Exhibit 10.1


    EXHIBIT
      10.1

    


    Approved
      by the Board of Directors

    December
      21, 2005 

    


    NATIONAL
      PENN BANCSHARES, INC. 

    EXECUTIVE
      INCENTIVE PLAN

    


    AMENDMENT
      AND RESTATEMENT - 2005

    


    


    The
      National Penn Bancshares, Inc. Executive Incentive Plan is hereby amended and
      restated in its entirety as follows:

    


    Since
      formation, National Penn Bancshares, Inc. ("NPB"), as a holding company for
      National Penn Bank (the "Bank"), has maintained in effect the executive
      incentive plan originally adopted by the Bank on July 26, 1978. NPB now desires
      to amend and restate the terms of the plan in a written document as set forth
      herein.

    


    The
      National Penn Bancshares, Inc. Executive Incentive Plan (the "Plan") is a
      variable award compensation arrangement for selected members of executive
      management. The purpose of the Plan is to motivate executives to meet and exceed
      established financial goals and to promote a superior level of performance
      relative to competitive banking institutions. Through payment of incentive
      compensation beyond a salary, the Plan provides reward for meeting and exceeding
      the established financial goals as well as recognition of individual
      achievements for certain employees.

    


    1. Definitions.
      The
      following terms have the meanings specified below, unless the context in which
      they are used otherwise requires:

    


    (a) "Affiliate"
      means any corporation which is included within a "controlled group of
      corporations" including NPB, as determined under Section 1563 of the Internal
      Revenue Code of 1986, as amended ("Code").

    


    (b) "Award"
      means the "Cash Award" and the "Matching Deferral" a Participant may earn in
      a
      Plan Year.

    


    (c) "Cash
      Award" means the amount payable to a Participant in cash within 75 days of
      the
      close of the Plan Year in which it is earned. It consists of the company
      performance award determined under Paragraph 3 and Schedule B and the individual
      performance award determined under Paragraph 4 and Schedule B.

    


    
      
        (d) 
          "CEO"
          means the Chief Executive Officer of NPB.

      

    

    


    
      
        (e)
          "Change
          in Control or Ownership" means any of the following:

      

    

    


    (i)
      a
      change in ownership of NPB, which is deemed to occur when an acquisition by
      any
      "person" or "group" (as those terms are defined or used in Section 13(d) of
      the
      Securities Exchange Act of 1934) of "beneficial ownership" (within the meaning
      of Rule 13d-3 under such Act) acquires stock of NPB that taken together with
      the
      equity securities held by such person or group constitutes more than 50% of
      the
      combined voting power or combined fair market value of NPB's stock then
      outstanding;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    (ii)
      a
      change in the effective control of NPB, which is deemed to occur when (A) any
      one person, or more than one person acting as a group acquires (or has acquired
      during the twelve-month period ending on the most recent acquisition by such
      person or group) ownership of the stock of NPB possessing 35% or more of the
      total voting power of such stock or (B) a majority of NPB's Board of Directors
      is replaced during any twelve-month period by directors whose appointment or
      election is not endorsed by a majority of the Board of Directors prior to the
      date of election; or

    


    (iii)
      a
      change in the ownership of a substantial portion of NPB's assets, which is
      deemed to occur on the date that any one person or more than one person acting
      as a group acquires (or has acquired during the twelve-month period ending
      on
      the date of the most recent acquisition by such person or group) assets from
      NPB
      that have a total gross fair market value equal to or more than 40% of the
      total
      gross fair market value of all of the assets of NPB immediately prior to such
      acquisition or acquisitions.

    


    The
      existence of any of the foregoing events shall be determined based on objective
      standards an in complete accordance with the requirements of Section 409A of
      the
      Code and regulations thereunder so that any accelerated distribution resulting
      from a Change in Control or Ownership does not result in a violation of Section
      409A of the Code.

    


    (f)
       "Committee"
      means the Compensation Committee of the Board of Directors of NPB.

