NATIONAL PENN BANCSHARES, INC.
                         ------------------------------

                 COMMUNITY EMPLOYEE SUBSTITUTE STOCK OPTION PLAN
                 -----------------------------------------------

                        (as assumed, amended and restated
                           effective January 3, 2001)


     1.   Purpose, Assumption, Amendment and Restatement
          ----------------------------------------------

          (a) Community Independent Bank, Inc. ("CIB") adopted the 1996 Employee
Stock Option Plan (the "CIB Plan") effective  February 8, 1996. The CIB Plan was
intended to provide additional  incentive to officers and other key employees of
CIB by encouraging  them to invest in shares of CIB's common stock,  and thereby
acquire a  proprietary  interest in CIB and an  increased  personal  interest in
CIB's  continued  success  and  progress,  to the mutual  benefit  of  officers,
employees and shareholders.

          (b) On January 3, 2001 (the  "Effective  Date"),  CIB merged  with and
into National Penn Bancshares,  Inc. (the "Company"), with the Company surviving
such merger (the "Merger"),  pursuant to an Agreement (the "Agreement")  between
CIB and the Company dated July 23, 2000.

          (c) On the Effective Date, pursuant to the Agreement, each outstanding
share of CIB's common stock was automatically  converted into 0.945 share of the
Company's common stock, without par value (the "Stock").

          (d) Immediately  prior to the Effective Date, there were stock options
outstanding  under the CIB Plan for 14,300 shares of CIB's common stock,  all of
which became 100% vested and presently exercisable because of the Merger. On the
Effective Date, pursuant to the CIB Plan and the Agreement, each such option was
automatically  converted  into a  substitute  stock  option for Stock,  with the
number of shares  and the per share  exercise  price  adjusted  to  reflect  the
exchange  ratio of 0.945 to 1, and otherwise on the same terms and conditions as
the  converted  CIB stock  option.  As a result,  stock  options 100% vested and
presently exercisable for 13,514 shares of Stock are outstanding.

          (e) This National Penn Bancshares,  Inc. Community Employee Substitute
Stock Option Plan (the "Plan") reflects the Company's assumption of the CIB Plan
and of the stock  options  outstanding  under  the CIB Plan as of the  Effective
Date, on the terms and conditions  provided in the Agreement,  and the Company's
determination to delete provisions of the CIB Plan inapplicable to

                                        1

<PAGE>



such outstanding options. The Plan amends and restates the CIB Plan accordingly.

          (f) As  used  herein,  the  term  "Options"  means,  individually  and
collectively,  the substitute  stock options issued pursuant to the CIB Plan and
the Agreement,  exercisable for 13,514 shares of Stock, subject to adjustment as
provided in Section 2 hereof.

     2.   Total Number of Shares
          ----------------------

          The total  number of shares of Stock that is subject to Options  under
the Plan is  13,514  shares,  subject  to  adjustment  in  accordance  with this
Section.  If the  shares  of Stock  shall be  changed  into or  exchanged  for a
different  number  or kind of  shares  of Stock  of the  Company  or of  another
corporation  (whether  by reason  of  merger,  consolidation,  recapitalization,
reclassification,  stock split,  combination of shares or otherwise),  or if the
number of such shares of Stock shall be increased through the payment of a stock
dividend,  then there shall be  substituted  for or added to each share of Stock
subject to an Option under the Plan and to the maximum number of shares of Stock
that may be subject to Options as set forth in this Section, the number and kind
of shares into which each outstanding  share of Stock shall be exchanged,  or to
which each such share shall be entitled,  as the case may be. Where appropriate,
outstanding  Options shall also be amended by the Committee  (defined in Section
4(a)) as to Option  Price  and  other  terms as may be  necessary  to  equitably
reflect the foregoing  events.  If there shall be any other change in the number
or kind of  outstanding  shares of Stock,  or any shares  into which such shares
shall have been changed,  or for which the Option  Committee  shall, in its sole
discretion,  determine that such change equitably  requires an adjustment in any
outstanding  Options,  such  adjustments  shall be made in  accordance  with the
Committees's determination. Reacquired shares of the Company's Stock, as well as
unissued shares, may be used for the purpose of this Plan.

