2014 Proportionate Amount of all January 2014 Advances made by, or for and on behalf of, such January
2014 Subscriber; and 
 (ii) from the First January 2014 Anniversary up to and including the Third January 2014 Anniversary,
Pinnacle (together with its Entity Affiliates) shall have the right, by delivering written notice to the Harbinger Agent, to require each January 2014 Subscriber to assign to Pinnacle up to the Sliding Proportionate January 2014 Amount of all
January 2014 Advances made by, or for and on behalf of, such January 2014 Subscriber. For purposes of this subsection, the “Sliding Proportionate January 2014 Amount” means an amount determined by multiplying (A) the January
2014 Proportionate Amount by (B) the quotient obtained by dividing (1) the total number of days between (and including) (x) the date of exercise of Pinnacle’s right to purchase the Sliding Proportionate January 2014 Amount and
(y) the Third January 2014 Anniversary, by (2) seven hundred and thirty (730). Such adjustment to the January 2014 Proportionate Amount in arriving at the Sliding Proportionate January 2014 Amount shall be referred to as the
“Sliding January 2014 Adjustment”. 
 (b) Solely for purposes of this Section 6.12: 

(i) the “January 2014 Proportionate Amount” applicable to an assignment to Pinnacle and its Entity Affiliates
pursuant to this Section 6.12 of a portion of all January 2014 Advances made by, or for and on behalf of, a January 2014 Subscriber shall equal: 
  

	 	(A)	twenty-seven percent (27%), multiplied by  

  

	 	(B)	the amount of all such January 2014 Advances, net of any repayments or prepayments thereon. 

  
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 (c) In the event of a sale, transfer or other disposition by a January 2014 Subscriber of all or
any portion the January 2014 Advances, the January 2014 Warrants or all or any portion of its commitment under the January 2014 Loan Agreement to make a January 2014 Advance (the January 2014 Advances, the January 2014 Warrants, such commitment
under the January 2014 Loan Agreement to make a January 2014 Advance and any January 2014 PIK Securities are each referred to herein as a “January 2014 Asset” and, collectively, as the “January 2014 Assets”) to an
unaffiliated third party which would cause such January 2014 Subscriber to hold less than twenty-seven percent (27%) of its original interest in any January 2014 Asset (the “Minimum January 2014 Retained Original Interest”),
such transferee shall, as a condition to the completion of such sale, transfer or other disposition, assume the obligations of such January 2014 Subscriber hereunder, provided, however, only in respect of such portion of the percentage
of the January 2014 Asset so acquired by the transferee as relates to the shortfall in such January 2014 Subscriber’s Minimum January 2014 Retained Original Interest; provided, however that in the event of a sale, transfer or
other disposition by a January 2014 Subscriber of all or any portion a January 2014 Asset to Harbinger or any of its Entity Affiliates, such transferee shall, as a condition to the completion of such sale, transfer or other disposition, assume the
obligations of a January 2014 Subscriber hereunder related to the percentage of the January 2014 Asset so acquired; provided, further that the required assumption of the obligations of a January 2014 Subscriber under this
Section 6.12(c) shall not apply in the case of a sale, transfer or other disposition by a January 2014 Subscriber to Pinnacle or its Entity Affiliates. An assumption of the obligations by a transferee as set forth in and required by this
Section 6.12(c) shall be in writing in a form reasonably satisfactory to Pinnacle. For the avoidance of doubt, the obligation of a transferor to ensure that a transferee of a January 2014 Asset becomes subject to this
Section 6.12(c) and assumes the obligations hereunder relating to such January 2014 Asset shall apply to successive sales, transfers and other dispositions of such January 2014 Asset and to subsequent transferors and transferees thereof,
except in the case of a transfer to Pinnacle or its Entity Affiliates. 
 (d) The purchase price payable by Pinnacle (or its Entity
Affiliates purchasing a part of a January 2014 Advance) to a January 2014 Subscriber for an assignment of a part of a January 2014 Advance under this Section 6.12 shall be an amount equal to one hundred percent (100%) of the
original principal amount of the portion of such January 2014 Advance being assigned, net of any repayments or prepayments received by such January 2014 Subscriber as of immediately prior to the effective time of such assignment to Pinnacle or its
Entity Affiliates. Such assignment shall exclude any and all accrued but unpaid interest on the original principal amount of such January 2014 Advance so assigned up to (but not including) the date of such assignment, which excluded interest shall
continue to be payable by the Company to that January 2014 Subscriber. 
 (e) The parties shall consummate such assignment (including the
assignments of January 2014 Warrants contemplated by Section 6.12(f) and of January 2014 PIK Securities contemplated by Section 6.12(g)) by a January 2014 Subscriber to Pinnacle on a Business Day within fifteen
(15) Business Days of the giving of such written notice of exercise by Pinnacle to the Harbinger Agent. The assigning January 2014 Subscriber or Pinnacle shall deliver to the Company the fully executed document(s) pursuant to which such
assignment was effected, together with all information reasonably required by the Company to determine the appropriate future payments to be made by the Company to the assigning January 2014 Subscriber and Pinnacle in respect of such January 2014
Advance. 
 (f) The right of Pinnacle (together with its Entity Affiliates) to require an assignment from each January 2014 Subscriber of a
part of all January 2014 Advances made by, or for and on behalf of, such January 2014 Subscriber pursuant to this Section 6.12 shall include the right of Pinnacle to acquire from each January 2014 Subscriber on the date of such
assignment, at no additional cost to Pinnacle, subject to compliance with Applicable Laws, the January 2014 Warrants issued to such January 2014 Subscriber covering the number of Common Shares equal to: 

 

	 	(i)	(A) the number of Common Shares covered by such January 2014 Warrant, in the aggregate, originally issued to such January 2014 Subscriber (as such number of Common Shares may be adjusted pursuant to the terms of such
January 2014 Warrant), multiplied by  

  
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	 	(B)	twenty-seven percent (27%); 

 (ii) multiplied by (1) the portion of the
January 2014 Advance(s) acquired by Pinnacle (and/or its Entity Affiliates) from such January 2014 Subscriber, divided by (2) the maximum portion of the January 2014 Advances that Pinnacle (and its Entity Affiliates) are entitled to
acquire from such January 2014 Subscriber pursuant to Section 6.12(a) as of the date of such assignment (and for the avoidance of doubt, Pinnacle and its Entity Affiliates shall remain entitled to acquire such January 2014 Warrants covering
their full entitlement of Common Shares notwithstanding any repayment or prepayment of the associated January 2014 Advance); 
 (iii)
multiplied by the Sliding January 2014 Adjustment, if and as applicable; 
 provided, however, that, such January
2014 Warrants shall be assigned to Pinnacle and/or its Entity Affiliates notwithstanding that such assigned January 2014 Warrants have been exercised by the relevant January 2014 Subscriber in part prior to such assignment, and Pinnacle and/or its
Entity Affiliates shall have the benefit of all remaining rights of such assigned January 2014 `Warrants. 
 For the avoidance of doubt, any
sales, transfers or other dispositions by Harbinger of any January 2014 Advances or January 2014 Warrants to any Persons other than Pinnacle and its Entity Affiliates shall not reduce the amount of January 2014 Warrants that Pinnacle or its Entity
Affiliates are entitled to acquire pursuant to this Section 6.12(f). 
 (g) The right of Pinnacle (together with its Entity
Affiliates) to purchase a part of a January 2014 Advance together with a portion of the January 2014 Warrants under this Section 6.12 shall include the right of Pinnacle (together with its Entity Affiliates) to acquire from Harbinger and
its Entity Affiliates, at the time of its purchase of a portion of such January 2014 Advance and associated January 2014 Warrants, at a purchase price and on the timing set forth below, all Securities (other than the January 2014 Warrants
themselves, which shall be included in the assignment of such January 2014 Advance and other than Common Shares issued upon exercise of the January 2014 Warrants not in contravention of the terms of this Agreement) received by, or accrued in favour
of, Harbinger and its Entity Affiliates in respect of such January 2014 Advance or January 2014 Warrants as dividends (including, without limitation, accrued but undeclared dividends) or other payments or distributions (excluding interest (whether
paid or accrued and unpaid) on such January 2014 Advance up to (but not including) the date of such purchase by Pinnacle (or its Entity Affiliates)) since the time Harbinger and/or its Entity Affiliates made such January 2014 Advance (the
“January 2014 PIK Securities”). 
 (h) Pinnacle shall pay the consideration for January 2014 PIK Securities by issuing one
or more promissory notes to Harbinger or its applicable Entity Affiliate: 
 (i) with an aggregate principal amount equal to the value of
the January 2014 PIK Securities; 
 (ii) bearing no interest; 

(iii) with the term (with payment in full being due on the last day of the term) being a period of time equal to the earliest to occur of
(A) five (5) years, (B) a bona fide sale by Pinnacle of such January 2014 PIK Securities to an unaffiliated third party, or any other liquidity event involving such January 2014 PIK Securities in which cash is received in full
satisfaction of such January 2014 PIK Securities (including, but not limited to, a redemption in full for cash of such January 2014 PIK Securities by the Company), or (C) a bona fide sale by Harbinger or its Entity Affiliates of all, but
not less than all, of the January 2014 Advances related to the January 2014 PIK Securities by Harbinger or its Entity Affiliates to an unaffiliated third party, or any other liquidity event involving such January 2014 Advances in which cash is
received in full satisfaction of such January 

  
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 2014 PIK Securities (including, but not limited to, a repayment in full for cash of such January
2014 Advances by the Company and termination of any further obligation to lend with respect thereto); and 
 (iv) which shall be secured by
a first priority security interest, in form and substance reasonably satisfactory to Harbinger, in the January 2014 PIK Securities. 
 (i)
Each January 2014 Subscriber agrees, upon any exercise by Pinnacle or its Entity Affiliates of their right to acquire any January 2014 Assets of such January 2014 Subscriber, to transfer and assign good and marketable title to the relevant January
2014 Assets held by such January 2014 Subscriber to Pinnacle or its Entity Affiliates free and clear of any Liens. In the event that upon such exercise, in Pinnacle’s reasonable determination, a January 2014 Subscriber is not able to assign
good and marketable title to any relevant January 2014 Asset to Pinnacle or its Entity Affiliates free and clear of Liens (such subscriber in such case, a “Proposed January 2014 Subscriber Transferor”), then in addition to all other
remedies at law and/or in equity that Pinnacle and/or its Entity Affiliates may have against such Proposed January 2014 Subscriber Transferor, upon Pinnacle’s written notice to the Company (which notice shall state that Pinnacle had attempted
to acquire January 2014 Assets from such Proposed January 2014 Subscriber Transferor identified in such notice in accordance with Section 6.12(a) and Section 6.12(f)), the following transactions shall be consummated so as to
afford Pinnacle, to the maximum extent possible, the full benefit of its rights under Section 6.12: 
 (i) Pinnacle and/or its
Entity Affiliates shall lend and the Company shall borrow from Pinnacle and/or its Entity Affiliates, on substantially the same terms and conditions as the January 2014 Advance (including with respect to maturity, interest rate and other terms), a
principal amount equal to the portion of the Payment Amount (as such term is defined in the January 2014 Loan Agreement) of the January 2014 Advance that Pinnacle and/or its Entity Affiliates sought to acquire from such Proposed January 2014
Subscriber Transferor (such loan, an “Alternate January 2014 Loan”), which shall be recorded as set forth in the January 2014 Loan Agreement and have the same effect as if Pinnacle or such Entity Affiliate had received an assignment
of a portion of a January 2014 Advance from the Proposed January 2014 Subscriber Transferor as the January 2014 Subscriber under Section 6.12(a); 

(ii) the Company agrees to apply all the cash proceeds of the Alternate January 2014 Loan promptly to prepay to such Proposed January 2014
Subscriber Transferor its respective portion of such January 2014 Advance that Pinnacle and/or its Entity Affiliates had intended to acquire from such Proposed January 2014 Subscriber Transferor; 

(iii) the holder of an Alternate January 2014 Loan shall be entitled to its proportionate interest in all of the benefits and security
afforded to the January 2014 Subscribers under and pursuant to the January 2014 Loan Agreement. The Company, Harbinger and each of Harbinger’s relevant Entity Affiliates agree to execute and deliver all instruments and agreements, and to
consent to such registrations, as may be required in the opinion of Pinnacle, acting reasonably, to properly entitle Pinnacle to all of the rights it would otherwise have been entitled to receive as if the January 2014 Assets referable to the
January 2014 Advance, as replaced by the Alternate January 2014 Loan, were assigned to Pinnacle by such Proposed January 2014 Subscriber Transferor; 

(iv) the number of Common Shares covered by the January 2014 Warrant of such Proposed January 2014 Subscriber Transferor shall be
automatically reduced, and without requirement of any action on the part of such Proposed January 2014 Subscriber Transferor, by the number of Common Shares that would have been covered by such January 2014 Warrant (or portion thereof) assigned to
Pinnacle and/or its Entity Affiliates pursuant to Section 6.12(f), and the Company shall notify such Proposed January 2014 Subscriber Transferor of the calculation of such reduction, which calculation shall be conclusive absent manifest
error; 

  
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 (v) the Company agrees to and shall issue a warrant or warrants (each, an “Alternate
January 2014 Warrant”) to Pinnacle or its Entity Affiliates, in form and substance substantially identical to the form of January 2014 Warrant issued to such Proposed January 2014 Subscriber Transferor (excluding any of the provisions as
shall not be applicable to Pinnacle and its Entity Affiliates including, without limitation, any restriction on exercise and any automatic reduction in the shares covered by such warrant relating to PNK Prepayments) covering the number of Common
Shares covered by January 2014 Warrants Pinnacle and/or its Entity Affiliates sought to acquire from such Proposed January 2014 Subscriber Transferor under Section 6.12(f). An Alternate January 2014 Warrant shall be a January 2014
Warrant for all purposes of this Agreement as if Pinnacle or such Entity Affiliate had received an assignment of all or a portion of a January 2014 Warrant from a January 2014 Subscriber under Section 6.12(f); and 

(vi) for greater clarity, the references to “Proposed January 2014 Subscriber Transferor” in this Section 6.12(i) shall
not include Pinnacle and/or its Entity Affiliates. 
 (j) Each January 2014 Subscriber agrees that, during the January 2014 Lookback Period,
it shall not exercise any January 2014 Warrant it holds with respect to more than: 
 (i) the number of such January 2014 Subscriber’s
original Common Share Entitlement then exercisable under such January 2014 Warrant, for the January 2014 Tranche in respect of such issued January 2014 Warrant (as adjusted pursuant to the terms of such January 2014 Warrant); minus

 (ii) the product of: 
 (A)
twenty-seven percent (27%) of such January 2014 Subscriber’s original Common Share Entitlement then exercisable under such January 2014 Warrant, for the January 2014 Tranche in respect of such issued January 2014 Warrant (as adjusted
pursuant to the terms of such January 2014 Warrant); multiplied by  
 (B) the Sliding January 2014 Adjustment, if and as
applicable, 
 (the “January 2014 Unreserved Lookback Amount”). 

Any attempted exercise by such January 2014 Subscriber of any portion of such January 2014 Warrant as relates to more than the January 2014
Unreserved Lookback Amount shall be null and void, of no force or effect whatsoever, and shall not be honoured by the Company. 
 (k) For
purposes of this Section 6.12, in the event that a January 2014 Subscriber assigns or transfers all or any portion of its commitment under the January 2014 Loan Agreement to make a January 2014 Advance (other than to Pinnacle), the
assigning or transferring January 2014 Subscriber and the assignee or transferee of such commitment (other than Pinnacle) shall be treated as one and the same January 2014 Subscriber, including without limitation for purposes of the calculations
contemplated by this Section 6.12 and for purposes of the obligation to transfer January 2014 Assets to Pinnacle should Pinnacle exercise its right to acquire January 2014 Assets as contemplated herein.” 

 

	(e)	The following definitions are added to section 7.1 (Certain Definitions) of the Shareholders Agreement in the appropriate alphabetical order: 

“Alternate January 2014 Loan” has the meaning set forth in Section 6.12(i)(i). 

“Alternate January 2014 Warrant” has the meaning set forth in Section 6.12(i)(v). 

  
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 “First January 2014 Anniversary” means, with respect any January 2014
Subscriber, the first anniversary of the earlier of (a) the later of (i) the January 2014 Second Advance Date and (ii) the date such January 2014 Subscriber completes its funding under and pursuant to the January 2014 Loan Agreement
and (b) the date upon which the Company terminates the obligation to make all or any remaining portion of the January 2014 Advance(s) that have not been advanced by, or for and on behalf of, such January 2014 Subscriber as if that date, whether
unilaterally or with the written agreement of such January 2014 Lender. 
 “January 2014 Advance” means a loan advance
completed by a January 2014 Subscriber to the Company pursuant to the terms of the January 2014 Loan Agreement. 
 “January 2014
Asset” has the meaning set forth in Section 6.12(c). 
 “January 2014 Breakaway Warrants” means the
aggregate entitlement of Global Opportunities Breakaway Ltd. under the warrant certificate(s) issued by the Company to Global Opportunities Breakaway Ltd. from time to time pursuant to section 3.2 of the January 2014 Loan Agreement, upon exercise of
the warrants evidenced thereby, to a number of Common Shares up to the aggregate Common Share Entitlement(s) contained therein. 

“January 2014 Harbinger Warrants” means the aggregate entitlement of Harbinger II S.à r.l. under the warrant
certificate(s) issued by the Company to Harbinger II S.à r.l. from time to time pursuant to section 3.2 of the January 2014 Loan Agreement, upon exercise of the warrants evidenced thereby, to a number of Common Shares up to the aggregate
Common Share Entitlement(s) contained therein. 
 “January 2014 Loan Agreement” means the Convertible Loan Agreement dated
January 17, 2014, by and among the Company and the January 2014 Subscribers, as the same may be amended, restated, supplemented or otherwise modified from time to time. 

“January 2014 Lookback Period” means the period commencing on January 17, 2014, and ending on the third anniversary of
the January 2014 Second Advance Date, provided that such period as it applies to each January 2014 Subscriber shall be extended by any Funding Default Period referable to such January 2014 Subscriber. 

“January 2014 PIK Securities” has the meaning set forth in Section 6.12(g). 

“January 2014 Proportionate Amount” has the meaning set forth in Section 6.12(b)(i). 

“January 2014 Second Advance Date” has the meaning ascribed to the term “Second Advance Date” in the January 2014
Loan Agreement. 
 “January 2014 Subscriber” means (a) each of Harbinger II S.à r.l. and Global Opportunities
Breakaway Ltd. and (b) any Entity Affiliate of Harbinger II S.à r.l. or Global Opportunities Breakaway Ltd. who becomes a party to the January 2014 Loan Agreement in connection with its assumption of a portion of one or more January 2014
Advances. 
 “January 2014 Tranche” has the meaning ascribed to the term “Tranche” in the January 2014 Loan
Agreement. 
 “January 2014 Unreserved Lookback Amount” has the meaning set forth in Section 6.12(j). 

“January 2014 Warrants” means the January 2014 Harbinger Warrants and the January 2014 Breakaway Warrants, and, if issued, the
Alternate January 2014 Warrants referable to such. 
 “Minimum January 2014 Retained Original Interest” has the meaning set
forth in Section 6.12(c). 
 “Proposed January 2014 Subscriber Transferor” has the meaning set forth in
Section 6.12(i). 

  
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 “Sliding January 2014 Adjustment” has the meaning set forth in
Section 6.12(a)(ii). 
 “Sliding Proportionate January 2014 Amount” has the meaning set forth in
Section 6.12(a)(ii). 
 “Third January 2014 Anniversary” means, with respect to any January 2014 Subscriber, the
third anniversary of the earlier of (a) the later of (i) the January 2014 Second Advance Date and (ii) the date such January 2014 Subscriber completes its funding under and pursuant to the January 2014 Loan Agreement and (b) the
date upon which the Company terminates the obligation to make all or any remaining portion of the January 2014 Advance(s) that have not been advanced by, or for and on behalf of, such January 2014 Subscriber as of that date, whether unilaterally or
with the written agreement of such January 2014 Subscriber.” 
  

	(f)	The definition of “Fully Diluted Basis” in section 7.1 (Certain Definitions) of the Shareholders Agreement is hereby deleted in its entirety and replaced with the following: 

“Fully Diluted Basis” means the aggregate number of Common Shares and Class VII Non-Voting Shares, assuming the issuance,
conversion or exercise (as the case may be) into Common Shares and Class VII Non-Voting Shares of any and all options (including the vested portion of such options, including the Pinnacle Option, but excluding any unvested portion of such options,
including the Pinnacle Option), warrants (but excluding any outstanding warrants, including any outstanding May 2013 Minimum Warrants, May 2013 Primary Warrants, November 2013 Warrants and January 2014 Warrants to the extent not yet exercisable on
the date of any relevant determination of the number of Common Shares and Class VII Non-Voting Shares on a “Fully Diluted Basis”) and convertible or exchangeable securities issued by the Company (including without limitation the Common
Shares underlying the Series V Special Shares and the Class VI Shares, but excluding the November 2013 Advances and the January 2014 Advances), in accordance with their respective terms.” 

 

	(g)	The definition of “Funding Default Period” in section 7.1 (Certain Definitions) of the Shareholders Agreement is hereby deleted in its entirety and replaced with the following: 

“Funding Default Period” means (a) with respect to any Backstop Lender and as to any Backstop Advance it is required to
make under and pursuant to the Backstop Loan Agreement, the period commencing as of the date such Backstop Lender was required to make such Backstop Advance, (b) with respect to any May 2013 Lender and as to any May 2013 Advance it is required
to make under and pursuant to the May 2013 Loan Agreement, the period commencing as of the date of such May 2013 Lender was required to make such May 2013 Advance and ending as of the date such May 2013 Lender makes such May 2013 Advance and
(c) with respect to any January 2014 Subscriber and as to any January 2014 Advance it is required to make under and pursuant to the January 2014 Loan Agreement, the period commencing as of the date of such January 2014 Subscriber was required
to make such January 2014 Advance and ending as of the date such January 2014 Subscriber makes such January 2014 Advance.” 
  

	(h)	The definition of “November 2013 Proportionate Amount” in section 7.1 (Certain Definitions) of the Shareholders Agreement is hereby deleted in its entirety and replaced with the following:

 “November 2013 Proportionate Amount” has the meaning set forth in Section 6.11(b)(i).” 

 

	(i)	The definition of “PNK Prepayment” in section 7.1 (Certain Definitions) of the Shareholders Agreement is hereby deleted in its entirety and replaced with the following: 

“PNK Prepayment” has the meaning set forth in the Backstop Loan Agreement, the May 2013 Loan Agreement, the November 2013 Loan
Agreement and the January 2014 Loan Agreement, as the context may require.” 

  
 - 9 - 

 3. Amendments to the Conversion Agreement. 

 

	(a)	The definition of “Aggregate Share Entitlement” in section 1.1 (Definitions) of the Conversion Agreement is hereby deleted in its entirety and replaced with the following: 

““Aggregate Share Entitlement” means, in respect of Pinnacle as of the Conversion Date, the aggregate of (a) the
number of Common Shares held by Pinnacle as registered holder, (b) the number of Common Shares to which Pinnacle is entitled upon the full exercise of the vested portion of the Pinnacle Option, (c) the number of Common Shares to which
Pinnacle is entitled upon the full conversion (pursuant to this Agreement) of the Series V Special Shares held by Pinnacle, (d) the number of Common Shares to which Pinnacle is entitled upon the full conversion (pursuant to this Agreement) of
the Class VI Preferred Shares, (e) the number of Common Shares to which Pinnacle is entitled upon the full exercise of the Pinnacle Warrants and (f) the number of Common Shares that Pinnacle will receive upon the full conversion (pursuant
to this Agreement) of the Outstanding Loan it makes under the September 2013 Loan Agreement; but, excluding, for the avoidance of doubt, any Common Shares which Pinnacle holds or to which Pinnacle becomes entitled by reason of the
exercise of its lookback rights pursuant to section 2.4 of the May 2013 Loan Agreement, section 6.2(b)(ii)(B), section 6.5, section 6.6, section 6.11 and /or section 6.12 of the Third Amended and Restated Shareholders Agreement, as the case may
be.” 
 4. No Other Changes. Except as set forth in this Amendment, the Shareholders Agreement and the Conversion Agreement shall remain in full
force and effect without any further changes or modifications. 
 5. Amendments Apply to the Fourth Amended and Restated Shareholders Agreement attached
to the Conversion Agreement. In addition to the amendments to the Shareholders Agreement made by those certain Amendments to the Third Restated Shareholders Agreement and Conversion Agreement, dated November 21, 2013, the parties
acknowledge and agree that the amendments set forth in Section 2 (Amendments to the Shareholders Agreement) of this Amendment shall apply to the form of the Fourth Amended and Restated Shareholders Agreement attached as Schedule
“C” to the Conversion Agreement dated September 23, 2013, as amended on November 21, 2013, by and among the Company, Harbinger II S.à r.l., Credit Distressed Blue Line Master Fund, Ltd., Harbinger Capital Partners Master
Fund I, Ltd., Harbinger Capital Partners Special Situations Fund, L.P., Harbinger China Dragon Intermediate Fund, LP, Global Opportunities Breakaway Ltd., Blue Line ACDL, Inc., Breakaway ACDL, Inc., Pinnacle and PNK Development 31, LLC (the
“Conversion Agreement”), to the extent applicable and with such reasonable changes as may be required to give effect to the intent hereof and thereof, including without limitation the inclusion of provisions set forth in
Section 2(d) of this Amendment to the extent of any portion of the January 2014 Advances that has not been converted into Common Shares and the inclusion of provisions substantially identical to section 6.6 of such form of Fourth Amended and
Restated Shareholders Agreement applicable to January 2014 Advances in respect and to the extent of any portion of the January 2014 Advances that has been converted into Common Shares from and after the Conversion Date (as defined in the Conversion
Agreement). 
 6. Governing Law. This Amendment shall be deemed to be made in, and in all respects shall be interpreted, construed and governed by
and in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein without regard to any conflict of law principles thereof that would result in the application of the laws of any other
jurisdiction. Each party submits to the exclusive jurisdiction of the Supreme Court of the Province of British Columbia for the purposes of all legal actions and proceedings arising out of or relating to this Amendment. 