    


    (g)
       "Employer"
      means NPB or the Affiliate which employs the Participant.

    


    (h)
       "Individual
      Award Fund" or "Fund" means the pool of funds generated, based on the formula
      established by the Committee that may, but is not required to be, distributed
      to
      Plan Participants as individual performance awards.

    


    (i) 
      "Matching Deferral" means the amount determined and approved by the Committee,
      expressed as a percentage of an annual Cash Award received by a Participant
      under this Plan.

     

    (j)
       "Participant"
      means an eligible officer or employee of NPB or an Affiliate who is designated
      by the CEO and approved by the Committee for participation in the Plan for
      the
      relevant Plan Year, or a person who was such at the time of his retirement,
      death, disability or resignation and who retains, or whose beneficiaries obtain,
      benefits under the Plan in accordance with its terms.

    


    
      
        (k) 
          "Plan
          Year" means the calendar year.

      

    

    


    (l) "Tax
      Deferral" means that portion of the Cash Award payable to a Participant under
      the Plan which the Participant elects, pursuant to Schedule C attached hereto
      and made a part hereof, to defer payment in accordance with the
      Plan.

    


    
      
        2.
          Plan
          Participation.

      

    

    


    (a)
       To
      be
      eligible for an Award under this Plan for a Plan Year, a Participant must be
      in
      the active full-time service of NPB or an Affiliate at the close of the Plan
      Year, continue to be employed as of the Cash Award payment date for the Plan
      Year, and be in a position with substantial responsibilities.

    


    (b)
       Prior
      to
      January 31 of each Plan Year, the CEO shall recommend to the Committee, in
      writing, those employees that the CEO recommends for eligibility for such Plan
      Year. The Committee shall meet as soon as practicable thereafter and act upon
      the recommendations of the CEO. Those employees approved by the Committee shall
      be entitled to participate in the Plan for such Plan Year.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c)
       Each
      year, the Committee shall classify the Participants into varying participation
      levels, as specified on Schedule A attached to this Plan, and shall specify
      defined Cash Award formulae for each category. Participants and their
      participation level will be listed on Schedule A attached to this Plan. This
      schedule will be revised each year, as appropriate.

     

    (d) At
      the
      Committee’s discretion, the Committee may act upon the recommendation of the CEO
      (or concerning CEO participation, on their own behalf), to remove a Participant
      from the Plan during a Plan Year.

    


    3. Company
      Performance Goals.

    


    (a) Performance
      goals and appropriate financial thresholds shall be established each Plan Year
      by the Committee prior to January 31st
      of that
      Plan Year. The established goals shall relate to the financial performance
      of
      NPB or an Affiliate or unit thereof.

    


    (b) The
      performance goals for a Plan Year will be shown on Schedule B attached to this
      Plan. This schedule shall be revised each year, as appropriate. There may be
      multiple goals and each goal may be weighted differently in the award
      calculation.

    


    (c)
       Each
      Participant will be in a performance goal level which has a threshold, target,
      and optimum performance award amount with related company performance measures.
      Company performance falling between threshold and target and target and optimum
      will be interpolated. Company performance above optimum will create higher
      performance award amounts which are increased at a rate which is one-half the
      rate of increased award between target and optimum. Additional performance
      points between the threshold and optimum may also be established for varying
      business conditions.

    


    (d) An
      Award
      to a Participant is conditioned on the satisfactory performance of such
      Participant, as determined by the Committee in its sole discretion.

    


    4. Individual
      Performance Awards.

    


    The
      Fund
      for a Plan Year for individual performance awards is 20% of the total of the
      company performance goals payable for that Plan Year. Individual performance
      goal payments are in addition to the company performance portion of the Cash
      Award and may range from 0% of the individual Participant’s base pay to 20% of
      the individual’s base pay (with the exception of Category A Participants whose
      individual performance payments are limited to 20% of that year’ company
      performance goal payment amount). The Committee, in its discretion, may
      distribute all, a portion or none of the Fund for a particular Plan Year.


