Exhibit 10(xi)


 


AMENDMENT
AND RESTATEMENT OF THE


JERSEY
SHORE STATE BANK


DIRECTOR
DEFERRED FEE AGREEMENT


 


THIS AGREEMENT is made this 1st day of
October, 2004, by JERSEY SHORE STATE BANK a Pennsylvania-chartered commercial
bank located in Jersey Shore, Pennsylvania (the “Company”), and William H.
Rockey (the “Director”) selected to participate in this Amendment and
Restatement of the Jersey Shore State Bank Director Deferred Fee Agreement (the
“Agreement”), intending to be legally bound hereby.


 


BACKGROUND


 


On October 14, 1999, the Company and the
Director entered into the Jersey Shore State Bank Director Deferred Fee
Agreement (the “1999 Agreement”).  The
Company and the Director now wish to amend and restate the 1999 Agreement to
update the terms and provisions contained therein.  This new Agreement shall rescind and replace
the existing 1999 Agreement.


 


INTRODUCTION


 


To encourage the Director to remain a member
of the Company’s Board of Directors (the “Board”), the Company is willing to
provide to the Director the opportunity to defer Fees.  The Company will pay the benefits from its
general assets.


 


AGREEMENT


 


The Director and the Company agree as
follows:


 


Article 1


Definitions


 


Definitions.  Whenever used in this Agreement, the
following words and phrases shall have the meanings specified:


 


1.1                                 “Beneficiary” means each designated person, or the estate of
a deceased Director, entitled to benefits, if any, upon the death of a Director
determined pursuant to Article 6.


 


1.2                                 “Beneficiary Designation Form” means the form established
from time to time by the Plan Administrator that a Director completes, signs
and returns to the Plan Administrator to designate one or more beneficiaries.


 


1.3                                 “Change in Control” means any of the following:


 





















 


(A)  any person
(as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), other than the Corporation, a
subsidiary of the Corporation, an employee benefit plan (or related trust) of
the Corporation or a direct or indirect subsidiary of the Corporation, or
affiliates of the Corporation (as defined in Rule 12b-2 under the Exchange
Act), becomes the beneficial owner (as determined pursuant to Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Corporation
representing more than 20% of the combined voting power of the Corporation’s
then outstanding securities or announces a tender offer or exchange offer for
securities of the Corporation representing more than 20% of the combined voting
power of the Corporation’s then outstanding securities; or


 


(B)  the liquidation or dissolution of the
Corporation or the Company or the occurrence of, or execution of an agreement
providing for, a sale of all or substantially all of the assets of the Corporation
or the Company to an entity which is not a direct or indirect subsidiary of the
Corporation; or


 


(C)  the occurrence of, or execution of an
agreement providing for, a reorganization, merger, consolidation or other
similar transaction or connected series of transactions of the Corporation as a
result of which either (a) the Corporation does not survive or (b) pursuant to
which shares of the Corporation common stock (“Common Stock”) would be
converted into cash, securities or other property, unless, in case of either
(a) or (b), the holders of Corporation Common Stock immediately prior to such
transaction will, following the consummation of the transaction, beneficially
own, directly or indirectly, more than 50% of the combined voting power of the
then outstanding voting securities entitled to vote generally in the election
of directors of the corporation surviving, continuing or resulting from such
transaction; or


 


(D)  the occurrence of, or execution of an
agreement providing for, a reorganization, merger, consolidation, or similar
transaction of the Corporation, or before any connected series of such
transactions, if, upon consummation of such transaction or transactions, the
persons who are members of the Board of Directors of the Corporation immediately
before such transaction or transactions cease or, in the case of the execution
of an agreement for such transaction or transactions, it is contemplated in
such agreement that upon consummation such persons would cease, to constitute a
majority of the Board of Directors of the Corporation or, in a case where the
Corporation does not survive in such transaction, of the corporation surviving,
continuing or resulting from such transaction or transactions; or


 


(E)  any other event which is at any time designated
as a “Change in Control”  for purposes of this Agreement by a
resolution adopted by the Board of Directors of the Corporation with the
affirmative vote of a majority of the non-employee directors in office at the
time the resolution is adopted; in the event any


 


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such resolution is
adopted, the Change in Control event specified thereby shall be deemed
incorporated herein by reference and thereafter may not be amended, modified or
revoked without the written agreement of Director.


 


Notwithstanding anything else to the contrary set
forth in this Agreement, if (i) an agreement is executed by the Company
providing for any of the transactions or events constituting a Change in
Control as defined herein, and the agreement subsequently expires or is
terminated without the transaction or event being consummated, and (ii)
Director’s service did not terminate during the period after the agreement and
prior to such expiration or termination, for purposes of this Agreement it
shall be as though such agreement was never executed and no Change in Control
event shall be deemed to have occurred as a result of the execution of such
agreement.


 


1.4                                 “Code” means the Internal Revenue Code of 1986, as amended.


 


1.5                                 “Corporation”
means Penns Woods Bancorp, Inc.