     3.   No Further Eligible Employees
          -----------------------------

          Other than the persons who received  Options on the Effective Date, no
persons are eligible to  participate in the Plan.  Prior to the Effective  Date,
the persons  eligible to  participate in the CIB Plan were such key officers and
other management employees (including officers and directors who were employees)
of CIB or an  affiliated  or  subsidiary  corporation  who were  selected by the
administrative committee under the CIB Plan.

     4.   Administration of Plan
          ----------------------

          (a) The Plan shall be  administered  by a committee (the  "Committee")
composed  of three to six  members  of the  Company's  Board of  Directors  (the
"Board") who are (i) "non-employee

                                        2

<PAGE>



directors" of the Company within the meaning of Rule  16b-3(b)(3)  under Section
16 of the  Securities  Exchange Act of 1934 (the "1934 Act"),  and (ii) "outside
directors" of the Company  within the meaning of Section  162(m) of the Internal
Revenue Code of 1986, as amended (the "Code").

          (b) The  Committee  shall  adopt  such  rules for the  conduct  of its
business and administration of this Plan as it considers  desirable.  A majority
of the members of the Committee shall constitute a quorum for all purposes.  The
vote or written  consent  of a majority  of the  members of the  Committee  on a
particular matter shall constitute the act of the Committee on such matter.  The
Committee shall have the right to construe the Plan and the Options,  to correct
defects and omissions and to reconcile  inconsistencies  to the extent necessary
to effectuate the Plan and the Options,  and such action shall be final, binding
and  conclusive  upon all parties  concerned.  No member of the Committee or the
Board shall be liable for any act or omission  (whether or not negligent)  taken
or omitted in good faith,  or for the exercise of any  authority  or  discretion
granted in connection with the Plan to a Committee or the Board, or for the acts
or  omissions of any other  members of a Committee or the Board.  Subject to the
numerical  limitations on Committee membership set forth in Section 4(a) hereof,
the Board may at any time appoint additional members of the Committee and may at
any time remove any member of the Committee with or without cause.  Vacancies in
the Committee, however caused, may be filled by the Board if it so desires.

          (c) The Committee  does not have  authority to grant any stock options
in addition to the Options set forth in Section 2 hereof.

     5.   Incentive Stock Options and Non-Qualified Stock Options
          -------------------------------------------------------

          (a) Options  issued  pursuant to the CIB Plan included both  Incentive
Stock Options and Non-Qualified Stock Options. An "Incentive Stock Option" is an
option which  satisfies all of the  requirements  of Section 422 of the Code and
the  regulations  thereunder,  and a  "Non-Qualified  Stock Option" is an option
which  either  does not satisfy  all of those  requirements  or the terms of the
option  provide that it will not be treated as an Incentive  Stock  Option.  The
Committee  was  authorized  to  grant  both  an  Incentive  Stock  Option  and a
Non-Qualified Stock Option to the same person, and more than one of each type of
option to the same person.

          (b) The per share  exercise  price of the Stock covered by each Option
(the "Option  Price") was determined by dividing the per share exercise price of
each stock option  outstanding  on the Effective  Date under the CIB Plan by the
exchange ratio (0.945).


                                        3
<PAGE>

          (c)  Incentive  Stock  Options  issued  pursuant  to the CIB Plan were
issued  by stock  option  agreements  substantially  in the  form  set  forth in
Appendix I to the CIB Plan (prior to its  assumption,  amendment and restatement
into this Plan).  Substitute Incentive Stock Options outstanding under this Plan
shall be  reflected  by stock option  agreements  substantially  in the form set
forth in Appendix I hereto,  which form is hereby  incorporated by reference and
made a part hereof and incorporates by reference the terms and conditions of the
original stock option agreement,  except as changed by the Agreement,  this Plan
or the stock option agreement itself. Substitute Incentive Stock Options are not
be exercisable after the expiration of ten years from the date their predecessor
options were  originally  granted by CIB,  unless  terminated  earlier under the
terms of the Option. Each of the substitute  Incentive Stock Options outstanding
under this Section 5(c) is intended to be an  "Incentive  Stock  Option" as that
term is defined in Section 422 of the Code and the  regulations  thereunder.  If
this  Plan or any  Option  outstanding  under  this  Section  5(c) is in any way
inconsistent  with  the  applicable  legal  requirements  of  the  Code  or  the
regulations  thereunder for an Incentive Stock Option, this Plan and such Option
(and its  predecessor  option) shall be deemed  automatically  amended as of the
date hereof (and as of February 8, 1996) to conform to such legal  requirements,
if such conformity may be achieved by amendment.

