Document:

Document

Exhibit 4.1

CERECOR INC.
FORM OF PRE-FUNDED WARRANT TO PURCHASE COMMON STOCK
												
				
				Number of Shares: [ ]
(subject to adjustment)

				

Warrant No. [ ]
Original Issue Date: January [__], 2021

Cerecor Inc., a Delaware corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Nantahala Capital Management LLC, or its permitted registered assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company up to a total of [___] shares of common stock, $0.001 par value per share (the “Common Stock”), of the Company (each such share, a “Warrant Share” and all such shares, the “Warrant Shares”) at an exercise price per share equal to $0.001 per share (as adjusted from time to time as provided in Section 9 herein, the “Exercise Price”), upon surrender of this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, this “Warrant”) at any time and from time to time on or after the date hereof (the “Original Issue Date”), subject to the following terms and conditions:
1.    Definitions. For purposes of this Warrant, the following terms shall have the following meanings:
(a)  “Affiliate” means any Person directly or indirectly controlled by, controlling or under common control with, a Holder, but only for so long as such control shall continue. For purposes of this definition, “control” (including, with correlative meanings, “controlled by,” “controlling” and “under common control with”) means, with respect to a Person, possession, direct or indirect, of (a) the power to direct or cause direction of the management and policies of such Person (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), or (b) at least 50% of the voting securities (whether directly or pursuant to any option, warrant or other similar arrangement) or other comparable equity interests.
(b)  “Commission” means the United States Securities and Exchange Commission.
(c)  “Closing Sale Price” means, for any security as of any date, the last trade price for such security on the Principal Trading Market for such security, as reported by Bloomberg Financial Markets, or, if such Principal Trading Market begins to operate on an extended hours basis and does not designate the last trade price, then the last trade price of such security immediately prior to 4:00 P.M., New York City time, as reported by Bloomberg Financial Markets, or if the foregoing do not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg Financial Markets, or, if no last trade price is reported for such security by Bloomberg Financial Markets, the average of the bid and ask prices, of any market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then the Board of Directors of the Company shall use its good faith judgment to determine the fair market value of such security on such date. The Board of Directors’ determination shall be binding upon all parties absent demonstrable error. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.
(d)  “Principal Trading Market” means the national securities exchange or other trading market on which the Common Stock is primarily listed on and quoted for trading, which, as of the Original Issue Date, shall be The Nasdaq Capital Market.

(e)  “Registration Statement” means the Company’s Registration Statement on Form S-3 (File No. 333-233978), as amended, declared effective on May 18, 2018.
(f)  “Securities Act” means the Securities Act of 1933, as amended.
(g)  “Trading Day” means any weekday on which the Principal Trading Market is open for trading.
(h)  “Transfer Agent” means Computershare Trust Company, N.A., the Company’s transfer agent and registrar for the Common Stock, and any successor appointed in such capacity.
2.    Issuance of Securities; Registration of Warrants. The Warrant and Warrant Shares, as initially issued by the Company, are offered and will be sold pursuant to the Registration Statement. The Company shall register ownership of this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder (which shall include the initial Holder or, as the case may be, any assignee to which this Warrant is assigned hereunder) from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
3.    Registration of Transfers. Subject to compliance with all applicable securities laws, the Company shall, or will cause its Transfer Agent to, register the transfer of all or any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, and payment for all applicable transfer taxes (if any) by the Holder or any subsequent holder. Upon any such registration or transfer, a new warrant to purchase Common Stock in substantially the form of this Warrant (any such new warrant, a “New Warrant”) evidencing the portion of this Warrant so transferred shall be issued to the transferee, and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations in respect of the New Warrant that the Holder has in respect of this Warrant. The Company shall, or will cause its Transfer Agent to, prepare, issue and deliver at the Company’s own expense any New Warrant under this Section 3. Until due presentment for registration of transfer, the Company may treat the registered Holder hereof as the owner and holder for all purposes, and the Company shall not be affected by any notice to the contrary.
4.    Exercise and Duration of Warrants.
