exh10-2.htm


    EXHIBIT
10.2

    NATIONAL PENN BANCSHARES,
INC

     

     DIRECTORS'
FEE PLAN 

     

     SECTION
I - DEFINITIONS 

    


    
    

    A.           Board of
Directors:  The Board of Directors of the Company.

    


    B.           Change in Control
Event:  An event constituting a change in control of the
Company as set forth in Section XVI herein.

    


    C.           Code:  The
Internal Revenue Code of 1986, as amended, and the same as may be amended from
time to time.

    


    D.           Common
Stock:  The Company's common stock, without par
value.

    


    E.           Company:  National
Penn Bancshares, Inc.

    


    F.           Compensation
Committee:  The Compensation Committee of the Board of
Directors (comprised solely of persons who are "non-employee directors" of the
Company, as such term is defined by the Securities and Exchange Commission
pursuant to Section 16 of the Securities Exchange Act of 1934).

    


    G.           Corporate
Secretary:  The Corporate Secretary of the
Company.

    


    H.           
Current Stock
Election:  An election to receive current payment of Director
Fees in shares of Common Stock, without deferral.

    


    I.           Deferred Cash Compensation
Account:  A book-entry reserve account maintained in the
records of the Company (in the case of its participating Directors) or of a
Subsidiary (in the case of its participating Directors) indicating the amount
owed to an individual Director as a result of a cash deferral of his Director
Fees.

    


    J.           Deferred Cash
Election:  An election to defer the receipt of all or a portion
of Director Fees and to receive eventual payment of such Director Fees in
cash.

    


    K.           Deferred Stock Compensation
Account:  A book-entry reserve account maintained in the
records of the Company (in the case of its participating Directors) or of a
Subsidiary (in the case of its participating Directors) indicating the amount
owed to an individual Director as a result of a stock deferral of his Director
Fees.

    


    L.           Deferred Stock
Election:  An election to defer the receipt of all Director
Fees and to receive eventual payment of such Director Fees in shares of Common
Stock.

    


    M.           Director:  Any
duly elected or appointed director of the Company or of a Subsidiary, or any
duly appointed member of an advisory board of a Subsidiary, other than a person
who is also a common law employee of the Company or of a
Subsidiary.  For purposes of administering and construing this Plan,
such a common law employee shall be deemed to be a person who is not a
Director.

    


    N.           Director
Fees:  Fees which are payable to a Director for services
performed by such Director as a member of the Board of Directors, as a member of
a Subsidiary's board of directors, as a member of any committee, or as a member
of any advisory board of a Subsidiary.

    


    O.           Election:  The
election by a Director to receive payment of Director Fees other than currently
in cash.

    


    P.           Fair Market
Value:  The fair market value of a share of Common Stock,
determined pursuant to Section XIII hereof.

    


    Q.           Interest Crediting
Date:  March 31, June 30, September 30 and December 31 of each
Plan Year.

    


    R.           
Plan:  This
Directors' Fee Plan, as adopted by the Company and as it may be amended from
time to time.

    


    S.           Plan
Quarter:  A calendar quarter.

    


    T.           Plan
Year:  A calendar year.

    


    U.           Subsidiary:  Any
corporation, 50% or more of the capital stock of which is owned, directly or
indirectly, by the Company.

    


    
      
        
        

      

      
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    SECTION II - PURPOSE;
RESERVATION OF SHARES

    


    The purposes of the Plan are to provide
each Director with payment alternatives for Director Fees and to increase the
identification of interests between Directors and the shareholders of the
Company by providing Directors with the opportunity to elect to receive payment
of Director Fees in shares of Common Stock.  For each Plan Year, the
aggregate number of shares of Common Stock which may be issued under Current
Stock Elections or credited to Deferred Stock Compensation Accounts for
subsequent issuance under the Plan is limited to 81,500 shares, subject to
adjustment and substitution as set forth in Section VII.B.

    


    SECTION III - ELIGIBILITY TO
PARTICIPATE

    


    Except as otherwise provided in Section
VI or Section VIII, any Director is eligible to participate in the
Plan.