          (d)  Non-Qualified  Stock Options issued pursuant to the CIB Plan were
issued  by stock  option  agreements  substantially  in the  form  set  forth in
Appendix II to the CIB Plan (prior to its assumption,  amendment and restatement
into this Plan).  Substitute  Non-Qualified Stock Options outstanding under this
Plan shall be reflected by stock option agreements substantially in the form set
forth in Appendix II hereto,  which form is hereby incorporated by reference and
made a part hereof and incorporates by reference the terms and conditions of the
original stock option agreement,  except as changed by the Agreement,  this Plan
or the stock option agreement itself.  Non-Qualified  Stock Options shall expire
ten years and 30 days after the date their  predecessor  options  were  granted,
unless terminated earlier under the terms of the Option.

          (e)  Neither  the  Company  nor any of its  current or future  parent,
subsidiaries or affiliates, nor any of their officers, directors,  shareholders,
stock option plan  committees,  employees or agents shall have any  liability to
any  optionee if (i) an Option  outstanding  under  Section 5(c) hereof does not
qualify as an  "Incentive  Stock  Option" as that term is used in Section 422 of
the Code and the regulations  thereunder;  (ii) any optionee does not obtain the
tax  treatment  pertaining  to an Incentive  Stock  Option;  or (iii) any Option
outstanding under Section 5(d) hereof is an "Incentive Stock Option."



                                        4

<PAGE>

     6.   Amendment, Supplement, Suspension and Termination
          -------------------------------------------------

          The Board shall have the right at any time,  and from time to time, to
amend or  supplement  this  Plan in any way,  or to  suspend  or  terminate  it,
effective as of such date,  which date may be either  before or after the taking
of such action, as may be specified by the Board;  provided,  however, that such
action  shall not  affect  any  Options.  If not  terminated  by the Board at an
earlier time, then, at such time as all Options  outstanding under the Plan have
either been exercised,  lapsed  unexercised,  or been  terminated,  forfeited or
cancelled as provided herein, the Plan shall terminate.

     7.   Effectiveness of Plan
          ---------------------

          This Plan shall be effective as of January 3, 2001.

     8.   General Conditions
          ------------------

          (a) Nothing  contained  in this Plan or any Option  outstanding  under
this Plan shall  confer upon any employee the right to continue in the employ of
the Company or any affiliated or subsidiary  corporation or interfere in any way
with the rights of the Company or any  affiliated or subsidiary  corporation  to
terminate his employment in any way.

          (b) The terms "parent  corporation"  and  "subsidiary  corporation" as
used throughout this Plan, and the Options  outstanding  under this Plan,  shall
(except as  otherwise  provided  in the option  form) have the  meaning  that is
ascribed  to that  term when  contained  in  Section  422(b) of the Code and the
regulations  thereunder,  and the  Company  shall be  deemed  to be the  grantor
corporation for purposes of applying such meaning.

          (c)  References in this Plan to the Code shall be deemed to also refer
to the corresponding provisions of any future United States revenue law.

          (d) The use of the masculine pronoun shall include the feminine gender
whenever appropriate.

                                        5

<PAGE>

                                                                      APPENDIX I
                                                                      ----------



                         NATIONAL PENN BANCSHARES, INC.
                         ------------------------------

                 COMMUNITY EMPLOYEE SUBSTITUTE STOCK OPTION PLAN
                 -----------------------------------------------



                             STOCK OPTION AGREEMENT
                                       FOR
                             INCENTIVE STOCK OPTION
                             ----------------------

                                     BETWEEN

                         NATIONAL PENN BANCSHARES, INC.

                                       AND

                         ------------------------------
                                 (the Optionee)


              Date of Grant:
                             ---------------------------------
                                [Date of original grant by
                             Community Independent Bank, Inc.]

              Number of Shares:                          shares
                                -----------------------


              Purchase Price:              $          per share
                                            --------


              Option Expires:
                              ---------------------------------



                                        1

<PAGE>

                        INCENTIVE STOCK OPTION AGREEMENT
                        --------------------------------


Number of shares subject to option:          ____________________ shares.

          This Agreement is dated  ______________________  between National Penn
Bancshares,  Inc.  (the  "Corporation")  and  ___________________________   (the
"Optionee").