    


    5. Distribution
      of Awards.

    


    (a) Cash
      Awards to Participants not deferred pursuant to Subparagraph (b) below shall
      be
      payable in cash as soon as practicable after the close of the Plan Year, but
      in
      any event not later than March 15th
      following the close of the Plan Year. Appropriate tax withholdings will be
      made
      through the payroll system.

    


    (b) Participants
      may elect to have the payment of all or a portion of their Cash Awards deferred,
      i.e., the Tax Deferral amount. Such election shall be made before the beginning
      of the relevant Plan Year and shall be in the form of Schedule C attached to
      this Plan. The Committee shall cause an account to be established on the
      Employer's books for each Participant who elects a deferral (the "Individual
      Tax
      Deferral Account"). The Account shall be credited, as of the last day of each
      calendar quarter, with interest calculated at the rate paid on the National
      Penn
      Investors Trust Company Money Market account for such quarter. For the quarter
      of deferral, the credit shall reflect deferral from January 1st.
      For the
      quarter of payment, no credit shall be made. 

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    (c) 
(i)
      The
      Committee shall cause an account to be established on the Employer's books
      for
      each Participant (the "Matching Deferral Account"), with subaccounts for each
      Plan Year, and shall credit annually the Matching Deferral Account with an
      amount equal to the Matching Deferral of such Participant for a Plan Year.
      The
      Matching Deferral Account shall be credited, as of the last day of each calendar
      quarter, with interest calculated at the rate paid on the National Penn
      Investors Trust Company Money
      Market account for such quarter. For the quarter of deferral, the credit shall
      reflect deferral from January 1st.
      For the
      quarter of payment, no credit shall be made.

     

    (ii)
      If,
      at the end of the fifth Plan Year following the Plan Year for which a particular
      Matching Deferral was credited to a Participant, such Participant is still
      employed by NPB or an Affiliate or has retired at age 60 or later or has died
      on
      or before the last day of such Plan Year, such Participant's Individual Matching
      Deferral Account reflecting that Matching Deferral and interest thereon shall
      be
      credited by the Employer with an additional amount equal to that Matching
      Deferral plus interest.

    


    (iii)
      For
      purposes of this subparagraph 5(c), a Participant shall be deemed to be still
      employed by NPB or an Affiliate as of the last day of any Plan Year on which
      a
      balance exists in such Participant's Matching Deferral Account if such
      Participant is no longer then performing services on behalf of NPB or such
      Affiliate as a result of such Participant's disability. For purposes this
      provision, a Participant shall be deemed to have terminated service due to
      disability if the Participant qualifies for disability benefits under his
      Employer's long term disability benefit plan.

    


    (d) 
In
      the
      event of a Participant's death after December 31st
      of a
      Plan Year but prior to receipt of his or her Cash Award earned hereunder the
      Cash Award for such Plan Year plus all deferred amounts, including the Matching
      Deferral earned for the Plan Year preceding death, shall be paid, within thirty
      (30) days of the last day of the calendar quarter during which the Participant’s
      death occurred, to the Participant's designated beneficiary under the Employer's
      group life insurance plan or, in the absence of a valid designation, to the
      Participant's estate. 

    


    6.
       Manner
      of Payment Tax Deferral Amounts.

    


    


    The
      amount credited to a Participant's Individual Tax Deferral Account shall be
      paid
      to such Participant in one lump sum or in annual installments. The actual manner
      of distribution will be in accordance with the Participant's election made
      in
      conjunction with the deferral election, the form of which is attached hereto
      as
      Schedule C. If a Participant elects installment payments, the amount of each
      installment shall be determined by dividing the Account balance as of the
      preceding December
      31st
      by the
      number of payments remaining to be made, including the current
      payment.

    


    7. Funding.

    


    (a) Deferred
      obligations under the Plan shall be paid from the general assets of NPB or
      an
      Affiliate.