    


    SECTION IV - PAYMENT OR
DEFERRAL OF DIRECTORS' FEES

    


    A.  General.  Each
Director may elect to receive current payment of Director Fees either in cash or
in shares of Common Stock, without deferral.  Each Director also may
elect to defer payment of Director Fees and to receive such deferred payment
either in cash or in shares of Common Stock.  An Election is made by
filing with the Corporate Secretary a "Notice of Election" in the form
prescribed by the Company, appropriately completed.  Director Fees
earned at any time for which an Election is not effective shall be paid in cash
on the date determined under Section XIII. Any Election shall terminate on the
date a Director ceases to be a Director. A Director may change an election to
receive cash or shares of Common Stock, in each case with or without deferral,
by filing a "Notice of Amendment or Revocation of Election" with the Corporate
Secretary in accordance with the provisions of this Section IV. Any "Notice of
Election" or "Notice of Amendment or Revocation of Election" shall become
irrevocable when filed, except by the filing of a new "Notice of Election" or
"Notice of Amendment or Revocation of Election" which thereafter becomes
effective in accordance with the provisions of this Section IV.

    


    B.  Current Stock
Payment.  Any Director desiring to make a Current Stock
Election shall file with the Corporate Secretary a "Notice of Election",
appropriately completed.  A Current Stock Election shall be effective
on the date on which the "Notice of Election" is filed.  Any Current
Stock Election shall remain in effect for each succeeding Plan Year unless and
until the Director revokes such Election by filing a "Notice of Amendment or
Revocation of Election" with the Corporate Secretary, appropriately
completed.  Any such revocation shall become effective for the Plan
Year immediately following the Plan Year in which such revocation is duly
filed.

    


    During the period that a Current Stock
Election is effective, all Director Fees payable shall be paid by the issuance
to the Director of a number of whole shares of Common Stock equal to the
Director Fees payable divided by the Fair
Market Value of a share of Common Stock on the date on which such Director Fees
are payable (as provided in Section XIII hereof).  Any amount of
Director Fees which is not paid in Common Stock because it is less than the Fair
Market Value of a whole share shall be accumulated in cash without interest and
added to the amount used in computing the number of shares of Common Stock
issuable to the Director on the next succeeding date on which Director Fees are
payable under the Current Stock Election.  Any such accumulated
fractional amount remaining as of the effective date of any termination of a
Current Stock Election or of the termination of the Plan shall be paid to the
Director in cash on the next succeeding date on which Director Fees would have
been payable to the Director under the Current Stock Election, but not later
than March 15th of the
calendar year following the Plan Year in which the fee was earned.

     

    The Company shall issue share
certificates to the Director for the shares of Common Stock acquired or, if
requested in writing by the Director, the shares acquired shall be added to the
Director's account under the Company's Dividend Reinvestment Plan. As of the
date under Section XIII on which the Director Fees are payable in shares of
Common Stock, the Director shall be a shareholder of the Company with respect to
such shares.

    


    C.  Deferred Cash
Payment.  Any Director desiring to make a Deferred Cash
Election shall, no later than December 31 of the Plan Year immediately preceding
the Plan Year for which such Deferred Cash Election is to become effective, file
with the Corporate Secretary a "Notice of Election", appropriately
completed.  In the case of a person who is elected or appointed as a
Director and who was not a Director on the preceding December 31st, such
Deferred Cash Election shall be made prior to the commencement of his term of
office.  Any Deferred Cash Election shall remain in effect for each
succeeding Plan Year unless and until the Director amends or revokes such
Election by filing with the Corporate Secretary a "Notice of Amendment or
Revocation of Election", appropriately completed.  Any such amendment
or revocation shall become effective for the Plan Year immediately following the
Plan Year in which such amendment or revocation is duly filed, and shall remain
effective until the Plan Year immediately following the Plan Year in which a new
"Notice of Amendment or Revocation of Election" is made as provided
above.

