Document:

Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made as of the 13th day of November, 2013, among GNB Financial Services, Inc., a Pennsylvania Corporation (the “Corporation”), and The Gratz Bank, a Commonwealth of Pennsylvania chartered bank (the “Bank”), and Jeremy A. Dobbin, a Pennsylvania resident (“Employee”).

 

WITNESSETH:

 

WHEREAS, Corporation is a registered bank holding company;

 

WHEREAS, Bank is a wholly owned subsidiary of Corporation;

 

WHEREAS, Employee serves in the capacity of Comptroller; and

 

WHEREAS, Corporation, Bank and Employee had an Employment Agreement dated the 5th day of October, 2010; and

 

WHEREAS, Corporation, Bank and Employee wish to enter into an employment agreement which defines their respective rights and obligations; and

 

WHEREAS, Corporation, Bank and Employee by this Agreement shall declare as null and void the prior Agreement.

 

AGREEMENT:

 

NOW, THEREFORE, in consideration of the covenants hereinafter set forth, and intending to be legally bound hereby, the Parties agree, effective the date hereof, as follows:

 

1.              Employment. Bank and Corporation hereby employ Employee and Employee hereby accepts employment with Bank and Corporation, under the terms and conditions set forth in this Agreement.

 

2.              Duties of Employee. Employee shall serve as the Senior Agricultural and Commercial Lending Officer of Bank. Employee shall have such other duties and hold such other titles, as may be provided by the bylaws of the Bank and Corporation and as may be given to him from time to time by the Boards of Directors of Bank and Corporation.

 

 

3.              Employment in Other Employment. Employee shall devote all of his working time, ability and attention to the business of the Bank and Corporation and/or their subsidiaries or affiliates, during the term of this Agreement. The Employee shall notify the President and Chief Executive Officer in writing before the Employee engages in any other business or commercial duties or pursuit including but not limited to directorships of other companies. Under no circumstances may the Employee engage in any business or commercial activities, duties or pursuits which compete with the business or commercial activities of the Bank and Corporation and/or any of its subsidiaries or affiliates nor may the Employee serve as a director or officer or in any other capacity in a company which competes with the Bank and Corporation and/or any of its subsidiaries or affiliates. Employee shall not be precluded, however, upon written notification to the Boards of Directors, from engaging in voluntary or philanthropic endeavors, from engaging in activities designed to maintain and improve his professional skills, or from engaging in activities incident or necessary to personal investments, so long as they are, in the Boards’ reasonable opinion, not in conflict with or detrimental to the Employee’s rendition of services on behalf of the Bank and Corporation and/or any of its subsidiaries or affiliates.

 

4.              Term of Agreement.

 

(a)                                 This Agreement shall be for a two (2) year period (the “Employment Period”) beginning on the date first written above and if not previously terminated pursuant to the terms of this Agreement, the Employment Period shall end two (2) years later (the “Initial Term”).

 

(b)                                 Notwithstanding the provisions of Section 4(a) of this Agreement, this Agreement shall terminate automatically for Cause (as defined herein) upon written notice from the Boards of Directors of Bank and Corporation to Employee. As used in this Agreement, “Cause” shall mean any of the following:

 

(i)                                     Employee’s conviction of or plea of guilty or nolo contendere to a felony, a crime of falsehood or a crime involving moral turpitude, or the actual incarceration of Employee for a period often (10) consecutive days or more;

 

(ii)                                  Employee’s failure to follow the good faith lawful instructions of the Boards of Directors of Bank and Corporation with respect to its operations, after written notice from Bank and Corporation and a failure to cure such violation within thirty (30) days of said written notice;

 

(iii)          Employee’s willful failure to substantially perform Employee’s duties to Bank and Corporation, other than a failure resulting from Employee’s incapacity because of physical or mental illness, as provided in subsection (d) of this Section 4, after written notice from Bank and Corporation and a failure to Cure such violation within thirty (30) days of said written notice;

 

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(iv)                              Employee’s intentional violation of the provisions of this Agreement, after written notice from the Bank and Corporation and a failure to cure such violation within thirty (30) days of said written notice.

