Document:

EX-10.22

   

  Exhibit 10.22

   

  409A Amendment

  to the

  Gratz National Bank

  Executive Deferred Compensation Agreement for

  Timothy J. Allison

  The Gratz National Bank (“Bank”) and Timothy J. Allison (“Executive") originally entered into the Gratz National Bank Executive Deferred Compensation Agreement (“Agreement”) on January 8, 2002, which was subsequently amended on December 29, 2006. Pursuant to Section XXII of the Agreement, the Bank and the Executive hereby adopt this 409A Amendment, effective January 1, 2005.

  RECITALS

  This Amendment is intended to bring the Agreement into compliance with the requirements of Internal Revenue Code Section 409A. Accordingly, the intent of the parties hereto is that the Agreement shall be operated and interpreted consistent with the requirements of Section 409A. Therefore, the following changes shall be made:

  1.Section III, “Election of Deferred Compensation”, shall be deleted in its entirety and replaced with the following Section III:

  ELECTION OF DEFERRED COMPENSATION

  The Executive shall, at the same time as entering into this Agreement, file a written statement with the Bank notifying the Bank as to the percent (%) or dollar amount of salary and compensation as defined in Section II that is to be deferred.

  2.Section III (A) shall be added relating to the rules regarding deferral elections, as follows:

  Deferral Elections - In General:

  In any Plan Year during which Executive defers compensation (as defined herein), Executive shall file a Deferral Election Form for any compensation deferred. Such form shall be filed with the Plan Administrator no later than the close of the Executive’s taxable year next preceding the service year, and such election and is effective only to defer compensation that has not yet been earned by the Executive at the time of the election.

  A deferral election submitted for a particular year may continue to be valid for succeeding years until changed or modified. Deferral elections, once made, however, are irrevocable as of the last permissible date on which such deferral elections may be made.

  Initial Deferral Election(s):

  Upon notification of eligibility in this Agreement during the initial Plan Year, and if Executive elects to defer compensation, Executive shall deliver to the Plan Administrator:

  (a)a Deferral Election Form, signed and dated;

  (b)a Beneficiary Form, signed and dated.

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  Executive shall deliver such forms to the Plan Administrator within thirty (30) days of notification of eligibility, and shall set forth on the forms the amount of compensation to be deferred.

  Subsequent Changes to Time and Form of Payment:

  The Bank may permit a subsequent change to form and timing of payments (a “subsequent deferral election”). Any such change shall be considered made only when it becomes irrevocable under the terms of the Agreement. Any subsequent deferral election will be considered irrevocable not later than thirty (30) days following acceptance of the change by the Plan Administrator, subject to the following rules:

  (1)the subsequent deferral election may not take effect until at least twelve (12) months after the date on which the election is made;

  (2)the payment (except in the case of death, disability, or unforeseeable emergency) upon which the subsequent deferral election is made is deferred for a period of not less than five years from the date such payment would otherwise have been paid; and

  (3)in the case of a payment made at a specified time, the election must be made not less than twelve (12) months before the date the payment is scheduled to be paid.

  3.Section VIII, “Payment of Monthly Installments”, shall be deleted in its entirety and replaced with the following Section VIII:

  PAYMENT OF MONTHLY INSTALLMENTS

  Installment payments of deferred amounts shall commence on the first day of the calendar month following the Executive’s Separation from Service due to resignation, removal, failure to be re-elected, or the Executive’s sixty-fifth (65th) birthday.

  4.Section “XII”, “Modification”, shall be relabeled Section XXII.

  5.The following provision regarding “Separation from Service” distributions shall be added as a new subsection XXV, as follows:

  Separation from Service:

  Notwithstanding anything to the contrary in this Agreement, to the extent that any benefit under this Agreement is payable upon a “Termination of Employment,” “Termination of Service,” or other event involving the Executive’s cessation of services, such payment(s) shall not be made unless such event constitutes a “Separation from Service” as defined in Treasury Regulations Section 1.409A-1(h).

