Document:

EX-10.18

   

  Exhibit 10.18

   

  EXECUTION VERSION

  THIRD AMENDMENT TO 
THE GRATZ BANK

  EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN

  THIS AMENDMENT (the “Amendment”) is adopted this 10th day of December 2020, by and between The Gratz Bank (the “Employer”) and Wesley M. Weymers (the “Executive”). 

  RECITALS

  WHEREAS, LINKBANCORP, Inc., a Pennsylvania Corporation (the “Corporation”), LINKBANK, a Pennsylvania-chartered bank and wholly-owned subsidiary of the Corporation (“LINKBANK”), GNB Financial Services, Inc., a Pennsylvania corporation (“GNB”), and the Employer, a wholly-owned subsidiary of GNB, have entered into that certain Agreement and Plan of Merger, dated as of the date hereof (as amended, restated or otherwise modified from time to time, the “Merger Agreement”), pursuant to which, at the Effective Time (as that term is defined in the Merger Agreement), and subject to and upon the terms and conditions of the Merger Agreement, GNB will merge with and into the Corporation, with the Corporation surviving, and immediately thereafter, LINKBANK will merge with and into the Employer, with the Employer surviving; 

  WHEREAS, the Employer and the Executive entered into an Executive Supplemental Retirement Plan, dated July 27, 2012, as amended (the “Agreement”), to provide deferred compensation benefits to the Executive under certain circumstances; and 

   WHEREAS, the Employer and the Executive now wish to amend the Agreement as set forth in this Amendment. 

  NOW, THEREFORE, the Employer and the Executive adopt the following amendments to the Agreement, effective as of, and contingent upon the occurrence of, the Effective Time: 

  1.   Section 2.2 of the Agreement shall be deleted and replaced by the following: 

  2.2     Early Termination Benefit.  If Early Termination occurs, the Employer shall pay the Executive the vested annual benefit in lieu of any other benefit hereunder.  The vested annual benefit will be paid in equal monthly installments commencing the month following Normal Retirement Age and continuing for fifteen (15) years.  If Early Termination occurs due to the termination of the Executive’s employment (i) by the Employer without Cause, (ii) as a result of the expiration of the employment period under the Executive’s employment agreement with LINKBANCORP, Inc. (the “Corporation”) and the Employer, or (iii) by the Executive for Good Reason (as defined in the Executive’s employment agreement with the Corporation and the Employer), then, in each case, the vested annual benefit shall be equal to $72,000.  If Early Termination occurs for any other reason, then the vested annual benefit shall be calculated as follows: 

   

  		
	Year of Separation from Service
	Amount of Annual Benefit

	2020
	$43,200

	2021
	$54,000

	2022
	$64,800

	2023
	$72,000

   

  2.   Section 7.10 of the Agreement shall be deleted and replaced by the following: 

  Competition After Separation from Service. The Employer shall not pay any benefit under this Agreement if the Executive, during the term of the Executive's employment with the Employer or during 

   

  

   

  the one-year period commencing with Separation from Service, and without the prior written consent of the Employer, engages in, becomes interested in, directly or indirectly, as a sole proprietor, as a partner in a partnership, or as a substantial shareholder in a corporation, or becomes associated with, in the capacity of employee, executive, officer, principal, agent, trustee or in any other capacity whatsoever, any enterprise conducted within a thirty (30) mile radius of the Bank’s main office located at 32 West Market Street, Gratz, Pennsylvania.

  In the event that the Effective Time does not occur or the Merger Agreement is otherwise terminated, this Amendment shall thereupon become null and void.

  In WINTNESS WHEREOF, the Executive and a representative of the Employer have executed this Amendment as indicated below. 

   

   

   

  

   

  THE GRATZ BANK

  SECOND AMENDMENT TO EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN

   

   

  This Second Amendment to Executive Supplemental Retirement Plan (the "Amendment") adopted and effective this 10th day of June        , 2020 (the "Effective Date") by and between GNB Financial Services, Inc. and The Gratz Bank (hereinafter collectively the "Employer") and Wesley M. Weymers (the "Executive"). 

  WHEREAS, the Employer and Executive are parties to that certain The Gratz Bank Executive Supplemental Retirement Plan adopted and effective July 12, 2012, as amended by a First Amendment dated December 21, 2015 (the "Plan"); 

  WHEREAS, the Plan constitutes an unfunded plan of deferred compensation which is intended to provide benefits to Executive who qualifies as a management/highly compensated employee of Employer; 

  WHEREAS, the Plan is operated in compliance with Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"); 

  WHEREAS, the Employer and Executive entered into an Employment Agreement dated December 12, 2018 (the "Employment Agreement"); 

  WHEREAS, the Employer is, as of even date with this Amendment, entering into a First Amendment to Employment Agreement (the "Employment Agreement Amendment"); 

  WHEREAS, the Employer and Executive desire to make certain amendments to the Plan in order that certain provisions of the Plan are consistent with certain similar provisions under the Employment Agreement. 

  NOW, THEREFORE, in consideration of the provision and intending to be legally bound, the parties hereby agree as follows: 

  1. 	The first paragraph of Section 2.3 of the Plan is hereby amended with the following clarification: 

  "2.3 	Disability Benefit. In the event of the Executive suffers a Disability prior to Normal Retirement Age, the Employer shall pay the Executive the vested annual benefit in lieu of any other benefit hereunder for purposes of this Section 2.3. Disability means the Executive: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) 

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  months under an accident and health plan covering employees of the Corporation or the Bank" 

  2. 	Section 2.14 of the Plan is hereby deleted in its entirety. 

  IN WITNESS WHEREOF, the Executive, the Corporation and the Bank have executed this effective as set forth above.

   

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  FIRST AMENDMENT TO 
THE GRATZ BANK

  EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN

  THIS AMENDMENT (the "Amendment") is adopted this 21    day of December  , 2015, to be effective January 1, 2016, by and between The Gratz Bank, (the "Employer") and Wes Weymers (the "Executive"). 

  RECITALS

  WHEREAS, the Employer and Executive entered into an Executive Supplemental Retirement Plan dated                      , 2012 (the "Agreement"), to provide deferred compensation benefits to the Executive under certain circumstances; and 

  WHEREAS, the Employer and the Executive now wish to amend the Agreement to increase the Executive's benefit; 

  NOW, THEREFORE, the Employer and Executive adopt the following amendments to the Agreement: 

  Sections 2.1, 2.2, 2.3, 2.4 and 2.5 of the Agreement shall be deleted and replaced by the following: 

  2.1 	Normal Retirement Benefit. Upon Separation from Service after Normal Retirement Age, the Employer shall pay the Executive an annual benefit in the amount of Seventy-Two Thousand Dollars ($72,000) in lieu of any other benefit hereunder. The annual benefit will be paid in equal monthly installments commencing the month following Separation from Service and continuing for fifteen (15) years. 

  2.2 	Early Termination Benefit. If Early Termination occurs, the Employer shall pay the Executive the vested annual benefit in lieu of any other benefit hereunder. The vested annual benefit will be paid in equal monthly installments commencing the month following Normal Retirement Age and continuing for fifteen (15) years. The vested annual benefit shall be calculated as follows: 

   

  		
	Year of Separation from Service
	Amount of annual benefit

	2016
	$14,400

	2017
	$14,400

	2018
	$23,760

	2019
	$28,800

	2020
	$43,200

	2021
	$54,000

	2022
	$64,800

	2023
	$72,000

   

  2.3 	Disability Benefit. In the event the Executive suffers a Disability prior to Normal Retirement Age the Employer shall pay the Executive the vested annual benefit in lieu 

   

  

   

  of any other benefit hereunder. The vested annual benefit will be paid in equal monthly installments commencing the month following Disability and continuing for fifteen (15) years. The vested annual benefit shall be calculated as follows:

   

  		
	Year of Disability
	Amount of annual benefit

	2016
	$14,400

	2017
	$14,400

	2018
	$23,760

	2019
	$28,800

	2020
	$43,200

	2021
	$54,000

	2022
	$64,800

	2023
	$72,000

   

  2.4	Change in Control Benefit. If a Change in Control occurs, followed within twenty-four (24) months by Separation of Service prior to Normal Retirement Age, the Employer shall pay the Executive an annual benefit in the amount of Seventy-Two Thousand Dollars ($72,000) in lieu of any other benefit hereunder. The annual benefit will be paid in equal monthly installments commencing the month following Separation from Service and continuing for fifteen (15) years.

