Document:

EXHIBIT 10.3, FORM OF PERFORMANCE SHARES GRANT NOTICE

    Exhibit
      10.3

     

    iPass
      Inc. 

    Performance
      Shares Grant Notice

    (2003
      Equity Incentive Plan)

     

    iPass
      Inc. (the “Company”),
      pursuant to Section 7(b) of the Company’s 2003 Equity Incentive Plan (the
“Plan”),
      hereby grants to Participant the number of shares of phantom stock (the
“Performance
      Shares”)
      set
      forth below (the “Award”).
      This
      Award shall be evidenced by a Performance Shares Award Agreement (the
“Award
      Agreement”).
      This
      Award is subject to all of the terms and conditions as set forth herein and
      in
      the applicable Award Agreement and the Plan, each of which are attached hereto
      and incorporated herein in their entirety. 

     

    Participant:  

    Date
      of
      Grant:  

    Number
      of
      Performance Shares:  

    Payment
      for Common Stock:  

     

    Vesting
      Schedule:
[Initially,
      the Performance Shares shall be unearned and unvested. The Performance Shares
      shall be earned upon [vesting performance metrics for the particular grant
      to be
      inserted here]; provided,
      however,
      that
      the Participant’s Continuous Service has not terminated prior to each such
      vesting date. If the Performance Shares vest on a day that does not occur during
      a “window period,” vesting may be delayed as provided in Section 2 of the Award
      Agreement. The foregoing notwithstanding, if within eighteen (18) months
      following the closing of a “Corporate Transaction,” (i) the Participant’s
      employment by the Company, or an affiliate of the Company, is terminated by
      the
      Company without “Cause” or (ii) if the Participant resigns his or her employment
      for “Good Reason”, then all of the Participant’s then outstanding unvested
      Performance Shares shall vest in full upon the date of such termination.
      ]

     

    Delivery
      Schedule:
      Delivery of one share of Common Stock for each Performance Share which vests
      shall be made on the applicable vesting date. 

     

    Additional
      Terms/Acknowledgements:
      Participant acknowledges receipt of, and understands and agrees to, this Grant
      Notice, the Award Agreement, and the Plan. Participant further acknowledges
      that
      as of the Date of Grant, this Grant Notice, the Award Agreement and the Plan
      set
      forth the entire understanding between Participant and the Company regarding
      the
      award of the Performance Shares and the underlying Common Stock and supersede
      all prior oral and written agreements on that subject with the exception of
      Awards previously granted and delivered to Participant under the
      Plan.

    
       

      
        	 iPass
                Inc.	 	 	 Participant
	
                 

                 

                By:

              	 	 	
                 

                 

                By:

              
	
                
                  
Signature

              	 	 	
                
                  
Signature

              
	
                 

                
Title:

                
Date:

              	 	 	
                 

                
Date:

              

      

       

    

    Attachments:
       Award
      Agreement, and 2003 Equity Incentive Plan

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Definitions:

    

    For
      the
      purposes of the Performance Shares: 

     

    “Cause”
      shall mean the occurrence of any of the following (and only the following):
      (i)
      conviction of the terminated Participant of any felony involving fraud or act
      of
      dishonesty against the Company or its parent corporation or subsidiary
      corporation (whether now or hereafter existing, as those terms are defined
      in
      Sections 424(e) and (f), respectively, of the Internal Revenue Code
      (“Affiliates”)); (ii) conduct by the terminated Participant which, based upon
      good faith and reasonable factual investigation and determination of the Board
      of Directors of the Company, demonstrates gross unfitness to serve; or (iii)
      intentional, material violation by the terminated Participant of any statutory
      or fiduciary duty of the terminated Participant to the Company or its
      Affiliates; 

    

    “Corporate
      Transaction” shall mean (i) the sale of all or substantially all of the assets
      of the Company or (ii) a merger of the Company with or into another entity
      in
      which the stockholders of the Company immediately prior to the closing of the
      transaction own less than a majority of the ownership interest of the Company
      immediately following such closing. For purposes of determining whether the
      stockholders of the Company prior to the occurrence of a transaction described
      above own less than fifty percent (50%) of the voting securities of the relevant
      entity afterwards, only the lesser of the voting power held by a person either
      before or after the transaction shall be counted in determining that person’s
      ownership afterwards; and 

     

    “Good
      Reason” shall mean resignation by the Participant of his or her employment
      because (i) the Company requires that such Participant relocate to a worksite
      that is more than 60 miles from its current principal executive office, unless
      such Participant agrees in writing to such relocation; or (ii) the Company
      reduces the Participant’s monthly salary below the gross rate of the
      then-existing rate at the time of the closing of the Corporate Transaction,
      unless the Participant agrees in writing to such reduction. 