(a)  All or any part of this Warrant shall be exercisable by the registered Holder in any manner permitted by this Warrant at any time and from time to time on or after the Original Issue Date.
(b)  The Holder may exercise this Warrant by delivering (as determined in accordance with the notice provisions hereof) to the Company an exercise notice, in the form attached as Schedule 1 hereto (the “Exercise Notice”), completed and duly signed. Within one (1) Trading Day following the date of delivery of the Exercise Notice, the Holder shall make payment of the Exercise Price for the number of Warrant Shares as to which this Warrant is being exercised (which may take the form of a “cashless exercise” if so indicated in the Exercise Notice pursuant to Section 10 below). The date on which the Notice of Exercise is delivered to the Company (as determined in accordance with the notice provisions hereof) is an “Exercise Date” provided, that if the Exercise Price is not delivered on or before one (1) Trading Day following the date of delivery of the Exercise Notice, the Exercise Date shall be deemed to be one (1) Trading Day following the date of that the Exercise Price is delivered to the Company. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder. Execution and delivery of the Exercise Notice shall have the same effect as cancellation of the original Warrant and issuance of a New Warrant evidencing the right to purchase the remaining number of Warrant Shares, if any. The aggregate exercise price of this Warrant, except for the Exercise Price, was pre-funded to the Company on or before the Original Issue Date, and consequently no additional consideration (other than the Exercise Price) shall be required by to be paid by the Holder to effect any exercise of this Warrant. The Holder shall not be entitled to the return or refund of all, or any portion, of such pre-funded exercise price under any circumstance or for any reason whatsoever.
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5.    Delivery of Warrant Shares.
(a)  Upon exercise of this Warrant, the Company shall promptly (but in no event later than two (2) Trading Days after the Exercise Date), upon the request of the Holder, credit or instruct the Transfer Agent to credit such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with The Depository Trust Company (“DTC”) through its Deposit / Withdrawal At Custodian system, or if the Transfer Agent is not participating in the Fast Automated Securities Transfer Program (the “FAST Program”) or if the certificates are required to bear a legend regarding restriction on transferability, issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise. The Holder, or any natural person or legal entity (each, a “Person”) so designated by the Holder to receive Warrant Shares, shall be deemed to have become the holder of record of such Warrant Shares as of the time of delivery of the Exercise Notice on the Exercise Date, irrespective of the date such Warrant Shares are credited to the Holder’s DTC account or the date of delivery of the certificates evidencing such Warrant Shares, as the case may be. While this Warrant remains outstanding, the Company shall maintain a transfer agent that participates in the FAST Program.
(b)  If by the close of the fifth (5th) Trading Day after the Exercise Date, the Company fails to deliver to the Holder a certificate representing the required number of Warrant Shares in the manner required pursuant to Section 5(a) or fails to credit the Holder’s balance account with DTC for such number of Warrant Shares to which the Holder is entitled, and if after such second (2nd) Trading Day and prior to the receipt of such Warrant Shares, the Holder purchases (in an open market transaction or otherwise that reflects prevailing market prices) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise to unwind its commercially reasonable hedge position in a commercially reasonable manner (a “Buy-In”), then the Company shall, within two (2) Trading Days after the Holder’s request, promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Warrant Shares and pay cash to the Holder in an amount equal to the excess (if any) of Holder’s total purchase price (including commercially reasonable brokerage commissions, if any) for the shares of Common Stock so purchased in the Buy-In over the product of (A) the number of shares of Common Stock purchased in the Buy-In, times (B) the Closing Sale Price of a share of Common Stock on the Exercise Date.
(c)  To the extent permitted by law and subject to Section 5(b), the Company’s obligations to issue and deliver Warrant Shares in accordance with and subject to the terms hereof (including the limitations set forth in Section 11 below) are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance that might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares. Subject to Section 5(b), nothing herein shall limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
6.    Charges, Taxes and Expenses. Issuance and delivery of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, transfer agent fee or other incidental tax or expense (excluding any applicable stamp duties) in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or the Warrants in a name other than that of the Holder or an Affiliate thereof. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

