Document:

Exhibit 4.12

 

EXECUTION COPY

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase
Agreement (this “Agreement”) is dated as of March 22, 2018, by and between Itamar Medical Ltd., a company incorporated
under the laws of the State of Israel (the “Company”), and the person or entity indicated in the signature page
hereto (the “Purchaser”). Purchaser and Company shall hereinafter be referred to as the "Parties".

 

WHEREAS, subject to
the terms and conditions set forth in this Agreement, the Company desires to issue and sell to the Purchaser, and the Purchaser
desires to purchase from the Company, the Offered Securities (as defined below); and

 

WHEREAS, prior to the
date hereof, Purchaser has executed a waiver letter in favor of the Company with respect to the amounts otherwise due to Purchaser
in connection with the Company's Convertible Debentures (Series 12) (the "Waiver Letter"), as shown on Schedule
A hereto under "Outstanding Amount";

 

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

 

		1.	The Transaction.

 

		1.1.	Upon the terms and subject to the conditions set forth
herein, at the Closing (as defined below), the Purchaser shall purchase from the Company, and the Company shall issue and sell
to the Purchaser, the number of ordinary shares of the Company, par value NIS 0.01 per share (the "Ordinary Shares"),
listed in Schedule A hereto (the "Offered Securities") in consideration for a price per Ordinary
Share that is equal to the PPS (as defined below), or, for all of the Offered Securities in the aggregate, the aggregate consideration
set forth in Schedule A hereto (the "Consideration" and the "Transaction", respectively).
Promptly upon issuance of the Offered Securities, the Company shall take all action to register the Offered Securities for trading
on the TASE (as defined below). All expenses incurred in connection with such registration will be borne by the Company. In the
event of any stock split (bonus shares), consolidation, share dividend (including any dividend or distribution of securities convertible
into share capital), reorganization, reclassification, combination, recapitalization or other like change with respect to the
Ordinary Shares occurring after the date hereof and prior to the Closing, all references in this Agreement to numbers of shares
and all related calculations shall be equitably adjusted to the extent necessary to provide to the Parties the same economic effect
as contemplated by this Agreement.

 

		1.2.	Promptly following the date hereof, and in any event within five (5) Business Days (as defined
below) following the date hereof, the Company shall (i) deposit an amount equal to the Consideration with I.B.I. Trust Management,
as escrow agent (or such other escrow agent as approved in writing by the Parties, the "Escrow Agent"), to hold
such funds in accordance with the terms of an escrow agreement, substantially in the form of Exhibit A hereto, to
be entered into by and among the Escrow Agent, Purchaser and the Company (the "Escrow Agreement") and (ii) transfer
to Purchaser the balance between the Outstanding Amount and the Consideration (as indicated on Schedule A hereto), by way of wire
transfer to Purchaser's bank account designated in writing by Purchaser.

 

    	 	 	 

     

    

  

		1.3	“Business Day” means any day on which commercial banks in Israel are open for
business.

 

		1.4	"PPS" shell mean a seven percent (7%) discount on the average closing prices of
the Ordinary Shares on the TASE during the fifteen (15) consecutive trading days immediately preceding March 16, 2018 (i.e., excluding
March 16, 2018).

 

		1.5	"TASE" means the Tel Aviv Stock Exchange.

 

		2.	Closing Conditions Etc.

 

		2.1.	Closing Conditions of Each Party. The obligations of each party to consummate the Transaction,
including the issuance of the Offered Securities by the Company and the transfer of the Consideration to the Company, is subject
to the satisfaction of all of the following conditions precedent (the "Mutual Closing Conditions"):

 

		2.1.1.	The approval of the Transaction by the Company's shareholders as required by Section 270(4) of
the Israeli Companies Law, 1999 (the "ICL") has been obtained (the "Shareholders Approval").

 

		2.1.2.	The approval of the TASE for the registration of all the Offered Securities has been obtained (the
 "TASE Approval" and, together with the Shareholders Approval, the "Required Approvals").

 

		2.1.3.	No governmental authority or court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order, decree, judgement, injunction or other order (whether temporary,
preliminary or permanent) which (i) is in effect and (ii) has the effect of making the consummation of the Transaction
illegal or otherwise prohibiting, restraining, enjoining or preventing consummation thereof.

 

		2.2.	Company Closing Conditions. The obligations of the Company to consummate the Transaction
is subject to the satisfaction (or waiver in writing by the Company) of all of the following conditions precedent (the "Company
Closing Conditions"):

 

		2.2.1.	The representations and warranties of Purchaser set forth herein shall be true and correct in all
respects as of the date hereof and in all material respects (except for those representations and warranties that are qualified
by materiality, which shall be true and correct in all respects) as of the Closing Date, as if made at and as of such time (in
each case, except to the extent expressly made as of an earlier date, in which case as of such date).

 

		2.2.2.	Purchaser shall have performed or complied in all material respects with all covenants and obligations
required by this Agreement to be performed or complied with by it on or prior to the Closing Date.

 

    	 	2	 

     

    

  

		2.3.	Purchaser Closing Conditions. The obligations of the Purchaser to consummate the Transaction
is subject to the satisfaction (or waiver in writing by the Purchaser) of all of the following conditions precedent (the "Purchaser
Closing Conditions" and together with the Mutual Closing Conditions and the Company Closing Conditions, the "Closing
Conditions"):

 

		2.3.1.	The representations and warranties of the Company set forth herein shall be true and correct in
all respects as of the date hereof and in all material respects (except for those representations and warranties that are qualified
by materiality and except for those representations and warranties in Sections 4.1, 4.2 and 4.3, all of which shall be true and
correct in all respects) as of the Closing Date, as if made at and as of such time (in each case, except to the extent expressly
made as of an earlier date, in which case as of such date).

 

		2.3.2.	The Company shall have performed or complied in all material respects with all covenants and obligations
required by this Agreement to be performed or complied with by it on or prior to the Closing Date.

 

		2.3.3.	All of the documents to be delivered by the Company pursuant to Section 3 below shall be in a form
as attached to this Agreement, or, if not attached, in a form and substance reasonably satisfactory to the Purchaser and shall
be delivered to the Purchaser at or prior to the Closing.

 

		2.3.4.	From the date hereof until the Closing there will have been no material adverse change in the financial
condition, business, liabilities, assets, properties or operating results of the Company and its subsidiaries, taken as a whole.

 

		2.3.5.	The Other PIPE Investors (as defined below) shall have entered into binding agreements for investment
in the Ordinary Shares for aggregate gross proceeds to the Company, including the investment by the Purchaser contemplated hereunder,
of no less than $5,000,000 and the closing of such transactions shall have occurred prior to, or simultaneously with, the Closing.

 

		2.4.	In the event that all of the Closing Conditions are not satisfied (or waived by the applicable
party), in whole or in part, on or before May 31, 2018 at 5:00 p.m. (IL Time) (the "Expiration Date"), this Agreement
shall be terminated and all the obligations of the Parties under this Agreement shall terminate; provided, however, that:

 

		(i)	in such event, unless otherwise agreed in writing by the Purchaser and the Company, the Escrow
Agent shall promptly, and in any event within five (5) Business Days following the termination, transfer the Consideration to the
Purchaser; and

 

		(ii)	neither the Company nor Purchaser shall be relieved of any obligation or liability arising from
any prior breach by such party of any provision of this Agreement.

 

    	 	3	 

     

    

  

		3.	Closing.

 

		3.1.	Closing Date. The closing of the sale and purchase of the Offered Securities (the "Closing")
shall take place at 10:00 a.m., local time (Israel) electronically via the exchange of documents and signatures, within no later
than the second (2nd) Business Day immediately following the satisfaction (or wavier, by the Party entitled to provide
such waiver) of all the Closing Conditions (other than those respective conditions that by their nature are to be satisfied only
at the Closing), or such other date and time as the Company and the Purchaser agree in writing (the date on which the Closing actually
takes place, the "Closing Date").

 

		3.2.	Closing Deliverables. At the Closing, the following actions will take place, all of which
shall be deemed to have occurred simultaneously and no transaction shall be deemed to have been completed or any document delivered
until all such transactions have been completed and all required documents delivered:

 

		3.2.1.	The Purchaser and the Company shall execute and deliver to the Escrow Agent, and the Escrow Agent
shall have confirmed receipt in writing (via email or otherwise), an irrevocable joint instruction letter to the Escrow Agent to
transfer the Escrow Moneys (as defined in the Escrow Agreement) to the bank account designated by the Company.

 

		3.2.2.	The Company will issue and allocate the Offered Securities in the name of the nominee (registration)
company (on behalf of the Purchaser).

