EXHIBIT 10.19


FORM OF AGREEMENT WITH RESPECT TO FORFEITURES OF SHARES COVERED
      BY
      PERFORMANCE-BASED RESTRICTED STOCK AWARD





**AGREEMENT**





**THIS
      AGREEMENT** is made
      as of this ____ day of ______________________ 2007 (the “Effective Date”)
      between KNBT Bancorp, Inc. (the “Corporation”) and ______________________ (the
“Recipient”).





**WHEREAS,** the
      Corporation granted to the Recipient on ______________________, 2006 (the “Grant
      Date”) a Performance Share Award (the “Award”) covering _____________ shares
      (the “Shares”) of the common stock, $0.01 par value per share (the “Common
      Stock”), of the Corporation, pursuant to the terms of the 2004 Recognition and
      Retention Plan and Trust Agreement (the “Plan”);





**WHEREAS,** pursuant
      to the terms of the Award, certain performance criteria (the “Targets”) are
      required to be satisfied before any of the Shares subject to the Award will
      vest;





**WHEREAS,** pursuant
      to the terms of the Award, in the event the Enhanced Performance Targets (as
      such term is defined in the Award) (the “Enhanced Targets”) are achieved, the
      number of Shares subject to the Award shall increase to  shares;





**WHEREAS,** if the
      Targets or the Enhanced Targets are achieved, then 60% of the Shares (_____
      shares if the Targets are achieved or  if
      the
      Enhanced Targets are achieved) subject to the Award, subject to any adjustment
      thereof as provided by Section 10.01 of the Plan, will vest on the third annual
      anniversary of the Grant Date (the “Valuation Date”);





**WHEREAS,** if the
      Targets or the Enhanced Targets are achieved, then the remaining _____ unearned
      Shares or  unearned
      Shares if the Enhanced Targets are achieved (the “Remaining Shares”) amounting
      to 40% of the Shares awarded (taking into account the increase in the number
      of
      Shares covered by the Award in the event the Enhanced Targets are achieved),
      subject to any adjustment thereof as provided by Section 10.01 of the Plan,
      will
      be earned pro rata on the fourth and fifth annual anniversaries of the Grant
      Date;





**WHEREAS,** the
      Corporation wishes to pay the Recipient a cash bonus valued on the basis of
      the
      fair market value of the Remaining Shares on the Valuation Date in exchange
      for
      the Recipient relinquishing any claims to the Remaining Shares; and





**WHEREAS,** the
      Recipient is willing to accept the cash bonus in lieu of receiving the Remaining
      Shares if the Targets are achieved under the terms of the Award.





**NOW,
      THEREFORE,** in
      consideration of the premises and the mutual covenants and conditions
      hereinafter set forth, the Corporation and the Recipient do hereby agree as
      follows:





1.  **Bonus** **.** If
      the
      Targets or the Enhanced Targets set forth in the Award are achieved and the
      Recipient remains employed by the Corporation or a subsidiary thereof on the
      Valuation Date, then the Corporation will pay to the Recipient in a lump sum
      within five business days of the Valuation Date a cash bonus (the “Bonus”) equal
      to the fair market value per share of the Common Stock on the Valuation Date
      multiplied by the number of Remaining Shares.







2.  **Valuation** **.** For
      purposes hereof, the “fair market value” of a share of Common Stock shall be the
      closing sale price of a share of Common Stock on the Valuation Date (or, if
      such
      day is not a trading day in the U.S. markets, on the nearest preceding trading
      day), as reported with respect to the principal market (or the composite of
      the
      markets, if more than one) in which such shares are then traded, or if no such
      closing prices are reported, the mean between the high bid and low asked prices
      that day on the principal market then in use, or if no such quotations are
      available, the price furnished by a professional securities dealer making a
      market in such shares selected by the Executive Compensation Committee (the
      “Committee”) of the Corporation.





3.  **Forfeiture** **.** By
      acceptance of and entry into this Agreement, the Recipient forgoes any claim
      to
      receive the Remaining Shares even if the Targets are achieved.


4.  **Withholding** **.** The
        Corporation, in its discretion, may withhold from the Bonus made to the
        Recipient sufficient amounts to cover any applicable withholding and employment
        taxes with respect to the Award as well as the Bonus.
  5.  **Non-transferability** **.** The
        Bonus
        granted hereby to the Recipient may not be sold, assigned, transferred, pledged,
        or otherwise encumbered or disposed of prior to the time that it is earned
        and
        distributed pursuant to the terms of this Agreement.


6.  **Administration** **.** The
        authority to manage and control the operation and administration of this
        Agreement shall be vested in the Committee. Any interpretation of the Agreement
        by the Committee and any decision made by it with respect to the Agreement
        are
        final and binding (in the absence of action by the Board of Directors of
        the
        Corporation) on the Recipient and the Recipient’s heirs, executors,
        administrators and successors.




7.  **Not
      an Employment Contract** **.** This
      Agreement will not confer on the Recipient any right with respect to continuance
      of employment or other service with the Corporation or any subsidiary thereof,
      nor will it interfere in any way with any right the Corporation or any
      subsidiary thereof would otherwise have to terminate or modify the terms of
      the
      Recipient’s employment or other service at any time.





8.  **Severability** .
      Should
      any provision of this Agreement be held by a court of competent jurisdiction
      to
      be unenforceable or invalid for any reason, the remaining provisions of this
      Agreement shall not be affected by such holding and shall continue in full
      force
      in accordance with their terms.





9.  **Governing
      Law** **.** Except
      to the extent pre-empted by federal law, this Agreement shall be governed by
      the
      laws of the Commonwealth of Pennsylvania.


10.  **Amendment** **.** This
        Agreement may be amended by written agreement of the Recipient and the
        Corporation, without the consent of any other person.





**IN
      WITNESS WHEREOF** ,
      the
      Corporation has caused this Agreement to be executed by its duly authorized
      officer, and the Recipient has hereunto set his or her hand, all as of the
      day
      first above written.





**ATTEST:**
            
            
            **KEYSTONE
                NAZARETH BANK****&
                TRUST COMPANY**BY:
            
            
            BY:Name:
            Michele
                A. Linsky
            
            Name:
            Jeffrey
                P. FeatherTitle:
            Corporate
                Secretary
            
            Title:
            Chairman
                of the Board[Seal]
            
            
            **[NAME
                OF RECIPIENT]****[Name]**