  
 - 10 - 

 7. Headings. The headings are for convenience only, do not form a part of this Amendment and are not
intended to interpret, define or limit the scope, extent or intent of this Amendment or any of its provisions. 
 8. Further Assurances. Each party
will execute and deliver such further agreements and other documents and do such further acts and things as the other party reasonably requests to evidence, carry out or give full force and effect to the intent of this Amendment. 

9. Counterparts. This Amendment may be executed in as many counterparts as may be necessary and may be delivered by facsimile or electronically
transmitted and each such counterpart will be deemed to be an original and such counterparts together will constitute one and the same instrument. 

[Remainder of Page Left Intentionally Blank] 

  
 - 11 - 

 IN WITNESS WHEREOF the parties, intending to be legally bound, have executed and delivered this Amendment
as of the date first referenced above. 
  

									
	 ASIAN COAST DEVELOPMENT

(CANADA) LTD.
	 		 	HARBINGER II S.À R.L.
					
	 Per:
	 	 /s/ Stephen H. Shoemaker
	 		 	Per:	 	 /s/ Lorenzo Barcaglioni

	 Name:
	 		 		 	Name:	 	Lorenzo Barcaglioni
	 Title:
	 		 		 	Title:	 	
					
		 		 		 	Per:	 	 /s/ Keith M. Hladek

		 		 		 	Name:	 	
		 		 		 	Title:	 	
			
	 BLUE LINE ACDL, INC.
	 		 	BREAKAWAY ACDL, INC.
					
	 Per:
	 	 /s/ Keith M. Hladek
	 		 	Per:	 	 /s/ Keith M. Hladek

	 Name:

Title:
	 		 		 	 Name:
 Title:
	 	
			
	 HARBINGER CHINA DRAGON

INTERMEDIATE FUND, L.P., By: Harbinger

Capital Partners II LP, its investment manager
	 		 	 CREDIT DISTRESSED BLUE LINE MASTER

FUND, LTD., By: Harbinger Capital Partners II
 LP, its
investment manager

					
	 Per:
	 	 /s/ Keith M. Hladek
	 		 	Per:	 	 /s/ Keith M. Hladek

	 Name:
	 		 		 	Name:	 	
	 Title:
	 		 		 	Title:	 	
			
	 GLOBAL OPPORTUNITIES BREAKAWAY

LTD., By: Harbinger Capital Partners II LP, its

investment manager
	 		 	PNK DEVELOPMENT 18, LLC
					
	 Per:
	 	 /s/ Keith M. Hladek
	 		 	Per:	 	 /s/ Carlos Ruisanchez

	 Name:
	 		 		 	Name:	 	Carlos Ruisanchez
	 Title:
	 		 		 	Title:	 	Chief Financial Officer, Treasurer

 [Signature Page- Second Amendment to the Third Amended and Restated Shareholders Agreement and Conversion
Agreement] 

			
	 PNK DEVELOPMENT 31, LLC

		
	 Per:
	 	 /s/ Carlos Ruisanchez

	 Name:
	 	Carlos Ruisanchez
	 Title:
	 	 Executive Vice President,
 Chief Financial
Officer and Treasurer

 [Signature Page- Second Amendment to the Third Amended and Restated Shareholders Agreement and Conversion
Agreement] 

 IN WITNESS WHEREOF the following parties, intending to be legally bound, have executed and
delivered this Amendment as to the Conversion Agreement only as of the date first referenced above. 
  

									
	 HARBINGER CAPITAL PARTNERS

MASTER FUND I, LTD., By: Harbinger

Capital Partners LLC, its investment manager
	 		 	 HARBINGER CAPITAL PARTNERS

SPECIAL SITUATIONS FUND, L.P., By:
 Harbinger Capital
Partners LLC, its investment
 manager

					
	Per:	 	 /s/ Keith M. Hladek
	 		 	Per:	 	 /s/ Keith M. Hladek

	 Name:
 Title:
	 		 		 	 Name:
 Title:
	 	

  
  
  

[Signature Page- Second Amendment to the Third Amended and Restated Shareholders Agreement and Conversion Agreement]NPBC 12.31.2013 EX 4.21

Exhibit 4.21
EXECUTION COPY

LOAN AGREEMENT
between
U.S. BANK NATIONAL ASSOCIATION
and
NATIONAL PENN BANCSHARES, INC.

Dated as of December 22, 2011

        

TABLE OF CONTENTS
	
				
	Page
	 
	Page
	

	1
	DEFINITIONS
	1
	

	1.1
	Defined Terms
	1
	

	1.2
	Certain UCC and Accounting Terms; Interpretations
	10
	

	1.3
	Exhibits and Schedules Incorporated
	10
	

	2.
	CREDIT FACILITY
	10
	

	2.1
	The Loan
	10
	

	2.2
	The Note
	11
	

	2.3
	Maturity Date
	11
	

	2.4
	Commitment Fee
	11
	

	2.5
	The Closing
	11
	

	2.6
	Interest Rate Matters
	11
	

	2.7
	Certain Provisions Regarding Taxes, Yield Protection and Illegality
	13
	

	2.8
	Payments
	16
	

	3.
	DISBURSEMENTS
	16
	

	3.1
	Initial and Subsequent Disbursements
	16
	

	3.2
	Closing Deliveries
	17
	

	3.3
	Conditions to All Disbursements; Renewals and Conversions
	18
	

	4.
	GENERAL REPRESENTATIONS AND WARRANTIES
	19
	

	4.1
	Organization and Authority
	19
	

	4.2
	No Impediment to Transactions
	20
	

	4.3
	Purposes of the Loan
	21
	

	4.4
	Financial Condition
	21
	

	4.5
	Title to Properties
	22
	

	4.6
	No Material Adverse Change
	23
	

	4.7
	Legal Matters
	23
	

	4.8
	Borrower Status
	25
	

	4.9
	No Misstatement
	25
	

	4.10
	Representations and Warranties Generally
	25
	

	5.
	GENERAL COVENANTS, CONDITIONS AND AGREEMENTS
	26
	

	5.1
	Compliance with Transaction Documents
	26
	

	5.2
	Material Transactions
	26
	

	5.3
	Subsidiary Bank Shares
	27
	

	5.4
	Business Operations
	27
	

	5.5
	Compliance with Laws
	28
	

	5.6
	Lender Expenses
	30
	

	5.7
	Inspection Rights
	31
	

	6.
	REPORTING
	31
	

	6.1
	Annual
	31
	

	6.2
	Quarterly
	31
	

	6.3
	Compliance Certificate
	31
	

i    

	
				
	6.4
	Copies of Other Reports and Correspondence
	31
	

	6.5
	Proceedings
	32
	

	6.6
	Event of Default; Material Adverse Change
	32
	

	6.7
	Issuance of Borrower Capital Stock
	32
	

	6.8
	Other Information Requested by Lender
	32
	

	7.
	FINANCIAL COVENANTS
	32
	

	7.1
	Capitalization
	32
	

	7.2
	Total Risk-Based Capital Ratio
	32
	

	7.3
	Nonperforming Assets to Capital
	32
	

	7.4
	Reserves to Nonperforming Loans
	33
	

	7.5
	Liquidity
	33
	

	7.6
	Minimum Fixed Charge Coverage Ratio
	33
	

	8.
	BORROWER’S DEFAULT
	34
	

	8.1
	Borrower’s Defaults and Lender’s Remedies
	34
	

	8.2
	Protective Advances
	37
	

	8.3
	Other Remedies
	37
	

	8.4
	No Lender Liability
	37
	

	8.5
	Lender’s Fees and Expenses
	37
	

	9.
	MISCELLANEOUS
	37
	

	9.1
	Release; Indemnification
	37
	

	9.2
	Assignment and Participation
	37
	

	9.3
	Prohibition on Assignment
	38
	

	9.4
	Time of the Essence
	38
	

	9.5
	No Waiver
	38
	

	9.6
	Severability
	39
	

	9.7
	Usury; Revival of Liabilities
	38
	

	9.8
	Notices and Electronic Communications
	40
	

	9.9
	Successors and Assigns
	41
	

	9.10
	No Joint Venture
	41
	

	9.11
	Brokerage Commissions
	41
	

	9.12
	Publicity
	42
	

	9.13
	Documentation
	42
	

	9.14
	Additional Assurances; Right of Set-off
	42
	

	9.15
	Entire Agreement
	42
	

	9.16
	Choice of Law, Jurisdiction and Venue
	42
	

	9.17
	No Advisory or Fiduciary Responsibility
	43
	

	9.18
	No Third Party Beneficiary
	44
	

	9.19
	Legal Tender of United States
	44
	

	9.20
	Captions; Counterparts
	44
	

	9.21
	Knowledge; Discretion
	44
	

	9.22
	ENTIRE AGREEMENT
	44
	

	9.23
	WAIVER OF CONSEQUENTIAL DAMAGES, ETC
	44
	

	9.24
	WAIVER OF RIGHT TO JURY TRIAL
	44
	

ii

EXHIBITS: 
A    Form of Note
B    Form of Rate Election Notice
C    Form of Opinion of Borrower’s Counsel
D    Form of Quarterly Compliance Certificate
DISCLOSURE SCHEDULES: 
4.1.2     Capital Stock of Subsidiary Bank
4.5.1     Financing Statements
4.7.3     Regulatory Enforcement Actions
4.7.4     Pending Litigation
4.7.6     ERISA
5.2.3     Indebtedness

iii

LOAN AGREEMENT
This LOAN AGREEMENT (this “Agreement”) is dated as of December 22, 2011 and is made by and between NATIONAL PENN BANCSHARES, INC., a Pennsylvania corporation (“Borrower”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association (“Lender”).
RECITALS:
A.Borrower is a bank holding company that owns 100% of the issued and outstanding capital stock of National Penn Bank (“Subsidiary Bank”), a national banking association with its principal banking offices in Boyertown, Pennsylvania.  The issued and outstanding capital stock of Subsidiary Bank is referred to as the “Subsidiary Bank Shares.”
B.Borrower has requested that Lender provide it with a revolving line of credit (the “Loan”) in the maximum principal amount of $25,000,000.
C.The proceeds from the Loan shall be used by Borrower to repurchase its outstanding common stock, without par value, to fund the purchase price for one or more acquisitions and for general corporate purposes.
D.Lender is willing to lend to Borrower up to an aggregate principal amount of $25,000,000 under the Loan in accordance with the terms, subject to the conditions, and in reliance on the recitals, representations, warranties, covenants and agreements set forth herein and in the other Transaction Documents (as defined below).
THEREFORE, in consideration of the mutual covenants, conditions and agreements herein contained, the parties hereto hereby agree as follows:
AGREEMENT:
1.DEFINITIONS.
1.1    Defined Terms.  The following capitalized terms generally used in this Agreement and in the other Transaction Documents have the meanings defined or referenced below.  Certain other capitalized terms used only in specific sections of this Agreement may be defined in such sections.
“Affiliate(s)” means, with respect to any Person, such Person’s immediate family members, partners, members or parent and subsidiary corporations, and any other Person directly or indirectly Controlling, Controlled by, or under common Control with, said Person, and their respective Affiliates, members, partners, shareholders, directors, officers, employees, agents and representatives.
“Allowance for Loan Losses” has the meaning ascribed to such term in Section 7.4.
“Assignee Lender” has the meaning ascribed to such term in Section 9.2.

1    

“Attributable Indebtedness” means, on any date, (a) in respect of any Capitalized Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease or similar payments under the relevant lease or other applicable agreement or instrument that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease or other agreement or instrument were accounted for as a Capitalized Lease.
“Base Rate” means that rate of interest (expressed as a percent per annum) equal to the highest of (a) the Federal Funds Rate plus 0.50% (50 basis points); (b) Lender’s “base” or “prime” rate (which is not necessarily the lowest or most favorable rate of interest charged by Lender on commercial loans at any time) in effect from time to time, which means a base rate of interest established by Lender from time to time that serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto; and (c) the LIBO Rate that would be applicable for a LIBOR Period of one month beginning on such day plus 1.00% (100 basis points).  Any change in the rate of interest hereunder due to a change in the base or prime rate shall become effective on the date each change in the base or prime rate is publicly announced by Lender.
“Base Rate Tranche” means a Borrowing Tranche as to which the Base Rate is applicable.
“Borrower” has the meaning ascribed to such term in the preamble hereto and shall include any successor to National Penn Bancshares, Inc. or such other Person that shall assume the obligations of the borrower under the Transaction Documents in accordance with the express terms of such Transaction Documents.
“Borrower 2010 Financial Statements” has the meaning ascribed to such term in Section 4.4.
“Borrower 2010 Financial Statements Date” has the meaning ascribed to such term in Section 4.4.
“Borrower Financial Statements” has the meaning ascribed to such term in Section 4.4.
“Borrower’s Accountant” means KPMG LLP or such other nationally recognized firm of certified public accountants selected by Borrower as shall from time to time audit Borrower.
“Borrower’s Liabilities” means Borrower’s obligations under this Agreement and any other Transaction Documents.
“Borrowing Date” means the date any Borrowing Tranche is disbursed, renewed or converted (from a LIBO Rate Tranche to a Base Rate Tranche or from a Base Rate Tranche to a LIBO Tranche pursuant to Section 2.7.2 or 2.7.3).
“Borrowing Tranche” means a disbursement of proceeds under the Loan pursuant to this Agreement and, where applicable, the renewal or conversion of any such disbursement or portion thereof pursuant to this Agreement.

2

“Business Day” means (a) for all purposes other than as covered by clause (b) hereof, a day of the week (but not a Saturday, Sunday or a legal holiday under the laws of the State of New York or any other day on which banking institutions located in New York are authorized or required by law or other governmental action to close) on which the Chicago, Illinois offices of Lender are open to the public for carrying on substantially all of its business functions and (b) with respect to determinations in connection with, and payments of principal and interest on any LIBO Rate Tranche, any day which is a Business Day described in clause (a) and which is also a day for trading by and between banks in U.S. dollar-denominated deposits in the London Inter-Bank Eurodollar Market.  Unless specifically referenced in this Agreement as a Business Day, all references to “days” shall be to calendar days.
“Capitalized Leases” means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases.
“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation, treaty or related guidance, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any governmental or similar authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any governmental or similar authority; provided, however, that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.
“Closing” means the meaning ascribed to such term in Section 2.5.
“Closing Date” means the date of this Agreement.
“Code” means the Internal Revenue Code of 1986, as amended or recodified. 
“Code Provisions” has the meaning ascribed to such term in Section 8.1.1.17.
“Condition or Release” means any presence, use, storage, transportation, discharge, disposal, release or threatened release of any Hazardous Materials.
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.
“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.
“Default Rate” has the meaning ascribed to such term in Section 2.6.3.

3

“Disclosure Schedule” means, in aggregate, the disclosures contemplated herein as included in the Disclosure Schedule, which has been delivered in connection with the execution of this Agreement.
“Employee Benefit Plan” means an “employee benefit plan” within the meaning of Section 3(3) of ERISA.
“Equity Interest” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended or recodified.
“ERISA Affiliate” means any person (as defined in Section 3(9) of ERISA) which together with Borrower would be a member of the same “controlled group” within the meaning of Sections 414(b), (m), (c) and (o) of the Code.
“Event of Default” has the meaning ascribed to such term in Section 8.1.1.
“FDIC” means the Federal Deposit Insurance Corporation.
“FDI Act” means the Federal Deposit Insurance Act, as amended or recodified.
“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Lender on such day.
“Fixed Charge Coverage Ratio” has the meaning ascribed to such term in Section 7.6.
“FRB” means the Board of Governors of the Federal Reserve System and shall include any other Governmental Agency that serves as the primary federal regulator of Borrower from time to time when the Loan is outstanding.

4

“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.
“Governmental Agency(ies)” means, individually or collectively, any federal, state, county or local governmental department, commission, board, regulatory authority or agency including, without limitation, the FRB, the OCC and the FDIC.
“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part) or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien).  The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.  The term “Guarantee” as a verb has a corresponding meaning.
“Hazardous Materials” means oil, flammable explosives, asbestos, urea formaldehyde insulation, polychlorinated biphenyls, radiologically enhanced or contaminated materials, hazardous wastes, toxic or contaminated substances or similar materials, including, without limitation, any substances which are “hazardous substances,” “hazardous wastes,” “hazardous materials” or “toxic substances” under the Hazardous Materials Laws and/or other applicable environmental laws, ordinances or regulations.
“Hazardous Materials Claims” has the meaning ascribed to such term in Section 4.7.7.
“Hazardous Materials Laws” mean any laws, regulations, permits, licenses or requirements pertaining to the protection, preservation, conservation or regulation of the environment which relates to real property, including, without limitation: the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Resource Conservation and Recovery Act of 1976, as amended, 

5

42 U.S.C. Section 6901 et seq.; the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (including the Superfund Amendments and Reauthorization Act of 1986), 42 U.S.C. Section 9601 et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651, the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; and all comparable state and local laws, laws of other jurisdictions or orders and regulations.
“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:
(a)all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;
(b)all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;
(c)net obligations of such Person under any Swap Contract;
(d)all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business and not past due for more than 90 days after the date on which such trade account was created);
(e)indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;
(f)all Attributable Indebtedness in respect of Capitalized Leases and Synthetic Lease Obligations of such Person;
(g)all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such Person or any other Person or any warrant, right or option to acquire such Equity Interest, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and
(h)all Guarantees of such Person in respect of any of the foregoing,
provided, however, Indebtedness shall not include (i) deposits or other indebtedness incurred in the ordinary course of Borrower’s or any such Subsidiary’s business (including, without limitation, federal funds purchased, advances from any Federal Home Loan Bank and secured deposits of municipalities, as the case may be, and in accordance with safe and sound banking practices and applicable laws and regulations, (ii) indebtedness that is expressly subordinate and 

6

junior in all respects (including, without limitation, with respect to the right of payment) to the Loan or (iii) purchase money obligations incurred in the ordinary course of business, which obligations (A) shall not, in the aggregate, exceed $5,000,000 and (B) may include liens, encumbrances or similar interests in the property that is acquired in connection with such obligations.
For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person.  The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date.
“Initial Disbursement” has the meaning ascribed to such term in Section 3.1.
“Instructions” means disbursement instructions given by Borrower to Lender specifying the manner in which proceeds of the Loan, if any, should be disbursed at Closing.
“Interest Rate Protection Agreement” means an interest rate swap, cap, collar or other hedging or derivative agreement, to which Lender or any Affiliate of Lender is the counterparty, intended to mitigate interest rate risk, along with any other related agreement or instrument executed in connection therewith.
“Interim Financial Statements” has the meaning ascribed to such term in Section 4.4.
“Leases” means all leases, licenses or other documents providing for the use or occupancy of any portion of any Property, including all amendments, extensions, renewals, supplements, modifications, sublets and assignments thereof and all separate letters or separate agreements relating thereto.
“Lender” has the meaning ascribed to such term in the preamble hereto.
“LIBO Rate” means that rate of interest equal to the quotient of (i) the average of the rates of interest, rounded upward, if necessary, to the nearest whole multiple of .0625% (1/16 of 1%), quoted to Lender in accordance with Lender’s normal and customary practices in the London Inter-Bank Eurodollar Market for U.S. Dollar deposits with prime banks, as such average is published by Reuters (or other commercially available source providing such quotation reasonably selected by Lender) or any successor thereto, at approximately 11:00 a.m., London time, on the date that is two Business Days prior to any applicable Borrowing Date for an amount approximately equal to the applicable LIBO Rate Tranche and for a period of time approximately equal to a LIBOR Period, divided by (ii) 100% minus the Reserve Percentage.  If such rate is not available at such time for any reason, then the “LIBO Rate” for such LIBOR Period shall be the rate per annum determined by Lender to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the LIBO Rate Tranche being made, continued or converted by Lender and with a term equivalent to such LIBOR Period would be offered by Lender’s London Branch to major banks in the London Inter-Bank Eurodollar Market 

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at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period.
“LIBO Rate Tranche” means a Borrowing Tranche as to which the LIBO Rate is applicable.
“LIBOR Period” means, with respect to any LIBO Rate Tranche, the period commencing on the Borrowing Date with respect to such LIBO Rate Tranche and ending on the numerically corresponding day in the calendar month that is three months thereafter, as Borrower may elect in accordance with this Agreement; provided, that (i) if any LIBOR Period would end on a day other than a Business Day, such LIBOR Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such LIBOR Period shall end on the next preceding Business Day, and (ii) any LIBOR Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such LIBOR Period) shall end on the last Business Day of the last calendar month of such LIBOR Period, with respect to a LIBO Rate Tranche.
“Liquid Assets” has the meaning ascribed to such term in Section 7.5.
“Loan” has the meaning ascribed to such term in the recitals hereto.
“Maturity Date” means December 21, 2012.
“Nonperforming Assets” has the meaning ascribed to such term in Section 7.3.
“Nonperforming Loans” has the meaning ascribed to such term in Section 7.4.
“Note” shall mean a promissory note in the form attached as Exhibit A hereto in the principal amount of the Loan, as amended, restated, supplemented or modified from time to time, and each note delivered in substitution or exchange for such note.
“OCC” means the Office of the Comptroller of the Currency.
“Person” means an individual, a corporation (whether or not for profit), a partnership, a limited liability company, a joint venture, an association, a trust, an unincorporated organization, a government or any department or agency thereof (including a Governmental Agency) or any other entity or organization.
“Property” means any real property owned or leased by Borrower or any Subsidiary.
“Rate Election Notice” shall mean a properly completed notice in the form attached as Exhibit B hereto or a verbal notice conveyed to Lender in accordance with its disbursement procedures from time to time.
“Reserve Percentage” means the percentage announced within Lender as the reserve percentage under Regulation D of the FRB for loans and obligations making reference to a LIBO Rate for a LIBOR Period.  The Reserve Percentage shall be based on Regulation D or other 

8

regulations from time to time in effect concerning reserves for Eurocurrency Liabilities as defined in Regulation D from related institutions as though Lender were in a net borrowing position, as promulgated by the FRB, or its successor.
 “RICO Related Law” means the Racketeer Influenced and Corrupt Organizations Act of 1970 or any other federal, state or local law for which forfeiture of assets is a potential penalty.
“Subsidiary” means Subsidiary Bank and any other corporation or other entity of which any Equity Interest is directly or indirectly owned and controlled by Borrower.
“Subsidiary Bank” has the meaning ascribed to such term in the recitals hereto.
“Subsidiary Bank Shares” has the meaning ascribed to such term in the recitals hereto.
“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
“Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).
“Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease or (b) an agreement for the use or possession of property (including sale and leaseback transactions), in each case, creating obligations that do not appear on the balance sheet of such Person but which, upon the application of any Debtor Relief Laws to such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).
“Tangible Primary Capital” has the meaning ascribed to such term in Section 7.3.

