Document:

EXHIBIT
10.41

 

SPRINGHURST
GROUND LEASE

 

THIS GROUND LEASE, dated
this 17th day of January, 2008, is between The Jaytee Properties Limited
Partnership, a Kentucky limited partnership, hereinafter referred to as
“Landlord” and Republic Bank & Trust Company, a Kentucky corporation,
hereinafter referred to as the “Tenant”. As parties hereto, Landlord and Tenant
agree as follows:

 

RECITALS

 

A.                                   Landlord
is the owner in fee simple of the land described in this Lease.

 

B.                                     Landlord
desires to lease said land to Tenant, and Tenant desires to lease said land
from Landlord, pursuant to the terms, covenants and conditions set forth
herein.

 

NOW, THEREFORE, in
consideration of the mutual covenants and promises contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
acknowledged, Landlord and Tenant covenant and agree as follows:

 

TERMS AND
CONDITIONS

 

SECTION 1. Definitions.
As used in this Lease, the following terms and phrases shall have the following
meanings:

 

(a)                                  “Commencement
Date” shall be January 17, 2008.

 

(b)                                 “Demised
Premises” shall mean all that certain tract of land, consisting of
approximately 2.0 acres, located at 9600 Brownsboro Road, Louisville, KY, as
more particularly described on EXHIBIT A attached hereto and made a part
hereof, together with any and all improvements, appurtenances, rights,
privileges and easements benefiting, belonging or pertaining thereto, and any
right, title and interest of Landlord in and to any land lying in the bed of
any street, road or highway (open or proposed) to the center line thereof, in
front of or adjoining said tract of land.

 

(c)                                  “Hazardous
Substances” shall mean any and all hazardous substances, toxic materials,
pollutants, contaminants, hazardous or toxic wastes as defined in any federal,
state, county or municipal law, rule, regulation or ordinance, including,
without limitation, asbestos.

 

(d)                                 “Improvements”
shall mean any and all landscaping, structures, driveways, sidewalks, parking
areas and other improvements constructed, erected or located on the Demised
Premises.

 

(e)                                  “Permitted
Exceptions” shall mean (i) governmental laws, ordinances and regulations
affecting the Demised Premises, (ii) liens for ad valorem real property
taxes and assessments due and payable in the year of the Commencement Date and
thereafter, and (iii) easements, restrictions and stipulations of record.

 

(f)                                    “Permitted
Use” shall mean the operation of a restaurant selling food and beverages for
on- or off-premises consumption including drive-through service.

 

(g)                                 “Plans
and Specifications” shall mean the plans and specifications for the initial
construction of the Improvements (parking lot).

 

(h)                                 “Taking
Date” shall mean the later of (i) the date that possession shall be taken
or condemned by any lawful authority, or (ii) the date on which the right
to compensation and damage accrues under the law applicable to the Demised
Premises.

 

(i)                                     “Taxes”
shall mean any and all taxes, special and general assessments, and other
governmental impositions and charges of every kind and nature whatsoever,
extraordinary as well as ordinary, and each and every installment thereof which
shall be charged, levied, laid, assessed, imposed, become due and payable, or
liens upon, for or with respect to all or any part of the Demised Premises, the
Improvements, appurtenances or equipment owned by Tenant thereon or therein or
any 

 

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part thereof, together
with all interest and penalties thereon, under or by virtue of all present or
future laws, ordinances, orders, rules and regulations of federal, state,
county and municipal governments and of all other governmental authorities
whatsoever. 

 

(j)                                     “Term”
shall mean the initial term of this Lease, which shall be for a period of fifteen
(15) years beginning on the Commencement Date and continuing until midnight on
January 16, 2023. Notwithstanding the above, Tenant may terminate this Lease,
without cause, at the end of any calendar month with 30 days prior written
notice to Landlord, at which time Landlord will pay to Tenant the prorated
value of Tenant’s improvement over the remaining 15-year term of the Lease.

 

(k)                                  “Utility
Expenses” shall mean any and all charges for water, natural gas, electricity,
sewer, drainage, telephone, cable television and other utility service
furnished to the Demised Premises during the Term.

 

SECTION 2. Demised
Premises. Landlord leases to Tenant, and Tenant leases from Landlord, the
following Demised Premises, upon and subject to the terms, covenants and
conditions contained herein as follows: 

 

Being a portion comprised
of approximately 2.0 acres of a certain real estate parcel totaling
approximately 5.33 acres located at the rear of the Republic Bank Building,
9600 Brownsboro Road in Jefferson County, Kentucky.

 

Tenant shall complete
paving/parking improvements on the approximately 2.0 acre portion of real
estate located at 9600 Brownsboro Road. 

 

SECTION 3. Term.
On the date hereof, Landlord shall be obligated to perform the terms, covenants
and conditions contained herein, for a period of fifteen years unless this
Lease is earlier terminated by Tenant, in which case Tenant at the end of any
calendar month with 30 days prior written notice to Landlord, at which time
Landlord will pay to Tenant the prorated value of Tenant’s improvement over the
remaining 15-year term of the Lease. Tenant shall be deemed to rent the Demised
Premises on a month to month basis. The Term shall commence on the Commencement
Date, at which time, Landlord and Tenant shall then become obligated to perform
all terms, covenants and conditions contained herein.

 

SECTION
4. Rent.

 

(a)                                  Annual
Rent. During the Initial Term, Tenant covenants and agrees to pay Landlord,
without offset, deduction, or previous demand, Annual Rent in the amount of
($0.00). The parking lot Improvements paid for by Tenant constitute adequate
consideration on behalf of Tenant. The cost of those Improvements is agreed to
be $276,500.00.

 

SECTION
5. Representations and Warranties. The parties represent and warrant
that:

 

(a)                                  Authority.
Landlord and Tenant possess full right, power and authority to execute, deliver
and perform this Lease, and when executed all parties having an interest in the
Demised Premises shall be lawfully bound pursuant to the terms, covenants and
conditions of this Lease. 

 

(b)                                 Fee
Simple Title. Landlord possesses and will possess on the date hereof, fee
simple title to the Demised Premises, subject only to the Permitted Exceptions,
and Landlord possesses full right and power to lease the Demised Premises to
Tenant. 

 

(c)                                  Breach
of Other Agreements. The execution and delivery of this Lease, the
consummation of the transaction provided for herein, and the fulfillment of the
terms, covenants and conditions hereof, will not result in a breach of any
term, covenant or condition of, or constitute a default under, any agreement or
instrument to which Landlord or Tenant is a party, or by which Landlord,
Tenant, or the Demised Premises is bound, including, without limitation, any
judgment, decree or order of any court or governmental body, or any applicable
law, ordinance, rule or regulation.

