Document:

Unassociated Document

    Exhibit
10.79

    

    EXECUTIVE
AGREEMENT

    

    THIS AGREEMENT is made as of this 1st
day of January 1, 2008, among NATIONAL PENN BANCSHARES, INC., a Pennsylvania
business corporation having its principal place of business in Boyertown,
Pennsylvania ("NPB"), NATIONAL PENN BANK, a national banking association having
its principal place of business in Boyertown, Pennsylvania ("Bank"), and H.
Anderson Ellsworth, an individual residing at 65 Wellington Blvd., Wyomissing,
Pennsylvania ("Executive").

    

    W I T N E S S E T H :

    

    WHEREAS, Executive is employed by NPB
and Bank as Executive Vice President of Bank’s SEC Reporting; and

    

    WHEREAS, the Boards of Directors of NPB
and Bank deem it advisable to provide Executive with certain additional benefits
in the event of certain changes in control of NPB or Bank so that Executive will
continue to attend to the business of NPB and Bank without distraction in the
face of the potentially disturbing circumstances arising therefrom.

    

    AGREEMENT

    

    NOW, THEREFORE, in consideration of the
mutual covenants and promises set forth herein, and each intending to be legally
bound, NPB, Bank and Executive agree as follows:

    

    1.            
Definitions.  The
following terms have the meanings specified below:

    

    a.           
"Affiliate"
means any corporation which is included within a "controlled group of
corporations" including NPB, as determined under Code Section 1563.

    

    b.           
"Base Salary" means the Executive's annual base salary, established either by
contract or by the Employer, prior to any reduction of such salary pursuant to
any contribution to a tax-qualified plan under Section 401(k) ofthe
Code.

    

    c.           
"Cause" means the occurrence of either of the following, the result of which is
the termination of Executive’s Employment:

    

    
      	
               
      

            	
              i.

            	
              Executive's
      conviction of, or plea of guilty or nolo contendere to, a felony or a
      crime of falsehood or involving moral turpitude;
  or

            

    

    

    
      	
               
      

            	
              ii.

            	
              the
      willful failure by Executive to substantially perform his duties to
      Employer, other than a failure resulting from Executive's incapacity as a
      result of the Executive's disability, which willful failure results in
      demonstrable material injury and damage to
  Employer.

            

    

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    Notwithstanding the foregoing,
Executive's Employment shall not be deemed to have been terminated for Cause if
such termination took place as a result of:

    

    
      	
               
      

            	
              x.

            	
              questionable
      judgment on the part of Executive;

            

    

    

    
      	
               
      

            	
              y.

            	
              any
      act or omission believed by Executive in good faith, to have been in or
      not opposed to the best interests of the Employer;
  or

            

    

    

    
      	
               
      

            	
              z.

            	
              any
      act or omission in respect of which a determination could properly be made
      that Executive met the applicable standard of conduct prescribed for
      indemnification or reimbursement or payment of expenses under the By-laws
      of NPB or the laws of the Commonwealth of Pennsylvania, or the directors
      and officers' liability insurance of NPB or any Employer, in each case as
      in effect at the time of such act or
omission.

            

    

    

    
      	
               
      

            	
              d.

            	
              "Change
      in Control" means:

            

    

    

    i.            
An
acquisition by any "person" or "group" (as those terms are defined or used in
Section 13(d) of the Exchange Act) of "beneficial ownership" (within the meaning
of Rule 13d-3 under the ExchangeAct) of securities of NPB representing 24.99% or
more of the combined voting power of NPB's securities then
outstanding;

    

    ii.           
A merger,
consolidation or other reorganization of Bank, except where the resulting entity
is controlled, directly or indirectly, by NPB;

    

    iii.          
A merger,
consolidation or other reorganization of NPB, except where shareholders of NPB
immediately prior to consummation of any such transaction continue to hold at
least a majority of the voting power of the outstanding voting securities of the
legal entity resulting from or existing after any transaction and a majority of the
members of the Board of Directors of the legal entity resulting from or existing
after any such transaction are former members of NPB's Board of
Directors;

    

    iv.         
A sale,
exchange, transfer or other disposition of substantially all of  the
assets of the Employer to another entity, except to an entitycontrolled,
directly or indirectly, by NPB;

    

    v.          
A sale,
exchange, transfer or other disposition of substantially all of the assets of
NPB to another entity, or a corporate division involving NPB; or

    

    vi.         
A
contested proxy solicitation of the shareholders of NPB that results in the
contesting party obtaining the ability to cast 25% or more of the votes entitled
to be cast in an election of directors of NPB.

    

    e.           
 "Code" means the Internal Revenue Code of 1986, as amended, and as the
same may be amended from time to time.

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              f.

            	
              "Employer"
      means Bank, NPB or any Affiliate which employs Executive at any particular
      time.

            

    

    

    
      	
               
      

            	
              g.

            	
              "Employment"
      means Executive's employment by Bank, NPB or any Affiliate at any
      particular time.

            

    

    

    
      	
               
      

            	
              h.

            	
              "Exchange
      Act" means the Securities Exchange Act of 1934, as
  amended.

            

    

    

    2.            
Resignation of
Executive.  If a Change in Control shall occur and if within
one hundred eighty (180) days after the effective date of a Change in Control
(or thirty (30) days after the completion of the conversion of the computer
systems if such conversion is later than one hundred eighty (180) days after the
effective date of a Change in Control, in either event, the “Transition Period”)
there shall be:

    

    a.            
Any
involuntary termination of Executive's employment (other than for
Cause);

    

    b.           
Any
reduction in Executive's title, responsibilities or authority, including such
title, responsibilities or authority as such may be increased from time to
time;

    

    c.           
Any
reduction in Executive's Base Salary in effect immediately prior to a Change in
Control, or any failure to provide Executive with benefits at least as favorable
as those enjoyed by Executive under any of the pension, life insurance, medical,
health and accident, disability or other employee plans of NPB or an Affiliate
in which Executive participated immediately prior to a Change in Control, or the
taking of any action that would materially reduce any of such compensation or
benefits in effect at the time of the Change in Control, unless such reduction
relates to a reduction applicable to all employees generally;

    

    d.           
Any
reassignment of Executive beyond a thirty (30) mile commute by automobile from
Boyertown, Pennsylvania; or

    

    e.           
Any
requirement that Executive travel in performance of his duties on behalf of NPB
or an Affiliate for a greater period of time during any year than was required
of Executive during the year preceding the year in which the Change in Control
occurred (each of the foregoing, a “Triggering Event”);

    

    then, at
the option of Executive, exercisable by Executive within one hundred eighty
(180) days of the occurrence of any Triggering Event within the Transition
Period, Executive may resign from Employment (or, if involuntarily terminated,
give notice of intention to collect benefits hereunder) by delivering a notice
in writing  to NPB, in which case Executive shall be entitled to a
lump sum cash severance payment equal to 150% of Executive's Base Salary in
effect immediately prior to a Change in Control, which Employer shall pay to
Executive within fifteen (15) days of Executive's termination of
employment.

    

    Executive shall not be required to
mitigate the amount of any payment providedfor in the preceding paragraph by
seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in the preceding paragraph be reduced by any compensation
earned by Executive as the result of employment by another employer or by reason
of Executive's receipt of or right to receive any retirement or other benefits
after the date of termination of employment or otherwise, except as otherwise
provided therein.

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    3.           Out-Placement
Services.  If a Change in Control occurs and Executive
exercises the option to resign from Employment (or is involuntarily terminated)
as described in Section 2, Employer shall provide Executive with the services of
a professional out-placement firm, if Executive so requests, for the period not
to exceed one year from the date of Executive’s resignation (or termination), at
Employer’s sole cost and expense, up to a maximum amount of Seven Thousand Five
Hundred Dollars ($7,500).

    

    4.           No Implied Rights; Rights on
Termination of Employment.

    

    a.           No Right to Continued
Employment.  Nothing in this Agreement shall confer upon
Executive any right with respect to continuance of Employment by Employer, nor
shall it interfere with or limit in any way theright of Employer to terminate
Executive’s Employment at any time.

