EX-10.4


    Exhibit
      10.4

    


    EMPLOYMENT
      AGREEMENT

    


    THIS
      EMPLOYMENT AGREEMENT ("Agreement"), dated September 6, 2005, is made among
      NATIONAL PENN BANCSHARES, INC., a Pennsylvania business corporation and
      registered bank holding company ("NPB"); NATIONAL PENN BANK, a national banking
      association ("Bank"); and ROBERT R. THOMAS ("Executive") (NPB and Bank are
      sometimes referred to herein collectively as "Employer").

    


    BACKGROUND

    


    1.
      Nittany Financial Corp. (“NF”) is a Pennsylvania business corporation and
      registered savings and loan holding company, and Nittany Bank is a wholly-owned
      banking subsidiary of NF (“Nittany Bank”).

    


    2.
      Executive is presently employed by NF as the President and Chief Executive
      Officer of its subsidiary, Vantage Investment Advisors LLC, pursuant to an
      Employment Agreement dated as of January 1, 2003 (the "Nittany Employment
      Agreement").

    


    3.
      On
      September 6, 2005, NPB and NF entered into an Agreement (the "Merger Agreement")
      providing, among other things, for the merger of NF with and into NPB (the
      "Merger"), to be followed, at the discretion of NPB, by the Bank Merger (as
      defined in the Merger Agreement). The Agreement also provides for Bank to
      establish, immediately after any such Bank Merger, a new banking division to
      be
      called the "Nittany Bank Division of National Penn Bank" (the "Nittany Bank
      Division").

    


    4.
      It is
      the desire of the Boards of Directors of NPB and Bank that Executive continue
      Executive’s employment from and after the effective date of the Merger (the
“Effective Date”), on the terms and conditions set forth herein, in order that
      the experience Executive has gained throughout Executive’s career and the
      management ability Executive has demonstrated will continue to be available
      to
      NPB and Bank, including Nittany Bank or the Nittany Bank Division, if and when
      established. Executive is willing to continue such employment, on the terms
      and
      conditions set forth herein.

    


    AGREEMENT

    


    NOW,
      THEREFORE, in consideration of the mutual promises contained herein, and each
      intending to be legally bound, NPB, Bank and Executive agree as
      follows:

    


    1. Background.
      The
      matters set forth in the "Background" section of this Agreement are incorporated
      by reference herein.

    


    
      
        
        

      

      
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    2. Term.
      This
      Agreement shall be for a term of five (5) years (the "Term"), beginning on
      the
      Effective Date, subject to termination at any time as provided in Sections
      9
      through 13.

    


    3. Position,
      Duties.

    


    (a) During
      the Term, NPB will cause Executive to be employed as President of its
      subsidiary, Vantage Investment Advisors LLC (“Vantage”). Executive acknowledges
      that Executive’s employment as such officer does not give rise to an obligation
      to maintain the Nittany Bank Division beyond that provided in the Merger
      Agreement. Executive accepts such employment, with such powers and duties as
      may
      from time to time be determined by NPB's Chairman or President.

    


    (b) Executive
      will devote substantially all of Executive’s time and attention to, and will use
      Executive’s best energies and abilities in the performance of, Executive’s
      duties and responsibilities as prescribed in this Section 3, and will not engage
      in consulting work or any trade or business for Executive’s own account or for
      or on behalf of any other person, firm or corporation which competes, conflicts,
      or interferes with the performance of Executive’s duties hereunder in any way,
      including, without limitation, the sale of variable annuity or insurance
      products. Executive shall cause any and all sales of variable annuity and
      insurance products to be conducted through an appropriate subsidiary of NPB.
      Notwithstanding the foregoing, Executive may perform community service
      consistent with NPB and Bank policy and engage in activities on behalf of NPB
      or
      Bank or for Executive’s own account, including personal investment activities
      (excluding any personal investments in publicly-traded companies (other than
      NPB) with voting power equal to five percent or more); provided, however, that
      all such service or activities do not interfere with performance of Executive's
      responsibilities under this Agreement.

