LONG-TERM INCENTIVE COMPENSATION PLAN

EXHIBIT 10.3

NATIONAL PENN BANCSHARES, INC.

STOCK OPTION AGREEMENT
BETWEEN

NATIONAL PENN BANCSHARES, INC.

AND

_______________________

(the Optionee)

NON-QUALIFIED

STOCK OPTION AGREEMENT

This Stock Option Agreement dated December 2, 2008, between National Penn Bancshares, Inc. (the "Corporation") and ___________ (the "Optionee"),

WITNESSETH:

1.            Grant of Option

Pursuant to the National Penn Bancshares, Inc. Long-Term Incentive Compensation Plan (the "Plan"), this Agreement confirms the Corporation's grant to the Optionee, subject to the terms and conditions of the Plan and subject further to the terms and conditions herein set forth, of the right and option to purchase from the Corporation all or any part of an aggregate of ____________ common shares (without par value) of the Corporation at the purchase price of $_______ per share, such option to be exercised as hereinafter provided.

2.            Terms and Conditions

It is understood and agreed that the option evidenced hereby is subject to the following terms and conditions:

(a)            Expiration Date .  Subject to the provisions of Paragraph 2(d), the option evidenced hereby shall expire on January 2, 2019 [10 years and one month from the date of grant].

(b)            Exercise of Option .  The Optionee shall have a cumulative vested interest in the right to exercise an option granted hereby, determined by reference to his or her continuous employment with the Corporation and/or a subsidiary following the date of grant of the option, as follows:

Period of Continuous                                                                                                           Cumulative Vested

Employment Following Grant                                                                                                    Percentage

Less than 1 year                                                                                                               -0-

1 year or more                                                                                                               20.0

2 years or more                                                                                                             40.0

3 years or more                                                                                                             60.0

4 years or more                                                                                                             80.0

5 years or more                                                                                                           100.0

To the extent the application of the above vesting schedule would at any time result in the right to acquire a fractional share, the right to acquire such fractional share shall be deferred to the next vesting period.

This option may be exercised, to the extent exercisable by its terms, in whole or from time to time in part at any time prior to the expiration hereof.  Any exercise shall be accompanied by a written notice to the Corporation specifying the number of shares as to which the option is being exercised.

(c)            Payment of Purchase Price Upon Exercise .  The option exercise price for the shares as to which this option shall be exercised shall be paid in cash or as otherwise permitted by the Plan and the Committee.

(d)            Exercise Upon Death, Disability, Retirement or other Termination of Employment .

(1)           If the Optionee's employment with the Corporation or a subsidiary terminates due to death, Disability (as defined in the Plan) or Retirement (as defined in the Plan and also including a voluntary termination of employment at age 60 or more), or if the Company or a subsidiary terminates the Optionee’s employment not for Cause (as defined in the Plan), this option (whether or not exercisable by the Optionee immediately prior to ceasing to be an employee) will be exercisable at any time prior to the expiration date of this option or within five years after the date of termination of employment, whichever is the shorter period.

(2)           If the Optionee voluntarily terminates employment not qualifying as Retirement (as provided in Paragraph 2(d)(1)) hereof), this option, if and to the extent not yet exercisable, will terminate, and if and to the extent then exercisable, may be exercised by the Optionee at any time prior to the expiration date of this option or within three months after the date of termination of employment, whichever is the shorter period.

(3)