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“Total Risk-Based Capital Ratio” has the meaning ascribed to such term in Section 7.2.
“Transaction Documents” means this Agreement, the Note and those other documents and instruments (including, all agreements, instruments, certificates and documents executed by and/or on behalf of Borrower in connection with this Agreement and the Note) entered into or delivered in connection with or relating to the Loan.  Transaction Documents shall also include any Interest Rate Protection Agreement between Borrower and Lender.
“UCC” shall mean the Uniform Commercial Code as enacted in the State of New York, as amended or recodified.
“Unmatured Event of Default” means an event or circumstance that with the passage of time, the giving of notice or both could become an Event of Default.
1.2    Certain UCC and Accounting Terms; Interpretations.  Except as otherwise defined in this Agreement or the other Transaction Documents, all words, terms and/or phrases used herein and therein shall be defined by the applicable definition therefore (if any) in the UCC.  Notwithstanding the foregoing, any accounting terms used in this Agreement which are not specifically defined herein shall have the meaning customarily given to them in accordance with GAAP.  Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, it shall be done in accordance with GAAP except where such principles are inconsistent with the specific provisions of this Agreement.  The foregoing definitions are equally applicable to both the singular and plural forms of the terms defined.  The words “hereof’, “herein” and “hereunder” and words of like import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  The word “including” when used in this Agreement without the phrase “without limitation,” shall mean “including, without limitation.” All references to time of day herein are references to Chicago, Illinois time unless otherwise specifically provided.  Any reference contained herein to attorneys’ fees and expenses shall be deemed to be reasonable fees and expenses of Lender’s outside counsel and of any other third-party experts or consultants engaged by Lender’s outside counsel on Lender’s behalf.  All references to a Transaction Document shall be deemed to be to such document as amended, modified or restated from time to time.  With respect to any reference in this Agreement to any defined term, (a) if such defined term refers to a Person, then it shall also mean all heirs, legal representatives and permitted successors and assigns of such Person, and (b) if such defined term refers to a document, instrument or agreement, then it shall also include any replacement, extension or other modification thereof.
1.3    Exhibits and Schedules Incorporated.  All Exhibits and Schedules attached hereto or referenced herein, are hereby incorporated into this Agreement.
2.    CREDIT FACILITY.
2.1    The Loan.  From the date hereof until the Maturity Date, Lender agrees to extend the Loan to Borrower in accordance with the terms of, and subject to the conditions set forth in, this Agreement, the Note and the other Transaction Documents.  An initial Borrowing Tranche under 

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the Loan shall be borrowed on the Closing Date as set forth in Section 3.1 and shall bear interest as a LIBO Rate Tranche, and, thereafter, any such Borrowing Tranche may be converted or renewed from time to time in accordance with the terms and subject to the conditions set forth in this Agreement.  Subject to Section 2.6 and any other conditions and limitations set forth in this Agreement, any Borrowing Tranche under the Loan shall be treated as, at Borrower’s election subject to and in accordance with the terms in this Agreement: (a) a LIBO Rate Tranche and shall bear interest per annum at a rate equal to 1.25% (125 basis points) plus the LIBO Rate; or (b) a Base Rate Tranche and shall bear interest at a rate equal to the Base Rate plus 1.25% (125 basis points).  The unpaid principal balance plus all accrued but unpaid interest on the Loan shall be due and payable on the Maturity Date, or such earlier date on which such amount shall become due and payable on account of acceleration by Lender in accordance with the terms of the Note and this Agreement.  For the avoidance of doubt, this is a revolving credit facility and Borrower may borrow, repay and reborrow until the Maturity Date, subject to the terms and conditions in the Agreement.  Notwithstanding the foregoing, Borrower shall maintain a principal balance of $0.00 (zero) outstanding under the Loan for a period of at least 30 consecutive calendar days during the term of the Loan.
2.2    The Note.  The Loan shall be evidenced by the Note.
2.3    Maturity Date.  On the Maturity Date, all sums due and owing under this Agreement and the other Transaction Documents with respect to the Loan shall be repaid in full.  Borrower acknowledges and agrees that Lender has not made any commitments, either express or implied, to extend the terms of the Loan past its Maturity Date, unless Borrower and Lender hereafter specifically otherwise agree in writing.
2.4    Commitment Fee.  Borrower shall pay Lender a fee equal to 0.15% (fifteen basis points) per annum (computed on the basis of a 360-day year, actual days elapsed) on the average daily unused amount of the Loan, which fee shall be calculated on a quarterly basis by Lender and shall be due and payable by Borrower on each March 31, June 30, September 30 and December 31, commencing on December 31, 2011.  Such fees shall be fully earned when paid and shall not be refunded for any reason.
2.5    The Closing.  The establishment of the revolving credit facility shall occur at the closing (the “Closing”) which will occur at the offices of Kirkland & Ellis LLP, counsel to Lender, at 300 North LaSalle Street, Suite 2400, Chicago, Illinois at 9:30 a.m. (local time) on the Closing Date, or at such other place, date, time or manner (including remotely via the electronic or other exchange of documents and signature pages) as the parties hereto may agree, and may include the disbursement of the proceeds of the Loan in accordance with the Instructions, if any, received at least one Business Day prior to Closing.
2.6    Interest Rate Matters.  Borrower agrees that matters concerning the election, payment, application, accrual and computation of interest and interest rates shall be in accordance with Lender’s practices set forth in this Agreement and in the other Transaction Documents.
2.6.1    Applicable Interest Rate.  Subject to Sections 2.6 and 2.7, the initial Borrowing Tranche shall bear interest as a LIBO Rate Tranche and shall continue as a LIBO Rate 

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Tranche unless LIBO Rate pricing is not available.  For any Base Rate Borrowing Tranche, Borrower may make, if available, a LIBO Rate election by delivering a Rate Election Notice before 12:00 p.m., Eastern time, on the second Business Day prior to the Borrowing Date.  The LIBO Rate shall remain fixed for each LIBO Rate Tanche until the next LIBOR Period commences.  Borrower may elect, by designation on a Rate Election Notice to convert a Base Rate Tranche or any portion thereof into a LIBO Rate Tranche.  For purposes of the immediately preceding sentence, the amount of any “portion” shall be $1,000,000, or a multiple thereof In the event Borrower fails to notify Lender that Borrower desires to continue any LIBO Rate Tranche or any portion thereof by the last day of the applicable LIBOR Period, Borrower shall be deemed to have elected to continue the LIBO Rate Tranche in question for an additional LIBOR Period.  Any Rate Election Notice delivered by Borrower shall be irrevocable and may not be modified in any way without the prior, written approval of Lender.  The LIBOR Period for the continuation of any LIBO Rate Tranche shall commence on the day after the last day of the next preceding LIBOR Period.  Notwithstanding anything to the contrary contained herein and subject to the default interest provisions contained herein, if an Default or Event of Default occurs, all LIBO Rate Tranches will convert to Base Rate Tranches upon the expiration of the LIBOR Periods therefore.  The conversion of a LIBO Rate Tranche to a Base Rate Tranche pursuant to a description in a Rate Election Notice shall only occur on the last Business Day of the LIBOR Period relating to such LIBO Rate Tranche.  Lender is hereby authorized to rely upon Instructions, Rate Election Notices and other written communications concerning the Loan delivered by any authorized officer of Borrower, including Mark R. Mershon, Treasurer and Michael J. Hughes, Chief Financial Officer, and any other officer designated on the Notice of Authorized Borrowers delivered by Borrower from time to time, and such additional authorized agents as any of the above-referenced officers of Borrower shall designate, in writing, to Lender from time to time.
2.6.2    Interest Payments.  Subject to Section 2.6.3 and except as otherwise expressly provided in the Note, interest accrued (a) on each LIBO Rate Tranche shall be payable by Borrower in arrears on the last day of each LIBOR Period and on the Maturity Date, and (b) on each Base Rate Tranche or any other outstanding amount of the Loan shall be payable by Borrower in arrears on the last day of each March, June, September and December, beginning December 31, 2011, and on the Maturity Date.
2.6.3    Default Interest.  Notwithstanding the rates of interest and the payment dates specified in this Section 2.6, effective immediately upon the occurrence and during the continuance of any Event of Default, the principal balance of the Loan then outstanding and, to the extent permitted by applicable law, any interest payments not paid within five days after the same becomes due shall bear interest payable upon demand at a rate which is 3% per annum in excess of the rate of interest otherwise payable under this Agreement (the “Default Rate”).  In addition, all other amounts due Lender (whether directly or for reimbursement) under this Agreement or any of the other Transaction Documents, if not paid when due or, in the event no time period is expressed, if not paid within five days after written notice from Lender that the same has become due, shall thereafter bear interest at the foregoing Default Rate.  Finally, any amount due on the Maturity Date which is not then paid shall also bear interest thereafter at the Default Rate.

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2.6.4    Computation of Interest.  Interest shall be computed on the basis of the actual number of days elapsed in the period during which interest accrues and a year of 360 days.  In computing interest, the date of funding shall be included and the date of payment (with respect to the amount timely paid on such date) shall be excluded; provided, however, that if any funding is repaid on the same day on which it is made, one day’s interest shall be paid thereon.  The parties hereto intend to conform strictly to applicable usury laws as in effect from time to time during the term of the Loan.  Accordingly, if the transaction contemplated hereby would be usurious under applicable law (including the laws of the United States of America, or of any other jurisdiction whose laws may be mandatorily applicable), then, in that event, notwithstanding anything to the contrary in this Agreement or the Note, Borrower and Lender agree that the aggregate of all consideration that constitutes interest under applicable law that is contracted for, charged or received under or in connection with this Agreement shall under no circumstances exceed the maximum amount of interest allowed by applicable law, and any excess shall be credited to Borrower by Lender (or if such consideration shall have been paid in full, such excess refunded to Borrower by Lender).
2.7    Certain Provisions Regarding Taxes, Yield Protection and Illegality.
2.7.1    Changes; Legal Restrictions.  In the event the adoption of or any change in any law, treaty, rule, regulation, guideline or the interpretation or application thereof by a Governmental Agency (whether or not having the force of law and whether or not the failure to comply therewith would be unlawful) either (a) subjects Lender to any tax (other than income taxes or franchise taxes not specifically based on loan transactions), duty or other charge of any kind with respect to any LIBO Rate Tranche or changes the basis of taxation of payments to Lender of principal, fees, interest or any other amount payable in connection with a LIBO Rate Tranche, or (b) imposes on Lender any other condition materially more burdensome in nature, extent or consequence than those in existence as of the date of this Agreement, and the result of any of the foregoing is to increase the cost to Lender of making, renewing or maintaining any LIBO Rate Tranches or to reduce any amount receivable thereunder; then, in any such case, Borrower shall promptly pay to Lender, as applicable, upon demand, such amount or amounts as may be necessary to compensate Lender for any such additional cost incurred or reduced amounts received.
2.7.2    LIBO Rate Lending Unlawful.  If Lender shall determine (which determination shall, upon notice thereof to Borrower, be conclusive and binding in the absence of readily demonstrable error) that the adoption of or any change in any law, treaty, rule, regulation, guideline or in the interpretation or application thereof by any Governmental Agency makes it unlawful for Lender to make or maintain any LIBO Rate Tranche, (a) the obligation of Lender to make or continue any LIBO Rate Tranche shall, upon such determination, forthwith be suspended until Lender shall notify Borrower that the circumstances causing such suspension no longer exist, and (b) if required by such law, interpretation or application, all LIBO Rate Tranches shall automatically convert into Base Rate Tranches.
2.7.3    Unascertainable Interest Rate.  If Lender shall have determined in good faith that adequate means do not exist for ascertaining the interest rate applicable hereunder to LIBO Rate Tranches, then, upon notice from Lender to Borrower, the obligations of Lender to make or 

13

continue LIBO Rate Tranches shall forthwith be suspended, and thereafter the Loan shall continue as a Base Rate Tranche until Lender shall notify Borrower that the circumstances causing such suspension no longer exist.  Lender will give such notice when it determines, in good faith, that such circumstances no longer exist; provided, however, that Lender shall not have any liability with respect to any delay in giving such notice.
2.7.4    Funding Losses.  In the event Lender shall incur any loss or expense (including, without limitation, any loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by Lender to make or maintain any LIBO Rate Tranche) as a result of any continuance, conversion, repayment or prepayment of the principal amount of, or failure to make or termination of, any LIBO Rate Tranche on a date other than the scheduled last day of the LIBOR Period applicable thereto, then, upon the written notice of such from Lender to Borrower, Borrower shall reimburse Lender for such loss or expense within three Business Days after receipt of such notice.  Such written notice (which shall include calculations in reasonable detail) shall be conclusive and binding in the absence of readily demonstrable error.
2.7.5    Increased Costs; Reserves on LIBO Rate Tranches.
2.7.5.1    Increased Costs Generally.  If any Change in Law shall: (a) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, Lender (except any reserve requirement contemplated by Section 2.7.5.5); (b) subject any Lender to any tax of any kind whatsoever with respect to this Agreement or any LIBO Rate Tranche made by it, or change the basis of taxation of payments to Lender in respect thereof; or (c) impose on any Lender or the London Inter-Bank Eurodollar Market any other condition, cost or expense affecting this Agreement or LIBO Rate Tranches made by Lender and the result of any of the foregoing shall be to increase the cost to Lender of making or maintaining the Loan based on the LIBO Rate (or of maintaining its obligation to make any such Loan), or to reduce the amount of any sum received or receivable by Lender hereunder (whether of principal, interest or any other amount) then, upon request of Lender, Borrower will pay to Lender, such additional amount or amounts as will compensate Lender for such additional costs incurred or reduction suffered.
2.7.5.2    Capital Requirements.  If Lender determines that any Change in Law affecting Lender or any lending office of Lender or such Lender’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on Lender’s capital or on the capital of Lender’s holding company, if any, as a consequence of this Agreement or the Loan made by Lender, to a level below that which Lender or Lender’s holding company could have achieved but for such Change in Law (taking into consideration Lender’s policies and the policies of Lender’s holding company with respect to capital adequacy), then from time to time Borrower will pay to Lender such additional amount or amounts as will compensate Lender or Lender’s holding company for any such reduction suffered.  Lender acknowledges that with respect to the provisions of Sections 2.7.5.1 and 2.7.5.2, Lender will treat Borrower in substantially the same manner as Lender treats other similarly situated borrowers.
2.7.5.3    Certificates for Reimbursement.  A certificate of Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, 

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as the case may be, as specified in subsection (a) or (b) of this Section and delivered to Borrower shall be conclusive absent manifest error.  Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.
2.7.5.4    Delay in Requests.  Failure or delay on the part of Lender to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Lender’s right to demand such compensation, provided, however, Borrower shall not be required to compensate a Lender pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that Lender notifies Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefore (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).
2.7.5.5    Reserves on LIBO Rate Tranches.  Borrower shall pay to Lender, as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including LIBO funds or deposits (currently known as “Eurocurrency liabilities”), additional interest on the unpaid principal amount of each LIBO Rate Tranche equal to the actual costs of such reserves allocated to the Loan by Lender (as determined by Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided, however, Borrower shall have received at least 10 days’ prior notice of such additional interest from Lender.  If Lender fails to give notice 10 days prior to the relevant Interest Payment Date, such additional interest shall be due and payable 10 days from receipt of such notice.
2.7.5.6    Compensation for Losses.  Upon demand of Lender from time to time, Borrower shall promptly compensate Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of: (i) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Tranche on a day other than the last day of the interest period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration or otherwise); (ii) any failure by Borrower (for a reason other than the failure of Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Tranche on the date or in the amount notified by Borrower; or (iii) any assignment of a LIBO Rate Tranche on a day other than the last day of the interest period therefore as a result of a request by Borrower; including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain the Loan or from fees payable to terminate the deposits from which such funds were obtained.  Borrower shall also pay any customary administrative fees charged by Lender in connection with the foregoing.  For purposes of calculating amounts payable by Borrower to Lender under this subsection (b), each Lender shall be deemed to have funded each LIBO Rate Tranche made by it at the LIBO Rate for such Tranche by a matching deposit or other borrowing in the London Inter-Bank Eurodollar Market for a comparable amount and for a comparable period, whether or not such LIBO Rate Tranche was in fact so funded.
2.7.5.7    Survival.  All of Borrower’s obligations under this Section 23 shall survive termination of the Agreement, and repayment of all Loan hereunder.

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2.7.6    Notice of Changes or Increased Costs Relating to LIBO Rate Tranches.  Lender agrees that, as promptly as reasonably practicable after it becomes aware of the occurrence of an event or the existence of a condition which would cause it to be affected by any of the events or conditions described in this Section 2.7, it will notify Borrower of such event and the possible effects thereof, provided that the failure to provide such notice shall not affect Lender’s rights to reimbursement provided for herein.
2.8    Payments.  Borrower agrees that matters concerning prepayments, payments and application of payments shall be in accordance with Lender’s practices set forth in this Agreement and in the other Transaction Documents.
2.8.1    Prepayment.  Subject to Section 2.7.4 hereof and the immediately following sentence, Borrower may, upon at least one Business Day’s notice to Lender, prepay, without penalty, all or a portion of the principal amount outstanding under the Note in a minimum aggregate amount of $100,000 or any larger integral multiple of $100,000 by paying the principal amount to be prepaid, together with unpaid accrued interest thereon to the date of prepayment.  Amounts that are prepaid under the Note may be reborrowed.
2.8.2    Manner and Time of Payment.  All payments of principal, interest and fees hereunder payable to Lender shall be made, without condition or reservation of right and free of set-off or counterclaim, in U.S. dollars and by wire transfer (pursuant to Lender’s written wire transfer instructions) of immediately available funds delivered to Lender not later than 11:00 a.m. (Central time) on the date due.  Funds received by Lender after that time and date shall be deemed to have been paid on the next succeeding Business Day.
2.8.3    Payments on Non-Business Days.  Whenever any payment to be made by Borrower hereunder shall be stated to be due on a day which is not a Business Day, payments shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest hereunder.
2.8.4    Application of Payments.  All payments received by Lender from or on behalf of Borrower shall be applied first to amounts due to Lender to reimburse Lender’s costs and expenses, including those pursuant to Section 5.5 or Section 8.5 and, second to accrued interest under the Note, and third to principal amounts outstanding under the Note; provided, however, subject to Section 8.1.2 of this Agreement, that after the date on which the final payment of principal with respect to the Loan is due or following and during any Event of Default, all payments received on account of Borrower’s Liabilities shall be applied in whatever order, combination and amounts as Lender, in its sole and absolute discretion, decides, to all costs, expenses and other indebtedness owing to Lender.
3.    DISBURSEMENTS.
3.1    Initial and Subsequent Disbursements.  Following the Closing and the delivery of all items required by Section 3, at such time as all of the terms and conditions in Section 3.3 have been satisfied by Borrower and Borrower has executed and delivered to Lender each of the Transaction Documents and any other related documents in form and substance reasonably 

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satisfactory to Lender, Lender shall disburse to Borrower an amount up to $25,000,000.  In the event Borrower fails to satisfy any disbursement conditions, Borrower nevertheless shall pay all costs and expenses incurred by Lender in connection with the transactions contemplated herein promptly upon receipt of an invoice therefore from Lender.
3.2    Closing Deliveries.  In conjunction with and as additional (but independent) supporting evidence for certain of the covenants, representations and warranties made by Borrower herein, at the Closing and as a condition of the first disbursement to be made pursuant to this Agreement (the “Initial Disbursement”), Borrower shall deliver or cause to be delivered to Lender each of the following, each of which shall be in form and substance satisfactory to Lender, in its sole and absolute discretion:
3.2.1    Searches.  Such UCC, tax lien and judgment searches regarding Borrower pertaining to the jurisdictions in which Borrower is organized and headquartered.
3.2.2    Opinions.  An opinion of counsel of Borrower in substantially the form attached as Exhibit C hereto and otherwise satisfactory to Lender, dated as of the Closing Date.
3.2.3    Transaction Documents.  The Transaction Documents, including the Note.
3.2.4    Authority Documents.
3.2.4.1    Copies certified by the appropriate secretary of state or Governmental Agency of (i) the articles of incorporation of Borrower, and (ii) the articles of association of Subsidiary Bank.
3.2.4.2    Good standing certificates for (i) Borrower issued by the Secretary of State of the Commonwealth of Pennsylvania, and (ii) Subsidiary Bank issued by the OCC.
3.2.4.3    Copies certified by the Secretary or an Assistant Secretary of Borrower of the Bylaws of Borrower and Subsidiary Bank.
3.2.4.4    Copies certified by the Secretary or an Assistant Secretary of Borrower of resolutions of the board of directors of Borrower authorizing the execution, delivery and performance of this Agreement, the Note and the other Transaction Documents.
3.2.4.5    An incumbency certificate of the Secretary or an Assistant Secretary of Borrower certifying the names of the officer or officers of Borrower authorized to sign this Agreement, the Note and the other documents provided for in this Agreement, together with a sample of the true signature of each such officer (Lender may conclusively rely on such certificate until formally advised by a like certificate of any changes therein).
3.2.5    Regulatory Consents.  Copies certified by the Secretary or an Assistant Secretary of Borrower of all documents evidencing all necessary consents, approvals and determinations of any Governmental Agency with respect to the transactions contemplated in the 

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Transaction Documents and any other transactions between Lender and Borrower or Subsidiary Bank.
3.2.6    Instructions.  The Instructions, if any.
3.2.7    Costs of Lender.  Payment of certain costs and expenses incurred by Lender to date in connection with the transactions contemplated herein, including Lender’s attorneys’ fees and expenses and other reasonable fees and expenses paid or payable to any other parties.
3.2.8    Other Requirements.  Such other additional information regarding Borrower, Subsidiary Bank and their respective assets, liabilities (including any liabilities arising from, or relating to, legal proceedings) and contracts as Lender may require in its sole discretion.
3.2.9    Other Documents.  Such other certificates, affidavits, schedules, resolutions, opinions, notes and/or other documents that are provided for hereunder or as Lender may reasonably request.
3.3    Conditions to All Disbursements; Renewals and Conversions.  Notwithstanding anything to the contrary contained herein, the continued performance, observance and compliance by Borrower of and with all of the covenants, conditions and agreements of Borrower contained herein (whether or not non-performance constitutes an Event of Default) and in the other Transaction Documents shall be further conditions precedent to any disbursements of the proceeds under the Loan.  In addition, Lender shall not be required to disburse proceeds under the Loan or to renew or convert any Borrowing Tranche at any time that any of the following are true:
3.3.1    Default.  There exists an Event of Default or Unmatured Event of Default.
3.3.2    Legislation or Proceedings.  Any legislation has been passed or any suit or other proceeding has been instituted the effect of which is to prohibit, enjoin (or to declare unlawful or improper) or otherwise adversely affect, in Lender’s sole and absolute judgment, Borrower’s performance of its obligations hereunder, or any litigation or governmental proceeding has been instituted or threatened against Borrower or any Subsidiary or any of their officers or shareholders which, in the sole discretion of Lender, may adversely affect the financial condition or operations of Borrower or any Subsidiary.
3.3.3    Representations and Warranties.  Any representation or warranty of Borrower contained herein or any information set forth in the recitals hereto, shall not be true on and as of the date of any Borrowing Tranche, with the same effect as though such representations and warranties had been made, or such information had been presented, on and as of such date.
3.3.4    Approvals.  All necessary or appropriate actions and proceedings have not been taken in connection with, or relating to, the transactions contemplated hereby and all documents incident thereto have not been completed and tendered for delivery, in substance and form satisfactory to Lender, including, without limitation, if appropriate in the opinion of Lender, Lender’s failure to have received evidence of all necessary approvals from Governmental Agencies.