    


    D.  Deferred Stock
Payment.  Any Director desiring to make a Deferred Stock
Election shall, no later than December 31 of the Plan Year immediately preceding
the Plan Year for which such Deferred Stock Election is to become effective,
file with the Corporate Secretary a "Notice of Election", appropriately
completed.  In the case of a person who is elected or appointed as a
Director and who was not a Director on the preceding December 31st, such
Deferred Stock Election shall be made prior to the commencement of his term of
office.  Any Deferred Stock Election shall remain in effect for each
succeeding Plan Year unless and until the Director revokes such Election by
filing with the Corporate Secretary a "Notice of Amendment or Revocation of
Election", appropriately completed.  Any such amendment or revocation
shall become effective for the Plan Year immediately following the Plan Year in
which such amendment or revocation is duly filed, and shall remain effective
until the Plan Year immediately following the Plan Year in which a new "Notice
of Amendment or Revocation of Election" is made as provided above. Upon
revocation of an election, the cash value of any fractional share shall be paid
in the same manner as provided for current stock payments in Section
IV-B.

    


    
      
        
        

      

      
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    SECTION V - DEFERRED CASH
COMPENSATION ACCOUNT

    


    A.  General.  The
amount of any Director Fees deferred in accordance with a Cash Deferral Election
shall be credited to a Deferred Cash Compensation Account in the name of the
Director on the date on which such Director Fees are otherwise payable as
provided in Section XIII.

    


    B.  Interest.  On
each Interest Crediting Date, each Deferred Cash Compensation Account shall be
credited with additional amounts in the nature of interest.  The rate
of interest that will accrue with respect to a Deferred Cash Compensation
Account for a given Plan Year will be equal to the rate of return realized by
the Mandatory Deferral Accounts ("Mandatory Deferral Accounts") of the National
Penn Bancshares, Inc. Executive Incentive Plan (the "Executive Incentive Plan")
during the three-month period ended within such Plan
Quarter.  Interest on amounts in Deferred Cash Compensation Accounts
shall accrue daily and shall be determined by reference to a 365/366-day year;
provided, however, that no deferred Director Fee shall commence accruing
interest until the first day of the Plan Quarter immediately following the Plan
Quarter in which it is payable as provided in Section XIII.

    


    Notwithstanding the provisions of the
preceding paragraph, if a Deferred Cash Compensation Account is completely
liquidated on a date other than an Interest Crediting Date, interest shall be
credited to such Account, as of the date of its liquidation, for the period
since the last Interest Crediting Date.  The interest rate to be used
shall be the rate of return realized by the Mandatory Deferral Accounts during
the three-month period ended within the last preceding Plan
Quarter.

    


    Notwithstanding anything herein to the
contrary, the Compensation Committee may vary the method of calculating interest
on Deferred Cash Compensation Account balances if the Executive Incentive Plan
is terminated or amended to materially alter the present nature of calculation
of interest on Mandatory Deferral Accounts.  The decision of the
Compensation Committee as to the use of a substituted method of calculating
interest shall be final and binding on all affected Directors.


    SECTION VI - DISTRIBUTION OF
DEFERRED

     CASH
COMPENSATION ACCOUNT BALANCES 

     

    A.  General.  No
distribution from a Deferred Cash Compensation Account shall be made or commence
prior to the (i) termination of the Director's service as such, (ii) the
Director's attainment of age 65 or (iii) the later of the foregoing as selected
by the Director in his initial Deferred Cash Election as occasioning such
distribution.  The actual date on which distribution will be made or
commence will be determined by the Compensation Committee; provided, however,
that such date may be no later than December 31 of the Plan Year in which the
elected distribution event occurs.

    


    Distributions from Deferred Cash
Compensation Accounts may be made in a lump sum or in annual installments over a
period of five or ten years, as elected.  The amount of any annual
installment shall be calculated by dividing the balance in a Director's Deferred
Cash Compensation Account at the relevant time by the number of installments
remaining to be paid.  The actual method of distribution from a
Director's Deferred Cash Compensation Account will be determined by the method
of distribution selected by the Director in his initial Deferred Cash
Election.

    


    The balance of the Deferred Cash
Compensation Account shall be appropriately reduced on the date of payment to
the Director or the Director's designated beneficiary to reflect the installment
payments made hereunder.  Amounts held pending distribution pursuant
to this Section VI shall continue to be credited with interest on a quarterly
basis as described in Section V hereof.