 

		3.2.3	The Company shall deliver to Purchaser a certificate dated as of the Closing Date, duly signed
on behalf of the Company by the Chief Executive Officer of the Company, certifying that (i) the Audit Committee, the Board of Directors
and the Shareholders of the Company have approved the Transaction (and attaching a copy of the resolutions) and (ii) the Purchaser
Closing Conditions (other than those waived in writing by the Purchaser, if any) and the Mutual Closing Conditions have been satisfied.

 

		3.2.4	The Company shall deliver to Purchaser a copy of the share certificate registered in the name of
the nominee (registration) company representing the Offered Securities (the “Share Certificate”) and a certified
copy of the updated shareholder register evidencing such issuance.

 

		3.2.5	The Company shall deliver to Purchaser a copy of the TASE Approval.

 

		3.2.6	The Company shall deliver to Purchaser (i) a copy of a letter of issuance to the nominee (registration)
company informing it of the issuance of the Offered Securities and irrevocably instructing it to accredit the Purchaser’s
securities account by such number of Offered Securities (the “Instruction Letter”); and (ii) a copy of the Company’s
immediate report to be filed with respect to the issuance of the Offered Securities (the “Immediate Report”).

 

		3.3.	Within one (1) Business Day after Closing, the Company shall file the Immediate Report with the
ISA and shall provide the Purchaser with evidence of delivery to the nominee (registration) company of the Instruction Letter,
the original executed Share Certificate and any other documents necessary for listing the Offered Securities with TASE.

 

    	 	4	 

     

    

  

		4.	Representations and Warranties of the Company.
The Company hereby represents and warrants to the Purchaser, as of the date hereof and as of the Closing, that:

 

		4.1.	The Company is a public company duly incorporated and validly existing under the laws of the State
of Israel, the shares of which are listed for trading on the TASE, with the requisite corporate power and authority to own and
use its properties and assets and to carry on its business as currently conducted. The Company is not in violation or default of
any of the provisions of its corporate organizational documents. As of the date hereof, the authorized (registered) share capital
of the Company is NIS 750,000,000 divided into 750,000,000 Ordinary Shares, of which 264,699,201 Ordinary Shares are issued and
outstanding. All of such outstanding shares are duly authorized, validly issued, fully paid and non-assessable. As of the date
hereof, the Company has reserved 78,105,294 Ordinary Shares upon exercise of options previously approved or awarded by the Company,
or the Company’s outstanding warrants or other convertible securities. As of the date hereof, the Offered Securities constitute
0.9% of the outstanding share capital and voting rights in the Company (and 0.7% of the outstanding share capital and voting rights
in the Company on a fully diluted basis), assuming the issuance of the Offered Securities as of the date hereof. Except as disclosed
in the TASE Documents (as defined below), (i) none of the shares of the Company are held in the treasury of the Company, and there
are no options, warrants or other rights to acquire, sell or issue any shares of the Company, including any rights of conversion
or exchange under any outstanding securities; and (ii) the Company has no obligation (contingent or otherwise) to purchase, redeem,
or otherwise acquire or issue to any person any shares or other interests therein or to pay any dividend or make any distribution
in respect thereof or to issue any options, warrants or other rights to acquire, sell or issue any shares or other securities of
the Company. There are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any
agreement providing rights to security holders) that will be triggered by the issuance of the Offered Securities. The Company has
the requisite corporate power and authority to execute and deliver this Agreement and any other documents executed (or to be executed)
by it hereunder and, subject to obtaining the Required Approvals, to consummate the transactions contemplated hereby. The execution
and delivery by the Company of this Agreement and any other documents executed (or to be executed) by it hereunder and, subject
to obtaining the Shareholders Approval, the consummation by it of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company and no further action is required by the Company in connection herewith
other than in connection with the Required Approvals. Except for the Required Approvals, no consents, approvals, authorizations
or permits are required in connection with the execution or consummation by the Company of the transactions contemplated by this
Agreement, other than those that have been obtained prior to the date hereof. This Agreement has been duly executed by the Company
and, when delivered in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Company
enforceable against the Company in accordance with its terms except as limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and (ii) laws relating
to the availability of specific performance, injunctive relief or other equitable remedies (clause (i) and (ii) collectively, "Equitable
Laws").

 

    	 	5	 

     

    

  

		4.2.	Neither the execution and delivery of this Agreement and any other documents executed (or to be
executed) hereunder, nor the performance thereof, by the Company shall: (a) require the consent or agreement of any competent court
or other governmental authority or (b) conflict with, result in the breach or violation of, or constitute a default under (i) any
applicable law, rule or regulation of any governmental authority applicable to the Company; (ii) any material contract, agreement,
instrument, or undertaking of any nature to which it is a party or by which it is bound; or (iii) any of the Company’s organizational
documents.

 

		4.3.	The Offered Securities have been duly authorized and, when issued for the Consideration in accordance
with the terms of this Agreement, will be duly and validly issued, fully paid and non-assessable, issued in compliance with all
applicable securities laws, and free and clear of all preemptive rights or Liens, other than restrictions on transfer under applicable
laws. “Lien” means any mortgage, lien, pledge, charge, security interest, encumbrance, restriction on transfer
or right of any third party or other adverse claim of any kind in respect of such property or asset.

 

		4.4.	Since January 1, 2015, the Company has timely filed all reports, schedules, forms, statements and
other documents required to be filed by it with the ISA (as defined below) pursuant to the applicable reporting requirements (all
of the foregoing filed prior to the date hereof (including those that the Company may file subsequent to the date hereof) and all
exhibits included therein and financial statements and schedules thereto and documents (other than exhibits to such documents)
incorporated by reference therein, being hereinafter referred to herein as the “TASE Documents”). As of their
respective dates, the TASE Documents complied in all material respects with all applicable requirements under the ISL (as defined
below) and none of the TASE Documents, at the time they were filed with the ISA, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. None of the statements made in any such TASE Documents is, or
has been, required to be amended or updated under applicable law (except for such statements as have been amended or updated in
subsequent filings prior the date hereof). As of their respective dates, the financial statements of the Company included in the
TASE Documents complied as to form in all material respects with applicable accounting requirements and the published rules and
regulations of the ISA with respect thereto. Such financial statements have been prepared in accordance with IFRS, consistently
applied, during the periods involved and fairly present in all material respects, in accordance with IFRS, the consolidated financial
position of the Company and its consolidated subsidiaries as of the dates thereof and the consolidated results of their operations
and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).
Except as set forth in the financial statements of the Company included in the TASE Documents, the Company has no liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business, and (ii) obligations under contracts
and commitments not required under IFRS to be reflected in such financial statements, which, individually or in the aggregate,
are not material to the financial condition or operating results of the Company.

 

    	 	6	 

     

    

  

		4.5.	There is no action, suit, claim, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company, any subsidiary or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively,
an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of this Agreement
or the Offered Securities or (ii) except as set forth in the TASE Documents, would reasonably be expected to, if there were an
unfavorable decision, have or reasonably be expected to result in a material adverse effect on the Company or the results of its
operations. Except as set forth in the TASE Documents, neither the Company nor any subsidiary, nor, to the knowledge of the Company,
any director or officer thereof (in their capacities as such), is or has been in the past five years the subject of any Action
involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. Except
as set forth in the TASE Documents, there has not been in the past five years, and to the knowledge of the Company, there is not
pending or contemplated, any investigation by the TASE or the Israeli Securities Authority ("ISA") involving the
Company or any current or former director or officer of the Company.

 

		4.6.	The Company has no knowledge of any facts or circumstances which are reasonably expected to lead
it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction
within one year from the Closing. The TASE Documents set forth all outstanding secured and unsecured Indebtedness of the Company
or any subsidiary, or for which the Company or any subsidiary has commitments. For the purposes of this Agreement, “Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in excess of $150,000 (other than trade accounts payable incurred
in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness
of others (excluding consolidated subsidiaries of the Company), whether or not the same are or should be reflected in the Company’s
consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection,
for performance or similar transactions in the ordinary course of business; and (z) the present value of any lease payments in
excess of $150,000 due under leases required to be capitalized in accordance with IFRS. Neither the Company nor any subsidiary
received notice of a claim that it is in default with respect to any outstanding Indebtedness.

 

		4.7.	The Company acknowledges and agrees that the Purchaser does not make nor has made any representations
or warranties in connection with the transactions contemplated hereby, other than those specifically set forth in Section 5.

