Document:

ex10_6.htm

    
      

    

    Exhibit
      10.6

     

    REGISTRATION
      RIGHTS AGREEMENT

    

    This
      REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into
      as of ________ __, 200__, by and between Rexahn Pharmaceuticals, Inc., a
      Delaware corporation (the “Company”), and Rexgene Biotech Co., Ltd., a
      Korean corporation (the “Purchaser”).

    

    Recital

    

    The
      parties have agreed to enter into this Agreement in connection with, and as
      a
      condition to the Closing under, the Securities Purchase Agreement, dated as
      of
      November 20, 2007, by and between the Company and the Purchaser (the
“Purchase Agreement”).

    

    Agreement

    

    NOW,
      THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
      and for other good and valuable consideration the receipt and adequacy of which
      are hereby acknowledged, the Company and the Purchaser agree as
      follows:

    

    1.      
            Definitions.  In addition
      to the terms defined elsewhere in this Agreement, (a) capitalized terms that
      are
      not otherwise defined herein have the meanings given to such terms in the
      Purchase Agreement, and (b) the following terms have the meanings
      indicated:

    

    “Actual
      Minimum” means, as of any date, the maximum aggregate number of shares of
      Common Stock then issued or potentially issuable in the future pursuant to
      the
      Transaction Documents, including Warrant Shares issuable upon exercise in full
      of all Warrants.

    

    “Effective
      Date” means the date on which the Registration Statement is first declared
      effective by the SEC.

    

    “Filing
      Date” means, with respect to the Registration Statement required to be filed
      pursuant to Section 2, the 60th day following the date on which the
      Common Stock is listed for trading on the American Stock Exchange.

    

    “Holder”
      means any holder, from time to time, of Registrable Securities.

    

    “Post-Effective
      Amendment” means a post-effective amendment to the Registration
      Statement.

    

    “Post-Effective
      Amendment Filing Deadline” means the 10th Trading Day after the Registration
      Statement ceases to be effective pursuant to the applicable securities laws
      due
      to the passage of time or the occurrence of an event requiring the Company
      to
      file a Post-Effective Amendment.

    

    “Prospectus”
      means the prospectus included in the Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the 1933 Act), as amended or supplemented by any
      prospectus supplement, with respect to the terms of the offering of any portion
      of the Registrable Securities covered by the Registration Statement, and all
      other amendments and supplements to the Prospectus, including post-effective
      amendments, and all material incorporated by reference or deemed to be
      incorporated by reference in such Prospectus.

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    “Registrable
      Securities” means any Common Stock (including Warrant Shares) issued or
      issuable pursuant to the Transaction Documents, together with any securities
      issued or issuable upon any stock split, dividend or other distribution,
      recapitalization or similar event with respect to the foregoing; provided,
      however, that any Common Stock will cease to be a Registrable Security when
      (i) it has been sold under the Registration Statement, or (ii) it may be
      transferred pursuant to Rule 144 under the 1933 Act.

    

    “Registration
      Statement” means the registration statement required to be filed hereunder,
      including the Prospectus, amendments and supplements to such registration
      statement or Prospectus, including pre- and post-effective amendments, all
      exhibits thereto, and all material incorporated by reference or deemed to be
      incorporated by reference in such registration statement.

    

    “Required
      Effectiveness Date” means, with respect to the Registration Statement
      required to be filed hereunder, the 90th day (or the 120th day in the event
      the
      Company receives comments to the Registration Statement from the SEC) following
      the Filing Date.

    

    “Required
      Holders” means the Holders of a majority of the Registrable
      Securities.

    

    “Rule
      415,” “Rule 424” and “Rule 461” means Rule 415, Rule 424 and
      Rule 461, respectively, promulgated by the SEC pursuant to the 1933 Act, as
      such
      Rules may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the SEC having substantially the same effect as such
      Rule.

    

    List
      of Additional Definitions.  The following is a list of additional
      terms used in this Agreement and a reference to the Section hereof in which
      such
      term is defined:

     

    
      	
              Term

            	
              Section

            
	
              Advice

            	
              6

            
	
              Effectiveness
                Period

            	
              2(a)

            
	
              Event

            	
              2(c)

            
	
              Event
                Date

            	
              2(c)

            
	
              Indemnified
                Party

            	
              5(c)

            
	
              Indemnifying
                Party

            	
              5(c)

            
	
              Losses

            	
              5(a)

            
	
              Purchaser
                Counsel

            	
              3(a)

            

    

    

    
      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

     

    2.         
         Shelf Registration.

    

    (a)           On
      or prior to the Filing Date, the Company shall prepare and file with the SEC
      a
“Shelf” Registration Statement covering the resale of all Registrable Securities
      eligible to be registered under the 1933 Act and rules and practices of the
      SEC
      for an offering to be made on a continuous basis pursuant to Rule
      415.  The Registration Statement shall be on Form SB-2 (or Form S-3 if
      the Company is then eligible to use such Form) and shall contain (except if
      otherwise directed by the Holders) the “Plan of Distribution” attached hereto as
Annex A.  The Company shall use its best efforts to cause the
      Registration Statement to be declared effective under the 1933 Act as promptly
      as possible after the filing thereof, but in any event prior to the Required
      Effectiveness Date, and shall use its best efforts to keep such Registration
      Statement continuously effective under the 1933 Act until the earliest of (i)
      the fifth anniversary of the Effective Date, (ii) when all Registrable
      Securities are eligible for resale pursuant to subsection (k) of Rule 144 under
      the 1933 Act, and (iii) when all Registrable Securities covered by such
      Registration Statement have been sold (the “Effectiveness
      Period”).  The Company shall notify each Holder in writing
      promptly (and in any event within one Business Day) after receiving notification
      from the SEC that a Registration Statement has been declared
      effective.

    

    (b)           The
      Registration Statement to be filed hereunder shall cover the sale by the Holders
      of 120% of the Actual Minimum number of shares of Common Stock issuable under
      the Transaction Documents.  As promptly as possible, and in any event
      no later than the Post-Effective Amendment Filing Deadline, the Company shall
      prepare and file with the SEC a Post-Effective Amendment, if required under
      this
      Agreement.  The Company shall use its best efforts to cause the
      Post-Effective Amendment to be declared effective by the SEC as promptly as
      possible after the filing thereof, but in any event prior to the 15th Trading
      Day after the Post-Effective Amendment Filing Deadline.  The Company
      shall notify the Purchaser in writing promptly (and in any event within one
      Business Day) after receiving notification from the SEC that the Post-Effective
      Amendment has been declared effective.

