Document:

exhibit10-6.htm

    EXHIBIT 10.6

    

      AMENDMENT
        NO. 1 TO

      KEYSTONE
        NAZARETH BANK & TRUST COMPANY

      TRUSTEE
        AND EXECUTIVE DEFERRED COMPENSATION PLAN

      

      

      THIS
        AMENDMENT NO. 1 (this “Amendment”)
        to the Keystone Nazareth Bank & Trust Company Trustee and Executive Deferred
        Compensation Plan (the “Plan”) is made and entered into effective as of November
        15, 2007 by Keystone Nazareth Bank & Trust Company (the
“Bank”).

      

      RECITALS:

      

      WHEREAS,
        Keystone Savings Bank
        converted from mutual to stock form and merged with First Colonial Group
        in
        October 2003;

      

      WHEREAS,
        Keystone Nazareth Bank &
Trust Company, as successor to Keystone Savings Bank, desires to amend the
        Plan
        to ensure that the Plan complies with Section 409A of the Internal Revenue
        Code
        of 1986, as amended (the “Code”);

      

      WHEREAS,
        the Plan was previously frozen
        so that no new deferral elections could be made with respect to compensation
        to
        be earned on or after January 1, 2006; and

      

      WHEREAS,
        pursuant to Section 11.1 of
        the Plan, the Board may amend the Plan from time to time;

      

      NOW,
        THEREFORE, in consideration of the
        premises, the mutual agreements herein set forth and such other consideration
        the sufficiency of which is hereby acknowledged, the Board hereby amends
        the
        Plan as follows:

      

      Section
        1. References to Keystone Savings Bank.  All references to
        Keystone Savings Bank in the Plan are hereby changed to Keystone Nazareth
        Bank
& Trust Company.

      

      Section
        2. References to Trustee.  All references to Trustee in the
        Plan are hereby changed to Director.

      

      Section
        3. Amendment to Article 2.0 of the Plan.  Article 2.0 of the
        Plan is hereby amended to add a new Section 2.2 at the end thereof to read
        in
        its entirety as follows:

      

      
        	
                 

              	
                2.2

              	
                Freezing
                  of the Plan.  Notwithstanding any provision in this Plan to
                  the contrary, no new Participants shall be entitled to participate
                  in the
                  Plan after December 31, 2005, and no compensation to be earned
                  on or after
                  January 1, 2006 may be deferred under this
                  Plan.”

              

      

      

      Section
        4. Amendment to Sections 6.1, 6.2, 6.3, 6.4 and 6.5 of the
        Plan.  Sections 6.1 through 6.5 of the Plan are hereby amended to
        read in their entirety as follows:

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      
        	
                "

              	
                6.1

              	
                Generally.  An
                  election to defer compensation must be received by the Committee
                  prior to
                  the date specified in this Section 6.0 of the Plan (“Deferral
                  Election”).  Any elections to defer compensation must be made on
                  or prior to the December 31st preceding the calendar year in which
                  such
                  income shall be earned, subject to the exception provided in Section
                  6.2
                  of the Plan (the “Elected Contribution Amount”).  Under no
                  circumstances may (i) a Participant defer compensation to which
                  the
                  Participant has already attained, at the time of the deferral,
                  a legally
                  enforceable right to receive such compensation, or (ii) defer any
                  compensation earned on or after January 1,
                  2006.

              

      

      

      
        	
                 

              	
                6.2

              	
                New
                  Participant. Notwithstanding anything in the Plan to the contrary, in
                  the case of the first year in which a Participant becomes eligible
                  to
                  participate in the Plan, elections to defer compensation may be
                  made for
                  services to be performed subsequent to the election within thirty
                  (30)
                  days of the date the Participant first becomes eligible to participate
                  in
                  this Plan, with such elections in each case to be effective as
                  of the
                  immediately following payroll period of the
                  Bank.

              

      

       

      
        	
                 

              	
                6.3

              	
                
                  A
                    Participant may not elect to change his or her Election Contribution
                    Amount that is in effect for a Plan Year.  The Committee, at its
                    discretion, may permit a Participant to change his or her Deferral
                    Election for a subsequent Plan Year, provided that the subsequent
                    Deferral
                    Election is made on or prior to the December 31st
                    preceding
                    the calendar year in which such income shall be
                    earned.