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7.    Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction (in such case) and, in each case, a customary and reasonable indemnity (but not the posting of any surety or other bond), if requested by the Company. Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe. If a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the Company as a condition precedent to the Company’s obligation to issue the New Warrant.
8.    Reservation of Warrant Shares. The Company covenants that it will, at all times while this Warrant is outstanding, reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares that are initially issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of persons other than the Holder (taking into account the adjustments and restrictions of Section 9). The Company covenants that all Warrant Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and non-assessable. The Company will take all such action as may be reasonably necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any securities exchange or automated quotation system upon which the Common Stock may be listed. The Company further covenants that it will not, without the prior written consent of the Holder, take any actions to increase the par value of the Common Stock at any time while this Warrant is outstanding.
9.    Certain Adjustments. The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 9.
(a)  Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock issued and outstanding on the Original Issue Date and in accordance with the terms of such stock on the Original Issue Date or as amended, as described in the Registration Statement, that is payable in shares of Common Stock, (ii) subdivides its outstanding shares of Common Stock into a larger number of shares of Common Stock, (iii) combines its outstanding shares of Common Stock into a smaller number of shares of Common Stock or (iv) issues by reclassification of shares of capital stock any additional shares of Common Stock of the Company, then in each such case the Exercise Price shall be multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately before such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, provided, however, that if such record date shall have been fixed and such dividend is not fully paid on the date fixed therefor, the Exercise Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Exercise Price shall be adjusted pursuant to this paragraph as of the time of actual payment of such dividends. Any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination.
(b)  Pro Rata Distributions. If the Company, at any time while this Warrant is outstanding, distributes to all holders of Common Stock for no consideration (i) evidences of its indebtedness, (ii) any security (other than a distribution of Common Stock covered by the preceding paragraph) or (iii) rights or warrants to subscribe for or purchase any security, or (iv) cash or any other asset (in each case, “Distributed Property”), then, upon any exercise of this Warrant that occurs after the record date fixed for determination of stockholders entitled to receive such distribution, the Holder shall be entitled to receive, in addition to the Warrant Shares otherwise issuable upon such exercise (if applicable), the Distributed Property that such Holder would have been entitled to receive in respect of
such number of Warrant Shares had the Holder been the record holder of such Warrant Shares immediately prior to such record date without regard to any limitation on exercise contained therein. The Company covenants that it will, at all times while this Warrant is outstanding, reserve and keep available all Distributed Property that the Holder shall be entitled to receive hereunder, solely for the purpose of fulfilling its obligations pursuant to this Section 9(b).
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(c)  Fundamental Transactions. If, at any time while this Warrant is outstanding (i) the Company effects any merger or consolidation of the Company with or into another Person, in which the Company is not the surviving entity and in which the stockholders of the Company immediately prior to such merger or consolidation do not own, directly or indirectly, at least 50% of the voting power of the surviving entity immediately after such merger or consolidation, (ii) the Company effects any sale to another Person of all or substantially all of its assets in one transaction or a series of related transactions, (iii) pursuant to any tender offer or exchange offer (whether by the Company or another Person) for more than 90% of the outstanding capital stock of the Company, holders of capital stock tender shares representing more than 50% of the voting power of the capital stock of the Company and the Company or such other Person, as applicable, accepts such tender for payment, (iv) the Company consummates a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement, but not including any underwritten offering, registered direct offering, private placement or other transaction with the primary purpose of financing or fund raising for the Company) with another Person whereby such other Person acquires more than the 50% of the voting power of the capital stock of the Company (except for any such transaction in which the stockholders of the Company immediately prior to such transaction maintain, in substantially the same proportions, the voting power of such Person immediately after the transaction) or (v) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than as a result of a subdivision or combination of shares of Common Stock covered by Section 9(a) above) (in any such case, a “Fundamental Transaction”), then following such Fundamental Transaction the Holder shall only have the right to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Warrant Shares then issuable upon exercise in full of this Warrant without regard to any limitations on exercise contained herein (the “Alternate Consideration”). The Company shall not effect any Fundamental Transaction in which the Company is not the surviving entity or the Alternate Consideration includes securities of another Person unless (i) the Alternate Consideration is solely cash, in which case the Warrant will be deemed automatically exercised in full in exchange for such cash consideration pursuant to the “cashless exercise” provisions in Section 10 below upon the consummation of the Fundamental Transaction or (ii) prior to or simultaneously with the consummation thereof, any successor to the Company, surviving entity or other Person (including any purchaser of assets of the Company) shall assume the obligation to deliver to the Holder such Alternate Consideration as, in accordance with the foregoing provisions, the Holder may be entitled to receive, and the other obligations under this Warrant. The provisions of this paragraph (c) shall similarly apply to subsequent transactions analogous of a Fundamental Transaction type.
(d)  Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to Section 9 (including any adjustment to the Exercise Price that would have been effected but for the final sentence in this paragraph (d)), the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the increased or decreased number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment. Notwithstanding the foregoing, in no event may the Exercise Price be adjusted below the par value of the Common Stock then in effect.
(e)  Calculations. All calculations under this Section 9 shall be made to the nearest one-tenth of one cent or the nearest share, as applicable.
(f)  Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this Section 9, the Company at its expense will, at the written request of the Holder, promptly compute such adjustment, in good faith, in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based. Upon written request, the Company will promptly deliver a copy of each such certificate to the Holder and to the Transfer Agent.
(g)  Notice of Corporate Events. If, while this Warrant is outstanding, the Company (i) declares a dividend or any other distribution of cash, securities or other property in respect of its Common Stock, including, without 
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limitation, any granting of rights or warrants to subscribe for or purchase any capital stock of the Company or any subsidiary, (ii) authorizes or approves, enters into any agreement contemplating or solicits stockholder approval for any Fundamental Transaction or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then, except if such notice and the contents thereof shall be deemed to constitute material non-public information, the Company shall deliver to the Holder a notice of such transaction at least ten (10) days prior to the applicable record or effective date on which a Person would need to hold Common Stock in order to participate in or vote with respect to such transaction; provided, however, that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice. In the event such notice and the contents thereof shall be deemed to constitute material non-public information, the Company shall (on the same time frame set forth in the immediately prior sentence) offer the Holder the ability to sign a confidentiality agreement related thereto sufficient to allow the Holder to receive such notice, and the Company shall deliver such notice immediately upon execution of such confidentiality agreement. In addition, if while this Warrant is outstanding, the Company authorizes or approves, enters into any agreement contemplating or solicits stockholder approval for any Fundamental Transaction contemplated by Section 9(c), other than a Fundamental Transaction under clause (iii) of Section 9(c), the Company shall deliver to the Holder a notice of such Fundamental Transaction at least thirty (30) days prior to the date such Fundamental Transaction is consummated. Holder agrees to maintain any information disclosed pursuant to this Section 9(g) in confidence until such information is publicly available, and shall comply with applicable law with respect to trading in the Company’s securities following receipt any such information.
10.    Payment of Exercise Price. Notwithstanding anything contained herein to the contrary, the Holder may, in its sole discretion, satisfy its obligation to pay the Exercise Price through a “cashless exercise” (with respect to which the Company will preserve the availability of the exemption from registration in Section 3(a)(9) of the Securities Act), in which event the Company shall issue to the Holder the number of Warrant Shares determined as follows:
X = Y [(A-B)/A]

