Exhibit
10(viii)


 


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 Michael J. Casale (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) Five Hundred Fifty Thousand One Hundred
Sixteen Dollars ($550,116) 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/ Michael J. Casale

  	
   

  	
  By

  	
  /s/ Ronald A. Walko

  	
   

  
	
  MICHAEL J CASALE

  	
   

  	
   

  
	
   

  	
  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/ Michael J. Casale

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
  October 1, 2004

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  	
   

  
	
   

  	
   

  	
   

  
	
  JERSEY SHORE STATE BANK

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
  /s/ Michael J. Casale

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  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 70.


 


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


 


ý                                    Termination of
Service


 


o                                    the date the Change
in Control occurs


 


	
  Signature

  	
  /s/ Michael J. Casale

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  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)  ý

  	
   

  	
  (d)  o

  
	
  4.4.2

  	
   

  	
  Change in Control

  	
   

  	
  (a)  ý

  	
   

  	
  (b)  o

  	
   

  	
  (c)  o

  	
   

  	
  (d)  o

  
	
  5.1.2

  	
   

  	
  Death

  	
   

  	
  (a)  o

  	
   

  	
  (b)  o

  	
   

  	
  (c)  o

  	
   

  	
  (d)  ý

  



 


 


	
  Signature

  	
  /s/  Michael J. Casale

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  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

  	
   

  	
  22,242

  	
   

  	
  231,938

  	
   

  
	
  14

  	
   

  	
  22,909

  	
   

  	
  254,847

  	
   

  
	
  15

  	
   

  	
  23,596

  	
   

  	
  278,443

  	
   

  
	
  16

  	
   

  	
  24,304

  	
   

  	
  302,747

  	
   

  
	
  17

  	
   

  	
  25,033

  	
   

  	
  327,780

  	
   

  
	
  18

  	
   

  	
  25,784

  	
   

  	
  353,564

  	
   

  
	
  19

  	
   

  	
  6,639

  	
   

  	
  360,203