    

    

    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    iPass
      Inc. 

    2003
      Equity Incentive Plan

    Performance
      Shares Award Agreement

    

    

    Pursuant
      to the Performance Shares Grant Notice (“Grant
      Notice”),
      this
      Performance Shares Award Agreement (“Agreement”),
      and
      Section 7(b) of the Company’s 2003 Equity Incentive Plan (the “Plan”),
      iPass
      Inc. (the “Company”)
      has
      awarded you the number of shares of phantom stock (the “Performance
      Shares”)
      indicated in the Grant Notice (collectively, the “Award”).
      Defined terms not explicitly defined in this Agreement but defined in the Plan
      shall have the same definitions as in the Plan. Subject to adjustment and the
      terms and conditions as provided herein and in the Plan, each Performance Share
      shall represent the right to receive one (1) share of Common Stock.

     

    The
      details of your Award, in addition to those set forth in the Grant Notice,
      are
      as follows.

     

    1.  Number
      of Performance Shares and Shares of Common Stock.
      The
      number of Performance Shares in your Award is set forth in the Grant
      Notice.

     

    (a)  The
      number of Performance Shares subject to your Award and the number of shares
      of
      Common Stock deliverable with respect to such Performance Shares may be adjusted
      from time to time for capitalization adjustments as described in Section 11(a)
      of the Plan. You shall receive no benefit or adjustment to your Award with
      respect to any cash dividend or other distribution that does not result in
      a
      capitalization adjustment pursuant to Section 11(a) of the Plan; provided,
      however,
      that
      this sentence shall not apply with respect to any shares of Common Stock that
      are delivered to you in connection with your Award after such shares have been
      delivered to you.

     

    (b)  Any
      additional Performance Shares, shares of Common Stock, cash or other property
      that becomes subject to the Award pursuant to this Section 1 shall be subject,
      in a manner determined by the Board, to the same forfeiture restrictions,
      restrictions on transferability, and time and manner of delivery as applicable
      to the other Performance Shares and Common Stock covered by your
      Award.

     

    (c)  Notwithstanding
      the provisions of this Section 1, no fractional Performance Shares or rights
      for
      fractional shares of Common Stock shall be created pursuant to this Section
      1.
      The Board shall, in its discretion, determine an equivalent benefit for any
      fractional Performance Shares or fractional shares that might be created by
      the
      adjustments referred to in this Section 1.

     

    2.  Vesting.
      

     

    (a)  The
      Performance Shares shall vest, if at all, as provided in the Vesting Schedule
      set forth in your Grant Notice, provided that vesting shall cease upon the
      termination of your Continuous Service. Notwithstanding the foregoing, in the
      event that you are subject to the Company’s Stock
      Trading By Officers, Directors, and Access Employees
      policy
      (or any successor policy) and any shares covered by your Award vest on a day
      (the “Original
      Vest Date”)
      that
      does not occur during a “window period” applicable to you as determined by the
      Company in accordance with such policy, then such shares shall not vest on
      such
      Original Vest Date and shall instead vest on the earliest to occur of the
      following: (i) the first day of the next “window period” applicable to you
      pursuant to such policy; (ii) your Involuntary Termination Without Cause (as
      defined in Section 2(b) below) after the Original Vest Date; or (iii) the day
      that is sixty (60) days after the Original Vest Date. 

