Document:

AGO-03.31.2015-10Q Ex. 10.4

Exhibit 10.4

Restricted Stock Agreement for 
Outside Directors under 
Assured Guaranty Ltd. 2004 Long-Term Incentive Plan
THIS AGREEMENT, entered into as of the Grant Date (as defined in paragraph 1), by and between the Director and Assured Guaranty Ltd. (the "Company"):
WITNESSETH THAT:
WHEREAS, the Company maintains the Assured Guaranty Ltd. 2004 Long-Term Incentive Plan, as amended and restated as of May 7, 2009, and as further amended thereafter from time to time (the "Plan"), and the Director has been selected by the committee administering the Plan (the "Committee") to receive a Restricted Stock Award under the Plan; and
NOW, THEREFORE, IT IS AGREED, by and between the Company and the Director, as follows:
1. Terms of Award.  The following words and phrases used in this Agreement shall have the meanings set forth in this paragraph 1:
		
	(a)
	The "Director" is _______________.

		
	(b)
	The "Grant Date" is May 6, 2015.

		
	(c)
	The number of "Covered Shares" shall be __________ shares of Stock.

Other words and phrases used in this Agreement are defined pursuant to paragraph 15 or elsewhere in this Agreement.
2.    Restricted Stock Award.  This Agreement specifies the terms of the "Restricted Stock Award" granted to the Director.
3.    Restricted Period.  Subject to the limitations of this Agreement, the "Restricted Period" for the Covered Shares of the Restricted Stock Award shall begin on the Grant Date and end on the day immediately prior to the next annual shareholders meeting during which elections for directors are held following the Grant Date.
The Restricted Period shall end prior to the date specified above to the extent set forth below:
(a)    The Restricted Period shall end on the date the Director ceases to be a director of the Company (and is not otherwise employed by the Company or its Subsidiaries), if the Director ceases to be a director by reason of his Disability or death.  The Director shall be considered to have a "Disability" if the Nominating and Governance Committee of the Board of Directors determines that he is unable to serve as a Director as a result of a medically determinable physical or mental impairment. 

	
			
	 
	 
	 

AMECURRENT 715404560.3 16-Apr-15 13:00

(b)    The Restricted Period shall end upon a Change in Control (as defined in the Plan), provided that such Change in Control occurs on or before the date the Director ceases to be a director of the Company.   
4.    Transfer and Forfeiture of Shares.  If the Restricted Period with respect to the Covered Shares ends on or before the date the Director ceases to be a director of the Company, then at the end of such Restricted Period, the Covered Shares shall be transferred to the Director free of all restrictions.  If the Restricted Period with respect to the Covered Shares does not end on or before the date the Director ceases to be a director of the Company, then as of the date the Director ceases to be a director of the Company, the Director shall forfeit all Covered Shares.
5.    Transferability.  Except as otherwise provided by the Committee, the Restricted Stock Award may not be sold, assigned, transferred, pledged or otherwise encumbered during the Restricted Period.
6.    Dividends.  The Director shall be entitled to receive any dividends paid with respect to the Covered Shares that become payable during the Restricted Period.  Any dividends shall be payable to the Director in cash.  The Director shall not be prevented from receiving dividends and distributions paid on the Covered Shares of Restricted Stock merely because those shares are subject to the restrictions imposed by this Agreement and the Plan; provided, however that no dividends or distributions shall be payable to or for the benefit of the Director with respect to record dates for such dividends or distributions for any Covered Shares occurring on or after the date, if any, on which the Director has forfeited those shares.
7.    Voting.  The Director shall be entitled to vote the Covered Shares during the Restricted Period to the same extent as would have been applicable to the Director if the Director was then vested in the shares; provided, however, that the Director shall not be entitled to vote Covered Shares with respect to record dates for any Covered Shares occurring on or after the date, if any, on which the Director has forfeited those shares.
8.    Registration of Restricted Stock Award.  Each certificate issued in respect of the Covered Shares awarded under this Agreement shall be registered in the name of the Director.
9.    Heirs and Successors.  This Agreement shall be binding upon, and inure to the benefit of, the Company and its successors and assigns, and upon any person acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the Company's assets and business.  If any benefits deliverable to the Director under this Agreement have not been delivered at the time of the Director's death, such benefits shall be delivered to the Designated Beneficiary, in accordance with the provisions of this Agreement and the Plan.  The "Designated Beneficiary" shall be the beneficiary or beneficiaries designated by the Director in a writing filed with the Committee in such form and at such time as the Committee shall require.  If a deceased Director fails to designate a beneficiary, or if the Designated Beneficiary does not survive the Director, any rights that would have been exercisable by the Director and any benefits distributable to the Director shall be distributed to the legal representative of the estate of the Director.  If a deceased Director designates a beneficiary and the Designated Beneficiary survives the Director but dies before the complete distribution of benefits to the Designated 

