NATIONAL PENN BANCSHARES, INC.
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1997 EMPLOYEE STOCK PURCHASE PLAN
(As amended and restated,
effective December 20, 2000)
The following constitutes the provisions of the Employee Stock Purchase
Plan (the "Plan") of National Penn Bancshares, Inc. (the "Company").
1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Subsidiaries with an opportunity to purchase Common Stock of the
Company. It is the Company's intention to have the Plan qualify as an "Employee
Stock Purchase Plan" under Section 423 of the Code. Accordingly, the provisions
of the Plan shall be construed so as to extend and limit participation in a
manner consistent with the requirements of that section of the Code.
2. Definitions.
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(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" means the Company's common stock, without par value.
(d) "Compensation" means all regular straight-time gross earnings
excluding payments for overtime, incentive compensation, incentive payments,
bonuses, commissions and other compensation. For Employees paid on a commissions
only basis, "straight-time gross earnings" means commissions paid.
(e) "Continuous Status as an Employee" means the absence of any
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of a leave of absence
agreed to in writing by the Company, provided that such leave is for a period of
not more than 90 days or re-employment upon the expiration of such leave is
guaranteed by contract or statute.
(f) "Contributions" means all amounts credited to the account of a
participant pursuant to the Plan.
(g) "Employee" means any person employed by the Company or one of its
Subsidiaries, including any officer of the Company or of one of its
Subsidiaries.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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(i) "Offering Date" means the first business day of each Offering
Period of the Plan.
(j) "Offering Period" means a period of three (3) months beginning on
January 1, April 1, July 1 or October 1 of each year.
(k) "Purchase Date" means the last day of each Offering Period of the
Plan.
(l) "Subsidiary" means a corporation of which not less than fifty
percent (50%) of the voting shares are held by the Company or a Subsidiary,
whether or not such corporation now exists or is hereafter organized or acquired
by the Company or a Subsidiary.
3. Eligibility.
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(a) Any person who has been continuously employed as an Employee for at
least three (3) months prior to the Offering Date of a given Offering Period
shall be eligible to participate in such Offering Period under the Plan, subject
to the requirements of Section 5(a) and the limitations imposed by Section
423(b) of the Code.
(b) No Employee shall be granted an option under the Plan (i) if,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own stock and/or hold outstanding options to purchase stock possessing
five percent (5%) or more of the total combined voting power or value of all
classes of stock of the Company or of any Subsidiary, or (ii) which permits his
or her rights to purchase stock under all employee stock purchase plans
(described in Section 423 of the Code) of the Company and its Subsidiaries to
accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) of fair
market value of such stock (determined at the time such option is granted) for
each calendar year in which such option is outstanding at any time.
4. Offering Periods. The Plan shall be implemented by a series of
Offering Periods, with a new Offering Period commencing on January 1, April 1,
July 1 and October 1 of each year. The Plan shall continue until terminated in
accordance with Section 19 hereof.
5. Participation. An eligible Employee may become a participant in the
Plan by completing a subscription agreement on the form provided by the Company
and filing it with the Company prior to the applicable Offering Date, unless a
later time for filing the subscription agreement is set by the Board for all
eligible Employees with respect to a given offering. The subscription agreement
shall set forth the percentage of the participant's Compensation (which shall be
not less than one
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percent (1%) and not more than ten percent (10%)) to be paid as Contributions
pursuant to the Plan.
6. Method of Payment of Contributions.
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(a) The participant shall elect to have payroll deductions made on each
payday during an Offering Period in an amount not less than one percent (1%) and
not more than ten percent (10%) of such participant's Compensation on each such
payday; provided that the aggregate of such payroll deductions during an
Offering Period shall not exceed ten percent (10%) of the participant's
aggregate Compensation during such Offering Period. All payroll deductions made
by a participant shall be credited to his or her account under the Plan. A
participant may not make any additional payments into such account.
(b) Payroll deductions shall commence on the first payroll following
the Offering Date and shall end on the last payroll paid on or prior to the
Purchase Date of the offering to which the subscription agreement is applicable,
unless sooner terminated by the participant as provided in Section 10.