 

    	 	7	 

     

    

  

		5.	Representations and Warranties of the Purchaser.
The Purchaser hereby represents and warrants to the Company, as of the date hereof and as of the Closing, that:

 

		5.1.	If Purchaser is an entity, it is duly incorporated and validly existing under the laws of its jurisdiction.
Purchaser has the requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery by the Purchaser of this Agreement and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary action on the part of the Purchaser and no further action is required by the
Purchaser in connection herewith.

 

		5.2.	This Agreement has been duly executed by the Purchaser and, when delivered in accordance with the
terms hereof, will constitute the valid and legally binding obligation of the Purchaser enforceable against it in accordance with
its terms except as limited by Equitable Laws.

 

		5.3.	[Reserved].

 

		5.4.	It is aware of and understands (i) the provisions of the Israeli Securities Law, 1968 (including
the rules and regulations promulgated thereunder, the "ISL") relating to the prohibition of using "inside
information", and undertakes to comply with these provisions, (ii) that the Offered Securities that will be issued to the
Purchaser will be subject to the resale limitations provided under section 15C of the ISL, including the Securities Regulations
(Details with respect to Sections 15A to 15C of the Law), 2000, and (iii) that the Company is entering into similar agreements
with other investors (or may do so in the near future) (the "Other PIPE Investors").

 

		5.5.	It acknowledges and agrees that the Company does not make nor has made any representations or warranties
with respect to the Company or the Offered Securities in connection with the transactions contemplated hereby, other than those
specifically set forth in Sections 4 and 8 hereof or in any certificate delivered by the Company to the Purchaser hereunder.

 

		6.	Covenants.

 

		6.1.	The Company undertakes to use its best efforts to publish and file with the ISA, as soon as practicable
following the date hereof, a private placement report as required by the ISL.

 

		6.2.	The Company undertakes to use its best efforts to convene, as soon as practicable following the
date hereof, a shareholder meeting in order to obtain the Shareholders Approval (it being understood that such meeting may include
other agenda items the Company deems appropriate).

 

		6.3.	The Company undertakes to (a) file with the TASE, as soon as practicable following the date hereof
and in any event within 14 days from the date hereof, an application for the TASE Approval and (b) pay the TASE all fees required
with respect to the registration of the Offered Securities for trading.

 

		6.4.	The Company shall make all other necessary filings and take all other necessary actions, in each
case, in a timely manner and as required by the ISL or the TASE to consummate the transactions contemplated by this Agreement.

 

    	 	8	 

     

    

  

		6.5.	The Company shall provide the Purchaser drafts of the documentation set forth in Sections 6.1 and
6.4 for Purchaser’s review and comments, but nothing herein shall require the Company to accept any comments thereon from
Purchaser unless not accepting such comments would be reasonably expected to result in the Company’s non-compliance with
applicable law.

 

		6.6.	The Company undertakes that from the date of this Agreement and until the earlier of the Closing
Date and the valid termination of this Agreement, it shall not, without the Purchaser's prior written consent, (a) pay any dividend
or make any distribution in respect of the issued and outstanding shares of the Company or (b) other than as contemplated by this
Agreement and the agreements with the Other PIPE Investors, issue any options, warrants or other rights to acquire, sell or issue
any shares or other securities of the Company (except for (i) issuance of shares upon exercise of any options outstanding on the
date of this Agreement and (ii) the grant of stock options in the ordinary course of business to employees who are not office holders).

 

		7.	Notices. Any notice pursuant to this Agreement
by the Company or by the Purchaser shall be in writing and shall be deemed to have been duly given (i) if given by facsimile transmission
or electronic mail on the Business Day immediately following the day on which such transmission is sent and electronically confirmed,
(ii) if given by air courier, two Business Days following the date it was sent, or (iii) if mailed by registered mail, return
receipt requested, five Business Days following the date it was mailed, to the following addresses:

 

	If to the Purchaser:	 	If to the Company:
	To the address in Schedule A hereto	 	
        9 Halamish Street

        Caesarea, Israel

	 	 	Attn: Chief Financial Officer
	 	 	Tel: 972-4-6177000
	 	 	Fax: 972-4-6275598
	 	 	Email: BShy@Itamar-Medical.com

 

		8.	Additional Rights. The Company shall deliver
copies of the Other Agreements (as defined below) to Purchaser as soon as practicable after they have been signed. Notwithstanding
anything to the contrary herein, to the extent that any of the agreements, contracts or understandings between the Company and
the Other PIPE Investors (including, for the avoidance of doubt, those Other PIPE Investors referred to Section 2.3.5) (the "Other
Agreements") contain rights or benefits (including, without limitation, in respect of the application of fees, expenses
or taxes, price per share, offered securities, access to information, press releases, notification of certain events, and/or additional
representations, warranties and covenants but excluding the size of investment) to such investors in relation to the Company that
are more favourable to such investor(s) in any respect (other than de-minimis) than those granted to the Purchaser hereunder
(“Additional Rights”), the Purchaser shall have the right to elect to receive any of such Additional Rights.
If (i) such Additional Rights exist and (ii) Purchaser so elects, it shall provide written notice thereof to the Company, and
upon such written notice this Agreement shall, automatically and without any additional action required by either party, be deemed
modified to include such Additional Rights as elected by Purchaser, effective as of the date of this Agreement. Company hereby
represents and warrants that as of the date hereof, there are no such agreements, contracts or understandings containing Additional
Rights. At the Closing, the Company shall provide the Purchaser with a written certificate, signed by an officer of the Company,
certifying that the Company is and has been in full compliance with this Section 8.

 

    	 	9	 

     

    

  

		9.	Miscellaneous. This Agreement shall be governed
by and construed in accordance with the laws of the State of Israel. The parties hereto irrevocably submit to the exclusive jurisdiction
of the courts of Tel Aviv, Israel in any action relating to this Agreement. This Agreement sets forth the entire understanding
of the parties hereto relating to the subject matter hereof and supersedes all prior agreements and understandings among or between
any of the parties relating to the subject matter hereof, including the Waiver Letter. All representations, warranties and covenants,
wherever in this Agreement contained, shall survive the date hereof and the Closing, until the first year anniversary of the Closing
Date (other than the representations and warranties in Sections 4.1, 4.2 and 4.3, which shall survive until the third anniversary
of the Closing Date). If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of this Agreement shall be enforceable in accordance with its terms and
interpreted so as to give effect, to the fullest extent consistent with and permitted by applicable law, to the meaning and intention
of the excluded provision. This Agreement may be amended, and the observance of any term hereof may be waived (either prospectively
or retroactively and either generally or in a particular instance), only by the prior written consent of all of the Parties. The
Company shall, at the Closing, reimburse the fees and expenses of counsel for the Purchaser, in an amount not to exceed, in the
aggregate, US$5,000 plus value added tax, if applicable. The Company shall bear and be responsible to pay in cash to the relevant
tax authorities all taxes, if any, in connection with or as a result of the transactions contemplated under this Agreement. This
Agreement may be executed in several counterparts (including via fax or scanned .PDF), each of which shall constitute an original
and all of which, when taken together, shall constitute one agreement.

 

[signature page follows]

 

    	 	10	 

     

    

  

IN WITNESS WHEREOF,
the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories
as of the date first indicated above.

 

	company:	 	Purchaser:
	 	 	 
	ITAMAR MEDICAL ltd.	 	 
	 	 	 
	By:	 	 	By:	 
	 	Name:	 	 	Name:
	 	Title:	 	 	Title:

 

    	 	11	 

     

    

  

SCHEDULE A

 

	
        Outstanding Amount (Principal and Interest excluding withholding
        tax on interest, as applicable, under Waiver Letter):

         
	 
	Consideration:	 
	Number of Offered Securities:	 
	 	 
	Balance (to be repaid to Purchaser pursuant to Section 1.2):	 
	 	 
	Purchaser's Address for Notices:	 

 

    	 	12	 

     

    

  

EXHIBIT A

 

ESCROW AGREEMENT

 

This ESCROW AGREEMENT (this “Agreement”)
is made and entered into as of March 22, 2018, by and among ITAMAR MEDICAL LTD., an Israeli company (“Company”),
the person or entity indicated in the signature page hereto (“Purchaser”), and I.B.I Trust Management
as Escrow Agent (the “Escrow Agent”); (each, a “Party”, and collectively, the “Parties”).
Capitalized terms used herein, unless otherwise defined, shall have the meanings assigned to them in the Purchase Agreement (as
defined below).

 

WHEREAS:

 

a.           Pursuant
to the Securities Purchase Agreement (the “Purchase Agreement”), dated of even date herewith, among the Purchaser
and the Company, the Purchaser will invest in the Company an amount equal to the Consideration (which, for purposes of this Agreement,
will be defined as the “Escrow Amount”), subject to the terms and conditions set forth in the Purchase Agreement;
and

 

b.           The
Escrow Agent is not a party to the Purchase Agreement, but has agreed to provide certain services to the other Parties as set out
in this Agreement.

