Document:

Exhibit 10.1

    EXHIBIT
      10.1

    SCHEDULE
      B 

    

    NATIONAL
      PENN BANCSHARES, INC.

    EXECUTIVE
      INCENTIVE PLAN

    2007
      PERFORMANCE GOALS AND AWARD SCHEDULE

    

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

    

    
      	
              Company
                Portion

            
	
              2007
                Earnings Per Share

            
	 	 	 	 	 	 	 	 	 
	 	 	
              Threshold

              (0%)

            	 	
              Market/Budget
                Target 

              (4%)

            	 	
              Stretch
                Target

              (8%)

            	 	
              Optimum
                

              (12%)

            
	 	 	
              $1.33

            	 	
              $1.38

            	 	
              $1.44

            	 	
              $1.49

            
	 	 	 	 	 	 	 	 	 
	
              Category

            	 	
              %
                of Base Salary

            
	
              A

            	 	
              17.5%

            	 	
              35.0%

            	 	
              50%

            	 	
              60%

            
	
              B

            	 	
              13.1%

            	 	
              24.1%

            	 	
              33.8%

            	 	
              40%

            
	
              C

            	 	
              10.5%

            	 	
              17.5%

            	 	
              24%

            	 	
              28%

            
	 	 	
               

              Individual
                Portion

            
	
              B
                & C

            	 	
              0%-10%

            	 	
              0%-15%

            	 	
              0%-20%

            	 	
              0%-20%

            

    

    

    

    Parameters:

     

    
      	q  	
              No
                awards will be paid for performance under threshold EPS of
                $1.33.

            

    

     

    
      	q  	
              After
                the total Company Portion award is determined an additional 5% of
                the
                total is available for distribution to individuals in Categories
                B & C
                for Individual Performance up to Market/Budget Target. From Market/Budget
                Target to Stretch Target it increases to 10%. Above Stretch Target
                the
                pool will be 20%. These individual awards may not exceed 10%, 15%,
                or 20%,
                respectively, of the participant’s base pay. Category A participants are
                eligible for an additional award for individual performance not to
                exceed
                20% of the participant’s Company Portion award. This award is determined
                solely by the Compensation Committee of the Board of Directors with
                ratification by the full Board and will only apply once EPS performance
                meets or exceeds the Market/Budget
                Target.

            

    

     

    
      	q  	
              Awards
                for performance between Threshold, interim Targets, and Optimum will
                be
                interpolated. 

            

    

     

    
      	q  	
              Performance
                above Optimum will result in increased awards interpolated at one
                half the
                rate of increase between Stretch Target and
                Optimum.

            

    

     

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

            

    

     

    
      	q  	
              In
                certain circumstances an individual participant’s performance may be
                determined to be inadequate and the participant would not receive
                any
                award under this plan, including the award calculated for company
                performance.

            

    

    

    Individual
      Matching Account - For
      2007 the
      Individual Matching Deferral Account will be established at 10% of each
      individual’s award as determined in the above schedule from Threshold to
      Market/Budget Target. The percentage will then increase to 20% from
      Market/Budget Target to Stretch Target. It will increase to 33% at Stretch
      Target and above.Exhibit 10.2

    EXHIBIT
      10.2

     

    

    Performance-Restricted
      Restricted Stock 

    Or
      Restricted Stock Units-Performance Goals - 2007  

     

     

    
      	Number
              of Shares of
              Restricted  	 	 	 	 	 
	 Stock
              or Restricted Stock Units
              (RSUs)	 	 	 	 	 
	 	 	
              National
                Penn

            	
               

            	
              National
                Penn

            	
               

            
	
               

            	
               

            	
              Bancshares

            	
               

            	
              Bank

            	
               

            
	
              Performance
                Goals

            	
               

            	
              Directors
                 

            	
               

            	
               Directors 

            	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	
              Threshold
                - $1.33 per share

            	 	 	
              400

            	 	 	
              100

            	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	
              Market/Budget
                Target - $1.38 per share

            	 	 	
              900

            	 	 	
              225

            	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	
              Stretch
                Target - $1.44 per share

            	 	 	
              1,000

            	 	 	
              250

            	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	
              Optimum
                - $1.49 per share

            	 	 	
              1,100

            	 	 	
              275

            	 

    

     

    ______________________

     

    These
      performance goals are consistent with the performance goals established
      under the
      National Penn Bancshares, Inc. Executive Incentive Plan.Unassociated Document

    EXHIBIT
      10.1 

     

    FORM
      OF

     

    CONSULTING
      AGREEMENT

     

    THIS
      CONSULTING AGREEMENT is entered into this _______ day of _______________, 200_,
      by and between COMMUNITY BANKS, INC., a Pennsylvania corporation (the
“Company”), and ROGER A. NICKOL, an individual residing in York County,
      Pennsylvania (“Nickol”). 