                

              

        	
                 

              	
                6.4

              	
                
                  Prior
                    Elections.  Any payment elections made by a Participant
                    before January 1, 2005 shall continue in effect until such time
                    as the
                    Participant makes a subsequent payment election pursuant to Section
                    6.5
                    below and such payment election becomes effective as set forth
                    below.  If no payment election was previously made, then the
                    current payment election shall be deemed to be a lump sum cash
                    payment as
                    of the first day of the month following (a) the date of the Participant’s
                    Separation from Service (as defined in Section 6.7 herein) with
                    respect to
                    any Participant who is not a “Specified Employee” (as defined in Treasury
                    Regulation §1.409A-1(i)) as of the date of the Participant’s Separation
                    from Service, (b) the lapse of six months after the Participant’s
                    Separation from Service with respect to any Participant who is
                    a Specified
                    Employee as of the date of the Participant’s Separation from Service, or
                    (c) the Participant’s death.

                

              

      

       

      
        	
              	
                6.5

              	
                Transitional
                  Elections Prior to 2009.  On or before December 31, 2008, if a
                  Participant wishes to change his payment election as to either
                  the time or
                  form of payment or both, the Participant may do so by completing
                  a payment
                  election form approved by the Committee, provided that any such
                  election
                  (1) must be made at least 12 months before the date on which benefit
                  payments are scheduled to commence, (2) must be made before the
                  Participant has a Separation from Service or dies, (3) shall not
                  take
                  effect before the date that is 12 months after the date the election
                  is
                  made and accepted by the Bank, (4) does not cause a payment that
                  would
                  otherwise be made in the year of the election to be delayed to
                  a later
                  year, and (5) does not accelerate into the year in which the election
                  is
                  made a payment that is otherwise scheduled to be made in a later
                  year.

              

      

       

      
        	
              	
                6.6

              	
                Subsequent
                  Payment Elections.  A Participant may not change his payment
                  election on or after January 1,
                  2009.

              

      

      

      
        	
              	
                6.7

              	
                Separation
                  from Service.  A “Separation from Service” shall mean a
                  termination of the Participant’s services (whether as an employee or as an
                  independent contractor) to the Bank for any reason other than
                  death.  Whether a Separation from Service has occurred shall be
                  determined in
                  accordance with the requirements of Section 409A of the Code based
                  on whether the facts and circumstances indicate that the Bank and
                  the
                  Participant reasonably anticipated that no further services would
                  be
                  performed after a certain date or that the level of bona fide services
                  the
                  Participant would perform after such date (whether as an employee
                  or as an
                  independent contractor) would permanently decrease to no more than
                  twenty
                  percent (20%) of the average level of bona fide services performed
                  (whether as an employee or an independent contractor) over the
                  immediately
                  preceding thirty-six (36) month
                  period.”

              

      

      

      Section
        5. Amendments to Sections 8.1, 8.2 and 8.3 of the
        Plan.  Sections 8.1 through 8.3 of the Plan are hereby amended to
        read in their entirety as follows:

      

      
        	
                 

              	
                8.1

              	
                Payment
                  Events.  Each Participant shall be entitled to payment of
                  deferred compensation equal to the amount of the balance of such
                  Participant’s Deferred Comp Plan Account as of the earliest to occur of
                  the following events selected by a Participant on his Deferral
                  Election
                  form (hereinafter “Payment Event”):

              

      

       

      (a)  Separation
        from Service (as defined in Section 6.7 above),

       

      (b)  Death,
        or

       

      (c)  A
        fixed
        payment date as specified on a Deferral Election form.

       

      
        	
                 

              	
                8.2

              	
                Form
                  of Payment.  Upon initially electing to participate in the
                  Plan, a Participant shall also select, on the Deferral Election
                  form, the
                  form in which deferred compensation is to be paid to him/her following
                  a
                  Payment Event.  A Participant may elect to receive payment in
                  the following forms of payment: (i) a lump sum payment or (ii)
                  equal
                  periodic payments  (no more frequently than monthly) over a
                  period from two (2) to up to one hundred twenty (120)
                  months.  The election may not be altered by the Participant
                  after he/she commences participation in the Plan, except as set
                  forth in
                  Section 6.5 above.  If a Participant fails to elect a form of
                  payment, the Participant’s Deferred Comp Plan Account shall be paid to
                  him/her in a lump sum cash payment.