    


    (b) NPB,
      or
      an Affiliate, in its sole discretion, may earmark assets or other means to
      meet
      the deferred obligations under the Plan. Any assets which may be earmarked
      to
      meet NPB's or an Affiliate's deferred obligations under the Plan shall continue
      for all purposes to be part of the general funds of NPB or an Affiliate and
      no
      person other than NPB or the Affiliate shall by virtue of the provisions of
      the
      Plan have any interest in such assets. To the extent a Participant or his
      beneficiary acquires a right to receive deferred payments from NPB or an
      Affiliate under the Plan, such right shall be no greater than the right of
      any
      unsecured general creditor of NPB or an Affiliate.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c) Nothing
      contained in the Plan and no action taken pursuant to the provisions of the
      Plan
      shall create or be construed to create a trust of any kind, or a fiduciary
      relationship between NPB or an Affiliate and a Participant or any other
      person.

    


    8.
       Plan
      Administration.

    


    (a) The
      Committee shall, with respect to the Plan, have full power and authority to
      construe, interpret and manage, control and administer the Plan, and to pass
      and
      decide upon cases in conformity with the objectives of the Plan under such
      rules
      as the Board of Directors of NPB may establish.

    


    (b) Any
      decision made or action taken by the Board of Directors of NPB or the Committee
      arising out of, or in connection with the administration, interpretation, and
      effect of the Plan shall be at their absolute discretion and shall be conclusive
      and binding on all parties.

    


    (c) The
      members of the Committee and the members of the Board of Directors of NPB shall
      not be liable for any act or action, whether of omission or commission, made
      in
      connection with the interpretation and administration of the Plan and which
      results in a loss, damage, expense or depreciation, except when due to their
      own
      gross negligence or willful misconduct.

    


    9. Amendment
      and Termination.

    


    NPB
      reserves the right to amend the Plan from time to time and to terminate the
      Plan
      at any time. All amendments, including any amendment to terminate the Plan,
      shall be adopted by the Board of Directors of NPB.

    


    10. Change
      in Control or Ownership.

    


    (a) Subject
      to the further terms and provisions of this Paragraph 10, the Plan shall
      automatically terminate on the date that a Change in Control or Ownership shall
      occur, without necessity of any action by the Board of Directors of
      NPB.

    


    (b) If
      a
      Change in Control or Ownership shall occur, each Participant's Matching Deferral
      Account shall be credited, as of the day immediately preceding the date on
      which
      such Change in Control or Ownership occurred, with additional amounts as
      follows: An amount equal to each Plan Year Balance (being the amount of the
      Matching Deferral as increased by interest through the close of the quarter
      preceding the Change in Control or Ownership) shall be credited by the Employer
      to such Participant's Matching Deferral Account (such additional amounts are
      referred to herein as "Change in Control Matching Contributions").

    


    (c)
      If a
      Change in Control or Ownership shall occur, the Employer shall pay each
      Participant a cash amount equal to the total amounts credited, as of the date
      such Change in Control or Ownership occurred, to (i) such Participant's Matching
      Deferral Account (including all Change in Control Matching Contributions made
      pursuant to subparagraph (b) hereof) and (ii) such Participant's Individual
      Tax
      Deferral Account, if any. The Employer shall pay such total amounts to the
      Participants within thirty (30) days of the termination of the Plan (as provided
      in subparagraph (a) hereof).


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    11. Effective
      Date.

    


    The
      initial effective date of the Plan shall be January 1, 1984. The effective
      date
      of this Plan as amended and restated shall be January 1, 2006, except as
      provided with in Paragraph 12.

    


    12. Transition
      and Compliance Rules.

    


    (a) Notwithstanding
      any provision of the Plan to the contrary, if any portion of any Award becomes
      payable within six months of the Participant's separation from service and
      the
      Committee 

    determines
      that such Participant is a "specified employee", payment shall be deferred
      until
      the first day of the calendar month that is at least six months after the
      Participant's separation from service. 

    


    (b) Notwithstanding
      any provision of the Plan as heretofore effective, no Participant shall be
      permitted to make an election (i) to defer any Cash Award other than the
      Participant's initial election with respect to a Cash Award or (ii) to defer
      any
      Matching Deferral beyond the automatic deferral period. 

