EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is being made this 14th day of November, 2005, by and
between KEYSTONE NAZARETH BANK & TRUST COMPANY, a Pennsylvania corporation
(“Employer”), and G. ALLEN WEISS (“Employee”).

RECITALS

WHEREAS, Employee is a principal and shareholder of Paragon Group, Inc.
(“Paragon”); and

WHEREAS, Employer is acquiring all of the issued and outstanding stock of
Paragon under the terms set forth in the Parties’ Agreement and Plan of Merger;
and

WHEREAS, Employer desires to assure continuity of operations by continuing the
employment of Employee pursuant to the terms and conditions of this Agreement;
and

WHEREAS, Employee represents and warrants to Employer that he is free to accept
employment hereunder and that he has no prior or other obligations or
commitments of any kind that would in any way hinder or interfere with his
acceptance of, or the full performance of such employment; and

NOW, THEREFORE, in consideration of the foregoing, the mutual agreements,
covenants and provisions herein contained, and intending to be legally bound
hereby, the parties agree as follows:

ARTICLE I

Employment

Section 1.1 — Employment. Employer hereby employs Employee and Employee hereby
accepts such employment under the terms and conditions set forth in this
Agreement.

Section 1.2 — Position, Duties, Authority.

(a) During the Term of this Agreement, Employee shall serve on a full-time basis
and devote his entire working time, attention, and energy as President of KNBT
Wealth Management Division in Employer’s Office of the President. Employee, as
President of KNBT Wealth Management Division, shall perform such executive,
managerial, administrative, and other duties as are from time to time assigned
to him by Employer and which are consistent with this position.

(b) Employee shall have such authority and responsibilities as are customarily
incident to his position as President of KNBT Wealth Management Division,
consistent with all applicable laws and the Corporate Charter and Bylaws of
Employer. Employee agrees that he will faithfully, diligently, and to the best
of his abilities perform all of the duties that may be required of him pursuant
to the terms of this Agreement.

(c) Both during and after the employment Term, Employee shall cooperate fully
with Employer and with any legal counsel, expert, or consultant it may retain to
assist it in connection with any judicial proceeding, arbitration,
administrative proceeding, governmental investigation or inquiry, or internal
audit in which Employer may be or become involved, including full disclosure of
all relevant information and truthfully testifying on Employer’s behalf in
connection with any such proceeding or investigation.

Section 1.3 — Outside Employment and Activities. Employee may not enter into or
continue any employment or render any service for compensation or remuneration
to any person or entity, except Employer, during Employee’s employment with
Employer, without the prior, express written consent of Employer’s President and
Chief Executive Officer. Additionally, Employee shall not hold office in or
serve as a member of the Board of Directors with or for any other entity or
organization, even without compensation or remuneration, if, in the sole
judgment of Employer, such service would or might interfere with Employee’s
duties and/or responsibilities to Employer or conflict in any way with
Employer’s interests. Should Employee wish to engage in any other employment or
to provide services to any other person or entity other than Employer or to hold
office in or serve on the Board of Directors of any other entity or
organization, Employee shall submit a written request to Employer’s President
and Chief Executive Officer.

ARTICLE II

Term

Section 2.1 — Initial Term. This Agreement shall be deemed as effective and the
Term of Employee’s employment shall begin as of the Effective Date, as defined
in the Agreement and Plan of Merger dated November 14, 2005, between Employer
and Paragon, and shall continue for a period of three (3) years (the “Initial
Term”), unless earlier terminated in accordance with the terms of this
Agreement.

Section 2.2 — Successor Terms. Subject to the subsequent provisions, upon the
expiration of the second twelve (12) full calendar month period after the date
first above written, the term hereof shall be extended for another twelve
(12) full calendar months, and upon expiration of each subsequent twelve
(12) full calendar months thereafter, the term of this Agreement shall be
likewise extended for an additional twelve (12) full calendar months. Such
extension of this Agreement’s term shall be automatic unless written notice is
given by either party not later than three (3) months before the expiration of
the then current twelve (12) months. Each reference in this Agreement to the
“Term” of this Agreement shall include the Initial Term and each extension
thereof, if any.