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Beneficiary under this Agreement, then any benefits distributable to the Designated Beneficiary shall be distributed to the legal representative of the estate of the Designated Beneficiary.
10.    Administration.  The authority to manage and control the operation and administration of this Agreement shall be vested in the Committee, and the Committee shall have all powers with respect to this Agreement as it has with respect to the Plan.  Any interpretation of this Agreement by the Committee and any decision made by it with respect to this Agreement is final and binding on all persons.
11.    Plan Governs.  Notwithstanding anything in this Agreement to the contrary, this Agreement shall be subject to the terms of the Plan, a copy of which may be obtained by the Director from the office of the Secretary of the Company; and this Agreement is subject to all interpretations, amendments, rules and regulations promulgated by the Committee from time to time pursuant to the Plan.
12.    Notices.  Any written notices provided for in this Agreement or the Plan shall be in writing and shall be deemed sufficiently given if either hand delivered or if sent by fax or overnight courier, or by postage paid first class mail.  Notices sent by mail shall be deemed received three business days after mailing but in no event later than the date of actual receipt.  Notices shall be directed, if to the Director, at the Director's address indicated by the Company's records, or if to the Company, at the Company's principal executive office.
13.    Fractional Shares.  In lieu of issuing a fraction of a share, resulting from an adjustment of the Restricted Stock Award pursuant to the Plan or otherwise, the Company will be entitled to pay to the Director an amount equal to the fair market value of such fractional share.
14.    Amendment.  This Agreement may be amended in accordance with the provisions of the Plan, and may otherwise be amended by written agreement of the Director and the Company without the consent of any other person.
15.    Plan Definitions.  Except where the context clearly implies or indicates the contrary, a word, term, or phrase used in the Plan is similarly used in this Agreement.

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IN WITNESS WHEREOF, the Director has executed the Agreement, and the Company has caused these presents to be executed in its name and on its behalf, all as of the Grant Date.

	
		
	Assured Guaranty Ltd.

	 

	By:
	James Michener

	Its:
	General Counsel

	
		
	Director:
	 

	 
	 

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AMECURRENT 715404560.3 16-Apr-15 13:00EX-10.1

 Exhibit 10.1 

EMPLOYMENT AGREEMENT 

THIS EMPLOYMENT AGREEMENT (the “Agreement”), dated as of February 4, 2015, is made and entered into by and
between Peoples Security Bank and Trust Company, a Pennsylvania state chartered bank (the “Bank”) and Bradley S. Grubb (the “Executive”). 

ARTICLE I 
 RECITALS

 WHEREAS, the Bank desires to employ the Executive pursuant to the terms and conditions set forth in this Agreement; and 

WHEREAS, the Executive desires to be so employed by the Bank. 

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

ARTICLE II 
 DEFINITIONS

 Section 2.1. “Accrued Obligations” means, as of the Date of Termination, to the extent not theretofore paid,
the sum of (i) Executive’s Base Salary through the Date of Termination, (ii) the amount of any bonus or other incentive compensation for any completed bonus period and other vested cash compensation earned by Executive as of the Date
of Termination under the terms of any compensation, benefit plans, and deferred compensation plans, policies or arrangements maintained in force by the Company, and (iii) any vacation pay, expense reimbursements and other cash entitlements
accrued by the Executive, in accordance with Company policy as of the Date of Termination. 
 Section 2.2. “Bank
Board” means the board of directors of the Bank. 
 Section 2.3. “Cause” means: (i) conviction of, or the
entry of a plea of guilty or no contest to a felony or any other crime of moral turpitude that causes the Bank or any of its subsidiaries or affiliates public disgrace or disrepute, or adversely affects the Bank’s operations, financial
performance, or relationship with its customers; (ii) fraud, embezzlement or other misappropriation of funds; (iii) habitual insobriety or illegal use of controlled drugs; (iv) material breach of this Agreement, if not cured within
thirty (30) days following Executive’s receipt from the Bank of written notice thereof specifying in reasonable detail the alleged breach; or (v) refusal to perform the lawful and reasonable directives of the Chief Executive Officer
of the Bank or the Bank Board, unless such refusal is cured within thirty (30) days following Executive’s receipt from the Bank of written notice thereof, specifying the directives Executive allegedly refused to perform. 

Section 2.4. “Change in Control” means the occurrence of any one of the following events: (i) any
“person” or “group” (as such terms are used in Sections 13(d) and 

  
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14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than any Company employee stock ownership plan or an equivalent retirement plan, becomes
the beneficial owner (as such term is used in Section 13(d) of the Exchange Act), directly or indirectly, of securities of Parent representing 50% or more of the combined voting power of Parent’s then outstanding voting securities,
(ii) the Parent Board ceases to consist of a majority of Continuing Directors (as defined below), (iii) the consummation of a sale of all or substantially all of the Company’s assets (as measured by the fair value of the assets being
sold compared to the fair value of all of the Company’s assets), or (iv) a merger or other combination occurs such that a majority of the equity securities of the resultant entity after the merger or other combination are not owned by
those who owned a majority of the equity securities of the Parent prior to the merger or other combination. A “Continuing Director” shall mean a member of the Parent Board who either (i) is a member of the Parent Board as of
the date of this Agreement or (ii) is nominated or appointed to serve as a member of the Parent Board by a majority of the then Continuing Directors. 

Section 2.5. “Change in Control Termination” means the termination of Executive’s employment under this Agreement
by the Bank or its successor or assignee without Cause, which occurs within twelve (12) months following a Change in Control. 

Section 2.6. “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended. 

Section 2.7. “Code” means the Internal Revenue Code of 1986, as amended. 

Section 2.8. “Company” means the Parent and its direct and indirect subsidiaries, including, without limitation, the
Bank. 
 Section 2.9. “Date of Termination” has the meaning given to that term in Section 3.6. 

Section 2.10. “Disability” means a condition entitling Executive to benefits under the long term disability plan, policy
or arrangement maintained for employees of the Bank. Termination as a result of a Disability will not be construed as a termination by the Bank “without Cause.” 

Section 2.11. “Parent” means Peoples Financial Services Corp., a Pennsylvania corporation. 

Section 2.12. “Parent Board” means the board of directors of Parent. 