    


    4. Base
      Compensation.
      Except
      as provided in Section 17, for all services to be performed by Executive
      pursuant to Section 3, Employer will pay Executive a base salary of One Hundred
      Ninety Thousand Dollars ($190,000.00) per year (pro-rated for partial years).
      Employer shall pay such salary to Executive in approximately equal installments
      during each year on the customary salary payment dates of Employer, and such
      salary shall be subject to applicable income tax withholding, deductions
      required by law, and other deductions authorized by Executive. Executive shall
      not be entitled to any additional compensation for service as a director or
      committee member of NPB, Bank, the Nittany Bank Division or any other affiliated
      company. Employer will evaluate Executive's performance annually, and Executive
      shall be eligible for annual merit increases in base salary in the discretion
      of
      NPB and Bank. A base salary increase (if any) shall, when it takes effect,
      become the new minimum base salary required thereafter by this Section
      4.

    


    
      
        
        

      

      
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    5. Health
      Insurance, Benefit Plans, Stock Compensation Plans, etc.

    


    (a) In
      addition to the compensation payable to Executive pursuant to Section 4 hereof,
      Executive shall be entitled during the time this Agreement is in effect to
      participate in all health insurance and benefit plans, group insurance, salary
      reduction (401(k)) plans, employee stock purchase plans or other plans (other
      than pension plans) providing benefits applicable generally to employees of
      NPB
      or Bank which are presently in force or which may hereafter be adopted by NPB
      or
      Bank.

    


    (b) Executive
      shall also be eligible during the time this Agreement is in effect for receipt
      of stock options, restricted stock, or other equity awards, commensurate with
      Executive’s positions with NPB and Bank, pursuant to NPB's Long-Term Incentive
      Compensation Plan or any successor or additional stock option plan or stock
      compensation plan which may hereafter be adopted by NPB for officers and other
      key employees of NPB and its subsidiaries. Any discretionary terms of grants
      or
      awards to Executive (other than with respect to amount) shall be consistent
      with
      grants or awards to other senior officers generally.

    


    6. Bonuses.
      As
      additional compensation for services rendered hereunder, Executive shall be
      entitled to participate in such Financial Performance Incentive Plan as NPB
      may
      establish from time to time for the Nittany Bank Division (the “Nittany
      Incentive Plan”). It
      is
      Employer's intention that any awards to Executive under the Nittany Incentive
      Plan shall be at levels generally commensurate with awards for other officers
      of
      comparable level.

    


    7. Other
      Benefits.
      Except
      as provided in Section 17, as additional compensation for services rendered
      hereunder, Executive shall be entitled during the time this Agreement is in
      effect:

    


    (a) To
      life
      insurance coverage and long-term disability insurance coverage at no expense
      to
      Executive, in amounts available to others in commensurate positions with
      Employer;

    


    (b) To
      receipt of an automobile allowance, in such amount as shall be determined by
      Employer from time to time, in Employer's sole discretion, but in no event
      less
      than $750.00 per month;

    


    (c) To
      receipt of a cellular telephone allowance, in such amount as shall be determined
      by Employer from time to time, in Employer’s sole discretion, but in no event
      less than $100.00 per month; and

    


    (d) To
      reasonable vacation and sick leave in accordance with Employer policy, as the
      same may be revised from time to time.

    


    
      
        
        

      

      
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    8. Change
      in Control.

    


    (a) If
      a
      Change in Control (as defined in Section 8(b)) shall occur, and if thereafter,
      there shall be:

    


    (1)
      At
      any time, any involuntary termination of Executive's employment (other than
      for
      Cause);

    


    (2)
      At
      any time, any reduction in Executive's title, responsibilities or authority,
      including such title, responsibilities or authority as such may be increased
      from time to time;

    


    (3)
      At
      any time, any reduction in Executive's Salary in effect immediately prior to
      a
      Change in Control, or any failure to provide Executive with benefits at least
      as
      favorable as those enjoyed by Executive under any of the pension, life
      insurance, medical, health and accident, disability or other employee plans
      of
      Employer in which Executive participated immediately prior to a Change in
      Control, or the taking of any action that would materially reduce any of such
      compensation or benefits in effect at the time of the Change in Control, unless
      such reduction relates to a reduction applicable to all employees
      generally;

    


    (4)
      At
      any time, any reassignment of Executive beyond a fifty (50) mile radius from
      Executive's home address set forth on the signature page hereto; or

    


    (5)
      At
      any time, any requirement that Executive travel in performance of Executive’s
      duties on behalf of NPB or an Affiliate for a greater period of time during
      any
      year than was required of Executive during the year preceding the year in which
      the Change in Control occurred;

    


    then,
      at
      the election of Executive, exercisable by Executive within one hundred eighty
      (180) days of the occurrence of any of the foregoing events, Executive may
      resign from employment (or, if involuntarily terminated, give notice of
      intention to collect benefits hereunder) by delivering a notice in writing
      to
      Employer, in which case Executive shall be entitled to a lump sum cash severance
      payment of $190,000, which Employer shall pay to Executive within fifteen (15)
      days of Executive's termination of employment.

