exhibit10-11.htm


    EXHIBIT 10.11

    

      KNBT
        BANCORP, INC.

      2004
        AMENDED AND RESTATED RECOGNITION

      AND
        RETENTION PLAN AND TRUST AGREEMENT

      


      


      ARTICLE
        I

      ESTABLISHMENT
        OF THE PLAN AND TRUST

      


                 1.01           KNBT
        Bancorp, Inc. (the “Corporation”) hereby amends and restates its 2004
        Recognition and Retention Plan (as amended and restated, the “Plan”) and Trust
        (the “Trust”) upon the terms and conditions hereinafter stated in this amended
        and restated 2004 Recognition and Retention Plan and Trust Agreement (the
        “Agreement”), with the amendment and restatement effective as of November 15,
        2007.  The Plan is being amended and restated in order to comply with
        Section 409A of the Code, as defined herein.

      


                 1.02           The
        Trustee hereby accepts this Trust and agrees to hold the Trust assets existing
        on the date of this Agreement and all additions and accretions thereto upon
        the
        terms and conditions hereinafter stated.

      


      ARTICLE
        II

      PURPOSE
        OF THE PLAN

      


                 The
        purpose of the Plan is to retain personnel of experience and ability in key
        positions by providing Employees and Non-Employee Directors with a proprietary
        interest in the Corporation and its Subsidiary Companies as compensation
        for
        their contributions to the Corporation and the Subsidiary Companies and as
        an
        incentive to make such contributions in the future.   Each
        Recipient of a Plan Share Award hereunder is advised to consult with his
        or her
        personal tax advisor with respect to the tax consequences under federal,
        state,
        local and other tax laws of the receipt of a Plan Share Award
        hereunder.

      


      ARTICLE
        III

      DEFINITIONS

      


                 The
        following words and phrases when used in this Agreement with an initial capital
        letter, unless the context clearly indicates otherwise, shall have the meanings
        set forth below.  Wherever appropriate, the masculine pronouns shall
        include the feminine pronouns and the singular shall include the
        plural.

      


                 3.01           “Advisory
        Director” means a person appointed to serve in such capacity by the Board of
        either the Corporation or the Bank or the successors thereto.

      


                 3.02           “Bank”
        means Keystone Nazareth Bank & Trust Company, the wholly owned subsidiary of
        the Corporation.


      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      


                 3.03           “Beneficiary”
        means the person or persons designated by a Recipient to receive any benefits
        payable under the Plan in the event of such Recipient's death.  Such
        person or persons shall be designated in writing on forms provided for this
        purpose by the Committee and may be changed from time to time by similar
        written
        notice to the Committee.  In the absence of a written designation, the
        Beneficiary shall be the Recipient's surviving spouse, if any, or if none,
        his
        or her estate.

      


                 3.04           “Board”
        means the Board of Directors of the Corporation.

      


                 3.05           “Change
        in Control” shall mean a change in the ownership of the Corporation or the Bank,
        a change in the effective control of the Corporation or the Bank or a change
        in
        the ownership of a substantial portion of the assets of the Corporation or
        the
        Bank, in each case as provided under Section 409A of the Code and the
        regulations thereunder.

      


                 3.06           “Code”
        means the Internal Revenue Code of 1986, as amended.

      


                 3.07           “Committee”
        means the committee appointed by the Board pursuant to Article IV
        hereof.

      


                 3.08           “Common
        Stock” means shares of the common stock, $0.01 par value per share, of the
        Corporation.

      


                 3.09           “Director”
        means a member of the Board of Directors of the Corporation or a Subsidiary
        Corporation or any successors thereto, including Non-Employee Directors as
        well
        as Officers and Employees serving as Directors.

      


                 3.10           “Disability”
        means the Recipient (i) is unable to engage in any substantial gainful activity
        by reason of any medically determinable physical or mental impairment which
        can
        be expected to result in death or can be expected to last for a continuous
        period of not less than 12 months, or (ii) is, by reason of any medically
        determinable physical or mental impairment which can be expected to result
        in
        death or can be expected to last for a continuous period of not less than
        12
        months, receiving income replacement benefits for a period of not less than
        three months under an accident and health plan covering employees of the
        Corporation or the Bank (or would have received such benefits for at least
        three
        months if he had been eligible to participate in such plan).

      


                 3.11           “Effective
        Date” means the day upon which the Board originally approved this
        Plan.