 


1.6                                 “Disability” means (a) the Director’s suffering a sickness,
accident or injury which has been determined by the carrier of any individual
or group disability insurance policy covering the Director, or by the Social
Security Administration, to be a disability rendering the Director totally and
permanently disabled.  The Director must
submit proof to the Plan Administrator of the carrier’s or Social Security
Administration’s determination upon the request of the Plan Administrator; or
(b) such definition of Disability promulgated by the Secretary of the Treasury
pursuant to legislation affecting non-qualified deferred compensation plans, in
which case such definition shall supersede any other definition of Disability
in this Agreement and shall control the terms of this Agreement.


 


1.7                                 “Election Form A” means the form attached as Exhibit A.


 


1.8                                 “Election Form B” means the form attached as Exhibit B.


 


1.9                                 “Election Form C” means the form attached as Exhibit C.


 


1.10                           “Exhibit D” means the chart attached entitled Planned Fee
Deferrals.


 


1.11                           “Fees” means the total directors fees payable to the
Director.


 


1.12                           “Normal Benefit Age” means the benefit distribution age
specified by the Director in Election Form B.


 


1.13                           “Plan Administrator” means the plan administrator described
in Section 10.10.


 


1.14                           “Plan Year” means the calendar year.  In the initial year, it shall mean the period
from the date of execution of this Agreement through December 31 of the same


 


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year.


 


1.15                           “ROE” means return on equity, measured by dividing annualized
net income of the Corporation by average total equity of the Corporation for
the applicable period.


 


1.16                           “Termination of Service” means that the Director ceases to be
a member of the Company’s Board for any reason whatsoever other than by reason
of a leave of absence which is approved by the Company.  For purposes of this Agreement, if there is a
dispute over the service status of the Director or the date of the Director’s
Termination of Service, the Company shall have the sole and absolute right to
decide the dispute.


 


1.17                           “Unforeseeable Financial Emergency” means a severe financial
hardship to a Director, resulting from a sudden and unexpected illness or
accident of the Director, the Director’s spouse, or a dependent (as defined in
Section 152(a) of the Code) of the Director, loss of the Director’s property
due to casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Director.


 


Article 2


Deferral Election


 


2.1                                 Initial Election.  The
Director shall make an initial deferral election under this Agreement by filing
with the Company signed Election Forms A, B and C within thirty (30) days after
the date of this Agreement.  The Election
Forms shall be effective to defer only Fees earned after the date the Election
Forms are received by the Company.


 


2.2                                 Election Changes.  The
Director may modify the amount of Fees to be deferred annually by filing a new
Election Form A with the Company.  The
modified deferral shall not be effective until the calendar year following the
year in which the subsequent Election Form A is received by the Company.  Any changes to the form of benefit payment
must be in accordance with Election Form C. 
Any changes to the Normal Benefit Age or Timing of Payout must be in
accordance with Election Form B.


 


Article 3


Deferral Account


 


3.1                                 Establishing and Crediting. 
The Company shall establish a Deferral Account on its books for the
Director, and shall credit to the Deferral Account the following amounts:


 


3.1.1                        Rollovers.  The
Director’s rollover balance from the Jersey Shore State Bank Director Deferred
Fee Agreement dated October 14, 1999.


 


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3.1.2                        Deferrals. The Fees deferred by the Director as of the time
the Fees would have otherwise been paid to the Director.


 


3.1.3                        Interest.  On or
around the first business day of each Plan Year and immediately prior to the
payment of any benefits, interest is to be credited to the Deferral
Account.  While in the service of the
Company, interest shall be credited at an annual rate equal to fifty percent
(50%) of the Corporation’s prior year ROE, compounded monthly, on the first
business day on or before said anniversary date.  After Termination of Service,
interest shall be credited to the Deferral Account at a rate based on the yield
on the 10 Year Treasury Note as specified in the applicable section of Article
4 or 5.


 


3.2                                 Statement
of Accounts. The Company shall provide to the Director, within one hundred
twenty (120) days after each Plan Year, a statement setting forth the Deferral
Account balance.


 


3.3                                 Accounting Device Only. 
The Deferral Account is solely a device for measuring amounts to be paid
under this Agreement.  The Deferral
Account is not a trust fund of any kind. 
The Director is a general unsecured creditor of the Company for the payment
of benefits.  The benefits represent the
mere Company promise to pay such benefits. 
The Director’s rights are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by the Director’s creditors.


 


Article 4


Benefits During Lifetime


 


4.1                                 Normal Benefit Age. 
If the Director terminates service as a Director on or after Normal
Benefit Age, the Company shall pay to the Director the benefit described in
this Section 4.1 in lieu of any other benefit under this Agreement.


 


4.1.1                        Amount of Benefit. 
The benefit under this Section 4.1 is the Deferral Account balance at
the date specified in Election Form B.