                                   BACKGROUND:

          1. On February  8, 1996,  Community  Independent  Bank,  Inc.  ("CIB")
adopted an Employee Stock Option Plan (the "CIB Plan").

          2. Optionee was granted  options under the CIB Plan to purchase shares
of CIB Common Stock  pursuant to an agreement  dated  ______________________(the
"CIB Agreement").

          3. Pursuant to an Agreement between CIB and the Corporation dated July
23, 2000, CIB merged with and into the Corporation on January 3, 2001, resulting
in, among other things,  the  Corporation  assuming the CIB Plan and the options
outstanding thereunder as of January 3, 2001.

                                   WITNESSETH:

          1.   Grant of Option

          Pursuant to the  provisions  of the  National  Penn  Bancshares,  Inc.
Community  Employee  Substitute Stock Option Plan (the "Plan"),  the Corporation
hereby  confirms that the Optionee,  subject to the terms and  conditions of the
Plan and subject further to the terms and conditions  herein set forth, has been
granted the right and option to purchase from the Corporation all or any part of
an aggregate  of  __________  shares of Common Stock  (without par value) of the
Corporation at the purchase price of  $__________  per share,  such option to be
exercised as hereinafter provided.

          2. Terms and Conditions

          It is  understood  and  agreed  that the  option  evidenced  hereby is
subject to the following terms and conditions:

          (a) Expiration Date.  Subject to the provisions of Paragraph 2(d), the
option granted hereby shall expire on _________________  [the expiration date of
the original option granted by CIB].

          (b) Exercise of Option. As of January 3, 2001, the Optionee has a 100%
vested interest in the right to exercise the option evidenced hereby.


                                        2

<PAGE>

          This option may be  exercised in whole or from time to time in part at
any time prior to the expiration  hereof. Any exercise shall be accompanied by a
written  notice to the  Corporation  specifying the number of shares as to which
the option is being exercised.

          (c)  Payment  of  Purchase  Price  Upon  Exercise.  At the time of any
exercise,  the  purchase  price of the shares as to which this  option  shall be
exercised shall be paid in any of the following  forms:  (1) cash,  which may be
evidenced by a check; (2) unless prohibited by the Committee  appointed pursuant
to Section 4 of the Plan (the "Committee"),  certificates representing shares of
Common Stock of the  Corporation,  which will be valued by the  Secretary of the
Corporation at the fair market value per share of the Corporation's Common Stock
(determined in a manner  consistent with fair market value  determination  under
the CIB Plan) on the date of delivery of such  certificates to the  Corporation,
accompanied  by an  assignment  of the stock to the  Corporation;  or (3) unless
prohibited by the  Committee,  any  combination  of cash and Common Stock of the
Corporation  valued as provided in clause (2). Any  assignment of stock shall be
in a form  and  substance  satisfactory  to the  Secretary  of the  Corporation,
including  guarantees of  signature(s)  and payment of all transfer taxes if the
Secretary deems such guarantees necessary or desirable.

          (d) Exercise Upon Death or Termination of Employment.

              (1) Upon the  termination  of  employment  of the Optionee for any
reason other than (i) disability as defined in Section  22(e)(3) of the Internal
Revenue Code of 1986, as amended (the "Code"),  and the regulations  thereunder,
or (ii) death, the unexercised  portion of any option held by the Optionee shall
lapse on the earlier of (i) the  expiration  of the term of the option,  or (ii)
three months from the date of such termination of employment.

              (2) Upon the termination of employment of the Optionee  because of
(i)  disability as defined in Section  22(e)(3) of the Code and the  regulations
thereunder,  or (ii) death,  the  unexercised  portion of any option held by the
Optionee  shall  lapse on the earlier of (i) the  expiration  of the term of the
option, or (ii) one year from the date of such termination of employment.

          (e) Transferability.  This option shall not be transferable other than
by Will or by the laws of descent and  distribution.  During the lifetime of the
Optionee, this option shall be exercisable only by the Optionee.

          (f)  Adjustments.  In the  event of any  change  in the  Common  Stock
through merger, consolidation,  reorganization,  recapitalization,  stock split,
stock dividend,  combination of shares, transfer of assets,  conversion or other
change in the corporate  structure of the Corporation  which the Committee deems
in

                                        3

<PAGE>

its  sole   discretion  to  be  similar   circumstances,   the  Committee  shall
appropriately  adjust the number of shares  subject to this option and the price
per share thereof (but not the total price),  so that upon exercise the Optionee
shall  receive the same number of shares he would have  received had he been the
holder of all shares  subject to this option  immediately  before the  effective
date of such change in the capital structure of the Corporation.  Any adjustment
so made shall be final and binding upon the Optionee.

