EXHIBIT 10.14
TERMINATION AGREEMENT

THIS AGREEMENT ("Agreement") made as of this 23rd day of October 2009, by and
between PEOPLES FINANCIAL SERVICES CORP., a Pennsylvania corporation ("Peoples")
and FREDERICK MALLOY (“Malloy”).

WITNESSETH:

WHEREAS, Peoples is engaged in the business of a bank holding company and is the
owner of all the issued and outstanding capital stock of Peoples National Bank
(the "Bank"); and

WHEREAS, Malloy is presently serving as Treasurer of Peoples and Vice President
and Controller of the Bank; and

WHEREAS, Peoples considers the continued services of Malloy to be in the best
interests of Peoples and its shareholders and desires to induce Malloy to remain
in the employ of the Bank on an impartial and objective basis in the event of a
change in control of Peoples.

AGREEMENT

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as follows:

1.           Term of Agreement.

(a)           The term of this Agreement shall:

(i)           initially be a term commencing as of October 23, 2009, and ending
on October 23, 2010; and

(ii)           be automatically extended to provide for a two (2) year term,
annually, on October 23, 2010, and again on October 23 of each year thereafter,
effective as of such respective dates, unless either Peoples or Malloy shall
have given written notice of nonextension of the term of this Agreement to the
other at least ninety (90) days before the date of any such extension.

(b)           Notwithstanding the provisions of Section 1(a) of this Agreement,
this Agreement shall terminate automatically upon termination by Peoples of
Malloy's employment for Cause.  As used in this Agreement, "Cause" shall mean
the following:

(i)           Malloy is convicted of or enters a plea of guilty or nolo
contendere to a felony, a crime of falsehood, or a crime involving fraud or
moral turpitude, or the actual incarceration of Malloy for a period of
forty-five (45) consecutive days;
 
(ii)           Malloy willfully fails to follow the lawful, good faith
instructions of the Board of Directors of Peoples after Malloy's receipt of
written notice of such instructions, other than a failure resulting from
Malloy's incapacity because of physical or mental illness; or

(iii)           any government regulatory agency orders that Peoples terminate
the employment of Malloy or relieve him of his duties.

Notwithstanding the foregoing, Malloy's employment under this Agreement shall
not be deemed to have been terminated for "Cause" under Clause (i) or (ii) above
if such termination took place solely as a result of:

(i)           questionable judgment on the part of Malloy;

(ii)           any act or omission believed by Malloy, in good faith, to have
been in, or not opposed to, the best interests of Peoples or its affiliated
companies; or

(iii)           any act or omission in respect of which a determination could
properly be made that Malloy met the applicable standard of conduct prescribed
for indemnification or reimbursement or payment of expenses under the Charter or
Bylaws of Peoples (or its affiliates) or the directors' and officers' liability
insurance of Peoples (or its affiliates), in each case as in effect at the time
of such act or omission.

If Malloy's employment is terminated for Cause, Malloy's rights under this
Agreement shall cease as of the effective date of such termination.

(c)           Notwithstanding the provisions of Section 1(a) of this Agreement,
this Agreement shall terminate automatically upon termination of Malloy's
employment as a result of Malloy's voluntary termination (other than in
accordance with Section 2 of this Agreement), retirement at Malloy's election,
or death, and Malloy's rights under this Agreement shall cease as of the date of
such voluntary termination, retirement at Malloy's election, or death; provided,
however, that if Malloy dies after a Notice of Termination (as defined in
Section 2(a) of this Agreement) is delivered by Malloy, the provisions of
Section 11(b) of this Agreement shall apply.

(d)           Notwithstanding the provisions of Section 1(a) of this Agreement,
this Agreement shall terminate automatically upon termination of Malloy's
employment as a result of Malloy's disability and Malloy's rights under this
Agreement shall cease as of the date of such termination.  For purposes of this
Agreement, "disability" shall mean Malloy's incapacitation by accident,
sickness, or otherwise that renders Malloy mentally or physically incapable of
performing the services therefore required of Malloy for a continuous period of
six (6) months.
 

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2.           Termination Following Change in Control.