    

    (c)           If:  (i)
      the Registration Statement is not filed on or prior to the Filing Date (if
      the
      Company files such Registration Statement without affording the Purchaser the
      opportunity to review and comment on the same as required by Section 3(a)
      hereof, the Company shall not be deemed to have satisfied this clause (i)),
      or
      (ii) the Company fails to file with the SEC a request for acceleration in
      accordance with Rule 461 promulgated under the 1933 Act, within five Trading
      Days after the date that the Company is notified (orally or in writing,
      whichever is earlier) by the SEC that a Registration Statement will not be
      “reviewed,” or will not be subject to further review, or (iii) the Registration
      Statement filed hereunder is not declared effective by the SEC by the Required
      Effectiveness Date, or (iv) a Post-Effective Amendment is not filed on or prior
      to the Post-Effective Amendment Filing Deadline or is not declared effective
      on
      or prior to the 15th Trading Day after the Post-Effective Amendment Filing
      Deadline, or (v) the Common Stock is not listed or quoted, or is suspended
      from
      trading on an Eligible Market for a period of five consecutive Trading Days,
      or
      (vi) the Company fails for any reason to deliver a certificate evidencing any
      Securities to the Purchaser within five Trading Days after delivery of such
      certificate is required pursuant to any Transaction Document or the exercise
      rights of the Purchaser pursuant to the Transaction Documents are otherwise
      suspended for any reason (any such failure or breach being referred to as an
      “Event,” and for purposes of clause (i), (iii) or (iv) the date on which
      such Event occurs, or for purposes of clause (ii) and (vi) the date on which
      such five Trading Day period is exceeded, or for purposes of clause (v) the
      date
      on which such three Trading Day period is exceeded, being referred to as
“Event Date”), then: (x) on each such Event Date the Company shall pay to
      the Purchaser an amount in cash, as partial liquidated damages and not as a
      penalty, equal to 2% of the aggregate purchase price paid by the Purchaser
      pursuant to the Purchase Agreement; and (y) on each monthly anniversary of
      each
      such Event Date thereof (if the applicable Event shall not have been cured
      by
      such date) until the applicable Event is cured, the Company shall pay to the
      Purchaser an amount in cash, as partial liquidated damages and not as a penalty,
      equal to 2% of the aggregate purchase price paid by the Purchaser pursuant
      to
      the Purchase Agreement; provided, however, that the maximum amount of
      such liquidated damages shall not exceed a total equal to 10% of the aggregate
      purchase price paid by the Purchaser under the Purchase
      Agreement.  Such payments shall be in partial compensation to the
      Purchaser and shall not constitute the Purchaser’s exclusive remedy for such
      events.  If the Company fails to pay any liquidated damages pursuant
      to this Section 2 in full within seven days after the date payable, the
      Company will pay interest thereon at a rate of 18% per annum (or such lesser
      maximum amount that is permitted to be paid by applicable law) to the Purchaser,
      accruing daily from the date such liquidated damages are due until such amounts,
      plus all such interest thereon, are paid in full.

    

    
      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

    

    (d)           During
      the period subsequent to the Filing Date and prior to the Effective Date, the
      Company shall not prepare and file with the SEC a registration statement
      relating to an offering for its own account or the account of others under
      the
      1933 Act of any of its equity securities.

    

    (e)           Notwithstanding
      anything in this Agreement to the contrary, after 60 consecutive Trading Days
      of
      continuous effectiveness of the Registration Statement filed and declared
      effective pursuant to this Agreement, the Company may, by written notice to
      the
      Purchaser, suspend sales under a Registration Statement after the Effective
      Date
      thereof and/or require that the Purchaser immediately cease the sale of shares
      of Common Stock pursuant thereto and/or defer the filing of any subsequent
      Registration Statement if the Company is engaged in a material merger,
      acquisition or sale and the Board of Directors determines in good faith, by
      appropriate resolutions, that, as a result of such activity, (A) it would be
      materially detrimental to the Company (other than as relating solely to the
      price of the Common Stock) to file a Registration Statement at such time and
      (B)
      it is in the best interests of the Company to defer proceeding with such
      registration at such time.  Upon receipt of such notice, the Purchaser
      shall immediately discontinue any sales of Registrable Securities pursuant
      to
      such registration until the Purchaser has received copies of a supplemented
      or
      amended Prospectus or until the Purchaser is advised in writing by the Company
      that the then-current Prospectus may be used and has received copies of any
      additional or supplemental filings that are incorporated or deemed incorporated
      by reference in such Prospectus.  In no event, however, shall this
      right be exercised to suspend sales beyond the period during which (in the
      good
      faith determination of the Company’s Board of Directors) the failure to require
      such suspension would be materially detrimental to the Company.  The
      Company’s rights, under this Section 2(e) may be exercised for a period
      of no more than 45 days in the aggregate in any 12-moth period, of which no
      more
      than 20 days may be consecutive.  Immediately after the end of any
      suspension period under this Section 2(e), the Company shall take all
      necessary actions (including filing any required supplemental prospectus) to
      restore the effectiveness of the applicable Registration Statement and the
      ability of the Purchaser to publicly resell their Registrable Securities
      pursuant to such effective Registration Statement.  The provisions of
Sections 3(b) and 3(d) hereof shall not be applicable during the
      pendency of any suspension period under this Section 2(e).

    

    
      
        
           

        

        
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    (f)           Rule
      415 Limitations.  Notwithstanding  anything in this
      Agreement to the contrary, if the SEC refuses to declare a registration
      statement filed pursuant to this Agreement effective as a valid secondary
      offering under Rule 415 promulgated under the 1933 Act due to the number of
      Registrable Securities sought to be included in such registration statement
      relative to the number of shares of Acquirer Common Stock outstanding or the
      number of outstanding shares of Acquirer Common Stock held by non-affiliates
      or
      for any other reason, then, without any liability under this Agreement or any
      further obligation to register such excess Registrable Securities, the Company
      shall be permitted to reduce  the  number
      of  Registrable  Securities included in such
      registration  statement  to an amount  that does
      not  exceed an amount  that the SEC allows for the offering
      thereunder to qualify as a valid secondary offering under Rule
      415.  The Company shall not be liable for damages under this Agreement
      as to any Registrable Securities that are not
      permitted  by  the  SEC  to
      be  included  in a
      registration  statement  due to SEC guidance relating to
      Rule 415.

    

    3.         
         Registration Procedures.

    

    (a)           Not
      less than three days prior to the filing of a Registration Statement or any
      related Prospectus or any amendment or supplement thereto, the Company shall
      (i)
      furnish to any counsel designated by the Purchaser (“Purchaser Counsel”)
      copies of all such documents proposed to be filed, which documents (other than
      those incorporated or deemed to be incorporated by reference) will be subject
      to
      the review of the Purchaser and Purchaser Counsel and (ii) cause its officers
      and directors, counsel and independent certified public accountants to respond
      to such inquiries as shall be necessary to conduct a reasonable investigation
      within the meaning of the 1933 Act.  The Company shall not file a
      Registration Statement or any such Prospectus or any amendments or supplements
      thereto to which the Required Holders shall reasonably object in writing in
      their good faith within three days of receipt.

