EXHIBIT 10.3


 


THIS DOCUMENT IS PROVIDED TO ASSIST YOUR LEGAL COUNSEL
IN DOCUMENTING YOUR SPECIFIC ARRANGEMENT. IT IS NOT A FORM TO BE SIGNED,
NOR IS IT TO BE CONSTRUED AS LEGAL ADVICE. FAILURE TO ACCURATELY DOCUMENT YOUR
ARRANGEMENT COULD RESULT IN SIGNIFICANT LOSSES, WHETHER FROM CLAIMS OF THOSE
PARTICIPATING IN THE ARRANGEMENT, FROM THE HEIRS AND BENEFICIARIES OF
PARTICIPANTS, OR FROM REGULATORY AGENCIES SUCH AS THE INTERNAL REVENUE SERVICE
AND THE DEPARTMENT OF LABOR. LICENSE IS HEREBY GRANTED TO YOUR LEGAL COUNSEL TO
USE THESE MATERIALS IN DOCUMENTING SOLELY YOUR ARRANGEMENT.


 


ADAMS
COUNTY NATIONAL BANK


 


EXECUTIVE
SUPPLEMENTAL LIFE INSURANCE PLAN


 


THIS AGREEMENT, hereby made and entered into this 1st
day of January 2001, by and between Adams County National Bank, a Bank
located in Gettysburg, Pennsylvania (the “Company”) and the executive selected
to participate in this Plan.


 


INTRODUCTION


 


The Company wishes to attract and retain highly
qualified executives. To further this objective, the Company is willing to
divide the death proceeds of certain life insurance policies which are owned by
the Company on the lives of the participating executives with the designated
beneficiary of each insured participating executive. The Company will pay life
insurance premiums from its general assets.


 


ARTICLE
1


 


GENERAL
DEFINITIONS


 


The following terms shall have the meanings specified:


 


1.1 “COMPENSATION COMMITTEE” means either the
Compensation Committee designated from time to time by the Company’s Board of
Directors or a majority of the Company’s Board of Directors, either of which
shall hereinafter be referred to as the Compensation Committee.


 


1.2 “DISABILITY” means the Executive’s inability to
perform substantially all normal duties of a Participant, as determined by the
Company’s Board of Directors in its sole discretion. As a condition to any
benefits, the Company may require the Executive to submit to such physical or
mental evaluations and tests, as the Board of Directors deems appropriate.


 


1.3 “INSURED” means the individual whose life is
insured.


 


1.4 “INSURER” means the insurance company issuing the
life insurance policy on the life of the insured.


 


1.5 “OTHER GROUP TERM COVERAGE” means group term life
insurance maintained on a Participant’s life owned by the Company that is in
addition to the Policies covered under this Plan.


 


1.6 “PARTICIPANT” means the executive who is
designated by the Compensation Committee as eligible to participate in the
Plan, elects .in writing to participate in the Plan using the form attached
hereto as Exhibit A, and signs a Split Dollar Endorsement for the Policy
in which he or she is the Insured.


 

















 


1.7 “POLICY” or “POLICIES” means the individual
insurance policy (or policies) adopted by the Compensation Committee for
purposes of insuring a Participant’s life under this Plan.


 


1.8 “PLAN” means this instrument, including all
amendments thereto.


 


1.9 “TERMINATED FOR CAUSE” means that the Company has
terminated the Insured’s employment for any of the following reasons:


 


1.9.1 Gross negligence or gross neglect of duties;


 


1.9.2 Commission of a felony or of a gross misdemeanor
involving moral turpitude; or


 


1.9.3 Fraud, disloyalty, dishonesty or willful
violation of any law or significant Company policy committed in connection with
the Executive’s employment.


 


1.10 “TWO TIMES BASE ANNUAL SALARY” means the current
base annual salary of the Participant at the earliest of: (1) the date of
the Participant’s death;  (2) the
date of the Participant’s Disability; or (3) the Participant’s date of termination
of employment multiplied by a factor of Two (2).