  6.A new Section XXVI shall be added as follows:

  Restriction on Timing of Distribution:

  Notwithstanding any provision of this Agreement to the contrary, distributions under this Agreement may not commence earlier than six (6) months after the date of a Separation from Service (as described under the “Separation from Service” provision herein) if, pursuant to Internal Revenue Code Section 409A, the participant hereto is considered a "specified employee” (under Internal Revenue Code Section 41 6(i)) of the Bank if any stock of the Bank is publicly traded on 

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  an established securities market or otherwise. In the event a distribution is delayed pursuant to this Section, the originally scheduled distribution shall be delayed for six (6) months, and shall commence instead on the first day of the seventh month following Separation from Service. If payments are scheduled to be made in installments, the first six (6) months of installment payments shall be delayed, aggregated, and paid instead on the first day of the seventh month, after which all installment payments shall be made on their regular schedule. If payment is scheduled to be made in a lump sum, the lump sum payment shall be delayed for six (6) months and instead be made on the first day of the seventh month.

  7.7A new Section XXVII shall be added as follows:

  Certain Accelerated Payments:

  The Bank may make any accelerated distribution permissible under Treasury Regulation l.409A-3(j)(4) to the Executive of deferred amounts, provided that such distribution(s) meets the requirements of Section 1.409A-3(j)(4).

  Therefore, the foregoing changes are agreed to.

   

   

   

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	MAR 30, 2007 02:13P
	000-000-00000
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  FIRST AMENDMENT

  TO THE EXECUTIVE DEFERRED COMPENSATION
AGREEMENT DATED JANUARY 8, 2002

  THIS AMENDMENT, made and entered into this 29th day of December   , 2006, by and between The Gratz National Bank, a bank organized and existing under the laws of the United States of America, (hereinafter referred to as the “Bank"), and Timothy J. Allison, an Executive of the Bank, (hereinafter referred to as the “Executive”), shall effectively amend the Executive Deferred Compensation Agreement dated January 8, 2002 as follows:

   

  1.)	Paragraph IX, Death of Executive Prior to Termination of Service or Commencement of Payments, shall be deleted in its entirety and replaced with the following:

  ix.DEATH OF EXECUTIVE PRIOR TO TERMINATION OF SERVICE OR COMMENCEMENT OF PAYMENTS

  In the event of the death of the Executive prior to termination of service or commencement of payments, the Executive's account balance(1) shall be paid in a lump sum to such individual or individuals as the Executive may have designated in writing and filed with the Bank. Said amount shall be paid on the first day of the second month following the decease of the Executive. In the event no designation is made, the Executive's account balance(1) shall be paid, in a lump sum, as set forth herein to the duly qualified executor or administrator of the Executive’s estate. The amount of the payments to be made under this Paragraph shall be calculated as if the Executive had survived to the later of five (5) years from October 28, 2001 or age sixty-five (65) and continued the dollar amount of deferrals made in the calendar year prior to the Executive’s date of death until that time with an annual interest crediting rate equal to the rate applicable to the Plan Year prior to the Executive’s date of death. The Bank shall annually calculate the amount payable pursuant to this Paragraph and advise the Executive no later than June 30th the amount that would be payable to the Executive’s beneficiary in the event of the Executive's death.

  2.)	Paragraph X, Executive’s Death, shall be deleted in its entirety and replaced with the following:

  x.EXECUTIVE’S DEATH

  In the event of the death of the Executive after commencement of payments but prior to the Executive receiving all payments due the Executive under this Agreement, the remaining account balance(1) shall be paid in a lump sum, on the first day of the second month following the death of the Executive, to such individual or individuals as the Executive may have designated in writing and filed with the Bank, In the event no designation is made, the Executive’s account balance(1) shall be paid, in a lump sum, as set forth herein to the duly qualified executor or administrator of the Executive’s estate.