    

    (b)           (i)  The
      Company shall prepare and file with the SEC such amendments, including
      post-effective amendments, to each Registration Statement and the Prospectus
      used in connection therewith as may be necessary to keep the Registration
      Statement continuously effective as to the applicable Registrable Securities
      for
      the Effectiveness Period and prepare and file with the SEC such additional
      Registration Statements in order to register for resale under the 1933 Act
      all
      of the Registrable Securities; (ii) cause the related Prospectus to be amended
      or supplemented by any required Prospectus supplement, and as so supplemented
      or
      amended to be filed pursuant to Rule 424; (iii) respond as promptly as
      reasonably possible, and in any event within ten business days to comments
      received from the SEC with respect to the Registration Statement or any
      amendment thereto and, as promptly as reasonably possible, upon request, provide
      the Purchaser with true and complete copies of all correspondence from and
      to
      the SEC relating to the Registration Statement; and (iv) comply in all material
      respects, to the extent applicable to the Company, with the provisions of the
      1933 Act and the 1934 Act with respect to the disposition of all Registrable
      Securities covered by the Registration Statement during the applicable period
      in
      accordance with the intended methods of disposition by the Purchaser thereof
      set
      forth in the Registration Statement as so amended or in such Prospectus as
      so
      supplemented.

    

    
      
        
           

        

        
          5

          
            

          

        

        
           

        

      

    

    

    (c)           The
      Company shall notify Purchaser Counsel as promptly as reasonably possible,
      and
      (if requested by any such Person) confirm such notice in writing no later than
      one Trading Day thereafter, of any of the following events: (i) the SEC notifies
      the Company whether there will be a “review” of any Registration Statement; (ii)
      the SEC comments in writing on any Registration Statement; (iii) any
      Registration Statement or any Post-Effective Amendment is declared effective;
      (iv) the SEC or any other Federal or state governmental authority requests
      any
      amendment or supplement to any Registration Statement or Prospectus or requests
      additional information related thereto; (v) the SEC issues any stop order
      suspending the effectiveness of any Registration Statement or initiates any
      proceedings for that purpose; (vi) the Company receives notice of any suspension
      of the qualification or exemption from qualification of any Registrable
      Securities for sale in any jurisdiction, or the initiation or threat of any
      proceeding for such purpose; or (vii) an event has occurred which requires
      a
      post-effective amendment to the Registration Statement or a supplement to the
      prospectus included therein.

    

    (d)           The
      Company shall use its best efforts to avoid the issuance of or, if issued,
      to
      obtain the withdrawal of (i) any order suspending the effectiveness of any
      Registration Statement, or (ii) any suspension of the qualification (or
      exemption from qualification) of any of the Registrable Securities for sale
      in
      any jurisdiction, as soon as possible.

    

    (e)           The
      Company shall promptly deliver to Purchaser Counsel, without charge, an
      electronic copy of the Prospectus or Prospectuses (including each form of
      prospectus) and each amendment or supplement thereto as such Persons may
      reasonably request.  The Company hereby consents to the use of such
      Prospectus and each amendment or supplement thereto by the Purchaser in
      connection with the offering and sale of the Registrable Securities covered
      by
      such Prospectus and any amendment or supplement thereto.

    

    (f)           The
      Company shall promptly deliver to the Purchaser and Purchaser Counsel, without
      charge, as many copies of the Prospectus or Prospectuses (including each form
      of
      prospectus) and each amendment or supplement thereto as such Persons may
      reasonably request.  The Company hereby consents to the use of such
      Prospectus and each amendment or supplement thereto by the Purchaser in
      connection with the offering and sale of the Registrable Securities covered
      by
      such Prospectus and any amendment or supplement thereto.

    

    (g)           (i)  In
      the time and manner required by each Trading Market, the Company shall prepare
      and file with such Trading Market an additional shares listing application
      covering all of the Registrable Securities; (ii) take all steps necessary to
      cause such Registrable Securities to be approved for listing on each Trading
      Market as soon as possible thereafter; (iii) provide to the Purchaser evidence
      of such listing; and (iv) maintain the listing of such Registrable Securities
      on
      each such Trading Market or another Eligible Market.

    

    
      
        
           

        

        
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    (h)           Prior
      to any public offering of Registrable Securities, the Company shall use its
      best
      efforts to register or qualify or cooperate with the selling Purchaser and
      Purchaser Counsel in connection with the registration or qualification (or
      exemption from such registration or qualification) of such Registrable
      Securities for offer and sale under the securities or Blue Sky laws of such
      jurisdictions within the United States as the Purchaser reasonably requests
      in
      writing, to keep each such registration or qualification (or exemption
      therefrom) effective during the Effectiveness Period and to do any and all
      other
      acts or things necessary or advisable to enable the disposition in such
      jurisdictions of the Registrable Securities covered by a Registration
      Statement.

    

    (i)           Subject
      to compliance by the Purchaser with Section 6 hereof, the Company shall
      cooperate with the Purchaser to facilitate the timely preparation and delivery
      of certificates representing Registrable Securities to be delivered to a
      transferee pursuant to a Registration Statement, which certificates shall be
      free, to the extent permitted by this Agreement, of all restrictive legends,
      and
      to enable such Registrable Securities to be in such denominations and registered
      in such names as the Purchaser may request.

    

    (j)           Upon
      the occurrence of any event described in Section 3(c)(vii), as promptly
      as reasonably possible, the Company shall prepare a supplement or amendment,
      including a post-effective amendment, to the Registration Statement or a
      supplement to the related Prospectus or any document incorporated or deemed
      to
      be incorporated therein by reference, and file such supplement, amendment or
      any
      other document as may be required so that, as thereafter delivered, neither
      the
      Registration Statement nor such Prospectus shall contain an untrue statement
      of
      a material fact or omit to state a material fact required to be stated therein
      or necessary to make the statements therein, in light of the circumstances
      under
      which they were made, not misleading.

    

    (k)           If
      Holders of a majority of the Registrable Securities being offered pursuant
      to a
      Registration Statement select underwriters for the offering, the Company shall
      enter into and perform its obligations under an underwriting agreement, in
      usual
      and customary form, including, without limitation, by providing customary legal
      opinions, comfort letters and indemnification and contribution
      obligations.

    

    (l)           The
      Company shall comply with all applicable rules and regulations of the
      SEC.