where:
“X” equals the number of Warrant Shares to be issued to the Holder;
“Y” equals the total number of Warrant Shares with respect to which this Warrant is then being exercised;
“A” equals (i) the last Closing Sale Price of the shares of Common Stock (as reported by Bloomberg Financial Markets) on the Trading Day immediately preceding the Exercise Date if the Exercise Notice is delivered prior to market close on the Exercise Date, or (ii) the last Closing Sale Price of the shares of Common Stock (as reported by Bloomberg Financial Markets) on the Exercise Date if the Exercise Notice is delivered following market close on the Exercise Date; and
“B” equals the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.
For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a “cashless exercise” transaction shall be deemed to have been acquired by the Holder, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued (provided that the Commission continues to take the position that such treatment is proper at the time of such exercise). In the event that the Registration Statement or another registration statement registering the issuance of Warrant Shares is, for any reason, not effective at the time of exercise of this Warrant, then the Warrant may only be exercised through a cashless exercise, as set forth in this Section 10. Except as set forth in Section 5(b) (Buy-In remedy) and Section 12 (payment of cash in lieu of fractional shares), in no event will the exercise of this Warrant be settled in cash. For the avoidance of doubt, in the event that the Registration Statement or another registration statement registering the issuance of the Warrant Shares is, for any reason, not effective at the time of exercise of this Warrant, then a cashless exercise pursuant to this Section 10 in exchange for unregistered Warrant Shares in accordance with Section 3(a)(9) of the Securities Act shall also be permitted.
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11.    Limitations on Exercise.
(a)  Notwithstanding anything to the contrary contained herein, the Company shall not effect any exercise of this Warrant, and the Holder shall not be entitled to exercise this Warrant for a number of Warrant Shares in excess of that number of Warrant Shares which, upon giving effect to such exercise, would cause (i) the aggregate number of shares of Common Stock beneficially owned by the Holder, the Holder together with such Holder’ss Affiliates, any person having beneficial ownership of shares of Common Stock owned by the Holder as calculated in accordance with Section 13(d) of the Exchange Act, or any persons acting as a Section 13(d) group together with such Holder or any of such Holder’s Affiliates (any such person other than Holder, including any group of which Holder is a member, an “Additional Restricted Ownership Person”)  (, to exceed 9.99% (the “Maximum Percentage”) of the total number of issued and outstanding shares of Common Stock of the Company following such exercise, or (ii) the combined voting power of the securities of the Company beneficially owned by the Holder or any Additional Restricted Ownership Person to exceed 9.99% of the combined voting power of all of the securities of the Company then outstanding following such exercise. For purposes of this Warrant, in determining the number of outstanding shares of Common Stock, the Holder and any Additional Restricted Ownership Person may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, filed with the Commission prior to the date hereof, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written request of the Holder, the Company shall within three (3) Trading Days confirm in writing or by electronic mail to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder since the date as of which such number of outstanding shares of Common Stock was reported. By written notice to the Company, the Holder may from time to time increase or decrease the Maximum Percentage to any other percentage not in excess of 19.99% specified in such notice; provided that any such increase will not be effective until the sixty-first (61st) day after such notice is delivered to the Company. For purposes of this Section 11(a), the aggregate number of shares of Common Stock or voting securities beneficially owned by the Holder or any Additional Restricted Ownership Person shall include the shares of Common Stock issuable upon the exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (x) exercise of the remaining unexercised and non-cancelled portion of this Warrant by the Holder or any Additional Restricted Ownership Person and (y) exercise or conversion of the unexercised, non-converted or non-cancelled portion of any other securities of the Company that do not have voting power (including without limitation any securities of the Company which would entitle the holder thereof to acquire at any time Common Stock, including without limitation any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock), is subject to a limitation on conversion or exercise analogous to the limitation contained herein and is beneficially owned by the Holder or any Additional Restricted Ownership Person, it being acknowledged by the Holder that the Company is not representing to such Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and such Holder is solely responsible for any schedules required to be filed in accordance therewith.. The limitations contained in this Section 11(a) shall terminate immediately at any time at which the Common Stock underlying the Warrants cease to be an “equity security” as defined in Rule 13d-1(i) promulgated under the Exchange Act (or any successor rule).
(b)  This Section 11 shall not restrict the number of shares of Common Stock which a Holder may receive or beneficially own in order to determine the amount of securities or other consideration that such Holder may receive in the event of a Fundamental Transaction as contemplated in Section 9(c) of this Warrant.
12.    No Fractional Shares. No fractional Warrant Shares will be issued in connection with any exercise of this Warrant. In lieu of any fractional shares that would otherwise be issuable, the number of Warrant Shares to be issued shall be rounded down to the next whole number and the Company shall pay the Holder in cash the fair market value (based on the Closing Sale Price) for any such fractional shares.
13.    Notices. Any and all notices or other communications or deliveries hereunder (including, without limitation, any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the time of 
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transmission, if such notice or communication is delivered via facsimile or confirmed e-mail at the facsimile number or e-mail address specified in the books and records of the Transfer Agent prior to 5:30 P.M., New York City time, on a Trading Day so long as the sender of an e-mail has not received an automated notice of delivery failure from the proposed recipient's computer server, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile or confirmed e-mail at the facsimile number or e-mail address specified in the books and records of the Transfer Agent on a day that is not a Trading Day or later than 5:30 P.M., New York City time, on any Trading Day so long as the sender of an e-mail has not received an automated notice of delivery failure from the proposed recipient's computer server, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service specifying next business day delivery, or (iv) upon actual receipt by the Person to whom such notice is required to be given, if by hand delivery. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any subsidiaries, the Company shall comply with its disclosure obligations under Regulation FD by simultaneously filing or publishing such notice on a Current Report on Form 8-K, a press release, or otherwise, or ensuring that the Holder is bound by a confidentiality obligation to which the Holder has agreed; provided, however, that nothing in this section shall obligate or require the Holder to agree to a confidentiality obligation.
14.    Warrant Agent. The Company shall initially serve as warrant agent under this Warrant. Upon thirty (30) days’ notice to the Holder, the Company may appoint a new warrant agent. Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or shareholders services business shall be a successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last address as shown on the Warrant Register. Notwithstanding anything to the contrary contained herein or in any warrant agency agreement that the Company may enter into in the future, the Holder shall be entitled to elect to receive, or continue to hold, this Warrant in certificated form, in which case the terms set forth in any such warrant agency agreement shall not apply to this Warrant.
15.    Miscellaneous.
(a)  No Rights as a Stockholder. The Holder, solely in such Person’s capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in such Person’s capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, amalgamation, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which such Person is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.
(b)  Authorized Shares.
(i)  Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate or articles of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.
    8    