    


    Notwithstanding
      the foregoing or any other provision of this Agreement to the contrary, in
      no
      event shall the lump sum payment to Executive pursuant to this Section 8(a)
      be
      greater than an amount equal to an amount ("X") determined pursuant to the
      following formula:

    


    
      
        
        

      

      
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    X
      =
      (2.99A - B) x (1 + C)D.

    


    For
      purposes of the foregoing formula:

    


    A
      =Executive's Base Amount on the date of the Change in Control;

    


    B
      =The
      present value of all other amounts which qualify as parachute payments under
      Code Section 280G(b)(2)(A) or (B) (without regard to the provisions of Code
      Section 280G(b)(2)(A)(ii)), such present value to be determined pursuant to
      the
      provisions of Code Section 280G;

    


    C
      =60%
      times the lowest of the semiannual applicable federal rates (determined pursuant
      to Code Section 1274(d)) in effect on the date of the Change in Control;
      and

    


    D
      =The
      number of whole semiannual periods plus any fraction of a semiannual period
      from
      the date of the Change in Control to the date of termination of the Executive's
      employment.

    


    (b) "NPB
      Change in Control" means:

    


    (1) 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 (the "Exchange Act"))
      of
      "beneficial ownership" (within the meaning of Rule 13d-3 under the Exchange
      Act)
      of securities of NPB representing 24.99% or more of the combined voting power
      of
      NPB's securities then outstanding;

    


    (2) A
      merger,
      consolidation or other reorganization of Bank, except where the resulting entity
      is controlled, directly or indirectly, by NPB;

    


    (3) A
      merger,
      consolidation or other reorganization of NPB, except where shareholders of
      NPB,
      immediately prior to consummation of any such transaction, continue to hold
      at
      least a majority of the voting power of the outstanding voting securities of
      the
      legal entity resulting from or existing after any such transaction and
      a
      majority of the members of the Board of Directors of the legal entity resulting
      from or existing after any such transaction are former members of NPB's Board
      of
      Directors;

    


    (4) A
      sale,
      exchange, transfer or other disposition of substantially all of the assets
      of
      Bank to another entity, except to an entity controlled, directly or indirectly,
      by NPB;

    


    (5) A
      sale,
      exchange, transfer or other disposition of substantially all of the assets
      of
      NPB to another entity, or a corporate division involving NPB; or

    


    
      
        
        

      

      
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    (6) The
      following individuals cease for any reason to constitute a majority of the
      number of directors then serving: individuals
      who were directors of NPB on the Effective Date, together with individuals
      elected as directors by not less than a majority of the individuals who were
      directors of NPB on the Effective Date, shall cease to constitute a majority
      of
      the members of the board of directors of NPB.

    


    (c)
      "Vantage Change in Control" means:

    


    (1) A
      merger,
      consolidation or other reorganization of Vantage, except where the resulting
      entity is controlled, directly or indirectly, by NPB; or 

    


    (2) A
      sale,
      exchange, transfer or other disposition of either all of the membership
      interests or all or substantially all of the assets of Vantage to another
      entity, except to an entity controlled, directly or indirectly, by
      NPB.

    


    (d) “Change
      in Control” means either a NPB Change in Control or a Vantage Change in
      Control.

    


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

    


    (f)
      "Base
      Amount" means Executive's average annualized taxable compensation from Employer
      for the five years prior to the year in which a Change in Control occurs,
      determined in accordance with the provisions of Code Section 280G.

    


    (g)
      "Code" means the Internal Revenue Code of 1986, as amended, and as the same
      may
      be amended from time to time.

    


    (h)
      "Employer" includes, for purposes of Section 8 only, NPB or any Affiliate which
      employs Executive at any particular time.

    


    (i)
      "Salary" means Executive's annual base salary, established either by contract
      or
      by the Board of Directors of Employer, prior to any reduction of such salary
      pursuant to any contribution to a tax-qualified plan under Section 401(k) of
      the
      Code.