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3.3.5    Other Documents.  Lender has not received in substance and form reasonably satisfactory to Lender, all certificates, affidavits, schedules, resolutions, opinions, notes, and/or other documents which are provided for hereunder or which it may reasonably request.
Lender’s refusal to disburse any proceeds of the Loan on account of the provisions of this Section 3.3 shall not alter or diminish any of Borrower’s other obligations hereunder or otherwise prevent any breach or default of Borrower hereunder from becoming an Event of Default.  Each Rate Election Notice submitted by Borrower hereunder shall constitute an affirmation that Borrower has performed, observed and complied with its covenants, conditions and agreements contained herein in all material respects.
4.    GENERAL REPRESENTATIONS AND WARRANTIES.  Borrower hereby covenants, represents and warrants to Lender as follows:
4.1    Organization and Authority.
4.1.1    Organization Matters.  Borrower (a) is a corporation duly organized and validly subsisting under the laws of the Commonwealth of Pennsylvania; (b) is duly qualified as a foreign corporation and in good standing in all jurisdictions in which it is doing business except where the failure to so qualify would not have a material adverse effect on the financial condition, business or operations of Borrower; (c) has all requisite power and authority, corporate or otherwise, to own, operate and lease its properties and to carry on its business as now being conducted, and to enter into this Agreement; and (d) is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended.  Each of Subsidiary Bank and the other Subsidiaries is duly organized, validly existing and chartered under the laws of the jurisdiction of its organization, and has all requisite power and authority, corporate or otherwise, to own, operate and lease its properties and to carry on its business as now being conducted.  The deposit accounts of Subsidiary Bank are insured by the FDIC to the fullest extent permitted by applicable law.  Borrower and Subsidiary Bank have made payment of all franchise and similar taxes in the Commonwealth of Pennsylvania, and in all of the other respective jurisdictions in which they are incorporated, chartered or qualified, except for any such taxes (i) where the failure to pay such taxes will not have a material adverse effect on the financial condition, business or operations of Borrower or Subsidiary Bank, (ii) the validity of which is being contested in good faith and (iii) for which proper reserves have been set aside on the books of Borrower or Subsidiary Bank, as the case may be.
4.12    Capital Stock of the Subsidiary Bank.  Section 4.1.2 of the Disclosure Schedule correctly sets forth (a) the state or states in which Subsidiary Bank owns, leases, operates, maintains, controls or otherwise has an interest in any bank or branch offices, loan production offices, deposit production offices, remote service units for the production of deposits or loans, or any ATMs, and the state or states in which Subsidiary Bank owns or leases any Property, and (b) a list of each class of stock of Subsidiary Bank as well as the owners of record and beneficial owners thereof, including the number of shares held by each, and, except as otherwise stated in Section 4.1.2 of the Disclosure Schedule, there is no plan, agreement or understanding providing for, or contemplating, the issuance of any additional shares of capital stock of Subsidiary Bank.  All of the Subsidiary Bank Shares have been duly authorized, legally and validly issued, fully paid and nonassessable, and the Subsidiary Bank Shares are owned by Borrower free and clear of all pledges, 

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liens, security interests, charges or encumbrances, except as may exist for the benefit of Lender and, following the Closing Date, Borrower will own the Subsidiary Bank Shares free and clear of all pledges, liens, security interests, charges or encumbrances, except for any security interest granted herewith by Borrower to Lender.  None of the Subsidiary Bank Shares have been issued in violation of any shareholder’s preemptive rights.  Except as otherwise stated in Section 4.1.2 of the Disclosure Schedule, there are, as of the date of this Agreement, no outstanding options, rights, warrants or other agreements or instruments obligating Borrower to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of the capital stock of Subsidiary Bank or obligation.
4.13    Subsidiaries.  Each of Borrower’s Subsidiaries is validly existing and in good standing under the laws of its jurisdiction or organization; and each Subsidiary has all requisite power and authority, corporate or otherwise, and possesses all licenses necessary, to conduct its business and own its properties.
4.2    No Impediment to Transactions.
4.2.1    Transaction is Legal and Authorized.  The borrowing of the principal amount of the Loan, the execution of this Agreement and the other Transaction Documents and compliance by Borrower with all of the provisions of this Agreement and of the other Transaction Documents are within the corporate and other powers of Borrower.  This Agreement and the other Transaction Documents to which Borrower is a party have been duly authorized, executed and delivered by Borrower, and are the legal, valid and binding obligations of Borrower, enforceable in accordance with their respective terms.
4.2.2    No Defaults or Restrictions.  Neither the execution and delivery of the Transaction Documents nor compliance with their terms and conditions will (a) violate, conflict with or result in a material breach of, or constitute a material default under: (i) any of the terms, obligations, covenants, conditions or provisions of any corporate restriction or of any indenture, mortgage, deed of trust, pledge, bank loan or credit agreement, charter, bylaw or any other agreement or instrument to which Borrower or any Subsidiary is now a party or by which any of them or any of their properties may be bound or affected; (ii) any judgment, order, writ, injunction, decree or demand of any court, arbitrator, grand jury, or Governmental Agency; or (iii) any statute, rule or regulation applicable to Borrower, or (b) result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any property or asset of Borrower or any Subsidiary.  None of Borrower or any Subsidiary is in material default in the performance, observance or fulfillment of any of the terms, obligations, covenants, conditions or provisions contained in any indenture or other agreement creating, evidencing or securing indebtedness of any kind or pursuant to which any such indebtedness is issued, or other agreement or instrument to which Borrower or any Subsidiary is a party or by which Borrower or any Subsidiary or their properties may be bound or affected.
4.2.3    Governmental Consent.  No governmental orders, permissions, consents, approvals or authorizations are required to be obtained by Borrower and no registrations or declarations are required to be filed by Borrower in connection with, or contemplation of, the execution and delivery of, and performance under, this Agreement and the other Transaction Documents.

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4.3    Purposes of the Loan.
4.3.1    Use of Proceeds.  Borrower shall use the proceeds of the Loan to fund repurchases of Borrower’s outstanding common stock, without par value, to fund the purchase price for one or more acquisitions and for general corporate purposes.  Borrower does not own any “margin security” as such term is defined in Regulation U of the FRB.  Borrower will not use any part of the proceeds of the Loan (a) directly or indirectly to purchase or carry any margin security or reduce or retire any indebtedness originally incurred to purchase any such margin security within the meaning of Regulation U of the FRB, or (b) so as to involve Borrower or Lender in a violation of Regulation U of the FRB.  Borrower agrees to execute, or cause to be executed, all instruments necessary to comply with all of the requirements of Regulation U of the FRB.
4.3.2    Usury.  None of the amounts to be received by Lender as interest under the Note is usurious or illegal under applicable law.
4.4    Financial Condition.
4.4.1    Borrower Financial Statements.  Borrower has delivered to Lender copies of the consolidated and consolidating financial statements of Borrower (which financial statements shall include the financial statement accounts and information of Subsidiary Bank) as of and for the year ending December 31, 2010 (the “Borrower 2010 Financial Statement Date”), audited by Borrower’s Accountant (the “Borrower 2010 Financial Statements”).  The Borrower 2010 Financial Statements are prepared in accordance with the respective books of account and records of Borrower and its Subsidiaries and have been prepared in accordance with GAAP applied on a basis consistent with prior periods, and fairly and accurately present, in all material respects, the financial condition of Borrower and its Subsidiaries and their assets and liabilities and the results of their operations as of such date.  In addition, Borrower has delivered to Lender copies of the call reports filed by Subsidiary Bank and copies of the quarterly financial reports filed by the Borrower with the applicable federal regulator, in each case for the quarterly periods ending March 31, June 30 and September 30, 2011 (such call reports and regulatory filings, “Interim Financial Statements” and together with the Borrower 2010 Financial Statements, the “Borrower Financial Statements”).  The Borrower Interim Financial Statements are prepared in accordance with the respective books of account and records of Borrower and its Subsidiaries and have been prepared in accordance with applicable banking regulations, rules and guidelines on a basis consistent with prior periods, and fairly and accurately present in all material respects the financial condition of Borrower and Subsidiary Bank and their respective assets and liabilities and the results of their respective operations as of such date.  The Borrower Financial Statements contain and reflect provisions for taxes, reserves and other liabilities of Borrower in accordance with GAAP and applicable banking regulations, rules, and guidelines, respectively.  Neither Borrower nor Subsidiary Bank has any material debt, liability or obligation of any nature (whether accrued, contingent, absolute or otherwise) that is not provided for or disclosed in the Borrower Financial Statements.
4.4.2    Absence of Default.  No event has occurred which either of itself or with the lapse of time or the giving of notice or both, would give any creditor of Borrower the right to accelerate the maturity of any indebtedness of Borrower for borrowed money.  Borrower is not in default under any other lease, agreement or instrument, or any law, rule, regulation, order, writ, 

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injunction, decree, determination or award, non-compliance with which could materially adversely affect Borrower’s properties, financial condition or business operations.
4.4.3    Loans.  To Borrower’s knowledge, each loan having an outstanding balance of more than $10,000,000 and reflected as an asset of Subsidiary Bank in the Borrower Financial Statements is the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, or other laws relating to or limiting creditors’ rights or equitable principles generally.  To Borrower’s knowledge, no obligor named therein is seeking to avoid the enforceability of the terms of any loan, and no loan having an unpaid balance (principal and accrued interest) in excess of $5,000,000 is subject to any defense, offset or counterclaim.
4.4.4    Allowance for Loan and Lease Losses.  The allowance for loan and lease losses shown in the Borrower Financial Statements is adequate to provide for losses, net of recoveries relating to loans previously charged off, on loans and leases outstanding as of the date of such statements or reports.
4.4.5    Solvency.  After giving effect to the consummation of the transactions contemplated by this Agreement, Borrower has capital sufficient to carry on its business and transactions and all businesses and transactions in which it is about to engage and is solvent and able to pay its debts as they mature.  No transfer of property is being made and no indebtedness is being incurred in connection with the transactions contemplated by this Agreement with the intent to hinder, delay or defraud either present or future creditors of Borrower or any Subsidiary.
4.5    Title to Properties.
4.5.1    Owned Property.  Borrower and the Subsidiaries have, respectively, good and marketable fee title to all the Properties, and good and marketable title to all other property and assets reflected in the Borrower Financial Statements, except for (a) real property and other assets acquired and/or being acquired from debtors in full or partial satisfaction of obligations owed to Subsidiary Bank, (b) property or other assets leased by Borrower or any Subsidiary, and (c) property and assets sold or otherwise disposed of for their fair market value subsequent to the date of the Borrower Financial Statements.  Except for Properties and other assets acquired and/or being acquired from debtors in full or partial satisfaction of obligations owed to Subsidiary Bank and property or other assets leased by Borrower or any Subsidiary, all property and assets of any kind (real or personal, tangible or intangible) of Borrower and any Subsidiary are free from any liens, encumbrances or defects in title, except for any liens granted previously by Borrower to Lender.  Except as identified in Section 4.5.1 of the Disclosure Schedule, no financing statement under the UCC that names Borrower or any Subsidiary has been filed and none of Borrower or any Subsidiary has signed any financing statement or any pledge agreement authorizing any secured party thereunder to file any such financing statement.
4.5.2    Leased Property.  For assets or property leased by Borrower or any Subsidiary, Borrower and each such Subsidiary enjoy peaceful and undisturbed possession under all of the Leases under which they are operating, all of which permit the customary operations of Borrower and any Subsidiary, as applicable.  None of such leases is in material default and no event 

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has occurred which with the passage of time or the giving of notice, or both, would constitute a material default under any thereof.
4.6    No Material Adverse Change.  Since the Borrower 2010 Financial Statements Date, neither the business, operations, properties nor assets of Borrower or any Subsidiary have been materially and adversely affected in any way.  Since the Borrower 2010 Financial Statements Date, there have been no material changes in the assets, liabilities, or condition, financial or otherwise, of Borrower or any Subsidiary other than changes arising from transactions in the ordinary course of business, and none of such changes has been materially adverse, whether in the ordinary course of business or otherwise.
4.7    Legal Matters.
4.7.1    Compliance with Law.  Borrower and the Subsidiaries have complied with all applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government, or any instrumentality or agency thereof, having jurisdiction over the conduct of their respective businesses or the ownership of their respective properties, except where any such failure to comply would not materially and adversely affect the financial condition, business or operations of Borrower or any Subsidiary.
4.7.2    Taxes.  Borrower and each Subsidiary have filed all United States income tax returns and all state and municipal tax returns which are required to be filed, and have paid, or made adequate provision for the payment of, all material taxes which have become due pursuant to said returns or pursuant to any assessment received by Borrower or any Subsidiary, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided.  Borrower is unaware of any audit, assessment or other proposed action or inquiry of the Internal Revenue Service with respect to the United States income tax liability of Borrower or any Subsidiary.  To Borrower’s knowledge, Borrower and each Subsidiary have withheld amounts from their employees, shareholders or holders of public deposit accounts in full and complete compliance with the tax withholding provisions of applicable federal, state and local laws and each has filed all federal, state and local returns and reports for all years for which any such return or report would be due with respect to employee income tax withholding, social security, unemployment taxes, income and other taxes and all payments or deposits with respect to such taxes have been made within the time period required by law.
4.7.3    Regulatory Enforcement Actions.  Except as set forth in Section 4.7.3 of the Disclosure Schedule, none of Borrower, any Subsidiary or any of their respective officers or directors is now operating under any restrictions, agreements, memoranda, or commitments (other than restrictions of general application) imposed by any Governmental Agency, nor, to Borrower’s knowledge, are any such restrictions threatened or agreements, memoranda or commitments being sought by any Governmental Agency.
4.7.4    Pending Litigation.  Except as otherwise disclosed in Section 4.7.4 of the Disclosure Schedule, there are no actions, suits, proceedings or written agreements pending, or, to Borrower’s knowledge, threatened or proposed, against Borrower or any Subsidiary at law or in equity or before or by any federal, state, municipal, or other governmental department, commission, 

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board, or other administrative agency, domestic or foreign, that, either separately or in the aggregate, will materially and adversely affect the financial condition, business, or operations of any of Borrower or any Subsidiary; and none of Borrower or any Subsidiary is in default with respect to any order, writ, injunction, or decree of, or any written agreement with, any court, commission, board or agency, domestic or foreign, that, either separately or in the aggregate, will materially and adversely affect the financial condition, business, or operations of Borrower or any Subsidiary.
4.7.5    RICO.  There are no suits, actions or proceedings pending or, to Borrower’s knowledge, threatened against Borrower or any Subsidiary, or any of the principals thereof, under a RICO Related Law.
4.7.6    ERISA.  All Employee Benefit Plans (as defined in Section 3(3) of ERISA) established or maintained by Borrower or any ERISA Affiliate or to which Borrower or any ERISA Affiliate contributes are in material compliance with applicable requirements of ERISA, and are in material compliance with applicable requirements (including qualification and non-discrimination requirements) of the Code for obtaining the tax benefits the Code thereupon permits with respect to such plans.  Each Employee Benefit Plan which is a group health plan (within the meaning of Section 5000(b)(1) of the Code) complies with and has been maintained and operated in material compliance with each of the requirements of Section 4980B of the Code.  Neither Borrower nor any ERISA Affiliate has failed to make on a timely basis any required contributions or to pay on a timely basis any amounts with respect to any Employee Benefit Plan or ERISA or any other applicable law.  No “reportable event” or non-exempt “prohibited transaction,” as defined in ERISA, has occurred and is continuing as to any Employee Benefit Plan and no excise taxes have been incurred or security is required with respect to any Employee Benefit Plan.  Except as set forth in Section 4.7.6 of the Disclosure Schedule, no Employee Benefit Plan has, or as of the Closing Date will have, any amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA) for which Borrower or any ERISA Affiliate could be liable to any Person under Title IV of ERISA if any such plan were terminated.  All Employee Benefit Plans are funded in accordance with Section 412 of the Code (if applicable).  There would be no obligations under Title IV of ERISA relating to any Employee Benefit Plan that is a multiemployer plan if any such plan were terminated or if Borrower or any ERISA Affiliate withdrew from any such plan.  Except as set forth in Section 4.7.6 of the Disclosure Schedule, and except as required by Section 4980B of the Code or applicable state insurance laws, neither Borrower nor any ERISA Affiliate has promised any employee medical coverage after termination of employment, or promised medical coverage to any former employee or other individual not employed by Borrower or any ERISA Affiliate, and neither Borrower nor any ERISA Affiliate maintains or contributes to any plan or arrangement providing medical benefits to employees after their termination of employment or any other individual not employed by Borrower or any ERISA Affiliate.
4.7.7    Environmental.  No Property is or, to the best of Borrower’s knowledge, has been a site for the use, generation, manufacture, storage, treatment, release, threatened release, discharge, disposal or transportation of any Hazardous Materials other than those used, stored and released by Borrower within an office in the ordinary course of business, and neither Borrower nor any Subsidiary has engaged in any such activities each outside of those performed in the ordinary course of business within an office.  Property, and Borrower and each Subsidiary, are in compliance 

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with all Hazardous Materials Laws.  There are no claims or actions (“Hazardous Materials Claims”) pending or, to the best of Borrower’s knowledge, threatened, nor have there been any such claims or actions in the past, against Borrower or any Subsidiary or any Property by any Governmental Agency or by any other Person relating to any Hazardous Materials or pursuant to any Hazardous Materials Law.
4.8    Borrower Status.
4.8.1    Restrictions on Borrower.  None of Borrower or any Subsidiary is a party, nor is bound by, any contract or agreement or instrument, or subject to any charter or other corporate restriction materially and adversely affecting its financial condition, business or operations.
4.8.2    Non-Foreign Status.  Borrower is not a nonresident alien for purposes of U.S. income taxation and is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as said terms are defined in the Code or regulations promulgated thereunder).
4.8.3    Investment Company Act.  Borrower is not an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.
4.8.4    No Burdensome Agreements.  None of Borrower or any Subsidiary is a party to any agreement, instrument or undertaking or subject to any other restriction (a) which presently has a material adverse affect upon the property, financial condition or business operations of Borrower or any Subsidiary, or (b) under or pursuant to which Borrower or any Subsidiary is or will be required to place (or under which any other Person may place) a lien upon any of its properties securing indebtedness either upon demand or upon the happening of a condition, with or without such demand.
4.9    No Misstatement.  No information, exhibit, report, schedule or document furnished by Borrower to Lender in connection with the negotiation, execution or performance of this Agreement or the funding of the Loan contains any untrue statement of a material fact, or omits to state a material fact or any fact necessary to make the statements contained therein not misleading in light of the circumstances when made or furnished to Lender.
4.10    Representations and Warranties Generally.  The representations and warranties set forth in this Agreement or in any other Transaction Document will be true and correct (a) on the date of this Agreement, (b) as otherwise provided herein, and (c) as otherwise provided in the quarterly compliance certificates delivered pursuant to Section 6.3 with the same force and effect as if made on each such date.  All representations, warranties, covenants and agreements made in this Agreement or in any certificate or other document delivered to Lender by or on behalf of Borrower pursuant to or in connection with this Agreement shall be deemed to have been relied upon by Lender notwithstanding Lender’s review of any documents or materials delivered by Borrower to Lender pursuant to the terms hereof and notwithstanding any investigation heretofore or hereafter made by Lender or on its behalf (and Borrower hereby acknowledges such reliance by Lender in making the Loan and all disbursements thereunder) and, furthermore, shall survive the making of any or all of the disbursements of proceeds under the Loan and continue in full force 

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and effect as long as there remains unperformed any obligations to Lender hereunder or under any of the other Transaction Documents.
5.    GENERAL COVENANTS, CONDITIONS AND AGREEMENTS.  Borrower hereby further covenants and agrees with Lender as follows:
5.1    Compliance with Transaction Documents.  Borrower shall comply with, observe and timely perform each and every one of the covenants, agreements and obligations under each and every one of the Transaction Documents.
5.2    Material Transactions.
5.2.1    Merger, Consolidation and Sale of Assets.  Without the prior written consent of Lender, which consent shall not be unreasonably withheld so long as Borrower is the survivor of any such transaction, Borrower shall not consolidate with or merge with, or sell, lease or otherwise transfer all or substantially all of its assets to, any Person.
5.2.2    Restricted Payments.  If an Event of Default has occurred and is continuing, Borrower shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock.
5.2.3    Incurring Debt.  Without the prior written consent of Lender, which consent shall not be unreasonably withheld, Borrower shall not itself, nor shall it cause, permit or allow any Subsidiary to (a) create, assume, incur, have outstanding, or in any manner become liable in respect of any Indebtedness other than as reflected in Section 5.2.3 of the Disclosure Schedule (including, without limitation, any refinancings, renewals, amendments and extensions thereof), or (b) create, assume, incur, suffer or permit to exist any mortgage, pledge, deed of trust, encumbrance (including the lien or retained security title of a conditional vendor), security interest, assignment, lien or charge of any kind or character upon or with respect to any of their real or personal property, including, without limitation, any capital stock owned by Borrower whether owned at the date hereof or hereafter acquired, or assign or otherwise convey any right to receive income; provided, however, that Borrower may create, assume, incur, suffer or permit to exist any encumbrance (including the lien or retained security title of a conditional vendor), security interest, assignment, lien or charge with respect to property purchased pursuant to permitted purchase money obligations that, in the aggregate, do not exceed $5,000,000; provided, further that Lender agrees and acknowledges that common stock of Borrower acquired by Borrower, if any, with the proceeds of the Loan shall not be subject to the limitations set forth in this Section 5.2.3 and may be used in the ordinary course by Borrower in connection with its equity-based compensation plans..
5.2.4    Asset Sales.  Borrower shall not itself, nor shall it cause, permit or allow any Subsidiary to dispose of by sale, assignment, lease or otherwise, property or assets now owned or hereafter acquired if such property or assets plus all other properties and assets sold, leased, transferred or otherwise disposed of during the 12-month period ending on the date of such sale, lease or other disposition shall have an aggregate value of more than 10% of the consolidated assets of Borrower as reflected in the most recent balance sheet delivered to Lender (pursuant to Section 

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6 hereof) prior to the commencement of such period, except that Subsidiary Bank may sell assets in the ordinary course of its banking business and consistent with safe and sound banking practices.
5.2.5    Capital Stock Matters.  Borrower shall not, nor shall it cause, permit or allow any Subsidiary to, redeem any of its capital stock or other outstanding securities or otherwise change its capital structure.
5.2.6    Making Loans.  Borrower shall not, nor shall it cause, permit or allow any Subsidiary to, make any loans or advances, whether secured or unsecured, to any Person, other than loans or advances made by Subsidiary Bank in the ordinary course of business and in accordance in all material respects with safe and sound banking practices and applicable laws and regulations.
5.2.7    Other Matters.  Borrower shall notify Lender of any of the following at least 10 days prior to the effectiveness thereof, or, in the case of matters described in clause (c) below for which 10 days’ pre-effectiveness notice is not given to Borrower, as soon as practicable: (a) any change in the name of Borrower or any Subsidiary; (b) any change in the headquarters or principal place of business of Borrower or any Subsidiary; (c) the issuance, execution or adoption of any formal or informal (whether voluntary or involuntary) regulatory action with respect to Borrower or any Subsidiary at the request of any Governmental Agency; and (d) any material change in the capital structure of Borrower.
5.3    Subsidiary Bank Shares.
5.3.1    Encumbrance.  Borrower shall not itself, nor shall it cause, permit or allow any Subsidiary to directly or indirectly create, assume, incur, suffer or permit to exist any pledge, encumbrance, security interest, assignment, lien or charge of any kind or character on the Subsidiary Bank Shares.  Borrower shall not itself, nor shall it cause, permit or allow any Subsidiary to sell, transfer, issue, reissue, exchange or grant any option with respect to any Subsidiary Bank Shares.
5.3.2    Dilution.  Borrower shall not itself, nor shall it cause, permit or allow any Subsidiary to cause or allow the percentage of Subsidiary Bank Shares owned directly or indirectly by Borrower to diminish as a percentage of the outstanding capital stock of Subsidiary Bank.
5.4    Business Operations.
5.4.1    Compliance with Transaction Documents.  Borrower shall not itself, nor shall it cause, permit or allow any Subsidiary to breach or fail to perform or observe in any material respect any of the terms and conditions of the Note, the Pledge Agreement or any other Transaction Document.  For purposes of this Agreement, any failure by Borrower to pay any amounts under the Agreement, the Note or any other Transaction Document when due (taking into account any applicable cure period) shall be deemed to be material.
5.4.2    Banking Practices.  Borrower shall not itself, nor shall it cause, permit or allow any Subsidiary to engage in any unsafe or unsound banking practices as determined by a Governmental Agency.