   

  (1) (deferrals plus credited interest)

   

  

   

  			
	MAR 30, 2007 02:13P
	000-000-00000
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  This Amendment shall be effective the 31st day of December, 2006. To the extent that any term, provision, or paragraph of said Agreement is not specifically amended herein, or in any other amendment thereto, said term, provision, or paragraph shall remain in full force and effect as set forth in said January 8, 2006 Agreement.

  IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully read this Amendment and executed the original thereof on the first day set forth hereinabove, and that, upon execution, each has received a conforming copy.

   

   

   

   

  

   

  EXECUTIVE DEFERRED COMPENSATION AGREEMENT

  THIS AGREEMENT, made and entered into this 8th day of January, 2002, by and between The Gratz National Bank, a banking corporation incorporated under the laws of Pennsylvania (hereinafter referred to as the “Bank”), and Timothy J. Allison (hereinafter referred to as the “Executive”);

  WHEREAS, the Bank and the Executive wish to enter into an agreement relating to the Executive’s services to the Bank upon the terms and conditions herein set forth;

  NOW, THEREFORE, in consideration of the payments herein provided and of mutual agreements contained herein, the parties hereto agree as follows:

  i.EXECUTIVE’S SERVICES

  So long as the Executive shall continue to be an Executive of the Bank, the Executive shall devote the Executive’s best efforts to the performance of the Executive’s duties as an employee of the Bank.

  ii.SALARY AND COMPENSATION

  The salary and compensation covered under this Agreement shall be any and all amounts paid to the Executive for the Executive’s as an Executive. In addition, the salary and compensation shall include any salary or bonus that is paid to the Executive by the Bank. The salary and compensation covered under this Agreement shall be credited to the Executive in the manner and on the terms and conditions specified in Paragraph IV, subject to the election requirement of Paragraph III.

  iii.ELECTION OF DEFERRED COMPENSATION

  The Executive shall, at the same time as entering this Agreement, file a written statement with the Bank notifying the Bank as to the percent (%) or dollar amount of salary and compensation as defined in Paragraph II that is to be deferred. The election to defer salary and compensation may only be made for salary and compensation not yet earned as of the date of said election. Signed written statements filed under this section, unless modified or revoked, shall be valid for all succeeding years. Any modification or revocation of a signed written statement must be in writing and shall be effective for one (l) calendar year succeeding the year in which the modification or revocation is made.

  iv.CREDITS TO DEFERRED COMPENSATION ACCOUNT

  The Bank shall establish a bookkeeping account for the Executive (hereinafter called the “Executive’s Deferred Compensation Account”) which shall be credited on the dates such salary and compensation, as defined in Paragraph II, would otherwise have been paid with the percentage or dollar amount that the Executive has notified the Bank in writing, pursuant to Paragraph III, that the Executive elected to have deferred.

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  v.INTEREST ON THE DEFERRED COMPENSATION ACCOUNT

  The Executive’s Deferred Compensation Account shall be credited with an amount that is in addition to the salary and compensation credited under Paragraph IV. Such amount shall be determined by multiplying the balance of the Executive’s Deferred Compensation Account by a rate of interest equal to one hundred fifty percent (150%) of the average one year Treasury instrument for the plan year as quoted in the Wall Street Journal. Such rate shall be adjusted annually. Such amount shall be credited as long as there is a balance in the Executive’s Deferred Compensation Account and shall be credited on December 31st of each year.

  vi.NATURE OF THE DEFERRED COMPENSATION ACCOUNT

  The Executive’s Deferred Compensation Account shall be utilized solely as a device for the measurement and determination of the amount of deferred compensation to be paid to the Executive at the times hereinafter specified and the Bank shall not segregate any of its assets in order to satisfy any obligations under this Agreement. The Executive’s Deferred Compensation Account shall not constitute or be treated as a trust fund of any kind. On the contrary, it is understood that all amounts credited to the Executive’s Deferred Compensation Account shall be for the sole purpose of bookkeeping and remain the sole property of the Bank, and that the Executive shall have no ownership rights of any nature with respect thereto. The Executive’s rights are limited to the rights to receive payments as hereinafter provided, and the Executive’s position with respect thereto is that of a general unsecured creditor of the Bank.