 

(v)                                 dishonesty or gross negligence of the Employee in the performance of his duties;

 

(vi)                              Employee’s removal or prohibition from being an institutional-affiliated party by a final order of an appropriate federal or state banking agency pursuant to Section 8(e) or 8(g) of the Federal Deposit Insurance Act or any other federal Or state regulation;

 

(vii)                           Employee’s breach of fiduciary duty involving personal gain;

 

(viii)        unlawful harassment by the Employee against employees, customers, business associates, contractors, or vendors of Bank and Corporation which results or may be reasonably expected to result in material liability to Bank and Corporation, as determined by the affirmative vote of two-thirds (2/3) of the disinterested independent members of the Boards of Directors of Bank and Corporation, following an investigation of the claims by a third party unrelated to the Bank and Corporation chosen by the Employee and Bank and Corporation;

 

(ix)                              the willful violation by the Employee of the provisions of Sections 9, 10, or 11 hereof after notice from the Bank and Corporation and a failure to cure such violation within thirty (30) days of said notice;

 

(x)                                 the willful violation of any law, rule or regulation governing banks or bank officers or any final cease and desist order issued by a bank regulatory authority;

 

(xi)                              theft or abuse by Employee of the Bank’s and Corporation’s property or the property of Bank’s and Corporation’s customers, employees, contractors, vendors, or business associates;

 

(xii)                           any act of fraud, misappropriation or personal dishonesty;

 

(xiii)        conduct by the Employee as determined by an affirmative vote of seventy-five percent (75%) of the disinterested members of the Boards of Directors of Bank and Corporation which brings public discredit to Bank and Corporation and which results or may be reasonably expected to result in material financial or other harm to the Bank and Corporation;

 

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(xiv)                       insubordination as determined by an affirmative vote of seventy-five percent (75%) of the Boards of Directors of Bank and Corporation, after written notice from the Bank and Corporation and a failure to cure such violation within thirty (30) days of said written notice; or

 

(xv)                          the existence of any material conflict between the interests of the Bank and Corporation and the Employee that is not disclosed in writing by the Employee to the Bank and Corporation and approved in writing by the Boards of Directors of the Bank and Corporation.

 

(xvi)                       Before taking any action under any subparagraphs above, Employee shall be entitled to appear before the Boards and present Employee’s position as to any issues about which Employee has been notified by the Boards in writing. Such appearance shall be within a reasonable period of time following written notice to Employee of the issues but in no event longer than thirty (30) days after the date of said written notice.

 

If this Agreement is terminated for Cause, all of Employee’s rights under this Agreement shall cease as of the effective date of such termination, except for the rights under Paragraph 19 hereof with respect to arbitration.

 

(c)                                  Notwithstanding the provisions of Section 4(a) of this Agreement, this Agreement shall terminate automatically upon Employee’s voluntary termination of employment for Good Reason. The term “Good Reason” shall mean (i) the assignment of duties and responsibilities inconsistent with Employee’s status as Comptroller of Bank and Corporation, (ii) a reassignment which requires Employee to move his principal residence or his office more than fifty (50) miles from the Bank’s and Corporation’s principal Employee office immediately prior to this Agreement, (iii) any removal of the Employee from office or any adverse change in the terms and conditions of the Employee’s employment, except for any termination of the Employee’s employment under the provisions of Section 4(b) hereof, (iv) any reduction in the Employee’s Annual Base Salary as in effect on the date hereof or as the same may be increased from time to time, or (v) any failure of Bank and Corporation to provide the Employee with benefits at least as favorable as those enjoyed by the Employee during the Employment Period under any of the pension, life insurance, medical, health and accident, disability or other employee plans of Bank and Corporation, or the taking of any action that would materially reduce any of such benefits unless such reduction is part of a reduction applicable to all employees.

 

Employee shall within ninety (90) days of the occurrence of any of the foregoing events, provide notice to Bank and Corporation of the existence of the “Good Reason” condition and provide Bank and Corporation thirty (30) days in which to cure such condition. In the event that Bank and Corporation do not cure the condition within thirty (30) days of such notice, Employee may resign from employment for “Good Reason” by written notice (the “Notice of Termination”) delivered to Bank and Corporation and the provisions of this Section 4( c) hereof shall thereupon apply.

 

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If such termination occurs for Good Reason and provided Employee executes a release agreement in favor of the Bank and Corporation, then Bank and Corporation shall pay Employee an amount equal to two (2) times the Employee’s Annual Base Salary, payable in twenty-four (24) equal monthly installments and shall be subject to federal, state and local tax withholdings. In addition, for a period of two (2) years from the date of termination of employment, or until Employee secures substantially similar benefits through other employment, whichever shall first occur, Employee shall receive a continuation of all life, disability, medical insurance and other normal health and welfare benefits in effect with respect to Employee during the two (2) years prior to his termination of employment. If Bank and Corporation cannot provide such benefits because Employee is no longer an employee, Bank and Corporation shall reimburse Employee in an amount equal to the monthly premium paid by him to obtain substantially similar health and welfare employee benefits which he enjoyed prior to termination, which reimbursement shall continue until the expiration of two (2) years (from the date of termination of employment or until Employee secures substantially similar benefits through other employment, whichever shall first occur, subject to Internal Revenue Code of 1986, as amended (the “Code”) Section 409A if applicable.

