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

          COMMUNITY NON-EMPLOYEE DIRECTOR 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 Stock
Option  Plan for  Non-Employee  Directors  (the  "CIB  Plan").  The CIB Plan was
intended to enhance the ability of CIB to attract,  retain, motivate and provide
additional  incentive to members of CIB's Board of Directors 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 directors, 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 6,000 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 5,670 shares of Stock are outstanding.

          (e) This  National  Penn  Bancshares,  Inc.  Community  Non-  Employee
Director  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

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<PAGE>

inapplicable to 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 5,670 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 5,670 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  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 Non-Employee Directors
          ------------------------------------------

          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  persons  who were
directors  of CIB or an  affiliated  or  subsidiary  corporation,  but  were not
employees of CIB or an affiliated or subsidiary  corporation,  and 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")
which shall be either the entire Board of Directors (the "Board") or a committee
appointed by the Board composed of

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<PAGE>

three to six members of the Board who are (i)  "non-employee  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.   Non-Qualified Stock Options
          ---------------------------

          (a) All Options  issued  pursuant  to the CIB Plan were  Non-Qualified
Stock Options.  No incentive stock options were issued pursuant to the CIB Plan.
References in the Plan to "Options" means only non-qualified stock options.

          (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).

          (c)  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  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

                                        3

<PAGE>

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.  The  Options  shall  expire  ten years  after the date their
predecessor  options were granted,  unless terminated earlier under the terms of
the Option.

     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 granted  pursuant to
this Plan shall  confer upon any director the right to continue as a director 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
remove him as a director.  For purposes of this Plan, service as a member of the
Berks County  Division  Board of  Directors of National  Penn Bank, a subsidiary
corporation, shall constitute service as a director of National Penn Bank.

          (b) The term "subsidiary  corporation" as used in this Plan shall mean
a corporation in which the Company owns, directly or indirectly, shares of stock
representing  fifty  percent  or more of the  outstanding  voting  power  of all
classes of stock of such corporation Plan.

          (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.

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<PAGE>

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


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

          COMMUNITY NON-EMPLOYEE DIRECTOR 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:
                                     --------------------------------



                                        5

<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. In 1996, Community Independent Bank, Inc. ("CIB") adopted the 1996 Stock
Option Plan for Non-Employee Directors (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  Non-Employee  Director 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.


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<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 Termination of Directorship.  When the Optionee ceases to
be  a  director  of  the  Corporation  or  any  subsidiary,  whether  by  death,
disability,  resignation,  removal,  failure to be reelected or  otherwise,  and
regardless  of whether the  failure to  continue as a director  was for cause or
otherwise,  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 the Optionee ceases to be a director. For purposes of
this  Agreement,  service  as a member of the  Berks  County  Division  Board of
Directors  of  National  Penn  Bank,  a  subsidiary  of the  Corporation,  shall
constitute service as a director of National Penn Bank.


                                        7
<PAGE>

     (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 Continue as Director. This option shall not confer upon the
Optionee  any  right  to  continue  as a  director  of  the  Corporation  or any
subsidiary,  nor shall it interfere in any way with the right of the Corporation
or any subsidiary to remove the Optionee as a director 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

                                        8
<PAGE>

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)

                                        9