 

THE
PARTIES HEREBY AGREE AS FOLLOWS:

 

1.           INTERPRETATION

 

1.1         Definitions:
In this Agreement, the following definitions shall have the following meanings:

 

“Business
Day” means a day (A) other than Saturday or Sunday and (B) on which commercial banks are open for business in Israel.

 

“Escrow
Account” means the account listed in Schedule 1.

 

“Escrow
Moneys” means all moneys deposited in the Escrow Account pursuant to Section 3, together with all property from
time to time representing the same, together with any accrued interest thereon.

 

“Liability”
means any loss, damage, cost, charge, claim, expense, penalty, judgement, action, proceeding or other liability whatsoever (including,
without limitation, in respect of taxes, duties, levies, imposts and other charges) and including any value added tax or similar
tax charged or chargeable in respect thereof and reasonable legal fees and expenses on a full indemnity basis.

 

1.2         In
this Agreement, unless the context otherwise requires: (a) references to a Party include references to the successors or permitted
assigns (immediate or otherwise) of that Party; (b) references to “person” shall include any firm or body of
persons whether corporate or not and any person deriving title therefrom and any of their respective successors or assigns; (c)
words importing the singular number alone shall include the plural number and vice versa; (d) words denoting one gender
only shall include the other gender; and (e) Sections, sub-Sections and Schedules shall, unless the context otherwise requires,
be construed as references to Sections and sub-Sections of and Schedules to this Agreement. References to costs, charges, remuneration
or expenses include any value added, turnover or similar tax charged in respect thereof. Headings shall be ignored in construing
this Agreement. References in this Agreement to "this Agreement" are to this Agreement and the Schedules hereto
or those documents as amended, modified, supplemented or replaced from time to time, and include any document that amends, modifies,
supplements or replaces them. The Schedules are part of this Agreement and shall have effect accordingly, and terms defined therein
and not in the main body of this Agreement shall have the meanings given to them in such Schedules.

 

2.           APPOINTMENT
OF THE ESCROW AGENT. Each of the Parties hereby appoints the Escrow Agent as escrow agent for the purposes set out in this
Agreement, and the Escrow Agent hereby accepts such appointment on the terms set out in this Agreement.

 

3.           DEPOSIT
AND RELEASE OF ESCROW AMOUNT

 

3.1         Promptly
following the date hereof, and in any event within five (5) Business Days following the date hereof, the Company shall cause the
Escrow Amount to be deposited with the Escrow Agent. Escrow Agent shall hold the Escrow Moneys deposited in the Escrow Account
to the order of the Purchaser and the Company. The Escrow Agent shall apply such moneys as it may from time to time be directed
in writing as further provided for in this Section 3 and in Section 4 below.

 

    	 	 	 

     

    

  

3.2         The
Escrow Agent shall release the Escrow Monies as follows:

 

		(a)	Promptly following, and in any event within three (3)
Business Days following receipt of a joint instruction letter signed by the Purchaser and the Company, Escrow Agent shall release
the Escrow Monies in accordance with the wire instructions in such joint instruction letter.

 

		(b)	At the Closing, the Company and Purchaser shall provide
written notice to the Escrow Agent that all of the closing conditions set forth in the Purchase Agreement have been satisfied
or waived by the appropriate party, and upon such written notice the Escrow Agent shall promptly, and in any event within three
(3) Business Days following receipt of such notice, disburse all the funds from the Escrow Account to the Company in accordance
with the wire instructions in Schedule 2 hereto.

 

		(c)	If the Escrow Monies have not been released before
the Expiration Date (as defined in the Purchase Agreement), each of the Company and Purchaser shall be entitled to provide written
instructions to the Escrow Agent that the closing conditions set forth in the Purchase Agreement have not been satisfied or waived
by the appropriate party and to release the Escrow Moneys to the Purchaser, and the Escrow Agent shall promptly, and in any event
within five (5) Business Days following receipt of such notice from either the Company or Purchaser, disburse all the funds from
the Escrow Account to the Purchaser in accordance with the wire instructions in Schedule 2 hereto.

 

4.           TREATMENT
OF ESCROW MONEYS. Escrow Moneys shall be held by the Escrow Agent in the Escrow Account and shall be kept separate from, and
shall not be co-mingled with, any other moneys. No portion of the Escrow Moneys or any beneficial interest therein may be pledged,
sold, assigned, or transferred, including by operation of law, by the Escrow Agent, the Company or Purchaser, nor may it be taken
or reached by any legal or equitable process in satisfaction of any debt or other liability of the Escrow Agent, the Company or
Purchaser before the release of the Escrow Moneys by the Escrow Agent to the Company or Purchaser pursuant to this Agreement. Escrow
Agent shall not release any of the Escrow Moneys, except as provided in this Agreement. During the term of this Escrow Agreement,
the funds will be held in a transaction account in IBI Investment House. The Escrow Moneys and any investment income thereon will
be invested in a NIS interest bearing weekly deposit, or as shall be instructed otherwise in writing, from time to time, by both
the Company and Purchaser. The payment of the interest to the Purchaser or the Company shall be made together with the final distribution
of the funds by the Escrow Agent.

 

5.           REPRESENTATIONS
AND WARRANTIES. Each of the Parties hereby represents and warrants to the Escrow Agent that (i) it has the power and authority
to sign and to perform its obligations under this Agreement, and (ii) this Agreement is duly authorized and signed and is its legal,
valid and binding obligation. Escrow Agent hereby represents and warrants to the Parties that (i) it has the power and authority
to sign and to perform its obligations under this Agreement, and (ii) this Agreement is duly authorized and signed and is its legal,
valid and binding obligation.

 

6.           LIABILITY
OF ESCROW AGENT

 

6.1         Escrow
Agent shall not be liable or responsible for any Liabilities which may result from anything done or omitted to be done by it in
accordance with the provisions of this Agreement and shall bear no obligation or responsibility to any person in respect of the
operation of the Escrow Account or its application of the Escrow Moneys unless such Liability arises as a result of negligence
or fraud or willful misconduct on the part of Escrow Agent, or as a result of a breach by the Escrow Agent of this Agreement. In
particular, but without limiting the generality of the foregoing, the Escrow Agent shall not be liable to the other Parties for
any failure to maximize the amount of interest or other amounts earned on all or part of the Escrow Moneys. Under no circumstances
shall Escrow Agent be liable for any consequential or special loss, or indirect, consequential or punitive damages, however caused
or arising (including loss of business, goodwill, opportunity or profit) even if advised of the possibility of such loss or damage.

 

    	 	- 2 -	 

     

    

  

6.2         The
duties of the Escrow Agent are purely administrative in nature. No implied duties or obligations shall be imposed on the Escrow
Agent by virtue of its entering into this Agreement or its agreeing to provide the services hereunder. The Escrow Agent shall not
be obliged to perform any additional duties unless it shall have previously agreed to perform such duties. The Escrow Agent shall
not be under any obligation to take any action under this Agreement that it expects will result in any expense to, or Liability
for, it, the payment of which is not, in its opinion, assured to it within a reasonable time.

 

6.3         The
Company shall indemnify and hold harmless the Escrow Agent for an amount equal to any and all Liabilities or obligations of any
kind whatsoever (and any interest thereon) (including, but not limited to, all properly incurred and reasonable costs, charges
and expenses paid or incurred in disputing or defending any of the foregoing) that may be imposed on or incurred by the Escrow
Agent in connection with any action, claim or proceeding of any kind brought or threatened to be brought against it as a result
of its acting hereunder or as a result of any action taken or omitted to be taken by it before the date of this Agreement in preparation
for acting hereunder; provided that the Company shall not have any obligation to indemnify the Escrow Agent or any of its officers
and employees or any other person for any claims arising in consequence of the negligence, fraud or willful and material default
on the part of the Escrow Agent.

 

6.4         The
Escrow Agent shall not be responsible or liable for any Liability incurred in relation to the Escrow Moneys arising from any transaction
made by it in good faith, or from any failure to diversify investment, or arising by reason of any other matter or thing except
for any such loss or damage incurred in consequence of negligence, fraud or willful misconduct on the part of the Escrow Agent,
or as a result of a breach by the Escrow Agent of this Agreement.

 

6.5         The
Escrow Agent shall be entitled to rely on, and shall not be liable for acting upon, and shall be entitled to treat as genuine and
as the document it purports to be, any instruction, letter, notice or other document furnished to it by the Purchaser or the Company,
or any lawyer or other expert in whatever format and by whatever means, including electronic, and believed by the Escrow Agent,
in its absolute discretion, to be genuine and to have been signed and presented by the proper person or persons.