 

However, in the event the payment described herein, when added to all other amounts or benefits provided to or on behalf of the Employee in connection with his termination of employment, would result in the imposition of an excise tax under Code Section 4999, Bank and Corporation will pay to Employee an additional cash payment (“Gross-up Payment”) in an amount such that the after-tax proceeds of such Gross-up Payment (including any income tax or excise tax on such Gross-up Payment) will be equal to the amount of the excise tax. Notwithstanding any other provision, in the event that Employee is determined to be a key employee as that term is defined in Section 409A of the Code, no payment that is determined to be deferred compensation subject to Section 409A of the Code shall be made until the first day of the seventh month following the date of separation of service as that term is defined in Section 409A of the Code.

 

(d)                                 Notwithstanding the provisions of Section 4(a) of this Agreement, this Agreement shall terminate automatically upon Employee’s Disability and Employee’s rights under this Agreement shall cease as of the date of such termination; provided, however, that Employee shall nevertheless be entitled to receive any amount due under any disability plan in effect at the Bank and Corporation for which Employee is a participant.

 

(e)                                  In the event that Employee terminates his employment without Good Reason as defined in Section 4(c), all of Employee’s rights under this Agreement shall cease as of the effective date of such termination, except for the rights under Paragraph 19 hereof with respect to arbitration.

 

(f)                                   Employee agrees that in the event that Bank, Corporation, or Employee provides notice of non-renewal of this Agreement under Section 4(a), Bank and Corporation shall have no further obligation under this Agreement, other than payment to Employee of his earned but unpaid Annual Base Salary under Section 5(a) and any employee benefits under Section 5, as of the date of the expiration of this Agreement or until Employee voluntarily terminates his employment, whichever occurs earlier.

 

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5.                                      Employment Period Compensation.

 

(a)                                 Annual Base Salary. For services performed by Employee under this Agreement, Bank and Corporation shall pay Employee an Annual Base Salary during the Employment Period at the rate of $75,000.00 per year, minus applicable withholdings and deductions, payable at the same times as salaries are payable to other Employee employees of Bank and Corporation.

 

(b)                                 Bonus. For services performed by Employee under this Agreement, Bank and Corporation may, from time to time, pay a bonus or bonuses to Employee as Bank and Corporation, in their sole discretion, deem appropriate. The payment of any such bonuses shall not reduce or otherwise affect any other obligation of Bank and Corporation to Employee provided for in this Agreement.

 

(c)                                  Paid Time-off. During the term of this Agreement, Employee shall be entitled to paid time off in accordance with the manner and amount provided under the paid time-off plan currently in effect and approved by the Boards of Directors.

 

(d)                                 Employee Benefit Plans. During the term of this Agreement, Employee shall be entitled to participate in or receive the benefits of any employee benefit plan currently in effect at Bank and Corporation, subject to the terms of said plan, until such time that the Boards of Directors of Bank and Corporation authorize a change in such benefits. Bank and Corporation shall not make any changes in such plans or benefits which would adversely affect Employee’s benefits thereunder, unless such change occurs pursuant to a program applicable to all Employee officers of Bank and Corporation and does not result in a proportionately greater adverse change in the rights of or benefits to Employee as compared with any other Employee officer of Bank and Corporation. Nothing paid to Employee under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of the salary payable to Employee pursuant to Section 5(a) hereof.

 

(e)                                  Expenses. During the term of this Agreement, Employee shall be entitled to receive prompt reimbursement for all reasonable expenses incurred in carrying out his duties under this Agreement, which are properly accounted for, in accordance with the policies and procedures established by the Boards of Directors of Bank and Corporation for its Employee officers.

 

6.                                      Termination of Employment Following a Change in Control.

 

(a)                                 If a Change in Control (as defined in Section 6(b) of this Agreement) shall occur and Employee’s employment is involuntarily terminated within one hundred eighty (180) days of the Change in Control, the Employee may give notice of the intention to collect benefits under this Agreement by delivering written notice (the “Notice of Termination”) to Bank and Corporation and the provisions of Section 7 of this Agreement shall apply.