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ARTICLE III

Compensation

Section 3.1 — Base Salary.

(a) For all of the services rendered by Employee, Employer shall pay Employee a
base salary of One Hundred Sixty Thousand Dollars ($160,000) for each full year
of the Initial Term (such annual compensation and any increases thereto referred
to as “Base Salary”), less withholdings required by law and deductions
authorized by Employee. The Base Salary shall be paid in installments at such
times as Employer customarily pays other employees holding comparable positions,
but no less often than monthly.

(b) If the Term of this Agreement is extended, the parties hereto shall mutually
agree on a Base Salary for each additional year of the Term; however, the Base
Salary for each additional year shall not be less than the Base Salary for the
preceding year.

Section 3.2 – Stock Options. Employee shall be granted a stock option for Ten
Thousand (10,000) shares of the common stock of KNBT Bancorp, Inc., pursuant to
Employer’s Stock Option Plan.

Section 3.3 – Non-Competition Covenant Consideration. In exchange for Employee’s
promises and agreements set forth in Sections 6.5 and 6.6 hereunder, Employer
shall pay Employee Two Hundred Forty Thousand Eighty-Six Dollars ($240,086).
This amount shall be paid to Employee, in a lump sum on the date of the Closing
of the Agreement and Plan of Merger; provided, however, that, in the event
Employee terminates this Agreement and his employment hereunder at any time
during the Initial Term, he shall immediately be obligated to reimburse Employer
for the pro-rata share of this Non-Competition Covenant Consideration pro-rated
from the date of execution of this Agreement to the effective date of
termination.

ARTICLE IV

Termination

Section 4.1 — Grounds for Termination.

(a) Termination Upon Death. Employee’s employment and any and all rights of
Employee under this Agreement shall terminate immediately upon the death of
Employee.

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(b) Termination Because of Incapacity.

  (i)   In the event that Employee is unable fully to perform the essential
functions, duties and responsibilities of his position hereunder, with or
without reasonable accommodation, due to physical or mental illness, injury or
incapacity, for a continuous period of more than three (3) months, or is
determined to be disabled under Employer’s insured long-term disability plan, if
any, and is also determined to be entitled to disability benefits thereunder,
all as determined in good faith by Employer, after consultation with a qualified
physician selected by Employer, Employer may terminate Employee’s employment
hereunder. If Employer shall so act, then any and all rights Employee may have
under this Agreement or otherwise as an employee of Employer shall terminate,
and Employer shall have no further liability or obligation to Employee for
compensation hereunder; provided, however, that Employee will be entitled to
receive the payments prescribed under Employer’s long-term disability benefit
plan, if any, under which he was covered during the period of his employment by
Employer. Notwithstanding the foregoing, Employee shall not be deemed terminated
by reason of disability nor shall Employee’s Base Salary as set forth in
Section 3.1 hereof cease unless and until Employee has received written notice
from Employer at least thirty (30) days prior to Employer’s intended date of
termination stating (i) Employer’s intent to terminate Employee by reason of
disability, and (ii) Employer’s intended date of such termination.

  (ii)   If Employee shall resume his duties within thirty (30) days after
receipt of such notice of termination and continue to perform the essential
functions, duties and responsibilities of his position for three (3) consecutive
months thereafter, this Agreement shall continue in full force and effect,
without any reduction in Base Salary or other benefits, and the notice of
termination shall be considered null and void and of no effect.

(c) Termination by Employer for Cause. This Agreement shall terminate upon
written notice by Employer to Employee that Employee has been terminated for
“Cause.” “Cause” shall mean:

  (i)   material failure to perform his assigned duties under this Agreement,
other than any failure resulting from the Employee’s incapacity due to physical
or mental injury or illness;

  (ii)   commission of an act involving moral turpitude in the course of his
employment with the Employer;

  (iii)   engaging in misconduct resulting in material harm to the Employer;

  (iv)   breaching his fiduciary duties for personal profit;

  (v)   material violation, in any material respect, of any law, rule,
regulation (other than traffic violations or similar offenses), written
agreement or final cease-and desist order with respect to his performance of
services for the Employer, as determined by the Board of Directors of Employer;
or

  (vi)   a material breach of the terms of this Agreement and a failure to cure
such material breach during a 30-day period following the date on which the
Employer gives written notice to the Employee of the material breach.