 

(d)                                 Eminent
Domain. No eminent domain or similar condemnation proceeding affecting all
or any part of the Demised Premises is now pending or, to the best of Landlord’s
knowledge, threatened.

 

(e)                                  Outstanding
Contract. No outstanding option to purchase, contract of sale or lease
exists with respect to all or any part of the Demised Premises, except for this
Lease.

 

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(f)                                    Litigation.
No litigation or proceeding before any commission, agency or other
administrative authority is pending or, to the best of Landlord’s knowledge,
threatened against or affecting the Demised Premises or arising out of or by
virtue of the ownership or use by Landlord of the Demised Premises. No pending
or threatened judicial, municipal or administrative proceeding exists which
affects the Demised Premises, or in which Landlord is or may be a party by
reason of the ownership or use by Landlord of all or any part of the Demised
Premises. No outstanding decree, order or award exists with respect to
Landlord, or all or any part of the Demised Premises.

 

(g)                                 Landlord
warrants that there is no easement, deed restriction, subdivision restriction
or regulation of any lawful governmental agency, authority or instrumentality
having jurisdiction over the Demised Premises exists which will adversely
affect or impair the intended use of the Demised Premises by Tenant, or
adversely affect or impair the access to or from the Demised Premises.

 

(h)                                 Landlord
warrants that the current conditional use zoning of the Demised Premises
permits the use of the Demised Premises for the Permitted Use. 

 

(i)                                     Tenant
has obtained all approvals, permits and licenses necessary to develop and
operate the Demised Premises for the intended use of Tenant. 

 

(j)                                     Tenant
has verified that the utility services currently available to the Demised
Premises, including, without limitation, electric, natural gas, telephone,
water, sanitary sewer, storm sewer, drainage and cable television, are in
capacities adequate for the intended use of the Demised Premises by Tenant and
are available by proper easement. 

 

(k)                                  Tenant
has verified that adequate access exists to the Demised Premises from and over
any and all roads, streets, lanes and highways adjacent to or adjoining the
Demised Premises.

 

(l)                                     Landlord
represents to Tenant, that to the best of Landlord’s knowledge, that
(A) the Demised Premises was not used for the storage, generation,
manufacture or disposal of any Hazardous Substance, (B) no Hazardous
Substance is or was located in, on or under the Demised Premises, and
(C) no underground storage tank is located in, on or under the Demised
Premises. 

 

(m)                               Landlord
warrants that the Demised Premises is not located in a flood hazard area as
designated by any governmental agency, authority or instrumentality.

 

SECTION 6. Zoning.
Tenant shall, at its sole cost and expense, apply for and obtain any zoning,
zoning variances, changes or consents that may be necessary for the Permitted
Use. Tenant may contest, through appropriate legal proceedings, any adverse
administrative or legislative action in connection therewith. Landlord shall
cooperate fully with Tenant to obtain such necessary zoning, zoning variances,
changes or consents, and shall execute such application forms, pleadings and
similar documents as may be required by the governmental authorities or courts
having jurisdiction over the Demised Premises. 

 

SECTION 7. No Net
Lease. It is the intention of the parties that the Landlord shall be
responsible for and that all costs, utilities, taxes and expenses and
obligations relating to the Demised Premises, except for maintenance expense,
which shall be a cost to Tenant.

 

SECTION
8. Construction of the Improvements. 

 

(a)                                  Commencement.
Tenant shall, at its sole cost and expense, begin construction of the
Improvements in accordance with the Plans and Specifications. Any material
changes to the Plans and Specifications shall require the prior written approval
of Landlord, which approval shall not be unreasonably withheld or delayed.
Construction of the Improvements shall be performed in compliance with all then
applicable codes, zoning ordinances and any other laws, rules, regulations and
ordinances of any governmental jurisdiction. 

 

(b)                                 Contractors.
In constructing the Improvements, Tenant shall require such persons or entities
to waive their right to place a lien against the interest of Landlord in the
Demised Premises and if so placed as a result of the construction of the
Improvements, Tenant shall cause same to be removed and any such lien right to
be satisfied. 

 

SECTION
9. Use of the Demised Premises. 

 

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Tenant shall use the
Demised Premises for the Permitted Use and for no other purpose, which shall be
for parking. Tenant shall not use or occupy, or permit all or any part of the
Demised Premises to be used or occupied for any unlawful or illegal business,
use or purpose, or in any manner constituting a nuisance of any kind. 

 

SECTION
10. Taxes and Utility Expenses. 

 

Payment.
During the Term, Landlord shall pay and discharge as and when the same shall
become due and payable, all Taxes and Utility Expenses. Landlord shall be
deemed to have complied with this Section 12(a) if payment of the Taxes and the
Utility Expenses are made either within any period allowed by law or by the
governmental authority imposing the same during which payment is permitted
without penalty or interest, or before the same shall become a lien on the
Demised Premises. Landlord shall, upon request, produce and exhibit to Tenant
satisfactory evidence of such payment.

 

SECTION
11. Repairs, Alterations and Replacements; Hazardous Substances. 

 

(a)                                  Tenant
to Repair and Maintain. Tenant shall, at all times during the Term and at
its sole cost and expense, keep and maintain the Improvements in good repair
and condition (ordinary wear and tear excepted) and shall use all reasonable
precaution to prevent waste or damage thereto. Landlord shall not be
required to make any repairs, additions, alterations or replacements in or to
the Demised Premises or the Improvements during the Term. 

 

(b)                                 Additions,
Alterations and Replacements. Subject to all applicable restrictions,
zoning ordinances and other governmental regulations, Tenant may, at its sole
cost and expense, and at any time and from time to time, make such repairs,
additions, alterations and replacements in and to the Improvements, as Tenant
deems desirable, subject to Landlord’s prior written approval, which approval
shall not be unreasonably withheld.

 

(c)                                  Title
to the Improvements. Title to the Improvements and any repair, addition,
alteration or replacement thereto shall remain the property of Landlord, and
Landlord alone shall be entitled to deduct all depreciation on Landlord’s
income tax returns for same. At the expiration or other termination of this
Lease, the Improvements shall become the property of Landlord, but Tenant may
remove any and all trade fixtures, equipment and other personal property of
Tenant from the Demised Premises; provided that Tenant shall, at its
sole cost and expense, repair any damage to the Demised Premises or the
Improvements caused by said removal.