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5.4.3    Affiliate Transactions.  Borrower shall not itself, nor shall it cause, permit or allow any Subsidiary to enter into any transaction including, without limitation, the purchase, sale or exchange of property or the rendering of any service, with any Affiliate except in the ordinary course of business and in accordance with safe and sound banking practices and applicable laws and regulations, and pursuant to the reasonable requirements of Borrower’s or such Affiliate’s business and upon terms consistent with applicable laws and regulations and reasonably found by the appropriate board(s) of directors to be fair and reasonable and no less favorable to Borrower or such Affiliate than would be obtained in a comparable arm’s length transaction with a Person not an Affiliate.
5.4.4    Insurance.  At its sole cost and expense, Borrower will maintain, and will cause each Subsidiary to maintain, bonds and insurance to such extent, covering such risks as is usual and customary for owners of similar businesses and properties in the same general area in which Borrower or a Subsidiary operates, including, without limitation, insurance for fire and other risks insured against by extended coverage, public liability insurance, workers’ compensation insurance and such additional bonds and insurance as may reasonably be requested by Lender.  All such bonds and policies of insurance shall be in a form, in an amount and with issuers/insurers recognized as adequate by prudent business persons.
5.5    Compliance with Laws.
5.5.1    Generally.  Borrower shall comply and cause each Subsidiary to comply in all material respects with all applicable statutes, rules, regulations, orders and restrictions in respect of the conduct of their respective businesses and the ownership of their respective properties.
5.5.2    Regulated Activities.  Borrower shall not itself, nor shall it cause, permit or allow any Subsidiary to (a) engage in any business or activity not permitted by all applicable laws and regulations, including without limitation, the FDI Act and any regulations promulgated thereunder, or (b) make any loan or advance secured by the capital stock of another bank or depository institution, or acquire the capital stock, assets or obligations of or any interest in another bank or depository institution, in each case other than in the ordinary course of business and in accordance with applicable laws and regulations and safe and sound banking practices.
5.5.3    Taxes.  Borrower shall promptly pay and discharge all taxes, assessments and other governmental charges imposed upon Borrower or any Subsidiary or upon the income, profits, or property of Borrower or any Subsidiary and all claims for labor, material or supplies which, if unpaid, might by law become a lien or charge upon the property of Borrower or any Subsidiary.  None of Borrower or any Subsidiary shall be required to pay any such tax, assessment, charge or claim, so long as the validity thereof shall be contested in good faith by appropriate proceedings, and reserves therefore shall be maintained on the books of Borrower and such Subsidiary as are deemed adequate by Lender.
5.5.4    ERISA.  As soon as possible, and in any event within ten Business Days, after: (a) Borrower or any ERISA Affiliate knows that with respect to any Employee Benefit Plan, a “prohibited transaction,” a “reportable event,” or any other event or condition which could subject Borrower or any ERISA Affiliate to liability under ERISA or the Code; or (b) the institution of steps 

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by Borrower or any ERISA Affiliate to withdraw from, or the institution of any steps by any party to terminate, any Employee Benefit Plan; has or may have occurred, Borrower shall deliver to Lender a certificate of a responsible officer setting forth the details of such matter, the action that Borrower proposes to take with respect thereto, and, when known, any action taken or threatened by the Internal Revenue Service, the U.S. Department of Labor, or the Pension Benefit Guarantee Corporation.  For purposes of this covenant, Borrower shall be deemed to have knowledge of all facts known by the fiduciaries of any plan of Borrower or any ERISA Affiliate.
5.5.5    Environmental Matters.  Borrower shall: (a) exercise, and cause each Subsidiary to exercise, due diligence in order to comply with all Hazardous Materials Laws; (b) promptly advise Lender in writing and in reasonable detail of (i) any Condition or Release required to be reported to any Governmental Agency under any applicable Hazardous Materials Laws, (ii) any and all written communications with respect to Hazardous Materials Claims or any Condition or Release required to be reported to any Governmental Agency, (iii) any remedial action taken by Borrower or any other Person in response to (A) any Hazardous Material on, under or about any Property, the existence of which is reasonably likely to give rise to an Environmental Claim, or (B) any Environmental Claim that could reasonably be expected to have a material adverse effect on Borrower or any Subsidiary, (iv) Borrower’s discovery of any occurrence or condition on any real property adjoining or in the vicinity of any Property that could cause such Property or any part thereof to be subject to any materially adverse restrictions on the ownership, occupancy, transferability or use thereof under any Hazardous Materials Law, and (v) any request for information from any Governmental Agency indicating that such agency has initiated an investigation as to whether Borrower or any Subsidiary may be potentially responsible for a Condition or Release or threatened Condition or Release of Hazardous Materials; (c) at its own expense, provide copies of such documents as Lender may reasonably request in relation to any matters disclosed pursuant to this Section 5.4.5; (d) promptly take any and all necessary remedial action in connection with any Condition or Release or threatened Condition or Release on, under or from any Property in order to comply with all applicable Hazardous Materials Laws.  In the event Borrower or any Subsidiary undertakes any remedial action with respect to such Hazardous Material on, under or about any Property, Borrower or such Subsidiary shall conduct and complete such remedial action in compliance with all applicable Hazardous Materials Laws and in accordance with the policies, orders and directives of all Governmental Agencies.  Borrower shall permit Lender, from time to time and in its sole and absolute discretion, to retain, at Borrower’s expense, an independent professional consultant to review any report relating to Hazardous Materials prepared by or for Borrower or any Subsidiary, and at reasonable times and subject to reasonable conditions to conduct its own investigation of any Property, and Borrower agrees to use commercially reasonable efforts to obtain permission for Lender’s professional consultant to conduct its own investigation of any Property and shall cause each Subsidiary to do the same.  Borrower hereby grants to Lender, its agents, employees, consultants, and contractors the right to enter into or on to, at reasonable times, any Property to perform such tests on such Property as are reasonably necessary to conduct such investigation.  Borrower shall promptly notify Lender of (1) any acquisition of stock, assets, or property by Borrower or any Subsidiary that reasonably could be expected to expose Borrower or any Subsidiary to, or result in, a Hazardous Materials Claim that could have a material adverse effect or that could be expected to have a material adverse effect on any governmental authorization, license, permit or approval then held by Borrower or any Subsidiary, and (2) any proposed action 

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outside the normal course of business to be taken by Borrower or any Subsidiary to commence industrial or other operations that could subject Borrower or any Subsidiary to additional laws, rules or regulations, including, without limitation, laws, rules and regulations requiring additional environmental permits or licenses.
5.5.6    Environmental Indemnity.  Borrower hereby agrees to defend, indemnify and hold harmless Lender, its directors, officers, employees, agents, successors and assigns (including, without limitation, any participants in the Loan) from and against any and all losses, damages, liabilities, claims, actions, judgments, court costs and legal or other expenses (including, without limitation, attorney’s fees and expenses) which Lender may incur as a direct or indirect consequence of (a) any Hazardous Materials Claim or any other violation of a Hazardous Materials Law, or (b) the use, generation, manufacture, storage, disposal, threatened disposal, transportation or presence of Hazardous Materials in, on, under or about the Property or otherwise by Borrower or any Subsidiary.  Borrower’s duty and obligations to defend, indemnify and hold harmless Lender shall survive the cancellation of the Note and any other Transaction Documents.
5.5.7    Corporate Existence.  Except in connection with a consolidation or merger in compliance with Section 5.2.1, Borrower shall do or cause to be done all things necessary to maintain, preserve and renew its corporate existence and that of the Subsidiaries and its and their rights and franchises, and comply with all related laws applicable to Borrower or the Subsidiaries.
5.5.8    USA Patriot Act Matters.  Borrower shall not, nor shall it cause, permit or allow, any Subsidiary (a) to be or become subject at any time to any law, regulation, or list of any Government Agency (including, without limitation, the U.S. Office of Foreign Asset Control list) that prohibits or limits Lender from making any advance or extension of credit to the Borrower or from otherwise conducting business with the Borrower, or (b) to fail to provide documentary or other evidence of Borrower’s identity as may be reasonably requested by Lender at any time to enable Lender to verify Borrower’s identity or to comply with any applicable law or regulation, including, without limitation, Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318.
5.6    Lender Expenses.  Whether or not the Initial Disbursement is made, Borrower will (a) pay all reasonable costs and expenses of Lender incident to the transactions contemplated by this Agreement including, without limitation, all costs and expenses incurred in connection with the preparation, negotiation and execution of the Transaction Documents, or in connection with any modification, amendment, alteration, or the enforcement of this Agreement, the Note or the other Transaction Documents, including, without limitation, Lender’s out-of-pocket expenses and the charges and disbursements to counsel retained by Lender, and (b) pay, on demand, and save Lender and all other holders of the Note harmless against any and all liability with respect to amounts payable as a result of (i) any taxes which may be determined to be payable in connection with the execution and delivery of this Agreement, the Note or the other Transaction Documents or any modification, amendment or alteration of the terms or provisions of this Agreement, the Note or the other Transaction Documents (which taxes exclude income taxes owed by Lender in respect of interest paid on the Note), (ii) any interest or penalties resulting from nonpayment or delay in payment of such expenses, charges, disbursements, liabilities or taxes, and (iii) any income taxes in respect of any reimbursement by Borrower for any of such violations, taxes, interests or penalties 

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paid by Lender.  The obligations of Borrower under this Section 5.6 shall survive the repayment in full of the Note.  Any of the foregoing amounts incurred by Lender and not paid by Borrower upon demand shall bear interest from the date incurred at the rate of interest in effect or announced by Lender from time to time as its Base Rate plus 3% per annum and shall be deemed part of Borrower’s Liabilities hereunder.
5.7    Inspection Rights.  Borrower shall permit and cause the Subsidiaries to permit Lender, through Lender’s employees, attorneys, accountants or other agents, to inspect any of the properties, corporate books and financial books and records of Borrower and any Subsidiary at such times as Lender reasonably may request, subject to Borrower’s confidentiality and privacy obligations under applicable laws and regulations.
6.    REPORTING.  Borrower shall furnish and deliver or cause to be furnished and delivered to Lender:
6.1    Annual.  As soon as available, but in any event not more than 90 days after the close of each fiscal year of Borrower, or within such further time as Lender may permit, consolidated and consolidating audited financial statements for Borrower and the Subsidiaries, including a balance sheet and related profit and loss statement, prepared in accordance with GAAP consistently applied throughout the periods reflected therein, which financial statements shall be accompanied by the unqualified opinion of Borrower’s Accountant or other independent certified public accountants acceptable to Lender.
6.2    Quarterly.  As soon as available, but in any event not more than 45 days after the close of each quarterly period of each fiscal year of Borrower, or within such further time as Lender may permit; (a) a copy of the consolidated financial statements of Borrower regarding such quarter, including balance sheet, statement of income and retained earnings and statements of cash flows for the quarter then ended; (b) the call reports filed by Subsidiary Bank with federal bank regulatory agencies; (c) the internally prepared “watch list” or other reports of Subsidiary Bank with respect to delinquent, classified or assets requiring special attention, and (d) Forms FRY-9C filed by Borrower with federal bank regulatory agencies.
6.3    Compliance Certificate.  Borrower shall furnish Lender, at the same time as the quarterly financial reports referred to in Section 6.2, a quarterly compliance certificate in the form attached as Exhibit D hereto.  Such quarterly compliance certificate shall be signed by the Chief Executive Officer, President, Chief Financial Officer or Treasurer of Borrower and shall also contain, in a form and with such specificity as is reasonably satisfactory to Lender, such additional information as Lender shall have reasonably requested by Borrower prior to the submission thereof
6.4    Copies of Other Reports and Correspondence.  To the extent permitted by law, promptly after same are available, copies of each of the following: (a) each annual report, proxy or financial statement or other report or communication sent by Borrower or any Subsidiary to the shareholders of Borrower; (b) all annual, regular, periodic and special reports and registration statements which Borrower or any Subsidiary may file or be required to file with any federal or state banking regulatory agency or any other Governmental Agency or with any securities exchange; 

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(c) each Uniform Bank Performance Report with respect to Borrower; and (d) promptly upon receipt thereof, one copy of each written audit report submitted to Borrower by Borrower’s Accountant.
6.5    Proceedings.  Promptly after receiving knowledge thereof, but in no event later than the tenth day following receipt, notice in writing of all charges, assessments, actions, suits and proceedings (as well as notice of the outcome of any such charges, assessments, actions, suits and proceedings) that are initiated by, or brought before, any court or Governmental Agency, in connection with Borrower or any Subsidiary; provided, however, Borrower shall not be obligated to provide such notice in connection with ordinary course of business litigation including any Governmental Agency other than the FRB, the FDIC or the OCC, which, if adversely decided, would not have a material adverse effect on the financial condition or operations of Borrower.
6.6    Event of Default; Material Adverse Change.  Promptly after the occurrence thereof, notice of any other matter which has resulted in, or could reasonably be expected to result in, a Default, an Unmatured Event of Default, an Event of Default or a materially adverse change in the financial condition, business or operations of Borrower or any Subsidiary.
6.7    Issuance of Borrower Capital Stock.  Subject to Section 5.3 hereof, an amended Section 4.1.2 of the Disclosure Schedule in the event that Borrower issues any capital stock of Subsidiary Bank as provided in Section 4.1.2.
6.8    Other Information Requested by Lender.  Such other information concerning the business, operations, financial condition and regulatory status of Borrower or any Subsidiary as Lender may from time to time reasonably request, so long as such information is not confidential and related to a customer of Borrower or any Subsidiary.
7.    FINANCIAL COVENANTS.
7.1    Capitalization.  Borrower (on a consolidated basis) shall maintain and cause Subsidiary Bank to maintain such capital as may be necessary to cause (a) Borrower to qualify as “well capitalized” and (b) the Subsidiary Bank to qualify as “well capitalized,” each in accordance with the rules and regulations of its respective primary federal regulator, as in effect from time to time and consistent with the financial information and reports contemplated in Section 6 hereof.
7.2    Total Risk-Based Capital Ratio.  Borrower (on a consolidated basis) shall, and shall cause Subsidiary Bank to maintain a “Total Risk-Based Capital Ratio” (Total Capital divided by Total Risk-Based Assets) equal to or in excess of twelve percent (12%) at all times.  All ratios set forth in this section shall be calculated in accordance with the rules and regulations of the applicable primary federal regulator as in effect from time to time and shall be derived from and be consistent with the applicable quarterly financial statements filed with the appropriate Governmental Agency.
7.3    Nonperforming Assets to Capital.  Borrower (on a consolidated basis) shall, and shall cause Subsidiary Bank to maintain, as of the last day of each calendar quarter, a ratio of Nonperforming Assets to Tangible Primary Capital (Nonperforming Assets divided by Tangible Primary Capital) of not more than 12%.  For purposes of this Agreement, “Nonperforming Assets” 

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shall mean the sum of all other real estate owned and repossessed assets, non-accrual loans, restructured loans and loans on which any payment is 90 or more days past due but which continue to accrue interest, and “Tangible Primary Capital” shall mean on an aggregate basis the Tier 1 Capital plus the Tier 2 Capital which, in all cases, shall be derived from the quarterly reports filed with the applicable primary federal regulator and shall be consistent with the financial information and reports contemplated in Section 6 hereof.
7.4    Reserves to Nonperforming Loans.  Borrower shall cause Subsidiary Bank to maintain, as of the last day of each calendar quarter, a ratio of the Allowances for Loan Losses to Nonperforming Loans (Allowance for Loan Losses divided by Nonperforming Loans) of not less than 100%.  For purposes of this Agreement, “Nonperforming Loans” shall mean the sum of all non-accrual loans, restructured loans and loans on which any payment is 90 or more days past due but which continue to accrue interest, and “Allowance for Loan Losses” shall mean the amount of such balance sheet account of Subsidiary Bank which, in all cases, shall be derived from the quarterly reports filed with the applicable primary federal regulator and shall be consistent with the financial information and reports contemplated in Section 6 hereof
7.5    Liquidity.  Borrower shall own and maintain unencumbered Liquid Assets in an amount, at all times, in excess of $25,000,000, which amount shall be decreased to $10,000,000 upon receipt by Borrower of written confirmation from the primary federal regulator of Borrower and Subsidiary Bank that neither Borrower or Subsidiary Bank is subject to any prior approval or notice requirements relating to the payment of dividends by Subsidiary Bank.  For purposes of this Agreement, “Liquid Assets” shall mean the sum of all cash balances (including proceeds from the Loan) and marketable securities held by Borrower in such balance sheet accounts which, in all cases, shall be derived from the quarterly reports filed with the applicable primary federal regulator and shall be consistent with the financial information and reports contemplated in Section 6; provided that during the period beginning five (5) Business Days before December 31 and ending five (5) Business Days after December 31, “Liquid Assets” shall include the unencumbered cash held by National Penn Investment Company , but only to the extent that such cash is transferred to Borrower prior to the end of such period, and only for so long as National Penn Investment Company remains a wholly-owned subsidiary of Borrower that has no restrictions on the payment of dividends or distributions.
7.6    Minimum Fixed Charge Coverage Ratio.  Borrower shall maintain on an annualized basis, a Fixed Charge Coverage Ratio in an amount the equals or exceeds 1.5X (150%).  For purposes of this Agreement, “Fixed Charge Coverage Ratio” shall mean with respect to the applicable period, the sum of (a) the after-tax net income of Borrower plus (b) the amount of any good will amortization expense, which sum shall be reduced by any dividends or similar distributions declared or paid (without duplication), by Borrower, which aggregate amount shall be divided by an amount equal to the sum of all contractually due interest and principal amounts (assuming all amounts available under the Loan have been advanced to Borrower and an amortization of such amounts using equal quarterly payments over a five year period) which, in all cases, shall be derived from the quarterly reports filed with the applicable primary federal regulator and shall be consistent with the financial information and reports contemplated in Section 6 hereof.

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8.    BORROWER’S DEFAULT.
8.1    Borrower’s Defaults and Lender’s Remedies.
8.1.1    Events of Default.  Regardless of whether Borrower has given the required notice under Section 6.6, the occurrence of one or more of the following will constitute an “Event of Default” under this Agreement:
8.1.1.1    Borrower fails to pay (a) any principal, interest or other amount due on the Note, when due, or (b) any other fees, charges, costs or expenses under this Agreement or any other Transaction Document within 5 days after the same becomes due (or, if no due date is provided therefore, 5 days after payment is requested); or
8.1.1.2    Borrower fails to perform or observe any agreement, term, provision, condition, or covenant (other than any such failure that results in an Event of Default as expressly provided in any other clause of this Section 8.1.1) required to be performed or observed by Borrower hereunder or under any other Transaction Document or under any other agreement with or in favor of Lender or any Affiliate of Lender, and in each case such failure continues uncured for a period of 15 days after written notice of failure to perform or observe is given to Borrower by Lender; or
8.1.1.3    Borrower fails to keep or perform in any material respect any of its agreements, undertakings, obligations, covenants or conditions under this Agreement not expressly referred to in another clause of this Section 8.1.1 and such failure continues for a period of 10 days after written notice thereof from Lender to Borrower; or
8.1.1.4    Any financial information, statement, certificate, representation or warranty given to Lender by or concerning Borrower in connection with entering into this Agreement or any other Transaction Documents, or required to be furnished under the terms hereof or thereof, proves untrue or misleading in any material respect (as determined by Lender in the exercise of its judgment) as of the time when given and such untrue or misleading condition continues uncured for 30 days after written notice thereof is given to Borrower by Lender; or
8.1.1.5    Borrower defaults, or otherwise fails to satisfy all of its obligations, under the terms of any loan agreement, promissory note, lease, conditional sale contract or other agreement, document or instrument evidencing, governing or securing any indebtedness, other than the Loan, owing by Borrower to Lender, or any other indebtedness in excess of $5,000,000 owing by Borrower to any third party, in each case beyond any period of grace provided for in the instrument or instruments evidencing such indebtedness; or
8.1.1.6    Any “Event of Default” or “Default” as defined under, or a default or breach in any respect by Borrower of any representation, warranty, covenant or agreement under, any of the Transaction Documents (other than this Agreement) occurs and is continuing 5 days after notice thereof from Lender to Borrower; or

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8.1.1.7    The dissolution of Borrower; or
8.1.1.8    The execution by Borrower of any financing agreements or arrangements of any kind whatsoever relating to or otherwise affecting all or any part of or interest in any Subsidiary Bank Shares; or
8.1.1.9    There occurs a material adverse change in the financial condition of Borrower that, in the reasonable judgment of Lender, is reasonably likely to cause a payment default under the Loan as of the next interest of principal payment date; or
8.1.1.10    Any order or decree is entered by any court of competent jurisdiction directly or indirectly enjoining or prohibiting Lender or Borrower from performing any of their obligations under this Agreement or any of the other Transaction Documents, and such order or decree is not vacated, and the proceedings out of which such order or decree arose are not dismissed, within 60 days after the granting of such decree or order; or
8.1.1.11    The FRB, the OCC, the FDIC or other Governmental Agency charged with the regulation of depository institutions: (a) issues to Borrower or Subsidiary Bank, or initiates any action, suit or proceeding to obtain against, impose on or require from Borrower or Subsidiary Bank, memorandum of understanding, a cease and desist order or similar regulatory order, the assessment of civil monetary penalties, articles of agreement, a memorandum of understanding, a capital directive, a capital restoration plan, any restrictions or limitations that prevent or as a practical matter impair the payment of dividends or the payments of any debt by Borrower or Subsidiary Bank, restrictions or limitations that make the payment of the dividends by Borrower or Subsidiary Bank subject to prior regulatory notice or approval, a notice or finding under Section 8(a) of the FDI Act, or any similar enforcement action, measure or proceeding; or (b) proposes or issues to any executive officer or director of Borrower or Subsidiary Bank, or initiates any action, suit or proceeding to obtain against, impose on or require from any such officer or director, a cease and desist order or similar regulatory order, a removal order or suspension order, or the assessment of civil monetary penalties; or
8.1.1.12    The filing of formal charges by any Governmental Agency, including without limitation, the issuance of an indictment, under a RICO Related Law against Borrower or Subsidiary Bank.
8.1.1.13    Final judgment or judgments for the payment of money in an amount in excess of $5,000,000 is or are outstanding against Borrower or against any of its property or assets, and any one of such judgments has remained unpaid, unvacated, unbonded or unstayed by appeal or otherwise for a period of 60 days from the date of its entry; or
8.1.1.14    Subsidiary Bank is notified that it is considered an institution in “troubled condition” within the meaning of 12 U.S.C. Section 1831i and the regulations promulgated thereunder, or if a conservator or receiver is appointed for Subsidiary Bank; or
8.1.1.15    Borrower or Subsidiary Bank becomes insolvent or is unable to pay its debts as they mature; or makes an assignment for the benefit of creditors or admits in 

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writing its inability to pay its debts as they mature; or suspends transaction of its usual business; or if a trustee, conservator or receiver of any substantial part of the assets of Borrower or Subsidiary Bank is applied for or appointed,; or
8.1.1.16    Any proceedings involving Borrower or Subsidiary Bank are commenced by or against Borrower or Subsidiary Bank under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law or statute of the federal government or any state government, or an order shall be entered approving the petition in such proceedings; or
8.1.1.17    Borrower applies for, consents to or acquiesces in the appointment of a trustee, receiver, conservator or liquidator for itself under Chapter 7 or Chapter 11 of the Bankruptcy Code (the “Code Provisions”), or in the absence of such application, consent or acquiescence, a trustee, conservator, receiver or liquidator is appointed for Borrower under the Code Provisions, or any bankruptcy, reorganization, debt arrangement or other proceeding or any dissolution, liquidation, or conservatorship proceeding is instituted by or against Borrower under the Code Provisions, or if Borrower is enjoined, restrained or in any way prevented from conducting all or any material part of its business under the Code Provisions; or
8.1.1.18    Subsidiary Bank applies for, consents to or acquiesces in the appointment of a receiver for itself, or in the absence of such application, consent or acquiescence, a receiver is appointed for Subsidiary Bank; or
8.1.1.19    The capital stock of any Subsidiary is attached, seized, subjected to a writ of distress warrant, or is levied upon or becomes subject to any lien, claim, security interest or other encumbrance of any kind, or comes within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors.
8.1.2    Lender’s Remedies.  Upon the occurrence of any Event of Default, Lender shall have the right, if such Event of Default shall then be continuing, in addition to all the remedies conferred upon Lender by law or equity or the terms of any Transaction Document, to do any or all of the following, concurrently or successively, without notice to Borrower; provided, however, upon the occurrence of an Event of Default indentified in any of Sections 8.1.1.15 through 8.1.1.17, the unpaid principal amount under the Loan, all interest and all other amounts outstanding under this Agreement or any other Transaction Document shall automatically become due and payable without further act of Lender:
8.1.2.1    Declare the Note to be, and it shall thereupon become, immediately due and payable without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, anything contained herein or in the Note to the contrary notwithstanding; or
8.1.2.2    Terminate Lender’s obligations under this Agreement to extend credit of any kind or to make any disbursement, whereupon the commitment and obligation of Lender to extend credit or to make disbursements hereunder shall terminate.

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8.2    Protective Advances.  If an Event of Default occurs, Lender may (but shall in no event be required to) cure any such Event of Default and any amounts expended by Lender in so doing, as determined by Lender in its sole and absolute discretion, shall (a) be deemed advanced by Lender under an obligation to do so regardless of the identity of the person or persons to whom such funds are furnished, (b) constitute additional advances hereunder, the payment of which is additional indebtedness evidenced by the Note, and (c) become due and owing, at Lender’s demand, with interest accruing from the date of disbursement thereof until fully paid at the Default Rate.
8.3    Other Remedies.  Nothing in this Article 8 is intended to restrict Lender’s rights under any of the other Transaction Documents, other related documents, or at law or in equity, and Lender may exercise such rights and remedies as and when they are available.
8.4    No Lender Liability.  To the extent permitted by law, Lender shall have no liability for any loss, damage, injury, cost or expense resulting from any action or omission by it, or any of its representatives, which was taken, omitted or made in good faith.
8.5    Lender’s Fees and Expenses.  In case of any Event of Default hereunder, Borrower shall pay Lender’s fees and expenses including, without limitation, attorneys’ fees and expenses, in connection with the enforcement of this Agreement or any of the other Transaction Documents or other related documents.
9.    MISCELLANEOUS.
9.1    Release; Indemnification.  Borrower hereby releases Lender from any and all causes of action, claims or rights which Borrower may now or hereafter have for, or which may arise from, any loss or damage caused by or resulting from (a) any failure of Lender to protect, enforce or collect in whole or in part any of the Loan, (b) any other act or omission to act on the part of Lender, its officers, agents or employees, except in each instance for those caused by Lender’s willful misconduct or gross negligence.  Borrower shall indemnify, defend and hold Lender and its Affiliates harmless from and against any and all losses, liabilities, obligations, penalties, claims, fines, demands, litigation, defenses, costs, judgments, suits, proceedings, actual damages, disbursements or expenses of any kind or nature whatsoever (including, without limitation, attorneys’ fees and expenses) which may at any time be either directly or indirectly imposed upon, incurred by or asserted or awarded against Lender or any of Lender’s Affiliates in connection with, arising from or relating to Borrower’s breach of any covenant, obligation, agreement, representation or warranty set forth in this Agreement or any other Transaction Document, or arising from or relating to any willful misconduct by Borrower, except to the extent Borrower establishes that the loss, liability, obligations, penalty, claim, fine, demand, litigation, defense, cost, judgment, suit, proceeding, damage, disbursement or expense arose solely by reason of Lender’s or any of Lender’s Affiliates’ willful misconduct or gross negligence.
9.2    Assignment and Participation.  Lender may pledge or otherwise hypothecate all or any portion of this Agreement or grant participations herein (provided Lender acts as agent for any participants, except as provided below) or in any of its rights and security hereunder.  Lender may also assign all or any part of the Loan and Lender’s obligations in connection therewith to one or more commercial banks or other financial institutions or investors (each an “Assignee Lender”).  