    


    (j) Executive
      shall not be required to mitigate the amount of any payment provided for in
      Section 8(a) by seeking other employment or otherwise, nor shall the amount
      of
      any payment or benefit provided for in Section 8(a) be reduced by any
      compensation earned by Executive as the result of employment by another employer
      or by reason of Executive's receipt of or right to receive any retirement or
      other benefits after the date of termination of employment or
      otherwise.

    


    9. Termination--Disability.
      Employer may terminate Executive's employment at any time if Executive shall
      be
      "disabled" for a period of 180 consecutive days. "Disability" means that,
      because of Executive's injury or sickness, Executive cannot perform each of
      the
      material duties of Executive’s regular occupation, as determined by Employer in
      good faith. In such event:

    


    
      
        
        

      

      
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    (a) This
      Agreement shall remain in effect for the remainder of the Term and terminate
      at
      the end of such Term;

    


    (b) Employer
      shall continue to pay Executive the compensation set forth in Section 4 for
      the
      remainder of the Term, at the times set forth in Section 4; 

    


    (c) Employer
      shall continue to pay Executive the compensation set forth in Section 6, if
      any,
      at the times and for the duration set forth in the Nittany Incentive Plan;
      and

    


    (d) Employer
      shall continue to pay Executive any amounts due to him pursuant to Section
      26
      hereof, at the times set forth in Section 26.

    


    10. Termination--Death.
      If
      Executive's employment is terminated because of Executive's death:

    


    (a) This
      Agreement shall terminate at that time; and

    


    (b) Within
      30
      days of the date of death, Employer shall pay to Executive's designated
      beneficiary, in one lump sum, an amount equal to the total amount of
      compensation remaining to be paid to Executive pursuant to Section 4 through
      the
      remaining Term of the Agreement and Section 6 for the remaining period set
      forth
      in the Nittany Incentive Plan, plus any amounts still due pursuant to Section
      26.

    


    11. Voluntary
      Termination.
      Executive may terminate Executive’s employment with Employer at any time. In
      such event:

    


    (a) This
      Agreement shall terminate at that time; and

    


    (b) Employer
      shall not be obligated to pay Executive any further compensation pursuant to
      Section 4 or otherwise, except that the following shall remain due and payable
      by Employer to Executive notwithstanding termination of this
      Agreement:

    


    (1) Section
      4
      compensation, if any, accrued and unpaid through the date of voluntary
      termination;

    


    (2) The
      remaining amount payable to Executive pursuant to Section 6, if any, in
      accordance with the Nittany Incentive Plan; and

    


    (3) The
      amount payable to Executive pursuant to Section 8, if any.

    


    
      
        
        

      

      
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    12. Termination--Cause.
      Nothing
      contained in this Agreement shall be construed to prevent Employer from
      terminating the employment of Executive hereunder at any time for
      "cause".

    


    (a) "Cause"
      means the Employer's good faith reasonable belief that the Executive committed
      (1) fraud, theft or embezzlement, (2) falsified corporate records,
      (3) disseminated confidential information concerning customers, NPB, Bank,
      any NPB or Bank subsidiary or any of its or their employees, (4) had
      documented unsatisfactory job performance under NPB's dismissal policy, or
      (5) violated NPB's Code of Conduct. The foregoing definition of "cause" is
      the definition of "cause" used by NPB, Bank and their subsidiaries in the
      ordinary course of business.

    


    (b) If
      Employer terminates Executive's employment for cause:

    


    (1) Employer
      shall give Executive a written notice of termination effective on the date
      specified by Employer in said notice, which notice shall contain a full
      statement of the facts and reasons for such termination;

    


    (2) This
      Agreement shall terminate at such time, and such date of termination shall
      constitute the last date of the Term; and

    


    (3) Employer
      shall not be obligated to pay Executive any further compensation pursuant to
      Section 4 or otherwise, except for (A) Section 4 compensation, if any, accrued
      and unpaid through the date of termination and (B) the remaining amount payable
      to Executive pursuant to Section 6, if any, in accordance with the Nittany
      Incentive Plan.