    

    b.           Voluntary Termination of
Employment.  If Executive terminates Executive’s Employment
with Employer at any time prior to a Change in Control, this Agreement shall
terminate at that time and Employer shall have no further liability
hereunder.

    

    c.           Termination--Cause.  If
Employer terminates Executive's Employment at any time for Cause, this Agreement
shall terminate at that time and Employer shall have no further liability
hereunder.

    

    d.           Termination—Without
Cause.  Employer may terminate Executive’s Employment at any
time without Cause.  If Employer terminates Executive's employment at
any time without Cause prior to a Change in Control, and if no event has been
publicly announced that with the passing of time would constitute a Change in
Control, this Agreement shall terminate at that time and Employer shall have no
further liability hereunder.  If Employer terminates Executive’s
Employment at any time prior to a Change in Control but subsequent to the
occurrence of an event that has been publicly announced that with the passing of
time would constitute a Change in Control, the provisions of Sections 2 and 3 of
this Agreement shall apply to same extent as if Executive’s Employment had been
involuntarily terminated subsequent to a Change in Control.

    

    5.            
Arbitration.  Any
dispute or controversy arising out of or relating to thisAgreement and any
controversy as to a termination for Cause shall be settled exclusively by
arbitration, conducted before a panel of three arbitrators, in Reading,
Pennsylvania, in accordance with the rules of the American Arbitration
Association then in effect.  Judgment may be entered on the
arbitrators' award in any court having jurisdiction.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    6.            
Exclusive
Benefit.  Executive shall have no right to commute, sell,
assign,transfer or otherwise convey the right to receive any payments hereunder,
which payment and the right thereto are expressly declared to be non-assignable
and non-transferrable.  In the event of any attempted assignment or
transfer, this Agreement shall terminate at that time and Employer shall have no
further liability hereunder.

    

    7.            
Notices.  Any
notice required or permitted to be given under this Agreement shallbe properly
given if in writing and if mailed by registered or certified mail, postage
prepaid with return receipt requested, to Executive's residence in the case of
any notice to Executive, or to the attention of the President at the principal
office of Bank, in the case of any notice to the Employer.

    

    8.            
Entire
Agreement.  This Agreement contains the entire agreement
relating to the subject matter hereof and may not be modified, amended or
changed orally but only by an agreement in writing, consented to in writing by
NPB, and signed by the party against whom enforcement of any modification,
amendment or change is sought.

    

    9.            
Benefits.

    

    a.           This
Agreement shall be binding upon and inure to the benefit of NPB and Bank and
their respective successors and assigns.  Each of NPB and Bank shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business and/or
assets of NPB or Bank to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that NPB or Bank would be required to
perform it if no such succession had taken place.  Failure to obtain
such assumption and agreement prior to the effectiveness of any such succession
shall constitute a breach of this Agreement and the provisions of Sections 2 and
3 of this Agreement shall apply.  As used in this Agreement, "NPB" or
"Bank" shall mean NPB or Bank as defined previously and any successor to the
business and/or assets of NPB or Bank as aforesaid which assumes and agrees to
perform this Agreement by operation of law or otherwise.

    

    b.           This
Agreement shall be binding upon and inure to the benefit of and be enforceable
by Executive's personal or legal representatives, executors, administrators,
heirs, distributees, devisees and legatees.

    

    10.           Applicable
Law.  This Agreement shall be governed by and construed in
accordance with the domestic internal law (but not the law of conflicts of law)
of the Commonwealth of Pennsylvania.

    

    11.           Headings.  The
headings of the sections and subsections hereof are for convenience only and
shall not control or affect the meaning or construction or limit the scope or
intent of any of the sections or subsections of this Agreement.

    

    IN WITNESS WHEREOF, NPB and Bank have
each duly caused this Agreement to be executed on its behalf by its duly
authorized officers, and Executive has hereunto set his hand and seal, as of the
day and year first above written.

    

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

    

    
      	
              NATIONAL
      PENN BANCSHARES, INC.

            	 
      	
              NATIONAL
      PENN BANK

            
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              By:  /s/ Glenn E.
      Moyer

            	 
      	By:	
              /s/ Glenn E.
      Moyer

            
	 
      	
              Name:

            	
              Glenn
      E. Moyer

            	 
      	 
      	
              Name:

            	
              Glenn
      E. Moyer

            
	 
      	
              Title:

            	
              President/CEO

            	 
      	 
      	
              Title:

            	
              Chair,
      President, CEO

            
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              Attest:
      /s/ Sandra L.
      Spayd

            	 
      	Attest: 	
              /s/ Sandra L.
      Spayd

            
	 
      	
              Name:

            	
              Sandra
      L. Spayd

            	 
      	 
      	
              Name:

            	
              Sandra
      L. Spayd

            
	 
      	
              Title:

            	
              GEVP

            	 
      	 
      	
              Title:

            	
              GEVP

            
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              Witness:

            	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	      
              /s/ Pamela K.
      Koeshartanto

            	 
      	 
      	/s/ H. Anderson
      Ellsworth
	 	 	 	 	 	      
              H.
      Anderson Ellsworth

            
	
               

            	 
      	
               

            
	 
      	 
      	 
      	 
      	
               

            

    

    

     

    6Unassociated Document

    Exhibit
10.83

    AMENDED
AND RESTATED

    EMPLOYMENT
AGREEMENT

    

    

                          This
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered
into as of January 28, 2008 by and among Keystone Nazareth Bank & Trust
Company (“KNBT Bank”), KNBT Bancorp, Inc. (“KNBT”), National Penn Bank (the
“Bank”), National Penn Bancshares, Inc. (the “Company”) (the Bank and the
Company are collectively referred to as the “Employer”), and Scott V.
Fainor  (the “Executive”) and shall become effective as of the
Effective Time (as defined below) and shall supersede, as of the Effective Time,
any and all agreements relating to the matters contained herein.

    

    

    W I T N E
S S E T H :

    

    WHEREAS,
the Executive is currently employed as the President and Chief Executive Officer
of each of KNBT and KNBT Bank pursuant to an Amended and Restated Employment
Agreement, dated December 28, 2006 (the “Prior Agreement”);

    

    WHEREAS,
on September 6, 2007, the Company and KNBT entered into an Agreement (the
“Merger Agreement”) providing, among other things, for the merger of KNBT with
and into the Company, to be followed by the Bank Merger (as defined in the
Merger Agreement);

    

    WHEREAS,
as of the Effective Time (as defined below) the Executive will be employed by
the Company and the Bank as the President and the Chief Executive Officer of the
Bank and Senior Executive Vice President and Chief Operating Officer of the
Company pursuant to the First Amendment to the Prior Agreement between the
Company, the Bank, KNBT and KNBT Bank and the Executive effective September 6,
2007 (the “First Amendment”);

     

    WHEREAS,
KNBT, KNBT Bank, the Company and the Bank desire to amend and restate the Prior
Agreement in order to make changes to comply with Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”) and to incorporate selected
provisions of the First Amendment;

    

    WHEREAS,
KNBT and KNBT Bank desire to ensure that the Company and the Bank are assured of
the continued availability of the Executive’s services as provided in this
Agreement; and

     

    WHEREAS,
the Executive is willing to serve the Company and the Bank on the terms and
conditions hereinafter set forth.

     

     NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
conditions hereinafter set forth, KNBT, KNBT Bank, the Company, the Bank and the
Executive hereby agree as follows:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      SECTION 1.  EFFECTIVE
DATE; EMPLOYMENT.

    

    

    For
purposes of this Agreement, “Effective Date” shall mean December 31, 2004, provided that this amendment
and restatement shall be effective as of the Effective Time.  The
Employer agrees to employ the Executive, and the Executive hereby agrees to such
employment, during the period and upon the terms and conditions set forth in
this Agreement.

     

    Effective
Time shall have the meaning assigned to such term in the Merger
Agreement.

    

    
      SECTION
2.  EMPLOYMENT
PERIOD.