 


4.1.2                        Payment of Benefit. 
The Company shall pay the benefit to the Director in the form specified
in Election Form C.  If installment
payments are elected, the Company shall continue to credit interest to the
Deferral Account at a rate based on the yield on the 10 Year Treasury Note,
compounded monthly, using the average yield in effect for the month immediately
prior to commencement of benefit payments.


 


4.2                                 Early Termination Benefit. 
If the Director terminates service as a Director before the Normal
Benefit Age for reasons other than death, Disability or following a Change in
Control, the Company shall pay to the Director
the benefit described in this Section 4.2 in lieu of any other benefit under
this Agreement.


 


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4.2.1                        Amount of Benefit. 
The benefit under this Section 4.2 is Deferral Account balance at the
date specified in Election Form B.  If
there is a delay of more than thirty (30) days between the Director’s
Termination of Service and the date payout commences, the Company shall
continue to credit interest to the Deferral Account balance, as specified in
Section 4.2.2, based on the yield on the 10 Year Treasury Note until payments
commence.


 


 


4.2.2                        Payment of
Benefit.  The Company shall
pay the benefit to the Director in the form specified in Election Form C.  If the Director terminates service as a
Director and has elected payment to be distributed at Normal Benefit Age, the
Company shall credit interest to the Deferral Account at a rate based on the
yield on the 10 Year Treasury Note, compounded monthly.  The initial rate shall be based on the
average yield in effect for the month immediately prior to Termination of
Service.  This rate will reset on January
1st of each calendar year based on the average yield in effect for
December of the prior year.  If
installment payments are elected, the Company shall continue to credit interest
on the undistributed account balance during any applicable installment period
at a rate based on the yield on the 10 Year Treasury Note, compounded monthly,
using the average yield in effect for the month immediately prior to
commencement of payments.


 


4.3                                 Disability Benefit.  Upon
Termination of Service for Disability prior to the Normal Benefit Age, the
Company shall pay to the Director the benefit described in this Section 4.3 in
lieu of any other benefit under this Agreement.


 


4.3.1                        Amount of Benefit. 
The benefit under this Section 4.3 is the Deferral Account balance at
the date specified in Election Form B. 
If there is a delay of more than thirty (30) days between the Director’s
Termination of Service and the date payout commences, the Company shall
continue to credit interest to the Deferral Account balance, as specified in
Section 4.3.2, based on the yield on the 10 Year Treasury Note until payments
commence.


 


4.3.2                        Payment of Benefit. 
The Company shall pay the benefit to the Director in the form specified
in Election Form C.  If the Director has
elected payment to be distributed at Normal Benefit Age, the Company shall
credit interest to the Deferral Account at a rate based on the yield on the 10
Year Treasury Note, compounded monthly. 
The initial rate shall be based on the average yield in effect for the
month immediately prior to Termination of Service.  This rate will reset on January 1st
of each calendar year based on the average yield in effect for December of the
prior year.  If installment payments are
elected, the Company shall continue to credit interest on the undistributed
account balance during any applicable installment period at a rate based on the
yield on the 10 Year Treasury Note, compounded monthly, using the average yield
in effect for


 


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the month immediately prior to commencement
of payments.


 


4.4                             Change in Control Benefit. 
If the Director is in the active service of the Company when the change
occurs, the Company shall pay to the Director the benefit described in this
Section 4.4 in lieu of any other benefit under this Agreement.


 


4.4.1                        Amount of
Benefit.  The benefit under this
Section 4.4 is Deferral Account balance at the date specified in Election Form
B.  If there is a delay of more than
thirty (30) days between the Director’s Termination of Service and the date
payout commences, the Company shall continue to credit interest to the Deferral
Account balance, as specified in Section 4.4.2, based on the yield on the 10
Year Treasury Note until payments commence.


 


4.4.2                        Payment of
Benefit.  The Company shall pay the
benefit to the Director in the form specified in Election Form C.  If the Director has elected payment to be
distributed at Normal Benefit Age, the Company shall credit interest to the
Deferral Account at a rate based on the yield on the 10 Year Treasury Note,
compounded monthly.  The initial rate
shall be based on the average yield in effect for the month immediately prior
to Termination of Service.  This rate
will reset on January 1st of each calendar year based on the average
yield in effect for December of the prior year. 
If installment payments are elected, the Company shall continue to
credit interest on the undistributed account balance during any applicable
installment period at a rate based on the yield on the 10 Year Treasury Note,
compounded monthly, using the average yield in effect for the month immediately
prior to commencement of payments.


 


4.5                               Hardship Distribution.  If the Director experiences an Unforeseeable
Emergency, the Director may petition the Board to suspend Deferrals required to
be made by such Director, to the extent deemed necessary by the Board to
satisfy the Unforeseeable Emergency.  If
suspension of Deferrals is not sufficient to satisfy the Director’s
Unforeseeable Emergency, or if


 


(i)                                     Reimbursement or compensation by insurance or
otherwise; or


(ii)                                  Liquidation
of Director’s assets (to the extent the liquidation would  not itself cause severe financial hardship)


 


cannot satisfy the Director’s
Unforeseeable Emergency, then the Director may further petition the Board to
receive a partial or full payout from the Agreement.  The Director shall only receive a payout from
the Agreement to the extent such payout is deemed necessary by the Board to
satisfy the Director’s Unforeseeable Emergency, plus an amount necessary to pay
taxes reasonably anticipated as a result of the distribution, up to a maximum
of the Director’s Deferral Account balance, calculated as of the
close of business on or around the date on


 


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which the amount becomes payable, as
determined by the Board in its sole discretion.