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Lender shall notify Borrower in advance of the identity of any proposed Assignee Lender.  Upon delivery to Borrower of an executed copy of the Assignee Lender’s assignment and acceptance (a) each such Assignee Lender shall be deemed to be a party hereto and, to the extent that rights and obligations hereunder have been assigned and delegated to such Assignee Lender, such Assignee Lender shall have the rights and obligations of Lender hereunder and under the other Transaction Documents and other related documents (b) Lender, to the extent that rights and obligations hereunder have been assigned and delegated by it, shall be released from its obligations hereunder and under the other Transaction Documents (including, without limitation, the obligation to fund the Assignee Lender’s share of the Loan) and other related documents.  Within five Business Days after receipt of a copy of the executed assignment and acceptance document, Borrower shall execute and deliver to Lender a new promissory note, as applicable (for delivery to the relevant Assignee Lender), in the form of Exhibit A hereto but substituting Assignee Lender’s name and evidencing such Assignee Lender’s assigned portion of the Loan and a replacement promissory note, as applicable, in the principal amount of the Loan retained by Lender (such promissory note to be in exchange for, but not in payment of, the promissory note then held by Lender).  The replacement promissory note shall be dated the date of the predecessor promissory note.  Lender shall mark the predecessor promissory note “exchanged” and deliver it to Borrower.  Accrued interest on that part of the predecessor promissory note evidenced by the new promissory note held by the Assignee Lender, and accrued fees, shall be paid as provided in the assignment agreement between Lender and to the Assignee Lender.  Accrued interest on that part of the predecessor promissory note evidenced by the replacement promissory note held by Lender shall be paid to Lender.  Accrued interest and accrued fees shall be so apportioned between the promissory note and paid at the same time or times provided in the predecessor promissory note and in this Agreement.  Borrower authorizes Lender to disclose to any prospective Assignee Lender any financial or other information pertaining to Borrower or the Loan.  In addition, Borrower agrees that, if so requested by Lender, Borrower will cause all insurance policies, binders and commitments (including, without limitation, casualty insurance and title insurance) required by the Transaction Documents or other related documents to be delivered to Lender to name the Assignee Lender as an additional insured or obligee, as Lender may request.  Anything in this Agreement to the contrary notwithstanding, and without the need to comply with any of the formal or procedural requirements of this Agreement, including this Section 9.2, Lender may at any time and from time to time pledge and assign all or any portion of its rights under all or any of the Transaction Documents and other related documents to a Federal Reserve Bank; provided that no such pledge or assignment shall release Lender from its obligations thereunder.
9.3    Prohibition on Assignment.  Borrower shall not assign or attempt to assign its rights under this Agreement, either voluntarily or, except to the extent permitted by the terms of Section 5.2.1 of this Agreement, by operation of law.
9.4    Time of the Essence.  Time is of the essence of this Agreement.
9.5    No Waiver.  No waiver of any term, provision, condition, covenant or agreement herein contained shall be effective unless set forth in a writing signed by Lender, and any such waiver shall be effective only to the extent set forth in such writing.  No failure to exercise or delay in exercising, by Lender or any holder of the Note, of any right, power or privilege hereunder shall 

38

operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right or remedy provided by law.  The rights and remedies provided in this Agreement are cumulative and not exclusive of any right or remedy provided by law or equity.  No notice or demand on Borrower in any case shall, in itself, entitle Borrower to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of Lender to any other or further action in any circumstances without notice or demand.  No consent or waiver, expressed or implied, by Lender to or of any breach or default by Borrower in the performance of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance of the same or any other obligations of Borrower hereunder.  Failure on the part of Lender to complain of any acts or failure to act or to declare a Default or an Event of Default, irrespective of how long such failure continues, shall not constitute a waiver by Lender of its rights hereunder or impair any rights, powers or remedies on account of any breach or default by Borrower.
9.6    Severability.  Any provision of this Agreement which is unenforceable or invalid or contrary to law, or the inclusion of which would adversely affect the validity, legality or enforcement of this Agreement, shall be of no effect and, in such case, all the remaining terms and provisions of this Agreement shall subsist and be fully effective according to the tenor of this Agreement the same as though any such invalid portion had never been included herein.  Notwithstanding any of the foregoing to the contrary, if any provisions of this Agreement or the application thereof are held invalid or unenforceable only as to particular persons or situations, the remainder of this Agreement, and the application of such provision to persons or situations other than those to which it shall have been held invalid or unenforceable, shall not be affected thereby, but shall continue valid and enforceable to the fullest extent permitted by law.
9.7    Usury; Revival of Liabilities.  All agreements between Borrower and Lender (including, without limitation, this Agreement and any other Transaction Documents) are expressly limited so that in no event whatsoever shall the amount paid or agreed to be paid to Lender exceed the highest lawful rate of interest permissible under the laws of the State of New York.  If, from any circumstances whatsoever, fulfillment of any provision hereof or of any other Transaction Documents, at the time performance of such provision shall be due, shall involve exceeding the limit of validity prescribed by law which a court of competent jurisdiction may deem applicable hereto, then, ipso facto, the obligation to be fulfilled shall be reduced to the highest lawful rate of interest permissible under the laws of the State of New York, and if for any reason whatsoever, Lender shall ever receive as interest an amount which would be deemed unlawful, such interest shall be applied to the payment of the last maturing installment or installments of the indebtedness to Lender (whether or not then due and payable) and not to the payment of interest.  To the extent that Lender received any payment on account of Borrower’s Liabilities and any such payment(s) and/or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, subordinated and/or required to be repaid to a trustee, receiver or any other Person under any bankruptcy act, state or federal law, common law or equitable cause, then to the extent of such payment(s) or proceeds received, Borrower’s Liabilities or part thereof intended to be satisfied shall be revived and continue in full force and effect, as if such payment(s) and/or proceeds had not been received by Lender and applied on account of Borrower’s Liabilities; provided, however, if Lender successfully contests any such invalidation, declaration, set aside, 

39

subordination or other order to pay any such payment and/or proceeds to any third party, the revived Borrower’s Liabilities shall be deemed satisfied.
9.8    Notices and Electronic Communications.  Any notice which either party hereto may be required or may desire to give hereunder shall be deemed to have been given if in writing and if delivered personally, or if mailed, postage prepaid, by United States registered or certified mail, return receipt requested, or if delivered by a responsible overnight courier, addressed:
		
	if to Borrower:
	National Penn Bancshares, Inc. 
P.O. Box 547 
Boyertown, Pennsylvania 19512 
Attn: H. Anderson Ellsworth, Chief Legal Officer 
Telephone No.: (610) 369-6451 
Fax No.: (610) 369-6349 
E-Mail Address: andy.ellsworth@nationalpenn.com

With a copy to:
Reed Smith, LLP 
2500 One Liberty Place 
1650 Market Street 
Philadelphia, PA 19103 
Attn:    Paul J. Jaskot 
    Margaret S. Jones 
Telephone No.: (215) 851 8100 
Fax No.: (215) 851 1420 
E-Mail Address:    pjaskot@reedsmith.com 
            msjones@reedsmith.com
		
	if to Lender:
	U.S. Bank National Association 
209 South LaSalle Street, Suite 501 
Chicago, Illinois 60604 
Attn: Michael Trenkmann, Portfolio Manager 
Telephone No.: (312) 325-8736 
Fax No.: (312) 325-2012 
E-Mail Address: michael.trenkmann@usbank.com

With a copy to:
U.S. Bank National Association 
209 South LaSalle Street, Suite 501 
Chicago, Illinois 60604 
Attn: Ruta Grigola, Client Services Representative 
Telephone No.: (312) 325-2028 
Fax No.: (312) 325-2021 
E-Mail Address: ruta.grigola@usbank.com

40

And to:
Kirkland & Ellis LLP 
300 North LaSalle Street 
Chicago, Illinois 60654 
Attn: Edwin S. del Hierro, P.C. 
Telephone No.: (312) 862-3222 
Fax No.: (312) 862-2200 
E-Mail Address: ed.delhierro@kirkland.com
or to such other address or addresses as the party to be given notice may have furnished in writing to the party seeking or desiring to give notice, as a place for the giving of notice, provided that no change in address shall be effective until seven days after being given to the other party in the manner provided for above.  Any notice given in accordance with the foregoing shall be deemed given when delivered personally or, if mailed, five Business Days after it shall have been deposited in the United States mails as aforesaid or, if sent by overnight courier, the Business Day following the date of delivery to such courier.  Notices and other communications to Lender hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by Lender.  Either Lender or Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.  Unless Lender otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefore.
9.9    Successors and Assigns.  This Agreement shall inure to the benefit of the parties and their respective heirs, legal representatives, successors and assigns except that, unless Lender consents in writing, no assignment made by Borrower in violation of this Agreement shall confer any rights on any assignee of Borrower.
9.10    No Joint Venture.  Nothing contained herein or in any document executed pursuant hereto and no action or inaction whatsoever on the part of Lender, shall be deemed to make Lender a partner or joint venturer with Borrower.
9.11    Brokerage Commissions.  Lender and Borrower each represent and warrant to the other that they have not dealt with any brokers or finders to whom a brokerage commission or finders fee is due in connection with the Loan.  Each of Lender and Borrower hereby indemnifies and holds harmless the other from all loss, cost and expenses (including reasonable attorneys’ fees and expenses) arising out of a breach of its representation and warranty set forth in this Section 

41

9.11.  The provisions of this Section 9.11 shall survive the Closing and the termination of this Agreement.
9.12    Publicity.  Neither party shall publicize the Loan without the prior written consent of the other, which consent shall not be unreasonably withheld, conditioned or delayed.
9.13    Documentation.  All documents and other matters required by any of the provisions of this Agreement to be submitted or furnished to Lender shall be in form and substance satisfactory to Lender.
9.14    Additional Assurances; Right of Set-off.  Borrower agrees that, at any time or from time to time, upon the written request of Lender, it will execute all such further documents and do all such other acts and things as Lender may reasonably request to effectuate the transaction herein contemplated.  If any Default or Event of Default shall have occurred and be continuing, Lender is hereby authorized at any time and from time to time to set-off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and any and all other indebtedness at any time owing by Lender to or for the credit or the account of Borrower against any and all of Borrower’s Liabilities or obligations irrespective of whether or not Lender shall have made any demand hereunder or thereunder.  Lender agrees promptly to notify Borrower after any such set-off and application made by Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application.  The rights of Lender under this Section 9.14 are in addition to any other rights and remedies (including, without limitation, other rights of set-off) which Lender may have.  Nothing contained in this Agreement or any other Transaction Document shall impair the right of Lender to exercise any right of set-off or counterclaim it may have against Borrower and to apply the amount subject to such exercise to the payment of indebtedness of Borrower unrelated to this Agreement or the other Transaction Documents.
9.15    Entire Agreement.  This Agreement and the Disclosure Schedule and Exhibits hereto constitute the entire agreement between the parties hereto with respect to the subject matter hereof and may not be modified or amended in any manner other than by supplemental written agreement executed by the parties hereto.  Neither party, in entering into this Agreement, has relied upon any representation, warranty, covenant, condition or other term that is not set forth in this Agreement.
9.16    Choice of Law, Jurisdiction and Venue.
9.16.2     GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
9.16.3    SUBMISSION TO JURISDICTION.  BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK, NEW YORK AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, OR FOR 

42

RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH ILLINOIS STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER TRANSACTION DOCUMENT SHALL AFFECT ANY RIGHT THAT LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT AGAINST BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
9.16.4    WAIVER OF VENUE.  BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
9.16.5    SERVICE OF PROCESS.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.8.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
9.17    No Advisory or Fiduciary Responsibility.  In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Transaction Document), Borrower acknowledges and agrees that: (a) (i) the arranging and other services regarding this Agreement provided by Lender are arm’s-length commercial transactions between Borrower and its Affiliates, on the one hand, Lender on the other hand, (ii Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate and (iii) Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Transaction Documents; (b) (i) Lender is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for Borrower or any of its Affiliates, or any other Person and (ii) Lender does not have any obligation to Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Transaction Documents; and (c) Lender and its respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of Borrower and its Affiliates, and 

43

Lender has no obligation to disclose any of such interests to Borrower or its Affiliates.  To the fullest extent permitted by law, Borrower hereby waives and releases any claims that it may have against Lender with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
9.18    No Third Party Beneficiary.  This Agreement is made for the sole benefit of Borrower and Lender, and no other person shall be deemed to have any privity of contract hereunder nor any right to rely hereon to any extent or for any purpose whatsoever, nor shall any other person have any right of action of any kind hereon or be deemed to be a third party beneficiary hereunder.
9.19    Legal Tender of United States.  All payments hereunder shall be made in coin or currency which at the time of payment is legal tender in the United States of America for public and private debts.
9.20    Captions; Counterparts.  Captions contained in this Agreement in no way define, limit or extend the scope or intent of their respective provisions.  This Agreement may be executed by facsimile and in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument.
9.21    Knowledge; Discretion.  All references herein to a party’s best knowledge shall be deemed to mean the best knowledge of such party based on commercially reasonable inquiry.  All references herein to Borrower’s knowledge shall be deemed to refer to the best knowledge of Borrower and each Subsidiary.  Unless specified to the contrary herein, all references herein to an exercise of discretion or judgment by Lender, to the making of a determination or designation by Lender, to the application of Lender’s discretion or opinion, to the granting or withholding of Lender’s consent or approval, to the consideration of whether a matter or thing is satisfactory or acceptable to Lender, or otherwise involving the decision making of Lender, shall be deemed to mean that Lender shall decide unilaterally using its sole and absolute discretion or judgment.
9.22    ENTIRE AGREEMENT.  THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
9.23    WAIVER OF CONSEQUENTIAL DAMAGES, ETC.  TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, NEITHER PARTY SHALL ASSERT, AND EACH PARTY HEREBY WAIVES, ANY CLAIM AGAINST ANY INDEMNITEE, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY, THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, ANY LOAN OR THE USE OF THE PROCEEDS THEREOF.  NO INDEMNITEE REFERRED TO IN SUBSECTION (B) ABOVE SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE 

44

USE BY UNINTENDED RECIPIENTS OF ANY INFORMATION OR OTHER MATERIALS DISTRIBUTED TO SUCH UNINTENDED RECIPIENTS BY SUCH INDEMNITEE THROUGH TELECOMMUNICATIONS, ELECTRONIC OR OTHER INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OTHER THAN FOR DIRECT OR ACTUAL DAMAGES RESULTING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE AS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT OF COMPETENT JURISDICTION.
9.24    WAIVER OF RIGHT TO JURY TRIAL.  EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN CONNECTION WITH THIS AGREEMENT, THE NOTE OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY OTHER STATEMENTS OR ACTIONS OF BORROWER OR LENDER.  BORROWER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS DISCUSSED THIS WAIVER WITH SUCH LEGAL COUNSEL.  BORROWER FURTHER ACKNOWLEDGES THAT (a) IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF THIS WAIVER, (b) THIS WAIVER HAS BEEN REVIEWED BY BORROWER AND BORROWER’S COUNSEL AND IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, (c) THIS WAIVER SHALL BE EFFECTIVE AS TO EACH OF SUCH TRANSACTION DOCUMENTS AS IF FULLY INCORPORATED THEREIN AND (d) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER.
[Remainder of Page Intentionally Left Blank]

45

IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be executed by their duly authorized representatives as of the date first above written.
NATIONAL PENN BANCSHARES, INC.
NATIONAL PENN BANCSHARES, INC.

By:     /s/ Scott V. Fainor     
    Name:    Scott V. Fainor 
    Title:    President and Chief Executive Officer

US. BANK NATIONAL ASSOCIATION

By:     /s/ Janet S. Hockman     
    Name:    Janet S. Hockman 
    Title:    Senior Vice President

S-1    

EXHIBIT A
FORM OF REVOLVING PROMISSORY NOTE
$25,000,000.00    New York, New York 
    Date: December [  ], 2011
FOR VALUE RECEIVED, the undersigned, NATIONAL PENN BANCSHARES, INC., a Pennsylvania corporation (“Borrower”), promises to pay to the order of U.S. BANK NATIONAL ASSOCIATION, a national banking association, or the holder hereof from time to time (“Lender”), at such place as may be designated in writing by Lender, the principal sum of TWENTY-FIVE MILLION AND NO/100THS DOLLARS ($25,000,000.00) (or so much thereof that has been advanced and remains outstanding), with interest thereon as hereinafter provided.  It is contemplated that there will be advances and payments under this note (this “Note”) from time to time, but no advances or payments under this Note (including payment in full of the unpaid balance of principal hereof prior to maturity) shall affect or impair the validity or enforceability of this Note as to future advances hereunder.  This Note is issued pursuant to the terms of that certain Loan Agreement of even date herewith by and between Borrower and Lender as amended, restated, supplemented or modified from time to time (the “Loan Agreement”).  All capitalized terms used but not defined herein shall have the respective meanings ascribed to them in the Loan Agreement.
Interest shall accrue on all sums as advanced and outstanding from time to time under this Note and Loan Agreement as set forth in the Loan Agreement.  Such interest shall be due and payable, in arrears (i) for any LIBO Rate Tranche, on the last day of each LIBOR Period, and (ii) for any Base Rate Tranche, on the last day of each September, December, March and June, beginning December 31, 2011, and as otherwise set forth in the Loan Agreement.
The outstanding principal balance of this Note, together with all accrued and unpaid interest, shall be due and payable on the Maturity Date.  Additional principal payments shall be made in accordance with the provisions of the Loan Agreement.
This Note is issued pursuant to the terms of the Loan Agreement.  if a Default or an Event of Default shall occur and be continuing, the principal of this Note together with all accrued interest thereon may, at the option of the holder hereof, immediately become due and payable on demand; provided, however, that if any document related to this Note provides for automatic acceleration of payment of sums owing hereunder, all sums owing hereunder shall be automatically due and payable in accordance with the terms of that document.
Unless otherwise provided in the Loan Agreement, all payments on account of the indebtedness evidenced by this Note shall be first applied to the payment of costs and expenses of Lender which are due and payable, then to past-due interest on the unpaid principal balance and the remainder to principal.
Provided that no Default or Event of Default then exists, this Note may be prepaid only upon those terms and conditions set forth in the Loan Agreement.

A-1    

From and after the Maturity Date, or such earlier date as all sums owing on this Note become due and payable by acceleration or otherwise, or after the occurrence of a Default or an Event of Default, and as otherwise provided in the Loan Agreement, interest shall be computed on all amounts then due and payable under this Note at a “Default Rate” equal to 3% per annum (based on a 360-day year and charged on the basis of actual days elapsed) in excess of the interest rate otherwise accruing under this Note.
If any attorney is engaged by Lender to enforce or defend any provision of this Note or any of the other Transaction Documents, or as a consequence of any Default or Event of Default, with or without the filing of any legal action or proceeding, then Borrower shall pay to Lender immediately upon demand all attorneys’ fees and expenses, together with interest thereon from the date of such demand until paid at the rate of interest applicable to the principal balance owing hereunder as if such unpaid attorneys’ fees and expenses had been added to the principal.
No previous waiver and no failure or delay by Lender or Borrower in acting with respect to the terms of this Note or any of the other Transaction Documents shall constitute a waiver of any breach, default or failure of condition under this Note, the Loan Agreement or any of the other Transaction Documents or the obligations secured thereby.  A waiver of any term of this Note or any of the other Transaction Documents or of any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of such waiver.  In the event of any inconsistencies between the terms of this Note and the terms of any other document related to the Loan evidenced by this Note, the terms of this Note shall prevail.
Except as otherwise provided in the Loan Agreement, Borrower expressly waives presentment, demand, notice of dishonor, notice of default or delinquency, notice of acceleration, notice of protest and nonpayment, notice of costs, expenses or losses and interest thereon, notice of late charges, and diligence in taking any action to collect any sums owing under this Note or in proceeding against any of the rights or interests in or to properties securing payment of this Note.  In addition, Borrower expressly agrees that this Note and any payment coming due hereunder may be extended from time to time without in any way affecting the liability of any such party hereunder.
Time is of the essence with respect to every provision hereof This Note shall be construed and enforced in accordance with the laws of the State of New York, except to the extent that federal laws preempt the laws of the State of New York, and all persons and entities in any manner obligated under this Note consent to the jurisdiction of any Federal or State court having situs in New York, New York and having proper venue, and also consent to service of process by any means authorized by New York or Federal law.  Any reference contained herein to attorneys’ fees and expenses shall be deemed to be to reasonable fees and expenses and to include all reasonable fees and expenses of third-party attorneys and the reasonable fees and expenses of any other experts or consultants.
All agreements between Borrower and Lender (including, without limitation, this Note and the Loan Agreement, and any other documents securing all or any part of the indebtedness evidenced hereby) are expressly limited so that in no event whatsoever shall the amount paid or agreed to be paid to Lender exceed the highest lawful rate of interest permissible under applicable law.  If, from any circumstances whatsoever, fulfillment of any provision hereof, the Loan Agreement or any other documents securing all or any part of the indebtedness evidenced hereby at the time 

A-2

performance of such provisions shall be due, shall involve exceeding the limit of validity prescribed by law which a court of competent jurisdiction may deem applicable hereto, then, ipso facto, the obligation to be fulfilled shall be reduced to the highest lawful rate of interest permissible under such applicable laws, and if, for any reason whatsoever, Lender shall ever receive as interest an amount which would be deemed unlawful under such applicable law, such interest shall be automatically applied to the payment of the principal of this Note (whether or not then due and payable) and not to the payment of interest or refunded to Borrower if such principal has been paid in full.
Any notice which either party hereto may be required or may desire to give hereunder shall be governed by the notice provisions of the Loan Agreement.
[Remainder of Page Intentionally Left Blank]

A-3

EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN CONNECTION WITH THIS NOTE OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY OTHER STATEMENTS OR ACTIONS OF BORROWER OR LENDER.  BORROWER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS DISCUSSED THIS WAIVER WITH SUCH LEGAL COUNSEL.  BORROWER FURTHER ACKNOWLEDGES THAT (a) IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF THIS WAIVER, (b) THIS WAIVER HAS BEEN REVIEWED BY BORROWER AND BORROWER’S COUNSEL AND IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THE TRANSACTION DOCUMENTS, (c) THIS WAIVER SHALL BE EFFECTIVE AS TO EACH OF THE TRANSACTION DOCUMENTS AS IF FULLY INCORPORATED THEREIN AND (d) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER.
IN WITNESS WHEREOF, the undersigned has executed this Note or caused this Note to be executed by its duly authorized representative as of the date first above written.
NATIONAL PENN BANCSHARES, INC.

By:              
    Name:  
    Title:

A-4    

EXHIBIT B
FORM OF RATE ELECTION NOTICE
[MONTH] [DAY], 201[  ]
U.S. Bank National Association 
[  ] 
[  ] 
Attn: Correspondent Banking Division
Ladies and Gentlemen:
This will confirm the telephone conversation Ms./Mr. _____________________had with your office on _____________, 201_, regarding Borrowing Tranches under and as defined in the Loan Agreement dated as of December [  ], 2011 as follows:
FROM LOAN #:    
Amount of Advance:    $    
Effective Date:        
LIBO Rate Tranche or, if permitted, Base Rate Tranche (circle one)
LIBOR Period: three months
We acknowledge that the election reflected herein is subject to Section 2.6.1 and the other provisions of the Agreement.
Date:    
Very truly yours,
NATIONAL PENN BANCSHARES, INC.

By:              
    Authorized Signature

B-1    

EXHIBIT C
FORM OF OPINION OF BORROWER’S COUNSEL
December [  ], 2011
U.S. Bank National Association 
[  ] 
[  ] 
Attn: Correspondent Banking Division
Re:    Borrowing by National Penn Bancshares, Inc.
Ladies and Gentlemen:
We have served as counsel to National Penn Bancshares, Inc. (“Borrower”), in connection with the Loan described in that certain Loan Agreement dated as of December [  ], 2011 (the “Loan Agreement”) by and between Borrower and U.S. Bank National Association, a national banking association (“Lender”).  This opinion is being delivered to you pursuant to Section 3.2.1 of the Loan Agreement.  Capitalized terms used herein and otherwise undefined shall have the meanings given them in the Loan Agreement.
In order to render the opinions expressed herein, we have examined the following (collectively, the “Financing Documents”):
		
	1.
	the executed Loan Agreement and the other Transaction Documents; and

		
	2.
	such other documents, instruments, writings and agreements as we deemed appropriate.

In our examination of the Financing Documents, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity of all copies submitted to us with the originals to be delivered and the due authorization, execution and delivery by each party to such documents (other than Borrower).
Based on the foregoing and subject to the qualifications set forth in this letter, it is our opinion that:
1.Borrower is duly organized and validly existing as a corporation under the laws of Pennsylvania.  Borrower is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended.
2.    Subsidiary Bank is a commercial bank duly organized, validly existing and in good standing as a national banking association.
3.    Intentionally omitted.