 

6.6         For
the avoidance of doubt: (a) the Escrow Moneys are held to the order of the Company and the Purchaser; (b) the Escrow Agent shall
act on the instruction of the Company and the Purchaser, as set forth in this Agreement and the Purchase Agreement; (c) the Escrow
Agent shall not act on the instructions of any other person in relation to the Escrow Account or the application of any moneys
standing to the credit thereto, other than as set forth in this Agreement; (d) the Parties agree and acknowledge that the Escrow
Agent is not a party to the Purchase Agreement and has been provided a copy of the Purchase Agreement for reference only. Accordingly,
any references in this Agreement to the Purchase Agreement shall bind the Company and the Purchaser only, and the Escrow Agent
shall not be required to investigate the occurrence of any event, or the satisfaction of any condition, under the Purchase Agreement
in order to discharge its obligations under this Agreement; and (e) the Escrow Agent shall not owe any duties or responsibilities
to any party who is not a party to this Agreement, and the Escrow Agent shall not be obliged to ensure that any such parties receive
any distributions of the Escrow Moneys pursuant to this Agreement, the Purchase Agreement or any other document.

 

6.7         If
the Escrow Agent is uncertain as to what action it should take in any circumstances, it shall be entitled to seek and rely upon,
and shall be protected in acting in good faith upon, the advice or opinion of, or any information (whether addressed to the Escrow
Agent or not) obtained, in the form of a written opinion setting out the basis for the Escrow Agent’s actions (which will
be made available to the other Parties upon demand of any of them) from any reputable lawyer or other expert and shall not be responsible
or liable for any Liability occasioned by so acting (or for any delay or inaction pending the obtaining of such advice or opinion
in good faith).

 

6.8         The
indemnities contained in this Section 6 shall survive the termination of this Agreement.

 

7.           FEES
AND EXPENSES

 

7.1         The
Company shall be liable for and shall pay to the Escrow Agent remuneration for its services as Escrow Agent pursuant to this Agreement.
In consideration for the Escrow Agent's services, the Company shall pay the Escrow Agent the fees (the “Fees”)
and charges set forth in Exhibit A.

 

    	 	- 3 -	 

     

    

  

7.2         All
payments by the Company under this Section 7 shall be made free and clear of, and without withholding or deduction for,
any taxes, duties, assessments or governmental charges of whatsoever nature imposed, levied, collected, withheld or assessed by
any government having power to tax, unless such withholding or deduction is required by law. In that event, the Company shall pay
such additional amounts as will result in receipt by the Escrow Agent of such amounts as would have been received by it if no such
withholding had been required.

 

8.           RESIGNATION
 & TERMINATION

 

8.1         Each
of the Parties agrees that the Escrow Agent shall have the right to resign its appointment hereunder upon 90 days' notice delivered
to each of the Purchaser and the Company. The Escrow Agent may be removed and replaced following the giving of at least 30 days’
prior written notice to the Escrow Agent jointly by the Company and Purchaser. In the case of such resignation or termination,
the Escrow Agent shall transfer any Escrow Moneys standing to the credit of the Escrow Account at that time to such persons as
the Purchaser and Company may direct in writing subject to any costs, fees, charges, expenses or indemnity amounts owed to the
Escrow Agent.

 

8.2         This
Agreement shall terminate automatically upon the earlier of (i) immediately following the release of all Escrow Monies held by
the Escrow Agent, subject to any costs, fees, charges, expenses or indemnity amounts owed to the Escrow Agent, and (ii) six (6)
months following the date hereof. Section 9 shall survive any termination of this Agreement.

 

9.           MISCELLANEOUS.
This Agreement together with the Purchase Agreement and all ancillary documents thereto represents the whole agreement between
the Parties in relation to its subject matter and supersedes all prior representations, promises, agreements and understandings.
Solely as between the Company and Purchaser, in the event that any claim of inconsistency between this Agreement and the Purchase
Agreement arises, as each such agreement may from time to time be amended, the Purchase Agreement shall control. No modification
to or variation of this Agreement (or any document entered into pursuant to this Agreement) or waiver of any of the terms thereof
shall be valid unless it is in writing and signed by or on behalf of each of the Parties. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of this
Agreement shall be enforceable in accordance with its terms and interpreted so as to give effect, to the fullest extent consistent
with and permitted by applicable law, to the meaning and intention of the excluded provision. This Agreement is governed by, and
shall be construed in accordance with, the laws of the State of Israel without regard to its conflict of laws provisions. Any disagreement
or dispute between the Parties arising under, in connection with or in relation to this Agreement shall be resolved exclusively
and finally by the competent courts of Tel Aviv-Jaffa. All notices, requests, consents, claims, demands, waivers and other communications
hereunder shall be in writing and shall be deemed given if delivered personally or by commercial delivery service, or mailed by
registered or certified mail (return receipt requested) or sent via electronic mail or facsimile (with automated confirmation of
receipt) to the Parties: (A) Any notice (i) if delivered personally or sent by facsimile transmission or email, shall conclusively
deemed to have been given or served at the time of dispatch if sent or delivered on a Business Day or, if not sent or delivered
on a Business Day, on the next following Business Day and (ii) if sent by commercial delivery service or mailed by registered or
certified mail (return receipt requested) shall conclusively be deemed to have been received on the third Business Day after the
post of the same; and (B) at the following address (or at such other address for a Party as shall be specified by like notice):

 

(i)          if
to Escrow Agent, to:

 

Escrow Agent.

I.B.I Trust Management

Eham Ha'am 9, Tel Aviv (Shalom Tower)

Attention: Mr. Tzvika Bernstein.

Telephone No.: +972 506 209 410

Facsimile No.: +972 3 519 0341 (Attn: Tzvika)

E- Mail: Tzvika@102trust.com

 

    	 	- 4 -	 

     

    

  

(ii)         if
to Purchaser, to the address set forth in the signature page hereto.

 

(iii)        If
to the Company, to:

 

	 	
        9 Halamish Street

        Caesarea, Israel

	 	Attn: Chief Financial Officer
	 	Tel: 972-4-6177000
	 	Fax: 972-4-6275598
	 	Email: BShy@Itamar-Medical.com

 

[Signature Page
to Follow]

 

    	 	- 5 -	 

     

    

  

IN
WITNESS WHEREOF, Escrow Agent, Purchaser, and the Company, have caused this Escrow Agreement to be executed and delivered by
their respective officers thereunto duly authorized, which may be entered into in any number of counterparts, and by the Parties
on different counterparts, each of which, when executed and delivered, shall be an original, but
all the counterparts shall together constitute one and the same instrument, all as of the date first written above.

 

	 	IBI Trust Management

 

	 	By:	 
	 	 	 
	 	Name:	 
	 	 	 
	 	Title:	 

 

	 	Itamar Medical Ltd.

 

	 	By:	 
	 	 	 
	 	Name:	 
	 	 	 
	 	Title:	 

 

	 	Purchaser:

 

	 	 	 

 

	 	By:	 
	 	 	 
	 	Name:	 
	 	 	 
	 	Title:	 

 

	 	Address, Including Email: ______________________________

 

[Signature Page
to Escrow Agreement]

 

    	 	- 6 -Exhibit 10(i)

 

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, made the 31st day of December 2018, between PENNS WOODS BANCORP, INC. (“Penns Woods”), a Pennsylvania business corporation, and BRIAN L. KNEPP, an adult individual (“Executive”).

 

WITNESSETH:

 

WHEREAS, Penns Woods and Executive are parties to an amended and restated employment agreement, dated October 30, 2017 (the “Existing Employment Agreement”); and

 

WHEREAS, Penns Woods and Executive desire to amend and restate the Existing Employment Agreement as to provide herein to, among other things, provide Executive’s continued services as President of Penns Woods and CFG.

 

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

 

1.                                      Employment.  Penns Woods hereby employs Executive, and Executive hereby accepts employment with Penns Woods, on the terms and conditions set forth in this Agreement.

 

2.                                      Titles and Duties of Executive.  Executive shall perform and discharge well and faithfully such management and administrative duties as an executive officer of Penns Woods and CFG as may be assigned to him from time to time by the Board of Directors of Penns Woods or CFG, as applicable, and which are consistent with his positions set forth in the following sentence.  Executive shall be employed as President of Penns Woods and as President of CFG.  Executive shall report directly to the Chief Executive Officer of Penns Woods.  Executive shall devote his full time, attention and energies to the business of Penns Woods and its affiliated companies during the Employment Period (as defined in Section 3); provided, however, that this section shall not be construed as preventing Executive from (a) investing his personal assets in enterprises that do not compete with Penns Woods or any of its majority-owned subsidiaries (except as an investor owning less than 5% of the stock of a publicly-owned company), or (b) being involved in any civic, community or other activities with the prior approval of the Board of Directors of Penns Woods.