 


ARTICLE
2


 


PARTICIPATION


 


2.1 ELIGIBILITY TO PARTICIPATE. The Compensation
Committee in its sole discretion shall designate from time to time executives
that are eligible to participate in this Plan.


 


2.2 PARTICIPATION. The eligible executive may
participate in this Plan by executing an Election to Participate and a Split
Dollar Endorsement. The Split Dollar Endorsement shall bind the executive and
his or her beneficiaries, assigns and transferees, to the terms and conditions
of this Plan. An executive’s participation is limited to only Policies where he
or she is the Insured. Exhibit B attached hereto sets forth the original
Participants and their corresponding Policies.


 


2.3 TERMINATION OF PARTICIPATION. A Participant’s
rights under this Plan shall cease and his or her participation in this Plan
shall terminate if the Insured’s employment with the Company is Terminated for
Cause.


 


In the event that the Company decides to maintain the
Policy after the Participant’s termination of participation in the Plan, the
Company shall be the direct beneficiary of the entire death proceeds of the
Policy.


 


ARTICLE
3


 


POLICY
OWNERSHIP/INTERESTS


 


3.1 PARTICIPANT’S INTEREST. With respect to each
Policy, the Participant, or the Participant’s assignee, shall have the right to
designate the beneficiary of an amount of death proceeds equal to: (i) Two
Times Base Annual Salary of the Insured/Participant; or (ii) the maximum
dollar amount of the Participant’s Interest set forth in the Participant’s
individual split dollar endorsement and based upon the vesting schedule
attached (to) their individual Split Dollar Endorsement. The Participant shall
also have the right to elect and change settlement options with the consent of
the Company and the Insurer.


 

















 


3.2 COMPANY’S INTEREST. The Company shall own the
Policies and shall have the right to exercise all incidents of ownership. With
respect to each Policy, the Company shall be the direct beneficiary of the
remaining (after the Participant’s Interest is determined) death proceeds of
the Policy.


 


ARTICLE
4


 


PREMIUMS


 


4.1 PREMIUM PAYMENT. The Company shall pay all
premiums due on all Policies.


 


4.2 IMPUTED INCOME. The Company shall impute income to
the Participant in an amount equal to the current term rate for the Participant’s
age multiplied by the aggregate death benefit payable to the Participant’s
beneficiary. The “current term rate” is the minimum amount required to be
imputed under Revenue Rulings 64-328 and 66-110, or any subsequent applicable
authority.


 


ARTICLE
5


 


ASSIGNMENT


 


Any Participant may assign without consideration all
interests in his or her Policy and in this Plan to any person, entity or trust.
In the event a Participant shall transfer all of his/her interest in the
Policy, then all of that Participant’s interest in his or her Policy and in the
Plan shall be vested in his/her transferee, who shall be substituted as a party
hereunder, and that Participant shall have no further interest in his or her
Policy or in this Plan.


 


ARTICLE
6


 


INSURER


 


The Insurer shall be bound only by the terms of their
corresponding Policy. Any payments the Insurer makes or actions it takes in
accordance with a Policy shall fully discharge it from all claims, suits and
demands of all persons relating to that Policy. The Insurer shall not be bound
by the provisions of this Plan. The Insurer shall have the right to rely on the
Company’s representations with regard to any definitions, interpretations, or
Policy interests as specified under this Plan.


 


ARTICLE
7


 


CLAIMS
PROCEDURE


 


7.1 CLAIMS PROCEDURE. The Company shall notify any
person or entity that makes a claim against this Plan (the “Claimant”), in
writing, within ninety (90) days of Claimant’s written application for
benefits, of Claimant’s eligibility or ineligibility for benefits under this
Plan. If the Company determines that Claimant is not eligible for benefits or
full benefits, the notice shall set forth (1) the specific reasons for
such denial, (2) a specific reference to the provisions of this Plan on
which the denial is based, (3) a description of any additional information
or material necessary for the Claimant to perfect Claimant’s claim, and a
description of why it is needed, and (4) an explanation of this Plan’s
claims review procedure and other appropriate information as to the steps to be
taken if the Claimant wishes to have the claim reviewed. If the Company
determines that there are special circumstances requiring additional time to
make a decision, the Company shall notify the Claimant of the special
circumstances and the date by which a decision is expected to be made, and may
extend the time for up to an additional ninety-day period.