  vii.PAYMENT OF EXECUTIVE’S DEFERRED COMPENSATION

  The amounts in the Executive’s Deferred Compensation Account shall be paid in equal monthly installments for one hundred and twenty (120) months. The amount payable shall be the balance of the Executive’s Deferred Compensation Account as defined in Paragraph IV, including all interest credited pursuant to Paragraph V.

  viii.PAYMENT OF MONTHLY INSTALLMENTS

  Installment payments of deferred amounts shall commence on the first day of the calendar month following the end of the Executive’s term of office due to resignation, removal, failure to be re-elected, or the Executive's sixty-fifth (65th) birthday or five (5) years from October 28, 2001, whichever is later.

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  ix.DEATH OF EXECUTIVE PRIOR TO TERMINATION OF SERVICE OR COMMENCEMENT OF PAYMENTS

  In the event of the death of the Executive prior to termination of service or commencement of payments, payments shall commence under this Paragraph within thirty (30) days after the Executive’s death and shall be made to a beneficiary or beneficiaries designated by the Executive in writing and delivered to the Bank’s president. The Executive shall have the right to change the designated beneficiary from time to time. In the event no designation is made, the Executive’s account balance1 shall be paid, in a lump sum, to the Executive’s estate. The amount of the payments to be made under this Paragraph shall be calculated as if the Executive had survived to the later of five (5) years from October 28, 2001 or age sixty-five (65) and continued the dollar amount of deferrals made in the calendar year prior to the Executive’s date of death until that time with an annual interest crediting rate equal to the rate applicable to the Plan Year prior to the Executive’s date of death. The Bank shall annually calculate the amount payable pursuant to this Paragraph and advise the Executive no later than June 30th the amount that would be payable to the Executive’s beneficiary in the event of the Executive’s death.

  x.EXECUTIVE’S DEATH

  In the event of the death of the Executive after commencement of payments but prior to the Executive receiving all payments due the Executive under this Agreement, the remaining payments shall be paid to a beneficiary or beneficiaries designed by the Executive in writing and delivered to the Bank’s president. The Executive shall have the right to change the Executive's designated beneficiary from time to time. In the event no designation is made, the Executive’s account balance1 shall be paid, in a Jump sum to the Executive’s estate. The lump sum payment under this Paragraph shall be made within thirty (30) days after the Executive’s death.

   

  1 Deferrals plus credited interest

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  xi.FUNDING

  The Bank’s obligations under this Agreement shall be an unfunded and unsecured promise to pay. The Bank shall not be obligated under any circumstances to fund its obligations, the Bank may, however, at its sole and exclusive option, elect to fund this Agreement in whole or in part.

  Should the Bank elect to fund this Agreement informally, in whole or in part, the manner of such informal funding, and the continuance or discontinuance of such informal funding shall be the sole and exclusive decision of the Bank.

  Should the Bank determine to informally fund this Agreement, in whole or in part, through the medium of life insurance or annuities, or both, the Bank shall be the owner and beneficiary of the policy. The Bank reserves the absolute right to terminate such life insurance or annuities, as well as any other funding at any time, either in whole or in part.

  Any such life insurance or annuity policy purchased by the Bank shall not in any way by considered to be security for the performance of the obligations for this Agreement. It shall be, and remain, a general, unpledged, unrestricted asset of the Bank and the Executive shall have no interest in such policy whatsoever.