 

(d)                                 Hazardous
Substances. Landlord represents and warrants that there are no Hazardous
Substances brought upon, kept, stored, generated, manufactured, disposed of, or
used in or about the Demised Premises prior to Tenant’s possession. Tenant
represents and warrants that it shall not cause or permit any Hazardous
Substance to be brought upon, kept, stored, generated, manufactured, disposed
of, or used in or about the Demised Premises by Tenant, its agents, employees,
contractors or invitees except for cleaning supplies used in the ordinary
course of business and in compliance with all applicable laws. Tenant shall be
fully liable for any and all costs and expenses related to the generation,
manufacture, use, storage or disposal of a Hazardous Substance on the Demised
Premises by Tenant, its agents, employees, contractors and invitees. Tenant
shall defend, indemnify and hold harmless Landlord and
its agents from and against any and all claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses (including, without
limitation, reasonable attorney’s fees, consultants fees, court costs and
litigation expenses) of whatever kind or nature known or unknown, contingent or
otherwise, arising out of or any way related to a Hazardous Substance brought
onto the Demised Premises by Tenant.. The terms, covenants and conditions of
this Section shall be in addition to any other obligation and liability that
either party may have at law or in equity, and shall survive the expiration or
other termination of this Lease.

 

SECTION
12. Requirements of Public Authority. 

 

(a)                                  Tenant
to Comply. During the Term, Tenant shall, at its sole cost and expense,
observe and comply with all present and future laws, ordinances, orders, rules
and regulations of the federal, state, county, municipal and other governmental
authorities affecting all or any part of the Demised Premises or the
Improvements whether the same are in force at the Commencement Date or which
may in the future be passed, enacted or directed. Tenant shall pay any and all
costs, expenses, liabilities, losses, damages, fines, penalties, claims and
demands incurred by Landlord, including, without limitation, reasonable
attorney’s fees and expenses, that may in any manner arise out of or be imposed
because of the failure of Tenant to comply with this Section 14.

 

(b)                                 Right
to Contest. Tenant may contest by appropriate legal proceeding conducted in
good faith, in the name of Tenant, Landlord or both, without cost or expense to
Landlord, the validity or application of any law, ordinance, order, rule or 

 

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regulation of the nature
referred to in Section 14(a) and, if by the terms of any such law, ordinance,
order, rule or regulation, compliance therewith may legally be delayed pending
the prosecution of any such proceeding, then Tenant may delay such compliance
therewith until the final determination of such proceeding.

 

(c)                                  Assistance
by Landlord. Landlord shall execute and deliver any appropriate instruments
which may be necessary or proper to permit Tenant to contest the validity or
application of any such law, ordinance, order, rule or regulation and shall
fully cooperate with Tenant in such contest.

 

SECTION
13. Covenant Against Liens. 

 

(a)                                  Tenant’s
Discharge of Lien and Indemnity. If, because of any act or omission of
Tenant, its agents, employees, subtenants or contractors, any mechanic’s lien,
materialman’s lien or other lien, charge, claim or order for the payment of
money shall be filed against the Demised Premises, then Tenant shall, at its
sole cost and expense, cause the same to be discharged of record or bonded off
within 30 days after the date the lien, charge, claim or order is filed against
the Demised Premises. Tenant shall indemnify and save harmless Landlord against
and from any and all costs, damages, liabilities, suits, penalties, claims and
demands resulting there from, including, without limitation, reasonable
attorney’s fees and expenses, that arise as a result of Tenant’s breach of this
covenant.

 

(b)                                 Failure
by Tenant to Discharge. If Tenant fails to comply with this covenant, then
in addition to any other right or remedy available to Landlord under this Lease
or otherwise, Landlord may, at its option, discharge such lien, charge, claim
or order, in which event Tenant shall pay Landlord an amount equal to the
amount of the lien, charge, claim or order thus discharged by Landlord plus any
attorneys’ fees incurred by Landlord. 

 

(c)                                  Tenant’s
Work. It is agreed and understood that any lien, charge, claim or order for
payment arising out of work or materials in connection with the Improvements
shall solely encumber the leasehold estate of Tenant in the Demised Premises,
and upon the expiration or other termination of this Lease, said lien, charge,
claim or order shall be extinguished, without further force or effect, as to
the Demised Premises, the Improvements and Landlord.

 

SECTION
14. Access to the Demised Premises. 

 

(a)                                  By
Tenant. Tenant or its representatives may, at any reasonable time after the
date hereof, enter the Demised Premises for any purpose, including, without
limitation, making surveys, taking soil borings, inspecting the Demised
Premises and any existing improvements, and making architectural or engineering
reports and studies.

 

(b)                                 By
Landlord. Landlord, its agents and representatives may enter upon the
Demised Premises at all reasonable times, to examine, inspect or exhibit the
Demised Premises to prospective purchasers and prospective tenants.

 

SECTION 15. Assignment
and Subletting. Tenant may not assign all or any part of this Lease, or
sublease all or any part of the Demised Premises, without the consent of
Landlord, which consent shall not be unreasonably withheld. 

 

SECTION
16. Indemnity. 

 

(a)                                  By
Tenant. Tenant shall defend, indemnify and save harmless Landlord from and
against any and all liability, damage, penalty, judgment, cost and expense,
including, without limitation, reasonable attorneys’ fees and expenses, arising
from loss, damage or injury to person or property sustained by anyone on or
about the Demised Premises resulting from any act or omission of Tenant, its
agents, employees, subtenants or contractors. Tenant shall, at its sole cost
and expense, defend, indemnify and save harmless Landlord against any and all
suits or actions (just or unjust) which may be brought against Landlord or in
which Landlord may be impleaded with others upon any claim(s) related to the
Demised Premises on or after the date hereof, except as may result from an act,
omission or negligence of Landlord, its agents, employees or contractors.

 

(b)                                 By
Landlord. Landlord shall defend, indemnify and save harmless Tenant from
and against any and all liability, damage, penalty, judgment, cost and expense,
including, without limitation, reasonable attorneys’ fees and expenses, arising
from loss, damage or injury to person or property sustained by anyone on or
about the Demised Premises resulting from any act or omission of Landlord, its
agents, employees or contractors. Landlord shall, at its sole cost and expense,
defend, indemnify and save harmless Tenant against any and all suits or actions
(just or unjust) which may be brought against Tenant or in which Tenant may be
impleaded with others upon any claim(s) related to the Demised Premises prior
to the date hereof, except as may result from an act, omission or negligence of
Tenant, its agents, employees, subtenants or contractors.

 

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SECTION
17. Insurance. 

 

(a)                                  Required
of Tenant. During the Term, Tenant shall, at its sole cost and expense,
obtain and maintain or cause to be obtained and maintained in full force and
effect with an insurance company or companies licensed to do business in the
State of Kentucky: 

 

(i)                                     commercial general liability insurance in
a combined single limit of at least $1,000,000 with respect to injury or death
to any person(s) or damage to property; 

 

(ii)                                  casualty insurance with extended coverage
and other commonly used endorsements, including, without limitation,
replacement/repair cost, lightning, vandalism, malicious mischief and
earthquake, covering the Improvements, equal to the full insurable value
thereof; 

 

(iii)                               during construction of the Improvements,
adequate builders’ risk insurance, including, without limitation, workers’
compensation insurance, covering all risks normally covered by such policies; 

 

(iv)                              such other insurance as may be reasonably
determined by Landlord.