 


Article 5


Death Benefits


 


5.1                   Death While in Service, but Prior to Commencement of Benefit Payments.  If the Director dies while in service, but
prior to commencement of benefit payments, the Company shall pay to the
Director’s beneficiary the benefit described in this Section 5.1 in lieu of any
other benefit under this Agreement.


 


5.1.1                        Amount of Benefit. 
The benefit amount under Section 5.1 is the greater of:  (a) the Deferral Account balance or (b) Four
Hundred Twenty Two Thousand Two Hundred Three Dollars ($422,203) multiplied by
the ratio representing the actual cumulative Fees deferred at the date of death
as a percentage of the planned cumulative Fee deferrals at the inception of
this Agreement as detailed in Exhibit D, provided such ratio shall not exceed
one hundred percent (100%).  In
calculating this ratio, the amount shall be interpolated to the nearest month
as of the date of death.


 


5.1.2                        Payment of Benefit. 
The Company shall pay the benefit to the beneficiary in the form
specified in Election Form C, with payment made or commencing within 90 days
following the receipt of Director’s death certificate.  If installment payments are elected, the
Company shall continue to credit interest on the undistributed account balance
during any applicable installment period at a rate based on the yield on the 10
Year Treasury Note, compounded monthly, using the average yield in effect for
the month immediately prior to commencement of payments.


 


5.2                   Death During Benefit Period. 
If the Director dies after benefit payments have commenced under this
Agreement but before receiving all such payments, the Company shall pay the
remaining benefits to the Director’s beneficiary at the same time and in the
same amounts they would have been paid to the Director had the Director
survived.


 


5.3                   Death After Termination of Service But Before Benefit
Payments Commence. 
If the Director is entitled to benefit payments under this Agreement,
but dies prior to the commencement of said benefit payments, the Company shall
pay to the Beneficiary the Deferral Account balance as elected by the Director
on Election Form C within ninety (90) days following receipt of the Director’s
death certificate.


 


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Article 6


Beneficiaries


 


6.1                   Beneficiary. Each Director shall have the right, at any
time, to designate a Beneficiary(ies) to receive any benefits payable under the
Agreement to a beneficiary upon the death of a Director.  The Beneficiary designated under this
Agreement may be the same as or different from the Beneficiary designation
under any other plan of the Company in which the Director participates.


 


6.2                   Beneficiary Designation; Change.  A Director shall designate a Beneficiary by
completing and signing the Beneficiary Designation Form, and delivering it to
the Plan Administrator or its designated agent. 
The Director’s beneficiary designation shall be deemed automatically
revoked if the beneficiary predeceases the Director or if the Director names a
spouse as beneficiary and the marriage is subsequently dissolved.  A Director shall have the right to change a
Beneficiary by completing, signing and otherwise complying with the terms of
the Beneficiary Designation Form and the Plan Administrator’s rules and
procedures, as in effect from time to time. 
Upon the acceptance by the Plan Administrator of a new Beneficiary
Designation Form, all Beneficiary designations previously filed shall be
cancelled.  The Plan Administrator shall
be entitled to rely on the last Beneficiary Designation Form filed by the
Director and accepted by the Plan Administrator prior to the Director’s death.


 


6.3                   Acknowledgment.  No
designation or change in designation of a Beneficiary shall be effective until
received, accepted and acknowledged in writing by the Plan Administrator or its
designated agent.


 


6.4                   No Beneficiary Designation. 
If the Director dies without a valid beneficiary designation, or if all
designated Beneficiaries predecease the Director, then the Director’s spouse
shall be the designated Beneficiary.  If
the Director has no surviving spouse, the benefits shall be made to the
personal representative of the Director’s estate.


 


6.5                   Facility of Payment.  If the Plan Administrator determines in its
discretion that a benefit is to be paid to a minor, to a person declared
incompetent, or to a person incapable of handling the disposition of that
person’s property, the Plan Administrator may direct payment of such benefit to
the guardian, legal representative or person having the care or custody of such
minor, incompetent person or incapable person. 
The Plan Administrator may require proof of incompetence, minority or
guardianship as it may deem appropriate prior to distribution of the
benefit.  Any payment of a benefit shall
be a payment for the account of the Director and the Beneficiary, as the case
may be, and shall be a complete discharge of any liability under the Agreement
for such payment amount.