          (g) No Rights as  Shareholder.  The Optionee shall have no rights as a
shareholder  with respect to any shares of Common  Stock  subject to this option
prior to the date of issuance to the Optionee of a certificate  or  certificates
for such shares.

          (h) No Right To  Continued  Employment.  This option  shall not confer
upon the Optionee any right with respect to  continuance  of  employment  by the
Corporation or any subsidiary,  nor shall it interfere in any way with the right
of his or her employer to terminate the Optionee's employment at any time.

          (i)  Compliance  with  Law  and  Regulations.   This  option  and  the
obligation of the  Corporation  to sell and deliver  shares  hereunder  shall be
subject to all applicable  federal and state laws,  rules and regulations and to
such  approvals by any government or regulatory  agency as may be required.  The
Corporation  shall not be  required  to issue or deliver  any  certificates  for
shares of Common  Stock  prior to (1) the  listing  of such  shares on any stock
exchange on which the Common Stock may then be listed and (2) the  completion of
any registration or qualification of such shares under any federal or state law,
or any rule or regulation of any government body which the Corporation shall, in
its sole discretion, determine to be necessary or advisable.

          3. Investment Representation

          The Committee may require the Optionee to furnish to the  Corporation,
prior to the issuance of any shares upon the exercise of all or any part of this
option,  an agreement (in such form as such  Committee may specify) in which the
Optionee  represents  that the shares acquired by the Optionee upon exercise are
being acquired for  investment  and not with a view to the sale or  distribution
thereof.

          4. Incentive Stock Option

          The  Corporation  and the Optionee  intend that this option shall,  if
possible,  be an "Incentive Stock Option" as that term is used in Section 422 of
the Code and the regulations thereunder.  In the event this option is in any way
inconsistent  with  the  legal  requirements  of the  Code  or  the  regulations
thereunder  for an  "Incentive  Stock  Option,"  this  option  shall  be  deemed
automatically

                                        4

<PAGE>

amended as of the date  hereof to conform  to such legal  requirements,  if such
conformity may be achieved by amendment.

          5. Optionee Bound by Plan

          The  Optionee  hereby  acknowledges  receipt of a copy of the Plan and
agrees  to be bound by all the terms and  provisions  thereof,  all of which are
incorporated herein by reference.  In addition,  the terms and provisions of the
CIB  Agreement  are   incorporated   herein  by  reference  to  the  extent  not
inconsistent with the terms and provisions hereof or the terms and provisions of
the Plan.

          6. Notices

          Any notice  hereunder to the  Corporation  shall be addressed to it at
its office,  Philadelphia and Reading Avenues,  Boyertown,  Pennsylvania  19512,
Attention:  Corporate  Secretary,  and any notice hereunder to Optionee shall be
addressed  to him or her at the  address  below,  subject to the right of either
party to designate at any time hereafter in writing some other address.

          IN WITNESS  WHEREOF,  National Penn  Bancshares,  Inc. has caused this
Agreement  to be executed by a duly  authorized  officer  and the  Optionee  has
executed this Agreement, both as of the day and year first above written.


          NATIONAL PENN BANCSHARES, INC.                      OPTIONEE


          By: _________________________               _________________________
                  (Signature)                                (Signature)

              _________________________               _________________________
                  (Print Name)

              _________________________               _________________________
                  (Print Title)                             (Print Address)


                                        5

<PAGE>

                                                                     APPENDIX II
                                                                     -----------


                         NATIONAL PENN BANCSHARES, INC.
                         ------------------------------

                 COMMUNITY EMPLOYEE SUBSTITUTE STOCK OPTION PLAN
                 -----------------------------------------------


                             STOCK OPTION AGREEMENT
                                       FOR
                           NON-QUALIFIED STOCK OPTION
                           --------------------------

                                     BETWEEN

                         NATIONAL PENN BANCSHARES, INC.

                                       AND


                         ------------------------------
                                 (the Optionee)


              Date of Grant:
                             ---------------------------------
                                 [Date of original grant by
                              Community Independent Bank, Inc.]