  2.5	Death Prior to Commencement of Benefit Payments. In the event the Executive dies prior to Separation from Service and Disability, the Employer shall pay the Beneficiary the vested annual benefit in lieu of any other benefit hereunder. The vested annual benefit will be paid in equal monthly installments commencing the month following the Executive's death and continuing for fifteen (15) years. The vested annual benefit shall be calculated as follows:

  		
	Year of Death
	Amount of annual benefit

	2016
	$14,400

	2017
	$14,400

	2018
	$23,760

	2019
	$28,800

	2020
	$43,200

	2021
	$54,000

	2022
	$64,800

	2023
	$72,000

  IN WITNESS WHEREOF, the Executive and a representative of the Employer have executed this Amendment as indicated below:

   

   

   

  

   

  THE GRATZ BANK
Executive Supplemental Retirement Plan

  This Executive Supplemental Retirement Plan (the “Agreement”) by and between The Gratz Bank, located in Gratz, Pennsylvania (hereinafter referred to as the “Employer”), and Wes Weymers (hereinafter referred to as the “Executive”), entered into this 27th day of July, 2012, formalizes the agreements and understanding between the Employer and the Executive.

  WITNESSETH:

  WHEREAS, the Executive is employed by the Employer;

  WHEREAS, the Employer recognizes the valuable services the Executive has performed for the Employer and wishes to encourage the Executive’s continued employment and to provide the Executive with additional incentive to achieve corporate objectives;

  WHEREAS, the Employer wishes to provide the terms and conditions upon which the Employer shall pay additional retirement benefits to the Executive;

  WHEREAS, the Employer and the Executive intend this Agreement shall at all times be administered and interpreted in compliance with Code Section 409A; and

  WHEREAS, the Employer intends this Agreement shall at all times be administered and interpreted in such a manner as to constitute an unfunded nonqualified deferred compensation arrangement, maintained primarily to provide supplemental retirement benefits for the Executive, a member of select group of management or highly compensated employee of the Employer;

  NOW THEREFORE, in consideration of the premises and of the mutual promises herein contained, the Employer and the Executive agree as follows:

  ARTICLE 1
DEFINITIONS

  For the purpose of this Agreement, the following phrases or terms shall have the indicated meanings:

  1.1	"Accrued Benefit ” means the dollar value of the liability that should be accrued by the Employer, under Generally Accepted Accounting Principles, for the Employer’s obligation to the Executive under this Agreement, calculated by applying by applying Accounting Standards Codification 710-10 and the Discount Rate.

  1.2	“Administrator ” means the Board or its designee,

  1.3	“Affiliate" means any business entity with whom the Employer would be considered a single employer under Code Section 414(b) and 414(c). Such term shall be interpreted in a manner consistent with the definition of “service recipient” contained in Code Section 409A.

  1.4 	“Beneficiary ” means the person or persons designated in writing by the Executive to receive benefits hereunder in the event of the Executive’s death.

   

  

   

  1.5	“Board" means the Board of Directors of the Employer.

  1.6	“Cause" means any of the following acts or circumstances: gross negligence or gross neglect of duties to the Employer; conviction of a felony or of a gross misdemeanor involving moral turpitude in connection with the Executive's employment with the Employer; or fraud, disloyalty, dishonesty or willful violation of any law or significant Employer policy committed in connection with the Executive's employment and resulting in a material adverse effect on the Employer.

  1.7 	“Change in Control" means a change in the ownership or effective control of the Employer, or in the ownership of a substantial portion of the assets of the Employer, as such change is defined in Code Section 409A and regulations thereunder.

  1.8	“Claimant" means a person who believes that he or she is being denied a benefit to which he or she is entitled hereunder.

  1.9	“Code " means the Internal Revenue Code of 1986, as amended.

  1.10	“Discount Rate” means the rate used by the Administrator to determine the Accrued Benefit. The Administrator shall review the Discount Rate regularly and adjust it as required by Generally Accepted Accounting Principles and bank regulatory guidance.

  1.11	“Early Termination" means Separation from Service before Normal Retirement Age except when such Separation from Service occurs within twenty-four (24) months following a Change in Control or due to termination for Cause.

  1.12	“Effective Date " means July 1,2012.

  1.13	“ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

  1.14	“Normal Retirement Age" means the date the Executive attains age sixty-five and one-half (65 1/2).

  1.15	“Plan Year " means each twelve (12) month period commencing on January 1 and ending on December 31 of each year. The initial Plan Year shall commence on the Effective Date and end on the following December 31.

  1.16	“Separation from Service” means a termination of the Executive’s employment with the Employer and its Affiliates for reasons other than death or Disability. A Separation from Service may occur as of a specified date for purposes of the Agreement even if the Executive continues to provide some services for the Employer or its Affiliates after that date, provided that the facts and circumstances indicate that the Employer and the Executive reasonably anticipated at that dale that either no further services would be performed after that date, or that the level of bona fide services the Executive would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed over the immediately preceding thirty-six (36) month period (or the full period during which the Executive performed services for the Employer, if that is less than thirty-six (36) months). A Separation from Service will not be deemed to have occurred while the Executive is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six (6) months or, if longer, the period for which a statute or contract provides the Executive with the right to reemployment with the Employer. If the Executive’s leave exceeds six (6) months but the Executive is not entitled to reemployment under a statute or contract, the Executive incurs a Separation of Service on the next day following the expiration of such six (6) month 

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  period. In determining whether a Separation of Service occurs the Administrator shall take into account, among other things, the definition of “service recipient” and “employer” set forth in Treasury regulation §1.409A- 1(h) (3). The Administrator shall have full and final authority, to determine conclusively whether a Separation from Service occurs, and the date of such Separation from Service.

  1.17	“Specified Employee" means an individual that satisfies the definition of a “key employee” of the Employer as such term is defined in Code §416(i) (without regard to Code §416(i)(5)), provided that the stock of the Employer is publicly traded on an established securities market or otherwise, as defined in Code §1.897-l(m). If the Executive is a key employee at any time during the twelve (12) months ending on December 31, the Executive is a Specified Employee for the twelve (12) month period commencing on the first day of the following April.

   

  ARTICLE 2

  PAYMENT OF BENEFITS

  2.1	Normal Retirement Benefit.  Upon Separation from Service after Normal Retirement Age, the Employer shall pay the Executive an annual benefit in the amount of Fifty- Four Thousand Dollars ($54,000) in lieu of any other benefit hereunder. The annual benefit will be paid in equal monthly installments commencing the month following Separation from Service and continuing for fifteen (15) years.