 


Article 7


General Limitations


 


7.1                   Termination for Cause. 
The Director will forfeit the interest credited since the date of
execution of this agreement if the Director’s service is terminated for
cause.  For purposes of this Section 7.1,
“for cause” shall mean:


 


(i)                                     Any
material breach of this Agreement by the Director; or


 


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(ii)                                  The
Director’s conviction of a crime, either federal or state, evidencing moral
turpitude or dishonesty; or


 


(iii)                               The
Director’s fraud, dishonesty, gross neglect of duties or gross misfeasance.


 


7.2                   Removal.  Notwithstanding
any provision of this Agreement to the contrary, the interest credited to the
deferred amounts since the date of execution of this Agreement shall be
forfeited if the Director is subject to a final removal or prohibition order
issued by an appropriate federal banking agency pursuant to Section 8(e) of the
Federal Deposit Insurance Act (“FDIA”).


 


7.3                   Competition after Termination of Employment.  The Director shall forfeit his right to the
interest credited to the deferred amounts since the date of execution of this
Agreement if the Director, without the prior written consent of the Company,
violates the following described restrictive covenants.


 


7.4                   Non-compete Provision. 
The Director shall forfeit any undistributed interest credited to the
deferred amounts since the date of execution of this Agreement under this
Agreement if during the term of this Agreement, and before all benefits have
been paid, the Director, directly or indirectly, either as an individual or as
a proprietor, stockholder, partner, officer, director, employee, agent,
consultant or independent contractor of any individual, partnership,
corporation or other entity (excluding an ownership interest of three percent
(3%) or less in the stock of a publicly-traded company):


 


(i)                                     becomes
employed by, participates in, or becomes connected in any manner with the
ownership, management, operation or control of any bank, savings and loan or
other similar financial institution if the Director’s responsibilities will
include providing banking or other financial services within the fifty (50)
miles of any office maintained by the Company as of the date of the termination
of the Director’s service;


 


(ii)                                  participates
in any way in hiring or otherwise engaging, or assisting any other person or
entity in hiring or otherwise engaging, on a temporary, part-time or permanent
basis, any individual who was employed by the Company as of the date of
termination of the Director’s service;


 


(iii)                               assists,
advises, or serves in any capacity, representative or otherwise, any third
party in any action against the Company or
transaction involving the Company;


 


(iv)                              sells,
offers to sell, provides banking or other financial services, assists any other
person in selling or providing banking or other


 


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financial services, or solicits or
otherwise competes for, either directly or indirectly, any orders, contract, or
accounts for services of a kind or nature like or substantially similar to the
financial services performed or financial products sold by the Company (the
preceding hereinafter referred to as “Services”), to or from any person or
entity from whom the Director or the Company, to the knowledge of the Director
provided banking or other financial services, sold, offered to sell or
solicited orders, contracts or accounts for Services during the three (3) year
period immediately prior to the termination of the Director’s service;


 


(v)                                 divulges,
discloses, or communicates to others in any manner whatsoever, any confidential
information of the Company, to the knowledge of the Director, including, but
not limited to, the names and addresses of customers or prospective customers,
of the Company, as they may have existed from time to time, of work performed
or services rendered for any customer, any method and/or procedures relating to
projects or other work developed for the Company, earnings or other information
concerning the Company. The restrictions contained in this subparagraph (v)
apply to all information regarding the Company, regardless of the source who
provided or compiled such information. 
Notwithstanding anything to the contrary, all information referred to herein
shall not be disclosed unless and until it becomes known to the general public
from sources other than the Director.


 


7.5                   Judicial Remedies.  In
the event of a breach or threatened breach by the Director of any provision of
these restrictions, the Director recognizes the substantial and immediate harm
that a breach or threatened breach will impose upon the Company or any of its
subsidiaries or Affiliates, and further recognizes that in such event monetary
damages may be inadequate to fully protect the Company or any of its
subsidiaries or Affiliates. Accordingly, in the event of a breach or threatened
breach of the provisions of this Agreement, the Director consents to the
Company’s or any of its subsidiaries’ entitlement to such ex  parte,
preliminary, interlocutory, temporary or permanent injunctive, or any other
equitable relief, protecting and fully enforcing the Company’ or any of its
subsidiaries’ rights hereunder and preventing the Director from further
breaching any of his obligations set forth herein.  The Director expressly waives any
requirement, based on any statute, rule of procedure, or other source, that the
Company or any of its subsidiaries or Affiliates post a bond as a condition of
obtaining any of the above-described remedies. 
Nothing herein shall be construed as prohibiting the Company or any of
its subsidiaries or Affiliates from pursuing any other remedies available to
the Company or any of its subsidiaries or Affiliates at law or in equity for
such breach or threatened breach, including the recovery of damages from the
Director.  The Director expressly
acknowledges and agrees that: (i) the restrictions set forth in Section 7.4 are
reasonable, in terms of scope, duration, geographic area, and otherwise, (ii)
the protections afforded the Company or any of its subsidiaries or Affiliates
in


 


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Section 7.4 are necessary to protect its legitimate business interest,
(iii) the restrictions set forth in Section 7.4 will not be materially adverse
to the Director’s service with the Company, and (iv) his agreement to observe
such restrictions forms a material part of the consideration for this
Agreement.