      


                 3.12           “Employee”
        means any person who is employed by the Corporation, the Bank or a Subsidiary
        Company or is an Officer of the Corporation or a Subsidiary Company, but
        not
        including directors who are not also Officers of or otherwise employed by
        the
        Corporation, the Bank or a Subsidiary Company.


      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      


                 3.13           “Employer
        Group” means the Corporation and any Subsidiary Company which, with the consent
        of the Board, agrees to participate in the Plan.

      


                 3.14           “Exchange
        Act” means the Securities Exchange Act of 1934, as amended.

      


                 3.15           “FDIC”
        means the Federal Deposit Insurance Corporation.

      


                 3.16           “Non-Employee
        Director” means a member of the Board (including advisory boards, if any) of the
        Corporation or any Subsidiary Company or any successor thereto, including
        an
        Advisory Director of the Board of the Corporation and/or any Subsidiary Company
        or a former Officer or Employee of the Corporation and/or any Subsidiary
        Company
        serving as a Director or Advisory Director who is not an Officer or Employee
        of
        the Corporation or any Subsidiary Company.

      


                 3.17           “Offering”
        means the offering of Common Stock to the public completed during 2003 in
        connection with the conversion of the Bank from the mutual to the stock form
        of
        organization and the issuance of the capital stock of the Bank to the
        Corporation.

      


                 3.18           “Officer”
        means an Employee whose position in the Corporation or a Subsidiary Company
        is
        that of a corporate officer, as determined by the Board.

      


                 3.19           “Performance
        Share Award” means a Plan Share Award granted to a Recipient pursuant to Section
        7.05 of the Plan.

      


                 3.20           “Performance
        Goal” means an objective for the Corporation or any Subsidiary Company or any
        unit thereof or any Employee of the foregoing that may be established by
        the
        Committee for a Performance Share Award to become vested, earned or
        exercisable.  The establishment of Performance Goals is intended to
        make the applicable Performance Share Awards “performance-based” compensation
        within the meaning of Section 162(m) of the Code, and the Performance Goals
        shall be based on one or more of the following criteria:

      
        


        
          	
                  (i)  

                	
                  net
                    income, as adjusted for non-recurring
                    items;

                


        

        
          	
                  (ii)  

                	
                  cash
                    earnings;

                


        

        
          	
                  (iii)  

                	
                  earnings
                    per share;

                


        

        
          	
                  (iv)  

                	
                  cash
                    earnings per share;

                


        

        
          	
                  (v)  

                	
                  return
                    on average equity;

                


        

        
          	
                  (vi)  

                	
                  return
                    on average assets;

                


        

        
          	
                  (vii)  

                	
                  assets;

                


        

        
          	
                  (viii)  

                	
                  stock
                    price;

                


        

        
          	
                  (ix)  

                	
                  total
                    shareholder return;

                


        

        
          	
                  (x)  

                	
                  capital;

                


        

        
          	
                  (xi)  

                	
                  net
                    interest income;

                


        

        
          	
                  (xii)  

                	
                  market
                    share;

                


        

        
          	
                  (xiii)  

                	
                  cost
                    control or efficiency ratio; and

                


        

        
          	
                  (xiv)  

                	
                  asset
                    growth.

                


        


        
          
            
            

          

          
            3

            
              

            

          

          
            
            

          

        

      

       

                 3.21           “Plan
        Shares” or “Shares” means shares of Common Stock which may be distributed to a
        Recipient pursuant to the Plan.

      


                 3.22           “Plan
        Share Award” or “Award” means a right granted under this Plan to receive a
        distribution of Plan Shares upon completion of the service requirements
        described in Article VII hereof, and includes Performance Share
        Awards.

      


                 3.23           “Recipient”
        means an Employee or Non-Employee Director or former Employee or Non-Employee
        Director who receives a Plan Share Award or Performance Share Award under
        the
        Plan.

      


                 3.24           “Retirement”
        means:

      


                 (a)
        A termination of employment which constitutes a “retirement” at the “normal
        retirement age” or later under the Keystone Nazareth Bank & Trust Company
        401(k) Plan or such other qualified pension benefit plan maintained by the
        Corporation or a Subsidiary Company as may be designated by the Board or
        the
        Committee, or, if no such plan is applicable, which would constitute
“retirement” under the Keystone Nazareth Bank & Trust Company 401(k) Plan,
        if such individual were a participant in that plan; provided, however, that
        the
        provisions of this subsection (a) will not apply as long as a Recipient
        continues to serve as a Non-Employee Director, including service as an Advisory
        Director; and (b) provided further that no “retirement” shall be deemed to have
        occurred prior to the one-year anniversary of the grant of a Plan Share
        Award.