 

3.                                      Term of Agreement.

 

(a)                                 This Agreement shall be for a period (the “Employment Period”) commencing on the date of this Agreement and ending on December 31, 2021; provided, however, that, commencing on January 1, 2022 and on January 1 of each succeeding year (each an “Annual Renewal Date”), the Employment Period shall be automatically extended for one (1) additional year from the applicable Annual Renewal Date, unless Penns Woods or Executive shall give written notice of nonrenewal to the other party at least sixty (60) days prior to an Annual Renewal Date, in which event this Agreement shall terminate at the end of the then existing Employment Period.  Neither the expiration of the Employment Period, nor the termination of this Agreement, shall affect the enforceability of the provisions of Sections 7, 8 and 9.

 

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(b)                                 Notwithstanding the provisions of Section 3(a), this Agreement shall terminate automatically for Cause (as defined below) upon fifteen (15) days’ prior written notice (setting forth the section relied upon and setting forth in reasonable detail the facts and circumstances claimed to provide the basis for termination for Cause) from the Board of Directors of Penns Woods to Executive, unless such Cause has been cured within such fifteen (15) day period (if capable of being cured).  As used in this Agreement, “Cause” shall mean any of the following:

 

(i)                                     Executive’s conviction of, or plea of guilty or nolo contendere to, a felony, a crime of falsehood, or a crime involving moral turpitude, or the actual incarceration of Executive for a period of at least thirty (30) days;

 

(ii)                                  Executive’s failure to follow the good faith lawful instructions of the Board of Directors of Penns Woods or CFG, following his receipt of written notice of such instructions;

 

(iii)                               Executive’s intentional failure to substantially perform his duties to, or on behalf of, Penns Woods or CFG, other than a failure resulting from Executive’s incapacity because of disability;

 

(iv)                              Executive’s intentional violation of any law, rule or regulation (other than traffic violations or similar offenses), Executive’s intentional violation of any memorandum of understanding or cease and desist order of a federal or state banking agency applicable to Penns Woods or any of its affiliated companies, Executive’s intentional violation of any code of conduct or ethics applicable to officers or employees of Penns Woods or any of its affiliated companies, or Executive’s intentional violation of any material provision of this Agreement;

 

(v)                                 dishonesty on the part of the Executive in the performance of his duties or conduct on the part of the Executive which, in the reasonable judgment of the Board of Directors of Penns Woods, brings public discredit to Penns Woods or any of its affiliated companies;

 

(vi)                              Executive’s breach of fiduciary duty, in connection with his employment hereunder, which involves personal profit or which results in demonstrable material injury to Penns Woods; or

 

(vii)                           Executive’s removal or prohibition from being an institution-affiliated party by a final order of an appropriate federal banking agency pursuant to Section 8(e) of the Federal Deposit Insurance Act or by the Pennsylvania Department of Banking pursuant to state law.

 

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

 

(c)                                  Notwithstanding the provisions of Section 3(a) of this Agreement, this Agreement shall terminate automatically upon Executive’s voluntary termination of employment (other than for Good Reason), retirement at Executive’s election, or Executive’s death, and

 

2

 

Executive’s rights under this Agreement shall cease as of the date of such voluntary termination, retirement at Executive’s election, or death; provided, however, that, if Executive dies after he delivers a Notice of Termination (as defined in Section 5(d)), the provisions of Section 16(b) shall apply.

 

(d)                                 Notwithstanding the provisions of Section 3(a), this Agreement shall terminate automatically upon Executive’s disability and Executive’s rights under this Agreement shall cease as of the date of such termination; provided, however, that, if Executive becomes disabled after Executive delivers a Notice of Termination, Executive shall be entitled to receive all of the compensation and benefits provided for in, and for the term set forth in, Section 5 of this Agreement.  For purposes of this Agreement, disability shall mean Executive’s incapacitation by accident, sickness, or otherwise which renders Executive mentally or physically incapable of performing the services required hereunder of Executive for a period of six (6) consecutive months.

 

(e)                                  Executive agrees that, in the event his employment under this Agreement terminates for any reason, Executive shall concurrently resign as a director of Penns Woods and any affiliate of Penns Woods, if he is then serving as a director of any of such entities.

 

4.                                      Employment Period Compensation.

 

(a)                                 Salary.  During the Employment Period, Executive shall be paid a base salary at the rate of $200,000 per year, payable bi-weekly at such times as salaries are paid to other executive officers of Penns Woods.  The Board of Directors of Penns Woods, or applicable Board Committee, shall review Executive’s base salary annually and may, from time to time, in its discretion increase Executive’s base salary.  Any and all such increases in base salary shall be deemed to constitute amendments to this subsection to reflect the increased amounts, effective as of the dates established for such increases by appropriate corporate action.

 

(b)                                 Discretionary Bonus.  During the Employment Period, Executive shall be entitled to participate in an equitable manner with other senior management employees of Penns Woods in such annual or other periodic bonus programs (if any) as may be maintained from time to time by Penns Woods for its executive officers.

 

(c)                                  Paid Time Off.  During the Employment Period, Executive shall be entitled to such paid time off as may be determined in accordance with the personnel policies of Penns Woods from time to time in effect.  Executive shall not be entitled to receive any additional compensation for failure to take all of his entitled paid time off, nor shall Executive be able to accumulate unused paid time off from one year to the next, unless otherwise provided by the personnel policies of Penns Woods from time to time in effect.

 

(d)                                 Employee Benefit Plans.  During the Employment Period, Executive shall be entitled to participate in and receive the benefits of any pension or other retirement benefit plan, welfare benefit plan or similar employee benefit plans or arrangements (including stock option plans, short- or long-term disability plans, life insurance programs, and health insurance) made available from time to time to employees of Penns Woods and its affiliated companies in accordance with the provisions of such plans.  The base salary and any bonus payable to

 

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Executive under Section 4 shall be considered covered compensation for purposes of such plans to the maximum extent permitted by the terms of such plans.  Nothing paid to Executive under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of the amounts payable to Executive pursuant to Section 4(a) hereof.

 

(e)                                  Expense Reimbursement.  Executive shall be promptly reimbursed, upon submission of appropriate documentation, for reasonable business expenses, including travel and reasonable entertainment expenses, incurred by Executive in accordance with the expense reimbursement policies of Penns Woods in effect from time to time.

 

(f)                                   Automobile. During the Employment Period, Penns Woods shall provide Executive with an automobile selected by Penns Woods (which shall be owned or leased by Penns Woods or an affiliate of Penns Woods) for the Executive’s business and personal use.  Penns Woods will cover all repairs and operating expenses of such automobile, including the cost of liability insurance, comprehensive and collision insurance.  Upon termination of Executive’s employment hereunder for any reason, Executive shall either immediately return the vehicle to Penns Woods or purchase the vehicle (or assume the lease) in accordance with the vehicle purchase policy of Penns Woods.  Upon request by Penns Woods, Executive shall submit to Penns Woods on a timely basis documentation which defines the percentage of Executive’s use of the vehicle which was for business purposes.

 

5.                                      Rights in Event of Termination of Employment Following a Change in Control.

 

(a)                                 Benefits.  If a Change in Control (as defined below) shall occur and concurrently therewith or during a period of twenty-four (24) months thereafter Executive’s employment hereunder is terminated by Penns Woods without Cause (other than for the reasons set forth in Section 3(d)) or by Executive with Good Reason (as defined below), Executive shall be entitled to receive a lump-sum cash payment, no later than thirty (30) days following the date of such termination, in an amount equal to two (2.0) times the sum of (i) Executive’s annual base salary then in effect (or immediately prior to any reduction resulting in a termination for Good Reason) and (ii) the average of the last three (3) annual bonuses paid to Executive.

 

(b)                                 Limitation on Benefits.  Notwithstanding anything in this section or elsewhere in this Agreement to the contrary, in the event the payments and benefits payable hereunder to or on behalf of Executive (which the parties agree will not include any portion of payments allocated to the non-competition and non-solicitation provisions of Sections 7 and 9 that are classified as payments of reasonable compensation for purposes of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”)), when added to all other amounts and benefits payable to or on behalf of Executive, would result in the loss of a deduction under Code Section 280G, or the imposition of an excise tax under Code Section 4999, the amounts and benefits payable hereunder shall be reduced to such extent as may be necessary to avoid such loss of deduction or imposition of excise tax.  In applying this principle, the reduction shall be made in a manner consistent with the requirements of Code Section 409A and where two or more economically equivalent amounts are subject to reduction, but payable at different times, such amounts shall be reduced on a pro-rata basis.  All calculations required to be made under this subsection will be made by Penns Woods’ independent public accountants, subject to the right of Executive’s professional advisors to review the same.  The parties recognize that the actual

 

4

 

implementation of the provisions of this subsection are complex and agree to deal with each other in good faith to resolve any questions or disagreements arising hereunder.