 


7.6                   Overbreadth of Restrictive Covenant.  It is the intention of the parties that if
any restrictive covenant in this Agreement is determined by a court of
competent jurisdiction to be overly broad, then the court should enforce such
restrictive covenant to the maximum extent permitted under the law as to area,
breadth and duration.


 


7.7                   Change in Control.  The non-compete provision detailed in Section
7.4 shall not apply if there is a Change in Control.


 


7.8                   Suicide or Misstatement. The Director
shall forfeit all interest credited since the date of execution of this
Agreement if the Director commits suicide within two years after the date of
this Agreement, or if the insurance company denies coverage for (i) material
misstatements of fact made by the Director on any application for life
insurance purchased by the Company, or (ii) any other reason.  The Company shall have no liability to the
Director for any denial of coverage by the insurance company.


 


Article 8


Claims and Review Procedures


 


8.1                   Claims Procedure.  A
Director or Beneficiary (“claimant”) who has not received benefits under the
Agreement that he or she believes should be paid shall make a claim for such
benefits as follows:


 


8.1.1                        Initiation –
Written Claim.  The claimant
initiates a claim by submitting to the Plan Administrator a written claim for
the benefits.


 


8.1.2                        Timing of
Plan Administrator Response.  The Plan Administrator shall respond to such
claimant within 90 days after receiving the claim.  If the Plan Administrator determines that
special circumstances require additional time for processing the claim, the
Plan Administrator can extend the response period by an additional 90 days by
notifying the claimant in writing, prior to the end of the initial 90-day
period, that an additional period is required. 
The notice of extension must set forth the special circumstances and the
date by which the Plan Administrator expects to render its decision.


 


8.1.3                        Notice of
Decision.  If the Plan
Administrator denies part or all of the claim, the Plan Administrator shall
notify the claimant in writing of such denial. 
The Plan Administrator shall write the notification in a manner
calculated to be understood by the claimant. 
The notification shall set forth:


 


(a)          The specific reasons for the denial;


(b)         A reference to the specific provisions of the
Agreement on which


 


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the denial is based;


(c)          A description of any additional information
or material necessary for the claimant to perfect the claim and an explanation
of why it is needed, and


(d)         An explanation of the Agreement’s review
procedures and the time limits applicable to such procedures.


 


8.2                   Review Procedure.  If
the Plan Administrator denies part or all of the claim, the claimant shall have
the opportunity for a full and fair review by the Plan Administrator of the
denial, as follows:


 


8.2.1                        Initiation –
Written Request.  To initiate
the review, the claimant, within 60 days after receiving the Plan Administrator’s
notice of denial, must file with the Plan Administrator a written request for
review.


 


8.2.2                        Additional
Submissions – Information Access. 
The claimant shall then have the opportunity to submit written comments,
documents, records and other information relating to the claim.  The Plan Administrator shall also provide the
claimant, upon request and free of charge, reasonable access to, and copies of,
all documents, records and other information relevant to the claimant’s claim
for benefits.


 


8.2.3                        Considerations
on Review.  In considering the
review, the Plan Administrator shall take into account all materials and
information the claimant submits relating to the claim, without regard to
whether such information was submitted or considered in the initial benefit
determination.


 


8.2.4                        Timing of
Plan Administrator Response. 
The Plan Administrator shall respond in writing to such claimant within
60 days after receiving the request for review. 
If the Plan Administrator determines that special circumstances require
additional time for processing the claim, the Plan Administrator can extend the
response period by an additional 60 days by notifying the claimant in writing,
prior to the end of the initial 60-day period, that an additional period is
required.  The notice of extension must
set forth the special circumstances and the date by which the Plan
Administrator expects to render its decision.


 


8.2.5                        Notice of
Decision.  The Plan
Administrator shall notify the claimant in writing of its decision on
review.  The Plan Administrator shall
write the notification in a manner calculated to be understood by the
claimant.  The notification shall set
forth:


 


(a)          The specific reasons for the denial;


(b)         A reference to the specific provisions of the
Agreement on which the denial is based, and


(c)          A statement that the claimant is entitled to
receive, upon request and free of charge, reasonable access to, and copies of,
all documents,


 


13





















 


records and other information relevant to the
claimant’s claim for benefits.


 


Article 9


Amendments and Termination


 


No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
the Director and such officer or officers as may be specifically designated by
the Board to sign on their behalf.  Provided,
however, in response to legislative or regulatory changes affecting
nonqualified deferred compensation plans that would otherwise cause the
Director to be deemed in constructive receipt of benefits under this Agreement,
the Company can amend this Agreement for the sole purpose of complying with
such legislative or regulatory changes.


 


Article 10


Miscellaneous


 


10.1                           Binding
Effect.  This Agreement shall bind
the Director and the Company, and their beneficiaries, survivors, executors,
successors, administrators and transferees.