      


                 (b)  With
        respect to Non-Employee Directors, retirement means retirement from service
        on
        the Board of Directors of the Corporation or a Subsidiary Company or any
        successors thereto (including service as an Advisory Director to the Corporation
        or any Subsidiary Company) after reaching normal retirement age as established
        by the Company.; and provided further that no “retirement”
shall be deemed to have occurred prior to the one-year
        anniversary of the grant
        of a Plan Share Award.  

      


                 3.25           “Subsidiary
        Companies” means those subsidiaries of the Corporation, including the Bank,
        which meet the definition of “subsidiary corporations” set forth in Section
        424(f) of the Code, at the time of the granting of the Plan Share Award in
        question.

      


                 3.26           “Trustee”
        means such firm, entity or persons approved by the Board to hold legal title
        to
        the Plan and the Plan assets for the purposes set forth herein.

      



      
        
          
          

        

        
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      ARTICLE
        IV

      ADMINISTRATION
        OF THE PLAN

      


                 4.01           Duties
        of the Committee.  The Plan shall be
        administered and interpreted by the Committee, which shall consist of two
        or
        more members of the Board, each of whom shall be a Non-Employee Director,
        as
        defined in Rule 16b-3(b)(3)(i) of the Exchange Act.  In addition, each
        member of the Committee shall be an (i) “outside director” within the meaning of
        Section 162(m) of the Code and the regulations thereunder at such times as
        is
        required under such regulations and (ii) an "independent director" as such
        term
        is defined in Rule 4200(a)(15) of the Marketplace Rules of the Nasdaq Stock
        Market.  The Committee shall have all of the powers allocated to it in
        this and other Sections of the Plan.  The interpretation and
        construction by the Committee of any provisions of the Plan or of any Plan
        Share
        Award granted hereunder shall be final and binding in the absence of action
        by
        the Board.  The Committee shall act by vote or written consent of a
        majority of its members.  Subject to the express provisions and
        limitations of the Plan, the Committee may adopt such rules, regulations
        and
        procedures as it deems appropriate for the conduct of its
        affairs.  The Committee shall report its actions and decisions with
        respect to the Plan to the Board at appropriate times, but in no event less
        than
        once per calendar year.

      


                 4.02           Role
        of the Board.  The members of the
        Committee and the Trustee shall be appointed or approved by, and will serve
        at
        the pleasure of, the Board.  The Board may in its discretion from time
        to time remove members from, or add members to, the Committee, and may remove
        or
        replace the Trustee, provided that any directors who are selected as members
        of
        the Committee shall be Non-Employee Directors.

      


                 4.03           Revocation
        for Misconduct.  Notwithstanding
        anything to the contrary herein, the Board or the Committee may by resolution
        immediately revoke, rescind and terminate any Plan Share Award, or portion
        thereof, to the extent not yet vested, previously granted or awarded under
        this
        Plan to an Employee who is discharged from the employ of the Corporation
        or a
        Subsidiary Company for cause, which, for purposes hereof, shall mean termination
        because of the Employee's personal dishonesty, incompetence, willful misconduct,
        breach of fiduciary duty involving personal profit, intentional failure to
        perform stated duties, willful violation of any law, rule, or regulation
        (other
        than traffic violations or similar offenses) or final cease-and-desist
        order.  Unvested Plan Share Awards to a Non-Employee Director who is
        removed for cause pursuant to the Corporation's Articles of Incorporation
        or
        Bylaws or the Bank’s Articles of Incorporation and Bylaws or the constituent
        documents of such other Subsidiary Company on whose board he or she serves
        shall
        terminate as of the effective date of such removal.