    


    Once made, an election as to the event
which shall occasion a distribution and an election as to the method or timing
of distribution shall be irrevocable, unless (i) the Compensation Committee
consents in writing to an election change, (ii) the election change does not
take effect until at least twelve months after the date  on which the
election is made, (iii) the payment with respect to which the election is made
is deferred for a period of not less than five years from the date such payment
would otherwise have been paid and (iv) the election is made not less than
twelve months before the date the payment is scheduled to be paid.

    


    B.  Beneficiary
Designation.  A Director may designate one or more persons to
receive the balance in his Deferred Cash Compensation Account in the event of
his death prior to receipt of the total amount therein.  No such
designation will be valid unless made on a "Beneficiary Designation" form
prescribed by the Company, and duly and timely filed with the Corporate
Secretary.  A Director may at any time, and from time to time, revoke
or amend such designation by duly and timely filing a new "Beneficiary
Designation" form with the Corporate Secretary.  If a Director dies
without a completed "Beneficiary Designation" form on file with the Corporate
Secretary, payment will be made to his estate. All distributions made as a
result of death shall be paid in lump sums.

    


    SECTION VII - DEFERRED STOCK
COMPENSATION ACCOUNT

    


    A.  General.  The
amount of any Director Fees deferred in accordance with a Stock Deferral
Election shall be credited to a Deferred Stock Compensation Account in the name
of the Director.  On each date on which Director Fees are payable
under Section XIII to Directors for whom Stock Deferral Elections are in effect,
the Director's Deferred Stock Compensation Account shall be credited with a
number of shares of Common Stock (including fractional shares) equal to the
Director Fees payable divided by the Fair
Market Value of a share of Common Stock on that date.  If a dividend
or distribution is paid on the Common Stock in cash or property other than
Common Stock, then, on
the date of payment of the dividend or distribution to holders of the Common
Stock, each Deferred Stock Compensation Account shall be credited with the
number of shares of Common Stock (including fractional shares) equal to the
number of shares of Common Stock credited to such Account on the date fixed for
determining the shareholders entitled to receive such dividend or distribution
times the
amount of the dividend or distribution paid per share of Common Stock divided by the Fair
Market Value of a share of Common Stock on the date on which the dividend or
distribution is paid.  If the dividend or distribution is paid in
property, the amount of the dividend or distribution shall equal the fair market
value of the property on the date on which the dividend or distribution is
paid.  The Deferred Stock Compensation Account of a Director shall be
charged on the date of distribution with any distribution of shares of Common
Stock made to the Director from such Account pursuant to Section VIII A
hereof.


    
      
         


      

      
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    B.  Adjustment and
Substitution.  The number of shares of Common Stock credited to
each Deferred Stock Compensation Account, and the number of shares of Common
Stock available for issuance or crediting under the Plan in each Plan Year in
accordance with Section II hereof, shall be proportionately adjusted to reflect
any dividend or other distribution on the outstanding Common Stock payable in
shares of Common Stock or any split or consolidation of the outstanding shares
of Common Stock.  If the outstanding Common Stock shall, in whole or
in part, be changed into or exchangeable for a different class or classes of
securities of the Company or securities of another company or cash or property
other than Common Stock, whether through reorganization, reclassification,
recapitalization, merger, consolidation or otherwise, the Board of Directors
shall adopt such amendments to the Plan as it deems necessary to carry out the
purposes of the Plan, including the continuing deferral of any amount of any
Deferred Stock Compensation Account.

     

    SECTION VIII - DISTRIBUTION
OF DEFERRED

    STOCK COMPENSATION ACCOUNT
BALANCES

    


    A.  General.  No
distribution from a Deferred Stock Compensation Account shall be made or
commence prior to the (i) termination of the Director's service as such, (ii)
the Director's attainment of age 65 or (iii) the later of the foregoing, as
selected by the Director in his initial Deferred Stock Election as occasioning
such distribution.  The actual date on which distribution will be made
or commence will be determined by the Compensation Committee; provided, however,
that such date may be no later than December 31 of the Plan Year in which such
event occurs.