    


    13. Termination--Without
      Cause.
      Employer may terminate Executive's employment at any time without cause (defined
      in Section 12(a)). In such event:

    


    (a) This
      Agreement shall remain in effect for the remainder of the Term and shall
      terminate thereafter;

    


    (b) Employer
      shall continue to pay Executive the compensation set forth in Section 4 for
      the
      remainder of the Term at the times set forth in Section 4;

    


    (c) Employer
      shall continue to pay Executive the compensation set forth in Section 6, if
      any,
      at the times and for the duration set forth in Nittany Incentive
      Plan;

    


    (d) Employer
      shall reimburse Executive for the cost of "COBRA" health care continuation
      coverage for the remainder of the Term;

    


    
      
        
        

      

      
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    (e) If
      a
      Change in Control (defined in Section 8(b)) shall occur prior to the end of
      the
      Term, Employer shall pay to Executive the payment to which Executive is entitled
      pursuant to Section 8; 

    


    (f) Employer
      shall continue to pay Executive any amounts due to him pursuant to Section
      26
      hereof, at the times set forth in Section 26; 

    


    (g) if
      applicable, during the Tail Period described in Section 14(b)(5) or Section
      14(b)(6) below, Employer shall make cash payments to Executive at a rate of
      Fifty-Two Thousand Dollars ($52,000) per year (pro-rated for partial years),
      in
      approximately equal installments during such Tail Period on the customary salary
      payment dates of Employer, subject to applicable income tax withholding and
      other deductions required by law; and

    


    (h) Executive
      shall not receive any other employee benefits, including the benefits described
      in Section 7 of this Agreement, or be entitled to participate in any other
      plan
      or plans providing benefits generally to employees of Employer which are
      presently in effect or which may hereafter be adopted by Employer, for the
      remainder of the Term.

    


    14. Non-Competition.
      

    


    (a) Executive
      acknowledges that NPB is a registered bank holding company engaged principally
      in the commercial and retail banking business and in the investment management
      and investment advisory business through its ownership, support, operation
      and
      management of its subsidiaries, including Bank. During the Term and thereafter
      for the applicable Tail Period (as defined in Section 14(b) below), if any,
      Executive shall not, directly or indirectly, acting alone or in conjunction
      with
      others:

    


    (1) Engage
      as
      a director, officer, employee, partner, shareholder, consultant, agent or in
      any
      other capacity, in the investment management or investment advisor business
      in
      competition with Vantage or any other NPB investment management or investment
      advisor subsidiary, in any location whether or not within the Commonwealth
      of
      Pennsylvania that is within either fifty (50) miles of Boyertown, Berks County,
      Pennsylvania, or within fifty (50) miles of State College, Centre County,
      Pennsylvania;

    


    (2) Engage
      as
      a Principal (defined below) in an investment management or investment advisor
      business in competition with Vantage or any other NPB investment management
      or
      investment advisor subsidiary, in the United States of America (including its
      territories and possessions);

    


    (3) Request
      any customers of NPB, Bank or any other future NPB subsidiary, to curtail or
      cancel their business with NPB, Bank, or any other future NPB subsidiary,
      excluding himself and any customer who is a relative of Executive;
      or

    


    
      
        
        

      

      
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    (4) Induce,
      or attempt to influence, any employee of NPB, Bank, or any other future NPB
      subsidiary to terminate employment with NPB, Bank, or any other future NPB
      subsidiary, or to enter into any employment or other business relationship
      with
      any other person (including Executive), firm or corporation.

    


    For
      purposes of clause (2) above, “Principal” means a director, shareholder,
      partner, senior executive or any other office, position or role in which
      Executive serves in an executive decision-making capacity or has the right
      or
      ability to influence or control such business’s strategic or operational
      decisions, practices, policies and procedures.

    


    (b) “Tail
      Period” shall have the following meaning, as the case may be: 

    


    (1) If,
      following any Change in Control, either Executive or Employer terminates
      Executive’s employment for any reason, whether voluntarily or involuntary,
      whether pursuant to Section 8(a) or otherwise (but excluding the reasons set
      forth in clause (7) below), then the Tail Period shall be a period of one year
      from the date of such termination.

    


    (2)
       If
      Executive terminates his employment pursuant to Section 11 hereof (other than
      following a Change of Control), then the Tail Period shall be a period of two
      years from the date of such termination.

    


    (3) If
      Employer terminates Executive’s employment pursuant to Section 12 hereof (other
      than following a Change of Control), then the Tail Period shall be a period
      of
      one year from the date of such termination.