Section 2.13. “Restricted Period” means the period commencing on the Date of Termination and ending either (i) on
date that is 24 months after the Date of Termination, in the event of a Change in Control Termination, or (ii) on date that is 12 months after the Date of Termination, in any other event. 

  
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 ARTICLE III 

EMPLOYMENT AND COMPENSATION 

Section 3.1. Employment Term. 

(a) The Bank shall employ Executive, and Executive hereby accepts employment with the Bank, upon the terms and conditions set forth in
this Agreement, effective February 4, 2015 (the “Effective Date”) and continuing for an initial term of thirty-six (36) months (the “Initial Term”) and thereafter for successive one year periods (each, a
“Renewal Term”), unless sooner terminated in accordance with this Agreement or written notice is given by one party to the other at least thirty (30) days prior to the expiration of the Initial Term or any Renewal Term, as
applicable. The Initial Term and any Renewal Term are herein collectively referred to as the “Term.” 
 (b) If Executive
dies while employed by the Bank, this Agreement and Executive’s employment by the Bank shall automatically terminate on the date of Executive’s death. The Bank may terminate Executive’s employment and all other positions with the
Company upon written notice to Executive at any time (i) due to the Disability of Executive, (ii) for Cause, or (iii) without Cause, for any or no reason. Executive may terminate his employment with the Bank and all other positions
with the Company at any time for any or no reason. Notwithstanding the generality of the preceding sentence, in the event that Executive resigns from his employment, Executive shall give thirty (30) days written notice to the Bank prior to the
proposed effective date of such resignation, and such resignation shall not be effective until the expiration of such notice period, unless such notice is waived by the Bank (in which case such resignation shall be effective as of the date of or
indicated in such waiver). 
 Section 3.2. Positions and Duties. Executive will serve as president (or an officer having
a comparable title) of Peoples Security Wealth Management Division, reporting directly to the Chief Executive Officer (“CEO”) of the Bank, and will have all duties customarily associated with such position, any duties as are set
forth in the Bank’s bylaws for such position and all duties as are delegated to Executive from time to time by the CEO or the Bank Board. Executive shall devote his best efforts and substantially all of his business time and services to the
Company. 
 Section 3.3. Other Activities. Executive may be involved in various leadership and non-leadership capacities
on a volunteer basis for not-for-profit organizations as a representative of the Company. In addition, nothing contained herein shall preclude the Executive from (i) engaging in charitable and community activities; (ii) participating in
industry and trade organization activities; (iii) managing his and his family’s personal investments and affairs; and (iv) delivering lectures, fulfilling speaking engagements or teaching at educational institutions; provided that
such activities do not interfere with the regular performance of his duties and responsibilities under this Agreement and do not violate his obligations under Article IV of this Agreement, and provided further that except as disclosed to the
Bank prior to the date hereof or with consent of the Bank Board, the Executive shall not serve as a paid director of any organization. 

  
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 Section 3.4. Compensation. The Bank shall pay or cause to be paid or provided
to Executive the following compensation and benefits: 
 (a) Base Salary. Effective as of the Effective Date, the Executive will
receive an initial base salary of $275,000 per annum, paid in accordance with the Bank’s payroll practices. The base salary shall be reviewed on an annual basis by the Bank (or, if appropriate, the Compensation and Benefits Committee of the
Parent Board (the “Compensation Committee”)) and may be increased (but not decreased, except in connection with an across-the-board salary reduction applicable to all of the Bank’s management employees) from time to time at the
discretion of the Bank (or, if appropriate, the Compensation Committee). The initial base salary as adjusted from time to time is hereinafter referred to as Executive’s “Base Salary.” 

(b) Annual Bonus. 
 (i)
For each calendar year ending during the Term, beginning with the 2015 calendar year, the Executive will be eligible to earn a cash incentive payment. The target amount of that cash incentive payment for the 2015 and 2016 calendar years will be
thirty percent (30%) of the Executive’s Base Salary at the commencement of the applicable calendar year (the “Target Bonus”). The actual cash incentive payment payable with respect to a particular calendar year (the
“Annual Bonus”) will be determined by the Bank (or, if appropriate, the Compensation Committee) based upon the degree of achievement of corporate and/or individual performance objectives established by the Bank (or, if appropriate,
the Compensation Committee) in its sole discretion. 
 (ii) For purposes of determining any Annual Bonus payable to Executive, the
measurement of corporate and individual performance will be performed by the Bank (or, if appropriate, the Compensation Committee) in good faith. From time to time, the Bank (or, if appropriate, the Compensation Committee) may, in its sole
discretion, make adjustments to corporate or individual performance goals, so that required departures from the Company’s operating budget, changes in accounting principles, acquisitions, dispositions, mergers, consolidations and other
corporate transactions, and other factors influencing the achievement or calculation of such goals do not affect the operation of this Section 3.4(b) in a manner inconsistent with its intended purposes. 

(iii) Any Annual Bonus payable under this Section 3.4(b) will be paid in the year following the applicable calendar year in which
such bonus is attributable within thirty (30) days following the recommendation of the audit committee of the Parent Board to include the audited financial statements for the applicable calendar year in Parent’s annual report on Form 10-K,
provided that the Executive has not been terminated for Cause before such payment date. No Annual Bonus shall be paid to the Executive if he has been terminated for Cause before any such Annual Bonus would otherwise be paid. 

(c) Signing Bonus. The Bank shall pay Executive a one-time signing bonus of $100,000 (the “Signing Bonus”) payable no
later than the 30th day after the Effective Date. 