 

(b)                                 Certificates
of Insurance. Tenant shall, upon request by Landlord, deliver certificates
of insurance to Landlord at the beginning of the Term and thereafter not less
than 15 days prior to the expiration of any policy. Insurance shall be non-cancelable
without 20 days’ prior written notice to Landlord, and any certificate shall
state that the insurer will notify Landlord of cancellation at least 20 days
prior thereto. All insurance shall name Landlord as an additional insured.

 

(c)                                  Tenant’s
Blanket Policy. Any insurance may, at Tenant’s election, be carried under a
blanket policy covering the Demised Premises and any other properties of
Tenant.

 

(d)                                 Failure
by Tenant to Insure. If Tenant should fail to pay any insurance premium
required under this Section 19, then Landlord may, but shall not be obligated
to, pay such insurance premium and charge the amount of such insurance premium
to Tenant. 

 

(e)                                  Insurance
Proceeds. During the Term, all casualty insurance proceeds shall be paid to
Tenant, subject, however, to the prior rights of any Leasehold Mortgagee.

 

SECTION 18. Waiver of
Subrogation. Landlord and Tenant waive any and all claim and right of recovery
against the other and all persons claiming by, through or under them to the
extent that such claim or right of recovery is covered by insurance, and all
insurance policies carried by either party covering the Demised Premises,
including, without limitation, contents, fire and casualty insurance, shall
expressly waive any right of the insurer to proceed against the other party.

 

SECTION 19. Damage or
Destruction. 

 

(a)                                  Damage
or Destruction. If the Improvements are damaged or destroyed by fire or
other casualty, Tenant shall, at Tenant’s sole cost and expense, repair or
rebuild the Improvements. Tenant shall commence such repairs or rebuilding as
soon as reasonably possible, and Tenant shall thereafter diligently pursue the
completion of any such rebuilding or repair. Any insurance proceeds shall be
placed in an interest bearing account with a bank mutually acceptable to
Landlord, Tenant and Leasehold Mortgagee. Such insurance proceeds shall be
deposited under such conditions that they may be withdrawn to meet Tenant’s
periodic construction draws and other costs incidental to rebuilding and
repairing the Improvements; provided that such withdrawals are supported
by estimates and payment certificates of the architect supervising the
rebuilding and repairing, certifying that the amount of that construction draw
is the correct amount based upon work performed and materials stored on the
Demised Premises. Any insurance proceeds remaining after rebuilding and
repairing is completed and any interest earned on said insurance proceeds shall
be the property of and belong to Tenant.

 

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SECTION
20. Eminent Domain.

 

(a)                                  Total
or Disabling Condemnation. If during the Term all of the Demised Premises
shall be taken or condemned for a public or quasi-public purpose by any lawful
authority having the power of eminent domain, or conveyance made in lieu
thereof, or if a partial taking or condemnation of the Demised Premises by such
authority, or conveyance made in lieu thereof, renders the same “untenantable”
(as defined hereinafter), then in either event Tenant may terminate this Lease
as of the Taking Date, and will be entitled to a return of its Improvement
costs on a pro-rata basis covering the 15-year term of the Lease. 

 

(b)                                 Partial
Non-Disabling Condemnation. If during the Term the partial taking or
condemnation for a public or quasi-public purpose by any lawful authority
having the power of eminent domain, or conveyance made in lieu thereof, does
not render the Demised Premises unusable for its intended purpose, then Tenant
shall immediately commence restoration of the Demised Premises, and shall
complete same with all reasonable diligence, to a condition comparable to the
condition of the Demised Premises at the time of such taking or condemnation.
This Lease shall automatically terminate as of the Taking Date for the portion
of the Demised Premises taken or condemned and if the parking lot spaces are
reduced by a taking, the like share of the costs of the Improvements shall be
refunded by Landlord to Tenant pro-rated over the remaining term of the Lease
or until such time the parking spaces are restored.

 

(c)                                  Allocation
of Condemnation Award. If any taking or condemnation occurs in a judicial
proceeding in which specific condemnation awards are made separately to
Landlord and Tenant, then in that event such condemnation awards shall be
binding upon Landlord and Tenant, and shall limit and define the rights of each
party in and to such condemnation awards. Both Landlord and Tenant may seek a
condemnation award for their respective interests. Condemnation awards awarded
by virtue of the taking or condemnation of all or any part of the Improvements
and/or the Demised Premises, whether by consent of the parties or any judicial
proceeding, where condemnation awards are not made to Landlord and Tenant
separately, shall be divided between Landlord and Tenant giving consideration
to the value of the rights and interests of each party in and to the
Improvements and the Demised Premises. Tenant may claim and recover from such
lawful authority causing the taking or condemnation, but not from Landlord,
such compensation as may be separately awarded or recoverable by Tenant or
Tenant’s subtenants, in their own right on account of any and all damages to
Tenant’s and Tenant’s subtenants’ businesses by reason of such taking or
condemnation, and any condemnation award which may be made under federal, state
or local law for moving expenses, for the taking of personal property, or for
damages for business interruption or displacement. 

 

SECTION 21. Quiet
Enjoyment. Tenant shall, upon observing and keeping all other terms,
covenants and conditions of this Lease on its part to be kept, have quiet
possession and enjoyment of the Demised Premises during the Term.

 

SECTION
22. Events of Default. 

 

(a)                                  Events
of Default by Tenant. The following shall be deemed events of default by
Tenant hereunder:

 

(i)                                     Tenant’s
failure to perform any term, covenant or condition contained herein on Tenant’s
part to be kept or performed, and the continuance of such failure without the
curing of same for a period of 30 days after receipt by Tenant of written
notice from Landlord specifying in detail the nature of such failure to
perform; and

 

(b)                                 Time
Period to Cure. In the event that Landlord gives Tenant written notice of a
non-monetary default and Tenant cannot cure such non-monetary default within
said 30-day period, then such non-monetary default shall not be deemed to
continue as long as Tenant, after receiving such written notice, proceeds to
cure such non-monetary default as soon as reasonably possible and continues to
take all steps necessary to cure the same within a period of time which, under
all prevailing circumstances, is reasonable.

 

SECTION
23. Rights and Remedies. 