(d) Termination by Notice. In accord with Section 2.2, this Agreement may be
unilaterally terminated by Employer or Employee by giving written notice to the
other party at least three (3) months prior to the expiration of: (i) the second
twelve-month period of the Initial Term; or (ii) if after completion of the
Initial Term, the then current twelve (12) month term.

(e) Termination Without Cause. If Employee is discharged by Employer for any
reason other than those enumerated in this Section 4.1(a)-(d), (including,
without limitation, a discharge after the effective date of a Change of
Control), such discharge shall be deemed a “termination without cause.”

(f) Change of Control of Employer. (i) If a Change in Control (as herein
defined) shall occur and if following the Date of Change in Control (as defined
herein): the Employee is involuntarily terminated without cause within twelve
(12) months of the Date of Change of Control; the Employee voluntarily
terminates his employment within twelve (12) months of the Date of Change of
Control because he determines in his sole discretion that he cannot effectively
work with the management team of the resulting entity; or the Employee
voluntarily terminates his employment at any time during the Term of this
Agreement because there shall be:

  (1)   any failure by the acquiring person or entity to offer employment to
Employee as of the Date of Change in Control (as defined herein), in a position
having substantially similar responsibilities, compensation and benefits as
Employee received immediately prior to the Change in Control (as defined
herein); or

  (2)   the assignment to Employee of duties substantially inconsistent with
Employee’s office on the date of the Change in Control or as the same may be
increased from time to time after the Change in Control; or

  (3)   any reassignment of Employee to a location greater than thirty
(30) miles from the location of Employee’s office on the date of the Change in
Control; or

  (4)   any reduction in Employee’s Base Salary in effect on the date of the
Change in Control or as the same may be increased from time to time after the
Change in Control, without Employee’s written consent or except in cases of
national financial depression or emergency when the Board of Directors of
Employer has implemented such reductions for the senior management of Employer;
or

  (5)   any failure to provide Employee with benefits that are substantially
similar or more favorable as those enjoyed by Employee under any of Employer’s
retirement or pension, life insurance, medical, health and accident, disability
or other employee benefit plans in which Executive participated at the time of
the Change in Control, or the taking of any action that would materially reduce
any such benefits in effect at the time of the Change in Control,

then at the option of Employee, exercisable by Employee within sixty (60) days
of the occurrence of any of the foregoing events, Employee may resign from
employment with Employer (or, if involuntarily terminated, give notice of
intention to collect benefits under this Agreement) by delivering a notice in
writing (the “Notice of Termination”) to Employer and the provisions of
Section 4.2(e) shall apply.

(ii) A change in control (other than one occurring by reason of an acquisition
of the Employer by Employee) shall be deemed to have occurred if the Board of
Directors of the Employer certifies that one of the following has occurred:

  (1)   the direct or indirect sale, lease, exchange, or other transfer of all
or substantially all (50% or more) of the assets of Employer to any individual,
corporation, partnership, trust, or other entity or organization (a “Person”) or
group of Persons acting in concert as a partnership or other group, other than a
Person controlling, controlled by, or under common control with Employer;

  (2)   the merger, consolidation, or other business combination of Employer
with or into another corporation other than a corporation controlling,
controlled by, or under common control with Employer; or

  (3)   a new entity other than a corporation controlling, controlled by, or
under common control with Employer becomes the owner of Employer; or

  (4)   the replacement of a majority of the Board of Directors of Employer,
over any period of one year or less, from the directors who constituted the
Board of Employer at the beginning of such period.

(iii) The Date of the Change of Control shall be

  (1)   the date of the closing of an Agreement, transferring all or
substantially all of Employer’s assets; or

  (2)   the date on which individuals who formerly constituted a majority of the
Board of Directors of Employer under Section 4.1(f)(ii)(4) hereof, ceased to be
a majority, or

  (3)   the date on which a merger, consolidation or business combination is
consummated, as applicable; or

  (4)   the date on which a merger, consolidation or business combination is
consummated, as applicable.