              

      

       

      
        	
                 

              	
                8.3

              	
                Timing
                  of Payment Event.  Following the occurrence of a Payment
                  Event, the Bank shall commence payment to the Participant or the
                  Participant’s designated Beneficiary or legal representative, as the case
                  may be, of the Participant’s Deferred Comp Plan Account, except as set
                  forth below.  The Deferred Comp Plan Account balance shall be
                  paid in accordance with Sections 6.4, 6.5 and 8.2
                  above.  Notwithstanding anything in the Plan to the contrary, if
                  a payment is to be made on account of a Separation from Service
                  to a
                  Participant who was a Specified Employee (as defined in Treasury
                  Regulation §1.409A-1(i)) as of the date of the Separation from Service,
                  then any payment will be made or will commence on the first day
                  of the
                  month following the lapse of six (6) months after the date of the
                  Separation from Service.  If payments are to be made in periodic
                  installments and are delayed as set forth in the preceding sentence,
                  then
                  (a) the number of periodic installments shall remain the same,
                  and (b) the
                  installments shall be paid each period, commencing as of the date
                  set
                  forth in the preceding sentence.  The dollar amount of each
                  periodic installment paid to a Participant or his or her Beneficiaries
                  shall be determined by multiplying the value of the Participant’s vested
                  Deferred Comp Plan Account as of the close of business on the day
                  preceding such payment by a fraction.  The numerator of the
                  fraction shall in all cases be one, and the denominator of the
                  fraction
                  shall be the number of periodic installments remaining to be paid
                  to the
                  Participant or his or her Beneficiaries, including the periodic
                  installment for which the calculation is being made. For example,
                  if a
                  Participant elected to receive 10 annual installments, the amount
                  of the
                  first annual installment shall be 1/10th
                  of the
                  Participant’s vested Deferred Comp Plan Account, the second annual
                  installment shall be 1/9th
                  of the then
                  remaining vested Deferred Comp Plan Account, and so
                  on.”

              

      

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      Section
        6. Amendment to Article 11.0 of the Plan.  Article 11.0 of the
        Plan is hereby amended to add a new Section 11.2 at the end thereof to read
        in
        its entirety as follows:

      

      
        	
                "

              	
                11.2

              	
                Termination.  Under
                  no circumstances may the Plan permit the acceleration of the time
                  or form
                  of any payment under the Plan prior to the payment events specified
                  herein, except as provided in this Section 11.2.  The Bank may,
                  in its discretion, elect to terminate the Plan in any of the following
                  three circumstances and accelerate the payment of the entire unpaid
                  balance of the Participant’s vested benefits as of the date of such
                  payment in accordance with Section 409A of the
                  Code:

              

      

      

      
        	
                (i)  

              	
                the
                  Plan is irrevocably terminated within the 30 days preceding a Change
                  in
                  Control and (1) all arrangements sponsored by the Bank that would
                  be
                  aggregated with the Plan under Treasury Regulation §1.409A-1(c)(2) are
                  terminated, and (2) the Participants and all participants under
                  the other
                  aggregated arrangements receive all of their benefits under the
                  terminated
                  arrangements within 12 months of the date the Bank irrevocably
                  takes all
                  necessary action to terminate the Plan and the other aggregated
                  arrangements;

              

      

      

      
        	
                (ii)  

              	
                the
                  Plan is irrevocably terminated at a time that is not proximate
                  to a
                  downturn in the financial health of the Bank and (1) all arrangements
                  sponsored by the Bank that would be aggregated with the Plan under
                  Treasury Regulation 1.409A-1(c) if a Participant participated in
                  such
                  arrangements are terminated, (2) no payments are made within 12
                  months of
                  the date the Bank takes all necessary action to irrevocably terminate
                  the
                  arrangements, other than payments that would be payable under the
                  terms of
                  the arrangements if the termination had not occurred, (3) all payments
                  are
                  made within 24 months of the date the Bank takes all necessary
                  action to
                  irrevocably terminate the arrangements, and (4) the Bank does not
                  adopt a
                  new arrangement that would be aggregated with the Plan under Treasury
                  Regulation 1.409A-1(c) if a Participant participated in both arrangements,
                  at any time within three years following the date the Bank takes
                  all
                  necessary action to irrevocably terminate the Plan;
                  or