(ii)  Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
(c)  Successors and Assigns. Subject to the restrictions on transfer set forth in this Warrant and compliance with applicable securities laws, this Warrant may be assigned by the Holder. This Warrant may not be assigned by the Company without the written consent of the Holder, except to a successor in the event of a Fundamental Transaction. This Warrant shall be binding on and inure to the benefit of the Company and the Holder and their respective successors and assigns. Subject to the preceding sentence, nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant. This Warrant may be amended only in writing signed by the Company and the Holder, or their successors and assigns.
(d)  Amendment and Waiver. Except as otherwise provided herein, the provisions of the Warrants may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Holders of Warrants representing no less than a majority of the Warrant Shares obtainable upon exercise of the Warrants then outstanding.
(e)  Acceptance. Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.
(f)  Governing Law; Jurisdiction. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. EACH OF THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT. EACH OF THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PERSON AT THE ADDRESS IN EFFECT FOR NOTICES TO IT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. EACH OF THE COMPANY AND THE HOLDER HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.
(g)  Headings. The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.
(h)  Severability. In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby, and the Company and the Holder will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.
(i)  Interpretation. For purposes of this Warrant, (a) the words “include,” “includes” and “including” are deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words 
    9    

“herein,” “hereof, “hereby,” “hereto” and “hereunder” refer to this Warrant as a whole. Unless the context otherwise requires, references herein: (x) to sections and schedules mean the sections of, and schedules attached to, this Warrant; (y) to an agreement, instrument, or other document means such agreement, instrument, or other document (as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof/without regard to subsequent amendments, supplements, and modifications thereto); and (z) to a statute means such statute (as amended from time to time and includes/enforced at the time and date of this Warrant becoming effective) and does not include any successor legislation thereto and any regulations promulgated thereunder. This Warrant shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The schedules referred to herein shall be construed with, and as an integral part of, this Warrant to the same extent as if they were set forth verbatim herein. All references to “$” or “dollars” mean the lawful currency of the United States of America. Whenever the singular is used in this Warrant, the same shall include the plural, and whenever the plural is used herein, the same shall include the singular, where appropriate.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

    10    

IN WITNESS WHEREOF, the undersigned has caused this Warrant to be duly executed by its authorized officer as of the date first indicated above.

												
				
				COMPANY:
				
				CERECOR, INC.

				
			By:	
			Name:	
			Title:	

[Signature Page to Warrant]

    11    

SCHEDULE 1
FORM OF EXERCISE NOTICE
[To be executed by the Holder to purchase shares of Common Stock under the Warrant]

Ladies and Gentlemen:

(1) The undersigned is the Holder of Warrant No. __ (the “Warrant”) issued by Cerecor Inc., a Delaware corporation (the “Company”). Capitalized terms used herein and not otherwise defined herein have the respective meanings set forth in the Warrant.
(2) The undersigned hereby exercises its right to purchase Warrant Shares pursuant to the Warrant.
(3) The Holder intends that payment of the Exercise Price shall be made as (check one):
☐    Cash Exercise

☐    “Cashless Exercise” under Section 10 of the Warrant

(4) If the Holder has elected a Cash Exercise, the Holder shall pay the sum of $ in immediately available funds to the Company in accordance with the terms of the Warrant.
(5) Pursuant to this Exercise Notice, the Company shall deliver to the Holder Warrant Shares determined in accordance with the terms of the Warrant.
(6) By its delivery of this Exercise Notice, the undersigned represents and warrants to the Company that in giving effect to the exercise evidenced hereby the Holder will not beneficially own in excess of the number of shares of Common Stock (as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended) permitted to be owned under Section 11(a) of the Warrant to which this notice relates.
															
					
					
	Dated:				
					
	Name of Holder:				
					
	By: 				
					
	Name:				
					
	Title:				

(Signature must conform in all respects to name of Holder as specified on the face of the Warrant)

    12Exhibit 10.1

 

Change
in Control Severance Agreement

 

This Change in Control
Severance Agreement (the “Agreement”), dated as of January 5, 2021, is made and entered into by and between
Peoples Security Bank and Trust Company, a Pennsylvania state chartered bank (the “Bank”) and John R. Anderson, III
(the “Employee”).

 

RECITALS

 

WHEREAS, the
Bank is the wholly owned subsidiary of Peoples Financial Services Corp., a Pennsylvania corporation (“Parent”),
and it is expected that Parent, from time to time, may consider the possibility of an acquisition by another company or other change
in control and that such consideration can be a distraction to Employee and can cause Employee to consider alternative employment
opportunities; and

 

WHEREAS, Parent
has determined that it is in the best interests of the Company (as defined below) and its shareholders to assure the continued
dedication and objectivity of Employee, notwithstanding the possibility, threat or occurrence of a Change in Control (as defined
below); and

 

WHEREAS, the
Bank believes that it is in the best interests of the Bank and Parent to provide Employee with an incentive to continue his employment
and to motivate Employee to maximize the value of the Bank and Parent upon a Change in Control for the benefit of their shareholders;
and

 

WHEREAS, the
Bank believes that it is imperative to provide Employee with certain severance benefits upon Employee’s termination of employment
following a Change in Control.