 

















 


7.2 REVIEW PROCEDURE. If a Claimant is determined by
the Company not to be eligible for benefits, or if the Claimant believes that
Claimant is entitled to greater or different benefits, the Claimant shall have
the opportunity to have such claim reviewed by the Company by filing a petition
for review with the Company within sixty (60) days after receipt of the notice
issued by the Company. Said petition shall state the specific reasons which the
Claimant believes entitle Claimant to benefits or to greater or different
benefits. Within sixty (60) days after receipt by the Company of the petition,
the Company shall afford the Claimant (and counsel, if any) an opportunity to
present Claimant’s position to the Company verbally or in writing, and the
Claimant (or counsel) shall have the right to review the pertinent documents.
The Company shall notify the Claimant of its decision in writing within the
sixty-day period, stating specifically the basis of its decision, written in a
manner calculated to be understood by the Claimant and the specific provisions
of this Plan on which the decision is based. If, because of the need for a
hearing, the sixty-day period is not sufficient, the decision may be deferred
for up to another sixty-day period at the election of the Company, but notice
of this deferral shall be given to the Claimant.


 


ARTICLE
8


 


AMENDMENTS
AND TERMINATION


 


This Agreement may be amended or terminated at the
discretion of the bank. However, each Participant shall be entitled to the
benefits in Section 3.1 calculated at the date of termination of the Plan.


 


ARTICLE
9


 


MISCELLANEOUS


 


9.1 BINDING EFFECT. This Plan in conjunction with each
Split Dollar Endorsement shall bind each Participant and the Company, their
beneficiaries, survivors, executors, administrators and transferees and any
Policy beneficiary.


 


9.2 NO GUARANTEE OF EMPLOYMENT. This Plan is not an
employment policy or contract. It does not give a Participant the right to
remain an employee of the Company, nor does it interfere with the Company’s
right to discharge a Participant. It also does not require a Participant to
remain an employee nor interfere with a Participant’s right to terminate
employment at any time.


 


9.3 REORGANIZATION. The Company shall not merge or
consolidate into or with another company, or reorganize, or sell substantially
all of its assets to another company, firm, or person unless such succeeding or
continuing company, firm, or person agrees to assume and discharge the
obligations of the Company under this Agreement.


 


9.4 NAMED FIDUCIARY. For purposes of the Employee
Retirement Income Security Act of 1974, if applicable, the Company shall be the
named fiduciary and plan administrator under the Agreement. The named fiduciary
may delegate to others certain aspects of the management and operation
responsibilities of the plan including the employment of advisors and the
delegation of ministerial duties to qualified individuals.


 


9.5 APPLICABLE LAW. The Plan and all rights hereunder
shall be governed by and construed according to the laws of the State of
Pennsylvania, except to the extent preempted by the laws of the United States
of America.


 


9.6 NOTICE. Any notice, consent or demand required or
permitted to be given under the provisions of this Plan by one party to another
shall be in writing, shall be signed by the party giving or making the same,
and may be given either by delivering the same to such other party personally,
or by mailing the same, by United States certified mail, postage prepaid, to
such party, addressed to his/her last known address as shown on the records of
the Company. The date of such mailing shall be deemed the date of such mailed
notice, consent or demand.


 


9.7 ENTIRE AGREEMENT. This Plan constitutes the entire
agreement between the Company and the Participant as to the subject matter
hereof. No rights are granted to the Participant by virtue of this Plan other
than those specifically set forth herein.