     

    (b)  For
      purposes of this Agreement, “Involuntary
      Termination Without Cause”
shall
      mean the Company’s termination of your Continuous Service unless such
      termination was on account of the occurrence of any of the following: (i) your
      commission of any felony or any crime involving fraud, dishonesty or moral
      turpitude; (ii) your attempted commission of, or participation in, a fraud
      or
      act of dishonesty against the Company or an Affiliate; (iii) your intentional,
      material violation of any material contract or agreement between you and the
      Company or an Affiliate or any statutory duty owed to the Company or an
      Affiliate; (iv) your unauthorized use or disclosure of confidential information
      or trade secrets of the Company or an Affiliate; or (v) your gross misconduct.
      The determination that your Continuous Service was terminated due to an
      Involuntary Termination Without Cause shall be made by the Company in its sole
      discretion. Any such determination by the Company for the purposes of this
      Agreement shall have no effect upon any determination of the rights or
      obligations of you or the Company for any other purpose. 

     

    3.  Discretion
      of Board.
      In
      making its determination whether the Company has achieved any performance
      criteria set forth in the Vesting Schedule of your Grant Notice, the Board
      shall
      have the discretion to: (i) exclude exchange rate effects, as applicable, for
      non-U.S. dollar denominated revenues; (ii) exclude the effects of changes to
      generally accepted accounting standards required by the Financial Accounting
      Standards Board; (iii) exclude any unusual or extraordinary corporate items,
      transactions, events or developments; (iv) exclude the effects of changes in
      applicable laws, regulations, accounting principles, or business conditions;
      (v)
      exclude the dilutive effects of acquisitions or joint ventures; (vi) assume
      that
      any business divested by the Company achieved performance objectives at targeted
      levels during the balance of the period following such divestiture; (vii)
      exclude the effects of a corporate transaction, such as a merger, consolidation,
      separation (including a spinoff or other distribution of stock or property
      by a
      corporation), or reorganization (whether or not such reorganization comes within
      the definition of such term in Section 368 of the Code); and (viii) make
      adjustments to reflect any partial or complete liquidation of the Company.
      

     

    4.  Distribution
      of Shares of Common Stock.
      Subject
      to the provisions of this Agreement and the Plan, in the event one or more
      Performance Shares vests, the Company shall deliver to you one (1) share of
      Common Stock for each Performance Share that vests. The delivery to you of
      the
      appropriate number of shares of Common Stock shall be made on the applicable
      vesting date. The form of such delivery (e.g.,
      a stock
      certificate or electronic entry evidencing such shares) shall be determined
      by
      the Company. 

     

    5.  Payment
      by You.
      This
      Award was granted in consideration of your services to the Company. Subject
      to
      Section 11 below, except as otherwise provided in the Grant Notice, you shall
      not be required to make any payment to the Company (other than your past and
      future services with the Company) with respect to your receipt of the Award,
      vesting of the Performance Shares, or the delivery of the shares of Common
      Stock
      underlying the Performance Shares. 

     

    6.  Securities
      Law Compliance.
      You may
      not be issued any Common Stock under your Award unless the shares of Common
      Stock are either (i) then registered under the Securities Act, or (ii) the
      Company has determined that such issuance would be exempt from the registration
      requirements of the Securities Act. Your Award must also comply with other
      applicable laws and regulations governing the Award, and you shall not receive
      such Common Stock if the Company determines that such receipt would not be
      in
      material compliance with such laws and regulations.

     

    7.  Restrictive
      Legends.
      The
      Common Stock issued under your Award shall be endorsed with appropriate legends,
      if any, determined by the Company.

     

    8.  Transfer
      Restrictions.
      Prior to
      the time that shares of Common Stock have been delivered to you, you may not
      transfer, pledge, sell or otherwise dispose of the shares in respect of your
      Award. For example, you may not use shares that may be issued in respect of
      your
      Performance Shares as security for a loan, nor may you transfer, pledge, sell
      or
      otherwise dispose of such shares. This restriction on transfer will lapse upon
      delivery to you of shares in respect of your Performance Shares. Your Award
      is
      not transferable, except by will or by the laws of descent and distribution.
      Notwithstanding the foregoing, by delivering written notice to the Company,
      in a
      form satisfactory to the Company, you may designate a third party who, in the
      event of your death, shall thereafter be entitled to receive any distribution
      of
      Common Stock pursuant to this Agreement.