    


    (4) If
      Employer terminates Executive’s employment pursuant to Section 13 hereof (other
      than following a Change of Control) and there shall be two years or more
      remaining in the Term, then there shall be no Tail Period.

    


    (5) If
      Employer terminates Executive’s employment pursuant to Section 13 hereof (other
      than following a Change of Control) and there shall be less than two years
      but
      more than one year remaining in the Term, then the Tail Period shall be such
      period of time which, when added to the remainder of the Term, would equal
      a
      period of two years.

    


    
      
        
        

      

      
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    Examples:

    


    
      	
              If
                Employer terminates Executive’s employment pursuant to Section 13 hereof
                (other than following a Change of Control):

            	 	
              Then
                the Tail Period in such case will be: 

            
	
               

              Three
                (3) years and one (1) month after the Effective Date

            	 	
               

              One
                (1) year and eleven (11) months after the end of the
                Term

            
	 	 	 
	
              Three
                (3) years and six (6) months after the Effective Date

            	 	
              One
                (1) year and six (6) months after the end of the Term

            
	 	 	 
	
              Three
                (3) years and eleven (11) months after the Effective Date

            	 	
              One
                (1) year and one (1) month after the end of the
                Term

            


    

    


    (6) If
      Employer terminates Executive’s employment pursuant to Section 13 hereof (other
      than following a Change of Control) and there shall be one year or less
      remaining in the Term, then the Tail Period shall be a period of one year from
      the end of the Term. 

    


    (7) If
      Employer terminates Executive’s employment pursuant to Section 9 hereof, or upon
      the expiration of the Term, then regardless of whether a Change of Control
      shall
      have previously occurred, there shall be no Tail Period.

    


    (c) Executive
      recognizes that immediate and irreparable damage will result to Employer if
      Executive breaches any of the terms and conditions of this Section 14 and,
      accordingly, Executive hereby consents to the entry by any court of competent
      jurisdiction of an injunction against him to restrain any such breach, in
      addition to any other remedies or claims for money damages which Employer may
      seek. Executive represents and warrants to Employer that Executive’s experience
      and capabilities are such that Executive can obtain employment in business
      without breaching the terms and conditions of this Section 14, and the
      enforcement hereof by injunction or otherwise will not prevent Executive from
      earning a livelihood. This Section 14 shall remain in full force and effect
      in
      accordance with its provisions following any termination of this
      Agreement.

    


    15. Non-Disclosure.
      During
      the Term of this Agreement and for an indefinite period thereafter, Executive
      shall not, directly or indirectly, acting alone or in conjunction with others,
      disclose to any person, firm or corporation any of the following information:
      any trade secret, any details of organization or business affairs, any names
      of
      past or present customers, consumers or employees, or any other proprietary
      data
      or confidential information, of NPB, Bank, or of any of NPB's other direct
      or
      indirect, present or future, subsidiaries or affiliates; provided, however,
      that
      disclosure of such information within the scope of Executive's employment,
      disclosure of such information as is required by law, and disclosure of such
      information already in the public domain through no fault of Executive, shall
      not be prohibited by this Section 15.

    


    
      
        
        

      

      
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    Employer
      may enforce the provisions of this Section 15 by suit for damages, injunction,
      or both. Executive agrees that Employer would be irreparably injured by the
      breach of any provision of this Section 15, and money damages alone would not
      be
      an appropriate measure of the harm to Employer from such continuing breach.
      Therefore, Executive acknowledges and agrees that Employer may seek equitable
      relief, including specific performance of the provisions of this Section 15,
      by
      injunction to remedy a breach of the provisions of this Section 15. This Section
      15 shall remain in full force and effect in accordance with its provisions
      following any termination of this Agreement.

    


    16. Binding
      Effect, Assignment.

    


    (a) This
      Agreement shall be binding upon and inure to the benefit of NPB and Bank, and
      it
      shall be assignable to any corporation, limited liability company or other
      entity which may be or become the legal employer of all of NPB's and Bank's
      current employees in which case both NPB and Bank shall be guarantors of the
      due
      performance of all obligations set forth herein and the term "Employer" used
      herein shall include such assignee. This Agreement shall also be assignable
      to
      any corporation, bank or other entity which may acquire NPB's or Bank's business
      or all or substantially all of the assets of NPB or Bank, or with or into which
      NPB or Bank may be merged or consolidated, as provided in Section
      16(b).