  
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 (d) Commissions. During the Term, Executive will be eligible to receive commission
compensation of (i) 2% of incremental gross revenue of the Bank’s Wealth Management Division and (ii) 7% of the incremental net profit before tax of the Bank’s Wealth Management Division, in each case measured from
January 1, 2015 and calculated in accordance with Exhibit A attached hereto (together, the “Commissions”). The amount of Commissions payable to Executive will be determined in good faith by the Bank (or, if appropriate,
the Compensation Committee) in its sole discretion, and shall be paid at the time and subject to terms and conditions provided under the Bank’s commission payment policy (or, in the absence of such policy, at the time and subject to terms and
conditions determined by the Bank). 
 (e) 2015 / 2016 Gross Compensation. If Executive’s gross compensation payable pursuant
to Sections 3.4(a), (b) and (d) in each of calendar year 2015 and 2016 is less than $350,000, the Bank shall make a payment to Executive no later than March 15 following the applicable year in an amount equal to $350,000 less
the aggregate amounts paid pursuant to Sections 3.4(a), (b) and (d). 
 (f) Relocation Allowance. The Bank will pay or
reimburse Executive for reasonable tax-qualified moving expenses incurred by Executive in connection with his residential relocation to the Scranton, Pennsylvania area. Payments and reimbursements to Executive for moving expenses under this
Section 3.4(f) shall not exceed $75,000 in aggregate and must be documented to the reasonable satisfaction of the Bank. 
 (g)
General Employee Benefits. The Executive will be eligible to participate in the employee benefit plans, policies or arrangements maintained by the Company for employees of the Bank generally, subject to the terms and conditions of such plans,
policies or arrangements; provided, however, that this Agreement will not limit the Company’s ability to amend, modify or terminate such plans, policies or arrangements at any time for any reason. 

(h) Paid Time Off. In addition to holidays observed by the Bank, Executive shall be entitled to twenty-five (25) working days
paid time off (“PTO”) during each year of employment without reduction in salary or other benefits. PTO days that remain unused at the end of any year will accrue or expire to the extent provided by the Bank’s PTO policy, as in
effect from time to time. 
 (i) Automobile Allowance. The Executive shall receive a monthly automobile allowance in the amount of
$833.33 for the duration of this Agreement, reimbursed in accordance with the Bank’s reimbursement and payroll policies. 
 (j)
Country Club. The Bank will reimburse Executive for the membership costs at a country club acceptable to the Bank, in accordance with Bank policy. 

(k) Reimbursement of Compensation. If Executive resigns his employment with the Bank for any reason on or before the second
anniversary of the Effective Date, within fifteen (15) business days following Date of Termination, Executive will repay to the Bank all amounts paid to Executive pursuant to Sections 3.4(b), (c), (d), (e), (f), (i) and (j). If
Executive resigns his employment with the Bank for any reason after the second anniversary of the Effective Date, but on or before the fifth anniversary of the Effective Date, within fifteen (15)

  
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business days following Date of Termination, Executive will repay to the Bank the Signing Bonus. All amounts paid to Executive pursuant to Sections 3.4(b), (c), (d), (e), (f), (i) and
(j) shall be deemed earned for purposes of this Section 3.4(k) and any applicable wage law when the obligation to repay such amounts lapses. Executive authorizes the Bank to deduct and/or offset the amounts reimbursable pursuant
to this Section 3.4(k) from any compensation or other sums that may be due to Executive at the Date of Termination, and Executive will repay the balance remaining due after such deduction to the Bank. Notwithstanding the foregoing, in
the event that Executive relocates to the Scranton, Pennsylvania area, purchases a residence in the Scranton, Pennsylvania area and resides there for a period of at least three consecutive months, then, from and after the expiration of such
three-month period, Executive shall have no liability for any amounts reimbursable pursuant to this Section 3.4(k), except for any such amounts which have become reimbursable prior to the expiration of such three-month period. 

Section 3.5. Reimbursement of Expenses. Executive will be reimbursed by the Bank for all reasonable business expenses
incurred by him in accordance with the Bank’s customary expense reimbursement policies as in effect from time to time. 

Section 3.6. Severance; Severance Payments. Upon a termination of his employment with the Bank (the effective date of such
termination is herein referred to as the “Date of Termination”), Executive will be entitled only to such compensation, benefits and rights as described in this Section 3.6 and in any other agreement between Executive and
the Bank. 
 (a) Termination without Cause. Except as otherwise provided in this Section 3.6, if Executive’s
employment by the Bank is terminated by the Bank without Cause, Executive will be entitled to: 
 (i) Payment of all Accrued Obligations,
including but not limited to those earned by Executive under Sections 3.4 and 3.5 above; and 
 (ii) Cash severance payments
equal to one-twelfth of Executive’s Base Salary as of the Date of such Termination payable for a period of twelve (12) months from and after the Date of Termination and in accordance with the Bank’s payroll practices. 

(b) Change in Control Termination. In lieu of any compensation and benefits payable under Section 3.6(a), in the event
that Executive’s employment by the Bank ceases due to a Change in Control Termination, Executive will be entitled to: 
 (i) Payment
of all Accrued Obligations, including but not limited to those earned by Executive under Sections 3.4 and 3.5 above; and 

(ii) Cash severance payments equal to one-twelfth of Executive’s Base Salary as of the Date of such Termination payable for a period of
twenty-four (24) months from and after the Date of Termination and in accordance with the Bank’s payroll practices. 
 (c)
Termination Following Expiration of a Term. In the event of a termination by the Bank of Executive’s employment following the expiration of any Initial Term or Renewal Term due to the Bank’s decision not to renew the applicable
Term, the Bank shall pay or provide to Executive the amounts, benefits and rights described in Section 3.6(a). 