     

    9.  Award
      not a Service Contract.
      Your
      Award is not an employment or service contract, and nothing in your Award shall
      be deemed to create in any way whatsoever any obligation on your part to
      continue in the service of the Company or any Affiliate, or on the part of
      the
      Company or any Affiliate to continue such service. In addition, nothing in
      your
      Award shall obligate the Company or any Affiliate, their respective
      stockholders, boards of directors or employees to continue any relationship
      that
      you might have as an Employee or Consultant of the Company or any
      Affiliate.

     

    10.  Unsecured
      Obligation.
      Your
      Award is unfunded, and even as to any Performance Shares which vest, you shall
      be considered an unsecured creditor of the Company with respect to the Company’s
      obligation, if any, to issue Common Stock pursuant to this Agreement. You shall
      not have voting or any other rights as a stockholder of the Company with respect
      to the Common Stock acquired pursuant to this Agreement until such Common Stock
      is issued to you pursuant to Section 4 of this Agreement. Upon such issuance,
      you will obtain full voting and other rights as a stockholder of the Company
      with respect to the Common Stock so issued. Nothing contained in this Agreement,
      and no action taken pursuant to its provisions, shall create or be construed
      to
      create a trust of any kind or a fiduciary relationship between you and the
      Company or any other person. 

     

    11.  Withholding
      Obligations.

     

    (a)  On
      or
      before the time you receive a distribution of Common Stock pursuant to your
      Award, or at any time thereafter as requested by the Company, you hereby
      authorize any required withholding from the Common Stock issuable to you and
      otherwise agree to make adequate provision for any sums required to satisfy
      the
      federal, state, local and foreign tax withholding obligations of the Company
      or
      any Affiliate which arise in connection with your Award. 

     

    (b)  Unless
      the tax withholding obligations of the Company and/or any Affiliate are
      satisfied, the Company shall have no obligation to deliver to you any Common
      Stock. 

     

    (c)  In
      the
      event the Company’s obligation to withhold arises prior to the delivery to you
      of Common Stock or it is determined after the delivery of Common Stock to you
      that the amount of the Company’s withholding obligation was greater than the
      amount withheld by the Company, you agree to indemnify and hold the Company
      harmless from any failure by the Company to withhold the proper
      amount.

     

    12.  Notices.
      Any
      notices provided for in your Award or the Plan shall be given in writing and
      shall be deemed effectively given upon receipt or, in the case of notices
      delivered by the Company to you, five (5) days after deposit in the United
      States mail, postage prepaid, addressed to you at the last address you provided
      to the Company. 

     

    13.  Headings.
      The
      headings of the Sections in this Agreement are inserted for convenience only
      and
      shall not be deemed to constitute a part of this Agreement or to affect the
      meaning of this Agreement.

     

    14.  Amendment.
      This
      Agreement may be amended only by a writing executed by the Company and you
      which
      specifically states that it is amending this Agreement. Notwithstanding the
      foregoing, this Agreement may be amended solely by the Company by a writing
      which specifically states that it is amending this Agreement, so long as a
      copy
      of such amendment is delivered to you, and provided that no such amendment
      adversely affecting your rights hereunder may be made without your written
      consent. Without limiting the foregoing, the Company reserves the right to
      change, by written notice to you, the provisions of this Agreement in any way
      it
      may deem necessary or advisable to carry out the purpose of the grant as a
      result of any change in applicable laws or regulations or any future law,
      regulation, ruling, or judicial decision, provided that any such change shall
      be
      applicable only to rights relating to that portion of the Award which is then
      subject to restrictions as provided herein.

     

    15.  Miscellaneous.

     

    (a)  The
      rights and obligations of the Company under your Award shall be transferable
      by
      the Company to any one or more persons or entities, and all covenants and
      agreements hereunder shall inure to the benefit of, and be enforceable by the
      Company’s successors and assigns. 

     

    (b)  You
      agree
      upon request to execute any further documents or instruments necessary or
      desirable in the sole determination of the Company to carry out the purposes
      or
      intent of your Award.

     

    (c)  You
      acknowledge and agree that you have reviewed your Award in its entirety, have
      had an opportunity to obtain the advice of counsel prior to executing and
      accepting your Award and fully understand all provisions of your
      Award.

     

    (d)  This
      Agreement shall be subject to all applicable laws, rules, and regulations,
      and
      to such approvals by any governmental agencies or national securities exchanges
      as may be required.