(c) A participant may discontinue his or her participation in the Plan
as provided in Section 10, or, on one occasion only during an Offering Period,
may increase or decrease the rate of his or her Contributions during such
Offering Period, without withdrawing from the Plan, by completing and filing
with the Company a new subscription agreement within the ten (10) day period
immediately preceding the beginning of any month during the Offering Period. The
change in rate shall be effective as of the beginning of the month following the
date of filing of the new subscription agreement and shall comply with the
limits as provided in Section 6(a).
(d) To the extent necessary to comply with Section 423(b)(8) of the
Code and Section 3(b) herein, a participant's payroll deductions may be
decreased to zero percent (0%) at such time, during any Offering Period which is
scheduled to end during the current calendar year, that the aggregate of all
payroll deductions accumulated with respect to such Offering Period and any
other Offering Period ending within the same calendar year equals $25,000.
Payroll deductions shall recommence at the rate provided in such participant's
subscription agreement at the beginning of the first Offering Period which is
scheduled to end in the following calendar year, unless terminated by the
participant as provided in Section 10.
7. Grant of Option.
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(a) On the Offering Date of each Offering Period, each eligible
Employee participating in such Offering Period shall be granted an option to
purchase, on the Purchase Date of such
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Offering Period, the number of shares of Common Stock determined by dividing
such Employee's Contributions accumulated prior to such Purchase Date and
retained in the participant's account as of the Purchase Date by ninety percent
(90%) of the fair market value of a share of Common Stock on the Purchase Date;
provided, however, that the maximum number of shares an Employee may purchase in
any one calendar year shall be determined at the Offering Date by dividing
$25,000 by the fair market value of a share of Common Stock on the Offering
Date, and provided further that such purchase shall be subject to the
limitations set forth in Sections 3(b) and 12 hereof. The fair market value of a
share of Common Stock shall be determined as provided in Section 7(b) herein.
(b) The option price per share of the shares offered in a given
Offering Period shall be ninety percent (90%) of the fair market value of a
share of Common Stock on the Purchase Date. The fair market value of a share of
Common Stock on a given date shall be determined (i) based on the average of the
closing sale prices of a share of Common Stock for the ten (10) day trading
period ending on the given date, as reported on the National Association of
Securities Dealers Automated Quotation ("Nasdaq") National Market and published
in The Wall Street Journal, (ii) if no closing sale prices are reported during
such ten (10) day trading period, based on the average of the mean of the bid
and asked prices per share of Common Stock for such ten (10) day trading period,
as reported on Nasdaq, (iii) if the Common Stock is listed on a stock exchange,
based on the average of the closing sale prices of a share of Common Stock for
the ten (10) day trading period ending on the given date, as reported in The
Wall Street Journal, or (iv) if the Common Stock is not listed on Nasdaq or on a
stock exchange, by the Board in its sole discretion.
8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in Section 10, his or her option for the purchase of shares will be
exercised automatically on the Purchase Date of the Offering Period, and the
maximum number of full and fractional shares subject to option will be purchased
for him or her at the applicable option price with the accumulated Contributions
in his or her account. The shares purchased upon exercise of an option hereunder
shall be deemed to be transferred to the participant on the Purchase Date.
During his or her lifetime, a participant's option to purchase shares hereunder
is exercisable only by him or her.
9. Stock Certificates; Cash Balances; Dividend Reinvestment.
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(a) Stock certificates will not be issued to participants for shares
purchased on the Purchase Date. Shares purchased for a participant on a Purchase
Date shall be held in an account for such participant under the Plan, and all
rights accruing to an owner of record of such shares (including voting rights)
shall belong to the participant for whose account such shares are held. A
participant
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may file a written election with the Company to withdraw some or all of the
shares of Common Stock held in his or her account, in which case a stock
certificate will be issued to such participant for such withdrawn shares.
(b) Each participant in the Plan shall be deemed to have authorized the
collection and accumulation of all dividends paid on shares held in his or her
account and the application of such dividends to the purchase of additional full
and fractional shares of Common Stock as of the dividend payment date, at its
fair market value on such date (without any discount). Fair market value shall
be determined as of the dividend payment date, in the manner set forth in
Section 7(b) hereof.
10. Withdrawal; Termination of Employment.
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(a) A participant may withdraw all, but not less than all, of the
Contributions credited to his or her account under the Plan at any time prior to
the Purchase Date of an Offering Period by giving written notice to the Company.