 


10.2                           No Guarantee of Service. 
This Agreement is not a service policy or contract.  It does not give the Director the right to
remain as a member of the Company’s Board, nor does it interfere with the
Company’s right to terminate the Director’s service.  It also does not require the Director to
remain in service nor interfere with the Director’s right to terminate service
at any time.


 


10.3                           Non-Transferability. Benefits under this Agreement cannot be
sold, transferred, assigned, pledged, attached or encumbered in any manner.


 


10.4                           Tax Withholding.  The
Company shall withhold any taxes that are required to be withheld from the
benefits provided under this Agreement.


 


10.5                           Applicable Law.  The
Agreement and all rights hereunder shall be governed by the laws of the Commonwealth
of Pennsylvania, except to the extent preempted by the laws of the United
States of America.


 


10.6                           Unfunded Arrangement. 
The Director and beneficiary are general unsecured creditors of the
Company for the payment of benefits under this Agreement.  The benefits represent the mere promise by
the Company to pay such benefits.  The
rights to benefits are not subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors.  Any insurance on the Director’s
life is a general asset of the Company to which the Director and beneficiary
have no preferred or secured claim.


 


14





















 


10.7                           Entire Agreement.  This
Agreement constitutes the entire agreement between the Company and the Director
as to the subject matter hereof.  No
rights are granted to the Director by virtue of this Agreement other than those
specifically set forth herein.


 


10.8                           Reorganization.  The
Company shall not merge or consolidate into or with another company, or
reorganize, or sell substantially all of its assets to another company, firm or
person unless such succeeding or continuing company, firm or person agrees to
assume and discharge the obligations of the Company under this Agreement.  Upon the occurrence of such event, the term “Company”
as used in this Agreement shall be deemed to refer to the successor or survivor
company.


 


10.9                           Administration.  The
Company shall have powers which are necessary to administer this Agreement,
including but not limited to:


 


10.9.1                        Interpreting the provisions of
the Agreement;


 


10.9.2                        Establishing and revising the
method of accounting for the Agreement;


 


10.9.3                        Maintaining a record of benefit
payments; and


 


10.9.4                        Establishing rules and prescribing
any forms necessary or desirable to administer the Agreement.


 


10.10                     Named Fiduciary and Plan Administrator.  The Company shall be the named fiduciary and
Plan Administrator under this Agreement. 
The named fiduciary may delegate to others certain aspects of the
management and operation responsibilities of the Agreement including the
service of advisors and the delegation of ministerial duties to qualified
individuals.


 


IN
WITNESS WHEREOF, the Director and a duly authorized officer of the Company have
signed this Agreement as of the date indicated above.


 


 


	
  DIRECTOR:

  	
  COMPANY:

  
	
   

  	
  JERSEY SHORE STATE BANK

  
	
   

  	
   

  
	
  /s/ William H. Rockey

  	
   

  	
  By

  	
  /s/ Ronald A. Walko

  	
   

  
	
  WILLIAM H. ROCKEY

  	
   

  
	
   

  	
  Title President and Chief Executive
  Officer

  
					



 


15





















 


By execution hereof, Penns
Woods Bancorp, Inc. consents to and agrees to be bound by the terms and
condition of this Agreement.


 


	
  ATTEST:

  	
  CORPORATION:

  
	
   

  	
  PENNS WOODS BANCORP, INC.

  
	
   

  	
   

  
	
  /s/  Hubert A. Valencik

  	
   

  	
  By

  	
  /s/ Ronald A. Walko

  	
   

  
	
   

  	
   

  
	
   

  	
  Title President and Chief Executive
  Officer

  
					



 


16





















 


EXHIBIT A


 


JERSEY SHORE STATE
BANK


DIRECTOR DEFERRED FEE AGREEMENT


 


Election Form A


 


Deferral Election:


I elect to defer 100% of my annual Cash
Allowance (or $      per year.)


 


I understand that I may change the deferral
amount provided I make an election in writing prior to the calendar year for
which the change will become effective.


 


 


	
  Signature

  	
  /s/  William H. Rockey

  	
   

  
	
   

  
	
  Date

  	
  October 1, 2004

  
	
   

  
	
   

  
	
  Accepted by the Company this 1st day of October 2004.

  
	
   

  
	
  JERSEY SHORE STATE BANK

  
	
   

  
	
  By

  	
  /s/  Ronald A. Walko

  	
   

  
	
   

  
	
  Title President and Chief Executive Officer

  
					



 


17





















 


EXHIBIT B


 


JERSEY SHORE STATE
BANK


DIRECTOR DEFERRED FEE AGREEMENT


 


Election Form B


 


Normal Benefit Age:   I elect a Normal
Benefit Age of 72.