 

Of Landlord.
If Tenant does not cure its default within the applicable cure period(s), then
Landlord shall be entitled to (i) re-enter the Demised Premises and remove
all persons and property there from by any suitable action or proceeding at law
and repossess and enjoy the Demised Premises, (ii) repair, alter, or
change the Demised Premises as it deems fit, (iii) relet at any time all
or any part of the Demised Premises, (iv) terminate this Lease; provided
that such termination shall not release Tenant from any of its obligations
contained in this Lease for the balance of the Term, (v) cure the default
and assess against Tenant the cost of curing the default, or (vi) exercise any
other remedy available at law or in equity. All rights and remedies available
herein or at law or in equity shall be cumulative with each other upon the
election of Landlord. The exercise by Landlord of any right or remedy granted
in this Section 23(a) shall not relieve Tenant from the obligation to pay the
Annual Rent and any other amount 

 

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due hereunder, and to
fulfill all other terms, covenants and conditions required by this Lease, at
the time and in the manner provided herein. Tenant throughout the Term shall
pay Landlord, no later than the last day of each calendar month, the amount of
the costs due to Landlord resulting from such default by Tenant, less
the proceeds received by Landlord from reletting the Demised Premises. Any
excess rent or amounts received by Landlord over and above sums due Landlord by
Tenant from reletting the Demised Premises as a result of such default by
Tenant shall remain the sole property of Landlord.

 

(a)                                  Not
Required of Landlord. Landlord shall not be required to (i) relet the
Demised Premises, (ii) exercise any other right or remedy granted to
Landlord hereunder, or (iii) minimize the loss of Tenant as a result of
the default of Tenant. If Landlord attempts to relet the Demised Premises, then
Landlord shall be the sole judge as to whether or not a proposed tenant is
suitable and acceptable.

 

SECTION 24. Waivers.
Failure of Landlord or Tenant to complain of any act or omission on the part of
the other party, no matter how long the same may continue, shall not be deemed
to be a waiver by said party of any of its rights or remedies provided herein,
at law, in equity or by statute. No waiver by Landlord or Tenant at any time,
express or implied, of any breach of any term, covenant or condition of this
Lease shall be deemed a waiver of a breach of any other term, covenant or
condition of this Lease or a consent to any subsequent breach of the same or
any other term, covenant or condition. No cure by Landlord of any breach of any
term, covenant or condition of this Lease by Tenant shall be deemed to be a
waiver by Landlord of such breach. 

 

SECTION 25. Force
Majeure. In the event that Landlord or Tenant shall be delayed, hindered
in, or prevented from the performance of any act required hereunder by reason
of an act of God, strike, lockout, labor trouble, inability to procure
materials, failure of power, restrictive governmental law, ordinance, rule or
regulation, riot, insurrection, war, or the act, failure to act, or default of
the other party, or other reason beyond their control, then performance of such
act shall be excused for the period of the delay and the period for the
performance of any such act shall be extended for a period equal to the period
of such delay.

 

SECTION
26. Notice. 

 

(a)                                  Delivery.
Any notice, approval or consent authorized or required by this Lease shall be
in writing and (i) delivered personally, (ii) sent postage prepaid by
certified mail or registered mail, return receipt requested, or (iii) sent
by a nationally recognized overnight carrier that guarantees next day delivery,
directed to the other party at the address set forth in this Section 26 or such
other parties or addresses as may be designated by Landlord or Tenant by notice
given from time to time in accordance with this Section 26:

 

	
  To Landlord:

  	
   

  	
  The Jaytee Properties Limited
  Partnership

  
	
   

  	
   

  	
  601 W. Market St.

  
	
   

  	
   

  	
  Louisville, KY 40202

  
	
   

  	
   

  	
  Attention:
  Mr. Steve Trager

  
	
   

  	
   

  	
   

  
	
  To Tenant:

  	
   

  	
  Republic Bank &
  Trust Company

  
	
   

  	
   

  	
  601 W. Market St.

  
	
   

  	
   

  	
  Louisville, KY 40202

  
	
   

  	
   

  	
  Attention:
  Mr. Mike Beckwith

  

 

(b)                                 Receipt.
A notice, approval or consent given in accordance with this Section 31 shall be
deemed received (i) upon delivering it in person, (ii) three days
after depositing it in an office of the United States Postal Service or any
successor governmental agency, or (iii) one day after giving it to a
nationally recognized overnight carrier.

 

SECTION 27. Estoppel
Certificates. Either party shall, without charge, at any time and from time
to time hereafter, within 15 days after written request, certify by written
instrument duly executed and acknowledged to any mortgagee, purchaser, or any
other person, firm or corporation specified in such request: (a) as to
whether this Lease has been modified or amended, and if so, to attach such
modification or amendment to the estoppel certificate; (b) as to the
validity, force and effect of this Lease, in accordance with its tenor as then
constituted; (c) as to the existence of any default hereunder; (d) as
to the existence of any offset, counterclaim or defense thereto on the part of
such other party; (e) as to the commencement and expiration dates of the
Term; and (f) as to any other matters reasonably requested. Any such
estoppel certificate may be relied upon by the party requesting it and any
other person, firm or corporation to whom the same may be exhibited or
delivered, and the contents of such estoppel certificate, shall be binding on
the party executing same.

 

8

 

SECTION 28. Governing
Law. This Lease and the performance thereof shall be governed, interpreted,
construed and regulated by the laws of the Commonwealth of Kentucky. 

 

SECTION 29. Partial
Invalidity. If any term, covenant or condition of this Lease or the
application thereof to any person or circumstance shall, at any time or to any
extent, be deemed invalid, illegal or unenforceable, then the remainder of this
Lease, or the application of such term, covenant or condition to persons or
circumstances other than those as to which it is held invalid, illegal or
unenforceable, shall not be affected thereby, and each term, covenant and
condition of this Lease shall be valid, legal and enforceable to the fullest
extent permitted by law.

 

SECTION 30. Short Form
of Lease. The parties hereto shall, at any time and at the request of
either party, execute a short form of lease in recordable form, setting forth a
description of the Demised Premises, the Term and any other portions hereof,
except the rent provisions, as either party may request.

 

SECTION 31. Construction
of this Lease. Whenever the singular number is used herein, the same shall
include the plural, and the masculine gender shall include the feminine and
neuter genders, and vice versa, as the context shall require. This Lease may be
executed in several counterparts, each of which shall be an original, but all
of which shall constitute one and the same instrument. “Landlord” and “Tenant”
shall mean only the owner at the time of Landlord’s or Tenant’s interest
herein, and upon any sale or assignment of the interest of either Landlord or
Tenant herein, then their respective successors and/or assigns shall, during
the term of their ownership of their respective estates herein, be deemed to be
Landlord or Tenant, as the case may be. This Lease was drafted by counsel for
one of the parties hereto as a matter of convenience only, and shall not be
construed against or in favor of either party on such basis. 