    

    

     (a)
The terms and conditions of this Agreement shall be and remain in effect through
December 31, 2009 plus such extensions, if any, as are provided pursuant to
Section 2(b) hereof (the “Employment Period”).

     

     (b)
Except as provided in Section 2(c), beginning on December 31, 2007 and on each
subsequent December 31st during
the Employment Period, the Employment Period shall automatically be extended for
one additional year, unless either the Company or the Bank, on the one hand, or
the Executive, on the other hand, elects not to extend the Agreement further by
giving written notice thereof to the other parties at least 30 days prior to
such annual anniversary date.  Upon termination of the Executive’s
employment with either Employer for any reason whatsoever, any annual extensions
provided pursuant to this Section 2(b), if not theretofore discontinued, shall
automatically cease.

    

                          (c)
Nothing in this Agreement shall be deemed to prohibit the Employer at any time
from terminating the Executive’s employment during the Employment Period for any
reason upon at least 30 days written notice to the Executive, other than
termination for Cause which shall be governed by Section 10 hereof, provided that the relative
rights and obligations of the Employer and the Executive in the event of any
such termination shall be determined under this Agreement. Furthermore,
notwithstanding anything to the contrary herein, no extension of this Agreement
pursuant to Section 2(b) shall occur that would extend the term of this
Agreement beyond December 31st of the
year in which the Executive reaches age 65.

    

    
      SECTION
3.  DUTIES.

    

    

                          (a)
Throughout the Employment Period, the Executive shall serve as the President and
the Chief Executive Officer of the Bank and Senior Executive Vice President and
Chief Operating Officer of the Company, having such power, authority and
responsibility and performing such duties as are prescribed by or under the
Bylaws of each of the Company and the Bank and as are customarily associated
with such positions.  The Executive shall devote his full business
time, attention, skills and efforts (other than during weekends, holidays,
vacation periods, and periods of illness or leaves of absence and other than as
permitted or contemplated by Section 7 hereof) to the business and affairs of
the Employer and shall use his best efforts to advance the interests of the
Employer.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

                          (b)           During
the period of the Executive’s employment hereunder, the Board of Directors of
the Company will cause the Company, as sole shareholder of the Bank, to elect
and annually re-elect the Executive to the Board of Directors of the Bank
(unless it believes such action would violate its fiduciary
duties).  Upon any termination of the Executive’s employment hereunder
for any reason, including, without limitation, a termination without cause, the
Executive will concurrently resign from the Board of Directors of the Bank and,
should the Executive then be serving as a director of the Company or any direct
or indirect subsidiary or affiliate of the Company or Bank, from all such boards
as well.

    

    
      SECTION
4.  CASH AND
OTHER COMPENSATION.

    

    

                          (a)
In consideration for the services to be rendered by the Executive hereunder, the
Employer shall pay to him a salary of four hundred forty-four thousand and nine
hundred and forty-five dollars ($444,945) annually (“Base
Salary”).  The Executive’s Base Salary shall be payable in
approximately equal installments in accordance with the Company’s and the Bank’s
customary payroll practices for senior officers.  Base Salary shall
include any amounts of compensation deferred by the Executive under any
tax-qualified retirement or welfare benefit plan or any other deferred
compensation arrangement.  The Company Board and the Bank Board shall
review the Executive’s annual rate of salary at such times during the Employment
Period as they deem appropriate, but not less frequently than once every twelve
months, and may, in their respective discretion, approve an increase
therein.  In addition to salary, the Executive may receive other cash
compensation from the Employer for services hereunder at such times, in such
amounts and on such terms and conditions as the Company Board or the Bank Board
may determine from time to time.  Any increase in the Executive’s
annual salary shall become the Base Salary of the Executive for purposes
hereof.  The Executive’s Base Salary as in effect from time to time
cannot be decreased by the Employer without the Executive’s express prior
written consent.

    

                          (b)
The Executive shall be entitled to participate in an equitable manner with all
other executive officers of the Employer in discretionary bonuses as authorized
by the Company Board and/or the Bank Board to executive officers.  No
other compensation provided for in this Agreement shall be deemed a substitute
for the Executive’s right to participate in such bonuses when and as declared by
the Company Board and/or the Bank Board.

    

    
      SECTION
5.  EMPLOYEE
BENEFIT PLANS AND PROGRAMS.

    

    

                          (a)
During the Employment Period, the Executive shall be treated as an employee of
the Company and the Bank and shall be entitled to participate in and receive
benefits under any and all qualified or non-qualified retirement, pension,
savings or profit-sharing plans, any and all group life, health (including
hospitalization, medical and major medical), dental, accident and long term
disability insurance plans, and any other employee benefit and compensation
plans (including, but not limited to, any incentive compensation plans or
programs, stock option and appreciation rights plans and restricted stock plans)
as may from time to time be maintained by, or cover employees of, the Company
and the Bank, in accordance with the terms and conditions of such employee
benefit plans and programs and compensation plans and programs and consistent
with the Company’s and the Bank’s customary practices.  Any grants
under a restricted stock plan to the Executive shall be at the discretion of
either the Company Board or the committee that administers such
plan.  Nothing paid to the Executive under any such plan or program
will be deemed to be in lieu of other compensation to which the Executive is
entitled under this Agreement.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

                          (b)
During the Employment Period, the Employer shall provide the Executive with an
automobile allowance equal to $1,000 per month, payable monthly.

    

    
      SECTION
6.  INDEMNIFICATION
AND INSURANCE.

    

    

                          (a)
During the Employment Period and for a period of six years thereafter, the
Employer shall cause the Executive to be covered by and named as an insured
under any policy or contract of insurance obtained by them to insure their
directors and officers against personal liability for acts or omissions in
connection with service as an officer or director of the Employer or service in
other capacities at the request of the Employer.  The coverage
provided to the Executive pursuant to this Section 6 shall be of the same scope
and on the same terms and conditions as the coverage (if any) provided to other
officers or directors of the Employer or any successors.

    

                          (b)
To the maximum extent permitted under applicable law, the Employer shall
indemnify the Executive against and hold him harmless from any costs,
liabilities, losses and exposures that may be incurred by the Executive in his
capacity as a director or officer of the Employer or any subsidiary or
affiliate.

    

    
      SECTION
7.  OUTSIDE
ACTIVITIES.

    

    

                          The
Executive may (a) serve as a member of the boards of directors of such business,
community and charitable organizations as he may disclose to and as may be
approved by the Employer (which approval shall not be unreasonably withheld),
and (b) perform duties as a trustee or personal representative or in any other
fiduciary capacity, provided
that in each case such service shall not materially interfere with the
performance of his duties under this Agreement or present any conflict of
interest.  The Executive may also engage in personal business and
investment activities which do not materially interfere with the performance of
his duties hereunder, provided
that such activities are not prohibited under any code of conduct or
investment or securities trading policy established by the Employer and
generally applicable to all similarly situated executives. If the Executive is
discharged or suspended, or is subject to any regulatory prohibition or
restriction with respect to participation in the affairs of the Bank, he shall
continue to perform services for the Company in accordance with this Agreement
but shall not directly or indirectly provide services to or participate in the
affairs of the Bank in a manner inconsistent with the terms of such discharge or
suspension or any applicable regulatory order.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    
      SECTION
8.  WORKING
FACILITIES AND EXPENSES.

    

    

                          It
is understood by the parties that the Executive’s principal place of employment
shall be at the Employer’s office located at Reading and Philadelphia Avenues in
Boyertown, Pennsylvania, or at such other location within a 25-mile radius of
such office, or at such other location as the Employer and Executive may
mutually agree upon.  The Employer shall provide the Executive at his
principal place of employment with a private office, secretarial services and
other support services and facilities suitable to his position with the Employer
and necessary or appropriate in connection with the performance of his assigned
duties under this Agreement.  The reimbursement in the next sentence
shall be paid promptly by the Employer and in any event no later than March 15
of the year immediately following the year in which such expenses were
incurred.  The Employer shall reimburse the Executive for his ordinary
and necessary business expenses attributable to the Employer’s business,
including, without limitation, the Executive’s travel and entertainment expenses
incurred in connection with the performance of his duties for the Employer under
this Agreement, in each case upon presentation to the Employer of an itemized
account of such expenses in such form as the Employer may reasonably require,
with such reimbursement to be paid promptly by the Employer and in any event no
later than March 15 of the year immediately following the year in which such
expenses were incurred.  For the avoidance of doubt, except for (a)
the automobile allowance payable to the Executive under Section 5(b) hereof, and
(b) tolls and parking expenses incurred in the ordinary course of business, the
Executive shall not be entitled to reimbursement under the immediately preceding
sentence for any expenses incurred for automobile travel, including without
limitation, mileage expenses.