Section 4.2 — Effect of Termination or Change of Control.

(a) General Provisions. Upon the termination of this Agreement for any reason
specified in Section 4.1 above, except for a termination without cause:

  (i)   Effective upon the date of termination: Employee’s Duties will cease;
Employee will be deemed to have given his resignation as an employee of Employer
and from all offices then held by him, including, if applicable, as a director
of Employer, and will immediately provide Employer with written, signed
confirmation of same; other than a termination for cause;

  (ii)   The obligation of Employer to pay Base Salary as provided in
Section 2.1 hereof will cease effective upon the date of termination, provided
that Employee shall be paid for services rendered through the date of
termination;

  (iii)   Employer will reimburse Employee for all properly reimbursable
expenses incurred through the date of termination; and

  (iv)   Any stock options granted to Employee that have not vested and been
exercised as of the date of termination of this Agreement shall lapse and be of
no further effect.

(b) Termination for Cause or By Notice. In the event that this Agreement is
terminated for “Cause” pursuant to Section 4.1(c) or by Notice pursuant to
Section 4.1(d), Employee will receive no further compensation hereunder, whether
by severance pay, salary, or otherwise, except as specifically provided in
Section 4.2(a)(iii) above.

(c) Termination Due to Death of Employee. In the event this Agreement is
terminated by reason of the death of Employee: Employee’s beneficiaries will
receive no further compensation hereunder other than the compensation due
Employee pursuant to Section 4.2(a)(ii) which shall be paid to Employee’s estate
or designated beneficiary; provided however; that any life insurance obtained by
Employer for Employee and payable to Employee’s beneficiaries shall be so paid
in accordance with any such policy.

(d) Termination Without Cause. In the event that Employer terminates Employee’s
employment either (i) “without cause” as defined in Section 4.1(e) of this
Agreement or (ii) with Notice as provided in Section 4.1(d) of this Agreement,
Employer shall pay to Employee severance benefits equal to Employee’s Base
Salary at the time of termination (minus all withholdings required by law and
authorized deductions) for the unexpired portion of the Term of this Agreement;
provided, however, in the event that Employee is given notice of non-renewal at
the end of the second twelve (12) month period of the Initial Term, the Employee
shall receive two (2) times his Base Salary. In the alternative and to the
extent that they are superior to severance benefits provided by this Agreement,
Employee shall be entitled to the same severance benefits as employees who are
members of Employer’s Office of the President.

(e) Change of Control. In the event Employee’s “termination without cause” under
Section 4.1(e) is due to a Change of Control of Employer as defined in
Section 4.1(f) or in the event the Employee terminates employment pursuant to
Section 4.1(f)(i), then, in that event only, as an alternative to the severance
benefits set forth above, Employer shall pay Employee a lump sum severance
benefit equal to twenty-four (24) months of Employee’s then current Base Salary.

ARTICLE V

Expenses, Benefits, and Other Prerequisites

Section 5.1 — Expenses. During the Term of Employee’s employment hereunder,
Employee shall receive reimbursement from Employer for all reasonable expenses
incurred by Employee in performing services hereunder, including, without
limitation, all expenses of travel and living expenses while away from home on
business at the request of or in the service of Employer, provided that such
expenses are incurred and accounted for in accordance with the standard policies
and procedures established by Employer for reimbursement of expenses.

Section 5.2 — Holidays, Vacation; Personal Days; Benefits. Employee shall be
entitled to the fringe benefits in accordance with Employer’s written policy (as
the same may be amended or changed from time to time), a current copy of which
has been supplied to Employee.

ARTICLE VI

Confidentiality, Non-Competition, and Other Employer Protections

Section 6.1 — Proprietary Information. Employee recognizes that his employment
with Employer creates a relationship of confidence and trust between himself and
Employer with respect to any information that is: (i) applicable to the business
of Employer; or (ii) applicable to the business of any client or customer of
Employer, which may be made known to him by Employer or any client or customer
of Employer, or learned by him in such context during the period of his
employment with Employer.

