Document:

EX-10.1

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”)

3EX-10.1

TITANIUM METALS CORPORATION

AMENDED AND RESTATED

1996 NON-EMPLOYEE DIRECTOR COMPENSATION PLAN

As Amended and Restated Effective November 15, 2005

1. Purpose. The purpose of the Amended and Restated 1996 Non-Employee Director
Compensation Plan is to promote the interests of the Company by providing an inducement to obtain
and retain the services of qualified persons who are neither employees nor officers of the Company
to serve as members of the Company’s Board of Directors.

2. Definitions.

(a) “Board” shall mean the Board of Directors of the Company.

(b) “Cause” shall mean any misappropriation of the assets of the Company or any of its
Subsidiaries resulting in material loss to such entity.

(c) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(d) “Company” shall mean Titanium Metals Corporation, a Delaware corporation.

(e) “Director” shall mean any person serving as a member of the Board.

(f) “Disability” shall mean the condition of a Grantee who is unable to engage in any
substantial gainful activities by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than twelve (12) months.

(g) “Eligible Directors” shall mean those Directors eligible to participate in the Plan
pursuant to Section 4.

(h) “Fair Market Value” shall mean the last reported sale price of Stock on the New
York Stock Exchange (or other exchange upon which the Stock is traded as of the date of
determination).

(i) “Grantee” shall mean an Eligible Director who has been granted an Option.

(j) “Ineligible Directors” shall mean those Directors who are not Eligible Directors.

(k) “Meeting Fees” shall mean the daily rate of $1,000 to be paid to each Eligible
Director for such Eligible Director’s attendance at a regular or special meeting of the
Board or Board committee (in person or by telephone), or for performing other services at
the request of the Board or Board committee (other than related to Board or Board committee
meetings).

Provided, that, the meeting fee is intended to be paid on a daily rate basis and not on a
per meeting basis and covers any preparation time required for such meetings.

(l) “Option” shall mean an option to purchase shares of Stock, granted pursuant to the
Plan and subject to the terms and conditions described in the Plan. Options shall not be
incentive stock options within the meaning of Code Section 422A.

(m) “Optionee” shall mean a person who holds an Option.

(n) “Parent” shall mean a corporation of the type defined in Code Section 424(e).

(o) “Plan” shall mean this Amended and Restated 1996 Non-Employee Director Compensation
Plan, as it may be amended from time to time pursuant to Section 9.

(p) “Retainer” shall mean an annual retainer paid in quarterly installments to Eligible
Directors which shall be comprised of $20,000 in cash, plus a variable number of shares of
Stock to be determined in accordance with the following schedule:

	 	 	 
	RANGE OF CLOSING PRICE PER SHARE	 	NUMBER OF SHARES IN ANNUAL
	ON THE DATE OF GRANT	 	RETAINER STOCK GRANT
	Over $20

	 	500 shares
	 

	 	 
	 
	 	 
	$10 to $20

	 	1,000 shares
	 

	 	 
	 
	 	 
	$5 to $9.99

	 	1,500 shares
	 

	 	 
	 
	 	 
	Under $5

	 	2,000 shares
	 

	 	 

For service on Board committees, Eligible Directors shall be paid an annual cash
retainer in accordance with the following schedule, with each such retainer to be payable in
quarterly installments on the same dates as the cash portion of the annual Retainer for
Board service is paid:

	 	 	 	 	 
	COMMITTEE OR POSITION	 	ANNUAL RETAINER
	Audit Committee Member
	 	$	5,000	 
	 
	 	 	 	 
	Audit Committee Financial Expert
	 	$5,000 (in addition to committee retainer)
	 
	 	 	 	 
	Members of All Other Committees
	 	$	2,000	 
	 
	 	 	 	 

(q) “Stock” shall mean the Company’s $.01 par value common stock.

(r) “Subsidiary” shall mean a corporation of the type defined in Code Section 424(f).