 

SECTION 32. Entire
Agreement. No oral statement or prior written matter shall have any force
or effect. Tenant is not relying on any representations or warranties other
than those contained in this Lease. This Lease shall not be modified, amended
or canceled except in a writing executed by all parties.

 

SECTION 33. Benefit
and Binding Effect. Except as otherwise expressly provided herein, the
terms, covenants and conditions contained in this Lease shall be binding upon,
and shall inure to the benefit of, Landlord, Tenant and their respective heirs,
legal representatives, successors and assigns.

 

SECTION 34. Attorney’s
Fees and Expenses. In the event that a dispute arises between the parties
with respect to this Lease, or either party is required to retain legal counsel
to enforce any term, covenant or condition of this Lease, then the prevailing
party shall be entitled to recover from the non-prevailing party any and all
reasonable attorneys’ fees and expenses resulting there from. 

 

SECTION 35. Real
Estate Commission. Landlord and Tenant each warrant and represent to the
other that neither has engaged or dealt with any real estate agent or broker in
connection with the transaction contemplated by this Lease. Landlord and Tenant
shall be solely responsible for and shall pay any and all real estate, broker’s
or finder’s commissions or fees which may be payable as a result of the actions
of Landlord or Tenant. Landlord and Tenant shall indemnify and hold the other
harmless from and against any and all claims, damages and causes of action
resulting from the claims of any real estate agent or broker.

 

SECTION 36. Surrender.
On the expiration or other termination of this Lease, Tenant shall quit and
surrender to Landlord the Demised Premises, free and clear of all liens,
encumbrances and title matters, except for the Permitted Exceptions and
easements approved by Landlord during the Term. The Improvements shall be in
good condition and repair, ordinary wear, tear and damage by casualty excepted.

 

SECTION 37. Section
Headings. The section headings used herein are for reference and
convenience purposes only, and shall not enter into the interpretation hereof. 

 

[NEXT
PAGE IS SIGNATURE PAGE]

 

9

 

IN WITNESS WHEREOF,
Landlord and Tenant duly executed this Lease as of the date first set forth
above, but actually on the dates set forth below.

 

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  The Jaytee Properties
  Limited Partnership

  	
   

  	
  Republic Bank &
  Trust Company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Steve Trager

  	
   

  	
  By: 

  	
  /s/ Kevin Sipes

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  General Partner

  	
   

  	
  Title:

  	
  EVP & CFO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  January 17, 2008

  	
   

  	
  Date:

  	
  January 17, 2008

  
										

 

10Exhibit 10 (vii)

 

EMPLOYMENT AGREEMENT

 

 

THIS AGREEMENT, made as of
the 11th day of January 1999, among PENNS WOODS BANCORP, INC. (“Penns
Woods”), a Pennsylvania business corporation having a place of business at
115 South Main Street, Jersey Shore, Pennsylvania, JERSEY SHORE STATE BANK
(“Bank”), a Pennsylvania banking institution having a place of business at
115 South Main Street, Jersey Shore, Pennsylvania, and WILLIAM H.
ROCKEY (“Executive”), an adult individual.

 

WITNESSETH:

 

WHEREAS, Bank is the wholly
owned banking subsidiary of Penns Woods;

 

WHEREAS, Penns Woods and
Bank desire to employ Executive to serve in the capacity of Senior Vice
President of each of Penns Woods and Bank on the terms and conditions set forth
herein;

 

WHEREAS, Executive desires
to accept employment with each of Penns Woods and Bank on the terms and
conditions set forth herein.

 

AGREEMENT:

 

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

 

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

 

2.             Duties of
Employee.  Executive
shall perform and discharge well and faithfully such duties as an executive officer
of Penns Woods and of Bank as may be assigned to Executive from time to time by
the respective Boards of Directors of Penns Woods and of Bank.  Executive shall be employed as Senior Vice
President of Penns Woods and of Bank, and shall hold such other titles as may
be given to him from time to time by the respective Boards of Directors of
Penns Woods and of Bank.  Executive shall
devote his full time, attention and energies to the business of Penns Woods and
of Bank during the Employment Period (as defined in Section 3 of this
Agreement); provided, however, that this Section 2 shall not be construed
as preventing Executive from (a) investing Executive’s personal assets in
enterprises that do not compete with Penns Woods or Bank or (b) being
involved in any 

 

1

 

other activity with the prior approval of the
Board of Directors of Penns Woods and Bank.

 

3.             Term of Agreement.

 

(a)           This Agreement
shall be for a three (3) year period (the “Employment Period”) commencing
on January 11, 1999 and ending on January 10, 2002; provided,
however, that the Employment Period shall be automatically extended on January 11,
2000 and on January 1 of each subsequent year thereafter (each an “Annual
Renewal Date”) for a period ending three (3) years from each Annual
Renewal Date unless either party shall give written notice of nonrenewal to the
other party at least ninety (90) days prior to an Annual Renewal Date, in which
event this Agreement shall terminate at the end of the then existing Employment
Period.

 

(b)           Notwithstanding
the provisions of Section 3(a) of this Agreement, this Agreement
shall terminate automatically for Cause (as defined herein) upon written notice
from the Board of Directors of each of Penns Woods and Bank to Executive.  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 forty-five (45) consecutive days or more;

 

(ii)           Executive’s
continued failure to follow the good faith lawful instructions of the Board of
Directors of Penns Woods or Bank with respect to its operations, for a material
period of time following written notice to Executive of such instructions; or

 

(iii)          Executive’s
willful failure to substantially perform Executive’s duties to Penns Woods or
Bank, other than a failure resulting from Executive’s incapacity because of
physical or mental illness, which willful failure results in demonstrable
material injury and damage to Penns Woods or Bank.

 

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 in accordance with Section 5 of this Agreement
relating to termination for Good Reason following a Change in Control),
retirement at Executive’s election, or

 

2

 

Executive’s death, and 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 Executive delivers a Notice of Termination (as defined in Section 5(a) of
this Agreement), the provisions of Section 14(b) of this Agreement
shall apply.

 

(d)           Notwithstanding the
provisions of Section 3(a) of this Agreement, 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 (as defined in Section 5(a) of this Agreement),
Executive shall nevertheless be absolutely entitled to receive all of the
compensation and benefits provided for in, and for the term set forth in, Section 6
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 of Executive for three hundred sixty (360)
consecutive days.