  2.2	Early Termination Benefit.  If Early Termination occurs, the Employer shall pay the Executive the vested annual benefit in lieu of any other benefit hereunder. The vested annual benefit will be paid in equal monthly installments commencing the month following Normal Retirement Age and continuing for fifteen (15) years. The vested annual benefit shall be calculated as follows:

   

  		
	Date of Separation from Service
	Amount of annual benefit

	Prior to January 1, 2015
	$0

	After December 31, 2014 and Before January 1, 2016
	$5,400

	After December 31, 2015 and Before January 1, 2017
	$10,800

	After December 31, 2016 and Before January 1, 2018
	$18,000

	After December 31, 2017 and Before January 1, 2019
	$21,000

	After December 31, 2018 and Before January 1, 2020
	$32,400

	After December 31, 2019 and Before January 1 ,2021
	$40,500

	After December 31, 2020 and Before January 1, 2022
	$48,600

	After December 31, 2021
	$54,000

   

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  2.3	Disability Benefit. In the event the Executive suffers a Disability prior to Normal Retirement Age the Employer shall pay the Executive the vested annual benefit in lieu of any other benefit hereunder. The vested annual benefit will be paid in equal monthly installments commencing the month following Disability and continuing for fifteen (15) years. The vested annual benefit shall be calculated as follows:

   

  		
	Date of Disability
	Amount of annual benefit

	Prior to January 1, 2015
	$0

	After December 31,2014 and Before January l, 2016
	$5,400

	After December 31,2015 and Before January l, 2017
	$10,800

	After December 31, 2016 and Before January 1, 2018
	$18,000

	After December 31,2017 and Before January 1, 2019
	$21,000

	After December 31, 2018 and Before January l, 2020
	$32,400

	After December 31,2019 and Before January 1, 2021
	$40,500

	After December 31,2020 and Before January 1, 2022
	$48,600

	After December 31, 2021
	$54,000

   

  2.4	Change in Control Benefit. If a Change in Control occurs, followed within twenty-four (24) months by Separation of Service after December 31, 2014 and prior to Normal Retirement Age, the Employer shall pay the Executive an annual benefit in the amount of Fifty- Four Thousand Dollars ($54,000) in lieu of any other benefit hereunder. The annual benefit will be paid in equal monthly installments commencing the month following Separation from Service and continuing for fifteen (15) years.

  2.5	Death Prior to Commencement of Benefit Payments. In the event the Executive dies prior to Separation from Service and Disability, the Employer shall pay the Beneficiary the vested annual benefit in lieu of any other benefit hereunder. The vested annual benefit will be paid in equal monthly installments commencing the month following the Executive’s death and continuing for fifteen (15) years. The vested annual benefit shall be calculated as follows:

   

  		
	Date of Death
	Amount of annual benefit

	Prior to January 1, 2015
	$0

	After December 31, 2014 and Before January 1, 2016
	$5,400

	After December 31, 2015 and Before January 1, 2017
	$10,800

	After December 31, 2016 and Before January 1, 2018
	$18,000

	After December 31,2017 and Before January 1, 2019
	$21,000

	After December 31,2018 and Before January 1, 2020
	$32,400

	After December 31, 2019 and Before January 1, 2021
	$40,500

	After December 31, 2020 and Before January 1,2022
	$48,600

	After December 31, 2021
	$54,000

   

  2.6	Death Subsequent to Commencement of Benefit Payments. In the event the Executive dies while receiving payments, but prior to receiving all payments due and owing hereunder, the Employer shall pay the Beneficiary the same amounts at the same times as the Employer would have paid the Executive had the Executive survived.

  2.7	Death After Separation from Service and Prior to Commencement of Benefit Payments. In the event the Executive dies after Separation from Service but before benefit payments have commenced according to Section 2.2 hereof, the Employer shall distribute to the Beneficiary the same benefits to which 

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  the Executive was entitled in accordance with Section 2.2 prior to death, except that the benefit distributions shall commence the month following the Executive’s death.

  2.8	Termination for Cause. If the Employer terminates the Executive’s employment for Cause, then the Executive shall not be entitled to any benefits under the terms of this Agreement.

  2.9	Restriction on Commencement of Distributions. Notwithstanding any provision of this Agreement to the contrary, if the Executive is considered a Specified Employee at the time of Separation from Service, the provisions of this Section shall govern all distributions hereunder. Distributions which would otherwise be made to the Executive due to Separation from Service shall not be made during the first six (6) months following Separation from Service. Rather, any distribution which would otherwise be paid to the Executive during such period shall be accumulated and paid to the Executive in a lump sum on the first day of the seventh month following Separation from Service, or if earlier, upon the Executive’s death. All subsequent distributions shall be paid as they would have had this Section not applied.

  2.10	Acceleration of Payments. Except as specifically permitted herein, no acceleration of the time or schedule of any payment may be made hereunder. Notwithstanding the foregoing, payments may be accelerated, in accordance with the provisions of Treasury Regulation §1.409A-3(j)(4) in the following circumstances: (i) as a result of certain domestic relations orders; (ii) in compliance with ethics agreements with the federal government; (iii) in compliance with the ethics laws or conflicts of interest laws; (iv) in limited cashouts (but not in excess of the limit under Code §402(g)(l)(B)); (v) to pay employment-related taxes; or (vi) to pay any taxes that may become due at any time that the Agreement fails to meet the requirements of Code Section 409A.

  2.11	Delays in Payment by Employer. A payment may be delayed to a date after the designated payment date under any of the circumstances described below, and the provision will not fail to meet the requirements of establishing a permissible payment event. The delay in the payment will not constitute a subsequent deferral election, so long as the Employer treats all payments to similarly situated Participants on a reasonably consistent basis.

  (a)	Payments subject to Code Section 162(m) If the Employer reasonably anticipates that the Employer’s deduction with respect to any distribution under this Agreement would be limited or eliminated by application of Code Section 162(m), then to the extent deemed necessary by the Employer to ensure that the entire amount of any distribution from this Agreement is deductible, the Employer may delay payment of any amount that would otherwise be distributed under this Agreement. The delayed amounts shall be distributed to the Executive (or the Beneficiary in the event of the Executive’s death) at the earliest date the Employer reasonably anticipates that the deduction of the payment of the amount will not be limited or eliminated by application of Code Section 162(m).

  (b)	Payments that would violate Federal securities laws or other applicable law. A payment may be delayed where the Employer reasonably anticipates that the making of the payment will violate Federal securities laws or other applicable law provided that the payment is made at the earliest date at which the Employer reasonably anticipates that the making of the payment will not cause such violation. The making of a payment that would cause inclusion in gross income or the application of any penalty provision of the Internal Revenue Code is not treated as a violation of law.

  (c) 	Solvency. Notwithstanding the above, a payment may be delayed where the payment would jeopardize the ability of the Employer to continue as a going concern,

  2.12	 Treatment of Payment as Made on Designated Payment Date. Solely for purposes of determining compliance with Code Section 409A, any payment under this Agreement made after the 

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  required payment date shall be deemed made on the required payment date provided that such payment is made by the latest of: (i) the end of the calendar year in which the payment is due; (ii) the 15th day of the third calendar month following the payment due date; (iii) if Employer cannot calculate the payment amount on account of administrative impracticality which is beyond the Executive’s control, the end of the first calendar year which payment calculation is practicable; and (iv) if Employer does not have sufficient funds to make the payment without jeopardizing the Employer’s solvency, in the first calendar year in which the Employer’s funds are sufficient to make the payment.

  2.13	Facility of Payment. If a distribution is to be made to a minor, or to a person who is otherwise incompetent, then the Administrator may make such distribution: (i) to the legal guardian, or if none, to a parent of a minor payee with whom the payee maintains his or her residence; or (ii) to the conservator or administrator or, if none, to the person having custody of an incompetent payee. Any such distribution shall fully discharge the Employer and the Administrator from further liability on account thereof,

  2.14	Excise Tax Limitation. Notwithstanding any provision of this Agreement to the contrary, if any benefit payment hereunder would be treated as an “excess parachute payment” under Code Section 280G, the Employer shall reduce such benefit payment to the extent necessary to avoid treating such benefit payment as an excess parachute payment. The Executive shall be entitled to only the reduced benefit and shall forfeit any amount over and above the reduced amount

  2.15	Changes in Form of Timing of Benefit Payments. The Employer and the Executive may, subject to the terms hereof, amend this Agreement to delay the timing or change the form of payments. Any such amendment:

  (a)	must take effect not less than twelve (12) months after the amendment is

  made;

  (b)	must, for benefits distributable due solely to the arrival of a specified date, or on account of Separation from Service or Change in Control, delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally scheduled to be made;

  (c)	must, for benefits distributable due solely to the arrival of a specified date, be made not less than twelve (12) months before distribution is scheduled to begin; and