3. Administration. The Plan shall be administered by the Board. The amount and
nature of the awards to be granted under the Plan, including grants of Options, shall be automatic
as described in Section 7. The Board, subject to the provisions of the Plan, have the power to
construe the Plan, to determine all questions thereunder and to adopt and amend such rules and
regulations for the administration of the Plan as they may deem desirable. Any interpretation,
determination, or other action made or taken by the Board shall be final, binding, and conclusive.
A majority of the total number of the Board members shall constitute a quorum for purposes of any
action by the Board, and the vote of a majority of the Board present at a meeting of the Board at
which a quorum is present shall be the act of the Board. Any action reduced to writing and signed
by all of the members of the Board shall be as fully effective as if it had been taken by a vote at
a meeting of the Board duly called and held. None of the Board shall be personally liable for any
action, determination or interpretation made in good faith with respect to the Plan or the Options.

4. Eligibility. All Directors of the Company shall be eligible to participate in the
Plan unless they are employees of the Company or any Subsidiary or Parent of the Company.

5. Shares Subject to the Plan

(a) Class. The shares which are to be made the subject of awards granted under
the Plan shall be the Company’s authorized but unissued Stock. In connection with the
issuance of Stock under the Plan, the Company may repurchase Stock in the open market or
otherwise.

(b) Aggregate Amount. The total number of shares of Stock authorized under the
Plan shall not exceed 52,500 (subject to adjustment under Section 10(c)). If any
outstanding Option under the Plan expires or is terminated for any reason, then the Stock
allocable to the unexercised portion of such Option shall not be charged against the
limitation of this Section 5(b) and may again become the subject of an Option granted under
the Plan.

	 	6.	 	Retainer/Meeting Compensation.

(a) Cash Portion of Retainer. The cash portion of the Board and committee
Retainers shall be paid to each Eligible Director quarterly in advance on or around the
first business day of each calendar quarter following the election or re-election of such
Eligible Director by the stockholders at the annual meeting (or by the Board, in the case of
a filled vacancy), and no payment of partial quarterly fees will be made or required for
partial calendar quarters served by a new director and/or committee member before the next
regular quarterly payment and no director and/or committee member who ceases to serve shall
be required to reimburse the Company for the remainder of the calendar quarter following
such termination of service.

(b) Stock Portion of Retainer. Certificates representing the stock portion of
the Retainer shall be delivered to each Eligible Director as soon as practicable following
the election or re-election of such Eligible Director by the stockholders at the annual
meeting. Such certificates shall be registered in the name of the Eligible Director, and
all Stock so issued shall be fully paid and nonassessable. The Company shall pay any
issuance or transfer taxes with respect to the issuance of Stock.

(c) Meeting Fees/Daily Rate. Meeting Fees and the daily services rate shall be
paid in cash on or as soon as practicable after any regular or special meeting attended, or
performance of any other services for the Board or a committee of the Board, by an Eligible
Director.

7. Terms, Conditions and Form of Options. Each Option granted under the Plan shall be
evidenced by a written agreement substantially in the form attached hereto or in such other form as
the Board shall from time to time approve, which agreements shall be executed by a duly authorized
officer of the Company and shall comply with and be subject to the following terms and conditions:

(a) Option Grant Dates. Commencing in 1999, Options were granted automatically
to each Eligible Director elected at the annual meeting of stockholders of the Company as of
the date of such meeting. For any Eligible Director who was elected or appointed after the
annual meeting of the stockholders of the Company in a given year, the Options were granted
to such Eligible Director as of the date of his or her election or appointment. Commencing
in 2003, no further Options shall be granted under this Plan; however, all previously
granted Options shall remain issued, outstanding and exercisable in accordance with their
respective terms.

(b) Option Formula. Each Eligible Director received an Option to purchase a
specified number of shares of Stock on the grant date of the Option without further action
by the Board.

(c) Period of Options. Options granted under the Plan vest and become
exercisable on the first anniversary of grant date of the Option; and Options shall
terminate and cease to be exercisable on the tenth anniversary of the grant date of the
Option (subject to prior termination as provided in Sections 7(g) and (h) below).

(d) Option Price. The exercise price of each Option was the Fair Market Value
of a share of Stock on the date the Option was granted.

