PWOD Penns Woods Bancorp Inc

On September 25, 2020, Jersey Shore State Bank (the “Bank”), the wholly owned subsidiary of Penns Woods Bancorp, Inc. (the “Company”), entered into supplemental executive retirement plan agreements (the “SERP Agreements”) with the following named executive officers: Brian Knepp, President and Chief Financial Officer of the Company and Chief Financial Officer of the Bank, and Aron Carter, Senior Vice President and Chief Risk Officer of the Company and the Bank (each, an “Executive” and, collectively, the “Executives”).

Under the SERP Agreements, the Bank will make monthly contributions ($4,469 for Mr. Knepp and $2,603 for Mr. Carter) to a deferral account established for each Executive until the earlier of such Executive’s separation of service from the Bank, disability, death, or until he reaches age 67. At the discretion of the Board of Directors of the Bank, the Bank may contribute a greater amount if the Executive’s performance or the interests of the Bank are best served by making a greater contribution. During the period of the Executive’s employment, the deferral account will earn interest at a rate equal to 3% per annum, compounded monthly.

Each SERP Agreement provides that, if the Executive separates from service other than for cause or on account of death or disability (including a separation prior to or after age 67 or before or after a change in control (as defined in the SERP Agreement)), the Executive will be paid his deferral account balance, calculated as of the date of separation from service, in 180 consecutive monthly installments. In the event the Executive terminates his employment due to a disability (as defined in the SERP Agreements) prior to age 67, the deferral account balance, calculated as of the date of determination of disability, will be paid in 180 consecutive monthly payments commencing the month following the date of determination of disability.

In the event of the Executive’s death prior to separation from service, disability or a change in control, the Executive’s designated beneficiary would be entitled to payment of an annual benefit in the amount of $126,000 in the case of Mr. Knepp and $66,000 in the case of Mr. Carter for a period of fifteen years, provided that, if the Executive’s deferral account balance exceeds specified amounts at the date of death, the annual benefit for such Executive’s beneficiary will instead be the amount necessary to fully amortize the deferral account balance over the fifteen year payment period with interest credited on the unpaid balance at the rate of 3% per annum. If the Executive dies subsequent to commencement of payments under the SERP Agreement, amounts that would have been paid to the Executive will be paid to the Executive’s designated beneficiary.

No benefit will be paid if the Executive’s termination of employment is for “cause” as defined in the SERP Agreements or if the Executive, in certain circumstances, violates applicable non-competition, non-solicitation, or confidentiality provisions set forth in the SERP Agreements.

The SERP Agreements provide that if any payment under such SERP Agreement would be treated as an “excess parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), the amount of the payments to the Executive will be reduced to the extent necessary to avoid treating such benefit payment as an “excess parachute payment.” In such case, the Executive will be entitled to only the reduced benefit and will forfeit any amount exceeding the reduced benefit. Benefits under the SERP Agreements may be delayed to comply with Section 409A of the Code, and the Bank and the Executive may amend the SERP Agreement to delay the timing or change form of payment as permitted under Section 409A of the Code.

The foregoing summary of the SERP Agreements is qualified in its entirety by reference to the full text of Mr. Knepp’s and Mr. Carter’s SERP Agreements, which are attached hereto as Exhibit 10.1 and Exhibit 10.2, respectively, and are incorporated herein by reference.