C-1    

4.    No order, permission, consent or approval of any federal or state commission, board or regulatory authority is required for the execution and delivery or performance by Borrower of the Transaction Documents.
5.    Intentionally Omitted.
6.    Intentionally Omitted.
7.    To our knowledge, no proceeds of the Loan will be used to purchase or carry any margin stock or to extend credit to others for purposes of purchasing or carrying margin stock.
8.    The execution, delivery and performance by Borrower of the Transaction Documents (i) are within its corporate powers, (ii) have been duly authorized by all necessary corporate action of Borrower, (iii) do not contravene (1) Borrower’s, Subsidiary Bank or any other Subsidiary’s charter or by-laws, (2) to our knowledge, any law affecting Borrower, Subsidiary Bank or any other Subsidiary, or (3) to our knowledge, any contractual restriction affecting Borrower, Subsidiary Bank or any other Subsidiary that would result in a material adverse effect on Borrower’s ability to perform under the Transaction Documents and (iv) other than as contained in the Pledge Agreement, do not result in the creation of any lien or other encumbrance upon or with respect to any of the assets or property of Borrower, Subsidiary Bank or any other Subsidiary.
9.    The Transaction Documents are legally valid and binding obligations of Borrower and are enforceable against it in accordance with their respective terms, except as such enforceability may be limiting by bankruptcy, insolvency, reorganization, moratorium, or other laws relating to or limiting creditors’ rights or equitable principles generally.
Very truly yours,
 

C-2

EXHIBIT D
FORM OF QUARTERLY COMPLIANCE CERTIFICATE 
for the Quarter Ended___________________
The undersigned, the ___________________ of National Penn Bancshares, Inc. (“Borrower”), hereby delivers this certificate pursuant to Section 6.3 of that certain Loan Agreement dated as of December [ ], 2011, between Borrower and U.S. Bank National Association (the “Agreement”) and certifies as of the date hereof as follows:
1.    Attached hereto are the financial reports described in Section 6 of the Agreement for the above-referenced period.
2.    Borrower is in compliance in all material respects with all covenants contained in the Agreement, and has provided a detailed calculation, as of each day of the quarter ended on the date set forth in the title hereof, of the financial covenants set forth in Sections 7 of the Agreement on Annex A attached hereto.
3.    No Default, Unmatured Event of Default or Event of Default has occurred or is continuing under the Agreement.  [Or, if incorrect, provide detail regarding the Default or Event of Default and the steps being taken to cure it and the time within which such cure will occur.]
4.    Borrower’s representations and warranties set forth in the Agreement are true as of the date of this certificate.
Capitalized terms in this Quarterly Compliance Certificate that are otherwise undefined shall have the meanings given them in the Agreement.
Dated: [  ]
NATIONAL PENN BANCSHARES, INC.

By:              
    Name:  
    Title:

D-1    

ANNEX A
TO
QUARTERLY COMPLIANCE CERTIFICATE

		
	A.
	Risk-Based Capital Adequacy Guidelines.  (Sections 7.1 and 7.2) 
(as of the fiscal quarter ending ________, 201__)

1.    Borrower 
    (FRB Capital Guidelines)         In Compliance         Not In Compliance
2.    Subsidiary Bank 
    (OCC Capital Guidelines)         In Compliance         Not In Compliance
[minimum capital category required: “well capitalized”] 
    [minimum required total risk-based Capital Ratio Bank- 12%]
B.    Maximum Nonperforming Assets.  (Section 7.3) 
    (as of the fiscal quarter ending ________, 201__)
1.    Total Nonperforming Assets    $    
2.    Tangible Primary Capital    $    
3.    NPAs divided by Primary Capital [B.1 divided by B.2]        %
[maximum permitted – 12%]
C.    Minimum Reserves to Nonperforming Loans.  (Section 7.4) 
    (as of the fiscal quarter ending ________, 201__)
1.    Allowance for Loan and Leases Losses    $    
2.    Nonperforming Loans    $    
3.    ALLLs divided by NPLs [C.1 divided by C.2]        %
[maximum required ALLL: 100% of NPLs]
D.    Minimum Liquid Assets.  (Section 7.5)
Liquid Assets    $    
[minimum required Liquid Assets- $25,000,000]

E.    Minimum Fixed Charge Coverage Ratio.  (Section 7.6) 
    (as of the fiscal quarter ending ________, 201__)
1.    After-tax Net Income of Borrower    $    
2.    Amount of Goodwill Amortized by Borrower    $    
3.    Cash distributions or declarations by Borrower    $    
4.    [E.1 plus E.2 minus E.3.]    $    
5.    Interest Expense    $    
6.    Required Principal Payments    $    
7.    Imputed Principal Amount – Loan    $1,250,000.00
8.    [E.5 plus E.6 plus E.7.]    $    
10.    Debt Service Coverage Ratio [E.4. divided by E.9.]         to 1.00
[minimum required Debt Service Coverage Ratio- 1.5X to 1.00]

    

Schedule 4.1.2
Capital Stock of Subsidiary Bank
		
	(a)
	Pennsylvania and Maryland.

		
	(b)
	National Penn Bancshares, Inc. owns 100% of the stock of Subsidiary Bank.

Schedule 4.5.1
Financing Statements
(1)UCC Financing Statement for leased equipment naming National Penn Bancshares, Inc. as debtor and US Bancorp as secured party, filed with the Pennsylvania Secretary of State on June 1, 2007 as file no. 2007060100074.
(2)UCC Financing Statement for leased equipment naming National Penn Bancshares, Inc. as debtor and US Bancorp as secured party, filed with the Pennsylvania Secretary of State on July 13, 2007 as file no. 2007071308344.
(3)UCC Financing Statement for leased equipment naming National Penn Bancshares, Inc. as debtor and US Bancorp as secured party, filed with the Pennsylvania Secretary of State on September 19, 2007 as file no. 2007091906411.
(4)UCC Financing Statement for leased equipment naming National Penn Bancshares, Inc. as debtor and Court Square Leasing Corporation as secured party, filed with the Pennsylvania Secretary of State on March 5, 2008 as file no. 2008030503745.
(5)UCC Financing Statement for leased equipment naming National Penn Bancshares, Inc. as debtor and Court Square Leasing Corporation, filed with the Pennsylvania Secretary of State on March 6, 2008 as file no. 2008030601731.
(6)UCC Financing Statement for leased equipment naming National Penn Bancshares, Inc. as debtor and Wells Fargo Financial Leasing, Inc. as secured party, filed with the Pennsylvania Secretary of State on September 19, 2008 as file no. 2008091903342.
(7)UCC Financing Statement for leased equipment naming National Penn Bancshares, Inc. as debtor and US Bancorp as secured party, filed with the Pennsylvania Secretary of State on September 24, 2008 as file no. 2008092408038.
(8)UCC Financing Statement for leased equipment naming National Penn Bancshares, Inc. as debtor and Canon Financial Services as secured party, filed with the Pennsylvania Secretary of State on February 18, 2009 as file no. 2009021806104.
(9)UCC Financing Statement for leased equipment naming National Penn Bancshares, Inc. as debtor and US Bancorp as secured party, filed with the Pennsylvania Secretary of State on May 21, 2009 as file no. 2009052114483.
(10)UCC Financing Statement for leased equipment naming National Penn Bancshares, Inc. as debtor and Wells Fargo Financial Leasing, Inc. as secured party, filed with the Pennsylvania Secretary of State on November 2, 2009 as file no. 2009110204726.
(11)UCC Financing Statement for leased equipment naming National Penn Bancshares, Inc. as debtor and Wells Fargo Financial Leasing, Inc. as secured party, filed with the Pennsylvania Secretary of State on December 17, 2009 as file no. 2009121703753.

(12)UCC Financing Statement for leased equipment naming National Penn Bancshares, Inc. as debtor and US Bancorp as secured party, filed with the Pennsylvania Secretary of State on January 28, 2010 as file no. 2010012806586.
(13)UCC Financing Statement for leased equipment naming National Penn Bancshares, Inc. as debtor and US Bancorp as secured party, filed with the Pennsylvania Secretary of State on January 28, 2010 as file no. 2010012806601.
(14)UCC Financing Statement for leased equipment naming National Penn Bancshares, Inc. as debtor and De Lage Landen Financial Services, Inc. as secured party, filed with the Pennsylvania Secretary of State on May 17, 2010 as file no. 2010051849381.
(15)UCC Financing Statement for leased equipment naming National Penn Bancshares, Inc. as debtor and U.S. Bancorp Business Equipment Finance Group as secured party, filed with the Pennsylvania Secretary of State on November 12, 2010 as file no. 2010111206522.
(16)UCC Financing Statement for leased equipment naming National Penn Bancshares, Inc. as debtor and U.S. Bancorp Business Equipment Finance Group as secured party, filed with the Pennsylvania Secretary of State on April 14, 2011 as file no. 2011041408212.
(17)UCC Financing Statement for leased equipment naming National Penn Bank as debtor and US Bancorp as secured party, filed with the Pennsylvania Secretary of State on December 21, 2009 as file no. 2009122106544.
(18)UCC Financing Statement for leased equipment naming National Penn Bank as debtor and US Bancorp as secured party, filed with the Pennsylvania Secretary of State on April 21, 2010 as file no. 2010042107922.
(19)UCC Financing Statement for leased equipment naming National Penn Bank as debtor and US Bancorp as secured party, filed with the Pennsylvania Secretary of State on April 21, 2010 as file no. 2010042108063.
(20)UCC Financing Statement for leased equipment naming National Penn Bank as debtor and US Bancorp as secured party, filed with the Pennsylvania Secretary of State on September 9, 2010 as file no. 2010090906772.
(21)UCC Financing Statement for leased equipment naming National Penn Bank as debtor and US Bancorp as secured party, filed with the Pennsylvania Secretary of State on September 9, 2010 as file no. 2010090906796.
(22)UCC Financing Statement for leased equipment naming National Penn Bank as debtor and US Bancorp as secured party, filed with the Pennsylvania Secretary of State on September 9, 2010 as file no. 2010090906811.
(23)Tax lien filed in the Court of Common Pleas of Berks Country, Pennsylvania, against National Penn Bank on January 31, 2011 in the amount of $389,091.49 as file no. 89008597.

    

Schedule 4.7.3
Regulatory Enforcement Actions
None.
 

Schedule 4.7.4
Pending Litigation
1.Reyes v. National Penn Bank et al., Eastern District of Pennsylvania Civil Action No. 10- 345.
2.Guerrido-Torres v. National Penn Bank, Philadelphia County Court of Common Pleas Civil Action No. 1109-3214.
3.Holland v. National Penn Bank, Eastern District of Pennsylvania Civil Action No. 11-5152.
4.Jennifer Collier, on behalf of herself and all other similar situated, v. National Penn Bank and National Penn Bancshares, Inc., Philadelphia County Court of Common Pleas Civil Action No. 11200163.

Schedule 4.7.6
ERISA
(a)Unfunded Benefit Liability - The Company has a non-contributory defined benefit pension plan that was frozen effective March 31, 2010. As of December 31, 2010, the pension plan had benefit obligations of $43,032,000 and held plan assets with a fair value of $39,161,000.
(b)Post-Termination Medical Coverage - Upon certain terminations, several senior executives maintain rights to continue company-provided health and welfare benefits, including medical coverage, at active employee rates for periods ranging from 12 to 24 months.

Schedule 5.2.3
Indebtedness
Borrower is guarantor of the following:
(1)The $65.2 million of debentures issued to NPB Capital Trust II on August 20, 2002 mature on September 30, 2032, and bear interest at the annual fixed rate of 7.85%.
(2)The $20.6 million of debentures issued to NPB Capital Trust III on February 20, 2004 mature on April 23, 2034, and bear interest at a floating rate (three month LIBOR plus a margin of 2.75%).
(3)The $20.6 million of debentures issued to NPB Capital Trust IV on March 25, 2004 mature on April 7, 2034, and bear interest at a floating rate (three month LIBOR plus a margin of 2.75%).
(4)The $20.6 million of debentures issued to NPB Capital Trust V on April 7, 2004 mature on April 7, 2034, and bear interest at a floating rate (three month LIBOR plus a margin of 2.75%).
(5)The $15.4 million of debentures issued to NPB Capital Trust VI on January 19, 2006 mature on March 15, 2036, and bear interest at a floating rate (three month LIBOR plus a margin of 1.38%).

EXECUTION COPY

FIRST AMENDMENT
to
LOAN AGREEMENT
between
U.S. BANK NATIONAL ASSOCIATION
and
NATIONAL PENN BANCSHARES, INC.

First Amendment dated as of December 22, 2012 
Original Agreement dated as of December 22, 2011

        

FIRST AMENDMENT TO 
LOAN AGREEMENT
This FIRST AMENDMENT TO LOAN AGREEMENT (this “First Amendment”) is dated as of December 22, 2012, and is made by and between NATIONAL PENN BANCSHARES, INC., a Pennsylvania corporation (“Borrower”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association (“Lender”).
RECITALS:
A.Borrower is a bank holding company that owns 100% of the issued and outstanding capital stock of National Penn Bank, a national banking association with its principal banking offices in Boyertown, Pennsylvania.
B.The Borrower and Lender are party to a Loan Agreement dated as of December 22, 2011 (as amended, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof, the “Original Agreement”).
C.The parties hereto desire to amend and modify the Original Agreement in accordance with the terms and subject to the conditions set forth in this First Amendment.
D.Capitalized terms not otherwise defined in this First Amendment shall have the meanings respectively ascribed to them in the Original Agreement.
THEREFORE, in consideration of the mutual covenants, conditions and agreements herein contained, the parties hereto hereby agree as follows:
AGREEMENT:
SECTION 1.     AMENDMENTS TO THE ORIGINAL AGREEMENT.
1.1    Definitions (Section 1.1).  The definition of the term “Maturity Date” set forth in Section 1.1 of the Original Agreement shall be amended in its entirety to read as follows:
“Maturity Date” means December 21, 2013.”
SECTION 2.    REPRESENTATIONS AND WARRANTIES.  Borrower hereby represents and warrants to Lender as of the date hereof as follows:
(i)    No Event of Default or Unmatured Event of Default has occurred and is continuing, and no Event of Default or Unmatured Event of Default would result from the amendments contemplated hereby.
(ii)    The execution, delivery and performance by the Borrower of this First Amendment have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, or notice to or action by any Person (including any Governmental Agency) in order to be effective and enforceable.

1    

(iii)    This First Amendment and the other Transaction Documents (as amended by this First Amendment) constitute the legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms.
(iv)    All representations and warranties of Borrower in the Original Agreement are true and correct.
(v)    Borrower’s obligations under the Original Agreement and under the other Transaction Documents are not subject to any defense, counterclaim, set-off, right to recoupment, abatement or other claim.
SECTION 3.    ADDITIONAL TERMS.
3.1    Acknowledgement of Indebtedness under Agreement.  Borrower acknowledges and confirms that, as of the date hereof, Borrower is indebted to Lender, without defense, setoff, or counterclaim, in the aggregate principal amount of Zero and 00/100 Dollars ($-0-) under the Original Agreement.
3.2    The Agreement.  On and after the Effective Date: (i) each reference in the Original Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like import shall mean and be a reference to the Original Agreement as amended hereby, (b) each reference to the Original Agreement in all Transaction Documents shall mean and be a reference to the Original Agreement, as amended hereby, and (c) this First Amendment shall be deemed a “Transaction Document” for the purposes of the Original Agreement.
3.3    First Amendment and Original Agreement to be Read Together.  This First Amendment supplements and is hereby made a part of the Original Agreement, and the Original Agreement and this First Amendment shall from and after the Effective Date be read together and shall constitute one agreement.  Except as otherwise set forth herein, the Original Agreement shall remain in full force and effect.
3.4    Acknowledgements.  Borrower acknowledges that (i) it has been advised by counsel of its choice of law with respect to this First Amendment, the Original Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby, (ii) any waiver of Borrower set forth herein has been knowingly and voluntarily made, and (iii) the obligations of Lender hereunder shall be strictly construed and shall be expressly subject to Borrower’s compliance in all respects with the terms and conditions of the Original Agreement.
3.5    No Waiver.  The execution, delivery and effectiveness of this First Amendment shall not operate as a waiver of any Event of Default (including without limitation any Events of Default existing on the date hereof), nor operate as a waiver of any right, power or remedy of Lender (including without limitation any rights, powers or remedies of Lender with respect to the Events of Default existing on the date hereof), nor constitute a waiver of, or consent to and departure from, any provision of the Original Agreement, or any of the other Transaction Documents.

2

3.6    No Novation.  The terms and conditions of the Original Agreement are amended as set forth in this First Amendment.  It is expressly understood and acknowledged that nothing in this First Amendment shall be deemed to cause or otherwise give rise to a novation of the indebtedness contemplated in the agreement.  All “Borrower’s Liabilities” under the Original Agreement shall in all respects be continuing and this First Amendment shall not be deemed to evidence or result in a novation or repayment and re-borrowing of such “Borrower’s Liabilities.”
SECTION 4.    CONDITIONS PRECEDENT.  The amendment set forth in SECTION 1 above shall become effective as of the date (the “Effective Date”) on which: (i) Borrower and Lender shall have received one or more counterparts of this First Amendment duly executed and delivered by the other; (ii) Lender shall have received payment from Borrower, in immediately available funds, of an amount sufficient to reimburse Lender for all reasonable out-of-pocket costs, fees and expenses incurred by Lender, or for which Lender has become obligated, in connection with the negotiation, preparation and consummation of this First Amendment, including but not limited to, reasonable attorneys’ fees and expenses; and (iii) Lender shall have received a copy, certified by the Secretary or Assistant Secretary of Borrower, of its Board of Directors’ resolutions authorizing the execution, delivery, and performance, respectively, of this First Amendment and any other documents to be executed, delivered, or performed in connection with this First Amendment.
SECTION 5.    RELEASE.  Borrower, for itself and its successors and assigns, does hereby fully, finally and unconditionally release and forever discharge, and agrees to hold harmless, Lender and each of its equityholders and affiliates, and their respective agents, advisors, managers, parents, subsidiaries, attorneys, representatives, employees, officers and directors, and the successors, assigns, heirs and representatives of each of the foregoing, from any and all debts, claims, counterclaims, setoffs, obligations, damages, costs, attorneys’ fees and expenses, suits, demands, liabilities, actions, proceedings and causes of action, in each case whether known or unknown, contingent or fixed, direct or indirect and of whatever kind, nature or description, and whether in law or in equity, under contract, tort, statute or otherwise, that Borrower has heretofore had or now or hereafter can, shall or may have by reason of any act, omission or thing whatsoever done or omitted to be done on or prior to the Effective Date arising out of, connected with or related in any way to this First Amendment, the Original Agreement, the other Transaction Documents, the transactions described therein, the Loan, Lender’s administration thereof, or the financing or banking relationships of Borrower with Lender.
SECTION 6.    Miscellaneous.  This First Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same amendatory instrument and any of the parties hereto may execute this First Amendment by signing any such counterpart.  This First Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York.
[Remainder of Page Intentionally Left Blank]

3

     IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed and delivered as of the day and year first above written.
NATIONAL PENN BANCSHARES, INC.

By:      /s/ Mark R. Mershon     
    Name:    Mark R. Mershon 
    Title:    Executive Vice President
US. BANK NATIONAL ASSOCIATION

By:     /s/ Janet S. Hockman     
    Name:    Janet S. Hockman 
    Title:    Senior Vice President

4

EXECUTION COPY

SECOND AMENDMENT
to
LOAN AGREEMENT
between
U.S. BANK NATIONAL ASSOCIATION
and
NATIONAL PENN BANCSHARES, INC.
Second Amendment dated as of August 8, 2013 
First Amendment dated as of December 22, 2012 
Original Agreement dated as of December 22, 2011

    

EXECUTION COPY

SECOND AMENDMENT TO 
LOAN AGREEMENT
This SECOND AMENDMENT TO LOAN AGREEMENT (this “Second Amendment”) is dated as of August 8, 2013, and is made by and between NATIONAL PENN BANCSHARES, INC., a Pennsylvania corporation (“Borrower”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association (“Lender”).
RECITALS:
A.Borrower is a bank holding company that owns 100% of the issued and outstanding capital stock of National Penn Bank, a national banking association with its principal banking offices in Boyertown, Pennsylvania.
B.The Borrower and Lender are party to a Loan Agreement dated as of December 22, 2011 (as amended, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof, including pursuant to the First Amendment to Loan Agreement dates as of December 22, 2012 by and between Borrower and Lender, the “Original Agreement”).
C.The parties hereto desire to amend and modify the Original Agreement in accordance with the terms and subject to the conditions set forth in this Second Amendment.
D.Capitalized terms not otherwise defined in this Second Amendment shall have the meanings respectively ascribed to them in the Original Agreement.
THEREFORE, in consideration of the mutual covenants, conditions and agreements herein contained, the parties hereto hereby agree as follows:
AGREEMENT:
SECTION 1.    AMENDMENTS TO THE ORIGINAL AGREEMENT.
1.1    Minimum Fixed Charge Coverage Ratio (Section 7.6).  The definition of “Fixed Charge Coverage Ratio” set forth in Section 7.6 of the Original Agreement shall be amended in its entirety to read as follows:
“For purposes of this Agreement, “Fixed Charge Coverage Ratio” shall mean with respect to the applicable period, the sum of (a) the after-tax net income of Borrower, plus (b) the amount of any good will amortization expense, plus (c) for periods occurring in fiscal year 2013, $42,200,000 (which is the after-tax effect of the recognition of an unamortized prepayment penalty in the Borrower’s consolidated statement of income for the three months ended March 31, 2013 in connection with the early extinguishment of $400 million of borrowings from the Federal Home Loan Bank of Pittsburgh on February 8, 2013), which sum shall be reduced by any dividends or similar distributions declared or paid (without duplication), by Borrower, which aggregate amount shall be divided by an amount equal to the sum of all contractually due interest and principal amounts (assuming all amounts available under the Loan have been advanced to Borrower and an amortization of such 

1

amounts using equal quarterly payments over a five year period) which, in all cases, shall be derived from the quarterly reports filed with the applicable primary federal regulator and shall be consistent with the financial information and reports contemplated in Section 6 hereof.”
SECTION 2.    REPRESENTATIONS AND WARRANTIES.  Borrower hereby represents and warrants to Lender as of the date hereof as follows:
(i)    No Event of Default or Unmatured Event of Default has occurred and is continuing that has not been waived in writing by the Lender, and no Event of Default or Unmatured Event of Default would result from the amendments contemplated hereby.
(ii)    The execution, delivery and performance by the Borrower of this Second Amendment have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, or notice to or action by any Person (including any Governmental Agency) in order to be effective and enforceable.
(iii)    This Second Amendment and the other Transaction Documents (as amended by this Second Amendment) constitute the legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms.
(iv)    All representations and warranties of Borrower in the Original Agreement are true and correct.
(v)    Borrower’s obligations under the Original Agreement and under the other Transaction Documents are not subject to any defense, counterclaim, set-off, right to recoupment, abatement or other claim.
SECTION 3.    ADDITIONAL TERMS.
3.1    Acknowledgement of Indebtedness under Agreement.  Borrower acknowledges and confirms that, as of the date hereof, Borrower is indebted to Lender, without defense, setoff, or counterclaim, in the aggregate principal amount of Zero and 00/100 Dollars ($-0-) under the Original Agreement.
3.2    The Agreement.  On and after the Effective Date: (i) each reference in the Original Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like import shall mean and be a reference to the Original Agreement as amended hereby, (b) each reference to the Original Agreement in all Transaction Documents shall mean and be a reference to the Original Agreement, as amended hereby, and (c) this Second Amendment shall be deemed a “Transaction Document” for the purposes of the Original Agreement.
3.3    Second Amendment and Original Agreement to be Read Together.  This Second Amendment supplements and is hereby made a part of the Original Agreement, and the Original Agreement and this Second Amendment shall from and after the Effective Date be read 

- 2 -

together and shall constitute one agreement.  Except as otherwise set forth herein, the Original Agreement shall remain in full force and effect.
3.4    Acknowledgements.  Borrower acknowledges that (i) it has been advised by counsel of its choice of law with respect to this Second Amendment, the Original Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby, (ii) any waiver of Borrower set forth herein has been knowingly and voluntarily made, and (iii) the obligations of Lender hereunder shall be strictly construed and shall be expressly subject to Borrower’s compliance in all respects with the terms and conditions of the Original Agreement.
3.5    No Waiver.  The execution, delivery and effectiveness of this Second Amendment shall not operate as a waiver of any Event of Default (including without limitation any Events of Default existing on the date hereof), nor operate as a waiver of any right, power or remedy of Lender (including without limitation any rights, powers or remedies of Lender with respect to the Events of Default existing on the date hereof), nor constitute a waiver of, or consent to and departure from, any provision of the Original Agreement, or any of the other Transaction Documents.
3.6    No Novation.  The terms and conditions of the Original Agreement are amended as set forth in this Second Amendment.  It is expressly understood and acknowledged that nothing in this Second Amendment shall be deemed to cause or otherwise give rise to a novation of the indebtedness contemplated in the agreement.  All “Borrower’s Liabilities” under the Original Agreement shall in all respects be continuing and this Second Amendment shall not be deemed to evidence or result in a novation or repayment and re-borrowing of such “Borrower’s Liabilities.”
SECTION 4.    CONDITIONS PRECEDENT.  The amendment set forth in SECTION 1 above shall become effective as of the date (the “Effective Date”) on which: (i) Borrower and Lender shall have received one or more counterparts of this Second Amendment duly executed and delivered by the other; (ii) Lender shall have received payment from Borrower, in immediately available funds, of an amount sufficient to reimburse Lender for all reasonable out-of-pocket costs, fees and expenses incurred by Lender, or for which Lender has become obligated, in connection with the negotiation, preparation and consummation of this Second Amendment, including but not limited to, reasonable attorneys’ fees and expenses; and (iii) Lender shall have received a copy, certified by the Secretary or Assistant Secretary of Borrower, of its Board of Directors’ resolutions authorizing the execution, delivery, and performance, respectively, of this Second Amendment and any other documents to be executed, delivered, or performed in connection with this Second Amendment.
SECTION 5.    RELEASE.  Borrower, for itself and its successors and assigns, does hereby fully, finally and unconditionally release and forever discharge, and agrees to hold harmless, Lender and each of its equityholders and affiliates, and their respective agents, advisors, managers, parents, subsidiaries, attorneys, representatives, employees, officers and directors, and the successors, assigns, heirs and representatives of each of the foregoing, from any and all debts, claims, counterclaims, setoffs, obligations, damages, costs, attorneys’ fees and expenses, suits, demands, liabilities, actions, proceedings and causes of action, in each case whether known or unknown, contingent or fixed, direct or indirect and of whatever kind, nature or description, and whether in law or in equity, under contract, tort, statute or otherwise, that Borrower has heretofore 

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had or now or hereafter can, shall or may have by reason of any act, omission or thing whatsoever done or omitted to be done on or prior to the Effective Date arising out of, connected with or related in any way to this Second Amendment, the Original Agreement, the other Transaction Documents, the transactions described therein, the Loan, Lender’s administration thereof, or the financing or banking relationships of Borrower with Lender.
SECTION 6.    Miscellaneous.  This Second Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same amendatory instrument and any of the parties hereto may execute this Second Amendment by signing any such counterpart.  This Second Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York.
[Remainder of Page Intentionally Left Blank]

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EXECUTION COPY

IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be duly executed and delivered as of the day and year first above written.