              Number of Shares:                          shares
                                -----------------------


              Purchase Price:             $           per share
                                           ----------


              Option Expires:
                              --------------------------------



                                        1

<PAGE>

                      NON-QUALIFIED STOCK OPTION AGREEMENT
                      ------------------------------------


Number of shares subject to option:             __________________ shares.

          This Agreement is dated  _____________________  between  National Penn
Bancshares,   Inc.  (the   "Corporation")   and   _______________________   (the
"Optionee").

                                   BACKGROUND:

          1. On February  8, 1996,  Community  Independent  Bank,  Inc.  ("CIB")
adopted an Employee Stock Option Plan (the "CIB Plan").

          2. Optionee was granted  options under the CIB Plan to purchase shares
of CIB Common Stock pursuant to an agreement  dated  ________________  (the "CIB
Agreement").

          3. Pursuant to an Agreement between CIB and the Corporation dated July
23, 2000, CIB merged with and into the Corporation on January 3, 2001, resulting
in, among other things,  the  Corporation  assuming the CIB Plan and the options
outstanding thereunder as of January 3, 2001.

                                   WITNESSETH:

          1. Grant of Option

          Pursuant to the  provisions  of the  National  Penn  Bancshares,  Inc.
Community  Employee  Substitute Stock Option Plan (the "Plan"),  the Corporation
hereby  confirms that the Optionee,  subject to the terms and  conditions of the
Plan and subject further to the terms and conditions  herein set forth, has been
granted the right and option to purchase from the Corporation all or any part of
an aggregate of  ________________  shares of Common Stock (without par value) of
the Corporation at the purchase price of $__________  per share,  such option to
be exercised as hereinafter provided.

          2. Terms and Conditions

          It is  understood  and  agreed  that the  option  evidenced  hereby is
subject to the following terms and conditions:

          (a) Expiration Date.  Subject to the provisions of Paragraph 2(d), the
option evidenced hereby shall expire on  _________________  [the expiration date
of the original option granted by CIB].

          (b) Exercise of Option. As of January 3, 2001, the Optionee has a 100%
vested interest in the right to exercise the option evidenced hereby.


                                        2

<PAGE>

          This option may be  exercised in whole or from time to time in part at
any time prior to the expiration  hereof. Any exercise shall be accompanied by a
written  notice to the  Corporation  specifying the number of shares as to which
the option is being exercised.

          (c)  Payment  of  Purchase  Price  Upon  Exercise.  At the time of any
exercise,  the  purchase  price of the shares as to which this  option  shall be
exercised shall be paid in any of the following  forms:  (1) cash,  which may be
evidenced by a check; (2) unless prohibited by the Committee  appointed pursuant
to Section 4 of the Plan (the "Committee"),  certificates representing shares of
Common Stock of the  Corporation,  which will be valued by the  Secretary of the
Corporation at the fair market value per share of the Corporation's Common Stock
(determined in a manner  consistent with fair market value  determination  under
the CIB Plan) on the date of delivery of such  certificates to the  Corporation,
accompanied  by an  assignment  of the stock to the  Corporation;  or (3) unless
prohibited by the  Committee,  any  combination  of cash and Common Stock of the
Corporation  valued as provided in clause (2). Any  assignment of stock shall be
in a form  and  substance  satisfactory  to the  Secretary  of the  Corporation,
including  guarantees of  signature(s)  and payment of all transfer taxes if the
Secretary deems such guarantees necessary or desirable.

          In  addition,   to  the  extent   permitted  by  applicable   law  and
regulations,  the  Committee  may permit  payment of the purchase  price through
arrangements  with a  brokerage  firm under  which  such firm,  on behalf of the
Optionee,  will pay to the  Corporation  the purchase  price of the shares being
purchased,  and the Corporation will promptly deliver to such firm the number of
shares  of Common  Stock  subject  to the  option so that the firm may sell such
shares, or a portion thereof, for the account of the Optionee. In addition,  the
Committee  may  permit   payment  of  the  purchase  price  by  delivery  of  an
unconditional and irrevocable undertaking by a broker to deliver promptly to the
Corporation  sufficient  funds to pay the  purchase  price as soon as the shares
subject to the option, or a portion thereof, are sold on behalf of the Optionee.

          (d) Exercise Upon Death or Termination of Employment.