      



      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      


                 4.04           Limitation
        on Liability.  No member of the Board or
        the Committee shall be liable for any determination made in good faith with
        respect to the Plan or any Plan Shares or Plan Share Awards granted under
        it.  If a member of the Board or the Committee is a party or is
        threatened to be made a party to any threatened, pending or completed action,
        suit or proceeding, whether civil, criminal, administrative or investigative,
        by
        reason of anything done or not done by him in such capacity under or with
        respect to the Plan, the Corporation shall, subject to the requirements of
        applicable laws and regulations, indemnify such member against all liabilities
        and expenses (including attorneys' fees), judgments, fines and amounts paid
        in
        settlement actually and reasonably incurred by him in connection with such
        action, suit or proceeding if he or she acted in good faith and in a manner
        he
        reasonably believed to be in the best interests of  the Corporation
        and any Subsidiary Companies and, with respect to any criminal action or
        proceeding, had no reasonable cause to believe his or her conduct was
        unlawful.

      


                 4.05           Compliance
        with Laws and Regulations.  All Awards
        granted hereunder shall be subject to all applicable federal and state laws,
        rules and regulations and to such approvals by any government or regulatory
        agency or shareholders as may be required.   The Corporation
        shall not be required to issue or deliver any certificates for shares of
        Common
        Stock prior to the completion of any registration or qualification of or
        obtaining of consents or approvals with respect to such shares under anyfederal
        or state law or any rule or regulation of any government body, which the
        Corporation shall, in its sole discretion, determine to be necessary or
        advisable.

      


                 4.06           Restrictions
        on Transfer.  The Corporation may place
        a legend upon any certificate representing shares issued pursuant to a Plan
        Share Award noting that such shares may be restricted by applicable laws
        and
        regulations.

      


                 4.07           No
        Deferral of Compensation Under Section 409A of the
        Code.  All Awards granted under the Plan are
        designed to not constitute a deferral of compensation for purposes of Section
        409A of the Code.  No Recipient shall be permitted to defer the
        recognition of income beyond the date an Award shall be deemed earned pursuant
        to Article VII of this Plan.

      


      ARTICLE
        V

      CONTRIBUTIONS

      


                 5.01           Amount
        and Timing of Contributions.  The Board
        shall determine the amount (or the method of computing the amount) and timing
        of
        any contributions by the Corporation and any Subsidiary Companies to the
        Trust
        established under this Plan.  Such amounts may be paid in cash or in
        shares of Common Stock and shall be paid to the Trust at the designated time
        of
        contribution.  No contributions by Employees or Non-Employee Directors
        shall be permitted.

      



      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      


                 5.02           Investment
        of Trust Assets; Number of Plan
        Shares.  Subject to Section 8.02 hereof,
        the Trustee shall invest all of the Trust's assets primarily in Common
        Stock.  The aggregate number of Plan Shares available for distribution
        pursuant to this Plan shall be 808,047 shares of Common Stock, subject to
        adjustment as provided in Section 9.01 hereof, which shares shall be purchased
        (from the Corporation and/or, if permitted by applicable regulations, from
        shareholders thereof) by the Trust with funds contributed by the
        Corporation.  During the time this Plan remains in effect, Awards to
        each Employee and each Non-Employee Director shall not exceed 25% and 5%
        of the
        shares of Common Stock available under the Plan, respectively.  Plan
        Share Awards to Non-Employee Directors in the aggregate shall not exceed
        30% of
        the number of shares available under this Plan.

      


      ARTICLE
        VI

      ELIGIBILITY;
        ALLOCATIONS

      


                 6.01           Awards.  Plan
        Share Awards and Performance Share Awards may be made to such Employees and
        Non-Employee Directors as may be selected by the Board or the
        Committee.  In selecting those Employees to whom Plan Share Awards
        and/or Performance Share Awards may be granted and the number of Shares covered
        by such Awards, the Board or the Committee shall consider the duties,
        responsibilities and performance of each respective Employee and Non-Employee
        Director, his or her present and potential contributions to the growth and
        success of the Corporation, his or her salary or other compensation and such
        other factors as deemed relevant to accomplishing the purposes of the
        Plan.  The Board or the Committee may but shall not be required to
        request the written recommendation of the Chief Executive Officer of the
        Corporation other than with respect to Plan Share Awards and/or Performance
        Share Awards to be granted to him or her.

      


                 6.02           Form
        of Allocation.  As promptly as
        practicable after an allocation pursuant to Section 6.01 that a Plan Share
        Award
        or a Performance Share Award is to be issued, the Board or the Committee
        shall
        notify the Recipient in writing of the grant of the Award, the number of
        Plan
        Shares covered by the Award, and the terms upon which the Plan Shares subject
        to
        the Award shall be distributed to the Recipient.  The Board or the
        Committee shall maintain records as to all grants of Plan Share
        Awards  or Performance Share Awards under the Plan.