(e) Exercise of Options. Vested and exercisable Options may be exercised (in
full or in part) only by written notice of exercise delivered to the Company at its
principal executive office accompanied either (i) by cash payment of the aggregate exercise
price for all shares of Stock being acquired upon exercise of the Option (“Exercise for
Cash”), or (ii) written direction to deliver the shares of Stock being acquired upon
exercise of the Option to a registered broker dealer with instruction to sell such shares
for the account of Optionee, and to remit to the Company out of such sale proceeds a cash
payment equal to the aggregate exercise price for all shares of Stock being acquired upon
exercise of the Option (“Cashless Exercise”). Such Option shall be deemed to have been
exercised, with respect to an Exercise for Cash on the date both the notice and the cash
payment have been received by the Company (with the proceeds per share being calculated as
the difference between the Fair Market Value of the stock on the date of exercise and the
exercise price of the Option). Such Option shall be deemed to have been exercised with
respect to a Cashless Exercise on the sale date shown on the Grantee’s brokerage
confirmation or other confirmation of trade (with the proceeds per share being calculated as
the difference between the sale price of the stock shown on the brokerage confirmation or
other confirmation of trade and the exercise price of the Option).

(f) Transferability. No Option granted under the Plan shall be transferable
other than by will or by the laws of descent and distribution; provided, however, that the
Board may determine to grant Options that are transferable, without payment of
consideration, to immediate family members of the Grantee or to trusts or partnerships for
such family members, and may amend outstanding Options to provide for such transferability.
No interest of any Optionee in any Option shall be subject to attachment, execution,
garnishment, sequestration, the laws of bankruptcy or any other legal or equitable process.
Except as otherwise determined by the Board, during the lifetime of the Grantee, Options
shall be exercisable only by the Grantee or the Grantee’s guardian or legal representative.

(g) Death or Disability of Grantee. If a Grantee dies or terminates
performance of services as a Director because of Disability, any unvested and unexercisable
Option granted to such Grantee shall immediately and fully vest. Such Option, together with
any other vested and unexercisable Options granted to such Grantee, may be exercised, at any
time, or from time to time, prior to the earlier of (i) the termination of such Option in
accordance with Section 7(c), or (ii) one year after the date of Grantee’s death or
termination of services as a Director, at which date all then-outstanding and unexercised
Options granted to such Grantee shall terminate. In the case of death, an Option may be
exercised by the person or persons to whom the Optionee’s rights under the Option pass by
will or applicable law, or if no such person has such rights, by the Optionee’s executors or
administrators; provided that such person(s) consent in writing to abide by and be subject
to the terms of the Plan and the Option and such writing is delivered to the Company.

	 	(h)	 	Termination of Services as Director.

(i) If a Grantee’s performance of services for the Company and its Subsidiaries
shall terminate for any reason other than death or Disability or termination of
services as a Director for Cause, any unvested and unexercisable Option granted to
such Grantee shall immediately and fully vest. Such Option, together with any other
vested and exercisable Options granted to such Grantee, may be exercised, at any
time, or from time to time, prior to the earlier of (i) the termination of such
Option in accordance with Section 7(c) or (ii) three months after the date of such
Grantee’s termination of services as a Director, at which date all then-outstanding
and unexercised Options granted to such Grantee shall terminate.

(ii) If a Grantee’s performance of services as a Director is terminated for
Cause, any unvested and unexercisable Option granted to such Grantee shall terminate
as of the date of such termination of services. All Options previously granted to
such Grantee which are, as of the date of such termination of services, vested and
exercisable, may be exercised at any time, or from time to time, prior to the earlier
of (i) the termination of such Option in accordance with Section 7(c) or (ii) one
month after the date of such Grantee’s termination of services as a Director, at
which date all then-outstanding and unexercised Options granted to such Grantee shall
terminate. For this purpose of the Plan and any Option agreement, such Grantee’s
service shall be deemed to have terminated on the earlier of (A) the date when the
Grantee’s service in fact terminated or (B) the date when such Grantee received
written notice that his service is to terminate for Cause.

(i) No Rights as Shareholder. No Optionee shall have any rights as a
shareholder with respect to any Stock subject to an Option prior to the date of issuance to
such Optionee of a certificate or certificates for such shares.