 

(b)                                 As used in this Agreement, “Change in Control” shall mean:

 

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(i)                                     any “person” or more than one person acting as a group (as such term is defined in Section 409A of the Code and any Internal Revenue Guidance and regulations under Section 409A of the Code), other than Bank and Corporation or any “person” who on the date hereof is a director Or officer of Bank and Corporation, acquires ownership of stock of the Corporation or Bank, together with stock held by such person constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Corporation or Bank; or

 

(ii)                                  any “person” or more than one person acting as a group (as such term is defined in Section 409A of the Code and any Internal Revenue Guidance and regulations under Section 409 A of the Code), acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Corporation or Bank possessing thirty percent (30%) or more of the total voting power of the stock of the Corporation or Bank; or

 

(iii)          a majority of the members of the Corporation’s Board of Directors is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Corporation’s Board of Directors before the date of the appointment or election.

 

7.                                      Rights in Event of Change in Control.

 

(a)                                 In the event the Employee’s employment is involuntarily terminated and Employee gives the Bank and Corporation a Notice of Termination under Section 6(a) of this Agreement, the Employee shall be entitled to receive a lump sum payment equal to 2 times his Annual Base Salary. In addition, for a period of 2 years from the date of termination of employment, or until Employee secures substantially similar benefits through other employment, whichever shall first occur, Employee shall receive a continuation of all life, disability, medical insurance and other normal health and welfare benefits in effect with respect to Employee during the 2 years prior to his termination of employment. If Bank and Corporation cannot provide such benefits because Employee is no longer an employee, Bank and Corporation shall reimburse Employee in an amount equal to the monthly premium paid by him to obtain substantially similar health and welfare employee benefits which he enjoyed prior to termination, which reimbursement shall continue until the expiration of 2 years from the date of termination of employment or until Employee secures substantially similar benefits through other employment, whichever shall first occur, subject to Code Section 409A if applicable.

 

However, in the event the payment described herein, when added to all other amounts or benefits provided to or on behalf of the Employee in connection with his termination of employment, would result in the imposition of an excise tax under Section 4999 of the Code, Bank and Corporation will pay to Employee an additional cash payment (“Gross-up Payment”) in an amount such that the after-tax proceeds of such Gross-up Payment (including any income tax or Excise Tax on such Gross-up Payment) will be equal to the amount of the Excise Tax.

 

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Notwithstanding any other provision, in the event that Employee is determined to be a key employee as that term is defined in Section 409 A of the Code, no payment that is determined to be deferred compensation subject to Section 409A of the Code shall be made until the first day of the seventh month following the date of separation of service as that term is defined in Section 409A of the Code.

 

(b)                                 Employee shall not be required to mitigate the amount of any payment provided for in this Section 7 by seeking other employment or otherwise. Unless otherwise agreed to in writing, the amount of payment or the benefit provided for in this Section 7 shall not be reduced by any compensation earned by Employee as the result of employment by another employer or by reason of Employee’s receipt of or right to receive any retirement or other benefits after the date of termination of employment or otherwise.

 

8.                                      Rights in Event of Termination of Employment Absent Change in Control.

 

(a)                                 In the event that Employee’s employment is involuntarily terminated by Bank and Corporation without Cause and no Change in Control shall have occurred at the date of such termination and provided Employee executes a release agreement in favor of the Bank and Corporation, then the Bank and Corporation shall pay Employee a lump sum payment equal to two (2) times his Annual Base Salary. In addition, for a period of two (2) years from the date of termination of employment, or until Employee secures substantially similar benefits through other employment, whichever shall first occur, Employee shall receive a continuation of all life, disability, medical insurance and other normal health and welfare benefits in effect with respect to Employee during the two (2) years prior to his termination of employment If Bank and Corporation cannot provide such benefits because Employee is no longer an employee, Bank and Corporation shall reimburse Employee in an amount equal to the monthly premium paid by him to obtain substantially similar health and welfare employee benefits which he enjoyed prior to termination, which reimbursement shall continue until the expiration of two (2) years from the date of termination of employment or until Employee secures substantially similar benefits through other employment, whichever shall first occur, subject to Code Section 409A if applicable.

 

Notwithstanding any other provision, in the event that Employee is determined to be a key employee as that term is defined in Section 409A of the Code, no payment that is determined to be deferred compensation subject to Section 409A of the Code shall be made until the first day of the seventh month following the date of separation of service as that term is defined in Section 409A of the Code.