  
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 (d) Except as provided in this Section 3.6, all compensation and participation in
all benefit plans, policies and arrangements will cease at the Date of Termination, subject to the terms of any benefit plans, policies and arrangements then in force and applicable to Executive, and the Company shall have no further liability or
obligation by reason of such termination, provided, however, that nothing in this paragraph shall affect or be deemed to affect Executive’s rights to accrued or vested benefits under any benefit plan, policy or arrangement. The payments
and benefits described in this Section 3.6 are in lieu of, and not in addition to, any other severance arrangement maintained for the employees of the Bank generally. 

Notwithstanding any provision of this Agreement, the payments and benefits described in this Section 3.6 are conditioned on: (a) the
Executive’s execution and delivery to the Bank and the expiration of all applicable statutory revocation periods, by the 60th day following the Date of Termination, of a general release of claims against the Company in a form reasonably
prescribed by the Bank (the “Release”); and (b) the Executive’s continued compliance with the provisions of Article IV of this Agreement. Subject to Section 3.6(f), below, the benefits described in this
Section 3.6 will be paid or provided (or begin to be paid or provided as applicable) as soon as administratively practicable after the Release becomes irrevocable, provided that if the 60-day period described above begins in one taxable
year and ends in a second taxable year such payments or benefits shall not commence until the second taxable year. Any payments to be made to Executive and any benefits to be provided to Executive pursuant to this Section 3.6 shall be
paid or provided, as applicable, to Executive’s beneficiaries, heirs or estate in the event of Executive’s death. 
 (e) Other
Terminations. If Executive’s employment with the Bank ceases for any reason other than as described in Sections 3.6(a), 3.6(b) and 3.6(c) above (including but not limited to termination (a) by the Bank for Cause,
(b) as a result of Executive’s death, (c) as a result of Executive’s Disability, or (d) by Executive), then the Bank’s obligation to Executive will be limited solely to the payment of Accrued Obligations. All
compensation and participation in benefits will cease at the time of such termination and, except as otherwise provided by COBRA or the terms of such plans, the Company will have no further liability or obligation by reason of such termination. The
foregoing will not be construed to limit Executive’s right to payment or reimbursement for claims incurred prior to the Date of Termination under any insurance contract funding an employee benefit plan, policy or arrangement of the Company in
accordance with the terms of such insurance contract or Executive’s right to accrued or vested benefits under the terms of any employee benefit plan, policy or arrangement. 

(f) Application of Section 409A of the Code. 

(i) Notwithstanding anything to the contrary in this Agreement, no portion of the benefits or payments to be made under
Section 3.6 hereof will be payable until the Executive has a “separation from service” from the Company within the meaning of Section 409A of the Code. In addition, to the extent compliance with the requirements of Treas.
Reg. § 1.409A-3(i)(2) (or any successor provision) is necessary to avoid 

  
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the application of an additional tax under Section 409A of the Code to payments due to the Executive upon or following his “separation from service,” then notwithstanding any other
provision of this Agreement (or any applicable plan, policy, program, agreement or arrangement), any such payments that are otherwise due within six months following the Executive’s “separation from service” (taking into account the
preceding sentence of this paragraph) will be deferred without interest and paid to the Executive in a lump sum immediately following that six month period. This paragraph should not be construed to prevent the application of Treas. Reg. §
1.409A-1(b)(9)(iii) (or any successor provision) to amounts payable hereunder. For purposes of the application of Section 409A of the Code, each payment in a series of payments will be deemed a separate payment. 

(ii) Any reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of
Section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement shall be for expenses incurred during the period of time specified in this Agreement, (ii) the amount of expenses eligible for
reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, (iii) the reimbursement of an eligible expense will be
made on or before the last day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit. 

(g) Limitation on Payments. If any payment or benefit due under this Agreement, together with all other payments and benefits that
Executive receives or is entitled to receive from the Bank, the Parent or any of their subsidiaries, affiliates or related entities, would (if paid or provided) constitute an Excess Parachute Payment (as defined below), the amounts otherwise payable
and benefits otherwise due under this Agreement or any other arrangement will be limited to the minimum extent necessary to ensure that no portion thereof will fail to be tax-deductible to the Company by reason of Section 280G of the Code or
result in an excise tax payable pursuant to Section 4999 of the Code. The determination of whether any payment or benefit would (if paid or provided) constitute an Excess Parachute Payment will be made by the Parent Board, in its good faith
discretion. If a reduction to Executive’s payments and benefits is required pursuant to this Section 3.6(g), such reduction shall occur to the payments and benefits in the order that results in the greatest economic present value of
all payments actually made to Executive. 
 (h) Adjustments Necessary to Comply with Maximum Payment Limit. If, notwithstanding the
initial application of Section 3.6(g), the Internal Revenue Service determines that any amount paid or benefit provided to Executive would constitute an Excess Parachute Payment, Section 3.6(g) will be reapplied based on the
Internal Revenue Service’s determination and Executive will be required to repay to the Bank any Overpayment (as defined below) immediately upon receipt of written notice of the applicability of this section. 

(i) Recoupment of Certain Incentive-Based Compensation. 

(i) Breach of Restrictive Covenants. If the Executive breaches, in any respect, any of the covenants to be performed by the Executive
pursuant to 

  
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Article IV below (regarding non-competition, non-solicitation, confidentiality, or non-disparagement), whether during the Term or the Restricted Period, then the Executive shall repay or
return to the Bank the entire amount of any incentive-based compensation received by the Executive during the 12 month period preceding such breach. 