8. Compliance With Other Laws and Regulations. The Plan, the grant and exercise of
Options under the Plan, and the obligation of the Company to transfer shares under such Options
shall be subject to all applicable federal and state laws, rules and regulations, including those
related to disclosure of financial and other information to Optionees, and to any approvals by any
government or regulatory agency as may be required. The Company shall not be required to issue or
deliver any certificates for shares of Stock prior to (a) the listing of such shares on any stock
exchange on which the Stock may then be listed, where such listing is required under the rules or
regulations of such exchange, and (b) the compliance with applicable federal and state securities
laws and regulations relating to the issuance and delivery of such certificates; provided, however,
that the Company shall make all reasonable efforts to so list such shares and to comply with such
laws and regulations.

9. Amendment and Discontinuance. The Board may from time to time amend, suspend or
discontinue the Plan; provided, however, that, the Plan shall not be amended without the consent of
the shareholders of the Company to the extent such consent is required under Rule 16b-3, Section
162(m) of the Code or any stock exchange or market quotation system on which the Stock is then
listed or quoted. Except where approval of the Board is required by applicable law, the power of
the Board to amend, suspend or discontinue the Plan shall be exercised by the Board.

10. General Provisions.

(a) Assignability. The rights and benefits under the Plan shall not be
assignable or transferable by an Eligible Director other than by will or by the laws of
descent and distribution, and, except for the Death Benefit described in Section 10(d)
below. Except as otherwise determined by the Board, during the lifetime of the Grantee,
Options granted under the Plan shall be exercisable only by the Grantee.

(b) Termination of Plan. No Options may be granted under the Plan after May
18, 2006 (or if such date is not a business day, on the next succeeding business day). The
Plan shall automatically terminate on the date all Options granted under the Plan have been
exercised or have terminated or expired.

(c) Adjustments in Event of Change in Stock. In the event of any change in the
Stock by reason of any stock dividend, recapitalization, reorganization, merger,
consolidation, split-up, combination, or exchange of shares, or of any similar change
affecting the Stock, the number and class of shares subject to outstanding Options, the
exercise price per share, and any other terms of the Plan or the Options which in the
Board’s sole discretion require adjustment shall be appropriately adjusted consistent with
such change in such manner as the Board may deem appropriate.

(d) Death Benefit. In the event that any Eligible Director’s services should
terminate because of death, the Company shall pay in cash to such Eligible Director’s
designated beneficiary or beneficiaries (or the Eligible Director’s estate if no beneficiary
is designated) an amount equal to the cash portion of the annual Board and any committee
Retainers, whether or not the Eligible Director has received any of such Retainer in such
year.

(e) No Right to Continue as a Director. Neither the Plan, nor the granting of
an Option nor any other action taken pursuant to the Plan, shall constitute or be evidence
of any agreement or understanding, express or implied, that the Company will retain a
Director for any period of time, or at any particular rate of compensation.

(f) ERISA. The Plan is not an employee benefit plan which is subject to the
provisions of the Employee Retirement Income Security Act of 1974, and the provisions of
Section 401(a) of the Code are not applicable to the Plan.

(g) Non-Statutory Options. All Options granted under the Plan shall be
non-statutory options not entitled to special tax treatment under Section 422A of the Code.

(h) Effective Date of the Plan. The Plan originally took effect on May 18, 1996
(ten days following last adoption by the stockholders of the Company on May 8, 1996). The
Plan was originally adopted by the Board on March 29, 1996, was subsequently amended by the
Board on April 15, 1996, and was amended and restated by the Board on February 14, 1997,
February 19, 1998, May 19, 1998, February 23, 1999, February 28, 2001, June 8, 2001, May 7,
2002, May 20, 2003, October 1, 2004 and November 15, 2005. The Plan was originally adopted
by the stockholders of the Company on March 29, 1996, and again on May 8, 1996 following the
amendment of the Plan by the Board.

(i) Effect of Amendment and Restatement of the Plan. This amended and restated
version of the Plan shall amend and supersede in its entirety previous versions of the Plan,
provided, however, that such amendment and restatement is not intended to affect the
validity of any actions taken under previous versions of the Plan, as summarized on
Exhibit A hereto.

(j) Governing Law. The Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of Colorado and construed
accordingly.

(k) Variation of Pronouns. All pronouns and any variations thereof contained
herein shall be deemed to refer to masculine, feminine, neuter, singular or plural, as the
identity of the person or persons may require.

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