     

    (e)  All
      obligations of the Company under the Plan and this Agreement shall be binding
      on
      any successor to the Company, whether the existence of such successor is the
      result of a direct or indirect purchase, merger, consolidation, or otherwise,
      of
      all or substantially all of the business and/or assets of the
      Company.

     

    16.  Governing
      Plan Document.
      Your
      Award is subject to all the provisions of the Plan, the provisions of which
      are
      hereby made a part of your Award, and is further subject to all interpretations,
      amendments, rules and regulations which may from time to time be promulgated
      and
      adopted pursuant to the Plan. In the event of any conflict between the
      provisions of your Award and those of the Plan, the provisions of the Plan
      shall
      control; provided,
      however,
      that
      Section 4 of this Agreement shall govern the timing of any distribution of
      Common Stock under your Award. The Company shall have the power to interpret
      the
      Plan and this Agreement and to adopt such rules for the administration,
      interpretation, and application of the Plan as are consistent therewith and
      to
      interpret or revoke any such rules. All actions taken and all interpretations
      and determinations made by the Board shall be final and binding upon you, the
      Company, and all other interested persons. No member of the Board shall be
      personally liable for any action, determination, or interpretation made in
      good
      faith with respect to the Plan or this Agreement.

     

    17.  Effect
      on Other Employee Benefit Plans.
      The
      value of the Award subject to this Agreement shall not be included as
      compensation, earnings, salaries, or other similar terms used when calculating
      benefits under any employee benefit plan (other than the Plan) sponsored by
      the
      Company or any Affiliate except as such plan otherwise expressly provides.
      The
      Company expressly reserves its rights to amend, modify, or terminate any or
      all
      of the employee benefit plans of the Company or any Affiliate.

     

    18.  Choice
      of Law.
      The
      interpretation, performance and enforcement of this Agreement shall be governed
      by the law of the state of California without
      regard to that state’s conflicts of laws rules.

     

    19.  Severability.
      If all
      or any part of this Agreement or the Plan is declared by any court or
      governmental authority to be unlawful or invalid, such unlawfulness or
      invalidity shall not invalidate any portion of this Agreement or the Plan not
      declared to be unlawful or invalid. Any Section of this Agreement (or part
      of
      such a Section) so declared to be unlawful or invalid shall, if possible, be
      construed in a manner which will give effect to the terms of such Section or
      part of a Section to the fullest extent possible while remaining lawful and
      valid.

     

    *
      * * *
      *

     

    This
      Performance Shares Award Agreement shall be deemed to be signed by the Company
      and the Participant upon the signing by the Participant of the Performance
      Shares Grant Notice to which it is attached.Termination Agreement Lawrenson

Exhibit 10.11

    TERMINATION
      AGREEMENT

    

     

    THIS
      AGREEMENT
      ("Agreement") made as of this 1st day of January 2007, by and between
PEOPLES
      FINANCIAL SERVICES CORP.,
      a
      Pennsylvania corporation ("Peoples") and STEPHEN
      N. LAWRENSON
      (the
“Executive”).

    

    WITNESSETH:

    

    WHEREAS,
      Peoples
      is engaged in the business of a bank holding company and is the owner of all
      the
      issued and outstanding capital stock of Peoples National Bank (the "Bank");
      and

    

    WHEREAS,
      the
      Executive is presently serving as Vice President of the Bank; and

    

    WHEREAS,
      Peoples
      considers the continued services of the Executive to be in the best interests
      of
      Peoples and its shareholders and desires to induce the Executive to remain
      in
      the employ of the Bank on an impartial and objective basis in the event of
      a
      change in control of Peoples.

    

    AGREEMENT

    

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

    

    1. Term
      of Agreement.

    

    (a) The
      term
      of this Agreement shall:

    

    (i) initially
      be a term commencing as of January 1, 2007, and ending on December 31, 2008;
      and

    

    (ii) be
      automatically extended to provide for a two (2) year term, annually, on January
      1, 2008, and again on January 1 of each year thereafter, effective as of such
      respective dates, unless either Peoples or the Executive shall have given
      written notice of nonextension of the term of this Agreement to the other at
      least ninety (90) days before the date of any such extension.