  (d)  	may not   accelerate the time or schedule of any distribution

  ARTICLE 3
BENEFICIARIES

   

  3.1	Designation of Beneficiaries. The Executive may designate any person to receive any benefits payable under the Agreement upon the Executive’s death, and the designation may be changed from time to time by the Executive by filing a new designation. Each designation will revoke all prior designations by the Executive, shall be in the form prescribed by the Administrator, and shall be effective only when filed in writing with the Administrator during the Executive’s lifetime. If the Executive names someone other than the Executive’s spouse as a Beneficiary, the Administrator may, in its sole discretion, determine that spousal consent is required to be provided in a form designated by the Administrator, executed by the Executive’s spouse and returned to the Administrator. The Executive’s beneficiary designation shall be deemed automatically revoked if the Beneficiary predeceases the Executive or if the Executive names a spouse as Beneficiary and the marriage is subsequently dissolved,

  3.2	Absence of Beneficiary Designation, In the absence of a valid Beneficiary designation, or if, at the time any benefit payment is due to a Beneficiary, there is no living Beneficiary validly named by the Executive, the Employer shall pay the benefit payment to the Executive’s spouse. If the spouse is not 

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  living then the Employer shall pay the benefit payment to the Executive’s living descendants per stirpes, and if there no living descendants, to the Executive’s estate. In determining the existence or identity of anyone entitled to a benefit payment, the Employer may rely conclusively upon information supplied by the Executive’s personal representative, executor, or administrator.

  ARTICLE 4
ADMINISTRATION

  4.1	Administrator Duties. The Administrator shall be responsible for the management, operation, and administration of the Agreement. When making a determination or calculation, the Administrator shall be entitled to rely on information furnished by the Employer, Executive or Beneficiary. No provision of this Agreement shall be construed as imposing on the Administrator any fiduciary duty under ERISA or other law, or any duty similar to any fiduciary duty under ERISA or other law.

  4.2	Administrator Authority. The Administrator shall enforce this Agreement in accordance with its terms, shall be charged with the general administration of this Agreement, and shall have all powers necessary to accomplish its purposes.

  4.3	Binding Effect of Decision. The decision or action of the Administrator with respect to any question arising out of or in connection with the administration, interpretation or application of this Agreement and the rules and regulations promulgated hereunder shall be final, conclusive and binding upon all persons having any interest in this Agreement.

  4.4	Compensation, Expenses and Indemnity. The Administrator shall serve without compensation for services rendered hereunder. The Administrator is authorized at the expense of the Employer to employ such legal counsel and/or recordkeeper as it may deem advisable to assist in the performance of its duties hereunder. Expense and fees in connection with the administration of this Agreement shall be paid by the Employer.

  4.5	Employer Information, The Employer shall supply full and timely information to the Administrator on all matters relating to the Executive’s compensation, death, Disability or Separation from Service, and such other information as the Administrator reasonably requires.

  4.6	Termination of Participation. If the Administrator determines in good faith that the Executive no longer qualifies as a member of a select group of management or highly compensated employees, as determined in accordance with ERISA, the Administrator shall have the right, in its sole discretion, to cease further benefit accruals hereunder.

  4.7	Compliance with Code Section 409A. The Employer and the Executive intend that the Agreement comply with the provisions of Code Section 409A to prevent the inclusion in gross income of any amounts deferred hereunder in a taxable year prior to the year in which amounts are actually paid to the Executive or Beneficiary. This Agreement shall be construed, administered and governed in a manner that affects such intent, and the Administrator shall not take any action that would be inconsistent therewith.

  ARTICLE 5

  CLAIMS AND REVIEW PROCEDURES

  5.1	Claims Procedure. A Claimant who has not received benefits under this Agreement that he or she believes should be distributed shall make a claim for such benefits as follows.

  (a)	Initiation – Written Claim. The Claimant initiates a claim by submitting to the Administrator a written claim for the benefits. If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within sixty (60) days after such notice was 

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  received by the Claimant. All other claims must be made within one hundred eighty (180) days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the Claimant.

  (b)	Timing of Administrator Response. The Administrator shall respond to such Claimant within ninety (90) days after receiving the claim. If the Administrator determines that special circumstances require additional time for processing the claim, the Administrator can extend the response period by an additional ninety (90) days by notifying the Claimant in writing, prior to the end of the initial ninety (90) day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Administrator expects to render its decision.

  (c)	Notice of Decision. If the Administrator denies part or all of the claim, the Administrator shall notify the Claimant in writing of such denial. The Administrator shall write the notification in a manner calculated to be understood by the Claimant. The notification shall set forth: (i) the specific reasons for the denial; (ii) a reference to tire specific provisions of this Agreement on which the denial is based; (iii) a description of any additional information or material necessary for the Claimant to perfect the claim and an explanation of why it is needed; (iv) an explanation of this Agreement’s review procedures and the time limits applicable to such procedures; and (v) a statement of the Claimant's right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

  5.2	Review Procedure. If the Administrator denies part or all of the claim, the Claimant shall have the opportunity for a full and fair review by the Administrator of the denial as follows.

  (a)	Initiation – Written Request. To initiate the review, the Claimant, within sixty (60) days after receiving the Administrator’s notice of denial, must file with the Administrator a written request for review.

  (b)	Additional Submissions – Information Access. The Claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim. The Administrator shall also provide the Claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the Claimant’s claim for benefits.

  (c)	Considerations on Review. In considering the review, the Administrator shall take into account all materials and information the Claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

  (d)	Timing of Administrator Response. The Administrator shall respond in writing to such Claimant within sixty (60) days after receiving the request for review. If the Administrator determines that special circumstances require additional time for processing the claim, the Administrator can extend the response period by an additional sixty (60) days by notifying the Claimant in writing, prior to the end of the initial sixty (60) day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Administrator expects to render its decision.

  (e)	Notice of Decision. The Administrator shall notify the Claimant in writing of its decision on review. The Administrator shall write the notification in a manner calculated to be understood by the Claimant. The notification shall set forth: (a) the specific reasons for the denial; (b) a reference to the specific provisions of this Agreement on which the denial is based; (c) a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the Claimant’s claim for benefits; and (d) a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a).

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  ARTICLE 6

  AMENDMENT AND TERMINATION

  6.1	Agreement Amendment Generally. Except as provided in Section 6,2, this Agreement may he amended only by a written agreement signed by both the Employer and the Executive.

  6.2	Amendment to Insure Proper Characterization of Agreement, Notwithstanding anything in this Agreement to the contrary, the Agreement may be amended by the Employer at any time, if found necessary in the opinion of the Employer, i) to ensure that the Agreement is characterized as plan of deferred compensation maintained for a select group of management or highly compensated employees as described under ERISA, ii) to conform the Agreement to the requirements of any applicable law or iii) to comply with the written instructions of the Employer’s auditors or banking regulators.

  6.3	Agreement Termination Generally. Except as provided in Section 6.4, this Agreement may be terminated only by a written agreement signed by the Company and the Executive. Such termination shall not cause a distribution of benefits under this Agreement. Rather, upon such termination benefit distributions will be made at the earliest distribution event permitted under Article 2.

  6.4	Effect of Complete Termination. Notwithstanding anything to the contrary in Section 6.3, and subject to the requirements of Code Section 409A and Treasury Regulations §1.409A-3(j)(4)(ix), at certain times the Employer may completely terminate and liquidate the Agreement, In the event of such a complete termination, the Employer shall pay the Accrued Benefit balance to the Executive. Such complete termination of the Agreement shall occur only under the following circumstances and conditions.

  (a)	Corporate Dissolution or Bankruptcy. The Employer may terminate and liquidate this Agreement within twelve (12) months of a corporate dissolution taxed under Code Section 331, or with the approval of a bankruptcy court pursuant to 11 U.S.C. §503(b)(l)(A), provided that all benefits paid under the Agreement are included in the Executive's gross income in the latest of: (i) the calendar year which the termination occurs; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the payment is administratively practicable.