 

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

 

4.             Employment Period
Compensation.

 

(a)           Salary.  For services performed by Executive under
this Agreement, Bank shall pay Executive a salary during the Employment Period
at the rate of $96,700 per year (the “Base Salary”), payable at the same times
as salaries are payable to other executive employees of Bank.  Bank may, from time to time, increase
Executive’s salary, and any and all such increases shall be deemed to constitute
amendments to this Section 4(a) to reflect the increased amounts,
effective as of the date established for such increases by the Board of
Directors of Bank or any committee of such Board in the resolutions authorizing
such increases.

 

(b)           Vacation.  During the Employment Period, Executive shall
be entitled to paid annual vacation in accordance with the policies as
established from time to time by the Boards of Directors of Penns Woods and
Bank plus such other personal or bonus days as may be set forth in the policies
of Penns Woods and Bank.  Executive shall
not be entitled to receive any additional compensation from Penns Woods and
Bank for failure to take a vacation, nor shall Executive be able to accumulate
unused vacation time from one year to the next, except to the extent authorized
by the Boards of Directors or the policies of Penns Woods and Bank.

 

3

 

(c)           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, profit sharing, stock option, incentive bonus,
employee stock ownership, or other plans, benefits and privileges given to
employees and executive officers of Penns Woods and Bank, to the extent
commensurate with Executive’s then existing duties and responsibilities as
fixed by the Boards of Directors of Penns Woods or Bank, in the same manner as
other executive officers.  Penns Woods
and Bank shall not make any changes in such plans, benefits or privileges which
would adversely affect Executive’s rights or benefits thereunder, unless such
change occurs pursuant to a program applicable to all executive officers of
Penns Woods and Bank and does not result in a proportionately greater adverse
change in the rights of or benefits to Executive as compared with any other
executive officer of Penns Woods and Bank. 
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
salary payable to Executive pursuant to Section 4(a) hereof.

 

5.             Termination of Employment
Following Change in Control.

 

(a)           If a Change in Control (as
defined in Section 5(b) of this Agreement) shall occur and if
thereafter, at any time during the term of this Agreement, there shall be:

 

(i)            any involuntary termination
of Executive’s employment (other than for the reasons set forth in Section 3(b) or
3(d) of this Agreement relating to termination for Cause or disability);

 

(ii)           any reduction in Executive’s
title, responsibilities, including reporting responsibilities, or authority,
including such title, responsibilities, or authority as such title,
responsibilities, or authority may be increased from time to time during the
term of this Agreement;

 

(iii)          the assignment to Executive
of duties inconsistent with Executive’s office on the date of the Change in
Control or as the same may be increased from time to time after the Change in
Control;

 

(iv)          any reassignment of
Executive to a location greater than twenty-five (25) miles from the location
of Executive’s office on the date of the Change in Control;

 

(v)           any reduction in Executive’s
annual base salary in effect on the date of the Change in Control or as

 

4

 

the same may be increased
from time to time after the Change in Control;

 

(vi)          any failure to continue
Executive’s participation in any of Penns Woods’ incentive compensation or
bonus plans in which Executive participated at the time of the Change in
Control or any change or amendment to any provisions of any of such plans which
would materially decrease the potential benefits to Executive under any of such
plans;

 

(vii)         any failure to provide
Executive with benefits at least as favorable as those enjoyed by Executive
under any of Penns Woods’ retirement or pension, life insurance, medical,
health and accident, disability or other 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;

 

(viii)        any requirement that
Executive travel in performance of his duties on behalf of Penns Woods or Bank
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;

 

(ix)           any sustained pattern of
interruption or disruption of Executive for matters substantially unrelated to
Executive’s discharge of Executive’s duties on behalf of Penns Woods and Bank;
or

 

(x)            any breach of this Agreement
of any nature whatsoever on the part of Penns Woods or Bank;

 

then, at the option of Executive, exercisable
by Executive within ninety (90) days of the occurrence of any of the foregoing
events, Executive may resign from employment with Penns Woods and Bank (or, if
involuntarily terminated, give notice of intention to collect benefits under
this Agreement) by delivering a notice in writing (the “Notice of Termination”)
to Penns Woods and Bank and the provisions of Section 6 of this Agreement
shall apply.

 

(b)           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 Bank, 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 eighty percent (80%) or more
of the members of the Board of

 

5

 

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; or

 

(ii)           any other change in control
of Penns Woods similar in effect to any of the foregoing.

 

6.             Rights in Event of
Termination of Employment.

 

(a)           In the event that (i) Executive’s
employment is involuntarily terminated by Penns Woods and Bank without Cause in
the absence of a Change in Control at the date of such termination or (ii) Executive
delivers a Notice of Termination pursuant to Section 5(a) of this
Agreement following a change in Control, Penns Woods and Bank shall pay (or
cause to be paid), in the aggregate, to Executive in cash, within thirty (30)
days following termination of Executive’s employment, an amount equal to the
greater of (x) the Executive’s then current Base Salary multiplied by two (2) or
(y) the aggregate amount of Base Salary due and payable to Executive over
the remaining Employment Period in effect at the time of termination of
Executive’s employment.  Notwithstanding
the preceding sentence, in the event that the lump-sum payment described in the
preceding sentence, when added to all other amounts or benefits provided to or
on behalf of Executive in connection with termination of Executive’s
employment, would result in the imposition of an excise tax under Section 4999
of the Internal Revenue Code of 1986, as amended, such lump-sum shall be
reduced (retroactively, if necessary) to the extent necessary to avoid such
imposition.  Penns Woods’ independent
auditors shall be responsible for calculating any potential excise tax under Section 4999
and the amount of reduction in the payments to be made to Executive, if any,
necessary to avoid imposition of such excise tax, and all such calculations
shall be final and binding on all parties.

 

(b)           Executive shall not be
required to mitigate the amount of any payment provided for in this Section 6
by seeking other employment or otherwise. 
The amount of payment or the benefit provided for in this Section 6
shall not be reduced by any compensation earned by Executive as the result of
employment by another employer or by reason of Executive’s receipt of or right
to receive any retirement or other benefits after the date of termination of
employment or otherwise.

 

(c)           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 by Penns
Woods and Bank.

 

6

 

7.             Covenant Not to Compete.

 

(a)           Executive hereby
acknowledges and recognizes the highly competitive nature of the business of Penns
Woods and Bank and accordingly agrees that, during and for the applicable
period set forth in Section 7(c) hereof, 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 of any
person, firm, corporation, or enterprise engaged, in (1) the banking or
financial services industry or (2) any other activity in which Penns Woods
or any of its subsidiaries is engaged during the Employment Period, in any
county in which, at any time during the Employment Period or at the date of
termination of the Executive’s employment, a branch office or other facility of
Penns Woods or Bank, or any of their respective subsidiaries, is located, or in
any county contiguous to such a county, including contiguous counties located
outside of the Commonwealth of Pennsylvania (the “Non-Competition Area”); or

 

(ii)           provide financial or other
assistance to any person, firm, corporation, or enterprise engaged in (1) the
banking or financial services industry, or (2) any other activity in which
Penns Woods or Bank or any of their respective subsidiaries, is engaged during
the Employment Period, in the Non-Competition Area.