      


                 6.03           Allocations
        Not Required to any Specific Employee or Non-Employee
        Director.  No Employee or Non-Employee
        Director shall have any right or entitlement to receive a Plan Share Award
        hereunder, with such Awards being at the total discretion of the Board or
        the
        Committee.

      



      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      


      ARTICLE
        VII

      EARNING
        AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS

       

      
                   7.01           Earning
          Plan Shares; Forfeitures.

         

                   (a)           General
          Rules.  Subject to the terms hereof,
          Plan Share Awards shall be earned by a Recipient at a rate no more rapid
          than
          twenty percent (20%) of the aggregate number of Shares covered by the Award
          as
          of each annual anniversary of the date of grant of the Award, with such
          vesting
          rate to be determined by the Committee.  If the employment of an
          Employee or service as a Non-Employee Director (including for purposes
          hereof
          service as an Advisory Director) is terminated before the Plan Share Award
          has
          been completely earned for any reason (except as specifically provided
          in
          subsection (b) below), the Recipient shall forfeit the right to any Shares
          subject to the Award which have not theretofore been earned.  In the
          event of a forfeiture of the right to any Shares subject to an Award, such
          forfeited Shares shall become available for allocation pursuant to Section
          6.01
          hereof as if no Award had been previously granted with respect to such
          Shares.  No fractional shares shall be distributed pursuant to this
          Plan.

        


                   (b)           Exception
          for Terminations Due to Death, Disability or Change in
          Control.  Notwithstanding the general
          rule contained in Section 7.01(a), all Plan Shares subject to a Plan Share
          Award
          held by a Recipient whose employment with the Corporation or any Subsidiary
          Company or service as a Non-Employee Director (including for purposes hereof
          service as an Advisory Director) terminates due to death or Disability
          shall be
          deemed earned as of the Recipient's last day of employment with or service
          to
          the Corporation or any Subsidiary Company (provided, however, no such
          accelerated vesting shall occur if a Recipient remains employed by or continues
          to serve as a Director (including for purposes hereof service as an Advisory
          Director) of at least one member of the Employer Group) and shall be distributed
          as soon as practicable thereafter.  Furthermore, notwithstanding the
          general rule contained in Section 7.01(a), all Plan Shares subject to a
          Plan
          Share Award held by a Recipient shall be deemed earned as of the effective
          date
          of a Change in Control.

      

      


                 7.02           Distribution
        of Dividends.  Any cash dividends or
        stock dividends declared in respect of each unvested Plan Share Award (excluding
        any unearned Performance Share Awards) then held by the Trust will be paid
        out
        proportionately by the Trust to the Recipient thereof as soon as practicable
        (and in any event no later than 30 days) after the Trust’s receipt thereof
        to the Recipient on whose behalf such Plan Share is then held by the
        Trust.  Any cash dividends, stock dividends or returns of capital
        declared in respect of each unvested Performance Share Award will be held
        by the
        Trust for the benefit of the Recipient on whose behalf such Performance Share
        Award is then held by the Trust, and such dividends or returns of capital,
        including any interest thereon, will be paid out proportionately by the Trust
        to
        the Recipient thereof as soon as practicable (and in any event no later than
        30
        days) after the Performance Share Awards become earned.


      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      


                 7.03           Distribution
        of Plan Shares.

      


                 (a)           Timing
        of Distributions.  General
        Rule.  Subject to the provisions of Section 7.05 hereof, Plan Shares
        shall be distributed to the Recipient or his or her Beneficiary, as the case
        may
        be, as soon as practicable (and in any event no later than 30 days) after
        they have been earned.

      


                 (b)           Form
        of Distributions.  All Plan Shares,
        together with any Shares representing stock dividends, shall be distributed
        in
        the form of Common Stock.  One share of Common Stock shall be given
        for each Plan Share earned and distributable. Payments representing cash
        dividends shall be made in cash.

       

          (c)           Withholding.  The
        Trustee may withhold from any cash payment or Common Stock distribution made
        under this Plan sufficient amounts to cover any applicable withholding and
        employment taxes, and if the amount of a cash payment is insufficient, the
        Trustee may require the Recipient or Beneficiary to pay to the Trustee the
        amount required to be withheld as a condition of delivering the Plan
        Shares.  The Trustee shall pay over to the Corporation or any
        Subsidiary Company which employs or employed such Recipient any such amount
        withheld from or paid by the Recipient or Beneficiary.