    

    4.      
            Registration Expenses.  The
      Company shall pay all fees and expenses incident to the performance of or
      compliance with this Agreement by the Company, including without limitation
      (a)
      all registration and filing fees and expenses, including without limitation
      those related to filings with the SEC, any Trading Market and in connection
      with
      applicable state securities or Blue Sky laws, (b) printing expenses (including
      without limitation expenses of printing certificates for Registrable Securities
      and of printing prospectuses requested by the Purchaser), (c) messenger,
      telephone and delivery expenses, (d) fees and disbursements of counsel for
      the
      Company, (e) fees and expenses of all other Persons retained by the Company
      in
      connection with the consummation of the transactions contemplated by this
      Agreement and (f) all listing fees to be paid by the Company to the Trading
      Market.

    

    
      
        
           

        

        
          7

          
            

          

        

        
           

        

      

    

    

    5.      
            Indemnification.

    

    (a)           Indemnification
      by the Company.  The Company shall, notwithstanding any
      termination of this Agreement, indemnify and hold harmless the Purchaser, and
      its officers, directors, partners, members, agents, investment advisors and
      employees, each Person who controls the Purchaser (within the meaning of Section
      15 of the 1933 Act or Section 20 of the 1934 Act) and the officers, directors,
      partners, members, agents and employees of each such controlling Person, to
      the
      fullest extent permitted by applicable law, from and against any and all losses,
      claims, damages, liabilities, settlement costs and expenses, including without
      limitation costs of preparation of legal action and reasonable attorneys’ fees
      (collectively, “Losses”), as incurred, arising out of or based upon any
      untrue or alleged untrue statement of a material fact contained in the
      Registration Statement, any Prospectus or any form of prospectus or in any
      amendment or supplement thereto or in any preliminary prospectus, or arising
      out
      of or based upon any omission or alleged omission of a material fact required
      to
      be stated therein or necessary to make the statements therein (in the case
      of
      any Prospectus or form of prospectus or supplement thereto, in the light of
      the
      circumstances under which they were made) not misleading, except to the extent,
      but only to the extent, that (i) such untrue statements, alleged untrue
      statements, omissions or alleged omissions are based solely upon information
      regarding the Purchaser furnished in writing to the Company by the Purchaser
      or
      its counsel or other Person acting on behalf of the Purchaser expressly for
      use
      therein, or to the extent that such information relates to the Purchaser or
      the
      Purchaser’s proposed method of distribution of Registrable Securities and was
      reviewed and expressly approved in writing by the Purchaser or its counsel
      or
      other Person acting on behalf of the Purchaser expressly for use in the
      Registration Statement, such Prospectus or such form of Prospectus or in any
      amendment or supplement thereto or (ii) in the case of an occurrence of an
      event
      of the type specified in Section 3(c)(v)-(vii), the use by the Purchaser
      of an outdated or defective Prospectus after the Company has notified the
      Purchaser in writing that the Prospectus is outdated or defective and prior
      to
      the receipt by the Purchaser of the Advice contemplated in Section
      6.  The Company shall notify the Purchaser promptly of the
      institution, threat or assertion of any proceeding of which the Company is
      aware
      in connection with the transactions contemplated by this Agreement.

    

    (b)           Indemnification
      by the Purchaser.  The Purchaser shall indemnify and hold harmless
      the Company, its directors, officers, agents and employees, each Person who
      controls the Company (within the meaning of Section 15 of the 1933 Act and
      Section 20 of the 1934 Act), and the directors, officers, agents or employees
      of
      such controlling Persons, to the fullest extent permitted by applicable law,
      from and against all Losses arising solely out of or based solely upon any
      untrue statement of a material fact contained in the Registration Statement,
      any
      Prospectus, or any form of prospectus, or in any amendment or supplement
      thereto, or arising solely out of or based solely upon any omission of a
      material fact required to be stated therein or necessary to make the statements
      therein (in the case of any Prospectus or form of prospectus or supplement
      thereto, in the light of the circumstances under which they were made) not
      misleading to the extent, but only to the extent, that such untrue statement
      or
      omission is contained in any information so furnished in writing by the
      Purchaser to the Company specifically for inclusion in such Registration
      Statement or such Prospectus or to the extent that (i) such untrue statements
      or
      omissions are based solely upon information regarding the Purchaser furnished
      in
      writing to the Company by the Purchaser expressly for use therein, or to the
      extent that such information relates to the Purchaser or the Purchaser’s
      proposed method of distribution of Registrable Securities and was reviewed
      and
      expressly approved in writing by the Purchaser or its counsel or other person
      acting on behalf of the Purchaser expressly for use in the Registration
      Statement, such Prospectus or such form of Prospectus or in any amendment or
      supplement thereto or (ii) in the case of an occurrence of an event of the
      type
      specified in Section 3(c)(v)-(vii), the use by the Purchaser of an
      outdated or defective Prospectus after the Company has notified the Purchaser
      in
      writing that the Prospectus is outdated or defective and prior to the receipt
      by
      the Purchaser of the Advice contemplated in Section 6.  In no
      event shall the liability of any selling Purchaser hereunder be greater in
      amount than the dollar amount of the net proceeds received by the Purchaser
      upon
      the sale of the Registrable Securities giving rise to such indemnification
      obligation.

    

    
      
        
           

        

        
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    (c)           Conduct
      of Indemnification Proceedings.  (i)  If any proceeding
      shall be brought or asserted against any Person entitled to indemnity hereunder
      (an “Indemnified Party”), such Indemnified Party shall promptly notify
      the Person from whom indemnity is sought (the “Indemnifying Party”) in
      writing, and the Indemnifying Party shall be entitled to assume the defense
      thereof, including the employment of counsel reasonably satisfactory to the
      Indemnified Party and the payment of all fees and expenses incurred in
      connection with defense thereof; provided, however, that the failure of
      any Indemnified Party to give such notice shall not relieve the Indemnifying
      Party of its obligations or liabilities pursuant to this Agreement, except
      (and
      only) to the extent that it shall be finally determined by a court of competent
      jurisdiction (which determination is not subject to appeal or further review)
      that such failure shall have proximately and materially adversely prejudiced
      the
      Indemnifying Party.

    

    (ii)           An
      Indemnified Party shall have the right to employ separate counsel in any such
      proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless:  (i) the Indemnifying Party has agreed in writing to pay such
      fees and expenses; or (ii) the Indemnifying Party shall have failed promptly
      to
      assume the defense of such proceeding and to employ counsel reasonably
      satisfactory to such Indemnified Party in any such proceeding; or (iii) the
      named parties to any such proceeding (including any impleaded parties) include
      both such Indemnified Party and the Indemnifying Party, and a conflict of
      interest is likely to exist if the same counsel were to represent such
      Indemnified Party and the Indemnifying Party (in which case, if such Indemnified
      Party notifies the Indemnifying Party in writing that it elects to employ
      separate counsel at the expense of the Indemnifying Party, the Indemnifying
      Party shall not have the right to assume the defense thereof and such counsel
      shall be at the expense of the Indemnifying Party).  The Indemnifying
      Party shall not be liable for any settlement of any such proceeding effected
      without its written consent, which consent shall not be unreasonably
      withheld.  No Indemnifying Party shall, without the prior written
      consent of the Indemnified Party, effect any settlement of any pending
      proceeding in respect of which any Indemnified Party is a party, unless (i)
      a
      conflict of interest exists between the Indemnified Party and the Indemnifying
      Party or (ii) such settlement includes an unconditional release of such
      Indemnified Party from all liability on claims that are the subject matter
      of
      such proceeding.