 

(c)                                  Exclusive Remedy.  The amounts payable pursuant to this Section 5 shall constitute Executive’s sole and exclusive remedy in the event of the termination of Executive’s employment in accordance with Section 5(a).

 

(d)                                 Good Reason Defined.  Executive shall be considered to have terminated employment hereunder for “Good Reason” if such termination of employment occurs on or within twenty-four (24) months after a Change in Control and is on account of any of the following actions by Penns Woods without Executive’s express written consent:

 

(i)                                     A material diminution in Executive’s authority, duties or other terms or conditions of employment as the same exist on the date of the Change in Control;

 

(ii)                                  Any reassignment of Executive to a location greater than 25 miles from the location of his office on the date of the Change in Control, unless such new location is closer to Executive’s primary residence than the location on the date of the Change in Control;

 

(iii)                               Any failure to pay Executive any amounts due and owing to him under Section 4 of this Agreement, which constitutes a material breach by Penns Woods of this Agreement;

 

(iv)                              Any failure to provide Executive with any benefits enjoyed by Executive under any of Penns Woods’ retirement or pension, life insurance, medical, health and accident, disability or other material employee plans in which Executive participated at the time of the Change in Control or the taking of any action that would materially reduce any of such benefits in effect at the time of the Change in Control, except for any reductions in benefits or other actions resulting from changes to or reductions in benefits applicable to employees generally;

 

(v)                                 Any requirement that Executive travel in the performance of his duties on behalf of Penns Woods for a significantly greater period of time during any year than was required of Executive during the year preceding the year in which the Change in Control occurred, which results in a material negative change to Executive in the employment relationship; or

 

(vi)                              Any other material breach of this Agreement.

 

Notwithstanding the foregoing, a termination by Executive shall not be for Good Reason, unless Executive shall have given Penns Woods at least ten (10) business days written notice (a “Notice of Termination”) specifying the grounds upon which Executive intends to terminate his employment hereunder for Good Reason and such notice is received by Penns Woods within ninety (90) days of the date the event of Good Reason occurred.  In addition, any action or inaction by Penns Woods which is remedied within thirty (30) days following a Notice of Termination shall not constitute Good Reason for termination hereunder and shall render such Notice of Termination null and void.

 

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(e)                                  Change in Control Defined.  As used in this Agreement, “Change in Control” shall mean the occurrence of any of the following:

 

(i)                                     (A) a merger, consolidation, or division involving Penns Woods, (B) a sale, exchange, transfer, or other disposition of substantially all of the assets of Penns Woods, or (C) a purchase by Penns Woods of substantially all of the assets of another entity, unless (x) such merger, consolidation, division, sale, exchange, transfer, purchase or disposition is approved in advance by 66-2/3% or more of the members of the Board of Directors of Penns Woods who are not interested in the transaction and (y) a majority of the members of the Board of Directors of the legal entity resulting from or existing after any such transaction and of the Board of Directors of such entity’s parent corporation, if any, are former members of the Board of Directors of Penns Woods;

 

(ii)                                  a “person” or “group” (within the meaning of Section 13(d) of the Securities Exchange Act of 1934) becomes the “beneficial owner” (within the meaning of Section 13(d) of the Securities Exchange Act of 1934) of more than 50% of the outstanding shares of common stock of Penns Woods;

 

(iii)                               at any time during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of Penns Woods cease to constitute a majority of such Board (unless the election or nomination of each new director was approved by a vote of at least 51% of the directors who were directors at the beginning of such period); or

 

(iv)                              any other change in control similar in effect to any of the foregoing and designated as a change in control by the Board of Directors of Penns Woods.

 

(f)                                   Notwithstanding the foregoing, to the extent the definition of “Change in Control” as set forth in Section 5(e) does not amount to a “change in control event” as defined under Treas. Reg. § 1.409A-3(i)(5), then the benefits set forth in Section 5(a) shall be paid at the same time and in the same form as benefits are paid under Section 6(a).

 

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6.                                      Rights in Event of Termination of Employment absent a Change in Control.

 

(a)                                 Benefits.  In the event that Executive’s employment is involuntarily terminated (other than by reason of Section 3(d)) without Cause and no Change in Control shall have occurred at the date of such termination, Executive shall be entitled to receive the following benefits:

 

(i)                                     Penns Woods shall continue to pay Executive’s then base salary under Section 4(a) for the greater of: (i) the number of full months remaining in the Employment Period as of the date of termination of employment or (ii) six (6) months.  With respect to clause (i) of this Section, a final pro-rated payment shall be made for any fraction of a month remaining in the Employment Period as of the date of his termination of employment.

 

(ii)                                  In addition, during the period in which Executive is receiving continued payments of base salary in accordance with Section 6(a)(i), Executive shall be permitted to continue participation in, and Penns Woods shall maintain the same level of contribution for, Executive’s participation in Penns Woods’ medical/health insurance in effect with respect to Executive during the one (1) year period prior to his termination of employment, or, if Penns Woods is not permitted to provide such benefits because Executive is no longer an employee or as a result of any applicable legal requirement, Executive shall receive a dollar amount, on or within thirty (30) days following the date of termination, equal to the cost to Executive of obtaining such benefits (or substantially similar benefits).

 

(b)                                 Exclusive Remedy.  The amounts payable pursuant to this Section 6 shall constitute Executive’s sole and exclusive remedy in the event of involuntary termination of Executive’s employment (other than by reason of Section 3(d)) without Cause in the absence of a Change in Control.

 

(c)                                  Limitation on Benefits.  Notwithstanding anything herein to the contrary, to the extent the provisions of Code Section 280G become applicable to payments or benefits to be provided under this Section 6, the provisions of Section 5(b) shall apply to such payments or benefits.

 

7.                                      Covenant Not to Compete.

 

(a)                                 Executive hereby acknowledges and recognizes the highly competitive nature of the business of Penns Woods, and its subsidiaries and affiliates, and accordingly agrees that, during and for the applicable period set forth in Section 7(c), Executive shall not:

 

(i)                                     be engaged, directly or indirectly, either for his own account or as agent, consultant, employee, partner, officer, director, proprietor, investor (except as an investor owning less than 5% of the stock of a publicly-owned company) or otherwise, in the banking or financial services business within twenty-five (25) miles of 300 Market Street, Williamsport, Pennsylvania (the “Non-Competition Area”); or

 

(ii)                                  provide financial or other assistance to any person, firm, corporation, or enterprise engaged in the banking or financial services business in the Non-Competition Area.

 

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(b)                                 It is expressly understood and agreed that, although Executive and Penns Woods consider the restrictions contained in Section 7(a) reasonable for the purpose of preserving for Penns Woods and its affiliated companies and their respective goodwill and other proprietary rights, if a final judicial determination is made by a court or arbitrator having jurisdiction that the time or territory or any other restriction contained in Section 7(a) is an unreasonable or otherwise unenforceable restriction against Executive, the provisions of Section 7(a) shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such other extent as such court may judicially determine or indicate to be reasonable.

 

(c)                                  The provisions of this Section 7 shall be applicable commencing on the date of this Agreement and ending on one of the following dates, as applicable:

 

(i)                                     if Executive voluntarily terminates his employment (other than for Good Reason) or Executive’s employment is terminated for Cause in accordance with the provisions of Section 3(b), one (1) year following the effective date of termination of employment;

 

(ii)                                  if Executive becomes entitled to receive the payment set forth in Section 5(a), one (1) year following the effective date of termination of employment;

 

(iii)                               if Executive’s employment is involuntarily terminated in accordance with the provisions of Section 3(d) or 6, and Executive actually receives payments under a disability plan or program maintained by Penns Woods or Section 6, respectively, the lesser of one (1) year following the effective date of termination of employment or the period during which such payments remain in effect;

 

(iv)                              if Executive’s employment terminates as a result of delivery of a notice of nonrenewal by Penns Woods in accordance with Section 3(a), the ending date of the then existing Employment Period; or

 

(v)                                 if Executive’s employment terminates as a result of delivery of a notice of nonrenewal by Executive in accordance with Section 3(a), one (1) year following the effective date of termination of employment.