              

      

      

      
        	
                 

              	
                (iii)

              	
                the
                  Plan is terminated within 12 months of a corporate dissolution
                  taxed under
                  Section 331 of the Code, or with the approval of a bankruptcy court
                  pursuant to 11 U.S.C. §503(b)(1)(A), provided that the amounts deferred by
                  each Participant under the Plan are included in the Participant’s gross
                  income in the later of (1) the calendar year in which the termination
                  of
                  the Plan occurs, or (2) the first calendar year in which the payment
                  is
                  administratively practicable.”

              

      

      

      Section
        7. No Further Modification.  Except as expressly amended
        hereby, the Plan remains unmodified and in full force and effect.

      

      Section
        8. Governing Law.  This Amendment shall be governed by and
        construed in accordance with the laws of the Commonwealth of Pennsylvania
        without regard to its conflicts of laws principles.

      

      Section
        9. Effectiveness.  The Amendment shall be deemed to be
        retroactively effective as of January 1, 2005.

      

      IN
        WITNESS WHEREOF, the Company has caused this Amendment to be executed as
        of the
        date and year first written above.

      

      
        	 	 	 	 	 
	 	 	 	
                KEYSTONE
                  NAZARETH BANK &
                  TRUST COMPANY

              
	 	 	 	 	 
	 	 	 	
                BY:

              	 
	 	 	 	
                Name:

              	 
	 	 	 	
                Title:

              	 

      

      

3exhibit10-7.htm

    EXHIBIT 10.7

    
 

    AMENDMENT
      NO. 1 TO

    NAZARETH
      NATIONAL BANK

    DIRECTORS’
      DEFERRED COMPENSATION PLAN #2

    

    

    THIS
      AMENDMENT NO. 1 (this “Amendment”)
      to the Nazareth National Bank Directors’ Deferred Compensation Plan #2 (the
“Plan”) is made and entered into effective as of November 15, 2007 by Keystone
      Nazareth Bank & Trust Company (the “Bank”).

    

    RECITALS:

    

    WHEREAS,
      Keystone Nazareth Bank &
Trust Company, as successor to Nazareth National Bank, desires to amend the
      Plan
      to ensure that the Plan complies with Section 409A of the Internal Revenue
      Code
      of 1986, as amended (the “Code”); and

    

    WHEREAS,
      pursuant to Section 11 of the
      Plan, the Board may amend the Plan from time to time;

    

    NOW,
      THEREFORE, in consideration of the
      premises, the mutual agreements herein set forth and such other consideration
      the sufficiency of which is hereby acknowledged, the Board hereby amends the
      Plan as follows:

    

    Section
      1.                      Addition
      of a New Section 1.S to the Plan. Section 1 of this Plan is hereby amended
      to add a new Section 1.S to read in its entirety as follows:

    

    “Specified
      Employee – “Specified
      Employee” shall have the meaning set forth in Treasury Regulation
§1.409A-1(i).”

    

    Section
      2.                      Other
      Amendments to Section 1 of the Plan. Current Sections 1.S, 1.T and 1.U of
      the Plan are re-numbered as Sections 1.T, 1.U and 1.V, respectively. In
      addition, newly numbered Section 1.U of the Plan is hereby amended to read
      in
      its entirety as follows:

    

    "U.
      Separation from Service -
“Separation from Service” means a termination of a Participant’s services
      (whether as an employee or as an independent contractor) to KNBT Bancorp, Inc.
      (the “Company”) and the Bank for any reason other than death.  Whether
      a Separation from Service has occurred shall be determined in
      accordance with the requirements of Section 409A of the Code based
      on whether the facts and circumstances indicate that the Company, the Bank
      and
      the Participant reasonably anticipated that no further services would be
      performed after a certain date or that the level of bona fide services the
      Participant would perform after such date (whether as an employee or as an
      independent contractor) would permanently decrease to no more than twenty
      percent (20%) of the average level of bona fide services performed (whether
      as
      an employee or an independent contractor) over the immediately preceding
      thirty-six (36) month period."