    

    (iii)           All
      reasonable fees and expenses of the Indemnified Party (including reasonable
      fees
      and expenses to the extent incurred in connection with investigating or
      preparing to defend such proceeding in a manner not inconsistent with this
      Section 5) shall be paid to the Indemnified Party, as incurred, within
      ten Trading Days of written notice thereof to the Indemnifying Party (regardless
      of whether it is ultimately determined that an Indemnified Party is not entitled
      to indemnification hereunder; provided, however, that the Indemnifying
      Party shall reimburse all such fees and expenses to the extent it is finally
      judicially determined that such Indemnified Party is not entitled to
      indemnification hereunder).

    

    
      
        
           

        

        
          9

          
            

          

        

        
           

        

      

    

     

    (d)           Contribution.  (i)  If
      a claim for indemnification under Section 5(a) or (b) is
      unavailable to an Indemnified Party (by reason of public policy or otherwise),
      then each Indemnifying Party, in lieu of indemnifying such Indemnified Party,
      shall contribute to the amount paid or payable by such Indemnified Party as
      a
      result of such Losses, in such proportion as is appropriate to reflect the
      relative fault of the Indemnifying Party and Indemnified Party in connection
      with the actions, statements or omissions that resulted in such Losses as well
      as any other relevant equitable considerations.  The relative fault of
      such Indemnifying Party and Indemnified Party shall be determined by reference
      to, among other things, whether any action in question, including any untrue
      or
      alleged untrue statement of a material fact or omission or alleged omission
      of a
      material fact, has been taken or made by, or relates to information supplied
      by,
      such Indemnifying Party or Indemnified Party, and the parties’ relative intent,
      knowledge, access to information and opportunity to correct or prevent such
      action, statement or omission.  The amount paid or payable by a party
      as a result of any Losses shall be deemed to include, subject to the limitations
      set forth in Section 5(c), any reasonable attorneys’ or other reasonable
      fees or expenses incurred by such party in connection with any proceeding to
      the
      extent such party would have been indemnified for such fees or expenses if
      the
      indemnification provided for in this Section 5 was available to such
      party in accordance with its terms.

    

    (ii)           The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 5(d) were determined by pro rata allocation or
      by any other method of allocation that does not take into account the equitable
      considerations referred to in the immediately preceding
      paragraph.  Notwithstanding the provisions of this Section
      5(d), the Purchaser shall not be required to contribute, in the aggregate,
      any amount in excess of the amount by which the net proceeds actually received
      by the Purchaser from the sale of the Registrable Securities subject to the
      proceeding exceeds the amount of any damages that the Purchaser has otherwise
      been required to pay by reason of such untrue or alleged untrue statement or
      omission or alleged omission.  No Person guilty of fraudulent
      misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall
      be
      entitled to contribution from any Person who was not guilty of such fraudulent
      misrepresentation.

    

    6.        
          Dispositions.  The Purchaser agrees
      that it will comply with the prospectus delivery requirements of the 1933 Act
      as
      applicable to it in connection with sales of Registrable Securities pursuant
      to
      the Registration Statement.  The Purchaser further agrees that, upon
      receipt of a notice from the Company of the occurrence of any event of the
      kind
      described in Sections 2(f) or 3(c)(v), (vi) or
(vii), the Purchaser will discontinue disposition
      of such Registrable
      Securities under the Registration Statement until the Purchaser’s receipt of the
      copies of the supplemented Prospectus and/or amended Registration Statement
      contemplated by Section 3(j), or until it is advised in writing (the
“Advice”) by the Company that the use of the applicable Prospectus
      may be
      resumed, and, in either case, has received copies of any additional or
      supplemental filings that are incorporated or deemed to be incorporated by
      reference in such Prospectus or Registration Statement.  The Company
      may provide appropriate stop orders to enforce the provisions of this
      paragraph.

    

    
      
        
           

        

        
          10

          
            

          

        

        
           

        

      

    

    

    7.        
          Miscellaneous.

    

    (a)           Remedies.  In
      the event of a breach by the Company or by a Holder of any of their obligations
      under this Agreement, each Holder or the Company, as the case may be, in
      addition to being entitled to exercise all rights granted by law and under
      this
      Agreement, including recovery of damages, will be entitled to specific
      performance of its rights under this Agreement.  The Company and each
      Holder agree that monetary damages would not provide adequate compensation
      for
      any losses incurred by reason of a breach by it of any of the provisions of
      this
      Agreement and hereby further agrees that, in the event of any action for
      specific performance in respect of such breach, it shall waive the defense
      that
      a remedy at law would be adequate.

    

    (b)           Amendments
      and Waivers.  The provisions of this Agreement, including the
      provisions of this sentence, may not be amended, modified or supplemented,
      and
      waivers or consents to departures from the provisions hereof may not be given,
      unless the same shall be in writing and signed by the Company and the Required
      Holders.

    

    (c)           No
      Inconsistent Agreements.  Neither the Company nor any of its
      subsidiaries has entered, as of the date hereof, nor shall the Company or any
      of
      its subsidiaries, on or after the date of this Agreement, enter into any
      agreement with respect to its securities that is inconsistent with the rights
      granted to the Holders in this Agreement or otherwise conflicts with the
      provisions hereof.  Except as and to the extent specified in the
      applicable schedule to the Purchase Agreement, neither the Company nor any
      Subsidiary has previously entered into any agreement granting any registration
      rights with respect to any of its securities to any Person that have not been
      satisfied in full.

    

    (d)           No
      Piggyback on Registrations.  Neither the Company nor any of its
      security holders (other than the Holders in such capacity pursuant hereto)
      may
      include securities of the Company in the Registration Statement other than
      the
      Registrable Securities, and the Company shall not after the date hereof enter
      into any agreement providing any such right to any of its security holders
      other
      than upon written consent of the Required Holders, unless the rights so granted
      are subject in all respects to the prior rights in full of the Holders set
      forth
      herein and are not otherwise in conflict with the provisions of this
      Agreement.

    

    (e)           Shareholder
      Obligations.  The selling Holders shall furnish to the Company
      such information regarding themselves and the Registrable Securities held by
      them as shall be required to effect the registration of their Registrable
      Securities, and the Company may exclude from the registration statement the
      shares of any Holder that does not do so on a timely basis.