  (b)	Change in Control. The Employer may terminate and liquidate this Agreement by taking irrevocable action to terminate and liquidate within the thirty (30) days preceding or the twelve (12) months following a Change in Control. This Agreement will then be treated as terminated only if all substantially similar arrangements sponsored by the Employer which are treated as deferred under a single plan under Treasury Regulations §1.409A- 1(c)(2) are terminated and liquidated with respect to each participant who experienced the Change in Control so that the Executive and any participants in any such similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the date the Employer takes the irrevocable action to terminate the arrangements.

  (c)	Discretionary Termination. The Employer may terminate and liquidate this Agreement provided that: (i) the termination does not occur proximate to a downturn in the financial health of the Employer; (ii) all arrangements sponsored by the Employer and Affiliates that would be aggregated with any terminated arrangements under Treasury Regulations §1.409A-1(c) are terminated; (iii) no payments, other than payments that would be payable under the terms of this Agreement if the termination had not occurred, are made within twelve (12) months of the date the Employer takes the irrevocable action to terminate this Agreement; (iv) all payments are made within twenty-four (24) months following the date the Employer takes the irrevocable action to terminate and liquidate this Agreement; and (v) neither the Employer nor any of its Affiliates adopt a new arrangement that would be aggregated with any terminated arrangement under Treasury Regulations §1.409A-1 (c) if the Executive participated in both arrangements, at any time 

  9

  

   

  within three (3) years following the date the Employer takes the irrevocable action to terminate this Agreement.

  ARTICLE 7
MISCELLANEOUS

  7.1	No Effect on Other Rights, This Agreement constitutes the entire agreement between the Employer and the Executive as to the subject matter hereof. No rights are granted to the Executive by virtue of this Agreement other than those specifically set forth herein. Nothing contained herein will confer upon the Executive the right to be retained in the service of the Employer nor limit the right of the Employer to discharge or otherwise deal with the Executive without regard to the existence hereof.

  7.2	State Law. To the extent, not governed by ERISA, the provisions of this Agreement shall be construed and interpreted according to the internal law of the Commonwealth of Pennsylvania without regard to its conflicts of laws principles.

  7.3	Validity. In case any provision of this Agreement shall be illegal or invalid for any reason, said illegality or invalidity shall affect the remaining parts hereof, but this Agreement shall be construed and enforced as if such illegal or invalid provision had never been inserted herein.

  7.4	Nonassignability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner,

  7.5	Unsecured General Creditor Status. Payment to the Executive or any Beneficiary hereunder shall be made from assets which shall continue, for all purposes, to be part of the general, unrestricted assets of the Employer and no person shall have any interest in any such asset by virtue of any provision of this Agreement. The Employer’s obligation hereunder shall be an unfunded and unsecured, promise to pay money in the future. In the event that the Employer purchases an insurance policy insuring the life of the Executive to recover the cost of providing benefits hereunder, neither the Executive nor the Beneficiary shall have any rights whatsoever in said policy or the proceeds therefrom.

  7.6	Life Insurance. If the Employer chooses to obtain insurance on the life of the Executive in connection with its obligations under this Agreement, the Executive hereby agrees to take such physical examinations and to truthfully and completely supply such information as may be required by the Employer or the insurance company designated by the Employer.

  7.7	Unclaimed Benefits. The Executive shall keep the Employer informed of the Executive’s current address and the current address of the Beneficiary. If the location of the Executive is not made known to the Employer within three years after the date upon which any payment of any benefits may first be made, the Employer shall delay payment of the Executive’s benefit payments) until the location of the Executive is made known to the Employer; however, the Employer shall only be obligated to hold such benefit payment(s) for the Executive until the expiration of three (3) years. Upon expiration of the three (3) year period, the Employer may discharge its obligation by payment to the Beneficiary. If the location of the Beneficiary is not made known to the Employer by the end of an additional two (2) month period following expiration of the three (3) year period, the Employer may discharge its obligation by payment to the Executive’s estate. If there is no estate in existence at such time or if such fact cannot be determined by the 

  10

  

   

  Employer, the Executive and Beneficiary shall thereupon forfeit all rights to any benefits provided under this Agreement.

  7.8	Suicide or Misstatement.  No benefit shall be distributed hereunder if the Executive commits suicide within two (2) years after the Effective Date, or if an insurance company which issued a life insurance policy covering the Executive and owned by the Employer denies coverage (i) for material misstatements of fact made by the Executive on an application for life insurance, or (ii) for any other reason.

  7.9	Removal.  Notwithstanding anything in this Agreement to the contrary, the Employer shall not distribute any benefit under this Agreement if the Executive is subject to a final removal or prohibition order issued pursuant to Section 8(e) of the Federal Deposit Insurance Act. Furthermore, any payments made to the Executive pursuant to this Agreement shall, if required, comply with 12 U.S.C. 1828, FDIC Regulation 12 CFR Part 359 and any other regulations or guidance promulgated thereunder.

  7.10	Competition After Separation from Service.  The Employer shall not pay any benefit under this Agreement if the Executive, during the term of the Executive’s employment with the Employer or during the one-year period commencing with Separation from Service, and without the prior written consent of the Employer, engages in, becomes interested in, directly or indirectly, as a sole proprietor, as a partner in a partnership, or as a substantial shareholder in a corporation, or becomes associated with, in the capacity of employee, executive, officer, principal, agent, trustee or in any other capacity whatsoever, any enterprise conducted in the trading area (including any county in which the Employer has an office as well as any county contiguous thereto) of the business of the Employer, which enterprise is, or may deemed to be, competitive with any business carried on by the Employer as of the date of Separation from Service.

  7.11	Notice.  Any notice, consent or demand required or permitted to be given to the Employer or Administrator under this Agreement shall be sufficient if in writing and hand- delivered or sent by registered or certified mail to the Employer’s principal business office. Any notice or filing required or permitted to be given to the Executive or Beneficiary under this Agreement shall be sufficient if in writing and hand-delivered or sent by mail to the last known address of the Executive or Beneficiary, as appropriate. Any notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark or on the receipt for registration or certification.

  7.12	Headings and Interpretation.  Headings and sub-headings in this Agreement are inserted for reference and convenience only and shall not be deemed part of this Agreement. Wherever the 

  11

  

   

  fulfillment of the intent and purpose of this Agreement requires and the context will permit, the use of the masculine gender includes the feminine and use of the singular includes the plural.

  7.13	Alternative Action.  In the event it becomes impossible for the Employer or the Administrator to perform any act required by this Agreement due to regulatory or other constraints, the Employer or Administrator may perform such alternative act as most nearly carries out the intent and purpose of this Agreement and is in the best interests of the Employer, provided that such alternative act does not violate Code Section 409A.

  7.14	Coordination with Other Benefits, The benefits provided for the Executive or the Beneficiary under this Agreement are in addition to any other benefits available to the Executive under any other plan or program for employees of the Employer. This Agreement shall supplement and shall not supersede, modify, or amend any other such plan or program except as may otherwise be expressly provided herein.

  7.15	Inurement. This Agreement shall be binding upon and shall inure to the benefit of the Employer, its successor and assigns, and the Executive, the Executive’s successors, heirs, executors, administrators, and the Beneficiary.

  7.16	Tax Withholding. The Employer may make such provisions and take such action as it deems necessary or appropriate for the withholding of any taxes which the Employer is required by any law or regulation to withhold in connection with any benefits under the Agreement. The Executive shall be responsible for the payment of all individual tax liabilities relating to any benefits paid hereunder.

  7.17	Aggregation of Agreement. If the Employer offers other non-account balance deferred compensation plans, this Agreement and those plans shall be treated as a single plan to the extent required under Code Section 409A.