       

          (d)           Restrictions
        on Selling of Plan Shares.  Plan Share
        Awards may not be sold, assigned, pledged or otherwise disposed of prior
        to the
        time that they are earned and distributed pursuant to the terms of this
        Plan.  Upon distribution, the Board or the Committee may require the
        Recipient or his or her Beneficiary, as the case may be, to agree not to
        sell or
        otherwise dispose of his distributed Plan Shares except in accordance with
        all
        then applicable federal and state securities laws, and the Board or the
        Committee may cause a legend to be placed on the stock certificate(s)
        representing the distributed Plan Shares in order to restrict the transfer
        of
        the distributed Plan Shares for such period of time or under such circumstances
        as the Board or the Committee, upon the advice of counsel, may deem
        appropriate.

      


                 7.04           Voting
        of Plan Shares.  After a Plan Share
        Award (other than a  Performance Share Award) has been made, the
        Recipient shall be entitled to direct the Trustee as to the voting of the
        Plan
        Shares which are covered by the Plan Share Award and which have not yet been
        earned and distributed to him pursuant to Section 7.03, subject to rules
        and
        procedures adopted by the Committee for this purpose.  All shares of
        Common Stock held by the Trust which have not been awarded under a Plan Share
        Award and shares subject to Performance Share Awards which have not yet vested
        and shares which have been awarded as to which Recipients have not directed
        the
        voting shall be voted by the Trustee in its discretion.

      



      
        
          
          

        

        
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                 7.05           Performance
        Awards

      


                 (a)           Designation
        of Performance Share Awards.  The
        Committee may determine to make any Plan Share Award a Performance Share
        Award
        by making such Plan Share Award contingent upon the achievement of a Performance
        Goal or any combination of Performance Goals.  Each Performance Share
        Award shall be evidenced by a written agreement (“Performance Award Agreement”),
        which shall set forth the Performance Goals applicable to the Performance
        Share
        Award, the maximum amounts payable and such other terms and conditions as
        are
        applicable to the Performance Share Award.  Each Performance Share
        Award shall be granted and administered to comply with the requirements of
        Section 162(m) of the Code or any successor thereto.

      


                 (b)           Timing
        of Grants.  Any Performance Share Award
        shall be made not later than 90 days after the start of the period for which
        the
        Performance Share Award relates and shall be made prior to the completion
        of 25%
        of such period.  All determinations regarding the achievement of any
        Performance Goals will be made by the Committee.  The Committee may
        not increase during a year the amount of a Performance Share Award that would
        otherwise be payable upon achievement of the Performance Goals but may reduce
        or
        eliminate the payments as provided for in the Award Agreement.

      


                 (c)           Restrictions
        on Grants.  Nothing contained in the
        Plan will be deemed in any way to limit or restrict the Committee from making
        any Award or payment to any person under any other plan, arrangement or
        understanding, whether now existing or hereafter in effect.

      


                 (d)           Rights
        of Recipients.  Notwithstanding anything
        to the contrary herein, a Participant who receives a Performance Share Award
        payable in Common Stock shall have no rights as a shareholder until the Common
        Stock is issued pursuant to the terms of the Performance Award
        Agreement.

      


                 (e)           Distribution.  No
        Performance Share Award or portion thereof that is subject to the attainment
        or
        satisfaction of a condition of a Performance Goal shall be distributed or
        considered to be earned or vested until the Committee certifies in writing
        that
        the conditions or Performance Goal to which the distribution, earning or
        vesting
        of such Award is subject have been achieved.

      


                 7.06           Nontransferable.  Plan
        Share Awards and Performance Share Awards and rights to Plan Shares shall
        not be
        transferable by a Recipient, and during the lifetime of the Recipient, Plan
        Shares may only be earned by and paid to a Recipient who was notified in
        writing
        of an Award by the Committee pursuant to Section 6.02 and/or 7.05(a), as
        the
        case may be.  No Recipient or Beneficiary shall have any right in or
        claim to any assets of the Plan or Trust, nor shall the Corporation or any
        Subsidiary Company be subject to any claim for benefits hereunder.