    

    
      SECTION
9.  TERMINATION
OF EMPLOYMENT WITH BENEFITS.

    

    

                          (a)
The Executive shall be entitled to the benefits described in Section 9(b) in the
event that either prior to a Change in Control or more than two years after a
Change in Control as defined in Section 11(a):

    

    (i) his
employment with the Employer terminates during the Employment Period as a result
of the Executive’s termination for Good Reason (as defined in Section 9(a)(i)(A)
and (B) of this Agreement), which shall mean a termination based on the
following:

    

    (A) any
material breach of this Agreement by either Employer, including without
limitation any of the following: (1) a material diminution in the Executive’s
base compensation, (2) a material diminution in the Executive’s authority,
duties or responsibilities as prescribed in Section 3, or (3) any requirement
that the Executive report to a corporate officer or employee of the Bank instead
of reporting directly to the Board of Directors of the Bank at the Bank level,
or

    

    (B) a
change in excess of 25 miles in the geographic location at which the Executive
must perform his services under Section 8 of this Agreement;

    

    provided,
however, that prior to any termination of employment for Good Reason, the
Executive must first provide written notice to each Employer within ninety (90)
days of the initial existence of the condition, describing the existence of such
condition, and the Employer shall thereafter have the right to remedy the
condition within thirty (30) days of the date the Employer received the written
notice from the Executive.  If the Employer remedies the condition
within such thirty (30) day cure period, then no Good Reason shall be deemed to
exist with respect to such condition.  If the Employer does not remedy
the condition within such thirty (30) day cure period, then the Executive may
deliver a notice of termination for Good Reason at any time within sixty (60)
days following the expiration of such cure period; or

     

    
      
         

      

      
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    (ii) the
Executive’s employment with the Employer is terminated by the Employer during
the Employment Period for any reason other than for “cause,” death or
“Disability,” as provided in Section 10(a).

    

                          (b)
Upon the termination of the Executive’s employment pursuant to Section 9(a) of
this Agreement either prior to a Change in Control as defined in Section 11(a)
or more than two years after a Change in Control, the Employer shall pay and
provide to the Executive (or, in the event of his subsequent death, to his
estate):

    

    (i) his
earned but unpaid Base Salary (including, without limitation, all items which
constitute wages under applicable law and the payment of which is not otherwise
provided for in this Section 9(b)) as of the date of the termination of his
employment, with such payment to be made at the time and in the manner
prescribed by law applicable to the payment of wages but in no event later than
30 days after termination of employment;

    

    (ii) the
benefits, if any, to which he is entitled under the employee benefit plans and
programs and compensation plans and programs maintained for the benefit of the
Company’s and the Bank’s officers and employees through the date of the
termination of his employment;

    

    (iii)
continued group life, health, dental, accident and long term disability
insurance benefits, in addition to that provided pursuant to Section 9(b)(ii),
and after taking into account the coverage provided by any subsequent employer,
if and to the extent necessary to provide for the Executive, for
the  period beginning on the date on which his employment terminates
and ending on the earlier of (A) the last day of the Employment Period (the
“Remaining Employment Period”) or (B) 24 months from the date of termination
(with such lesser period being the “Coverage Period”), coverage equivalent to
the coverage to which he would have been entitled under such plans if he had
continued to be employed during such period; provided that any insurance
premiums payable by the Employer or any successors pursuant to this Section
9(b)(iii) shall be payable at such times and in such amounts as if the Executive
was still an employee of the Employer, subject to any increases in such amounts
imposed by the insurance company or COBRA, and the amount of insurance premiums
required to be paid by the Employer in any taxable year shall not affect the
amount of insurance premiums required to be paid by the Employer in any other
taxable year; and provided further that if the
participation of the Executive or other covered dependents in any group
insurance plan is barred, the Employer shall either arrange to provide such
persons with insurance benefits substantially similar to those which the
Executive was entitled to receive under such group insurance plan or, if such
coverage cannot be obtained, pay a lump sum cash equivalency amount within
thirty (30) days following the date of termination based on the annualized rate
of premiums being paid by the Employer as of the date of termination of
employment.

     

    
      
         

      

      
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    (iv)
within 30 days following the date on which his employment terminates, a lump sum
payment, in an amount equal to the present value of the Base Salary that the
Executive would have earned if he had continued to be employed during the
Coverage Period at the highest annual rate of Base Salary achieved during the
Employment Period, with such present value to be determined using a discount
rate equal to the applicable short-term federal rate prescribed under Section
1274(d) of the Code, compounded using the compounding periods corresponding to
the Company’s and the Bank’s regular payroll periods for their officers, and
with such lump sum to be paid in lieu of all other payments of Base Salary
provided for under this Agreement in respect of the Coverage
Period;

    

    (v)
within 30 days following the date on which his employment terminates, a lump sum
payment in an amount equal to the excess, if any, of:

    

               (A)
the present value of the aggregate benefits to which he would be entitled under
any and all qualified defined benefit pension plans and non-qualified plans
related thereto maintained by, or covering employees of, the Company and the
Bank if he were 100% vested thereunder and had continued to be employed during
the Coverage Period at the highest annual rate of Base Salary achieved during
the Employment Period; over

    

               (B)
the present value of the benefits to which he is actually entitled under such
defined benefit pension plans as of the date on which his employment terminates,
with such present values to be determined using the mortality tables prescribed
under Section 415(b)(2)(E)(v) of the Code and a discount rate, compounded
monthly, equal to the annualized rate of interest prescribed by the Pension
Benefit Guaranty Corporation for the valuation of immediate annuities payable
under terminating single-employer defined benefit plans for the month in which
the Executive’s employment terminates (“Applicable PBGC Rate”);

    

    (vi)
within 30 days following the date on which his employment terminates, a lump sum
payment in an amount equal to the present value of the additional employer
contributions to which he would have been entitled under any and all qualified
defined contribution plans and non-qualified plans related thereto maintained
by, or covering employees of, the Company and the Bank as if he were 100% vested
thereunder and had continued to be employed during the Coverage Period at the
highest annual rate of Base Salary achieved during the Employment Period and
making the maximum amount of employee contributions, if any, required or
permitted under such plan or plans, with such present value to be determined on
the basis of a discount rate, compounded using the compounding period that
corresponds to the frequency with which employer contributions are made to the
relevant plan, equal to the applicable short-term federal rate prescribed under
Section 1274(d) of the Code, provided that no payments shall be made pursuant to
this subsection (vi) with respect to the Company’s Employee Stock Ownership Plan
(“ESOP”) if the ESOP  is terminated effective as of a date within one
year of the date of the termination of the Executive’s employment, with the
Executive to reimburse the Employer for any such payments previously made within
30 days of the Executive’s receipt of a request for reimbursement from the
Employer;

     

    
      
         

      

      
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    (vii)
within 30 days following the  date on which his employment terminates,
a lump sum payment in an amount equal to the present value of the payments that
would have been made to the Executive under any cash bonus or long-term or
short-term cash incentive compensation plan maintained by, or covering employees
of, the Company and the Bank if he had continued to be employed during the
Coverage Period and had earned in each calendar year that ends during the
Coverage Period a bonus or incentive award that equals the highest annual bonus
or incentive award paid to the Executive during the preceding 36 calendar
months, with the present value of such payments to be determined using a
discount rate equal to the applicable short-term federal rate prescribed under
Section 1274(d) of the Code, compounded using the compounding periods
corresponding to the Company’s and the Bank’s schedule of paying
bonuses;