    

    (f)           Piggy-Back
      Registrations.  If at any time during the Effectiveness Period
      there is not an effective Registration Statement covering all of the Registrable
      Securities and the Company shall determine to prepare and file with the SEC
      a
      registration statement relating to an offering for its own account or the
      account of others under the 1933 Act of any of its equity securities, other
      than
      on Form S-4 or Form S-8 (each as promulgated under the 1933 Act) or their then
      equivalents relating to equity securities to be issued solely in connection
      with
      any acquisition of any entity or business or equity securities issuable in
      connection with stock option or other employee benefit plans, then the Company
      shall send to each Holder written notice of such determination and, if within
      fifteen days after receipt of such notice, any such Holder shall so request
      in
      writing, the Company shall include in such registration statement all or any
      part of such Registrable Securities such holder requests to be
      registered.  The selling Holders shall enter into and timely perform
      their obligations under the underwriting agreement, if any, and shall execute
      other customary agreements necessary or appropriate to facilitate the offering,
      including without limitation custody agreements and powers of
      attorney.

    

    
      
        
           

        

        
          11

          
            

          

        

        
           

        

      

    

    

    (g)           Notices.  Any
      and all notices or other communications or deliveries required or permitted
      to
      be provided hereunder shall be in writing and shall be deemed given and
      effective on the earliest of (a) the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile telephone number
      specified in this Section 7(g) prior to 18:30 (New York City time) on a
      Trading Day, (b) the next Trading Day after the date of transmission, if such
      notice or communication is delivered via facsimile at the facsimile telephone
      number specified in this Agreement on a day that is not a Trading Day or later
      than 18:30 (New York City time) and earlier than 24:00 (New York City time)
      on
      any Trading Day, (c) the Trading Day following the date of mailing, if sent
      by
      U.S. nationally recognized overnight courier service, or (d) upon actual receipt
      by the party to whom such notice is required to be given.  The address
      for such notices and communications shall be as set forth in the Purchase
      Agreement.

    

    (h)           Successors
      and Assigns.  This Agreement shall inure to the benefit of and be
      binding upon the successors and permitted assigns of each of the parties and
      shall inure to the benefit of each Holder.  The Company may not assign
      its rights or obligations hereunder without the prior written consent of each
      Holder.  The Purchaser may assign its rights and obligations hereunder
      to a transferee or assignee of Registrable Securities in the manner and to
      the
      extent permitted under the Purchase Agreement.

    

    (i)           Assignment
      of Registration Rights.  The rights of each Holder hereunder,
      including the right to have the Company register for resale Registrable
      Securities in accordance with the terms of this Agreement, shall be
      automatically assignable by each Holder to any Affiliate of such Holder or
      any
      other Holder or Affiliate of any other Holder of all or a portion of the
      Preferred Stock or the Registrable Securities if:  (i) the Holder
      agrees in writing with the transferee or assignee to assign such assignment,
      (ii) the Company is, within a reasonable time after such transfer or assignment,
      furnished with written notice of (a) the name and address of such transferee
      or
      assignee, and (b) the securities with respect to which such registration rights
      are being transferred or assigned, (iii) following such transfer or assignment
      the further disposition of such securities by the transferee or assignees is
      restricted under the 1933 Act and applicable state securities laws, (iv) at
      or
      before the time the Company receives the written notice contemplated by clause
      (ii) of this Section 7(i), the transferee or assignee agrees in writing
      with the Company to be bound by all of the provisions of this Agreement, (v)
      such transfer shall have been made in accordance with the applicable
      requirements of the Purchase Agreement, and (vi) at least 80,000 shares of
      Registrable Securities (appropriately adjusted for any stock dividend, split
      or
      combination of the Common Stock) are being transferred to such transferee or
      assignee in connection with such assignment of rights.  In addition,
      each Holder shall have the right to assign its rights hereunder to any other
      Person who is a transferee of Registrable Securities with the prior written
      consent of the Company, which consent shall not be unreasonably
      withheld.  The rights to assignment shall apply to the Holders (and to
      subsequent) successors and assigns.

    

    
      
        
           

        

        
          12

          
            

          

        

        
           

        

      

    

    

    (j)           Counterparts.  This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and, all of which taken together
      shall constitute one and the same Agreement.  In the event that any
      signature is delivered by facsimile transmission, such signature shall create
      a
      valid binding obligation of the party executing (or on whose behalf such
      signature is executed) the same with the same force and effect as if such
      facsimile signature were the original thereof.

    

    (k)           GOVERNING
      LAW; VENUE; WAIVER OF JURY TRIAL.  ALL QUESTIONS CONCERNING THE
      CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL
      BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
      REPUBLIC OF KOREA WITHOUT REGARD TO CONFLICTS OF LAWS
      PRINCIPLES.  EACH PARTY HEREBY IRREVOCABLY SUBMITS TO
      THE EXCLUSIVE JURISDICTION OF THE SEOUL CENTRAL DISTRICT COURT OF THE
      REPUBLIC OF KOREA, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED
      HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION
      DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY
      SUIT,
      ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
      JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS
      IMPROPER.  EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF
      PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR
      PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR
      OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS
      IN
      EFFECT FOR NOTICES TO IT UNDER THIS WARRANT AND AGREES THAT SUCH SERVICE SHALL
      CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING
      CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS
      IN ANY MANNER PERMITTED BY LAW.  THE COMPANY AND THE PURCHASER HEREBY
      WAIVE ALL RIGHTS TO A TRIAL BY JURY.

    

    (l)           Cumulative
      Remedies.  The remedies provided herein are cumulative and not
      exclusive of any remedies provided by law.

    

    (m)           Severability.  If
      any term, provision, covenant or restriction of this Agreement is held by a
      court of competent jurisdiction to be invalid, illegal, void or unenforceable,
      the remainder of the terms, provisions, covenants and restrictions set forth
      herein shall remain in full force and effect and shall in no way be affected,
      impaired or invalidated, and the parties hereto shall use their reasonable
      efforts to find and employ an alternative means to achieve the same or
      substantially the same result as that contemplated by such term, provision,
      covenant or restriction.  It is hereby stipulated and declared to be
      the intention of the parties that they would have executed the remaining terms,
      provisions, covenants and restrictions without including any of such that may
      be
      hereafter declared invalid, illegal, void or unenforceable.

    

    
      
        
           

        

        
          13

          
            

          

        

        
           

        

      

    

    

    (n)           Headings.  The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

    

    [Signature
      page follows]

    

    
      
        
           

        

        
          14

          
            

          

        

        
           

        

      

    

    

    IN
      WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
      as
      of the date first written above.

    

    
      	 	
              REXAHN
                PHARMACEUTICALS, INC.  