    

    (b) Notwithstanding
      the provisions of Section 1(a) of this Agreement, this Agreement shall terminate
      automatically upon termination by Peoples of the Executive's employment for
      Cause. As used in this Agreement, "Cause" shall mean the following:

    

    (i) the
      Executive is convicted of or enters a plea of guilty or nolo contendere to
      a
      felony, a crime of falsehood, or a crime involving fraud or moral turpitude,
      or
      the actual incarceration of the Executive for a period of forty-five (45)
      consecutive days;

    

    (ii) the
      Executive willfully fails to follow the lawful, good faith instructions of
      the
      Board of Directors of Peoples after the Executive's receipt of written notice
      of
      such instructions, other than a failure resulting from the Executive's
      incapacity because of physical or mental illness; or

    

    (iii) any
      government regulatory agency orders that Peoples terminate the employment of
      the
      Executive or relieve him of his duties.

    

    Notwithstanding
      the foregoing, the Executive's employment under this Agreement shall not be
      deemed to have been terminated for "Cause" under Clause (i) or (ii) above if
      such termination took place solely as a result of:

    

    (i) questionable
      judgment on the part of the Executive;

    

    (ii) any
      act
      or omission believed by the Executive, in good faith, to have been in, or not
      opposed to, the best interests of Peoples or its affiliated companies;
      or

    

    (iii) any
      act
      or omission in respect of which a determination could properly be made that
      the
      Executive met the applicable standard of conduct prescribed for indemnification
      or reimbursement or payment of expenses under the Charter or Bylaws of Peoples
      (or its affiliates) or the directors' and officers' liability insurance of
      Peoples (or its affiliates), in each case as in effect at the time of such
      act
      or omission.

    

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

    

    (c) Notwithstanding
      the provisions of Section 1(a) of this Agreement, this Agreement shall terminate
      automatically upon termination of the Executive's employment as a result of
      the
      Executive's voluntary termination (other than in accordance with Section 2
      of
      this Agreement), retirement at the Executive's election, or death, and the
      Executive's rights under this Agreement shall cease as of the date of such
      voluntary termination, retirement at the Executive's election, or death;
      provided, however, that if the Executive dies after a Notice of Termination
      (as
      defined in Section 2(a) of this Agreement) is delivered by the Executive, the
      provisions of Section 11(b) of this Agreement shall apply.

    

    (d) Notwithstanding
      the provisions of Section 1(a) of this Agreement, this Agreement shall terminate
      automatically upon termination of the Executive's employment as a result of
      the
      Executive's disability and the Executive's rights under this Agreement shall
      cease as of the date of such termination. For purposes of this Agreement,
      "disability" shall mean the Executive's incapacitation by accident, sickness,
      or
      otherwise that renders the Executive mentally or physically incapable of
      performing the services therefore required of the Executive for a continuous
      period of six (6) months.

    

    2. Termination
      Following Change in Control.

    

    (a) If
      a
      Change in Control (as defined in Section 2(b) of this Agreement) shall occur
      and
      if thereafter, at any time during the term of this Agreement, the Executive
      shall be involuntarily terminated or there shall be:

    

    (i) any
      reduction in title or a reduction in the Executive's responsibilities or
      authority with respect to Peoples or the Bank, including such responsibilities
      and authority as the same may be increased at any time during the term of this
      Agreement, or the assignment to the Executive of duties inconsistent with the
      Executive's prior status as a Vice President of the Bank;

    

    (ii) any
      reassignment of the Executive which requires the Executive to move his principal
      residence;

    

    (iii) any
      removal of the Executive from office or any adverse change in the terms and
      conditions of the Executive's employment, except for any termination of the
      Executive's employment under the provisions of Section 1(b) hereof;

    

    (iv) any
      reduction in the Executive's annual base salary as in effect on the date hereof
      or as the same may be increased from time to time;

    

    (v) any
      failure of Peoples to provide the Executive with benefits at least as favorable
      as those enjoyed by the Executive under any of the pension, life insurance,
      medical, health, accident, disability or other employee benefit plans of Peoples
      (or any affiliated company) in which the 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, unless
      such
      reduction is part of a reduction applicable to all employees;

    

    (vi) any
      failure to obtain a satisfactory agreement from any successor to assume and
      agree to perform under this Agreement, as contemplated in Section 11(a)
      hereof;

    

    (vii) any
      material change in the legal relationship between Peoples and the Bank;
      or

    

    (viii) any
      material breach of this Agreement on the part of Peoples;

    

    then,
      at
      the option of the Executive, exercisable by the Executive within one hundred
      twenty (120) days of the occurrence of each and every of the foregoing
      enumerated events, the Executive may resign from employment with Peoples (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 Peoples, and the provisions of Section 3 of this Agreement shall
      apply.