    


    (c) An
      election to defer a Cash Award shall be irrevocable.

    


    (d) An
      election with respect to the mode or time of payment of a deferred Cash Award
      shall be irrevocable. 

    


    (e) To
      the
      extent this Plan provides for deferred compensation under a nonqualified
      deferred compensation plan subject to Section 409A of the Code, no distribution,
      no acceleration of distribution and no Participant election shall be permitted
      other than as expressly set forth in the Plan and as permitted by Section
      409A((a)(2),(3) and (4) of the Code, respectively.

    


    (f) The
      provisions of this Paragraph 12 and the definition of Change in Control or
      Ownership shall apply to all amounts deferred under the Plan, including amounts
      deferred prior to the effective date of this amended and restated
      Plan.

    


    13. Miscellaneous
      Provisions.

    


    (a) The
      Plan
      does not constitute a contract of employment, and participation in the Plan
      shall not give any Participant the right to be retained in the service of NPB
      or
      an Affiliate or any right or claim to a benefit under the Plan unless such
      right
      or claim has specifically accrued under the terms of this Plan.

    


    (b) NPB
      or an
      Affiliate reserves the right to withhold from the gross amount any amounts
      payable hereunder, amounts it determines are required to be withheld to satisfy
      applicable federal, state or local income or payroll tax requirements


    


    (c) The
      captions of the several paragraphs and subparagraphs of this Plan are inserted
      for convenience of reference only and shall not be considered in the
      construction hereof.

    


    (d) Whenever
      any word is used herein in the singular form, it shall be construed as though
      it
      were used in the plural form, as the context requires, and vice
      versa.

    


    (e) A
      masculine, feminine or neuter pronoun, whenever used herein, shall be construed
      to include all genders as the context requires.

    


    (f) This
      Plan
      may be executed in any number of counterparts, each of which shall be deemed
      one
      and the same instrument which may be sufficiently evidenced by any one
      counterpart.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    (g) Except
      to
      the extent pre-empted by federal law, this Plan shall be construed,
      administered, and enforced in accordance with the domestic internal law of
      the
      Commonwealth of Pennsylvania.

    


    (h) The
      Board
      of Directors of NPB may adjust the financial targets and/or awards generated
      under this plan for extraordinary gains and losses to best reflect the overall
      interests of the shareholders.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


    SCHEDULE
      A

    


    


    Participants
      for the __________ Plan Year consist of Categories
      ___________________.

    


    It
      is
      anticipated that the following named persons will meet the eligibility
      requirements for participation as of December 31, _________. 

    


    Named
      participants are classified accordingly:

    


    CATEGORY
      A (___ persons) (name and grade level)

    


    


    CATEGORY
      B (____ persons) (name and grade level)

    


    


    CATEGORY
      C (____ persons) (name and grade level)

    


    [INSERT
      NAMES AND GRADE LEVELS]

    


    



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    SCHEDULE
      B

    


    NATIONAL
      PENN BANCSHARES, INC.

    


    EXECUTIVE
      INCENTIVE PLAN

    


    _______
      PERFORMANCE GOALS AND AWARD SCHEDULE

    


    [SUBJECT
      TO CHANGE]

    


    Awards
      pursuant to the Plan will not be made unless the internal and external
      performance goals set forth below are met.