    


    Distributions of Common Stock from
Deferred Stock Compensation Accounts may be made in a lump sum or in annual
installments over a period of five or ten years.  The number of shares
of Common Stock distributed in any annual installment shall be calculated by
dividing the balance in a Director's Deferred Stock Compensation Account at the
relevant time by the number of installments remaining to be paid.  The
actual method of distribution from a Director's Deferred Stock Compensation
Account will be determined
by the method of distribution selected by the Director in his initial Deferred
Stock Election.

    


    The balance of the number of shares of
Common Stock in the Deferred Stock Compensation Account shall be appropriately
reduced to reflect the installment payments made hereunder. Shares of Common
Stock remaining in a Deferred Stock Compensation Account pending distribution
pursuant to this Section shall continue to be credited with respect to dividends
or distributions paid on the Common Stock pursuant to Section VII hereof and
shall be subject to adjustment or substitution pursuant to Section VII
hereof.  If a lump sum payment or the final installment payment
hereunder would result in the issuance of a fractional share of Common Stock,
such fractional share shall not be issued and cash in lieu of such fractional
share shall be paid to the Director based on the Fair Market Value of a share of
Common Stock on the date immediately preceding the date of such
payment.

    


    The Company shall issue share
certificates to the Director, or the Director's designated beneficiary, for the
shares of Common Stock distributed hereunder, or if requested in writing by the
Director, the shares to be distributed shall be added to the Director's account
under the Company's Dividend Reinvestment Plan. As of the date on which the
Director is entitled to receive payment of shares of Common Stock, the Director
shall be a shareholder of the Company with respect to such shares.

    


    Once made, an election as to the event
which shall occasion a distribution and an election as to the method or timing
of distribution shall be irrevocable, unless (i) the Compensation Committee
consents in writing to an election change, (ii) the election does not take
effect until at least twelve months after the date  on which the
election is made, (iii) the payment with respect to which the election is made
is deferred for a period of not less than five years from the date such payment
would otherwise have been paid and  (iv) the election  is
made not less than twelve months before the date the payment is scheduled to be
paid.

    


    B.  Beneficiary
Designation.  A Director may designate one or more persons to
receive the balance in his Deferred Stock Compensation Account in the event of
his death prior to receipt of the total amount therein.  No such
designation will be valid unless made on a "Beneficiary Designation" form
prescribed by the Company, and duly and timely filed with the Corporate
Secretary.  A Director may at any time, and from time to time, revoke
or amend such designation by duly and timely filing a new "Beneficiary
Designation" form with the Corporate Secretary.  If a Director dies
without a completed "Beneficiary Designation" form on file with the Corporate
Secretary, payment will be made to his estate. All distributions made as a
result of death shall be paid in lump sums.

    


    
      
        
        

      

      
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    SECTION IX -
NON-ALIENABILITY OF BENEFITS

    


    A. General Rule. Except
as provided in Section IX B, neither the Director nor any beneficiary designated
by the Director shall have the right, directly or indirectly, to alienate,
assign, transfer, pledge, anticipate or encumber (except by reason of death) any
amount that is or may be payable hereunder, nor shall any such amount be subject
to anticipation, alienation, sale, assignment, transfer, pledge, encumbrance,
attachment or garnishment by creditors of the Director or the Director's
designated beneficiary or to the debts, contracts, liabilities, engagements or
torts of any Director or the Director's designated beneficiary, or transfer by
operation of law in the event of bankruptcy or insolvency of the Director or the
Director's designated beneficiary, or any legal process.

    


    B. Domestic Relations
Order. The Compensation Committee shall permit an assignment of all or a
portion of a Director's interest in the Plan to the extent that such assignment
is required to comply with any judgment, decree or order (including approval of
a property settlement agreement) which relates to the provision of child
support, alimony payments or marital property rights to a spouse, former, spouse
child or other dependent of a Director made pursuant to a State domestic
relations order.

    


    SECTION X - NATURE OF
DEFERRED ACCOUNTS

    


    Any Deferred Cash Compensation Account
or Deferred Stock Compensation Account shall be established and maintained only
on the books and records of the Company or the applicable Subsidiary, and no
assets or funds of the Company, a Subsidiary or the Plan or shares of Common
Stock shall be removed from the claims of the Company's or a Subsidiary's
general or judgment creditors or otherwise made available until such amounts are
actually payable to Directors or their designated beneficiaries as provided
herein.