  IN WITNESS WHEREOF, the Executive and a representative of the Employer have executed this Agreement document as indicated below:

   

  	
	 

   

  12EX-10.19

  The Gratz Bank

  Director Deferred Compensation Agreement 

  Exhibit 10.19

  THE GRATZ BANK

  DIRECTOR DEFERRED COMPENSATION AGREEMENT

  THIS DIRECTOR DEFERRED COMPENSATION AGREEMENT (this “Agreement”) is adopted this 1st day of January, 2013, by and between The Gratz Bank, a state chartered commercial bank located in Gratz, Pennsylvania (the “Bank”), and Wesley M. Weymers (the “Director”).

  The purpose of this Agreement is to provide specified benefits to the Director who contributes materially to the continued growth, development and future business success of the Bank. This Agreement shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended from time to time.

  Article 1
Definitions

  Whenever used in this Agreement, the following words and phrases shall have the meanings specified:

  1.1 “Beneficiary” means each designated person or entity, or the estate of the deceased Director, entitled to any benefits upon the death of the Director pursuant to Article 6.

  1.2 “Beneficiary Designation Form” means the form established from time to time by the Plan Administrator that the Director completes, signs and returns to the Plan Administrator to designate one or more beneficiaries.

  1.3 “Board” means the Board of Directors of the Bank as from time to time constituted.

  1.4 “Change in Control” means a change in the ownership or effective control of the Bank, or in the ownership of a substantial portion of the assets of the Bank, as such change is defined in Code Section 409A.

  1.5 “Code” means the Internal Revenue Code of 1986, as amended, and all regulations and guidance thereunder, including such regulations and guidance as may be promulgated after the Effective Date of this Agreement.

  1.6 “Crediting Rate” means one hundred fifty percent (150%) of the average ten year Treasury instrument as quoted in the Wall Street Journal on the last business day of the Plan Year. Notwithstanding the foregoing, at no time shall the Crediting Rate be less than two percent (2.0%) or greater than six percent (6.0%).

  1.7 “Deferrals” means the amount of Fees the Director elects to defer according to this Agreement.

  1.8 “Deferral Account” means the Bank’s accounting of the accumulated Deferrals plus accrued interest.

   

  

  The Gratz Bank

  Director Deferred Compensation Agreement 

  1.9 “Deferral Election Form” means each form established from time to time by the Plan Administrator that the Director completes, signs and returns to the Plan Administrator to designate the amount of Deferrals.

  1.10 “Effective Date” means January 1, 2013.

  1.11 “Fees” means any and all amounts paid to the Director for his services as a director, including but not limited to annual, fees, meeting fees, and committee fees during the Plan Year. In addition, fees shall include any salary or bonus that is paid to the Director by the Bank.

  1.12 “Normal Retirement Age” means the later of the Director’s age sixty-five (65) or the end of the fifth (5th) Plan Year.

  1.13 “Normal Retirement Date” means the later of Normal Retirement Age or Separation from Service.

  1.14 “Plan Year” means each twelve (12) month period commencing on January 1 and ending on December 31 of each year. The initial Plan Year shall commence on the Effective Date of this Agreement and end on the following December 31.

  1.15 “Separation from Service” means the termination of the Director’s service with the Bank for reasons other than death. Whether a Termination of Service takes place is determined based on the facts and circumstances surrounding the termination of the Director’s service and whether the Bank and the Director intended for the Director to provide significant services for the Bank following such termination.

  1.16 “Specified Employee” means an employee who at the time of Separation from Service is a key employee of the Bank, if any stock of the Bank is publicly traded on an established securities market or otherwise. For purposes of this Agreement, an employee is a key employee if the employee meets the requirements of Code Section 416(i)(l )(A)(i), (ii), or (iii) (applied in accordance with the regulations thereunder and disregarding section 416(i)(5)) at any time during the twelve (12) month period ending on December 31 (the “identification period”). If the employee is a key employee during an identification period, the employee is treated as a key employee for purposes of this Agreement during the twelve (12) month period that begins on the first day of April following the close of the identification period.

  1.17“Termination for Cause” means a Separation from Service for:

  (a)Gross negligence or gross neglect of duties to the Bank;

  (b)Conviction of a felony or of a gross misdemeanor involving moral turpitude in connection with the Director’s service with the Bank; or

  (c)Fraud, disloyalty, dishonesty or willful violation of any law or significant Bank policy committed in connection with the Director’s service and resulting in a material adverse effect on the Bank.

   

  

  The Gratz Bank

  Director Deferred Compensation Agreement 

  Article 2

  Deferral Election

  2.1 Elections Generally. The Director may annually file a Deferral Election Form with the Plan Administrator no later than the end of the Plan Year preceding the Plan Year in which services leading to such Fees will be performed.

  2.2 Initial Election. After being notified by the Plan Administrator of becoming eligible to participate in this Agreement, the Director may make an initial deferral election by delivering to the Plan Administrator a signed Deferral Election Form and Beneficiary Designation Form within thirty (30) days of becoming eligible. The Deferral Election Form shall set forth the amount of Fees to be deferred. However, if the Director was eligible to participate in any other account balance plans sponsored by the Bank (as referenced in Code Section 409A) prior to becoming eligible to participate in this Agreement, the initial election to Fees under this Agreement shall not be effective until the Plan Year following the Plan Year in which the Director became eligible to participate in this Agreement

  2.3 Election Changes. The Director may modify the amount of Fees to be deferred annually by filing a new Deferral Election Form with the Bank. The modified deferral shall not be effective until the calendar year following the year in which the subsequent Deferral Election Form is received by the Bank.

  Article 3

  Deferral Account

  3.1 Establishing and Crediting. The Bank shall establish a Deferral Account on its books for the Director and shall credit to the Deferral Account the following amounts:

  (a)Any Deferrals hereunder; plus

  (b)On the last day of each Plan Year and during any applicable installment period, interest shall be credited on the Deferral Account at an annual rate equal to the Crediting Rate.

  3.2 Accounting Device Only. The Deferral Account is solely a device for measuring amounts to be paid under this Agreement and is not a trust fund of any kind.

  Article 4

  Distributions During Lifetime

  4.1Normal Retirement Benefit. Upon the Normal Retirement Date, the Bank shall distribute to the Director the benefit described in this Section 4.1 in lieu of any other benefit under this Article.

  4.1.1 Amount of Benefit. The benefit under this Section 4.1 is the Deferral Account balance at the Normal Retirement Date.

   

  

  The Gratz Bank

  Director Deferred Compensation Agreement 

  4.1.2 Distribution of Benefit. The Bank shall distribute the benefit to the Director in equal monthly installments for one hundred and twenty (120) months commencing within thirty (30) days following the Normal Retirement Date.

  4.2 Early Termination Benefit. If Separation from Service prior to the Director’s Normal Retirement Age occurs, the Bank shall distribute to the Director the benefit described in this Section 4.2 in lieu of any other benefit under this Article.

  4.2.1 Amount of Benefit. The benefit under this Section 4.2 is the Deferral Account balance determined as of the date of Separation from Service

  4.2.2 Distribution of Benefit. The Bank shall distribute the benefit to the Director in equal monthly installments for one hundred and twenty (120) months commencing within thirty (30) days following the Normal Retirement Date.

  4.3 Restriction on Commencement of Distributions. Notwithstanding any provision of this Agreement to the contrary, if the Director is considered a Specified Employee, the provisions of this Section 4.3 shall govern all distributions hereunder. If benefit distributions which would otherwise be made to the Director due to Separation from Service are limited because the Director is a Specified Employee, then such distributions shall not be made during the first six (6) months following Separation from Service. Rather, any distribution which would otherwise be paid to the Director during such period shall be accumulated and paid to the Director in a lump sum on the first day of the seventh month following Separation from Service. All subsequent distributions shall be paid in the manner specified.

  4.4 Distributions Upon Taxation of Amounts Deferred. If, pursuant to Code Section 409A, the Federal Insurance Contributions Act or other state, local or foreign tax, the Director becomes subject to tax on the amounts deferred hereunder, then the Bank may make a limited distribution to the Director in a manner that conforms to the requirements of Code section 409A. Any such distribution will decrease the Deferral Account balance.