      



      
        
          
          

        

        
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      ARTICLE
        VIII

      TRUST

      


                 8.01           Trust.  The
        Trustee shall receive, hold, administer, invest and make distributions and
        disbursements from the Trust in accordance with the provisions of the Plan
        and
        Trust and the applicable directions, rules, regulations, procedures and policies
        established by the Committee pursuant to the Plan.

      


                 8.02           Management
        of Trust. It is the intent of this Plan and
        Trust that the Trustees shall have complete authority and discretion with
        respect to the arrangement, control and investment of the Trust, and that
        the
        Trustees shall invest all assets of the Trust in Common Stock to the fullest
        extent practicable, except to the extent that the Trustees determine that
        the
        holding of monies in cash or cash equivalents is necessary to meet the
        obligations of the Trust.  In performing their duties, the Trustees
        shall have the power to do all things and execute such instruments as may
        be
        deemed necessary or proper, including the following powers:

      


                 (a)           To
        invest up to one hundred percent (100%) of all Trust assets in Common Stock
        without regard to any law now or hereafter in force limiting investments
        for
        trustees or other fiduciaries.  The investment authorized herein may
        constitute the only investment of the Trust, and in making such investment,
        the
        Trustees are authorized to purchase Common Stock from the Corporation or
        from
        any other source, and such Common Stock so purchased may be outstanding,
        newly
        issued, or treasury shares.

      


                 (b)           To
        invest any Trust assets not otherwise invested in accordance with (a) above,
        in
        such deposit accounts, and certificates of deposit, obligations of the United
        States Government or its agencies or such other investments as shall be
        considered the equivalent of cash.

      


                 (c)           To
        sell, exchange or otherwise dispose of any property at any time held or acquired
        by the Trust.

      


                 (d)           To
        cause stocks, bonds or other securities to be registered in the name of a
        nominee, without the addition of words indicating that such security is an
        asset
        of the Trust (but accurate records shall be maintained showing that such
        security is an asset of the Trust).

      


                 (e)           To
        hold cash without interest in such amounts as may in the opinion of the Trustees
        be reasonable for the proper operation of the Plan and Trust.

      


                 (f)           To
        employ brokers, agents, custodians, consultants and accountants.

      


                 (g)           To
        hire counsel to render advice with respect to their rights, duties and
        obligations hereunder, and such other legal services or representation as
        they
        may deem desirable.


      
        
          
          

        

        
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                 (h)           To
        hold funds and securities representing the amounts to be distributed to a
        Recipient or his Beneficiary as a consequence of a dispute as to the disposition
        thereof, whether in a segregated account or held in common with other assets
        of
        the Trust.

      


                 Notwithstanding
        anything herein contained to the contrary, the Trustees shall not be required
        to
        make any inventory, appraisal or settlement or report to any court, or to
        secure
        any order of court for the exercise of any power herein contained, or give
        bond.

      


                 8.03           Records
        and Accounts.  The Trustees shall
        maintain accurate and detailed records and accounts of all transactions of
        the
        Trust, which shall be available at all reasonable times for inspection by
        any
        legally entitled person or entity to the extent required by applicable law,
        or
        any other person determined by the Board or the Committee.

      


                 8.04           Expenses.  All
        costs and expenses incurred in the operation and administration of this Plan
        shall be borne by the Corporation or, in the discretion of the Corporation,
        the
        Trust.

      


                 8.05           Indemnification.  Subject
        to the requirements of applicable laws and regulations, the Corporation shall
        indemnify, defend and hold theTrustees harmless against all claims, expenses
        and
        liabilities arising out of or related to the exercise of the Trustees’ powers
        and the discharge of their duties hereunder, unless the same shall be due
        to
        their gross negligence or willful misconduct.

      


      ARTICLE
        IX

      MISCELLANEOUS

      


                 9.01           Adjustments
        for Capital Changes.  The aggregate number of Plan Shares
        available for distribution pursuant to the Plan Share Awards and the number
        of
        Shares to which any unvested Plan Share Award relates shall be proportionately
        adjusted for any increase or decrease in the total number of outstanding
        shares
        of Common Stock issued subsequent to the Effective Date of the Plan resulting
        from any split, subdivision or consolidation of shares or other capital
        adjustment, the payment of a stock dividend or other increase or decrease
        in
        such shares effected without receipt or payment of consideration by the
        Corporation.  If, upon a merger, consolidation, reorganization,
        liquidation, recapitalization or the like of the Corporation or of another
        corporation, the shares of the Corporation's Common Stock shall be exchanged
        for
        other securities of the Corporation or of another corporation, each Recipient
        of
        a Plan Share Award shall be entitled, subject to the conditions herein stated,
        to receive such number of shares of Common Stock or amount of other securities
        of the Corporation or such other corporation as were exchangeable for the
        number
        of shares of Common Stock of the Corporation which such Recipients would
        have
        been entitled to receive except for such action.