 


Timing of Payout:


 


If I terminate
service before Normal Benefit Age for reasons other than Death, Disability or
following a Change in Control, I elect to have my benefits distributed
commencing within 30 days of (Initial One):


 


	
  o

  	
   

  	
  Normal Benefit Age

  
	
   

  	
   

  	
   

  
	
  ý

  	
   

  	
  Termination of Service

  



 


If I terminate
service before Normal Benefit Age due to Disability, I elect to have my
benefits distributed commencing within 30 days of (Initial One):


 


	
  o

  	
   

  	
  Normal Benefit Age

  
	
   

  	
   

  	
   

  
	
  ý

  	
   

  	
  Termination of Service

  



 


If a Change in
Control occurs, while I am in active service, but prior to Normal Benefit Age,
I elect to have my benefits distributed commencing within 30 days of (Initial
One):


 


	
  o

  	
   

  	
  Normal Benefit Age

  
	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Termination of Service

  
	
   

  	
   

  	
   

  
	
  ý

  	
   

  	
  the date the Change in Control occurs

  



 


 


	
  Signature

  	
  /s/  William H. Rockey

  	
   

  
	
   

  
	
  Date

  	
  October 1, 2004

  
	
   

  
	
  Accepted by the Company this 1st day of October 2004.

  
	
   

  
	
  JERSEY SHORE STATE BANK

  
	
  By

  	
  /s/  Ronald A. Walko

  	
   

  
	
   

  
	
  Title President and Chief Executive Officer

  
					



 





















 


EXHIBIT C


 


JERSEY SHORE STATE
BANK


DIRECTOR DEFERRED FEE AGREEMENT


 


Election Form C


 


Form of Payment:


 


I elect to have my
benefits paid in the following form (initial (a), (b), (c) or (d) for each
category):


 


	
  Section

  Reference

  	
   

  	
  Triggering

  Event

  	
   

  	
  Lump

  Sum

  	
   

  	
  Annuitized

  Over

  24 Months

  	
   

  	
  Annuitized

  Over

  60 months

  	
   

  	
  Annuitized

  Over

  120 months

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1.2

  	
   

  	
  Normal Benefit Age

  	
   

  	
  (a)   o   

  	
   

  	
  (b)   o   

  	
   

  	
  (c)   o   

  	
   

  	
  (d)   ý   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.2.2

  	
   

  	
  Early Termination

  	
   

  	
  (a)   o   

  	
   

  	
  (b)   o   

  	
   

  	
  (c)   o   

  	
   

  	
  (d)   ý   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.3.2

  	
   

  	
  Disability

  	
   

  	
  (a)   o   

  	
   

  	
  (b)   o   

  	
   

  	
  (c)   o   

  	
   

  	
  (d)   ý   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.4.2

  	
   

  	
  Change in Control

  	
   

  	
  (a)   o   

  	
   

  	
  (b)   o   

  	
   

  	
  (c)   o   

  	
   

  	
  (d)   ý   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.1.2

  	
   

  	
  Death

  	
   

  	
  (a)   o   

  	
   

  	
  (b)   o   

  	
   

  	
  (c)   o   

  	
   

  	
  (d)   ý   

  



 


 


	
  Signature

  	
  /s/  William H. Rockey

  	
   

  
	
   

  
	
  Date

  	
  October 1, 2004

  
	
   

  
	
   

  
	
  Accepted by the Company this 1st day of October 2004.

  
	
   

  
	
  JERSEY SHORE STATE BANK

  
	
   

  
	
  By

  	
  /s/  Ronald A. Walko

  	
   

  
	
   

  
	
  Title President and Chief Executive Officer

  
					



 





















 


EXHIBIT D


 


JERSEY SHORE STATE
BANK


DIRECTOR DEFERRED FEE AGREEMENT


 


Planned Fees Deferrals


 




	
  Plan Year

  	
   

  	
  Planned Annual

  Deferrals

  	
   

  	
  Planned Cumulative

  Deferrals

  	
   

  
	
  1

  	
   

  	
  3,900

  	
   

  	
  3,900

  	
   

  
	
  2

  	
   

  	
  16,068

  	
   

  	
  19,968

  	
   

  
	
  3

  	
   

  	
  16,550

  	
   

  	
  36,518

  	
   

  
	
  4

  	
   

  	
  17,047

  	
   

  	
  53,565

  	
   

  
	
  5

  	
   

  	
  17,558

  	
   

  	
  71,123

  	
   

  
	
  6

  	
   

  	
  18,085

  	
   

  	
  89,208

  	
   

  
	
  7

  	
   

  	
  18,627

  	
   

  	
  107,835

  	
   

  
	
  8

  	
   

  	
  19,186

  	
   

  	
  127,021

  	
   

  
	
  9

  	
   

  	
  19,762

  	
   

  	
  146,783

  	
   

  
	
  10

  	
   

  	
  20,354

  	
   

  	
  167,137

  	
   

  
	
  11

  	
   

  	
  20,965

  	
   

  	
  188,102

  	
   

  
	
  12

  	
   

  	
  21,594

  	
   

  	
  209,696

  	
   

  
	
  13

  	
   

  	
  5,560

  	
   

  	
  215,256