            
	
               

            	
                 

            
	
               

            	
                 

            
	
               

            	
                 

            
	
               

            	
              By:

            	
               

            	
               

            
	
               

            	
              Name:

            	
               

            	
               

            
	
               

            	
              Title:

            	
               

            	
               

            
	
               

            	
                 

            
	
               

            	
                 

            
	
               

            	
              REXGENE
                BIOTECH CO., LTD.  

            
	
               

            	
                 

            
	
               

            	
                 

            
	
               

            	
                 

            
	
               

            	
              By:

            	
               

            	
               

            
	
               

            	
              Name:

            	
               

            	
               

            
	
               

            	
              Title:

            	
               

            	
               

            

    

    

    

    

    [Signature
      page to Registration Rights Agreement]

    

    
      
        
           

        

        
          15

          
            

          

        

        
           

        

      

    

    

    Annex
      A

    

    Plan
      of Distribution

    

    The
      selling stockholders may, from time to time, sell any or all of their shares
      of
      common stock on any stock exchange, market or trading facility on which the
      shares are traded or in private transactions.  These sales may be at
      fixed or negotiated prices.  The selling stockholders may use any one
      or more of the following methods when selling shares:

    

    
      	
               

            	
              ·

            	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits Purchaser;

            

    

    

    
      	
               

            	
              ·

            	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            

    

    

    
      	
               

            	
              ·

            	
              purchases
                by a broker-dealer as principal and resale by the broker-dealer for
                its
                account;

            

    

    

    
      	
               

            	
              ·

            	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            

    

    

    
      	
               

            	
              ·

            	
              privately
                negotiated transactions;

            

    

    

    
      	
               

            	
              ·

            	
              short
                sales;

            

    

    

    
      	
               

            	
              ·

            	
              broker-dealers
                may agree with the selling stockholders to sell a specified number
                of such
                shares at a stipulated price per
                share;

            

    

    

    
      	
               

            	
              ·

            	
              a
                combination of any such methods of sale;
                and

            

    

    

    
      	
               

            	
              ·

            	
              any
                other method permitted pursuant to applicable
                law.

            

    

    

    The
      selling stockholders may also sell shares under Rule 144 under the 1933 Act,
      if
      available, rather than under this prospectus.

    

    The
      selling stockholders may also engage in short sales against the box, puts and
      calls and other transactions in our securities or derivatives of our securities
      and may sell or deliver shares in connection with these trades.

    

    Broker-dealers
      engaged by the selling stockholders may arrange for other brokers-dealers to
      participate in sales.  Broker-dealers may receive commissions or
      discounts from the selling stockholders (or, if any broker-dealer acts as agent
      for the purchaser of shares, from the purchaser) in amounts to be
      negotiated.  The selling stockholders do not expect these commissions
      and discounts to exceed what is customary in the types of transactions
      involved.  Any profits on the resale of shares of common stock by a
      broker-dealer acting as principal might be deemed to be underwriting discounts
      or commissions under the 1933 Act.  Discounts, concessions,
      commissions and similar selling expenses, if any, attributable to the sale
      of
      shares will be borne by a selling stockholder.  The selling
      stockholders may agree to indemnify any agent, dealer or broker-dealer that
      participates in transactions involving sales of the shares if liabilities are
      imposed on that person under the 1933 Act.

    

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    The
      selling stockholders may from time to time pledge or grant a security interest
      in some or all of the shares of common stock owned by them and, if they default
      in the performance of their secured obligations, the pledgees or secured parties
      may offer and sell the shares of common stock from time to time under this
      prospectus after we have filed an amendment to this prospectus under Rule
      424(b)(3) or other applicable provision of the 1933 Act amending the list of
      selling stockholders to include the pledgee, transferee or other successors
      in
      interest as selling stockholders under this prospectus.

    

    The
      selling stockholders also may transfer the shares of common stock in other
      circumstances, in which case the transferees, pledgees or other successors
      in
      interest will be the selling beneficial owners for purposes of this prospectus
      and may sell the shares of common stock from time to time under this prospectus
      after we have filed an amendment to this prospectus under Rule 424(b)(3) or
      other applicable provision of the 1933 Act amending the list of selling
      stockholders to include the pledgee, transferee or other successors in interest
      as selling stockholders under this prospectus.

    

    The
      selling stockholders and any broker-dealers or agents that are involved in
      selling the shares of common stock may be deemed to be “underwriters” within the
      meaning of the 1934 Act in connection with such sales.  In such event,
      any commissions received by such broker-dealers or agents and any profit on
      the
      resale of the shares of common stock purchased by them may be deemed to be
      underwriting commissions or discounts under the 1933 Act.

    

    We
      are
      required to pay all fees and expenses incident to the registration of the shares
      of common stock, including the fees and disbursements of counsel to the selling
      stockholders.  We have agreed to indemnify the selling stockholders
      against certain losses, claims, damages and liabilities, including liabilities
      under the 1933 Act.

    

    The
      selling stockholders have advised us that they have not entered into any
      agreements, understandings or arrangements with any underwriters or
      broker-dealers regarding the sale of their shares of common stock, nor is there
      an underwriter or coordinating broker acting in connection with a proposed
      sale
      of shares of common stock by any selling stockholder.  If we are
      notified by any selling stockholder that any material arrangement has been
      entered into with a broker-dealer for the sale of shares of common stock, if
      required, we will file a supplement to this prospectus.  We have
      advised each Selling Stockholder that it may not use shares registered on this
      Registration Statement to cover short sales made prior to the date on which
      this
      Registration Statement shall have been declared effective by the
      Commission.  If the selling stockholders use this prospectus for any
      sale of the shares of common stock, they will be subject to the prospectus
      delivery requirements of the 1933 Act.

    

    The
      anti-manipulation rules of Regulation M under the 1934 Act may apply to sales
      of
      our common stock and activities of the selling stockholders.exhibit10-1.htm

        EXHIBIT
      10.1

     

    AMENDED
      AND RESTATED

    EMPLOYMENT
      AGREEMENT

    

    

    This
      AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered
      into as of November 15, 2007 by and among Keystone Nazareth Bank & Trust
      Company (the “Bank”), KNBT Bancorp, Inc. (the “Company”) (the Bank and the
      Company are collectively referred to as the “Employer”), and Scott V.
      Fainor  (the “Executive”).

    

    

    W
      I T N E
      S S E T H :

    

    

    WHEREAS,
      the Executive is currently employed as the President and Chief Executive Officer
      of the Company and the Bank pursuant to an amended and restated employment
      agreement between the Company, the Bank and the Executive effective December
      28,
      2006 (the “Prior Agreement”);

    

    WHEREAS, 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”);

    

    WHEREAS,
      the Employer desires 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, the Employer 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 date first written above.  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.

    

    
      	
              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 each Employer, 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.