     

    Section
      3.                      References
      to Termination of Service.  All references to Termination of
      Service in the Plan are hereby changed to Separation from Service.

    

    Section
      4.                      Amendment
      to Section 2.2 of the Plan.  Sections 2.2 of the Plan is hereby
      amended to add a new subsection (c) at the end of such section to read in its
      entirety as follows:

    

    
      	
              "

            	
              c.

            	
              Freezing
                of the Plan.  No new Participants shall be entitled to
                participate in the Plan after December 31, 2005, and no new Deferred
                Compensation Agreements shall be entered into by any Participant
                after
                December 31, 2005.  Deferred Compensation Agreements entered
                into on or before December 31, 2005 shall continue to be honored
                in
                accordance with their terms."

            

    

    

    Section
      5.                      Amendment
      to Section 3.1(a) of the Plan.  Section 3.1(a) of the Plan is
      hereby amended to read in its entirety as follows:

    

    
      	
              "

            	
              a.

            	
              Generally.  The
                Bank shall pay to the Participant an amount equal to the product
                of the
                Normal Benefit multiplied by the Vested Percentage.  The benefit
                shall be paid over a 15-year period in annual installments, provided
                that
                any benefits being paid in monthly or quarterly installments prior
                to the
                date of this Amendment shall continue to be paid in monthly or quarterly
                installments. Except as provided in Section 3.1(c) below, such payments
                shall commence on the first day of the month coincident with or next
                following the later of (1) the Normal Benefit Date, or (2) for any
                Participant who is not a Specified Employee as of the date of the
                Separation from Service, the date of the Participant’s Separation from
                Service (or, if earlier, upon the death of a Participant pursuant
                to
                Section 3.2 of the Plan).  If a Participant is a Specified
                Employee as of the date of the Separation from Service, then the
                payments
                shall commence on the first day of the month coincident with or next
                following the later of (y) the Normal Benefit Date or (2) the lapse
                of six
                months after the date of the Participant’s Separation from Service (or, if
                earlier, upon the death of a Participant pursuant to Section 3.2
                of the
                Plan). In each case, subsequent payments shall be paid on the anniversary
                date of the first payment."

            

    

    

    Section
      6.                      Amendment
      to Section 3.1(b) of the Plan.  The last three sentences of
      Section 3.1(b) of the Plan are hereby deleted in their entirety.

    

    Section
      7.                      Deletion
      of Section 3.1(c) of the Plan.  Section 3.1(c) of the Plan is
      hereby deleted in its entirety.

    

    Section
      8.                      Deletion
      of Section 3.1(d) of the Plan. Section 3.1(d) of the Plan is hereby deleted
      in its entirety.

    

    Section
      9.                      Amendment
      to Section 3.2(a) of the Plan.  The first sentence of Section
      3.2(a) of the Plan is hereby amended to read in its entirety as
      follows:

    

    
      	
              "

            	
              a.

            	
              Death
                Prior to Commencement of Normal Benefits.  If a Participant dies
                prior to receiving any Normal Benefit payments, the Bank shall pay
                to the
                beneficiary the Pre-Termination Survivor’s Benefit specified in the
                Benefit Schedule.  Such benefit shall be paid over a 15-year
                period in annual installments commencing on the first day of the
                month
                coincident with or next following the Participant’s death, provided that
                any benefits being paid in monthly or quarterly installments prior
                to the
                date of this Amendment shall continue to be paid in monthly or quarterly
                installments. Payment of the Pre-Termination Survivor’s Benefit shall
                relieve the Bank of the obligation to pay any other benefits under
                the
                Plan."

            

    

    

    Section
      10                                Amendment
      to Section 3.3(c) of the Plan.  Section 3.3(c) of the Plan is
      hereby amended to read in its entirety as follows:

    

    
      	
              "

            	
              c.