NATIONAL PENN BANCSHARES, INC.
By:     /s/ Scott V. Fainor     
    Name:    Scott V. Fainor 
    Title:    President & CEO

US. BANK NATIONAL ASSOCIATION
By:     /s/ Janet S. Hockman     
    Name:    Janet S. Hockman 
    Title:    Senior Vice President

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EXECUTION COPY
THIRD AMENDMENT
to
LOAN AGREEMENT
between
U.S. BANK NATIONAL ASSOCIATION
and
NATIONAL PENN BANCSHARES, INC.
Third Amendment dated as of December 23, 2013 
Second Amendment dated as of August 8, 2013 
First Amendment dated as of December 22, 2012 
Original Agreement dated as of December 22, 2011

THIRD AMENDMENT TO 
LOAN AGREEMENT
This THIRD AMENDMENT TO LOAN AGREEMENT (this “Third Amendment”) is dated as of December 23, 2013, and is made by and between NATIONAL PENN BANCSHARES, INC., a Pennsylvania corporation (“Borrower”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association (“Lender”).
RECITALS:
A.Borrower is a bank holding company that owns 100% of the issued and outstanding capital stock of National Penn Bank, a national banking association with its principal banking offices in Boyertown, Pennsylvania.
B.The Borrower and Lender are party to a Loan Agreement dated as of December 22, 2011 (as amended, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof, the “Original Agreement”).
C.The parties hereto desire to amend and modify the Original Agreement in accordance with the terms and subject to the conditions set forth in this Third Amendment.
D.Capitalized terms not otherwise defined in this Third Amendment shall have the meanings respectively ascribed to them in the Original Agreement.
THEREFORE, in consideration of the mutual covenants, conditions and agreements herein contained, the parties hereto hereby agree as follows:
AGREEMENT:
SECTION 1.    AMENDMENTS TO THE ORIGINAL AGREEMENT.
1.1    Recitals (Recital B).  Recital B of the Original Agreement shall be amended in its entirety to read as follows:
“Borrower has requested that Lender provide it with a revolving line of credit (the “Loan”) in the maximum principal amount of $75,000,000.”
1.2    Recitals (Recital D).  Recital D of the Original Agreement shall be amended in its entirety to read as follows:
“Lender is willing to lend to Borrower up to an aggregate principal amount of $75,000,000 under the Loan in accordance with the terms, subject to the conditions, and in reliance on the recitals, representations, warranties, covenants and agreements set forth herein and in the other Transaction Documents (as defined below).”
1.3    Definitions (Section 1.1).  The definition of the terms “Maturity Date” set forth in Section 1.1 of the Original Agreement shall be amended in its entirety to read as follows:

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“Maturity Date” means December 21, 2014.”
1.4    Definitions (Section 1.1).  The definition of the term “Note” in Section 1.1 of the Original Agreement shall be amended to replace Exhibit A to the Original Agreement with Exhibit A to this Third Amendment (the “Restated Note”).
1.5    Commitment Fee (Section 2.4).  Section 2.4 of the Original Agreement shall be amended in its entirety to read as follows:
“Commitment Fee.  Borrower shall pay Lender a fee equal to 0.25% (twenty five basis points) per annum (computed on the basis of a 360-day year, actual days elapsed) on the average daily unused amount of the Loan, which fee shall be calculated on a quarterly basis by Lender and shall be due and payable by Borrower on each March 31, June 30, September 30 and December 31, commencing on December 31, 2013.  Such fees shall be fully earned when paid and shall not be refunded for any reason.”
1.6    Initial and Subsequent Disbursements (Section 3.1).  Section 3.1 of the Original Agreement shall be amended in its entirety to read as follows:
“Initial and Subsequent Disbursements.  Following the Closing and the delivery of all items required by Section 3, at such time as all of the terms and conditions in Section 3.3 have been satisfied by Borrower and Borrower has executed and delivered to Lender each of the Transaction Documents and any other related documents in form and substance reasonably satisfactory to Lender, Lender shall disburse to Borrower an amount up to $75,000,000.  In the event Borrower fails to satisfy any disbursement conditions, Borrower nevertheless shall pay all costs and expenses incurred by Lender in connection with the transactions contemplated herein promptly upon receipt of an invoice therefore from Lender.”
1.7    Compliance Certificate (Section 6.3).  Section 6.3 of the Original Agreement shall be amended in its entirety to read as follows (including to replace Exhibit D to the Original Agreement with Exhibit D to this Third Amendment):
“Compliance Certificate.  Borrower shall furnish Lender, at the same time as the quarterly financial reports referred to in Section 6.2, a quarterly compliance certificate in the form attached as Exhibit D hereto.  In addition, as a condition to any disbursement to be made under the Loan at any time during which Borrower or Subsidiary Bank is party to a definitive agreement in connection with an acquisition that has not been consummated, Borrower shall furnish Lender a compliance certificate in the form attached as Exhibit D hereto, as of the most recently ended fiscal quarter on a pro forma basis to reflect such acquisition.  Any compliance certificate delivered pursuant to this Section 6.3 shall be signed by the Chief Executive Officer, President, Chief Financial Officer or Treasurer of Borrower and shall also contain, in a form and with such specificity as is reasonably satisfactory to Lender, such additional information as Lender shall have reasonably requested by Borrower prior to the submission thereof.”

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1.8    Liquidity (Section 7.5).  The first sentence of Section 7.5 of the Original Agreement shall be amended in its entirety to read as follows:
“Borrower shall own and maintain unencumbered Liquid Assets in an amount, at all times, in excess of $10,000,000.”
1.9    Fixed Charge Coverage Ratio (Section 7.6).  The definition of “Fixed Charge Coverage Ratio” in Section 7.6 of the Original Agreement shall be amended in its entirety to read as follows:
“For purposes of this Agreement, “Fixed Charge Coverage Ratio” shall mean with respect to the applicable period, the sum of (a) the after-tax net income of Borrower, plus (b) the amount of any good will amortization expense, plus (c) for periods occurring in fiscal year 2013, $42,200,000 (which is the after-tax effect of the recognition of an unamortized prepayment penalty in the Borrower’s consolidated statement of income for the three months ended March 31, 2013 in connection with the early extinguishment of $400 million of borrowings from the Federal Home Loan Bank of Pittsburgh on February 8, 2013), which sum shall be reduced by any dividends or similar distributions declared or paid (without duplication), by Borrower, which aggregate amount shall be divided by an amount equal to the sum of all contractually due interest and principal amounts (assuming all amounts available under the Loan have been advanced to Borrower and an amortization of such amounts using equal quarterly payments over a seven year period) which, in all cases, shall be derived from the quarterly reports filed with the applicable primary federal regulator and shall be consistent with the financial information and reports contemplated in Section 6 hereof.”
SECTION 2.    REPRESENTATIONS AND WARRANTIES.  Borrower hereby represents and warrants to Lender as of the date hereof as follows:
(i)    No Event of Default or Unmatured Event of Default has occurred and is continuing, and no Event of Default or Unmatured Event of Default would result from the amendments contemplated hereby.
(ii)    The execution, delivery and performance by the Borrower of this Third Amendment have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, or notice to or action by any Person (including any Governmental Agency) in order to be effective and enforceable.
(iii)    This Third Amendment and the other Transaction Documents (as amended by this Third Amendment) constitute the legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms.
(iv)    All representations and warranties of Borrower in the Original Agreement are true and correct.

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(v)    Neither Borrower nor Subsidiary Bank is subject to any prior approval or notice requirements relating to the payment of dividends by Subsidiary Bank.
(vi)    Borrower’s obligations under the Original Agreement and under the other Transaction Documents are not subject to any defense, counterclaim, set-off, right to recoupment, abatement or other claim.
SECTION 3.    ADDITIONAL TERMS.  
3.1    Acknowledgement of Indebtedness under Agreement.  Borrower acknowledges and confirms that, as of the date hereof, Borrower is indebted to Lender, without defense, setoff, or counterclaim, in the aggregate principal amount of Zero and 00/100 Dollars ($-0-) under the Original Agreement.
3.2    The Agreement.  On and after the Effective Date: (i) each reference in the Original Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like import shall mean and be a reference to the Original Agreement as amended hereby, (b) each reference to the Original Agreement in all Transaction Documents shall mean and be a reference to the Original Agreement, as amended hereby, and (c) this Third Amendment shall be deemed a “Transaction Document” for the purposes of the Original Agreement.
3.3    Third Amendment and Original Agreement to be Read Together.  This Third Amendment supplements and is hereby made a part of the Original Agreement, and the Original Agreement and this Third Amendment shall from and after the Effective Date be read together and shall constitute one agreement.  Except as otherwise set forth herein, the Original Agreement shall remain in full force and effect.
3.4    Acknowledgements.  Borrower acknowledges that (i) it has been advised by counsel of its choice of law with respect to this Third Amendment, the Original Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby, (ii) any waiver of Borrower set forth herein has been knowingly and voluntarily made, and (iii) the obligations of Lender hereunder shall be strictly construed and shall be expressly subject to Borrower’s compliance in all respects with the terms and conditions of the Original Agreement.
3.5    No Waiver.  The execution, delivery and effectiveness of this Third Amendment shall not operate as a waiver of any Event of Default (including without limitation any Events of Default existing on the date hereof), nor operate as a waiver of any right, power or remedy of Lender (including without limitation any rights, powers or remedies of Lender with respect to the Events of Default existing on the date hereof), nor constitute a waiver of, or consent to and departure from, any provision of the Original Agreement, or any of the other Transaction Documents.
3.6    No Novation.  The terms and conditions of the Original Agreement are amended as set forth in this Third Amendment.  It is expressly understood and acknowledged that nothing in this Third Amendment shall be deemed to cause or otherwise give rise to a novation of the indebtedness contemplated in the agreement.  All “Borrower’s Liabilities” under the Original 

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Agreement shall in all respects be continuing and this Third Amendment shall not be deemed to evidence or result in a novation or repayment and re-borrowing of such “Borrower’s Liabilities.”
SECTION 4.    CONDITIONS PRECEDENT.  The amendment set for in SECTION 1 above shall become effective as of the date (the “Effective Date”) on which each of the following conditions shall have been satisfied: (i) Lender shall have received a fully executed Restated Note and this Third Amendment; (ii) Lender shall have received payment from Borrower, in immediately available funds, of an amount sufficient to reimburse Lender for all reasonable out-of-pocket costs, fees and expenses incurred by Lender, or for which Lender has become obligated, in connection with the negotiation, preparation and consummation of this Third Amendment, including but not limited to, reasonable attorneys’ fees and expenses; and (iii) Lender shall have received a copy, certified by the Secretary or Assistant Secretary of Borrower, of its Board of Directors’ resolutions authorizing the execution, delivery, and performance, respectively, of this Third Amendment and any other documents to be executed, delivered, or performed in connection with this Third Amendment; and (iv) Lender shall have received a written opinion of Borrower’s counsel, addressed to Lender, in a form reasonably satisfactory to Lender and its counsel.
SECTION 5.    RELEASE.  Borrower, for itself and its successors and assigns, does hereby fully, finally and unconditionally release and forever discharge, and agrees to hold harmless, Lender and each of its equityholders and affiliates, and their respective agents, advisors, managers, parents, subsidiaries, attorneys, representatives, employees, officers and directors, and the successors, assigns, heirs and representatives of each of the foregoing, from any and all debts, claims, counterclaims, setoffs, obligations, damages, costs, attorneys’ fees and expenses, suits, demands, liabilities, actions, proceedings and causes of action, in each case whether known or unknown, contingent or fixed, direct or indirect and of whatever kind, nature or description, and whether in law or in equity, under contract, tort, statute or otherwise, that Borrower has heretofore had or now or hereafter can, shall or may have by reason of any act, omission or thing whatsoever done or omitted to be done on or prior to the Effective Date arising out of, connected with or related in any way to this Third Amendment, the Original Agreement, the other Transaction Documents, the transactions described therein, the Loan, Lender’s administration thereof, or the financing or banking relationships of Borrower with Lender, except in each instance for those caused by Lender’s willful misconduct or gross negligence
SECTION 6.    Miscellaneous.  This Third Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same amendatory instrument and any of the parties hereto may execute this Third Amendment by signing any such counterpart.  This Third Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York.
[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be duly executed and delivered as of the day and year first above written.
NATIONAL PENN BANCSHARES, INC.

By:      /s/ Michael J. Hughes     
    Name:    Michael J. Hughes 
    Title:    Senior Executive Vice President and 
        Chief Financial Officer

US. BANK NATIONAL ASSOCIATION

By:      /s/ Roy O. Young         
    Name:    Roy O. Young 
    Title:    Senior Vice President

[Signature Page to Third Amendment]

EXHIBIT A
FORM OF RESTATED REVOLVING PROMISSORY NOTE
$75,000,000.00    New York, New York 
    Date: December [  ], 2013
FOR VALUE RECEIVED, the undersigned, NATIONAL PENN BANCSHARES, INC., a Pennsylvania corporation (“Borrower”), promises to pay to the order of U.S. BANK NATIONAL ASSOCIATION, a national banking association, or the holder hereof from time to time (“Lender”), at such place as may be designated in writing by Lender, the principal sum of SEVENTY-FIVE MILLION AND NO/100THS DOLLARS ($75,000,000.00) (or so much thereof that has been advanced and remains outstanding), with interest thereon as hereinafter provided.  It is contemplated that there will be advances and payments under this note (this “Note”) from time to time, but no advances or payments under this Note (including payment in full of the unpaid balance of principal hereof prior to maturity) shall affect or impair the validity or enforceability of this Note as to future advances hereunder.  This Note is issued pursuant to the terms of that certain Loan Agreement of even date herewith by and between Borrower and Lender as amended, restated, supplemented or modified from time to time (the “Loan Agreement”).  All capitalized terms used but not defined herein shall have the respective meanings ascribed to them in the Loan Agreement.
Interest shall accrue on all sums as advanced and outstanding from time to time under this Note and Loan Agreement as set forth in the Loan Agreement.  Such interest shall be due and payable, in arrears (i) for any LIBO Rate Tranche, on the last day of each LIBOR Period, and (ii) for any Base Rate Tranche, on the last day of each September, December, March and June, beginning December 31, 2013, and as otherwise set forth in the Loan Agreement.
The outstanding principal balance of this Note, together with all accrued and unpaid interest, shall be due and payable on the Maturity Date.  Additional principal payments shall be made in accordance with the provisions of the Loan Agreement.
This Note is issued pursuant to the terms of the Loan Agreement.  If a Default or an Event of Default shall occur and be continuing, the principal of this Note together with all accrued interest thereon may, at the option of the holder hereof, immediately become due and payable on demand; provided, however, that if any document related to this Note provides for automatic acceleration of payment of sums owing hereunder, all sums owing hereunder shall be automatically due and payable in accordance with the terms of that document.
Unless otherwise provided in the Loan Agreement, all payments on account of the indebtedness evidenced by this Note shall be first applied to the payment of costs and expenses of Lender which are due and payable, then to past-due interest on the unpaid principal balance and the remainder to principal.
Provided that no Default or Event of Default then exists, this Note may be prepaid only upon those terms and conditions set forth in the Loan Agreement.

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From and after the Maturity Date, or such earlier date as all sums owing on this Note become due and payable by acceleration or otherwise, or after the occurrence of a Default or an Event of Default, and as otherwise provided in the Loan Agreement, interest shall be computed on all amounts then due and payable under this Note at a “Default Rate” equal to 3% per annum (based on a 360-day year and charged on the basis of actual days elapsed) in excess of the interest rate otherwise accruing under this Note.
If any attorney is engaged by Lender to enforce or defend any provision of this Note or any of the other Transaction Documents, or as a consequence of any Default or Event of Default, with or without the filing of any legal action or proceeding, then Borrower shall pay to Lender immediately upon demand all attorneys’ fees and expenses, together with interest thereon from the date of such demand until paid at the rate of interest applicable to the principal balance owing hereunder as if such unpaid attorneys’ fees and expenses had been added to the principal.
No previous waiver and no failure or delay by Lender or Borrower in acting with respect to the terms of this Note or any of the other Transaction Documents shall constitute a waiver of any breach, default or failure of condition under this Note, the Loan Agreement or any of the other Transaction Documents or the obligations secured thereby.  A waiver of any term of this Note or any of the other Transaction Documents or of any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of such waiver.  In the event of any inconsistencies between the terms of this Note and the terms of any other document related to the Loan evidenced by this Note, the terms of this Note shall prevail.
Except as otherwise provided in the Loan Agreement, Borrower expressly waives presentment, demand, notice of dishonor, notice of default or delinquency, notice of acceleration, notice of protest and nonpayment, notice of costs, expenses or losses and interest thereon, notice of late charges, and diligence in taking any action to collect any sums owing under this Note or in proceeding against any of the rights or interests in or to properties securing payment of this Note.  In addition, Borrower expressly agrees that this Note and any payment coming due hereunder may be extended from time to time without in any way affecting the liability of any such party hereunder.
Time is of the essence with respect to every provision hereof This Note shall be construed and enforced in accordance with the laws of the State of New York, except to the extent that federal laws preempt the laws of the State of New York, and all persons and entities in any manner obligated under this Note consent to the jurisdiction of any Federal or State court having situs in New York, New York and having proper venue, and also consent to service of process by any means authorized by New York or Federal law.  Any reference contained herein to attorneys’ fees and expenses shall be deemed to be to reasonable fees and expenses and to include all reasonable fees and expenses of third-party attorneys and the reasonable fees and expenses of any other experts or consultants.
All agreements between Borrower and Lender (including, without limitation, this Note and the Loan Agreement, and any other documents securing all or any part of the indebtedness evidenced hereby) are expressly limited so that in no event whatsoever shall the amount paid or agreed to be paid to Lender exceed the highest lawful rate of interest permissible under applicable law.  If, from any circumstances whatsoever, fulfillment of any provision hereof, the Loan Agreement or any other documents securing all or any part of the indebtedness evidenced hereby at the time 

8

performance of such provisions shall be due, shall involve exceeding the limit of validity prescribed by law which a court of competent jurisdiction may deem applicable hereto, then, ipso facto, the obligation to be fulfilled shall be reduced to the highest lawful rate of interest permissible under such applicable laws, and if, for any reason whatsoever, Lender shall ever receive as interest an amount which would be deemed unlawful under such applicable law, such interest shall be automatically applied to the payment of the principal of this Note (whether or not then due and payable) and not to the payment of interest or refunded to Borrower if such principal has been paid in full.
Any notice which either party hereto may be required or may desire to give hereunder shall be governed by the notice provisions of the Loan Agreement.
[Remainder of Page Intentionally Left Blank]
 

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EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES (TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN CONNECTION WITH THIS NOTE OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY OTHER STATEMENTS OR ACTIONS OF BORROWER OR LENDER.  BORROWER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS DISCUSSED THIS WAIVER WITH SUCH LEGAL COUNSEL.  BORROWER FURTHER ACKNOWLEDGES THAT (a) IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF THIS WAIVER, (b) THIS WAIVER HAS BEEN REVIEWED BY BORROWER AND BORROWER’S COUNSEL AND IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THE TRANSACTION DOCUMENTS, (c) THIS WAIVER SHALL BE EFFECTIVE AS TO EACH OF THE TRANSACTION DOCUMENTS AS IF FULLY INCORPORATED THEREIN AND (d) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER.
IN WITNESS WHEREOF, the undersigned has executed this Note or caused this Note to be executed by its duly authorized representative as of the date first above written.
NATIONAL PENN BANCSHARES, INC.

By:              
    Name:  
    Title:  

EXHIBIT D
FORM OF QUARTERLY COMPLIANCE CERTIFICATE 
for the Quarter Ended______________________
The undersigned, the ___________________ of National Penn Bancshares, Inc. (“Borrower”), hereby delivers this certificate pursuant to Section 6.3 of that certain Loan Agreement dated as of December 22, 2011, between Borrower and U.S. Bank National Association (as amended, the “Agreement”) and certifies as of the date hereof as follows:
1.Attached hereto are the financial reports described in Section 6 of the Agreement for the above-referenced period.
2.Borrower is in compliance in all material respects with all covenants contained in the Agreement, and has provided a detailed calculation, as of each day of the quarter ended on the date set forth in the title hereof, of the financial covenants set forth in Sections 7 of the Agreement on Annex A attached hereto.
3.No Default, Unmatured Event of Default or Event of Default has occurred or is continuing under the Agreement.  [Or, if incorrect, provide detail regarding the Default or Event of Default and the steps being taken to cure it and the time within which such cure will occur.]
4.Borrower’s representations and warranties set forth in the Agreement are true as of the date of this certificate.
Capitalized terms in this Quarterly Compliance Certificate that are otherwise undefined shall have the meanings given them in the Agreement.
Dated: [•]
NATIONAL PENN BANCSHARES, INC.

By:              
    Name:  
    Title:

2

ANNEX A
TO
QUARTERLY COMPLIANCE CERTIFICATE
		
	A.
	Risk-Based Capital Adequacy Guidelines.  (Sections 7.1 and 7.2) 
(as of the fiscal quarter ending ________, 201__)

1.    Borrower 
    (FRB Capital Guidelines)         In Compliance         Not In Compliance
2.    Subsidiary Bank 
    (OCC Capital Guidelines)         In Compliance         Not In Compliance
[minimum capital category required: “well capitalized”] 
    [minimum required total risk-based Capital Ratio Bank- 12%]
B.    Maximum Nonperforming Assets.  (Section 7.3) 
    (as of the fiscal quarter ending ________, 201__)
1.    Total Nonperforming Assets    $    
2.    Tangible Primary Capital    $    
3.    NPAs divided by Primary Capital [B.1 divided by B.2]        %
[maximum permitted – 12%]
C.    Minimum Reserves to Nonperforming Loans.  (Section 7.4) 
    (as of the fiscal quarter ending ________, 201__)
1.    Allowance for Loan and Leases Losses    $    
2.    Nonperforming Loans    $    
3.    ALLLs divided by NPLs [C.1 divided by C.2]        %
[maximum required ALLL: 100% of NPLs]
D.    Minimum Liquid Assets.  (Section 7.5)
Liquid Assets    $    
[minimum required Liquid Assets- $10,000,000]

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E.    Minimum Fixed Charge Coverage Ratio.  (Section 7.6) 
    (as of the fiscal quarter ending ________, 201__)
1.    After-tax Net Income of Borrower*    $    
2.    Amount of Goodwill Amortized by Borrower    $    
3.    Cash distributions or declarations by Borrower    $    
4.    [E.1 plus E.2 minus E.3.]    $    
5.    Interest Expense    $    
6.    Required Principal Payments    $    
7.    Imputed Principal Amount – Loan    $10,714,286.00
8.    [E.5 plus E.6 plus E.7.]    $    
9.    Fixed Charge Coverage Ratio [E.4. divided by E.8.]         to 1.00
*Plus, for periods occurring in fiscal year 2013, $42,200,000 (which is the after-tax effect of the recognition of an unamortized prepayment penalty in the Borrower’s consolidated statement of income for the three months ended March 31, 2013 in connection with the early extinguishment of $400 million of borrowings from the Federal Home Loan Bank of Pittsburgh on February 8, 2013).

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