All of such participant's Contributions credited to his or her account will be
paid to him or her promptly after receipt of such notice of withdrawal, and his
or her option for the current period will be automatically terminated, and no
further Contributions for the purchase of shares will be made during the
Offering Period.
(b) Upon termination of a participant's Continuous Status as an
Employee prior to the Purchase Date of an Offering Period for any reason,
including retirement or death, the Contributions credited to his or her account
prior to the Purchase Date will be returned to him or her or, in the case of his
or her death, to the person or persons entitled thereto under Section 14, and
his or her option will automatically be terminated.
(c) A participant who withdraws from an Offering Period will not be
eligible to participate again in the Plan until the first anniversary of the
Purchase Date of the Offering Period during which such participant withdrew from
the Plan. The Board, or its committee established under Section 13 hereof, may
waive the non- participation period in its sole discretion. A participant's
withdrawal from an Offering Period will not have any effect upon his or her
eligibility to participate in any similar plan which may hereafter be adopted by
the Company.
11. No Interest. No interest shall accrue on the Contributions of a
participant in the Plan.
12. Stock.
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(a) The maximum number of shares of Common Stock which shall be made
available for sale under the Plan shall be 250,000 shares, subject to adjustment
upon changes in capitalization of the Company
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as provided in Section 18. If the total number of shares which would otherwise
be subject to options granted pursuant to Section 7(a) hereof on the Offering
Date of an Offering Period exceeds the number of shares then available under the
Plan (after deduction of all shares for which options have been exercised or are
then outstanding), the Company shall make a pro rata allocation of the shares
remaining available for option grant in as uniform a manner as shall be
practicable and as it shall determine to be equitable. Any amounts remaining in
an Employee's account not applied to the purchase of Common Stock pursuant to
this Section 12 shall be refunded on or promptly after the Purchase Date. In
such event, the Company shall give written notice of such reduction of the
number of shares subject to the option to each Employee affected thereby and
shall similarly reduce the rate of Contributions, if necessary.
(b) No participant will have any interest or voting rights in any
shares covered by his or her option until such option has been exercised.
13. Administration. The Board, or a committee named by the Board, shall
supervise and administer the Plan and shall have full power to (i) adopt, amend
and rescind any rules deemed desirable and appropriate for the administration of
the Plan and not inconsistent with the Plan, (ii) construe and interpret the
Plan, and (iii) make all other determinations necessary or advisable for the
administration of the Plan. The Board, or a committee named by the Board, may
engage a firm or entity to administer the Plan, subject to the Board's or
committee's control and authority.
14. Designation of Beneficiary.
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(a) A participant may file with the Company a written designation of a
beneficiary who is to receive any shares and/or cash, if any, from the
participant's account under the Plan upon such participant's death.
(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. Upon the death of a participant and in the
absence of a beneficiary validly designated under the Plan who is living at the
time of such participant's death, the Company shall deliver such shares and/or
cash to the executor or administrator of the estate of the participant, or if no
such executor or administrator has been appointed (to the knowledge of the
Company), the Company, in its sole discretion, may deliver such shares and/or
cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
15. Transferability. Neither Contributions credited to a participant's
account nor any rights with regard to the exercise of
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an option or to receive shares under the Plan may be assigned, transferred,
pledged or otherwise disposed of in any way (other than by will, the laws of
descent and distribution or as provided in Section 14 hereof) by the
participant. Any such attempt at assignment, transfer, pledge or other
disposition shall be without effect, except that the Company may treat such act
as an election to withdraw funds in accordance with Section 10.
16. Use of Funds. All Contributions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such Contributions.
17. Reports. Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to participating
Employees promptly following the Purchase Date, which statements will set forth
the amounts of Contributions, the per share purchase price, the number of shares
purchased and the remaining cash balance, if any.
18. Adjustments Upon Changes in Capitalization; Corporate Transactions.
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(a) Subject to any required action by the shareholders of the Company,
the number of shares of Common Stock covered by each option under the Plan which
has not yet been exercised and the number of shares of Common Stock which have
been authorized for issuance under the Plan but have not yet been placed under
option (collectively, the "Reserves"), as well as the price per share of Common
Stock covered by each option under the Plan which has not yet been exercised,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other increase or decrease in the number of shares of Common Stock affected
without receipt of consideration by the Company.