    


               The
Plan constitutes a mere promise by the Company or the applicable Subsidiary to
make payments in the future.  The Directors and their designated
beneficiaries shall have the status of, and their rights to receive a payment of
cash or shares of Common Stock under the Plan shall be no greater than the
rights of, general unsecured creditors of the Company or the applicable
Subsidiary.  No person shall be entitled to any voting rights with
respect to shares credited to a Deferred Stock Compensation Account and not yet
payable to a Director or the Director's designated beneficiary.  The
Company and the Subsidiaries shall not be obligated under any circumstances to
fund their respective financial obligations under the Plan and the Plan is
intended to constitute an unfunded plan for Federal income tax
purposes.

     

    SECTION XI - PLAN
ADMINISTRATION

     

    The Compensation Committee shall, with
respect to the Plan, have full power and authority to construe, interpret,
manage, control and administer this Plan, and to pass and decide upon cases in
conformity with the objectives of the Plan under such rules as the Board of
Directors and/or the Compensation Committee may establish consistent with
satisfying the requirements of section 409A of the Code and other applicable
law.

    


    If the Compensation Committee deems any
person entitled to receive a distribution incapable of receiving or disbursing
the same by reason of age, illness or any infirmity or incapacity of any kind,
payment may be made directly for the comfort, support and maintenance of such
person or to any person selected by the Compensation Committee to disburse the
same, whose receipt shall be a complete acquittance therefor.

    


    SECTION XII – ACCELERATION
OF DISTRIBUTION

    


    A. Hardship.
Notwithstanding the terms of a Cash Deferral Election or a Stock Deferral
Election made by a Director hereunder, the Compensation Committee may, in its
sole discretion, permit the withdrawal of amounts credited to a Deferred Cash
Compensation Account or of shares credited to a Deferred Stock Compensation
Account with respect to Director Fees previously payable, upon the request of a
Director or the Director's representative, if the Compensation Committee
determines that the Director or the Director's representative, as the case may
be, is confronted with an unforeseeable emergency. If a Director receives a
distribution under this Section, the Director's deferral election shall
automatically be cancelled and any later deferral election shall be subject to
the rules governing initial elections.  For this purpose, an
unforeseeable emergency is a severe financial hardship of the Director resulting
from (i) an illness or accident of the Director, the Director's spouse, or the
Director's dependent (within the meaning of section 152(a) of the Code without
regard to sections 152(b)(1), (b)(2) and (d)(1)(B)), (ii) loss of the
Director's property due to a casualty (including the need to rebuild a home
following damage to a home not otherwise covered by insurance; (iii) or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Director. The Director or the Director's
representative shall provide to the Compensation Committee such evidence as the
Compensation Committee, in its discretion, may require to demonstrate that such
emergency exists and financial hardship would occur if the withdrawal were not
permitted.  The withdrawal shall be limited to the amount or to the
number of shares, as the case may be, reasonably necessary to meet the emergency
need (including amounts necessary to pay any applicable taxes or penalties
resulting from the distribution) and not otherwise relieved through
reimbursement or compensation from insurance or otherwise, by liquidation of the
Director's other assets (to the extent liquidation of such assets would not
cause severe financial hardship or by cessation of deferrals under this
Plan.  Payment shall be made as soon as practicable after the
Compensation Committee approves the payment and determines the amount of the
payment or number of shares which shall be withdrawn, in a single lump
sum.  No Director shall participate in any decision of the
Compensation Committee regarding such Director's request for a withdrawal under
this Section XII.

    


    B. Domestic Relations
Order. The Compensation Committee shall permit an acceleration of the
time or payment schedule to a person other than the Director to the extent such
acceleration is required to comply with a domestic relations order, as provided
for in Section IX B.

    


    C. Income Inclusion under
Section 409A. The Compensation Committee shall permit the acceleration of
the time or schedule of a payment at any time that this Plan fails to meet the
requirements of section 409A of the Code and the regulations that apply
to it.
The payment may not exceed the amount required to be included in income as a
result of the failure to comply with the requirements of section 409A and the
regulations.