 

















 


9.8 ADMINISTRATION. The Company shall have powers
which are necessary to administer this Plan, including but not limited to:


 


9.8.1 Interpreting the provisions of the Plan;


 


9.8.2 Establishing and revising the method of
accounting for the Plan;


 


9.8.3 Maintaining a record of benefit payments; and


 


9.8.4 Establishing rules and prescribing any
forms necessary or desirable to administer the Plan.


 


IN WITNESS WHEREOF, the Company executes this Plan as
of the date indicated above.


 


	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  Adams County National Bank

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas A. Ritter

  
	
   

  	
   

  	
   

  
	
   

  	
  TITLE 

  	
  President

  
				



 

















 


EXHIBIT
A


 


ELECTION
TO PARTICIPATE


 


I,                                                                             ,
an eligible Participant of the Adams County National Bank Group Term
Replacement Plan (the “Plan”) dated                                       2000,
hereby elect to become a Participant of the Plan.


 


Executed this                                                             
day of                           
, 2000.


 


	
  Witness

  	
   

  	
  Participant

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


 

















 


SPLIT
DOLLAR POLICY ENDORSEMENT


 


Policy No.                                         
Insured:


 


Supplementing and amending the application of Adams
County National Bank on                                       ,
2000 to                                                                                                       
(“Insurer”), the applicant requests and directs that:


 


BENEFICIARIES


 


1. The beneficiary designated by the Insured, or
his/her transferee shall be the beneficiary (based on the attached vesting
schedule) of the lesser of:

(i) Two Times Base Annual Salary of the Insured/Participant or (ii) $                              .


 


2. The beneficiary of any remaining death proceeds
shall be Adams County National Bank, a banking association located in
Gettysburg, Pennsylvania (the “Company”).


 


OWNERSHIP


 


3. The Owner of the policy shall be the Company. The
Owner shall have all ownership rights in the Policy except as may be
specifically granted to the Insured or his/her transferee in paragraph (4) of
this endorsement.


 


4. The Insured or his/her transferee shall have the
right to assign all rights and interests in the policy with respect to that
portion of the death proceeds designated in paragraph (1) of this
endorsement, and to exercise all settlement options with respect to such death
proceeds.


 

















 


MODIFICATION
OF ASSIGNMENT PROVISIONS OF THE POLICY


 


Upon the death of the Insured, the interest of any collateral
assignee of the Owner of the policy designated in paragraph (3) above
shall be limited to the portion of the proceeds described in paragraph (2) above.


 


OWNER’S
AUTHORITY


 


The Insurer is hereby authorized to recognize the
Owner’s claim to rights hereunder without investigating the reason for any
action taken by the Owner, including its statement of the amount of premiums it
has paid on the policy. The signature of the Owner shall be sufficient for the
exercise of any rights under this Endorsement and the receipt of the Owner for
any sums received by it shall be a full discharge and release to the Insurer.
Any transferee’s rights shall be subject to this Endorsement.


 


Signed at                               ,
PENNSYLVANIA, this                 
day of                               ,
2000.


 


	
   

  	
  COMPANY

  
	
   

  	
   

  
	
   

  	
  Adams County National Bank

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its

  	
   

  



 


Acceptance
and Beneficiary Designation


 


The Insured accepts and agrees to the foregoing and,
subject to the rights of the Owner as stated above, designates                                                               
as direct beneficiary and                                                     
as contingent beneficiary of the portion of the proceeds described in paragraph
(1) above.


 


Signed at                                         ,
Pennsylvania, this               
day of                         ,
2000.


 


	
   

  	
  INSURED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (print name)

  



 


 


The following table details the participants vested
benefit upon termination of service:


 


VESTING
SCHEDULE


 




	
  End of Plan Year 1

  	
  20% vesting in benefit

  
	
  End of Plan Year 2

  	
  40% vesting in benefit

  
	
  End of Plan Year 3

  	
  60% vesting in benefit

  
	
  End of Plan Year 4

  	
  80% vesting in benefit

  
	
  End of Plan Year 5

  	
  100% vesting in benefit

  






 


Upon termination of service due to disability, the
participant’s vested percentage is 100%.


 


If a change of control occurs while employed by the
bank, the participant’s vested percentage is 100%.