    

    (viii)
for the first year following the date on which his employment terminates,
reimbursement for all reasonable expenses incurred by the Executive in
connection with the search for new employment, including without limitation
those of a placement agency or service, and reimbursement for all reasonable
relocation expenses incurred by the Executive in connection with securing new
employment, with such expenses to be reimbursed promptly by the Employer and in
any event no later than March 15 of the year immediately following the year in
which such expenses were incurred; provided, however, that the amounts payable
by the Employer pursuant to this subsection (viii) shall not exceed $75,000;
and

    

    (ix)
within 30 days following the date on which his employment terminates, upon the
surrender of then outstanding options or appreciation rights (other than options
or appreciation rights which do not, by their terms, vest in the event of a
Change in Control as defined in Section 11(a) hereof) previously issued to the
Executive under any stock option and appreciation rights plan or program
maintained by, or covering employees of, the Employer, a lump sum payment in an
amount equal to the product of:

    

                          (A)
the excess of (I) the fair market value of a share of stock of the same class as
the stock subject to the option or appreciation right, determined as of the date
on which his employment terminates, over (II) the exercise price per share for
such option or appreciation right, as specified in or under the relevant plan or
program; multiplied by

    

                          (B)
the number of shares with respect to which options or appreciation rights are
being surrendered.

    

    The
Employer and the Executive agree that the Employer may condition the payments
and benefits (if any) due under Sections 9(b)(iii), (iv), (v), (vi), (vii) and
(viii) on the receipt of the Executive’s resignation from any and all positions
which he holds as an officer, director or committee member with respect to the
Employer or any of its subsidiaries or affiliates.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

                (c)           In
the event the Executive’s employment is terminated by voluntary resignation
(including voluntary retirement) subsequent to the Executive reaching age 65 but
before the end of the Employment Period other than pursuant to Section 9(a) and
such termination occurs either before a Change in Control as defined in Section
11(a) or more than two years after a Change in Control, the Employer shall pay
and provide to the Executive (or, in the event of his subsequent death, to his
estate):

     

    (i)    his
earned but unpaid Base Salary  as of the date of the termination of
his employment, with such payment to be made at the time and in the manner
prescribed by law applicable to the payment of wages but in no event later than
30 days after termination of employment;

     

    (ii)    the
benefits, if any, to which he is entitled under the employee benefit plans and
programs and compensation plans and programs maintained for the benefit of the
Company’s and the Bank’s officers and employees through the date of the
termination of his employment;

     

    (iii)    in
eighteen (18) equal monthly installments beginning with the first business day
of the month following the Executive’s termination of employment an aggregate
amount equal to 1.125 times his Base Salary as in effect immediately prior to
his termination; provided that if the Executive is a “Specified Employee” (as
defined in Section 409A of the Code and the regulations thereunder) as of the
date of termination of his employment, then the monthly installments shall not
commence until the first business day of the month following the lapse of six
months from the date of termination of employment (the “Delayed Payment Date”),
with the monthly installments that would have been paid prior to the Delayed
Payment Date absent the six-month delay required by Section 409A of the Code to
be aggregated and included in the payment made on the Delayed Payment Date and
to be counted toward the total of eighteen (18) monthly installments;
and

     

    (iv)    continued
group health and dental insurance benefits at the same level as in effect as of
the date of termination of employment for a period of eighteen (18) months
beginning on the date his employment terminates; provided that any insurance
premiums payable by the Employer or any successors pursuant to this Section
9(c)(iv) shall be payable at such times and in such amounts as if the Executive
was still an employee of the Employer, subject to any increases in such amounts
imposed by the insurance company or COBRA, and the amount of insurance premiums
required to be paid by the Employer in any taxable year shall not affect the
amount of insurance premiums required to be paid by the Employer in any other
taxable year; and provided further that if the
participation of the Executive or other covered dependents in any group
insurance plan is barred, the Employer shall either arrange to provide such
persons with insurance benefits substantially similar to those which the
Executive was entitled to receive under such group insurance plan or, if such
coverage cannot be obtained, pay a lump sum cash equivalency amount within
thirty (30) days following the date of termination based on the annualized rate
of premiums being paid by the Employer as of the date of termination of
employment.

     

    
      
         

      

      
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      SECTION
10.  TERMINATION
WITHOUT ADDITIONAL EMPLOYER LIABILITY.

    

     

                (a)           In
the event that the Executive’s employment with the Employer shall terminate
during the Employment Period on account of:

    

    (i)           
the discharge of the Executive for “cause,” which, for purposes of this
Agreement, shall mean a discharge because either the Company Board or the Bank
Board determines that the Executive has: (A) willfully failed to perform his
assigned duties under this Agreement, other than any failure resulting from the
Executive’s incapacity due to physical or mental impairment; (B) committed an
act involving moral turpitude in the course of his employment with the Employer
and its subsidiaries; (C) engaged in willful misconduct; (D) breached his
fiduciary duties for personal profit; (E) willfully violated, in any material
respect, any law, rule or 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 Company or the Bank, as determined by the
Company Board or the Bank Board; or (F) materially breached the terms of this
Agreement and failed to cure such material breach during a 15-day period
following the date on which the Company Board or the Bank Board gives written
notice to the Executive of the material breach;

    

    (ii)           the
Executive’s voluntary resignation from employment (including voluntary
retirement) with the Company and the Bank for reasons other than Good Reason as
specified in Section 9(a)(i) and other than pursuant to the provisions of
Section 9(c); or

    

    (iii)          the
death of the Executive while employed by the Employer, or the termination of the
Executive’s employment because of “Disability” as defined in Section 10(c)
below;

    

    then in
any of the foregoing events, the Employer shall have no further obligations
under this Agreement, other than (A) the payment to the Executive of his earned
but unpaid Base Salary as of the date of the termination of his employment, (B)
the payment to the Executive of the benefits to which he is entitled under all
applicable employee benefit plans and programs and compensation plans and
programs, and (C) the provision of such other benefits, if any, to which he is
entitled as a former employee under the Company’s or the Bank’s employee benefit
plans and programs and compensation plans and programs.

    

                (b)           For
purposes of this Section 10, no act or failure to act, on the part of the
Executive, shall be considered “willful” unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of the
Employer.  Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Company Board, the Bank Board or
based upon the written advice of counsel for the Employer shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good faith and
in the best interests of the Employer.  The cessation of employment of
the Executive shall not be deemed to be for “cause” within the meaning of
Section 10(a)(i) unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of
three-fourths of the members of the Company Board or the Bank Board at a meeting
of such Board called and held for such purpose (after reasonable notice is
provided to the Executive and the Executive is given an opportunity, together
with counsel, to be heard before such Board), finding that, in the good faith
opinion of such Board, the Executive is guilty of the conduct described in
Section 10(a)(i) above, and specifying the particulars thereof in
detail.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    

                          (c)           “Disability”
shall be deemed to have occurred if the Executive: (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 Employer.

    

                          (d)          During
any period in which the Executive is absent due to physical or mental
impairment, the Employer may, without breaching this Agreement, appoint another
person or persons to act as interim President and interim Chief Executive
Officer pending the Executive’s return to his duties on a full-time basis
hereunder or his termination as a result of such Disability.  Prior to
the Executive’s employment being terminated due to Disability under Section
10(e) hereof, the Executive shall continue to receive his full Base Salary,
bonuses and other benefits to which he is entitled under this Agreement,
including continued participation in all employee benefit plans and
programs.

    

                          (e)           The
Employer may provide notice to the Executive in writing that it intends to
terminate the Executive’s employment under this Agreement, with the termination
date to be on or after the date that the Executive is deemed to have a
Disability.  At the time his employment hereunder is terminated due to
Disability, (i) the Executive shall not be entitled to any payments or benefits
pursuant to Sections 4 and 5 hereof for periods subsequent to such date of
termination, and (ii) the Executive shall become entitled to receive the
Disability payments that may be available under any applicable long-term
disability plan or other benefit plan.

    

    
      SECTION
11.  PAYMENTS
UPON A CHANGE IN CONTROL.