 

NOW, THEREFORE,
in consideration of the foregoing and the mutual covenants and promises contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:

 

Article I

DEFINITIONS

 

The capitalized terms
used in this Agreement shall have the meanings specified in this Article I or where defined in the other sections of
this Agreement.

 

Section 1.1.
“Accrued Obligations” means, as of the Date of Termination, to the extent not theretofore paid, the sum
of (i) Employee’s base salary through the Date of Termination, (ii) the amount of any bonus or other incentive
compensation for any completed bonus period and other vested cash compensation earned by Employee as of the Date of Termination
under the terms of any compensation, benefit plans, and deferred compensation plans, policies or arrangements maintained in force
by the Company, and (iii) any vacation pay, expense reimbursements and other cash entitlements accrued by the Employee, in
accordance with Company policy as of the Date of Termination.

 

    -1- 

     

    

 

Section 1.2.
“Cause” means: (i) conviction of, or the entry of a plea of guilty or no contest to a felony or any
other crime of moral turpitude that causes the Company or any of its affiliates public disgrace or disrepute, or adversely affects
the Company’s operations, financial performance, or relationship with its customers; (ii) fraud, embezzlement or other
misappropriation of funds; (iii) habitual insobriety or illegal use of controlled drugs; or (iv) refusal to perform the
lawful and reasonable directives of the Company, unless such refusal is cured within ten (10) days following Employee’s
receipt from the Bank of written notice thereof, specifying the directives Employee allegedly refused to perform.

 

Section 1.3.
“Change in Control” means the occurrence of any one of the following events: (i) any “person”
or “group” (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act), other than any Company
employee stock ownership plan or an equivalent retirement plan, becomes the beneficial owner (as such term is used in Section 13(d) of
the Exchange Act), directly or indirectly, of securities of Parent representing 50% or more of the combined voting power of Parent’s
then outstanding voting securities, (ii) the Parent Board ceases to consist of a majority of Continuing Directors (as defined
below), (iii) the consummation of a sale of all or substantially all of the Company’s assets (as measured by the fair
value of the assets being sold compared to the fair value of all of the Company’s assets), or (iv) a merger or other
combination occurs such that a majority of the equity securities of the resultant entity after the merger or other combination
are not owned by those who owned a majority of the equity securities of the Parent prior to the merger or other combination.

 

Section 1.4.
“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended.

 

Section 1.5.
“Code” means the Internal Revenue Code of 1986, as amended.

 

Section 1.6.
“Company” means the Parent and its direct and indirect subsidiaries, including, without limitation, the
Bank.

 

Section 1.7.
“Continuing Director” means a member of the Parent Board who either (i) is a member of the Parent Board
as of the date of this Agreement or (ii) is nominated or appointed to serve as a member of the Parent Board by a majority
of the then Continuing Directors.

 

Section 1.8.
“Disability” means a condition entitling Employee to benefits under the long term disability plan, policy
or arrangement maintained for employees of the Bank. Termination as a result of a Disability will not be construed as a termination
by the Bank without Cause.

 

Section 1.9.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

Section 1.10.
“Good Reason” means either of the following, without Employee’s prior consent: (i) a reduction
in base salary of fifteen percent (15%) or more; or (ii) Employee being required to relocate to a principal place of employment
more than 50 miles from Scranton, Pennsylvania; provided that no such reduction or required relocation shall constitute
 “Good Reason” unless: (a) Employee provides the Bank with written objection to the event or condition within thirty
(30) days of first receiving notice of such reduction or required relocation, (b) the Bank does not reverse or otherwise cure
the reduction or required relocation within thirty (30) days of receiving Employee’s written objection, and (c) Employee
resigns his employment within thirty (30) days following the expiration of the cure period provided for in the preceding clause
(b).

 

    -2- 

     

    

 

Section 1.11.
“Parent Board” means the board of directors of Parent.

 

Article II

TERM

 

Section 2.1.
Term of Agreement. The term of this Agreement will commence on the date hereof and shall continue until the earliest
of: (i) a termination by written consent of the parties hereto; (ii) a termination of Employee’s employment for
any reason prior to a Change in Control; (iii) a termination of Employee’s employment for any reason other than by the
Bank or its successor or assignee without Cause or by Employee for Good Reason within twenty-four (24) months following a Change
in Control; and (iv) the date that is twenty-four (24) months after a Change in Control. Notwithstanding the previous sentence,
if Employee becomes entitled to benefits hereunder, the Agreement will terminate when all of the obligations of the parties hereto
with respect to this Agreement have been satisfied.

 

Article III

SEVERANCE BENEFITS

 

Section 3.1.
Severance Benefits. Upon a termination of Employee’s employment by the Bank or its successor or assignee without
Cause or by Employee for Good Reason, which in either case occurs within twenty-four (24) months following a Change in Control
(the effective date of such termination is herein referred to as the “Date of Termination”), Employee will be
entitled to such compensation, benefits and rights as follows:

 

(a)            payment
of all Accrued Obligations; and

 

(b)            cash
severance payments equal to the sum of one-twelfth (1/12) of Employee’s base salary as in effect as of the Date of Termination
plus one-twelfth of Employee’s average annual bonus in the three fiscal years ending before such Date of Termination, payable
for a period of twenty-four (24) months in accordance with the payroll practices of the Bank (or its successor or assignee); and

 

(c)            subject
to Employee’s timely election of COBRA continuation coverage under the Company’s group health plan, on the first regularly
scheduled payroll date of each of the first eighteen (18) months after the termination of employment, payment of an amount equal
to the monthly COBRA premium cost; provided, that the payments pursuant to this Section 3.1(c) shall cease
in the event the Employee becomes eligible to receive group health benefits, including through a spouse’s employer; and provided
further, that if the Company’s payments under this Section 3.1(c) would violate and result in the imposition
of penalties under the Patient Protection and Affordable Care Act of 2010 (the “PPACA”) and related regulations
and guidance promulgated thereunder, the parties agree to reform this provision in such manner as is necessary to comply with the
PPACA and avoid any such penalties.