(a)           If a Change in Control (as defined in Section 2(b) of this
Agreement) shall occur and if thereafter, at any time during the term of this
Agreement, Malloy shall be involuntarily terminated or there shall be:

(i)           any reduction in title or a reduction in Malloy's responsibilities
or authority with respect to Peoples or the Bank, including such
responsibilities and authority as the same may be increased at any time during
the term of this Agreement, or the assignment to Malloy of duties inconsistent
with Malloy's prior status as Treasurer of Peoples or as a Vice President and
Controller of the Bank;

(ii)           any reassignment of Malloy which requires Malloy to move his
principal residence;

(iii)           any removal of Malloy from office or any adverse change in the
terms and conditions of Malloy's employment, except for any termination of
Malloy's employment under the provisions of Section 1(b) hereof;

(iv)           any reduction in Malloy's annual base salary as in effect on the
date hereof or as the same may be increased from time to time;

(v)           any failure of Peoples to provide Malloy with benefits at least as
favorable as those enjoyed by Malloy under any of the pension, life insurance,
medical, health, accident, disability or other employee benefit plans of Peoples
(or any affiliated company) in which Malloy participated at the time of the
Change in Control, or the taking of any action that would materially reduce any
of such benefits in effect at the time of the Change in Control, unless such
reduction is part of a reduction applicable to all employees;

(vi)           any failure to obtain a satisfactory agreement from any successor
to assume and agree to perform under this Agreement, as contemplated in Section
11(a) hereof;

(vii)           any material change in the legal relationship between Peoples
and the Bank; or

(viii)           any material breach of this Agreement on the part of Peoples;

then, at the option of Malloy, exercisable by Malloy within one hundred twenty
(120) days of the occurrence of each and every of the foregoing enumerated
events, Malloy may resign from employment with Peoples (or, if involuntarily
terminated, give notice of intention to collect benefits under this Agreement)
by delivering a notice in writing (the "Notice of Termination") to Peoples, and
the provisions of Section 3 of this Agreement shall apply.
 
(b)           As used in this Agreement, "Change in Control" means a change of
control of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as enacted and in force on the
date hereof, whether or not Peoples is then subject to such reporting
requirement; provided, however, that, without limitation, such a Change in
Control shall be deemed to have occurred if:

(i)           any "person" (including a group acting in concert, as the term
"person" is defined in Section 13(d) of the Exchange Act, as enacted and in
force on the date hereof) becomes the "beneficial owner" (as that term is
defined in Rule 13d-3, as enacted and in force on the date hereof, under the
Exchange Act) of securities of Peoples representing more than 19.9% of the
combined voting power of Peoples' securities then outstanding;

(ii)           there occurs a merger, consolidation or other business
combination or reorganization to which Peoples or the Bank is a party, whether
or not approved in advance by the Board of Directors of Peoples or the Bank (as
the case may be) in which the members of the Board of Directors of Peoples or
the Bank (as the case may be) immediately preceding the consummation of such
transaction do not constitute a majority of the members of the Board of
Directors of the resulting corporation and of any parent corporation thereof
immediately after the consummation of such transaction;

(iii)           there occurs a sale, exchange, transfer, or other disposition of
substantially all of the assets of Peoples or the Bank to another entity, which
is not approved in advance by the Board of Directors of Peoples;

(iv)           there occurs a contested proxy solicitation of the stockholders
of Peoples that results in the contesting party obtaining the ability to elect
candidates to a majority of the positions on Peoples' Board of Directors next up
for election; or

(v)           there occurs a tender offer for the shares of voting securities of
Peoples that results in the tender offeror obtaining securities representing
more than 19.9% of the combined voting power of Peoples' securities then
outstanding.

3.           Rights in Event of Certain Termination of Employment After Change
in Control.  In the event that Malloy resigns from employment in accordance with
the provisions of Section 2(a), or Malloy's employment is terminated by Peoples
without Cause after a Change in Control, Peoples shall pay (or cause to be paid)
to Malloy in cash, within twenty (20) days following termination, an amount
equal to 2.00 times his "base amount" (within the meaning of Section 280G(b)(3)
of the Internal Revenue Code of 1986, as amended (the "Code")), calculated as
though the occurrence of the Change in Control were an event described in Code
Section 280G(b)(2)(A)(1).

Notwithstanding the preceding sentence, in the event the lump sum payment
described in the preceding sentence, when added to all other amounts or benefits
provided to or on behalf of Malloy in connection with his termination of
employment, would result in the imposition of an excise tax under Code Section
4999, such lump sum shall be reduced to the extent necessary to avoid such
imposition.

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4.           Legal Expenses.  Peoples shall pay to Malloy all legal fees and
expenses incurred by Malloy in seeking in good faith to obtain or enforce any
right or benefit provided by the Agreement, provided that any action or
proceeding is not summarily decided against Malloy.