    

    

          (a)           The
term “Change in Control” means the occurrence of any of the
following:

    

          (1)           any
person or “group” of persons (as provided under Section 409A of the Code, and
any Internal Revenue Service (the “IRS”) guidance and regulations issued under
Section 409A of the Code) acquires ownership of stock of the Company or the Bank
that, together with stock held by such person or group, constitutes more than
50% of the total fair market value or total voting power of the outstanding
stock of the Company or the Bank, provided that the stock of the Company or the
Bank remains outstanding after such acquisition and provided further that if the
person or group of persons is already deemed to own more than 50% of the total
fair market value or total voting power, then the acquisition of additional
stock by such person or group of persons shall not constitute an additional
Change in Control;

     

    
      
         

      

      
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(2)           any person
or “group” of persons (as provided under Section 409A of the Code and any IRS
guidance and regulations issued under Section 409A of the
Code)  acquires (or has acquired during the 12-month period ending on
the date of the most recent acquisition by such person or group of persons)
ownership of stock of the Company or the Bank possessing 30% or more of the
total voting power of the stock of the Company or the Bank, provided that if a
person or group of persons that is deemed to have effective control of the
Company or the Bank pursuant to this clause acquires additional stock of the
Company or the Bank, such additional acquisition shall not constitute an
additional Change in Control;

    

           (3)           a
majority of the members of the Board of Directors of the Company is replaced
during any 12-month period by directors whose appointment or election is not
endorsed by a majority of the Board of Directors of the Company prior to the
date of the appointment or election, provided that if a person or group of
persons that is deemed to have effective control of the Company or the Bank
pursuant to this clause acquires stock of the Company or the Bank that would
trigger either clauses (1) or (2) above, such acquisition of stock shall not
constitute an additional Change in Control; and

    

           (4)           any
person or “group” of persons (as provided under Section 409A of the Code and any
IRS guidance and regulations issued under Section 409A of the Code) acquires (or
has acquired during the 12-month period ending on the date of the most recent
acquisition by such person or group of persons) assets from the Company or the
Bank that have a total gross fair market value equal to 40% or more of the total
gross fair market value of all of the assets of the Company or the Bank, as the
case may be, immediately prior to such acquisition or
acquisitions.  For purposes of this provision, “gross fair market
value” means the value of the assets of the Company or the Bank, as the case may
be, or the value of the assets being disposed of, determined without regard to
any liabilities associated with such assets.  A transfer of assets by
the Company or the Bank to related persons, shareholders or entities shall not
be treated as a Change in Control to the extent that such transfers are excluded
from the definition of a change in control under Section 409A of the Code and
the regulations issued thereunder.

    

                         
 (b)           For
purposes of determining whether a Change in Control has occurred, persons will
not be considered to be acting as a group solely because they purchase or own
stock of the Company at the same time.

    

                         
  (c)           Upon
the occurrence of the events specified in this Section 11(c), the Executive
shall be entitled to receive certain payments at the times and in the amounts as
follows:

    

    (i)           As
a result of the change in control of KNBT and KNBT Bank resulting from the
merger of KNBT with and into the Company, the Executive shall receive a lump sum
payment as of the Effective Time (as defined in the Merger Agreement) in an
amount equal to $740,503 (the “KNBT CIC Payment”) from KNBT or KNBT
Bank.

     

    
      
         

      

      
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    (ii)           The
Executive shall receive a Severance Payment (defined below) from the Employer
within ten (10) business days of the earliest to occur of the following events,
if any:  (A) the termination of the Executive’s employment during the
two-year period immediately following the Effective Time by the Employer other
than for cause (as defined in Section 10); (B) the termination of the
Executive’s employment during the two-year period immediately following the
Effective Time by the Executive pursuant to Section 9(a)(i) above; or (C) a
Change in Control during the period of the Executive’s employment hereunder
(each, a “Triggering Event”).  “Severance Payment” means a lump sum
payment determined as follows: (x) if the Triggering Event occurs during the
one-year period immediately following the Effective Time, then the Severance
Payment shall equal the KNBT CIC Payment; or (y) if the Triggering Event occurs
after the one-year anniversary of the Effective Time, then the Severance Payment
shall equal 1.5 times the Executive’s Base Amount (defined below); provided; however, that in
calculating the Executive’s Base Amount for purposes of this clause (y), any
income related to the KNBT CIC Payment shall be excluded from such
calculation.  “Base Amount” shall be equal to the Executive’s average
annualized income from the Employer, KNBT, KNBT Bank and their predecessors
includible in the Executive’s gross income (excluding any income resulting from
the vesting of restricted stock or the exercise of non-qualified options on or
prior to December 31, 2004) for the most recent five taxable years ending before
the Triggering Event.

    

    (iii)           The
Executive shall not be entitled to receive any payments or benefits under
Section 9 of this Agreement if he receives payments pursuant to Section
11(c)(ii).

    

    
      SECTION
12.  TAX
INDEMNIFICATION.

    

    

                          (a)  If
the payments and benefits pursuant to this Agreement, either alone or together
with other payments and benefits which the Executive has the right to receive
from the Employer and their subsidiaries, would constitute a “parachute payment”
as defined in Section 280G(b)(2) of the Code (the “Initial Parachute Payment”),
then the Company shall pay to the Executive, at the time such payments or
benefits are paid and subject to applicable withholding requirements, a lump sum
cash amount equal to the sum of the following:

    

    (i)           twenty
(20) percent (or such other percentage equal to the tax rate imposed by Section
4999 of the Code) of the amount by which the Initial Parachute Payment exceeds
the Executive’s “base amount” from the Employer and their subsidiaries
(including their predecessors), as defined in Section 280G (b)(3) of the Code,
with the difference between the Initial Parachute Payment and the Executive’s
base amount being hereinafter referred to as the “Initial Excess Parachute
Payment”; and

    

    (ii)           such
additional amount (tax allowance) as may be necessary to compensate the
Executive for the payment by the Executive of state and federal income and
excise taxes on the payment provided under clause (i) above and on any payments
under this clause (ii).  In computing such tax allowance, the payment
to be made under clause (i) above shall be multiplied by the “gross up
percentage” (“GUP”).  The GUP shall be determined as
follows:

    

                                       Tax
Rate

                          GUP  =

                                      1-
Tax Rate

     

    
      
         

      

      
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               The
Tax Rate for purposes of computing the GUP shall be the highest marginal federal
and state income and employment-related tax rate (including Social Security and
Medicare taxes), including any applicable excise tax rate, applicable to the
Executive in the year in which the payment under clause (i) above is made, and
shall also reflect the phase-out of deductions and the ability to deduct certain
of such taxes.

    

                          (b)  Notwithstanding
the foregoing, if it shall subsequently be determined in a final judicial
determination or a final administrative settlement to which the Executive is a
party that the actual excess parachute payment as defined in Section 280G(b)(1)
of the Code (before giving effect to the payments under Sections 12(a)(i) and
(ii) above) is different from the Initial Excess Parachute Payment (such
different amount being hereafter referred to as the “Determinative Excess
Parachute Payment”), then the Company’s independent tax counsel or accountants
shall determine the amount (the “Adjustment Amount”) which either the Executive
must pay to the Company or the Company must pay to the Executive in order to put
the Executive (or the Company, as the case may be) in the same position the
Executive (or the Company, as the case may be) would have been if the Initial
Excess Parachute Payment had been equal to the Determinative Excess Parachute
Payment. In determining the Adjustment Amount, the independent tax counsel or
accountants shall take into account any and all taxes (including any penalties
and interest) paid by or for the Executive or refunded to the Executive or for
the Executive’s benefit.  As soon as practicable after the Adjustment
Amount has been so determined, and in no event more than thirty (30) days after
the Adjustment Amount has been so determined, the Company shall pay the
Adjustment Amount to the Executive or the Executive shall repay the Adjustment
Amount to the Company, as the case may be.