Employer further recognizes that all such information has commercial value in
the business in which Employer is engaged and is hereinafter called “Proprietary
Information.” By way of illustration, but not limitation, Proprietary
Information includes any and all technical and non-technical information
including customer account information, patent, copyright, trade secret,
financial, and proprietary information, techniques, sketches, drawings, models,
inventions, know-how, processes, apparatus, equipment, algorithms, software
programs, software source documents, and formulae related to the current,
future, and proposed products and services of Employer, and includes, without
limitation, its respective information concerning research, experimental work,
development, design details and specifications, engineering, financial
information, procurement requirements, purchasing, manufacturing, customer
lists, business forecasts, sales, merchandising, and marketing plans and
information. “Proprietary Information” also includes proprietary or confidential
information of any third party.

Section 6.2 — Nondisclosure of Proprietary Information. All Proprietary
Information is the sole property of Employer, its assigns, and its customers,
and Employer, its assigns, and its customers shall be the sole owner of all
patents, copyrights, maskworks, trade secrets, and other rights in connection
therewith. Employee hereby assigns to Employer any rights he may have or acquire
in such Proprietary Information. At all times, both during and after Employee’s
employment by Employer, Employee agrees to keep in confidence and trust all
Proprietary Information and not to use or disclose any Proprietary Information
or anything directly relating to it without the written consent of Employer,
except as may be necessary in the ordinary course of performing his duties as an
employee of Employer. Notwithstanding the foregoing, it is understood that, at
all such times, Employee is free to use information which is generally known in
the trade or industry, not as a result of a breach of this Agreement, and his
own skill, knowledge, know-how, and experience to whatever extent and in what
way he wishes.

Section 6.3 — Business Opportunities. During the term of this Agreement and
ceasing with the termination of this Agreement, Employee shall promptly disclose
to Employer each business opportunity of a type which, based upon its prospects
and relationship to the business of Employer, Employer might reasonably consider
pursuing. In the event that the Employee’s employment is terminated for any
reason, Employer shall have the exclusive right to participate in or undertake
any such opportunity on its own behalf without any involvement by or
remuneration to Employee. This provision shall only apply to business
opportunities existing as of the termination date. This provision shall not
apply to subsequent employment by Employee outside of the terms of the
non-compete area.

Section 6.4 — Return of Materials. Upon termination of Employee’s employment or
at the request of Employer before termination, Employee agrees to deliver to
Employer all written and tangible material in his possession incorporating
Employer’s Proprietary Information or otherwise relating to Employer’s business.

Section 6.5 — Non-Competition. Employee shall not, for a period of the later of
five (5) consecutive years from the date of signing of this Agreement or two
years from the date of any Change of Control of Employer, within a one hundred
(100) mile radius of Employer’s corporate headquarters in Bethlehem,
Pennsylvania, engage in competition with Employer. In the event Employee is
terminated under Section 4.1(d) or 4.1(e) of this Agreement, this Section shall
apply; provided, however, that termination of this non-competition covenant
shall be accelerated to the last date for which Employee receives severance
benefits pursuant to Sections 4.2(d) or 4.2(e) regardless of whether such
benefits have been paid in a lump sum or in installments.

For purposes of this Agreement, Employee shall be deemed to “engage in
competition” with Employer if he shall directly or indirectly, either
individually or as a stockholder, director, officer, partner, consultant, owner,
employee, agent, or in any other capacity, work for, consult with or otherwise
assist any person or entity engaged in the same or similar business engaged in
by Employer. Employee agrees that the restrictions imposed upon him by the
provisions of this Section are fair and reasonable considering the nature of
Employer’s business and are reasonably required for the protection of Employer.
Employee further acknowledges and agrees that there are material and valuable
benefits bestowed upon him by this Agreement and the parties’ Agreement and Plan
of Merger which constitute new, valuable and legally binding consideration for
the non-competition, non-solicitation and nondisclosure provisions herein,
including, but not limited to, the benefits conveyed in Sections 3.2 and 3.3
above.