    


    D. Plan
Termination.  Distribution may be accelerated in accordance
with the Plan termination provisions of Section XVI.

    


    
      
        
        

      

      
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    SECTION XIII - PAYMENT
DATES; FAIR MARKET VALUE

    


    Director Fees payable currently in cash
or to be credited to a Deferred Cash Compensation Account shall be paid or
credited, as the case may be, on such dates as the Company's or the Subsidiary's
management shall determine, but not less frequently than June 30 and December 31
of each Plan Year.  Director Fees payable currently in shares of
Common Stock or to be credited to a Deferred Stock Compensation Account shall be
paid or credited, as the case may be, on March 31, June 30, September 30 and December 31
of each Plan Year, in each case covering the three-month period ending on
such date.

    


    "Fair Market Value" of a share of
Common Stock on a given date shall be determined (i) based on the average of the
closing sale prices of a share of Common Stock for the ten (10) day trading
period ending on the given date, as reported on the National Association of
Securities Dealers Automated Quotation ("Nasdaq") National Market and published
in The Wall Street
Journal, (ii) if no closing sale prices are reported during such ten (10)
day trading period, based on the average of the mean of the bid and asked prices
per share of Common Stock for such ten (10) day trading period, as reported on
Nasdaq, (iii) if the Common Stock is listed on a stock exchange, based on the
average of the closing sale prices of a share of Common Stock for the ten (10)
day trading period ending on the given date, as reported in The Wall Street
Journal, or (iv) if the Common Stock is not listed on Nasdaq or on a
stock exchange, by the Board of Directors in its sole discretion.

    


    SECTION XIV - SECURITIES
LAWS; ISSUANCE OF SHARES

    


    Subject to Section XV A, the obligation
of the Company to issue or credit shares of Common Stock under the Plan shall be
subject to (i) the effectiveness of a registration statement under the
Securities Act of 1933, as amended, with respect to such shares, if deemed
necessary or appropriate by counsel for the Company, (ii) the condition that the
shares shall have been listed (or authorized for listing upon official notice of
issuance) upon Nasdaq or each stock exchange, if any, on which the shares of
Common Stock may then be listed and (iii) all other applicable laws,
regulations, rules and orders which may then be in effect.  If, on the
date on which any shares of Common Stock would be issued pursuant to a Current
Stock Election or credited to a Deferred Stock Compensation Account, sufficient
shares of Common Stock are not available under the Plan or the Company is not
obligated to issue shares pursuant to this Section, then no shares of Common
Stock shall be issued or credited, but rather, in the case of a Current Stock
Election, cash shall be paid in payment of the Director Fees payable, and in the
case of a Deferred Stock Compensation Account, Director Fees and dividends which
would otherwise have been credited in shares of Common Stock shall be credited
in cash to a Deferred Cash Compensation Account in the name of the
Director.  The Compensation Committee shall adopt appropriate rules
and regulations to carry out the intent of the immediately preceding sentence if
the need for such rules and regulations arises.

    


    SECTION XV – PERMITTED AND
REQUIRED PAYMENT DELAYS

    


    A. Violation of Law.
Payment will be delayed if the Company reasonably anticipates that the making of
the payment will violate Federal securities laws or other applicable law;
provided, that the payment is made at the earliest date at which the Company
reasonably anticipates that the making of the payment will not cause such
violation.  For purposes of this provision, the making of a payment
that would cause inclusion in gross income or the application of any penalty
provision or other provision of the Code is not treated as a violation of
applicable law.

    


    B.  Required
Delay.  If any amount becomes payable on account of a payee’s
separation from service and the Committee determines that such payee is a
“specified employee”, payment of any amount due during the first six calendar
months following the payee’s separation from service shall be deferred until the
first day of the calendar month that is at least six full months after the
payee’s separation from service.  The term “specified employee” means
a payee who, as of the date of separation from service, is a “key employee” of
the Company or a subsidiary of the Company.  A payee is a “key
employee” if the payee meets the requirements of section 416(i)(1)(A)(i), (ii)
or (iii) of the Code (applied in accordance with the regulations thereunder and
disregarding section 416(i)(5)) at any time during the twelve-month period
ending on a December 31st.  If
a payee is a “key employee” on that date, the payee is treated as such and
therefore is a “specified employee” for the entire twelve-month period beginning
on the April 1st
following the December 31st as of
which key employee status is determined.