(ii) Obligations Not Exclusive. The rights of the Bank and the obligations of the Executive set forth in this
Section 3.6(i) are in addition to any other rights and obligations under applicable laws and regulations, the terms and conditions of any plan and award agreement pursuant to which incentive-based compensation is awarded to the
Executive, and the terms and conditions of any claw back, recoupment or similar policy applicable to the executive officers of the Bank, which the Bank or the Company may adopt and maintain from time to time. 

(j) Definitions. For purposes of this Agreement: 

(i) “Excess Parachute Payment” has the same meaning as used in Section 280G(b)(1) of the Code. 

(ii) “Overpayment” means any amount paid to Executive in excess of the maximum payment limit of Section 3.6(g)
of this Agreement. 
 ARTICLE IV 

RESTRICTIVE COVENANTS AND REMEDIES 

Section 4.1. Confidential Information. In consideration of the employment by the Bank of Executive and the consideration
outlined in Article III of this Agreement, and as an inducement to the Company to continue to entrust Executive with its Trade Secrets (as hereinafter defined), Executive agrees that Executive will not use for himself or disclose to any
person any Trade Secret of the Company obtained by Executive as a result of his employment by the Bank unless authorized in writing by the Bank to do so. For purposes of this Agreement, “Trade Secrets” means any trade secrets and is
deemed to include, but not be limited to, all confidential information, including price lists, patents, designs, inventions, copyrighted materials, product lists, marketing strategies, personnel files, customer lists, and all other information or
material received by Executive in connection with his employment by the Bank which is not otherwise available to the general public; provided, that the term Trade Secrets shall exclude (i) information that is or subsequently becomes publicly
available other than as a result of Executive’s breach of this Agreement; (ii) is acquired from another source not under a duty of confidentiality to the Company and not as a result of a breach of this Agreement; (iii) is
independently developed by Executive without use of the Trade Secrets; (iv) is approved for public release by the Company; or (v) is required to be disclosed by court order, subpoena, in connection with a civil or criminal investigative
demand, the discovery rules of any court or otherwise by law or legal process. Upon cessation of Executive’s service to the Bank for any reason, all written or electronic materials evidencing Trade Secrets, and all copies thereof, in the
possession or control of Executive shall be delivered to the Bank. 
 Section 4.2. Ownership of Inventions and Ideas.
Executive acknowledges that the Bank shall be the sole owner of all the results and proceeds of his service to the Company, 

  
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including but not limited to, all patents, patent applications, patent rights, formulas, copyrights, inventions, developments, discoveries, other improvements, data, documentation, drawings,
charts, and other written, audio and/or visual materials relating to equipment, methods, products, processes or programs in connection with or useful to the business of the Company (collectively, the “Developments”) which Executive,
by himself or in conjunction with any other person, may conceive, make, acquire, acquire knowledge of, develop or create during Executive’s employment by the Bank, free and clear of any claims by Executive (or any successor or assignee of
Executive) of any kind or character whatsoever. Executive acknowledges that all copyrightable Developments shall be considered works made for hire under the Federal Copyright Act. Executive hereby assigns and transfers his right, title and interest
in and to all such Developments and agrees that he shall, at the request of the Bank, execute or cooperate with the Company in any patent applications, execute such assignments, certificates or other instruments, and do any and all other acts, as
the Bank from time to time reasonably deems necessary or desirable to evidence, establish, maintain, perfect, protect, enforce or defend the Company’s right, title and interest in or to any such Developments. 

Section 4.3. Restrictive Covenants. In consideration of the employment by the Bank of Executive and the consideration
outlined in Article III of this Agreement, Executive agrees to be bound by this Section 4.3. Executive will not, directly or indirectly, do any of the following during the Term and the Restricted Period: 

(a) engage or participate in any business activity substantially similar to an activity from which the Company derives revenue (or, with
respect to the application of this provision during the Restricted Period, engage or participate in any such business activity within any Company branch or office operating or preparing to operate on the date Executive’s employment ends) (a
“Competing Business”); 
 (b) become interested in (as owner, stockholder, lender, partner, co-venturer, director,
officer, employee, agent or consultant) any person, firm, corporation, association or other entity engaged in any Competing Business. Notwithstanding the foregoing, Executive may hold up to 4.9% of the outstanding securities of any class of any
publicly traded securities of any company; 
 (c) solicit or call on, either directly or indirectly, for purposes of selling goods or
services competitive with goods or services sold by the Company, any customer with whom the Company shall have dealt or any prospective customer that the Company has identified and solicited at any time during Executive’s employment by the
Bank; 
 (d) adversely influence or attempt to adversely influence any supplier, customer or potential customer of the Company to terminate
or modify any written or oral agreement or course of dealing with the Company; 
 (e) adversely influence or attempt to adversely influence
any person to terminate or modify any employment, consulting, agency, distributorship or other arrangement with the Company; or 

  
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 (f) employ or retain, or arrange to have any other person or entity employ or retain, any
employee, consultant, agent or distributor of the Company (or with respect to the application of this provision during the Restricted Period, any person or entity who, within the 12 months preceding the Date of Termination, was employed or engaged
by the Company as an employee, consultant, agent or distributor). 
 Executive acknowledges that the restrictions contained in Sections
4.1, 4.2 and 4.3 are reasonable and necessary to protect the legitimate interests of the Bank and the Parent and that the duration of the Restricted Period, and the provisions of Sections 4.1, 4.2 and 4.3, are
reasonable given Executive’s position within the Bank and the substantial consideration payable under this Agreement. Executive further acknowledges that Sections 4.1, 4.2 and 4.3 are included herein in order to induce the
Bank and the Parent to enter into this Agreement and that the Bank and the Parent would not have entered into this Agreement in the absence of these provisions. 