 

(b)           It is expressly understood
and agreed that, although Executive, Penns Woods, and Bank consider the
restrictions contained in Section 7(a) hereof reasonable for the
purpose of preserving for Penns Woods, Bank, and their respective subsidiaries,
their good will and other proprietary rights, if a final judicial determination
is made by a court having jurisdiction that the time or territory or any other
restriction contained in Section 7(a) hereof is an unreasonable or
otherwise unenforceable restriction against Executive, the provisions of Section 7(a) hereof
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’s employment
terminates in accordance with the provisions of Section 3 (other than 

 

7

 

Section 3(b) relating
to termination for Cause), the effective date of termination of employment;

 

(ii)           if Executive’s employment
terminates in accordance with the provisions of Section 3(b) of this
Agreement (relating to termination for Cause) or the Executive voluntarily
terminates his employment other than in accordance with the provisions of Section 5
hereof, the first anniversary date of the effective date of termination of
employment; or

 

(iii)          if the Executive voluntarily
terminates his employment in accordance with the provisions of Section 5
hereof, the effective date of termination of employment.

 

8.             No Disclosure of
Confidential Information.  The
Executive agrees that all customer lists and information, files and records now
or hereafter used by the Penns Woods or Bank are the property of Penns Woods
and Bank and constitute trade secrets. 
Accordingly, the Executive acknowledges that the trade secrets of Penns
Wood and Bank as they may exist from time to time and other confidential
information concerning the business, products, technical information, sales
activities, procedures, promotion, pricing techniques, business plans, customer
lists and credit and financial data concerning customers of Penns Wood and Bank
are valuable, special and unique assets of Penns Wood and Bank, access to and
knowledge of which are essential to the performance of the Executive’s duties
under this Agreement.  Executive further
agrees that all knowledge and information described in the preceding sentence
not in the public domain and heretofore or in the future obtained by the
Executive as a result of employment by the Bank shall be considered
confidential information and shall not be disclosed without the consent of
Penns Wood and Bank.  Nothing contained
herein shall be deemed to preclude the Executive from responding to requests
for information or inquiries from federal or state banking regulations or
complying with applicable laws and regulations.

 

9.             Equitable Relief.  Executive acknowledges that the restrictions
contained in Sections 7 and 8, in view of the nature of the business in
which Penns Woods and Bank are engaged, are reasonable and necessary in order
to protect the legitimate interests of Penns Woods and Bank and that any
violation thereof would result in irreparable injury to Penns Woods and Bank,
and Executive therefore acknowledges that, in the event of Executive’s
violation of any of these restrictions, Penns Woods or Bank shall be entitled
to obtain from any court of competent jurisdiction preliminary and permanent
injunctive relief as well as damages and an equitable accounting of all
earnings, profits and other benefits arising from such violation, which rights
shall be cumulative and in addition to any other remedies to which Penns Woods
or Bank may be entitled.

 

8

 

10.           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, in the case of notices to Executive, and to the principal executive
offices of Penns Woods and Bank, in the case of notices to Penns Woods and
Bank.

 

11.           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 executive officer specifically designated by the Boards of Directors of
Penns Woods and Bank.  No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.

 

12.           Assignment. This
Agreement shall not be assignable by any party, except by Penns Woods and Bank
to any successor in interest to their respective businesses.

 

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

 

14.           Successors; Binding
Agreement.

 

(a)           Penns Woods and Bank 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 and Bank to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that Penns Woods and
Bank would be required to perform it if no such succession had taken
place.  Failure by Penns Woods and Bank
to obtain such assumption and agreement prior to the effectiveness of any such
succession shall constitute a breach of this Agreement.  As used in this Agreement, “Penns Woods” and “Bank”
shall mean Penns Woods and Bank as defined previously and any successor to
their respective businesses and/or assets as aforesaid 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 

 

9

 

in accordance with the terms of this
Agreement to Executive’s devisee, legatee, or other designee, or, if there is
no such designee, to Executive’s estate.

 

15.           Legal Fees.  Penns Woods shall reimburse Executive for
legal fees and expenses incurred by Executive in connection with any legal
action necessary to enforce any provision of this Agreement.

 

16.           Arbitration. Penns Woods,
Bank and Executive recognize that, in the event a dispute should arise between
them concerning the interpretation or implementation of this Agreement, lengthy
and expensive litigation will not afford a practical resolution of the issues
within a reasonable period of time. 
Consequently, each party agrees that all disputes, disagreements and
questions of interpretation concerning this Agreement other than matters
relating to Section 7 (Covenant Not to Compete) are to be submitted for
resolution to the American Arbitration Association (the “Association”) in
accordance with the Association’s National Rules for the Resolution of
Employment Disputes or other applicable rules then in effect (“Rules”) at
a location selected by Penns Woods. 
Penns Woods and Bank or Executive may initiate an arbitration proceeding
at any time by giving notice to the other in accordance with the Rules.  Penns Woods and Bank and Executive, may, as a
matter of right, mutually agree on the appointment of a particular arbitrator
from the Association’s pool.  The
arbitrator shall not be bound by the rules of evidence and procedure of
the courts of the Commonwealth of Pennsylvania but shall be bound by the
substantive law applicable to this Agreement. 
The decision of the arbitrator, absent fraud, duress, incompetence or
gross and obvious error of fact, shall be final and binding upon the parties
and shall be enforceable in courts of proper jurisdiction.  Following written notice of a request for
arbitration, Penns Woods, Bank and Executive shall be entitled to an injunction
restraining all further proceedings in any pending or subsequently filed
litigation concerning this Agreement, except as otherwise provided herein.

 

17.           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.

 

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

 

10

 

19.           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.

 

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

 

PENNS WOODS BANCORP, INC.

 

	
   

  	
  By

  	
  /s/

  	
  Theodore
  Reich

  	
  (SEAL)

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
  /s/
  

  	
  Ronald
  Walko

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Penns
  Woods”

  	
   

  
								

 

JERSEY SHORE STATE BANK

 

	
   

  	
  By

  	
  /s/
     Theodore Reich

  	
  (SEAL)

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
  /s/

  	
  Ronald
  Walko

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Bank”

  	
   

  	
   

  
									

 

Witness:

 

	
  /s/    Carolyn
  Wolfanger

  	
   

  	
  /s/  
  William H. Rockey

  	
  (SEAL)

  
	
   

  	
   

  	
  William H. Rockey

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  “Executive”

  
							

 

11

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