  4.5 Change in Form or Timing of Distributions. For distribution of benefits under this Article 4, the Director and the Bank may, subject to the terms of Section 10.1, amend this Agreement to delay the timing or change the form of distributions. Any such amendment:

  (a)may not accelerate the time or schedule of any distribution, except as provided in Code Section 409A;

  (b)must, for benefits distributable under Article 4 be made at least twelve (12) months prior to the first scheduled distribution;

  (c)must, for benefits distributable under Article 4 delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally scheduled to be made; and

  (d)must take effect not less than twelve (12) months after the amendment is made.

  Article 5

  Distributions at Death

  5.1 Death During Active Service. If the Director dies prior to Separation from Service, the Bank shall distribute to the Beneficiary the benefit described in this Section 5.1. This benefit shall be distributed in lieu of the benefit under Article 4.

  5.1.1 Amount of Benefit. The benefit under this Section 5.1 is the Deferral Account balance determined as if the Director had survived until the Normal Retirement Age and continued the dollar amount of deferrals made 

   

  

  The Gratz Bank

  Director Deferred Compensation Agreement 

  in the calendar year prior to the Director’s death plus interest calculated using the Crediting Rate in effect for the Plan Year prior to the Director’s death. The Bank shall annually calculate the amount payable pursuant to this Paragraph and advise the Director no later than June 30th the amount that would be payable to the Director’s Beneficiary in the event of the Director’s death.

  5.1.2 Distribution of Benefit. The Bank shall distribute the benefit to the Beneficiary in a lump sum commencing on the first day of the fourth month following the Director’s death. The Beneficiary shall be required to provide to the Bank the Director’s death certificate receipt.

  5.2 Death During Distribution of a Benefit. If the Director dies after any benefit distributions have commenced under this Agreement but before receiving all such distributions, the Bank shall distribute to the Beneficiary the remaining benefits in a lump sum.

  5.3 Death After Separation from Service But Before Benefit Distributions Commence. If the Director is entitled to benefit distributions under this Agreement but dies prior to the date that commencement of said benefit distributions are scheduled to be made under this Agreement, the Bank shall distribute to the Beneficiary the same benefits to which the Director was entitled prior to death, except that the benefit distributions shall be paid in the manner specified in Section 5.1.2 and shall commence on the first day of the fourth month following the Director’s death.

  Article 6
Beneficiaries

  6.1 In General. The Director shall have the right, at any time, to designate a Beneficiary to receive any benefit distributions under this Agreement upon the death of the Director. The Beneficiary designated under this Agreement may be the same as or different from the beneficiary designated under any other plan of the Bank in which the Director participates.

  6.2 Designation. The Director shall designate a Beneficiary by completing and signing the Beneficiary Designation Form and delivering it to the Plan Administrator or its designated agent. If the Director names someone other than the Director’s spouse as a Beneficiary, the Plan Administrator may, in its sole discretion, determine that spousal consent is required to be provided in a form designated by the Plan Administrator, executed by the Director’s spouse and returned to the Plan Administrator. The Director's beneficiary designation shall be deemed automatically revoked if the Beneficiary predeceases the Director or if the Director names a spouse as Beneficiary and the marriage is subsequently dissolved. The Director shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Plan Administrator’s rules and procedures. Upon the acceptance by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled. The Plan Administrator shall be entitled to rely on the last Beneficiary Designation Form filed by the Director and accepted by the Plan Administrator prior to the Director’s death.

  6.3 Acknowledgment. No designation or change in designation of a Beneficiary shall be effective until received, accepted and acknowledged in writing by the Plan Administrator or its designated agent.

  6.4 No Beneficiary Designation. If the Director dies without a valid Beneficiary designation, or if all designated Beneficiaries predecease the Director, then the Director’s spouse shall be the designated Beneficiary. If the Director has no surviving spouse, any benefit shall be paid to the personal representative of the Director’s estate.

   

  

  The Gratz Bank

  Director Deferred Compensation Agreement 

  6.5 Facility of Distribution. If the Plan Administrator determines in its discretion that a benefit is to be distributed to a minor, to a person declared incompetent or to a person incapable of handling the disposition of that person’s property, the Plan Administrator may direct distribution of such benefit to the guardian, legal representative or person having the care or custody of such minor, incompetent person or incapable person. The Plan Administrator may require proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Any distribution of a benefit shall be a distribution for the account of the Director and the Beneficiary, as the case may be, and shall completely discharge any liability under this Agreement for such distribution amount.

  Article 7

  General Limitations

  7.1 Termination for Cause. Notwithstanding any provision of this Agreement to the contrary, the Bank shall not distribute any benefit under this Agreement in excess of the Deferrals if the Director’s service with the Bank is terminated by the Bank or an applicable regulator due to a Termination for Cause.

  7.2 Suicide or Misstatement. No benefit in excess of the Deferrals shall be distributed if the Director commits suicide within two (2) years after the Effective Date, or if an insurance company which issued a life insurance policy covering the Director and owned by the Bank denies coverage (i) for material misstatements of fact made by the Director on an application for such life insurance, or (ii) for any other reason.

  7.3 Removal. Notwithstanding any provision of this Agreement to the contrary, the Bank shall not distribute any benefit under this Agreement in excess of Deferrals credited thereon) if the Director is subject to a final removal or prohibition order issued by an appropriate federal banking agency pursuant to Section 8(e) of the Federal Deposit Insurance Act. Notwithstanding anything herein to the contrary, any payments made to the Director pursuant to this Agreement, or otherwise, shall be subject to and conditioned upon compliance with 12 U.S.C. 1828 and FDIC Regulation 12 CFR Part 359, Golden Parachute Indemnification Payments and any other regulations or guidance promulgated thereunder.

  Article 8

  Administration of Agreement

  8.1 Plan Administrator Duties. The Plan Administrator shall administer this Agreement according to its express terms and shall also have the discretion and authority to (i) make, amend, interpret and enforce all appropriate rules and regulations for the administration of this Agreement and (ii) decide or resolve any and all questions, including interpretations of this Agreement, as may arise in connection with this Agreement to the extent the exercise of such discretion and authority does not conflict with Code Section 409A.

  8.2 Agents. In the administration of this Agreement, the Plan Administrator may employ agents and delegate to them such administrative duties as the Plan Administrator sees fit, including acting through a duly appointed representative, and may from time to time consult with counsel who may be counsel to the Bank.

  8.3 Binding Effect of Decisions. Any decision or action of the Plan Administrator with respect to any question arising out of or in connection with the administration, interpretation or application of this Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in this Agreement.

  8.4 Indemnity of Plan Administrator. The Bank shall indemnify and hold harmless the Plan Administrator against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Agreement, except in the case of willful misconduct by the Plan Administrator.

   

  

  The Gratz Bank

  Director Deferred Compensation Agreement 

  8.5 Bank Information. To enable the Plan Administrator to perform its functions, the Bank shall supply full and timely information to the Plan Administrator on all matters relating to the date and circumstances of the Director’s death or Separation from Service, and such other pertinent information as the Plan Administrator may reasonably require.

  8.6 Statement of Accounts. The Plan Administrator shall provide to the Director, within one hundred twenty (120) days after the end of each Plan Year, a statement setting forth the benefits to be distributed under this Agreement.

   

  

  The Gratz Bank

  Director Deferred Compensation Agreement 

  
Article 9

  Claims and Review Procedures

  9.1 Claims Procedure. A Director or Beneficiary (“claimant”) who has not received benefits under this Agreement that he or she believes should be distributed shall make a claim for such benefits as follows:

  9.1.1 Initiation - Written Claim. The claimant initiates a claim by submitting to the Plan Administrator a written claim for the benefits. If such a claim relates to the contents of a notice received by the claimant, the claim must be made within sixty (60) days after such notice was received by the claimant. All other claims must be made within one hundred eighty (180) days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the claimant.

  9.1.2 Timing of Plan Administrator Response. The Plan Administrator shall respond to such claimant within ninety (90) days after receiving the claim. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional ninety (90) days by notifying the claimant in writing, prior to the end of the initial ninety (90) day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.