    

                          (c)  In
each calendar year that the Executive receives payments of benefits that
constitute a parachute payment, the Executive shall report on his state and
federal income tax returns such information as is consistent with the
determination made by the independent tax counsel or accountants of the Company
as described above.  The Company shall indemnify and hold the
Executive harmless from any and all losses, costs and expenses (including
without limitation, reasonable attorneys’ fees, interest, fines and penalties)
which the Executive incurs as a result of so reporting such information, with
such indemnification to be paid by the Company to the Executive as soon as
practicable and in any event no later than March 15 of the year immediately
following the year in which the amount subject to indemnification was
determined.  The Executive shall promptly notify the Company in
writing whenever the Executive receives notice of the institution of a judicial
or administrative proceeding, formal or informal, in which the federal tax
treatment under Section 4999 of the Code of any amount paid or payable under
this Section 12 is being reviewed or is in dispute.  The Company shall
assume control at its expense over all legal and accounting matters pertaining
to such federal tax treatment (except to the extent necessary or appropriate for
the Executive to resolve any such proceeding with respect to any matter
unrelated to amounts paid or payable pursuant to this Section 12) and the
Executive shall cooperate fully with the Company in any such
proceeding.  The Executive shall not enter into any compromise or
settlement or otherwise prejudice any rights the Company may have in connection
therewith without the prior consent of the Company.

     

    
      
         

      

      
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                          (d)  The
Executive hereby agrees with the Employer and any successor thereto to in good
faith consider and take steps commonly used to minimize or eliminate any tax
liability or costs that would otherwise be created by the tax indemnification
provisions set forth in Section 12 of this Agreement if requested to do so by
the Employer or any successor thereto; provided, however, that the
foregoing language shall neither require the Executive to take or not take any
specific action in furtherance thereof nor contravene, limit or remove any right
or privilege provided to the Executive under this Agreement.

    

    SECTION
13.  SOURCE OF PAYMENTS; NO DUPLICATION OF PAYMENTS.

    

                          All
payments provided in this Agreement shall be timely paid in cash or check from
the general funds of the Company or the Bank.  Payments pursuant to
this Agreement shall be allocated between the Company and the Bank in proportion
to the level of activity and the time expended on such activities by the
Executive as determined by the Company and the Bank on a quarterly basis, unless
the applicable provision of this Agreement specifies that the payment shall be
made by either the Company or the Bank.  In no event shall the
Executive receive duplicate payments or benefits from the Company and the
Bank.

    

    
      SECTION
14.  COVENANT
NOT TO COMPETE.

    

    

                          In
the event the Executive’s employment with the Employer is terminated for any
reason prior to the expiration of the Employment Period other than a termination
of employment occurring within 30 days of a Change in Control, the Executive
hereby covenants and agrees that for a period of two years following the date of
his termination of employment with the Employer (or, if less, for the Remaining
Employment Period), he shall not, without the written consent of the Employer,
become an officer, employee, consultant, director or trustee of any savings
bank, savings and loan association, savings and loan holding company, bank or
bank holding company, or any direct or indirect subsidiary or affiliate of any
such entity, that entails working within any county in which the Company or the
Bank maintains an office as of the date of termination of the Executive’s
employment.

    

    
      SECTION
15.  CONFIDENTIALITY.

    

    

                          Unless
he obtains the prior written consent of the Employer, the Executive shall at all
times keep confidential and shall refrain from using for the benefit of himself,
or any person or entity other than the Employer or its subsidiaries, any
material document or information obtained from the Employer or its subsidiaries,
in the course of his employment with any of them concerning their properties,
operations or business (unless such document or information is readily
ascertainable from public or published information or trade sources or has
otherwise been made available to the public through no fault of his own) until
the same ceases to be material (or becomes so ascertainable or available); provided, however, that
nothing in this Section 15 shall prevent the Executive, with or without the
Employer’s consent, from participating in or disclosing documents or information
in connection with any judicial or administrative investigation, inquiry or
proceeding or the Company’s public reporting requirements to the extent that
such participation or disclosure is required under applicable law.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    

    
      SECTION
16.  SOLICITATION.

    

    

                          The
Executive hereby covenants and agrees that, for a period of two years following
his termination of employment with the Employer for any reason, he shall not,
without the written consent of the Employer, either directly or
indirectly:

    

                          (a)
solicit, offer employment to, or take any other action intended, or that a
reasonable person acting in like circumstances would expect, to have the effect
of causing any officer or employee of the Employer or any of its subsidiaries or
affiliates to terminate his employment and accept employment or become
affiliated with, or provide services for compensation in any capacity whatsoever
to, any savings bank, savings and loan association, bank, bank holding company,
savings and loan holding company, or other institution engaged in the business
of accepting deposits, making loans or doing business within the counties
specified in Section 14;

    

                          (b)
provide any information, advice or recommendation with respect to any such
officer or employee to any savings bank, savings and loan association, bank,
bank holding company, savings and loan holding company, or other institution
engaged in the business of accepting deposits, making loans or doing business
within the counties specified in Section 14, that is intended, or that a
reasonable person acting in like circumstances would expect, to have the effect
of causing any officer or employee of the Employer or any of its subsidiaries or
affiliates to terminate his employment and accept employment or become
affiliated with, or provide services for compensation in any capacity whatsoever
to, any savings bank, savings and loan association, bank, bank holding company,
savings and loan holding company, or other institution engaged in the business
of accepting deposits, making loans or doing business within the counties
specified in Section 14; or

    

                          (c)
solicit, provide any information, advice or recommendation or take any other
action intended, or that a reasonable person acting in like circumstances would
expect, to have the effect of causing any customer of the Company or the Bank to
terminate an existing business or commercial relationship with the Company or
the Bank.

    

    
      SECTION
17.  NO EFFECT
ON EMPLOYEE BENEFIT PLANS OR PROGRAMS.

    

    

                          The
termination of the Executive’s employment during the Employment Period or
thereafter, whether by the Employer or by the Executive, shall have no effect on
the vested rights of the Executive under the Company’s or the Bank’s qualified
or non-qualified retirement, pension, savings, thrift, profit-sharing or stock
bonus plans, group life, health (including hospitalization, medical and major
medical), dental, accident and long term disability insurance plans, or other
employee benefit plans or programs, or compensation plans or programs in which
the Executive was a participant.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    

    
      SECTION
18.  SUCCESSORS
AND ASSIGNS.

    

    

                          (a)           
This Agreement is personal to each of the parties hereto, and no party may
assign or delegate any of its rights or obligations hereunder without first
obtaining the written consent of the other parties; provided, however, that the
Employer will require any successor or assign (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Employer, by an assumption agreement in form and
substance  satisfactory to the Executive, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Employer would be required to perform it if no such succession or assignment
had taken place.  Failure of the Employer to obtain such an assumption
agreement prior to the effectiveness of any such succession or assignment shall
be a breach of this Agreement and shall entitle the Executive to compensation
from the Employer in the same amount and on the same terms as the compensation
pursuant to Sections 9 and 11 hereof.  For purposes of implementing
the provisions of this Section 18(a), the date which any such succession without
an assumption agreement becomes effective shall be deemed the date of
termination of the Executive’s employment.

    

                          (b)           This
Agreement and all rights of the Executive hereunder shall inure to the benefit
of and be enforceable by the Executive’s personal and legal representatives,
executors, administrators, successors, heirs, distributees, devises and
legatees.

    

    
      SECTION
19.  NOTICES.

    

    

                          Any
communication required or permitted to be given under this Agreement, including
any notice, direction, designation, consent, instruction, objection or waiver,
shall be in writing and shall be deemed to have been given at such time as it is
delivered personally, or five days after mailing if mailed, postage prepaid, by
registered or certified mail, return receipt requested, addressed to such party
at the address listed below or at such other address as one such party may by
written notice specify to the other party:

    

    If to the
Executive:

     

    Scott V.
Fainor

    At the
address last appearing

    on the
personnel records of

    the
Executive

    If to the
Employer:

     

    National
Penn Bancshares, Inc.