     

    BACKGROUND:

    

    A. Nickol
      has most recently served as the chief executive officer of East Prospect State
      Bank (“East Prospect”).

     

    B. On
      _____________, 200_ East Prospect merged with and into CommunityBanks, the
      banking subsidiary of the Company (the “Merger”), pursuant to an Agreement and
      Plan of Merger by and among the Company, CommunityBanks and East Prospect dated
      September 12, 2006 (“Merger Agreement”). 

     

    C. At
      the
      request of the Company, Nickol has advised the Company that he is willing to
      serve in the capacity of an independent contractor consultant in order to
      facilitate the smooth transition and assimilation of the operations and customer
      relationships of East Prospect with those of CommunityBanks. 

     

    D. The
      parties wish to set forth the terms and conditions of Nickol’s consulting
      arrangement with the Company. Initially capitalized terms used, but not defined,
      in this Agreement shall have the same meanings as in the Merger
      Agreement.

     

    NOW,
      THEREFORE, in consideration of the premises, and intending to be legally bound
      hereby, the parties agree as follows: 

     

    1.
       Retention
      of Nickol and Duties.
      Commencing on the Effective Date of the Merger and continuing through the second
      anniversary of the Effective Date (“Consulting Period”), the Company shall
      retain Nickol to serve it in the capacity of a consultant and an independent
      contractor. During the Consulting Period, Nickol shall be responsible to use
      his
      best efforts to develop new customer business for the Company and its
      subsidiaries, retain the existing business relationships of East Prospect,
      promote the corporate image of the Company in the market heretofore served
      by
      East Prospect and engage in such additional duties as may reasonably be
      requested by the Board of Directors of the Company (the “Board”). Nickol shall
      report, and otherwise be answerable, to the Chairman of the Board (the
“Chairman”); provided, however, that neither the Chairman, nor the Board as a
      whole, shall be entitled to direct Nickol as to the means and methods he must
      use to carry out his duties under this section. 

     

    2.
       Term.
      The
      term of this Agreement shall commence the moment immediately following the
      Merger and continue for a period of two years thereafter, unless earlier
      terminated pursuant to Section 6. 

     

    3.
       Time
      Requirements of Consulting.
      During
      the Consulting Period, Nickol agrees to devote such time to his consulting
      duties hereunder as may reasonably be required to discharge the same; provided,
      however, that in no event shall he be required, on average, to render consulting
      services 

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    in
      excess
      of 15 hours per week. During the Consulting Period, Nickol (or any individual
      or
      business controlled by or affiliated with him) may render services to other
      business entities as he desires, provided the rendering of such services does
      not materially interfere with the discharge of his consulting duties hereunder
      and does not otherwise violate the provisions of Sections 7 and 8. With due
      regard to the duties assigned to him and the reasonable timeframes given to
      him
      to perform such duties, Nickol shall be free to take such time off for vacation
      or otherwise as he desires; provided, however, that as a matter of courtesy,
      he
      agrees to give 20 days prior notice to the Chairman of any material period
      of
      time that he plans on being unavailable to render services hereunder.

     

    4.
       Compensation
      and Related Matters.
      During
      the term hereof, the Company agrees to pay Nickol compensation at an annualized
      rate of $100,000, at such times as the Company pays its exempt employees their
      salaries. 

     

    5.
       Expenses.
      During
      the term hereof, the Company shall promptly reimburse Nickol for all
      out-of-pocket expenses, including automobile mileage expenses, reasonably
      incurred by him in connection with the discharge of his duties hereunder. Such
      obligation of expense reimbursement shall not exist until Nickol shall have
      submitted such detailed information regarding such expenses as the Company
      requires of its employees and consultants generally. 

     

    6.
       Early
      Termination of Agreement.
      Notwithstanding anything herein to the contrary, the following provisions shall
      govern the termination of this Agreement prior to the otherwise scheduled
      expiration of its term set forth in Section 2. 

     

    (a)
       Death.
      This
      Agreement shall terminate immediately upon the death of Nickol. In such event,
      the Company shall forthwith pay or continue to pay, as provided in Section
      13(b)
      and at the time otherwise due (i) a pro rata portion of his compensation earned
      through the date of death under Section 4 and (ii) expenses incurred by him
      but
      not yet reimbursed pursuant to Section 5. 

     

    (b)
       Disability.
      This
      Agreement shall terminate upon the good faith determination by the Board, after
      consultation with a physician mutually satisfactory to the parties or their
      representatives, that Nickol has incurred a “permanent and total disability,” as
      such term is defined in Section 22(e)(3) of the Internal Revenue Code of 1986,
      as amended (the “Code”). In such event, the Company shall forthwith pay or
      continue to pay to him (or his surviving spouse or estate, as provided in
      Section 13(b), if appropriate) at the time otherwise due (i) a pro rata portion
      of his compensation earned through the date of termination under Section 4
      and
      (ii) expenses incurred by him but not yet reimbursed pursuant to Section 5.
      