    


    (b) Each
      of
      NPB and Bank shall require any successor (whether direct or indirect, by
      purchase, merger, consolidation or otherwise) to all or substantially all of
      the
      business and/or assets of NPB or Bank to expressly assume and agree to perform
      this Agreement in the same manner and to the same extent that NPB or Bank would
      be required to perform it if no such succession had taken place. Failure to
      obtain such assumption and agreement prior to the effectiveness of any such
      succession shall constitute a breach of this Agreement, in which case a "Change
      in Control" (as defined in Section 8(b)) shall be deemed to have occurred and
      Executive shall have the immediate right to take the actions and receive the
      payments provided in Section 8. As used in this Agreement, "NPB" and "Bank"
      shall mean NPB and Bank as previously defined and any successor to the business
      and/or assets of NPB or Bank as aforesaid which assumes and agrees to perform
      this Agreement by operation of law or otherwise.

    


    (c) This
      Agreement shall be binding upon and inure to the benefit of Executive,
      Executive’s personal and legal representatives, heirs, distributees, devisees
      and assigns. Notwithstanding the foregoing, the obligations and duties of
      Executive hereunder shall be personal and not assignable or delegable by
      Executive in any manner whatsoever.

    


    
      
        
        

      

      
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    17. Exception
      for Across-the-Board Actions.
      If,
      during the Term, the Boards of Directors of NPB and Bank shall determine, acting
      in good faith and with a reasonable basis, that it is in the best interests
      of
      NPB, Bank and NPB's shareholders to implement one or more broad,
      across-the-board cost-cutting measures for all members of senior management
      of
      NPB and its subsidiaries, then, notwithstanding Sections 4 and 7, Executive's
      base compensation and other benefits may be reduced in accordance with such
      cost-cutting measures in a manner consistent with any such reductions in base
      compensation and/or other benefits for other senior officers
      generally.

    


    18.
      Employment
      After Term; Survival of Provisions.
      Upon
      expiration of the Term, as it may be extended from time to time and Executive's
      employment status shall convert to "at will" employment status and the
      provisions of Section 15 relating to non-disclosure shall remain in full force
      and effect in accordance with its provisions.

    


    19. Notices.
      All
      notices or other communications hereunder shall be in writing and shall be
      deemed given upon delivery if delivered personally or two business days after
      mailing if mailed by prepaid, registered or certified mail, return receipt
      requested, addressed as follows:

    


    If
      to
      NPB, to:

    


    Wayne
      R.
      Weidner

    Chairman
      and Chief Executive Officer

    National
      Penn Bancshares, Inc.

    Reading
      and Philadelphia Avenues

    Boyertown,
      PA 19512

    


    If
      to
      Bank, to:

    


    Glenn
      E.
      Moyer

    President
      and Chief Executive Officer

    National
      Penn Bank

    Reading
      and Philadelphia Avenues

    Boyertown,
      PA 19512

    


    If
      to
      Executive, at the address set forth on the signature page hereto;

    


    or
      to
      such other address as may have been previously furnished by the party to the
      other by notice given in the manner provided herein.

    


    20. Entire
      Agreement.
      This
      Agreement is intended by the parties to constitute and does constitute the
      entire agreement between NPB, Bank and Executive with respect to the subject
      matter hereof. This Agreement supersedes any and all prior agreements,
      understandings, negotiations and discussions of the parties, whether oral or
      written.

    


    
      
        
        

      

      
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    21. Amendment.
      This
      Agreement may be amended, modified, waived, discharged or terminated only by
      an
      instrument in writing signed by Executive, an authorized officer of NPB or
      an
      authorized officer of Bank, as the case may be, against whom or which
      enforcement of the amendment, modification, waiver, discharge or termination
      is
      sought.

    


    22. Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the domestic
      internal law of the Commonwealth of Pennsylvania.

    


    23. Interpretation
      of Provisions.
      Wherever possible, each provision of this Agreement shall be interpreted in
      such
      manner as to be effective and valid under applicable law, but if any provision
      of this Agreement shall be prohibited by or invalid under applicable law, such
      provision shall be ineffective to the extent of such prohibition or invalidity,
      without invalidating the remainder of such provision or the remaining provisions
      of this Agreement. Without limiting the generality of the foregoing, if a court
      of competent jurisdiction shall determine that the time or geography provisions
      of Section 14 are not reasonable, then such provision(s) shall be reformed
      to
      reflect such period of time or geographical areas as the court shall determine
      to be reasonable and enforceable.