Section 4.4. Enforcement. 

(a) Specific Enforcement. Executive acknowledges that any material breach by him, willfully or otherwise, of this Article IV
will cause continuing and irreparable injury to the Bank and the Parent for which monetary damages would not be an adequate remedy. Executive will not, in any action or proceeding to enforce any of the provisions of this Agreement, assert the claim
or defense that such an adequate remedy at law exists. In the event of any such material breach by Executive, the Bank and/or the Parent will have the right to enforce this Agreement by seeking injunctive or other relief in any court and this
Agreement will not in any way limit remedies of law or in equity otherwise available to the Bank and the Parent. 
 (b) Restitution.
If Executive materially breaches any part of Section 4.1, 4.2 or 4.3, the Bank and the Parent will have the right and remedy to require Executive to account for and pay over to the Bank and the Parent all compensation,
profits, monies, accruals, increments or other benefits derived or received by Executive as the result of such breach. This right and remedy will be in addition to, and not in lieu of, any other rights and remedies available to the Bank and the
Parent under law or in equity. 
 (c) Extension of Restricted Period. If Executive breaches Section 4.1, 4.2 or
4.3, the Restricted Period will be extended by an amount of time equal to the period that Executive was in breach. 
 (d)
Judicial Modification. If any court determines that Section 4.1, 4.2 or 4.3, or this Section 4.4 (or any part thereof) is unenforceable because of its duration or geographic scope, that court will have
the power to modify that section and, in its modified form, that section will then be enforceable. 
 (e) Restrictions Enforceable in
All Jurisdictions. If any court holds that Section 4.1, 4.2 or 4.3, or this Section 4.4 (or any part thereof) is unenforceable by reason of its breadth or scope or otherwise, it is the intention of the
parties hereto that such determination not bar or in any way affect the right of the Bank and the Parent to the relief provided above in the courts of any other jurisdiction within the geographic scope of this section. 

  
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 (f) Disclosure of Protective Provisions. Executive agrees to disclose the existence and
terms of Sections 4.1, 4.2 and 4.3 to any employer for whom Executive seeks to work during the Restricted Period. Executive also agrees that during the Restricted Period the Executive will provide and the Company may similarly
provide a copy of this Section 4 to any business or enterprise (i) which Executive may directly or indirectly own, manage, operate, finance, join, control or of which he may participate in the ownership, management, operation,
financing, or control, or (ii) with which Executive may be connected as an officer, director, employee, partner, principal, agent, representative, consultant or otherwise, or in connection with which Executive may use or permit to be used
Executive’s name. 
 ARTICLE V 

MISCELLANEOUS 

Section 5.1. No Liability of Officers and Directors for Severance Upon Insolvency. Notwithstanding any other provision of
the Agreement and intending to be bound by this provision, Executive hereby (a) waives any right to claim payment of amounts owed to him, now or in the future, pursuant to this Agreement from directors or officers of the Company if the Company
becomes insolvent, except through their individual or collective acts of malfeasance or misfeasance, and (b) fully and forever releases and discharges the Company’s officers and directors from any and all claims, demands, liens, actions,
suits, causes of action or judgments arising out of any present or future claim for such amounts except if such claims, demands, liens, actions, suits, causes of action or judgments are based on their individual or collective acts of malfeasance or
misfeasance. 
 Section 5.2. Ability to Perform. Executive represents and warrants to the Company that there are no
restrictions, agreements or understandings whatsoever to which he is a party that would prevent or make unlawful his execution of this Agreement, that would be inconsistent or in conflict with this Agreement or Executive’s obligations
hereunder, or that would otherwise prevent, limit or impair the performance by Executive of his duties under this Agreement on and after the Effective Date. 

Section 5.3. Payments Subject to Tax Withholding. All payments and transfers of property described in this Agreement will
be made net of any applicable tax withholding. 
 Section 5.4. Dispute Resolution. Except for disputes arising under
Article IV hereof, all disputes involving the interpretation, construction, application or alleged breach of this Agreement and all disputes relating to the termination of Executive’s employment with the Bank shall be submitted to final
and binding arbitration in Scranton, Pennsylvania. The arbitrator shall be selected and the arbitration shall be conducted pursuant to the then most recent Employment Dispute Resolution Rules of the American Arbitration Association in Philadelphia,
Pennsylvania. The arbitrator shall have authority to rule on any dispositive motions filed by the parties. The decision of the arbitrator shall be final and binding, and any court of competent jurisdiction may enter judgment upon the award. The
arbitrator shall have jurisdiction and authority to interpret and apply the provisions of this Agreement and relevant federal, state and local laws, rules and regulations insofar as necessary to the determination of the dispute and to remedy any
breaches of the Agreement and/or violations of applicable laws, but shall not have jurisdiction or authority to alter in any way the provisions of this Agreement. The arbitrator shall 

  
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have the authority to award attorneys’ fees and costs to the prevailing party. The parties hereby agree that this arbitration provision shall be in lieu of any requirement that either party
exhaust such party’s administrative remedies under federal, state or local law. 
 Section 5.5. Successors and Assigns;
Third Party Beneficiary. Each of the Bank and the Parent may assign this Agreement to any affiliate or to any successor to its assets or business by means of liquidation, dissolution, merger, consolidation, sale of assets or otherwise. For
avoidance of doubt, a termination of the Executive’s employment by the Bank in connection with a permitted assignment of the Bank’s rights and obligations under this Agreement is not a termination “without Cause” so long as the
successor or assignee offers employment to the Executive on the terms herein specified (without regard to whether the Executive accepts employment with the successor or assignee). The duties of the Executive hereunder are personal to Executive and
may not be assigned by him. The Parent and each of its direct and indirect subsidiaries (excluding the Bank) is designated as a third party beneficiary of this Agreement and shall be entitled to enforce the terms hereof as if it were a party hereto.