    Philadelphia
& Reading Avenues

    P.O. Box
547

    Boyertown,
PA 19512-0547

                          

    (or the
address of the Company’s or the Bank’s principal executive office, if
different)

     

    Attention:
Chairman of the Board

    

    with a
copy, in the case of a notice to the Employer, to:

    Reed
Smith LLP

    2500 One
Liberty Place

    1650
Market Street

    Philadelphia,
PA  19103

    Attention:  Lori
L. Lasher, Esq.

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    

    
      SECTION
20.  INDEMNIFICATION
FOR ATTORNEYS’ FEES.

    

    

                          (a)
The Employer shall indemnify, hold harmless and defend the Executive against
reasonable costs, including legal fees and expenses, incurred by him in
connection with or arising out of any action, suit or proceeding in which he may
be involved, as a result of his efforts, in good faith, to defend or enforce the
terms of this Agreement.  For purposes of this Agreement, any
settlement agreement which provides for payment of any amounts in settlement of
the Employer’s obligations hereunder shall be conclusive evidence of the
Executive’s entitlement to indemnification hereunder, and any such
indemnification payments shall be in addition to amounts payable pursuant to
such settlement agreement, unless such settlement agreement expressly provides
otherwise.

    

                          
(b) The Employer’s obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Employer may have against the Executive or
others.  Unless it is determined that a claim made by the Executive
was either frivolous or made in bad faith, the Employer agrees to pay as
incurred (and in any event no later than March 15 of the year immediately
following the year in which incurred), to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
or in connection with his consultation with legal counsel or arising out of any
action, suit, proceeding or contest (regardless of the outcome thereof) by the
Employer, the Executive or others regarding the validity or enforceability of,
or liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by the Executive about
the amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the applicable federal rate provided for in
Section 7872(f)(2)(A) of the Code.  This Section 20(b) shall apply
whether such consultation, action, suit, proceeding or contest arises before,
on, after or as a result of a Change in Control.

    

    
      SECTION
21.  SEVERABILITY.

    

    

                          A
determination that any provision of this Agreement is invalid or unenforceable
shall not affect the validity or enforceability of any other provision
hereof.

    

    
      SECTION
22.  WAIVER.

    

    

                          Failure
to insist upon strict compliance with any of the terms, covenants or conditions
hereof shall not be deemed a waiver of such term, covenant or
condition.  A waiver of any provision of this Agreement must be made
in writing, designated as a waiver, and signed by the party against whom its
enforcement is sought.  Any waiver or relinquishment of any right or
power hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    

    
      SECTION
23.  COUNTERPARTS.

    

    

                          This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, and all of which shall constitute one and the same
Agreement.

    

    
      SECTION
24.  GOVERNING
LAW.

    

    

                          This
Agreement shall be governed by and construed and enforced in accordance with the
laws of the Commonwealth of Pennsylvania applicable to contracts entered into
and to be performed entirely within the Commonwealth of Pennsylvania, except to
the extent that federal law controls.

    

    
      SECTION
25.  HEADINGS
AND CONSTRUCTION.

    

    

                          The
headings of sections in this Agreement are for convenience of reference only and
are not intended to qualify the meaning of any section.  Any reference
to a section number shall refer to a section of this Agreement, unless otherwise
stated.

    

    
      SECTION
26.  ENTIRE
AGREEMENT; MODIFICATIONS.

    

    

                          This
instrument contains the entire agreement of the parties relating to the subject
matter hereof, and supersede in their entirety any and all prior agreements,
understandings or representations relating to the subject matter hereof,
including but not limited to the Prior Agreement and the First
Amendment.  No modifications of this Agreement shall be valid unless
made in writing and signed by the parties hereto; provided, however, that if the
Employer determines, after a review of the final regulations issued under
Section 409A of the Code and all applicable IRS guidance, that this Agreement
should be further amended to avoid triggering the tax and interest penalties
imposed by Section 409A of the Code, the Employer may amend this Agreement to
the extent necessary to avoid triggering the tax and interest penalties imposed
by Section 409A of the Code.

    

    
      SECTION
27.  REQUIRED
REGULATORY PROVISIONS.

    

    

                          Notwithstanding
anything herein contained to the contrary, any payments to the Executive by the
Employer, whether pursuant to this Agreement or otherwise, are subject to and
conditioned upon their compliance with Section 18(k) of the Federal Deposit
Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated
thereunder in 12 C.F.R. Part 359.

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    

    SECTION
28.  DISPUTE RESOLUTION.

    

                          (a)           In
the event of any dispute, claim, question or disagreement arising out of or
relating to this Agreement or the breach hereof, the parties hereto shall use
their best efforts to settle such dispute, claim, question or
disagreement.  To this effect, they shall consult and negotiate with
each other, in good faith, and, recognizing their mutual interests, attempt to
reach a just and equitable solution satisfactory to both parties.

    

                          (b)           If
they do not reach such a solution within a period of thirty (30) days, then the
parties agree first to endeavor in good faith to amicably settle their dispute
by mediation under the Commercial Mediation Rules of the American Arbitration
Association (the “AAA”), before resorting to arbitration.

    

                          (c)           Thereafter,
any unresolved controversy or claim arising out of or relating to this Agreement
or the breach thereof, upon notice by any party to the other, shall be submitted
to and finally settled by arbitration in accordance with the Commercial
Arbitration Rules (the “Rules”) of the AAA in effect at the time demand for
arbitration is made by any such party.  The parties shall mutually
agree upon a single arbitrator within thirty (30) days of such
demand.  In the event that the parties are unable to so agree within
such thirty (30) day period, then within the following thirty (30) day period,
one arbitrator shall be named by each party.  A third arbitrator shall
be named by the two arbitrators so chosen within ten (10) days after the
appointment of the first two arbitrators.  In the event that the third
arbitrator is not agreed upon, he or she shall be named by the
AAA.  Arbitration shall occur in Boyertown, Pennsylvania or such other
location as may be mutually agreed to by the parties.

    

                          (d)           The
award made by all or a majority of the panel of arbitrators shall be final and
binding, and judgment may be entered based upon such award in any court of law
having competent jurisdiction.  The award is subject to confirmation,
modification, correction or vacation only as explicitly provided in Title 9 of
the United States Code.  The prevailing party shall be entitled to
receive any award of pre- and post-award interest as well as attorney’s fees
incurred in connection with the arbitration and any judicial proceedings related
thereto.  The parties acknowledge that this Agreement evidences a
transaction involving interstate commerce.  The United States
Arbitration Act and the Rules shall govern the interpretation, enforcement, and
proceedings pursuant to this Section.  Any provisional remedy which
would be available from a court of law shall be available from the arbitrators
to the parties to this Agreement pending arbitration.  Either party
may make an application to the arbitrators seeking injunctive relief to maintain
the status quo, or may seek from a court of competent jurisdiction any interim
or provisional relief that may be necessary to protect the rights and property
of that party, until such times as the arbitration award is rendered or the
controversy otherwise resolved.

    

                          IN
WITNESS WHEREOF, the Employer has caused this Agreement to be executed and the
Executive has hereunto set his hand, all as of the day and year first above
written.

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    

    THIS
AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE
PARTIES.

    

    

    
      	
              KNBT
      BANCORP, INC.

               

               

              By:    /s/ Jeffrey P.
      Feather

              Name:  Jeffrey P.
      Feather

              Its:  Chairman of the
      Board

            	
              NATIONAL
      PENN BANCSHARES, INC.

               

               

              By:   /s/ Glenn E.
      Moyer

              Name: Glenn E.
      Moyer

              Its: President and
      CEO

            
	 
      	 
      
	
              KEYSTONE
      NAZARETH

              BANK
      & TRUST COMPANY

               

               

              By:    /s/ Jeffrey P.
      Feather

              Name:  Jeffrey P.
      Feather

              Its:  Chairman of the
      Board

            	
              NATIONAL
      PENN BANK

               

               

               

              By:    /s/ Glenn E.
      Moyer

              Name:  Glenn E.
      Moyer

              Its: President and
      CEO

               

            
	 
      	 
      
	
              EXECUTIVE:

               

               

              /s/ Scott V.
      Fainor

              Scott
      V. Fainor

            	 
      

    

    

    

    

    
      21

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