 

    -3- 

     

    

 

Except as provided in this Section 3.1,
all compensation and participation in all benefit plans, policies and arrangements will cease at the Date of Termination, subject
to the terms of any benefit plans, policies and arrangements then in force and applicable to Employee, and the Company shall have
no further liability or obligation by reason of such termination, provided, however, that nothing in this paragraph
shall affect or be deemed to affect Employee’s rights to accrued or vested benefits under any benefit plan, policy or arrangement
(other than a severance arrangement generally sponsored by the Company). The payments and benefits described in this Section 3.1,
which relate to the termination of Employee’s employment by the Bank or its successor or assignee without Cause or by Employee
for Good Reason, in either case within twenty-four (24) months following a Change in Control, are in lieu of, and not in addition
to, any other severance payments and benefits payable as a result of any such termination under arrangements maintained for the
employees of the Bank or its successor or assignee generally, but is not in lieu of any other severance payments and benefits payable
as a result of any other termination under arrangements maintained for the employees of the Bank or its successor or assignee generally.

 

Section 3.2.
Release Requirement. Notwithstanding any provision of this Agreement, the payments and benefits described in Section 3.1
(other than the Accrued Obligations) are conditioned on Employee’s execution and delivery to the Bank and the expiration
of all applicable statutory revocation periods, by the sixtieth (60th) day following the Date of Termination, of a general release
of claims against the Company in a form reasonably prescribed by the Bank (the “Release”). Subject to Section 3.4,
below, the benefits described in Section 3.1 will be paid or provided (or begin to be paid or provided as applicable)
as soon as administratively practicable after the Release becomes irrevocable, provided that if the 60-day period described above
begins in one taxable year and ends in a second taxable year such payments or benefits shall not commence until the second taxable
year. Any payments to be made to Employee and any benefits to be provided to Employee pursuant to Section 3.1 shall
be paid or provided, as applicable, to Employee’s beneficiaries, heirs or estate in the event of Employee’s death.

 

Section 3.3.
Other Terminations. If Employee’s employment with the Bank ceases for any reason other than as described in Section 3.1
(including but not limited to termination (a) by the Bank for Cause, (b) as a result of Employee’s death, (c) as
a result of Employee’s Disability, (d) by Employee without Good Reason or (e) for any reason prior to a Change
in Control, or more than twenty-four (24) months after a Change in Control), then the Bank’s obligation to Employee will
be limited solely to the payment of Accrued Obligations. All compensation and participation in benefits will cease at the time
of such termination and, except as otherwise provided by COBRA or the terms of such plans, the Company will have no further liability
or obligation by reason of such termination. The foregoing will not be construed to limit Employee’s right to payment or
reimbursement for claims incurred prior to the Date of Termination under any insurance contract funding an employee benefit plan,
policy or arrangement of the Company in accordance with the terms of such insurance contract or Employee’s right to accrued
or vested benefits under the terms of any employee benefit plan, policy or arrangement.

 

    -4- 

     

    

 

Section 3.4.
Application of Section 409A of the Code. Notwithstanding anything to the contrary in this Agreement, no portion
of the benefits or payments to be made under Section 3.1 hereof will be payable until the Employee has a “separation
from service” from the Company within the meaning of Section 409A of the Code. In addition, to the extent compliance
with the requirements of Treas. Reg. § 1.409A-3(i)(2) (or any successor provision) is necessary to avoid the application
of an additional tax under Section 409A of the Code to payments due to the Employee upon or following his “separation
from service,” then notwithstanding any other provision of this Agreement (or any applicable plan, policy, program, agreement
or arrangement), any such payments that are otherwise due within six (6) months following Employee’s “separation
from service” (taking into account the preceding sentence of this paragraph) will be deferred without interest and paid to
the Employee in a lump sum immediately following that six-month period. This paragraph should not be construed to prevent the application
of Treas. Reg. § 1.409A-1(b)(4) or Treas. Reg. § 1.409A-1(b)(9)(iii) (or any successor provisions) to amounts
payable hereunder. For purposes of the application of Section 409A of the Code, each payment in a series of payments will
be deemed a separate payment.

 

Section 3.5.
Limitation on Payments. If any payment or benefit due under this Agreement or any other payments and benefits that Employee
receives or is entitled to receive from the Bank, the Parent or any of their subsidiaries, affiliates or related entities, would
(if paid or provided alone or together with another payment or benefit) constitute an Excess Parachute Payment (as defined in Section 280G(b)(1) of
the Code and regulations issued thereunder), the amounts otherwise payable and benefits otherwise due under this Agreement will
be limited to the minimum extent necessary to ensure that no portion thereof will fail to be tax-deductible to the Company by reason
of Section 280G of the Code or result in an excise tax payable pursuant to Section 4999 of the Code. The determination
of whether any payment or benefit would (if paid or provided) constitute an Excess Parachute Payment will be made by the Parent
Board, in its good faith discretion. If a reduction to Employee’s payments and benefits is required pursuant to this Section 3.5,
such reduction shall occur to the payments and benefits in the following order: (a) first, any future cash payments (if necessary,
to zero); (b) second, any current cash payments (if necessary, to zero); (c) third, all non-cash payments (other than
equity or equity derivative related payments) (if necessary, to zero); and (d) fourth, all equity or equity derivative payments;
provided that in all events, such reductions shall be done in a manner consistent with the requirements of Section 409A
of the Code, to the extent applicable. If, notwithstanding the initial application of this Section 3.5, the Internal
Revenue Service determines that any amount paid or benefit provided to Employee would constitute an Excess Parachute Payment, this
Section 3.5 will be reapplied based on the Internal Revenue Service’s determination and Employee will be required
to repay to the Bank any overpayment immediately upon receipt of written notice of the applicability of this section.