    


    24. Captions.
      The
      captions contained in this Agreement are for reference purposes only and are
      not
      part of this Agreement.

    


    25. Joint
      and Several Obligations.
      All
      obligations of NPB and Bank herein shall be joint and several
      obligations.

    


    26. Termination
      of Prior Agreement, Pay-Out of Change-in-Control Benefit.
      Effective concurrently with the closing of the Merger, the Nittany Employment
      Agreement is terminated and of no further force and effect, and in exchange
      for
      consent to such agreement termination, the Executive shall be paid the amount
      calculated under Section 7(a) of the Nittany Bank Employment Agreement without
      regard to the occurrence of the conditions precedent to such
      payments
      less the
      sum of any other payments that would constitute parachute payments under section
      280G of the Code with respect to the Merger (“Cancellation Payment”),
      such
      Cancellation Payment to be paid to Executive (after any required withholding
      or
      excise tax, if applicable), as follows: one-half shall be paid within five
      (5)
      business days following the Effective Date and the remainder shall be placed
      in
      an interest bearing escrow account at Bank (the “Escrow Account”) that would
      earn interest at the “National Penn Investors Trust Company” money market
      account rate. Monies held in the Escrow Account shall be paid to Executive
      in 3
      installments as follows: (i) one-fifth (1/5) of the escrowed amount, plus
      accrued interest thereon, within five (5) business days following the 1st
      anniversary of the Effective Date; (ii) one-fifth (1/5) of the escrowed amount,
      plus accrued interest thereon, within five (5) business days following the
      2nd
      anniversary of the Effective Date; and (iii) three-fifths (3/5) of the escrowed
      amount, plus accrued interest thereon, within five (5) business days following
      the 3rd anniversary of the Effective Date. Notwithstanding the foregoing, if
      Executive is eligible for payment under Section 8(a) and exercises his option
      to
      receive such payment in accordance with such Section, then all monies in the
      Escrow Account, together with accrued but unpaid interest on those monies,
      shall
      be paid to Executive concurrently with the payment being made under Section
      8(a). If Executive terminates employment pursuant to Section 11 hereof or
      Employer terminates employment of Executive pursuant to Section 12 hereof,
      all
      monies in the Escrow Account, together with all accrued and unpaid interest
      thereon, shall be paid to NPB within thirty (30) days following either of those
      events.

    


    
      
        
        

      

      
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    27. Deferred
      Compensation.
      Notwithstanding
      anything herein to the contrary, in no event shall this Agreement be construed
      to cause a payment of deferred compensation (as defined for purposes of Section
      409A of the Code and any guidance or regulations promulgated thereunder) to
      be
      made on any date (or upon the occurrence of any event) which would cause the
      imposition of an excise tax under Section 409A of the Code. In the event that
      this Agreement purports to provide that such a payment is to be made on any
      date
      (or upon the occurrence of any event) which would cause the imposition of an
      excise tax under Section 409A of the Code, such payment shall not be made until
      the earliest date on which (or upon the occurrence of the next event upon which)
      such payment can be made without causing the imposition of such an excise
      tax.

    


    28. Effective
      Date.
      This
      Agreement shall terminate and be of no further force and effect if for any
      reason the Merger Agreement is terminated prior to a Merger.

    


    [Signature
      Page Follows]


    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
      first above written.

    


    

      
        	 	
                NATIONAL
                  PENN BANCSHARES, INC.

              
	 	 
	 	 
	 	
                By:
                  /s/
                  Wayne R. Weidner

              
	 	
                Name:
                  Wayne R. Weidner

              
	 	
                Title:
                  Chairman/CEO

              
	 	 
	 	
                NATIONAL
                  PENN BANK

              
	 	 
	 	 
	 	
                By:
                  /s/
                  Glenn E. Moyer

              
	 	
                Name:
                  Glenn E. Moyer

              
	 	
                Title:
                  President/CEO

              
	 	 
	 	 
	
                Witness:
                  /s/ Lisa M. Williams

              	
                /s/
                  Robert R. Thomas

              
	 	
                Robert
                  R. Thomas

              
	 	 
	 	
                Address:

                 

              
	 	
                _____________________________

                 

              
	 	
                _____________________________

                 

              
	 	
                _____________________________

                 

              


      

    

     

    16