    

    (b) As
      used
      in this Agreement, "Change in Control" means a change of control of a nature
      that would be required to be reported in response to Item 6(e) of Schedule
      14A
      of Regulation 14A promulgated under the Securities Exchange Act of 1934, as
      amended (the "Exchange Act"), as enacted and in force on the date hereof,
      whether or not Peoples is then subject to such reporting requirement; provided,
      however, that, without limitation, such a Change in Control shall be deemed
      to
      have occurred if:

    

    (i) any
      "person" (including a group acting in concert, as the term "person" is defined
      in Section 13(d) of the Exchange Act, as enacted and in force on the date
      hereof) becomes the "beneficial owner" (as that term is defined in Rule 13d-3,
      as enacted and in force on the date hereof, under the Exchange Act) of
      securities of Peoples representing more than 19.9% of the combined voting power
      of Peoples' securities then outstanding;

    

    (ii) there
      occurs a merger, consolidation or other business combination or reorganization
      to which Peoples or the Bank is a party, whether or not approved in advance
      by
      the Board of Directors of Peoples or the Bank (as the case may be) in which
      the
      members of the Board of Directors of Peoples or the Bank (as the case may be)
      immediately preceding the consummation of such transaction do not constitute
      a
      majority of the members of the Board of Directors of the resulting corporation
      and of any parent corporation thereof immediately after the consummation of
      such
      transaction;

    

    (iii) there
      occurs a sale, exchange, transfer, or other disposition of substantially all
      of
      the assets of Peoples or the Bank to another entity, which is not approved in
      advance by the Board of Directors of Peoples;

    

    (iv) there
      occurs a contested proxy solicitation of the stockholders of Peoples that
      results in the contesting party obtaining the ability to elect candidates to
      a
      majority of the positions on Peoples' Board of Directors next up for election;
      or

    

    (v) there
      occurs a tender offer for the shares of voting securities of Peoples that
      results in the tender offeror obtaining securities representing more than 19.9%
      of the combined voting power of Peoples' securities then
      outstanding.

    

    3. Rights
      in Event of Certain Termination of Employment After Change in
      Control.
      In the
      event that Executive resigns from employment in accordance with the provisions
      of Section 2(a), or Executive's employment is terminated by Peoples without
      Cause after a Change in Control, Peoples shall pay (or cause to be paid) to
      the
      Executive in cash, within twenty (20) days following termination, an amount
      equal to 2.00 times his "base amount" (within the meaning of Section 280G(b)(3)
      of the Internal Revenue Code of 1986, as amended (the "Code")), calculated
      as
      though the occurrence of the Change in Control were an event described in Code
      Section 280G(b)(2)(A)(1).

    

    Notwithstanding
      the preceding sentence, in the event the lump sum payment described in the
      preceding sentence, when added to all other amounts or benefits provided to
      or
      on behalf of the Executive in connection with his termination of employment,
      would result in the imposition of an excise tax under Code Section 4999, such
      lump sum shall be reduced to the extent necessary to avoid such
      imposition.

    

    4. Legal
      Expenses.
      Peoples
      shall pay to the Executive all legal fees and expenses incurred by the Executive
      in seeking in good faith to obtain or enforce any right or benefit provided
      by
      the Agreement, provided that any action or proceeding is not summarily decided
      against the Executive.

    

    5. Arbitration.
      Peoples
      and the 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 are to be submitted for resolution to the American Arbitration
      Association (the "Association") in Scranton, Pennsylvania. Peoples, or the
      Executive, may initiate an arbitration proceeding at any time by giving notice
      to the other in accordance with the rules of the Association. The Association
      shall designate a single arbitrator to conduct the proceeding, but Peoples,
      and
      the Executive, may, as a matter of right, require the substitution of a
      different arbitrator chosen by the Association. Each such right of substitution
      may be exercised only once. 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, Peoples, and the Executive, shall be entitled to an injunction
      restraining all further proceedings in any pending or subsequently filed
      litigation concerning this Agreement. Notwithstanding the preceding provisions
      of this section, in the event any such provision is in conflict with a rule
      or
      policy of the Association, the arbitration proceeding shall be governed by
      such
      rule or policy.