 Section 5.6. Non-Disparagement. Executive agrees that he shall not in any way, orally or in writing, disparage or
defame the Company or any of its board members, officers or employees to any third party or commit any libelous or slanderous act against the Company or any of its board members, officers or employees whether in the capacity as his former employer
or otherwise. 
 Section 5.7. Severability. Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law. However, if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other
provision, and this Agreement will be reformed, construed and enforced as though the invalid, illegal or unenforceable provision had never been herein contained. 

Section 5.8. Survival. This Agreement, including, without limitation, the recoupment provisions set forth in
Section 3.6(i) and the restrictive covenants set forth in Article IV, will survive the cessation of the Executive’s employment to the extent necessary to fulfill the purposes and intent of this Agreement. 

Section 5.9. Entire Agreement; Amendments. Except as otherwise provided herein, this Agreement contains the entire
agreement and understanding of the parties hereto relating to the subject matter hereof. Therefore, this Agreement merges and supersedes all prior and contemporaneous discussions, agreements and understandings of every nature relating to
Executive’s employment, compensation, severance, termination or any related matter. This Agreement may not be changed or modified, except by an Agreement in writing signed by the Executive, the Bank and the Parent. 

Section 5.10. Notice. Any notice or communication required or permitted under this Agreement will be made in writing and
(a) sent by overnight courier, (b) mailed by certified or registered mail, return receipt requested or (c) sent by telecopier, addressed as follows: 

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

  
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 If to the Bank or the Parent: 

Peoples Security Bank and Trust Company 

150 North Washington Avenue 

Scranton, PA 18503 
 Attn: Chief
Executive Officer 
 Section 5.11. Governing Law. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania, without regard to the principles of conflicts of laws rules of any state. Any legal proceeding arising out of or relating to this Agreement will be instituted in a state or federal court in the
Commonwealth of Pennsylvania, and each of the Executive, the Bank and the Parent hereby consent to the personal and exclusive jurisdiction of such court(s) and hereby waive any objection(s) that they may have to personal jurisdiction, the laying of
venue of any such proceeding and any claim or defense of inconvenient forum. 
 Section 5.12. Counterparts and
Facsimiles. This Agreement may be executed, including execution by facsimile signature, in one or more counterparts, each of which will be deemed an original, and all of which together will be deemed to be one and the same instrument. 

Section 5.13. Remedies. In the event of any breach of this Agreement by either party, the party injured by such breach
shall be entitled to attorneys’ fees, costs and expenses incurred by reason of such breach, if any, together with interest at the maximum rate permitted by law. This paragraph shall not be considered a waiver of or a limitation on the remedies
available under this Agreement or at law or in equity for breach of this Agreement. 
 [signature page follows] 

  
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 IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date(s) written
below. 
  

					
	PEOPLES SECURITY BANK AND TRUST COMPANY
		
	By:		 /s/ Craig W.
Best                                    2/4/15

	Name:		Craig W. Best		Date
	Title:		President CEO		
	
	EXECUTIVE
	
	 /s/ Bradley S.
Grubb                                        
  2/4/15

	Bradley S. Grubb		Date    

  
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 Exhibit A 

Wealth Management Division 
 The “Bank’s
Wealth Management Division” means the Bank’s business of providing wealth management, trust, investment and brokerage services, wherever located within the Bank and its affiliates, from time to time. 

Incremental Gross Revenue 
 “Incremental gross
revenue of the Bank’s Wealth Management Division” means, with respect to any year ending December 31 during the Term, the excess, if any, of the gross revenue of the Bank’s Wealth Management Division for such year, over the gross
revenue of the Bank’s Wealth Management Division for the immediately preceding year. 
 The “gross revenue of the Bank’s Wealth Management
Division” means the gross revenue of the Bank’s Wealth Management Division, comprised of trust income (or “commissions and fees on fiduciary activities”) and brokerage revenue (or “wealth management income”), before
deduction of any third party payments (including, without limitation, revenue sharing or expense reimbursement payments to Infinex Investments, Inc. or Commonwealth Financial Network) or other expenses. For reference, the unaudited gross revenue of
the Bank’s Wealth Management Division for the year ended December 31, 2014, was $3,108,936. 
 Incremental Net Profit 

“Incremental net profit before tax of the Bank’s Wealth Management Division” means, with respect to any year ending December 31 during the
Term, the excess, if any, of the net profit before tax of the Bank’s Wealth Management Division for such year, over the net profit before tax of the Bank’s Wealth Management Division for the immediately preceding year. 

The “net profit before tax of the Bank’s Wealth Management Division” means the gross revenues of the Bank’s Wealth Management Division,
less all third party payments (including, without limitation, revenue sharing or expense reimbursement payments to Infinex Investments, Inc. and Commonwealth Financial Network) and other expenses incurred by or allocated to the Bank’s Wealth
Management Division, including, without limitation, salaries and employee benefits expense, depreciation of equipment, and other expenses, excluding only income tax expense. The net profit before tax of the Bank’s Wealth Management Division
shall not include any net funds credit. For reference, the unaudited net profit before tax of the Bank’s Wealth Management Division for the year ended December 31, 2014, was $1,382,896. 

  
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