 

Article IV

MISCELLANEOUS

 

Section 4.1.
Payments Subject to Tax Withholding. All payments and transfers of property described in this Agreement will be made
net of any applicable tax withholding.

 

    -5- 

     

    

 

Section 4.2.
Dispute Resolution. All disputes involving the interpretation, construction, application or alleged breach of this Agreement
and all disputes relating to the termination of Employee’s employment with the Bank shall be submitted to final and binding
arbitration in Scranton, Pennsylvania. The arbitrator shall be selected and the arbitration shall be conducted pursuant to the
then most recent Employment Dispute Resolution Rules of the American Arbitration Association in Philadelphia, Pennsylvania.
The arbitrator shall have authority to rule on any dispositive motions filed by the parties. The decision of the arbitrator
shall be final and binding, and any court of competent jurisdiction may enter judgment upon the award. The arbitrator shall have
jurisdiction and authority to interpret and apply the provisions of this Agreement and relevant federal, state and local laws,
rules and regulations insofar as necessary to the determination of the dispute and to remedy any breaches of the Agreement
and/or violations of applicable laws, but shall not have jurisdiction or authority to alter in any way the provisions of this Agreement.
The arbitrator shall have the authority to award attorneys’ fees and costs to the prevailing party. The parties hereby agree
that this arbitration provision shall be in lieu of any requirement that either party exhaust such party’s administrative
remedies under federal, state or local law.

 

Section 4.3.
Successors and Assigns; Third Party Beneficiary. The Bank may assign this Agreement to any affiliate or to any successor
to its assets or business by means of liquidation, dissolution, merger, consolidation, sale of assets or otherwise. For avoidance
of doubt, a termination of the Employee’s employment by the Bank in connection with a permitted assignment of the Bank’s
rights and obligations under this Agreement is not a termination without Cause so long as the successor or assignee offers employment
to the Employee on terms which would not constitute Good Reason (without regard to whether the Employee accepts employment with
the successor or assignee).

 

Section 4.4.
Non-Disparagement. Employee agrees that he shall not in any way, orally or in writing, disparage or defame the Company
or any of its board members, officers or employees to any third party or commit any libelous or slanderous act against the Company
or any of its board members, officers or employees.

 

Section 4.5.
Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective
and valid under applicable law. However, if any provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability will not affect any other provision, and this Agreement will be reformed,
construed and enforced as though the invalid, illegal or unenforceable provision had never been herein contained.

 

Section 4.6.
Survival. This Agreement will survive the cessation of the Employee’s employment to the extent necessary to fulfill
the purposes and intent of this Agreement.

 

Section 4.7.
Entire Agreement; Amendments. Except as otherwise provided herein, this Agreement contains the entire agreement and
understanding of the parties hereto relating to the subject matter hereof. Therefore, this Agreement merges and supersedes all
prior and contemporaneous discussions, agreements and understandings of every nature relating to Employee’s severance and
termination or any related matter. This Agreement may not be changed or modified, except by an Agreement in writing signed by the
Employee and the Bank.

 

    -6- 

     

    

 

Section 4.8.
Notice. Any notice or communication required or permitted under this Agreement will be made in writing and (a) sent
by overnight courier, (b) mailed by certified or registered mail, return receipt requested or (c) sent by telecopier,
addressed as follows:

 

If to Employee, to the address on file with the Bank.

 

If to the Bank:

 

Peoples Security Bank and Trust Company

150 North Washington Avenue

Scranton, PA 18503

Attn: Chief Executive Officer

 

Section 4.9.
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of
Pennsylvania, without regard to the principles of conflicts of laws rules of any state.

 

Section 4.10.
Counterparts and Facsimiles. This Agreement may be executed, including execution by facsimile signature, in one or more
counterparts, each of which will be deemed an original, and all of which together will be deemed to be one and the same instrument.

 

Section 4.11.
Remedies. In the event of any breach of this Agreement by either party, the party injured by such breach shall be entitled
to attorneys’ fees, costs and expenses incurred by reason of such breach, if any, together with interest at the maximum rate
permitted by law. This paragraph shall not be considered a waiver of or a limitation on the remedies available under this Agreement
or at law or in equity for breach of this Agreement.

 

[Signature page follows.]

 

    -7- 

     

    

 

IN WITNESS WHEREOF,
the parties hereto have executed this Agreement on the date first written above.

 

	 	PEOPLES SECURITY BANK
	 	AND TRUST COMPANY
	 
	 	By:	/s/ Thomas P. Tulaney
	 	Name:	Thomas P. Tulaney
	 	Title:	President and Chief Operating Officer
	 
	 	EMPLOYEE:
	 
	 
	 	/s/ John R. Anderson, III
	 	John R. Anderson, III

 

    -8-

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