  9.1.3 Notice of Decision. If the Plan Administrator denies part or all of the claim, the Plan Administrator shall notify the claimant in writing of such denial. The Plan Administrator shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

  (a)The specific reasons for the denial;

  (b)A reference to the specific provisions of this Agreement on which the denial is based;

  (c)A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed;

  (d)An explanation of this Agreement’s review procedures and the time limits applicable to such procedures; and

  (e)A statement of the claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

  9.2 Review Procedure. If the Plan Administrator denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Plan Administrator of the denial as follows:

  9.2. l Initiation - Written Request. To initiate the review, the claimant, within sixty (60) days after receiving the Plan Administrator’s notice of denial, must file with the Plan Administrator a written request for review.

   

   

  

  The Gratz Bank

  Director Deferred Compensation Agreement 

  9.2.2 Additional Submissions - Information Access. The claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim. The Plan Administrator shall also provide the claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits.

  9.2.3 Considerations on Review. In considering the review, the Plan Administrator shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

  9.2.4 Timing of Plan Administrator Response. The Plan Administrator shall respond in writing to such claimant within sixty (60) days after receiving the request for review. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional sixty (60) days by notifying the claimant in writing, prior to the end of the initial sixty (60) day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.

  9.2.5 Notice of Decision. The Plan Administrator shall notify the claimant in writing of its decision on review. The Plan Administrator shall write the notification in a manner calculated to be understood by the claimant. A notification of denial shall set forth:

  (a)The specific reasons for the denial;

  (b)A reference to the specific provisions of this Agreement on which the denial is based;

  (c)A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits; and

  (d)A statement of the claimant’s right to bring a civil action under ERISA Section 502(a).

  Article 10

  Amendments and Termination

  l 0.1 Amendments. This Agreement may be amended only by a written agreement signed by the Bank and the Director. However, the Bank may unilaterally amend this Agreement to conform with written directives to the Bank from its auditors or banking regulators or to comply with legislative changes or tax law, including without limitation Code Section 409A.

   

   

  

  The Gratz Bank

  Director Deferred Compensation Agreement 

  10.2 Plan Termination Generally. This Agreement may be terminated only by a written agreement signed by the Bank and the Director. Except as provided in Section 10.3, the termination of this Agreement shall not cause a distribution of benefits under this Agreement. Rather, upon such termination benefit distributions will be made at the earliest distribution event permitted under Article 4 or Article 5.

  10.3 Plan Terminations Under Section 409A. Notwithstanding anything to the contrary in Section 10.2, if the Bank terminates this Agreement in the following circumstances:

  (a)Within thirty (30) days before or twelve (12) months after a Change in Control, provided that all distributions are made no later than twelve (12) months following such termination of this Agreement and further provided that all the Bank's arrangements which are substantially similar to this Agreement are terminated so the Director and all participants in the similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of such termination;

  (b)Upon the Bank’s dissolution or with the approval of a bankruptcy court provided that the amounts deferred under this Agreement are included in the Director's gross income in the latest of (i) the calendar year in which this Agreement terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or

  (c)Upon the Bank’s termination of this and all other arrangements that would be aggregated with this Agreement pursuant to Treasury Regulations Section 1.409A-l(c) if the Director participated in such arrangements (“Similar Arrangements”), provided that (i) the termination and liquidation does not occur proximate to a downturn in the financial health of the Bank, (ii) all termination distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and (iii) the Bank does not adopt any new arrangement that would be a Similar Arrangement for a minimum of three (3) years following the date the Bank takes all necessary action to irrevocably terminate and liquidate the Agreement;

  the Bank may distribute the Deferral Account balance, determined as of the date of the termination of this Agreement, to the Director in a lump sum subject to the above terms.

  Article 11

  Miscellaneous

  11.1 Binding Effect. This Agreement shall bind the Director and the Bank and their beneficiaries, survivors, executors, administrators and transferees.

  11.2 No Guarantee of Employment. Neither this Agreement nor the payments of any benefits hereunder shall be construed as giving to the Director any right to be retained as a member of the Board of Directors of the Bank.

  11.3 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.

  11.4 Tax Withholding and Reporting. The Bank shall withhold any taxes that are required to be withheld, including but not limited to taxes owed under Code Section 409A from the benefits provided under this Agreement. The Director acknowledges that the Bank’s sole liability regarding taxes is to forward any amounts withheld to the appropriate taxing authorities. The Bank shall satisfy all applicable reporting requirements, including those under Code Section 409A.

   

  

  The Gratz Bank

  Director Deferred Compensation Agreement 

  11.5 Applicable Law. This Agreement and all rights hereunder shall be governed by the laws of the Commonwealth of Pennsylvania, except to the extent preempted by the laws of the United States of America.

  11.6 Unfunded Arrangement. The Director and the Beneficiary are general unsecured creditors of the Bank for the distribution of benefits under this Agreement. The benefits represent the mere promise by the Bank to distribute such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by creditors. Any insurance on the Director's life or other informal funding asset is a general asset of the Bank to which the Director and Beneficiary have no preferred or secured claim.

  11.7 Reorganization. The Bank shall not merge or consolidate into or with another bank, or reorganize, or sell substantially all of its assets to another bank, firm or person unless such succeeding or continuing bank, firm or person agrees to assume and discharge the obligations of the Bank under this Agreement. Upon the occurrence of such an event, the term “Bank” as used in this Agreement shall be deemed to refer to the successor or survivor entity.

  11.8 Entire Agreement. This Agreement constitutes the entire agreement between the Bank and the Director as to the subject matter hereof No rights are granted to the Director by virtue of this Agreement other than those specifically set forth herein.

  11.9 Interpretation. Wherever the fulfillment of the intent and purpose of this Agreement requires and the context will permit, the use of the masculine gender includes the feminine and use of the singular includes the plural

  11.10 Alternative Action. In the event it shall become impossible for the Bank or the Plan Administrator to perform any act required by this Agreement due to regulatory or other constraints, the Bank or Plan Administrator may perform such alternative act as most nearly carries out the intent and purpose of this Agreement and is in the best interests of the Bank, provided that such alternative act does not violate Code Section 409A.

  11.11 Headings. Article and section headings are for convenient reference only and shall not control or affect the meaning or construction of any provision herein.

  11.12 Validity. If any provision of this Agreement shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Agreement shall be construed and enforced as if such illegal or invalid provision had never been included herein.

  11.13 Notice. Any notice or filing required or permitted to be given to the Bank or Plan Administrator under this Agreement shall be sufficient if in writing and hand-delivered or sent by registered or certified mail to the address below:

   

  	
	32 West Market Street

	Box 159

	Gratz, PA 17030

   

  Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.

   

  

  The Gratz Bank

  Director Deferred Compensation Agreement 

  Any notice or filing required or permitted to be given to the Director under this Agreement shall be sufficient if in writing and hand-delivered or sent by mail to the last known address of the Director.

  11.14 Deduction Limitation on Benefit Payments. If the Bank reasonably anticipates that the Bank’s deduction with respect to any distribution under this Agreement would be limited or eliminated by application of Code Section 162(m), then to the extent deemed necessary by the Bank to ensure that the entire amount of any distribution from this Agreement is deductible, the Bank may delay payment of any amount that would otherwise be distributed under this Agreement. The delayed amounts shall be distributed to the Director (or the Beneficiary in the event of the Director's death) at the earliest date the Bank reasonably anticipates that the deduction of the payment of the amount will not be limited or eliminated by application of Code Section 162(m).

  11.15 Compliance with Section 409A. This Agreement shall be interpreted and administered consistent with Code Section 409A.

  IN WITNESS WHEREOF, the Director and a duly authorized representative of the Bank have signed this Agreement.

   

  				
	DIRECTOR
	 
	BANK

	/s/ Wesley M. Weymers
	 
	By:
	 

	Wesley M. Weymers
	 
	Title:

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