 

8.                                      Unauthorized Disclosure.  During the Employment Period and at any time thereafter, Executive shall not, without the written consent of the Board of Directors of Penns Woods, or a person authorized thereby, knowingly disclose to any person, other than an employee of Penns Woods or its affiliated companies, or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by Executive of his duties hereunder, any material confidential information obtained by him while in the employ of Penns Woods or any of its affiliated companies with respect to Penns Woods’, or any of such affiliated companies’, services, products, pricing, improvements, formulas, designs or styles, processes, customers, methods of business or any business practices the disclosure of which could be or would be damaging to Penns Woods or any such affiliated company; provided, however, that confidential information shall not include any information known generally to the public (other than as a result of unauthorized disclosure by Executive or any person with the

 

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assistance, consent, or direction of Executive), or any information that must be disclosed as required by law.

 

9.                                      Nonsolicitation of Customers and Employees.  Executive hereby agrees that he shall not during any period that he is subject to the provisions of Section 7, directly or indirectly, (i) solicit any customer of Penns Woods or any of its majority-owned subsidiaries located in the Non-Competition Area for any banking or financial services business, or (ii) solicit or hire any persons who are currently or were within six (6) months prior to Executive’s termination date employees of Penns Woods or any of its majority-owned subsidiaries.  Executive also agrees that he shall not, for the period described in the preceding sentence, encourage or induce any of such customers or employees of Penns Woods or any of its majority-owned subsidiaries to terminate their business relationship with any of such entities.

 

10.                               Remedies.  Executive acknowledges and agrees that the remedy at law of Penns Woods for a breach or threatened breach of any of the provisions of Section 7, 8 or 9 would be inadequate and, in recognition of this fact, in the event of a breach or threatened breach by Executive of any of the provisions of Section 7, 8 or 9, it is agreed that Penns Woods shall be entitled to, without posting any bond, and the Executive agrees not to oppose any request of Penns Woods for, equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction, or any other equitable remedy which may then be available.  Nothing contained in this section shall be construed as prohibiting Penns Woods from pursuing any other remedies available to them, at law or in equity, for such breach or threatened breach.

 

11.                               Legal Expenses.  If Executive obtains a judgment, award or settlement which enforces a material disputed right or benefit under this Agreement, Penns Woods shall pay to Executive, within ten (10) days after demand therefor, all legal fees and expenses incurred by Executive in seeking to obtain or enforce such right or benefit.

 

12.                               Notices.  Except as otherwise provided in this Agreement, any notice required or permitted to be given under this Agreement shall be deemed properly given if in writing and if mailed by registered or certified mail, postage prepaid with return receipt requested, to Executive’s residence (as then reflected in the personnel records of Penns Woods), in the case of notices to Executive, and to the then principal offices of Penns Woods, in the case of notices to Penns Woods.

 

13.                               Waiver.  No provision of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in writing and signed by Executive and an authorized member of the Board of Directors of Penns Woods.  No waiver by any party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

 

14.                               Assignment.  This Agreement shall not be assignable by any party, except by Penns Woods to any affiliated company or to any successor in interest to its businesses.

 

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15.                               Entire Agreement; Effect on Prior Agreements.  This Agreement contains the entire agreement of the parties relating to the subject matter of this Agreement, including, but not limited to, that this Agreement supersedes and replaces in its entirety the Existing Employment Agreement.

 

16.                               Successors; Binding Agreement.

 

(a)                                 Penns Woods will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the businesses and/or assets of Penns Woods to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Penns Woods would be required to perform it if no such succession had taken place.  Failure by Penns Woods to obtain such assumption and agreement prior to the effectiveness of any such succession shall constitute a material breach of this Agreement and the provisions of Section 5 (relating to termination of employment following a Change in Control) shall apply as though a Notice of Termination was authorized and had been timely given.  As used in this Agreement, “Penns Woods” shall mean Penns Woods as defined previously and any successor to its businesses and/or assets which assumes and agrees to perform this Agreement by operation of law or otherwise.

 

(b)                                 This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators, heirs, distributees, devisees, and legatees.  If Executive should die after a Notice of Termination is delivered by Executive, or following termination of Executive’s employment without Cause, and any amounts would be payable to Executive under this Agreement if Executive had continued to live, all such amounts shall be paid in accordance with the terms of this Agreement to Executive’s devisee, legatee, or other designee, or, if there is no such person, to Executive’s estate.  The preceding sentence shall also apply to the last clause of Section 3(c).

 

17.                               No Mitigation or Offset.  Executive shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking employment or otherwise.  Further, there shall be no offset against any amount or benefit payable or provided hereunder following Executive’s termination of employment solely by reason of his employment with another employer.

 

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

 

19.                               Applicable Law.  This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to its conflict of laws principles.

 

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

 

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21.                               Number.  Words used herein in the singular form shall be construed as being used in the plural form, as the context requires, and vice versa.

 

22.                               Regulatory Matters.  The obligations of Penns Woods under this Agreement shall in all events be subject to any required limitations or restrictions imposed by or pursuant to the Federal Deposit Insurance Act as the same may be amended from time to time, or any other applicable law.

 

23.                               Tax Withholding.  All payments made and benefits provided hereunder shall be subject to such federal, state and local tax withholding as may be required by law.

 

24.                               Compliance with Code Section 409A.

 

(a)                                 Notwithstanding anything in this Agreement to the contrary, the receipt of any benefits under this Agreement as a result of a termination of employment shall be subject to satisfaction of the condition precedent that Executive undergo a “separation from service” within the meaning of Treas. Reg. § 1.409A-1(h) or any successor thereto.  In addition, if Executive is deemed to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then with regard to any payment or the provisions of any benefit that is required to be delayed pursuant to Code Section 409A(a)(2)(B), such payment or benefit shall not be made or provided prior to the earlier of (i) the expiration of the six (6) month period measured from the date of Executive’s “separation from service” (as such term is defined in Treas. Reg. § 1.409A-1(h)), or (ii) the date of Executive’s death (the “Delay Period”).  Within ten (10) days following the expiration of the Delay Period, all payments and benefits delayed pursuant to this section (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.  To the extent that the foregoing applies to the provision of any ongoing welfare benefits to Executive that would not be required to be delayed if the premiums therefore were paid by Executive, Executive shall pay the full costs of premiums for such welfare benefits during the Delay Period and Penns Woods shall pay Executive an amount equal to the amount of such premiums paid by Executive during the Delay Period within ten (10) days after the conclusion of such Delay Period.

 

(b)                                 Except as otherwise expressly provided herein, to the extent any expense reimbursement or other in-kind benefit is determined to be subject to Code Section 409A, the amount of any such expenses eligible for reimbursement or in-kind benefits in one calendar year shall not affect the expenses eligible for reimbursement or in-kind benefits in any other taxable year (except under any lifetime limit applicable to expenses for medical care), in no event shall any expenses be reimbursed or in-kind benefits be provided after the last day of the calendar year following the calendar year in which Executive incurred such expenses or received such benefits, and in no event shall any right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit.

 

(c)                                  Any payments made pursuant to Sections 5 and 6, to the extent of payments made from the date of termination through March 15th of the calendar year following such date, are intended to constitute separate payments for purposes of Treas. Reg. §1.409A-2(b)(2) and

 

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thus payable pursuant to the “short-term deferral” rule set forth in Treas. Reg. §1.409A-1(b)(4); to the extent such payments are made following said March 15th, they are intended to constitute separate payments for purposes of Treas. Reg. §1.409A-2(b)(2) made upon an involuntary termination from service and payable pursuant to Treas. Reg. §1.409A-1(b)(9)(iii), to the maximum extent permitted by said provision.  Notwithstanding the foregoing, if Penns Woods determines that any other payments hereunder fail to satisfy the distribution requirement of Section 409A(a)(2)(A) of the Code, the payment of such benefit shall be delayed to the minimum extent necessary so that such payments are not subject to the provisions of Code Section 409A(a)(1).

 

(d)                                 To the extent it is determined that any benefits described in Section 6(b) are taxable to Executive, they are intended to be payable pursuant to Treas. Reg. §1.409A-1(b)(9)(v), to the maximum extent permitted by said provision.

 

IN WITNESS WHEREOF, the parties have executed this Agreement, or caused it to be executed, as of the date first above written.

 

	
 
    	
 
    	
PENNS WOODS   BANCORP, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Richard A. Grafmyre
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Attest:
    	
/s/ Michelle Karas
    
	
 
    	
 
    	
 
    
	
Witness:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Michelle Karas
    	
 
    	
/s/ Brian L. Knepp
    
	
 
    	
 
    	
Brian L. Knepp
    

 

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