Section 6.6 — Solicitation of Customers and Employees. Employee agrees that
during the term of this Agreement, and for a period of twelve (12) consecutive
months after termination of his employment for any reason, he shall not, except
in the course of his duties hereunder, directly or indirectly induce or attempt
to induce or otherwise counsel, advise, solicit or encourage (i) any customer or
employee to cease doing business with, or leave the employ of, Employer or, in
the case of employees accept employment with any other person or entity; or
(ii) any person who at the time of such inducement, counseling, advice,
solicitation or encouragement had ceased doing business with, or left the employ
of, Employer within the previous six (6) months to do business with, or accept
employment with, any person or entity besides Employer.

Section 6.7 — Specific Performance. Employee agrees that in the event of his
breach of any of the provisions of this Article VI, the remedies available to
law to Employer would be inadequate and in lieu thereof or in addition thereto
Employer shall be entitled to appropriate equitable remedies, including specific
performance and injunctive relief. Employee further agrees that he shall pay
Employer’s actual attorneys’ fees if Employer successfully obtains such
injunctive relief and that the restrictive time periods set forth in
Sections 6.5 and 6.6 of this Agreement shall be tolled during any period that
Employee is in violation of these restrictions.

ARTICLE VII

Concluding Provisions

Section 7.1 — Entire Agreement. This Agreement supersedes all prior agreements,
including Employee’s Executive Employment Agreement with Paragon and the Trust
Company of Lehigh Valley, and contains the entire understanding between Employer
and Employee (the “Parties”) with respect to the subject matter hereof. There
are no oral understandings, terms, or conditions, and no party has relied upon
any representation, express or implied, not contained in this Employment
Agreement.

Section 7.2 — Amendments. This Agreement may not be amended in any respect
whatsoever except by a further agreement, in writing, fully executed by each of
the Parties.

Section 7.3 — Successors and Assigns. This Agreement, including the
non-competition provision set forth in Section 6.5 above, shall inure to the
benefit of and be binding upon any corporation or other successor of Employer
which shall acquire, directly or indirectly, by merger, consolidation, purchase,
or otherwise, all or substantially all of the equity or assets of Employer and
shall otherwise inure to the benefit of and be binding upon the Parties hereto
and their respective heirs, executors, administrators, successors, and assigns.
Nothing in the Agreement shall preclude Employer from selling, consolidating or
merging into or with, or transferring all or substantially all of its equity or
assets to another person or entity. In that event, however, such other person or
entity shall assume this Agreement and all obligations of Employer hereunder.
Upon such sale, consolidation, merger, or other transfer of equity or assets and
assumption, the term “Employer,” as used herein, shall mean such other person or
entity, and this Agreement shall continue in full force and effect.

Section 7.4 — Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision contained in this
Agreement.

Section 7.5 — Governing Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania. This
Agreement shall also be interpreted as is minimally required to qualify any
payment hereunder as not triggering any penalty on the Employee or Employer
pursuant to Section 409A of the Code. Employer recognizes and accepts that
Northampton County, Pennsylvania and the United States District Court for the
Eastern District of Pennsylvania shall have jurisdiction and venue for any
disputes under this Agreement.

Section 7.6 — Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original.

Section 7.7 — Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provisions or applications of this Agreement that can be given
effect without the invalid or unenforceable provisions or applications and shall
not invalidate or render unenforceable such provision in any other jurisdiction
or under any other circumstance.

Section 7.8 — Waivers. If either Party should waive any breach of any provision
of this Agreement, such Party shall not thereby be deemed to have waived any
preceding or succeeding breach(es) of the same provision, or have thereby waived
any other provisions hereof.

IN WITNESS WHEREOF, intending to be legally bound hereby, the parties have
hereunto set their hands and seals effective as provided herein.

     
WITNESS:
  KEYSTONE NAZARETH BANK & TRUST
COMPANY (“Employer”)
 
   
By: /s/ Eugene T. Sobol
  By:/s/ Scott V. Fainor
 
   
 
  Scott V. Fainor, President & CEO
WITNESS:
 

 
   
By: /s/ Eugene T. Sobol
  By:/s/ Jeffrey P. Feather
 
   
 
  Jeffrey P. Feather, Chairman
WITNESS:
 

 
   
By: /s/ C. Palmer Zigmund
  By:/s/ G. Allen Weiss
 
   

G. Allen Weiss (“Employee”)

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