    


    SECTION XVI -
AMENDMENT,

    MODIFICATION, SUSPENSION OR
TERMINATION

    


    A. General. The Company
reserves the right, by and through the Board of Directors, to amend, suspend or
terminate all or any part of the Plan at any time; provided, that no such
amendment, suspension or termination shall adversely affect the amounts or
shares then credited to any Deferred Cash Compensation Account or to any
Deferred Stock Compensation Account.

    


    B. Termination Incident to
Change in Control Event. If this Plan is terminated within thirty days
preceding or the twelve months following a Change in Control Event (as defined
below),  distributions shall be made in one lump sum thirty days after
the later of the Change in Control Event or the action providing for Plan
termination, as the case may be. For purposes of this provision, accelerated
distribution is only permitted if substantially all
similar arrangements that the Company sponsors are terminated in a manner that
requires participants in such arrangements to receive all amounts of
compensation deferred under the terminated arrangements within twelve months of
the date of termination of the arrangements.

    


    
      
        
        

      

      
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    A Change in Control Event is any of the
following:

    


    "(1) A
change in ownership of the Company, which is deemed to occur when an acquisition
by any one person, or more than one person acting as a group (as defined in 26
CFR 1.409A-3(i)(5)(v)(B)) acquires ownership of stock of the Company that taken
together with stock held by such person or group constitutes more than 50% of
the total voting power or total fair market value of the Company's stock then
outstanding.

    


    (2) A
change in the effective control of the Company, which is deemed to occur when
(i) any one person, or more than one person acting as a group (as determined
under 26 CFR 1.409A-3(i)(5)(v)(B)) 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 the Company possessing 30%  or more
of the total voting power of such stock or (ii) a majority of the Company'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.

    


    (3) A
change in the ownership of a substantial portion of the Company's assets, which
is deemed to occur on the date that any one person or more than one person
acting as a group (as determined under 26 CFR 1.409A-3(i)(5)(v)(B) 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 the Company 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 the Company immediately prior to such acquisition
or acquisitions."

    


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

     

    C.   Other Terminations.
If this Plan is terminated for reasons other than as provided above, the Board
of Directors may authorize accelerated distributions only if (i) all
arrangements that the Company sponsors that would be aggregated with this Plan
under regulations promulgated under section 409A of the Internal Revenue Code of
1986, as amended, are terminated, (ii)no payments other than payments that would
be payable under the Plan if the termination had not occurred are made within
twelve months of the termination, (iii) all payments are made within twenty-four
months of the termination; and (iv) the Company does not adopt a new arrangement
that would be aggregated with this Plan under regulations promulgated pursuant
to section 409A if any person participated in this Plan and such new arrangement
at any time within five years following the date of termination.

    


    SECTION XVII - GOVERNING
LAW; PRONOUNS

    


    Except to the extent pre-empted by
Federal law, the provisions of the Plan shall be construed, administered and
enforced in accordance with the domestic internal law (but not the law of
conflicts of law) of the Commonwealth of Pennsylvania.  Each
masculine, feminine or neuter pronoun used herein shall be deemed a reference to
each other gender, as the content requires.

    


    SECTION XVIII - RESTATEMENT;
EFFECTIVE DATE

    


    This Plan is an amendment and
restatement effective as of January 1, 2005, of the Company's Deferred
Compensation Plan for Non-Employee Directors. This Plan as amended and restated
herein was approved by the Board of Directors on November 23, 2005.

    


    The Plan originally was adopted by the
Board of Directors effective January 1, 1995 and was subsequently amended or
amended and restated from time to time.

    


    The Plan as amended and restated herein
shall continue in effect for a term through December 31, 2016, provided it is
approved by the Company's shareholders at the 2006 Annual Meeting unless sooner
terminated under Section XVI.  If the Plan is not approved by
shareholders at the 2006 Annual Meeting, it shall terminate on December 31,
2006, unless sooner terminated under Section XVI.

    



    
      
         


      

      
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