(b) Upon a proposed dissolution or liquidation of the Company, the
Offering Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board.
(c) Upon a sale of all or substantially all of the assets of the
Company or the merger of the Company with or into another corporation, each
option under the Plan shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, unless the Board determines, in the exercise of its sole
discretion and in lieu of such assumption or substitution, to shorten the
Offering Period then in progress by setting a new Purchase Date (the "New
Purchase Date"). If the Board shortens the Offering Period then in progress in
lieu of assumption or
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substitution in the event of a merger or sale of assets, the Board shall notify
each participant in writing, at least ten (10) days prior to the New Purchase
Date, that the Purchase Date for his or her option has been changed to the New
Purchase Date and that his or her option will be exercised automatically on the
New Purchase Date, unless prior to such date he or she has withdrawn from the
Offering Period as provided in Section 10. For purposes of this Section 18, an
option granted under the Plan shall be deemed to be assumed if, following the
sale of assets or merger, the option confers the right to purchase, for each
share of option stock subject to the option immediately prior to the sale of
assets or merger, the consideration (whether stock, cash or other securities or
property) received in the sale of assets or merger by holders of Common Stock
for each share of Common Stock held on the effective date of the transaction
(and if such holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares of
Common Stock); provided, however, that if such consideration received in the
sale of assets or merger was not solely common stock of the successor
corporation or its parent (as defined in Section 424(e) of the Code), the Board
may, with the consent of the successor corporation and the participant, provide
for the consideration to be received upon exercise of the option to be solely
common stock of the successor corporation or its parent, equal in fair market
value to the per share consideration received by holders of Common Stock in the
sale of assets or merger.
(d) The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per share of Common Stock covered by each outstanding option, if the Company
effects one or more reorganizations, recapitalizations, rights offerings or
other increases or reductions of shares of its outstanding Common Stock, or if
the Company is consolidated with or merged into any other corporation.
19. Amendment or Termination.
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(a) The Board may at any time terminate or amend the Plan. Except as
provided in Section 18, no such termination may affect options previously
granted, nor may an amendment make any change in any option theretofore granted
which adversely affects the rights of any participant. In addition, to the
extent, if any, necessary to comply with Section 423 of the Code (or any
successor provision) or any other applicable law or regulation, the Company
shall obtain shareholder approval in such a manner and to such a degree as so
required.
(b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been adversely affected, the Board
(or its committee) shall be entitled to permit payroll withholding in excess of
the amount designated by a
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participant in order to adjust for delays or mistakes in the Company's
processing of properly completed withholding elections, establish reasonable
waiting and adjustment periods and/or accounting and crediting procedures to
ensure that amounts applied toward the purchase of Common Stock for each
participant properly correspond with amounts withheld from such participant's
Compensation, and establish such other limitations or procedures as the Board
(or its committee) determines in its sole discretion advisable which are
consistent with the Plan.
20. Notices. All subscription agreements, designations, notices or
other communications by a participant to the Company under or in connection with
the Plan shall be deemed to have been duly given when received in the form
specified by the Company at the location, or by the person, designated by the
Company for the receipt thereof.
21. Conditions Upon Issuance of Shares.
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(a) Shares shall not be issued with respect to an option unless the
exercise of such option and the issuance and delivery of such shares pursuant
thereto shall comply with all applicable provisions of law, domestic or foreign,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of Nasdaq or any stock exchange upon which the shares may then be
listed, and shall be further subject to the approval of counsel for the Company
with respect to such compliance.
(b) As a condition to the exercise of an option, the Company may
require the person exercising such option to represent and warrant at the time
of any such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
22. Effective Date; Term of Plan. The Plan was approved by the Board on
December 18, 1996. Upon approval by the shareholders of the Company, the Plan
will become effective and shall continue in effect for a term through June 30,
2007, unless sooner terminated under Section 19.
23. Section 16. With respect to persons subject to Section 16 of the
Exchange Act, this Plan is intended to be a "tax- conditioned plan" within the
meaning of Rule 16b-3(c) and to otherwise comply with all applicable conditions
of Rule 16b-3 (or any successor rule) under the Exchange Act. Accordingly, the
provisions of the Plan shall be construed in a manner consistent with the
requirements of Rule 16b-3(c).
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24. Captions. All section captions in this Plan are for convenience of
reference only.
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