     

    (c)
       Cause.
      The
      Board may terminate this Agreement for Cause. For purposes of this section,
      the
      term “Cause” shall mean (i) the willful refusal by Nickol to discharge duties
      reasonably assigned to him pursuant to the provisions of this Agreement after
      written notice to Nickol and the failure of Nickol to resume the discharge
      of
      such duties within 30 days after such notice, (ii) the material breach of any
      of
      the provisions of Sections 7 or 8 or (iii) the incarceration of Nickol for
      a
      period of at least 45 days. In such event, the Company shall forthwith pay
      to
      him solely (iv) a pro rata portion of his compensation earned through the date
      of termination under Section 4 and (v) expenses incurred by him but not yet
      reimbursed pursuant to Section 5. 

     

    (d)
       Without
      Cause.
      In the
      event the Board terminates this Agreement without Cause prior to its scheduled
      expiration date, the Company shall forthwith pay to Nickol, in one lump sum
      (and
      without discount), an amount equal to (i) all amounts that would otherwise
      have
      been paid under 

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    Section
      4
      had the Agreement not been so terminated and (ii) expenses incurred by him
      but
      not yet reimbursed pursuant to Section 5. 

     

    (e)
       Voluntary
      Termination by Nickol Without Company Breach.
      In the
      event Nickol voluntarily terminates the relationship created by this Agreement,
      other than by reason of a material breach of the same by the Company, the
      Company shall forthwith pay him (i) a pro rata portion of his compensation
      earned through the date of termination under Section 4 and (ii) expenses
      incurred by him but not yet reimbursed pursuant to Section 5. Notwithstanding
      the foregoing, Nickol shall remain bound by the provisions of Sections 7 and
      8.

     

    (f)
       Voluntary
      Termination by Nickol Following Company Breach.
      In the
      event Nickol voluntarily terminates the relationship created by this Agreement
      by reason of a material breach of this Agreement by the Company, the Company
      shall forthwith pay, in one lump sum (and without discount), an amount equal
      to
      (i) all amounts that would otherwise have been paid under Section 4 had he
      not
      so terminated and (ii) expenses incurred by him but not yet reimbursed pursuant
      to Section 5. Notwithstanding the foregoing, Nickol shall remain bound by the
      provisions of Sections 7 and 8. 

     

    7.
       Covenants. 

     

    (a)
       Covenants.
      Nickol
      hereby acknowledges and recognizes the highly competitive nature of the business
      of the Company and its affiliated companies and accordingly agrees that, during
      the term of this Agreement (as specified in Section 2) and for a period of
      one
      year thereafter, he shall not: 

     

    (i)
      be
      engaged, directly or indirectly, either for his own account or as agent,
      consultant, employee, partner, officer, director, proprietor, investor (except
      as an investor owning less than 5% of the stock of a publicly owned company)
      or
      otherwise of any person, firm, corporation, or enterprise engaged, in any line
      of business in which the Company or any of its affiliated companies are engaged
      during the term of this Agreement through the date of his termination hereunder
      (the “Protected Businesses”), in any state in which the Company or any of its
      affiliated companies is licensed to do, or otherwise legally engages in,
      business (the “Non-Competition Area”); 

     

    (ii)
      provide financial or other assistance to any person, firm, corporation, or
      enterprise engaged in a Protected Business in the Non-Competition Area;

     

    (iii)
      solicit current or former customers of the Company or any of its affiliated
      companies in the Non- Competition Area; or 

     

    (iv)
      solicit for hire or otherwise hire current or former employees of the Company
      or
      any of its affiliated companies. 

     

    (b)
       Judicial
      Cut-Back.
      It is
      expressly understood and agreed that, although Nickol and the Company consider
      the restrictions contained in Section 7(a) reasonable for the purpose of
      preserving for the Company and its affiliated companies their good will and
      other proprietary rights, if a final determination is made by a court or
      arbitrator having jurisdiction that the time or territory or any other
      restriction contained in Section 7(a) is an unreasonable or otherwise
      unenforceable restriction against Nickol, the provisions of Section 7(a) shall
      not be rendered void but shall be deemed amended to apply as to such maximum
      time and territory and to such other extent as such court or arbitrator may
      determine or indicate to be reasonable. 