    


    
      	
              Company
                Portion

            
	
              (Yr.)
                Earnings Per Share

            
	 	 	 	 	 	 	 	 	 
	 	 	
              Threshold

            	 	
              Market

              Target

            	 	
              NPB
                Target

            	 	
              Optimum

            
	 	 	
               

              $

            	 	
               

              $

            	 	
               

              $

            	 	
               

              $

            
	 	 	 	 	 	 	 	 	 
	
               

              Category

            	 	
               

              %
                of Base Salary

            
	
               

              A

            	 	
               

              20%

            	 	
               

              40%

            	 	
               

              50%

            	 	
               

              60%

            
	
               

              B

            	 	
               

              15%

            	 	
               

              27.5%

            	 	
               

              33.8%

            	 	
               

              40%

            
	
               

              C

            	 	
               

              12%

            	 	
               

              20%

            	 	
               

              24%

            	 	
               

              28%

            
	 
	
               

              Individual
                Portion

            
	
               

              All

            	 	
               

              0%-20%

            	 	
               

              0%-20%

            	 	
               

              0%-20%

            	 	
               

              0%-20%

            


    

    


    


    Parameters:

     

    
      	 	
              q

            	
              No
                Awards will be paid for performance under
                threshold.

            


    

     

    
      	 	
              q

            	
              An
                Individual Award Fund equal to 20% of the total Performance Goal
                portion
                of the Cash Award is available for distribution to individuals for
                individual performance. These individual additional awards may not
                exceed
                20% of the participant’s base pay (except for Category A which is capped
                at 20% of the Company performance award
                amount).

            


    

     

    
      	 	
              q

            	
              Cash
                Awards for performance between threshold and target and target and
                optimum
                will be interpolated. 

            


    

     

    
      	 	
              q

            	
              Performance
                above optimum will result in awards interpolated at one half the
                rate of
                increase between target and
                optimum.

            


    

     

    
      	 	
              q

            	
              A
                participant must be continued to be employed through award payment
                date to
                receive an award.

            


    

     

    
      	 	
              q

            	
              The
                Committee in its sole discretion may determine that an individual
                participant’s performance is not satisfactory for a Plan Year and that
                such participant will not receive any award under this Plan for such
                Plan
                Year.

            


    

    


    Individual
      Matching Account - For
      _____
      (yr.) the
      Individual Matching Deferral Account will be established at _____% of each
      individual’s Cash Award (inclusive of any elective deferral from that award) as
      determined above.


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


    SCHEDULE
      C

    


    NATIONAL
      PENN BANCSHARES, INC.

    EXECUTIVE
      INCENTIVE PLAN

    DEFERRAL
      ELECTION LETTER

    


    


    TO
      THE
      COMMITTEE:

    


    In
      accordance with the National Penn Bancshares, Inc. Executive Incentive Plan,
      as
      amended and restated in 2005, I hereby request to defer receipt of that portion
      of any Cash Award earned by me (to the extent provided in Paragraph 2 below)
      for
      services rendered as an eligible Participant in the Plan during the calendar
      year specified below. This election shall be governed by all of the provisions
      of the Plan.

    


    
      	 	
              1.

            	
              This
                request shall be effective beginning with calendar year
                _________.

            


    

    


    
      	 	
              2.

            	
              This
                request shall apply to ________________________ of my Cash Award.
                (Expressed as "all" or a designated dollar or percentage
                limitation.)

            


    

    


    
      	 	
              3.

            	
              My
                deferred award and the interest thereon shall become payable on the
                January 1 next following the date I retire or otherwise cease to
                be
                employed by NPB or an Affiliate of
                NPB.

            


    

    


    
      	 	
              4.

            	
              I
                irrevocably elect that, when payable, my deferred Cash Award and
                the
                interest thereon shall be paid to me as indicated
                below:

            


    

    (
      ) In
      one
      lump sum.

    


    (
      ) In
      a
      series of five annual installments.

    


    (
      ) In
      a
      series of ten annual installments.

    


    I
      agree
      that such terms and conditions shall be binding upon my beneficiaries,
      distributees, and personal representatives.

    


    Unless
      noted below, my beneficiaries shall be the same as designated for my group
      life
      insurance.

    


    


    


    
      	
              ____________________________

            	
              ____________________________________________

            
	
              Date

            	
              Signature
                of Participant

            


    

     

    
 

    
      	 	Approved
              By:
	 	 
	 	 
	
              ____________________________

            	
              ____________________________________________

            
	
              Date

            	
              Signature
                of the Chairman of the Committee