            	
              Community
                Property.  If the Participant’s Compensation constitutes
                community property, then any beneficiary designation made by the
                Participant other than a designation of his spouse shall not be effective
                if any such beneficiary or beneficiaries are to receive more than
                50
                percent of the aggregate benefits hereunder unless such spouse shall
                approve such designation in
                writing."

            

    

    

    Section
      11.                                Amendment
      to 11 of the Plan.  Section 11 of the Plan is hereby amended to
      read in its entirety as follows:

    

    
      	
              "

            	
              11.

            	
              Amendments
                and Termination.  The Board of Directors of the Bank may, at any
                time, amend or terminate the Plan, provided, however, that the Board
                of
                Directors may not reduce or modify any benefit payable to a Participant
                or
                beneficiary receiving benefit payments at the time the Plan is amended
                or
                terminated.  Under no circumstances may the Plan permit the
                acceleration of the time or form of any payment under the Plan prior
                to
                the payment events specified herein, except as provided in this Section
                11.  The Board of Directors of the Bank may, in its discretion,
                elect to terminate the Plan in any of the following three circumstances
                and accelerate the payment of the entire unpaid balance of the
                Participant’s vested benefits as of the date of such payment in accordance
                with Section 409A of the Code:

            

    

    

    
      	
              (i)  

            	
              the
                Plan is irrevocably terminated within the 30 days preceding a Change
                in
                Control and (1) all arrangements sponsored by the Bank that would
                be
                aggregated with the Plan under Treasury Regulation §1.409A-1(c)(2) are
                terminated, and (2) each Participant and all participants under the
                other
                aggregated arrangements receive all of their benefits under the terminated
                arrangements within 12 months of the date the Bank irrevocably takes
                all
                necessary action to terminate the Plan and the other aggregated
                arrangements;

            

    

    

    
      	
              (ii)  

            	
              the
                Plan is irrevocably terminated at a time that is not proximate to
                a
                downturn in the financial health of the Bank and (1) all arrangements
                sponsored by the Bank that would be aggregated with the Plan under
                Treasury Regulation 1.409A-1(c) if any Participant participated in
                such
                arrangements are terminated, (2) no payments are made within 12 months
                of
                the date the Bank takes all necessary action to irrevocably terminate
                the
                arrangements, other than payments that would be payable under the
                terms of
                the arrangements if the termination had not occurred, (3) all payments
                are
                made within 24 months of the date the Bank takes all necessary action
                to
                irrevocably terminate the arrangements, and (4) the Bank does not
                adopt a
                new arrangement that would be aggregated with the Plan under Treasury
                Regulation 1.409A-1(c) if any Participant participated in both
                arrangements, at any time within three years following the date the
                Bank
                takes all necessary action to irrevocably terminate the Plan;
                or

            

    

    

    
      	
               

            	
              (iii)

            	
              the
                Plan is terminated within 12 months of a corporate dissolution taxed
                under
                Section 331 of the Code, or with the approval of a bankruptcy court
                pursuant to 11 U.S.C. §503(b)(1)(A), provided that the amounts deferred by
                each Participant under the Plan are included in the Participant’s gross
                income in the later of (1) the calendar year in which the termination
                of
                the Plan occurs, or (2) the first calendar year in which the payment
                is
                administratively practicable.”

            

    

    

    Section
      12.                                No
      Further Modification.  Except as expressly amended hereby, the
      Plan remains unmodified and in full force and effect.

    

    Section
      13.                                Governing
      Law.  This Amendment shall be governed by and construed in
      accordance with the laws of the Commonwealth of Pennsylvania without regard
      to
      its conflicts of laws principles.

    

    IN
      WITNESS WHEREOF, the Bank has caused
      this Amendment to be executed as of the date and year first written
      above.

    

    

    
      	 	 	 	 	 
	 	 	 	
              KEYSTONE
                NAZARETH BANK

            
	 	 	 	
              &
                TRUST COMPANY

            
	 	 	 	 	 
	 	 	 	
              BY:

            	 
	 	 	 	
              Name:

            	
              Jeffrey
                P. Feather

            
	 	 	 	
              Title:

            	
              Chairman
                of the Board

            

    

    

    
      
        
        

      

      
        1

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