    

    (b) Throughout
      the Employment Period, the Board of Directors of the Bank (the “Bank Board”)
      shall nominate the Executive to be a director of the Bank when his term expires,
      subject to the fiduciary duties of the Bank Board, and the Company agrees to
      approve his election as a director of the Bank.  Throughout the
      Employment Period, the Board of Directors of the Company (the “Company Board”)
      shall nominate the Executive to be a director of the Company when his term
      expires and recommend his election to the shareholders of the Company, subject
      to the fiduciary duties of the Company Board.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    
      	
              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 twenty two thousand and
      three
      hundred dollars ($422,300) 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.

    

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

    

    (c)
      During the Employment Period, the Employer shall reimburse the Executive for
      his
      monthly membership dues to be a member of the Saucon Valley Country Club, with
      such reimbursement to be made promptly by the Employer and in any event no
      later
      than March 15 of the year immediately following the year in which the dues
      were
      paid by the Executive.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
      	
              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.

    

    
      	
              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 principal executive office located in Bethlehem,
      Pennsylvania, or at such other location within 25 miles of
      the address of such principal executive office, or at such other location as
      the
      Employer and the 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.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
      	
              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
      thefollowing:

    

    (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)
      any
      material change in the geographic location at which the Executive must perform
      his services under 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

    

    (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;

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (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 provided 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.

    

    (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”);

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (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;

    

    (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:

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (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.

    

    (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

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (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 provided 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.

     

    

    
      	
              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 mentalimpairment; (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.

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (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.

    

    (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 Executiveis 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:

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (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;

    

    (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.

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (c) Upon
      the occurrence of a Change in Control prior to the expiration of the Employment
      Period, the Executive shall be entitled to receive a severance benefit in an
      amount as calculated hereunder.  If the Executive is not terminated as
      of the Change in Control, he shall receive a lump sum payment within 25 days
      after the effective time of such Change in Control in an amount equal to 1.5
      times the Executive’s Base Amount, as hereinafter defined, from the
      Employer.  If the Executive’s employment is terminated as of the
      Change of Control, he shall receive a lump sum payment within 25 days after
      the
      effective time of such Change in Control in an amount equal to 3.0 times the
      Executive’s Base Amount from the Employer, minus $1.00. If the Executive’s
      employment is not terminated as of the Change in Control but is terminated
      within one year thereafter by either the Employer for other than cause or by
      the
      Executive upon the occurrence of any of the events set forth in Section 9(a)(i),
      then in addition to the payment made at or within 25 days of the Change in
      Control, the Executive shall receive a lump sum payment upon termination of
      employment from the Employer or its predecessor in an amount equal to 1.5 times
      the Executive’s Base Amount as calculated in connection with the Change in
      Control. If the Executive’s employment is terminated more than one year but less
      than two years after the Change in Control by either Employer other than for
      cause or by the Executive upon the occurrence of any of the events set forth
      in
      Section 9(a)(i), then in addition to the payment made at or within 25 days
      of
      the Change in Control, he shall receive a lump sum payment upon termination
      from
      the Employer or its predecessor in an amount equal to 1.5 times the Executive’s
      Base Amount as if the Change in Control had occurred as of the date of
      termination; provided however, that for purposes of calculating the
      Executive’s Base Amount for purposes of this sentence, any income related to the
      initial severance payment paid to the Executive at or within 25 days of the
      Change in Control pursuant to this Section 11(c) shall be
      excluded.  For purposes hereof, “Base Amount” shall be equal to the
      Executive’s “base amount” (excluding any income resulting from the vesting of
      restricted stock or the exercise of non-qualified options on or prior to the
      Effective Date) as defined under Section 280G of the Code.  The
      Executive shall not be entitled to receive any payments or benefits under
      Section 9 of this Agreement if he receives payments pursuant to this Section
      11(c) unless his employment is terminated more than two years after a Change
      in
      Control.

    

    
      	
              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

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (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

    

    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.

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (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.

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    
      	
              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.

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    
      	
              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:

    

    KNBT
      Bancorp, Inc.

    Keystone
      Nazareth Bank & Trust Company

    Route
      512
      and Highland Avenue

    Bethlehem,
      Pennsylvania 18017

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    (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:

    

    Elias,
      Matz, Tiernan & Herrick L.L.P.

    734
      15th Street,
      N.W.

    Washington,
      D.C.  20005

    Attention:
      Raymond A. Tiernan, Esq.

             Philip
      Ross Bevan, Esq.

    

    
      	
              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.

            	
              PROVISIONS
                APPLICABLE FOLLOWING THE ACQUISITION BY NATIONAL
                PENN.

            

    

    

    The
      Company, the Bank, the Executive, National Penn Bancshares, Inc. (“NPB”) and
      National Penn Bank (“NPBank”) previously entered into a First Amendment dated
      September 6, 2007 (the “First Amendment”) to the Prior
      Agreement.  This amendment and restatement of the Prior Agreement does
      not alter or modify the First Amendment in any manner, except as follows: (a)
      the definition of “Employment Agreement” in paragraph No. 2 under Background in
      the First Amendment shall refer to this Amended and Restated Employment
      Agreement dated November 15, 2007, and (b) Section 6 of the First Amendment
      is
      deleted in its entirety.  All other provisions of the First Amendment
      shall continue in full force and effect.

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    
      	
              SECTION
                22.

            	
              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
                23.

            	
              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.

    

    
      	
              SECTION
                24.

            	
              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
                25.

            	
              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
                26.

            	
              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
                27.

            	
              ENTIRE
                AGREEMENT; MODIFICATIONS.

            

    

    

    This
      instrument and the First Amendment contain 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.  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.

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    
      	
              SECTION
                28.

            	
              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.

    

    SECTION
      29.  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 Bethlehem, 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.

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    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.

    

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

    

    

    
      	 	 	 	 	 
	 	 	 	 	
              Scott
                V. Fainor, Executive

            
	 	 	 	 	 
	
              ATTEST:

            	 	 	
              KEYSTONE
                NAZARETH BANK

            
	 	 	 	
              &
                TRUST COMPANY

            
	 	 	 	 	 
	
              BY:

            	 	 	
              BY:

            	 
	
              Name:

            	
              Michele
                A. Linsky

            	 	
              Name:

            	
              Jeffrey
                P. Feather

            
	
              Title:

            	
              Corporate
                Secretary

            	 	
              Title:

            	
              Chairman
                of the Board

            
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	
              [Seal]

            	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	
              ATTEST:

            	 	 	
              KNBT
                BANCORP, INC.

            
	 	 	 	 	 
	
              BY:

            	 	 	
              BY:

            	 
	
              Name:

            	
              Michele
                A. Linsky

            	 	
              Name:

            	
              Jeffrey
                P. Feather

            
	
              Title:

            	
              Corporate
                Secretary

            	 	
              Title:

            	
              Chairman
                of the Board

            

    

    

    
      
        
        

      

      
        19

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00133-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00133-of-00352.parquet"}]]