              (1) Upon the  termination  of  employment  of the Optionee for any
reason other than (i) disability as defined in Section  22(e)(3) of the Internal
Revenue Code of 1986, as amended (the "Code"),  and the regulations  thereunder,
or (ii) death, the unexercised  portion of any option held by the Optionee shall
lapse on the earlier of (i) the  expiration  of the term of the option,  or (ii)
three months from the date of such termination of employment.

              (2) Upon the termination of employment of the Optionee  because of
(i)  disability as defined in Section  22(e)(3) of the Code and the  regulations
thereunder, or (ii) death, the unexercised

                                        3

<PAGE>

portion of any option held by the Optionee shall lapse on the earlier of (i) the
expiration  of the term of the  option,  or (ii) one year  from the date of such
termination of employment.

          (e) Transferability.  This option shall not be transferable other than
by Will or by the laws of descent and  distribution.  During the lifetime of the
Optionee, this option shall be exercisable only by the Optionee.

          (f)  Adjustments.  In the  event of any  change  in the  Common  Stock
through merger, consolidation,  reorganization,  recapitalization,  stock split,
stock dividend,  combination of shares, transfer of assets,  conversion or other
change in the corporate  structure of the Corporation  which the Committee deems
in  its  sole  discretion  to be  similar  circumstances,  the  Committee  shall
appropriately  adjust the number of shares  subject to this option and the price
per share thereof (but not the total price),  so that upon exercise the Optionee
shall receive the same number of shares the Optionee would have received had the
Optionee been the holder of all shares subject to this option immediately before
the effective date of such change in the capital  structure of the  Corporation.
Any adjustment so made shall be final and binding upon the Optionee.

          (g) No Rights as  Shareholder.  The Optionee shall have no rights as a
shareholder  with respect to any shares of Common  Stock  subject to this option
prior to the date of issuance to the Optionee of a certificate  or  certificates
for such shares.

          (h) No Right To  Continued  Employment.  This option  shall not confer
upon the Optionee any right with respect to  continuance  of  employment  by the
Corporation or any subsidiary,  nor shall it interfere in any way with the right
of the Optionee's employer to terminate the Optionee's employment at any time.

          (i)  Compliance  with  Law  and  Regulations.   This  option  and  the
obligation of the  Corporation  to sell and deliver  shares  hereunder  shall be
subject to all applicable  federal and state laws,  rules and regulations and to
such  approvals by any government or regulatory  agency as may be required.  The
Corporation  shall not be  required  to issue or deliver  any  certificates  for
shares of Common  Stock  prior to (1) the  listing  of such  shares on any stock
exchange on which the Common Stock may then be listed and (2) the  completion of
any registration or qualification of such shares under any federal or state law,
or any rule or regulation of any government body which the Corporation shall, in
its sole discretion, determine to be necessary or advisable.

          3. Investment Representation

          The Committee may require the Optionee to furnish to the  Corporation,
prior to the issuance of any shares upon the exercise

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<PAGE>

of all or any part of this option,  an agreement (in such form as such Committee
may specify) in which the Optionee  represents  that the shares  acquired by the
Optionee upon exercise are being  acquired for investment and not with a view to
the sale or distribution thereof.

          4. Optionee Bound by Plan

          The  Optionee  hereby  acknowledges  receipt of a copy of the Plan and
agrees  to be bound by all the terms and  provisions  thereof,  all of which are
incorporated herein by reference.  In addition,  the terms and provisions of the
CIB  Agreement  are   incorporated   herein  by  reference  to  the  extent  not
inconsistent with the terms and provisions hereof or the terms and provisions of
the Plan.

          5. Notices

          Any notice  hereunder to the  Corporation  shall be addressed to it at
its office,  Philadelphia and Reading Avenues,  Boyertown,  Pennsylvania  19512,
Attention:  Corporate  Secretary,  and any notice hereunder to Optionee shall be
addressed to the Optionee at the address  below,  subject to the right of either
party to designate at any time hereafter in writing some other address.

          IN WITNESS  WHEREOF,  National Penn  Bancshares,  Inc. has caused this
Agreement  to be executed by a duly  authorized  officer  and the  Optionee  has
executed this Agreement, both as of the day and year first above written.


         NATIONAL PENN BANCSHARES, INC.                       OPTIONEE


         By:  _________________________               _________________________
                  (Signature)                               (Signature)

              _________________________               _________________________
                  (Print Name)

              _________________________               _________________________
                  (Print Title)                            (Print Address)

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