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    8.
       Unauthorized
      Disclosure.
      During
      the term of this Agreement, or at any later time, Nickol shall not, without
      the
      written consent of the Board or a person authorized thereby, knowingly disclose
      to any person, other than an employee of the Company or a person to whom
      disclosure is reasonably necessary or appropriate in connection with the
      performance by Nickol of his duties hereunder, any material confidential
      information obtained by him while rendering services to or on behalf of the
      Company with respect to any of the Company’s or any of its affiliated companies’
services, products, improvements, formulas, designs or styles, processes,
      customers, methods of business or any business practices the disclosure of
      which
      could be or will be damaging to the Company or any of its affiliated companies;
      provided, however, that confidential information shall not include any
      information known generally to the public (other than as a result of
      unauthorized disclosure by Nickol or any person with the assistance, consent
      or
      direction of Nickol) or any information of a type not otherwise considered
      confidential by persons engaged in the same business or a business similar
      to
      that conducted by the Company or its affiliated companies, or any information
      that must be disclosed as required by law. 

     

    9.
       Notices.
      Any
      notice required or permitted to be given under this Agreement shall, to be
      effective hereunder, be given to the Company, in the case of notices given
      by
      Nickol, and be given by the Company, in the case of notices given to Nickol.
      Any
      such notice shall be deemed properly given if in writing and if mailed by
      registered or certified mail, postage prepaid with return receipt requested,
      to
      the last known residence of Nickol, in the case of notices to Nickol, and to
      the
      principal executive office of Company, in the case of notices to Company.

     

    10.
       Waiver.
      No
      provision of this Agreement may be modified, waived, or discharged unless such
      waiver, modification, or discharge is agreed to in writing and signed by Nickol
      and an executive officer of the Company specifically designated by the Board
      for
      such purpose. No waiver by any party hereto at any time of any breach by the
      other party hereto of, or compliance with, any condition or provision of this
      Agreement to be performed by such other party shall be deemed a waiver of
      similar or dissimilar provisions or conditions at the same or at any prior
      or
      subsequent time. 

     

    11.
       Assignment.
      This
      Agreement shall not be assignable by any party hereto, except by the Company
      to
      any successor in interest to its business. 

     

    12.
       Entire
      Agreement.
      This
      Agreement contains the entire agreement of the parties relating to the subject
      matters of this Agreement, and it supersedes all prior written or unwritten
      understandings between the parties (or between East Prospect and Nickol) with
      respect to such subject matters. 

     

    13.
       Successors,
      Binding Agreement. 

     

    (a)
      The
      Company will 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 the Company to expressly assume and agree to perform this
      Agreement in the same manner and to the same extent that the Company would
      be
      required to perform if no such succession had taken place. Failure by the
      Company to obtain such assumption and agreement prior to the effectiveness
      of
      any such succession shall constitute a material breach of this Agreement. As
      used in this Agreement, the “Company” shall mean the Company as hereinbefore
      defined and any successor to the business and/or assets of the Company as
      aforesaid which assumes and agrees to perform this Agreement by operation of
      law, or otherwise. 

     

    (b)
      This
      Agreement shall inure to the benefit of and be enforceable by Nickol’s personal
      or legal representatives, executors, administrators, heirs, distributees,
      devisees, and legatees, as appropriate. If Nickol should die while any amount
      or
      benefit would be payable to him under this 

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    Agreement
      if he had continued to live, all such amounts and benefits, unless otherwise
      provided herein, shall be paid in accordance with the terms of this Agreement
      to
      his surviving spouse, if any, and, if there is no surviving spouse, to his
      estate. 

     

    14.
       Legal
      Expenses.
      The
      Company shall pay to Nickol (or his surviving spouse or estate) all reasonable
      legal fees and expenses when incurred by Nickol (or his surviving spouse or
      estate) in seeking to obtain or enforce any right or benefit provided by this
      Agreement; provided he (or his spouse or estate) prevails with respect to any
      material issue in dispute. 

     

    15.
       Validity.
      The
      invalidity or unenforceability of any provision of this Agreement shall not
      affect the validity or enforceability of any other provision of this Agreement,
      which shall remain in full force and effect. 

     

    16.
       Applicable
      Law.
      This
      Agreement shall be governed by and construed in accordance with the domestic
      internal laws (but not the law of conflict of laws) of the Commonwealth of
      Pennsylvania. 

     

    17.
       Headings.
      The
      headings of the sections, subsections and paragraphs of this Agreement are
      for
      convenience only and shall not control or affect the meaning or construction
      or
      limit the scope or intent of any of the provisions of this Agreement.

     

    IN
      WITNESS WHEREOF, the parties hereto have executed, or cause to be executed,
      this
      Agreement as of the day and year first above written. 

     

    
      	
              COMMUNITY
                BANKS, INC.

               

               

              By:      

              Eddie
                L. Dunklebarger, Chairman, President and CEO

            	 	
              WITNESS:

               

               

              ________________________________

              Name:

              Title:

            
	 	 	 
	
               

               

               

              ________________________________

              Roger
                A. Nickol

            	 	
              WITNESS:

               

               

              _________________________________

              Name:

              Title:

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