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  xii.MEDICAL EXAMINATION

  The Executive hereby agrees to submit to medical examination, supply such information, and execute such documents as may be required by the insurance company or companies to whom the Bank may have applied for such insurance.

  xiii.EFFECT ON OTHER BANK BENEFIT PLANS

  Nothing contained in this Agreement shall affect the right of the Executive to participate in or be covered by any qualified or non-qualified pension, profit-sharing, group, bonus or other supplemental compensation or fringe benefit plans constituting a part of the Bank’s existing or future compensation structure.

  xiv.ASSIGNMENT OR PLEDGE

  The Executive's Deferred Compensation Account and any payment payable at any time to this Agreement shall not be assignable or subject to pledge or hypothecation nor shall said payments be subject to seizure for the payment of any debts, judgments, alimony or separate maintenance, or be transferable by operation of law in the event of bankruptcy, insolvency or otherwise except to the extent as provided by law.

  xv.CONTINUATION AS EXECUTIVE

  Neither this Agreement nor the payments of any benefits there under shall be construed as giving to the Executive any right to be retained as a member of the Board of the Bank.

  xvi.NAMED FIDUCIARY

  The Named Fiduciary of this Agreement for purposes of claim procedures under this Agreement is the President of the Bank. The business address and telephone number of the Named Fiduciary under this Agreement is as follows:

  Theodore R. Bonwit, Jr.

  The Gratz National 
Bank Market Street 
Gratz, Pennsylvania 17030 
(717) 365-3181

  The Bank shall have the right to change the Named Fiduciary under this Agreement at any time. The Bank shall give the Executive written notice of any change of the Named Fiduciary, address or telephone number.

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  xvii.CLAIMS PROCEDURE AND ARBITRATION

  In the event that benefits under this Agreement are not paid to the Executive (or to the Executive’s beneficiary(ies) in the case of the Executive’s death) and such claimants feel they are entitled to receive such benefits, then a written claim must be made to the Named Fiduciary named above within sixty (60) days from the date payments are refused. The Named Fiduciary and the Bank shall review the written claim and if the claim is denied, in whole or in part, they shall provide in writing within ninety (90) days of receipt of such claim provisions of this Agreement upon which the denial is based and any additional material or information necessary to perfect the claim. Such written notice shall further indicate the additional steps to be taken by claimants if a further review of the claim denial is desired. A claim shall be deemed denied if the Named Fiduciary fails to take any action within the aforesaid ninety (90) day period.

  If claimants desire a second review, they shall notify the Named Fiduciary in writing within sixty (60) days of the first claim denial. Claimants may review this Agreement or any other documents relating thereto and submit any written issues and comments they may feel appropriate. In its sole discretion, the Named Fiduciary shall then review the second claim and provide a written decision within sixty (60) days of receipt of such claim. This decision shall likewise state the specific reasons for the decision and shall include reference to specific provisions of this Agreement upon which the decision is based.

  If claimants continue to dispute the benefit denial based upon completed performance of this Agreement or the meaning and effect of the terms and conditions thereof, then claimants may submit the dispute to a Board of Arbitration for final arbitration. Said Board shall consist of one member selected by the claimant, one member selected by the Bank, and one member selected by the first two members. The Board shall operate under any generally recognized set of arbitration rules. The parties hereto agree that they and their heirs, personal representatives, successors and assigns shall be bound by the decision of such Board with respect to any controversy properly submitted to it for determination.

  xviii.SEVERABILITY

  Any provisions of this Agreement found to be invalid shall be severable and the remainder of this Agreement shall remain effective.

  xix.APPLICABLE STATE LAW

  This Agreement shall be construed and interpreted in accordance with the laws of the State of Pennsylvania.

  xx.ALIENABILITY

  The rights of either party under this Agreement may not be transferred or assigned in any fashion or manner whatsoever.

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  xxi.TERMINATION OF AGREEMENT BY REASON OF CHANGES IN LAW

  The bank is entering into this Agreement upon the assumption that certain existing tax laws will continue in effect in their current form. If there are any changes in Federal law affecting the tax-free accumulation of earnings within a life insurance policy, the income tax-free payment of proceeds from life insurance policies or the deduction from income or interest payments on certificates of deposit issued by banking institutions, the Bank shall have the option to terminate and modify this Agreement. Provided, however, that the Executive shall be entitled to receive at least the Executive’s Deferred Compensation Account including interest earned.

  xxii.MODIFICATION

  This Agreement contains the entire understanding between the parties and supersedes all prior agreements and understanding between the parties with respect to matters set forth in this Agreement. Any additions or modifications to this Agreement must be in writing and signed by the parties.

  xxiii.HEADINGS

  Headings and subheadings in this Agreement are inserted for reference and convenience only and shall not be deemed a part of this Agreement,

  xxiv.BINDING EFFECT

  This Agreement shall be binding upon the parties hereto, their legal representatives, successors and assigns.

  IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully read this Agreement and executed the original thereof on the first day set forth hereinabove and that, upon execution, each has received a conforming copy.

   

   

   

  7EX-10.23

   

  Exhibit 10.23

  FIRST AMENDMENT TO THE
THE GRATZ NATIONAL BANK
DIRECTOR DEFERRED COMPENSATION AGREEMENT

  THIS FIRST AMENDMENT (the “Amendment”) is adopted effective the first day of January, 2012, by and between The Gratz National Bank, located in Gratz, Pennsylvania (the "Bank”), and Joseph Michetti, Jr. (the "Director”).

  The Bank and the Director are parties to a certain Director Deferred Compensation Agreement dated January 2, 2008 (the "Agreement”). The Bank and the Director now wish to change the manner of calculating the Crediting Rate used in the Agreement.

  Now, therefore, the Bank and the Director agree as follows.

  Section 1.6 of the Agreement shall be deleted and replaced with the following:

  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%).

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

   

   

   

   

   

  

  The Gratz National Bank

  Director Deferred Compensation Agreement

   

  Prepared 12/17/08

   

   

  © 2008 Clark Consulting

  This document is provided to assist your legal counsel in documenting your specific arrangement. The Jaws of the various states may differ considerably, and this specimen is for general information only. 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, the Department of Labor, or bank examiners. License is hereby granted to your legal counsel to use these materials in documenting solely your arrangement.

  In general,  if your bank is subject to SEC regulation, implementation of this or any other executive or director compensation program may trigger rules requiring certain disclosures on Form 8-K within four days of implementing the program. Consult with your SEC attorney, if applicable, to determine your responsibilities under the disclosure rules.

   

   

   

   

  IMPORTANT NOTICE ON CODE SECTION 409A COMPLIANCE

  It is critical that you consult with your legal and tax advisors to determine the impact of Internal Revenue Code Section 409A to your particular situation. On April 10, 2007 the Treasury Department issued final regulations implementing the requirements of Section 409A which apply to nonqualified deferred compensation arrangements. Documentary compliance with Section 409A is required by December 31, 2008.

   

  THE GRATZ NATIONAL BANK
DIRECTOR REFERRED COMPENSATION AGREEMENT

  THIS DIRECTOR DEFERRED COMPENSATION AGREEMENT (this “Agreement”) is adopted this 17th day of December, 2008, by and between The Gratz National Bank, a nationally chartered commercial bank located in Gratz, Pennsylvania (the "Bank”), and Joseph Michetti, Jr. (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 he 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.

   

  

  The Gratz National Bank

  Director Deferred Compensation Agreement

  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 and fifty percent (150%) of the average one year Treasury instrument as quoted in the Wall Street Journal on the first business day of the Plan Year.

  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.

  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                      .

  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 foes 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)(1)(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.

  Article 2

   

  

  The Gratz National Bank

  Director Deferred Compensation Agreement

  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 he 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 clay 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

  4.1 Normal 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 National 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 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 

   

  

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  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.

  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 

   

  

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  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.

   

  

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  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.

  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.

   

  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 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 

   

  

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  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:

  9.2.1 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.

   

  

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  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 lake 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) clays 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

  10.1 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.

  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 

   

  

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  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-1(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.

   

  

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  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.

  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, sal6, 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.

   

   

  

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  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:

   

   

  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.

  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/ Joseph Michetti, Jr.
	 
	By:

	Joseph Michetti, Jr.
	 
	Title:

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