5.           Arbitration.  Peoples and Malloy recognize that in the event a
dispute should arise between them concerning the interpretation or
implementation of this Agreement, lengthy and expensive litigation will not
afford a practical resolution of the issues within a reasonable period of
time.  Consequently, each party agrees that all disputes, disagreements and
questions of interpretation concerning this Agreement are to be submitted for
resolution to the American Arbitration Association (the "Association") in
Scranton, Pennsylvania.  Peoples, or Malloy, may initiate an arbitration
proceeding at any time by giving notice to the other in accordance with the
rules of the Association.  The Association shall designate a single arbitrator
to conduct the proceeding, but Peoples, and Malloy, may, as a matter of right,
require the substitution of a different arbitrator chosen by the
Association.  Each such right of substitution may be exercised only once.  The
arbitrator shall not be bound by the rules of evidence and procedure of the
courts of the Commonwealth of Pennsylvania but shall be bound by the substantive
law applicable to this Agreement.  The decision of the arbitrator, absent fraud,
duress, incompetence or gross and obvious error of fact, shall be final and
binding upon the parties and shall be enforceable in courts of proper
jurisdiction.  Following written notice of a request for arbitration, Peoples,
and Malloy, shall be entitled to an injunction restraining all further
proceedings in any pending or subsequently filed litigation concerning this
Agreement.  Notwithstanding the preceding provisions of this section, in the
event any such provision is in conflict with a rule or policy of the
Association, the arbitration proceeding shall be governed by such rule or
policy.

6.           Mitigation of Damages.  Malloy shall not be required to mitigate
the amount of any payment provided for in Section 3 by seeking other employment
or otherwise, nor shall the amount of any payment or benefit provided for in
Section 3 be reduced by any compensation earned by Malloy as the result of
employment by another employer or by reason of Malloy's receipt of or right to
receive any retirement or other benefits after the date of termination of
employment or otherwise; provided, however, that the payments provided for in
Section 3 shall be reduced by the amount actually received by Malloy under any
severance policy of Peoples then in effect.

7.           Notices.  Any notice required or permitted to be given under this
Agreement shall be deemed properly given if in writing and if mailed by
registered or certified mail, postage prepaid with return receipt requested, to
the residence of Malloy, in the case of notices to Malloy, and to the principal
office of Peoples, in the case of notices to Peoples.
 
8.           Waiver.  No provision of this Agreement may be modified, waived, or
discharged unless such waiver, modification, or discharge is agreed to in
writing and signed by Malloy and an executive officer of Peoples specifically
designated by the Board of Directors of Peoples.  No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.

9.           Assignment.  This Agreement shall not be assignable by either
party, except by Peoples to any successor in interest to the business of
Peoples.

10.           Entire Agreement.  This Agreement contains the entire agreement of
the parties relating to the subject matter of this Agreement.

11.           Successors; Binding Agreement.

(a)           Peoples will require any successor (whether direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of
the business and/or assets of Peoples to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that Peoples would be
required to perform it if no such succession had taken place.  Failure by
Peoples to obtain such assumption and agreement prior to the effectiveness of
any such succession shall constitute a breach of this Agreement and the
provisions of Section 3 of this Agreement shall apply.  As used in this
Agreement, "Peoples" shall mean Peoples as hereinbefore defined and any
successor to the respective businesses and/or assets of Peoples which assumes
and agrees to perform this Agreement by operation of law or otherwise.

(b)           This Agreement shall inure to the benefit of and be enforceable by
Malloy's personal or legal representatives, executors, administrators, heirs,
distributees, devisees, and legatees.  If Malloy should die after a Notice of
Termination is delivered by Malloy and any amounts would be payable to Malloy
under this Agreement if Malloy had continued to live, all such amounts shall be
paid in accordance with the terms of this Agreement to Malloy's devisee,
legatee, or other designee, or, if there is none, to Malloy's estate.

12.           Validity.  The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.

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

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

 
 

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15.           Termination of Prior Agreements.  Upon the execution and delivery
of this Agreement by the parties hereto, any prior agreement relating to the
subject matter hereof shall be automatically terminated and be of no further
force or effect.

16.           409A Safe Harbor.  Notwithstanding anything in this Agreement to
the contrary, in no event shall Peoples be obligated to commence payment or
distribution to Malloy of any amount that constitutes nonqualified deferred
compensation within the meaning of Internal Revenue Code Section 409A (“CODE
SECTION 409A”) earlier that the earliest permissible date under Code Section
409A that such amount could be paid without additional taxes or interest being
imposed under Code Section 409A.  Peoples and Malloy agree that they will
execute any and all amendments to this Agreement as they mutually agree in good
faith may be necessary to ensure compliance with the distribution provisions of
Code Section 409A and to cause any and all amounts due under this Agreement, the
payment or distribution of which is delayed pursuant to Code Section 409A, to be
paid or distributed in a single sum payment at the earliest permissible date
under Code Section 409A.

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

PEOPLES FINANCIAL SERVICES CORP.

By:                                                                
President
(SEAL)

Attest:                                                                
 Secretary

Witness:                                                                              MALLOY

Frederick Malloy