    

    6. Mitigation
      of Damages.
      The
      Executive shall not be required to mitigate the amount of any payment provided
      for in Section 3 by seeking other employment or otherwise, nor shall the amount
      of any payment or benefit provided for in Section 3 be reduced by any
      compensation earned by the Executive as the result of employment by another
      employer or by reason of the Executive's receipt of or right to receive any
      retirement or other benefits after the date of termination of employment or
      otherwise; provided, however, that the payments provided for in Section 3 shall
      be reduced by the amount actually received by the Executive under any severance
      policy of Peoples then in effect.

    

    7. Notices.
      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 the residence of the
      Executive, in the case of notices to the Executive, and to the principal office
      of Peoples, in the case of notices to Peoples.

    

    8. 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 the
      Executive and an executive officer of Peoples specifically designated by the
      Board of Directors of Peoples. 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.

    

    9. Assignment.
      This
      Agreement shall not be assignable by either party, except by Peoples to any
      successor in interest to the business of Peoples.

    

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

    

    11. Successors;
      Binding Agreement.

    

    (a) Peoples
      will require any successor (whether direct or indirect, by purchase, merger,
      consolidation, or otherwise) to all or substantially all of the business and/or
      assets of Peoples to expressly assume and agree to perform this Agreement in
      the
      same manner and to the same extent that Peoples would be required to perform
      it
      if no such succession had taken place. Failure by Peoples to obtain such
      assumption and agreement prior to the effectiveness of any such succession
      shall
      constitute a breach of this Agreement and the provisions of Section 3 of this
      Agreement shall apply. As used in this Agreement, "Peoples" shall mean Peoples
      as hereinbefore defined and any successor to the respective businesses and/or
      assets of Peoples 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 the Executive's
      personal or legal representatives, executors, administrators, heirs,
      distributees, devisees, and legatees. If the Executive should die after a Notice
      of Termination is delivered by the Executive and any amounts would be payable
      to
      the Executive under this Agreement if the Executive had continued to live,
      all
      such amounts shall be paid in accordance with the terms of this Agreement to
      the
      Executive's devisee, legatee, or other designee, or, if there is none, to the
      Executive's estate.

    

    12. 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.

    

    13. Applicable
      Law.
      This
      Agreement shall be governed by and construed in accordance with the domestic
      laws (but not the law of conflict of laws) of the Commonwealth of
      Pennsylvania.

    

    14. Headings.
      The
      headings of the sections 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.

    

    15. Termination
      of Prior Agreements.
      Upon
      the execution and delivery of this Agreement by the parties hereto, any prior
      agreement relating to the subject matter hereof shall be automatically
      terminated and be of no further force or effect.

    

    16. 409A
      Safe Harbor.
      Notwithstanding anything in this Agreement to the contrary, in no event shall
      Peoples be obligated to commence payment or distribution to the Executive of
      any
      amount that constitutes nonqualified deferred compensation within the meaning
      of
      Internal Revenue Code Section 409A (“CODE SECTION 409A”) earlier that the
      earliest permissible date under Code Section 409A that such amount could be
      paid
      without additional taxes or interest being imposed under Code Section 409A.
      Peoples and the Executive agree that they will execute any and all amendments
      to
      this Agreement as they mutually agree in good faith may be necessary to ensure
      compliance with the distribution provisions of Code Section 409A and to cause
      any and all amounts due under this Agreement, the payment or distribution of
      which is delayed pursuant to Code Section 409A, to be paid or distributed in
      a
      single sum payment at the earliest permissible date under Code Section
      409A.

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

    

    PEOPLES
      FINANCIAL SERVICES CORP.

    

    

    By:
            

    President

    (SEAL)

    

    Attest:
           

    (Assistant)
      Secretary 

     

    

    Witness:      EXECUTIVE

     

    Stephen
      N. Lawrenson

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