      



      
        
          
          

        

        
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                 9.02           Amendment
        and Termination of Plan.  The Board may, by resolution,
        at any time amend or terminate the Plan, subject to any required shareholder
        approval or any shareholder approval which the Board may deem to be advisable
        for any reason, such as for the purpose of obtaining or retaining any statutory
        or regulatory benefits under tax, securities or other laws or satisfying
        any
        applicable stock exchange listing requirements.  The Board may not,
        without the consent of the Recipient, alter or impair his or her Plan Share
        Award except as specifically authorized herein.  Notwithstanding any
        other provision of the Plan, this Plan may not be terminated until such time
        as
        all Plan Shares held by the Trust have been awarded to Plan Recipients and
        shall
        be deemed to be earned prior to the time of termination.

      


                 9.03           Employment
        or Service Rights.  Neither the Plan nor any grant of a
        Plan Share Award, Performance Share Award or Plan Shares hereunder nor any
        action taken by the Trustee, the Committee or the Board in connection with
        the
        Plan shall create any right on the part of any Employee or Non-Employee Director
        to continue in such capacity.

      


                 9.04           Voting
        and Dividend Rights.  No Recipient shall have any voting
        or dividend rights or other rights of a shareholder in respect of any Plan
        Shares covered by a Plan Share Award or Performance Share Award, except as
        expressly provided in Sections 7.02, 7.04 and 7.05 above, prior to the time
        said
        Plan Shares are actually earned and distributed to him.

      


                 9.05           Governing
        Law.  To the extent not governed by federal law, the Plan
        and Trust shall be governed by the laws of the Commonwealth of
        Pennsylvania.

      


                 9.06           Effective
        Date.  This Plan as originally adopted was effective as
        of the Effective Date, and Awards may be granted hereunder no earlier than
        the
        date this Plan was approved by the shareholders of the Corporation and prior
        to
        the termination of the Plan.  Notwithstanding the foregoing or
        anything to the contrary in this Plan, the implementation of this Plan was
        subject to the approval of the Corporation's shareholders.  The
        amendment and restatement of this Plan shall be effective as of November
        15,
        2007.

      


                 9.07           Term
        of Plan.  This Plan shall remain in effect until the
        earlier of (i) ten (10) years from the Effective Date, (ii) termination by
        the
        Board, or (iii) the distribution to Recipients and Beneficiaries of all the
        assets of the Trust.

      


                 9.08           Tax
        Status of Trust.  It is intended that the trust
        established hereby be treated as a Grantor Trust of the Corporation under
        the
        provisions of Section 671 et seq. of the Code, as the same may be amended
        from
        time to time.

      



      
        
          
          

        

        
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                 IN
        WITNESS WHEREOF, the Corporation has caused this amended and restated
        Agreement to be executed by its duly authorized officers and the corporate
        seal
        to be affixed and duly attested, and the initial Trustees of the Trust
        established pursuant hereto have duly and validly executed this Agreement,
        all
        on this 15th day of November 2007.

      


      


      
        	 	 	 	 	 
	
                KNBT
                  BANCORP, INC.

              	 	
                TRUSTEES:

              
	 	 	 	 
	 	 	 	 
	
                By:

              	
                Scott
                  V.Fainor

              	 	
                Jeffrey
                  P. Feather

              
	 	
                President
                  and CEO

              	 	 	 
	 	 	 	 
	 	 	 	
                R.
                  Chadwick Paul, Jr.

              
	 	 	 	 	 
	 	 	 	 
	 	 	 	
                Kenneth
                  R. Smith

              
	 	 	 	 	 
	 	 	 	 
	 	 	 	
                R.
                  Charles Stehly

              
	 	 	 	 	 
	 	 	 	 
	 	 	 	
                Richard
                  Stevens, III

              


      

      



      
        
          
          

        

        
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