 

(b)                                 Employee shall not be required to mitigate the amount of any payment provided for in this Section 8 by seeking other employment or otherwise. Unless otherwise agreed to in writing, the amount of payment or the benefit provided for in this Section 8 shall not be reduced by any compensation earned by Employee as the result of employment by another employer or by reason of Employee’s receipt of or right to receive any retirement or other benefits after the date of termination of employment or otherwise.

 

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9.                                      Covenant Not to Compete.

 

(a)                                 Employee hereby acknowledges and recognizes the highly competitive nature of the business of Bank and Corporation and accordingly agrees that, during and for the applicable period set forth in Section 9( c) hereof, Employee shall not, except as otherwise permitted in writing by the Bank and Corporation:

 

(i)                                     be engaged, directly or indirectly, either for his own account or as agent, consultant, employee, partner, officer, director, proprietor, investor (except as an investor owning less than 5% of the stock of a publicly owned company) or otherwise of any person, firm, corporation or enterprise engaged in (1) the banking (including bank and corporation holding company) or financial services industry, or (2) any other activity in which Bank and Corporation or any of its affiliates are engaged during the Employment Period, and remain so engaged at the end of the Employment Period, within a twenty (20) mile radius of the Bank’s main office located at 32 West Market Street, Gratz, Pennsylvania; or

 

(ii)                                  provide financial or other assistance to any person, firm, corporation. or enterprise engaged in (1) the banking (including bank and corporation holding company) Or financial services industry or (2) any other activity in which Bank and Corporation or any of its affiliates are engaged during the Employment Period, in the Non-Competition Area; or

 

(iii)                               directly or indirectly solicit persons or entities who were customers or referral sources of Bank and Corporation or its affiliates within one year of Employee’s termination of employment, to a become customer or referral source of a person or entity other than Bank and Corporation or its affiliates; or

 

(iv)                              directly or indirectly solicit employees of Bank and Corporation or its affiliates who were employed within one year of Employee’s termination of employment to work for anyone other than Bank and Corporation or its affiliates.

 

(b)                                 It is expressly understood and agreed that, although Employee and Bank and Corporation consider the restrictions contained in Section 9( a) hereof reasonable for the purpose of preserving for the Bank and Corporation and its subsidiaries their good will and other proprietary rights, if a final judicial determination is made by a Court having jurisdiction that the time or territory or any other restriction contained in Section 9(a) hereof is an unreasonable or otherwise unenforceable restriction against Employee, the provisions of Section 9(a) hereof shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such other extent as such court may judicially determine or indicate to be reasonable.

 

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(c)                                  The provisions of this Section 9 shall be applicable, commencing on the date of this Agreement and ending as follows:

 

(i)                                     if Employee’s employment terminates as a result of Employee giving notice of non-renewal of this Agreement or if Employee voluntarily terminates his employment without Good Reason, the second anniversary date of the effective date of termination of employment; or

 

(ii)                                  if Employee’s employment terminates in accordance with the provisions of Section 4(b) of this Agreement (relating to termination for Cause), the second anniversary date of the effective date of termination of employment; or

 

(iii)          if the Employee terminates his employment in accordance with Section 4( c) (relating to Good Reason termination) or his employment is terminated in accordance with Section 8 (relating to termination without cause), the second anniversary date of the effective date of termination of employment; or

 

(iv)                              if the Employee voluntarily terminates his employment in accordance with the provisions of Section 6 (relating to Change in Control) hereof, the second anniversary date of the effective date of termination of employment.

 

10.                               Unauthorized Disclosure. During the term of his employment hereunder, or at any later time, the Employee shall not, without the written consent of the Boards of Directors of Bank and Corporation or a person authorized thereby, knowingly disclose to any person, other than an employee of Bank and Corporation or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by the Employee of his duties as an Employee of Bank and Corporation, any material confidential information obtained by him while in the employ of Bank and Corporation with respect to any of Bank and Corporation’s services, products, improvements, formulas, designs or styles, processes, customers, methods of business or any business practices the disclosure of which could be or will be damaging to Bank and Corporation; provided, however, that confidential information shall not include any information known generally to the public (other than as a result of unauthorized disclosure by the Employee or any person with the assistance, consent or direction of the Employee) or any information of a type not otherwise considered confidential by persons engaged in the same business or a business similar to that conducted by Bank and Corporation or any information that must be disclosed as required by law.

 

11.                               Work Made for Hire. Any work performed by the Employee under this Agreement should be considered a “Work Made for Hire” as the phrase is defined by the U.S. patent laws and shall be owned by and for the express benefit of the Bank and Corporation and their subsidiaries and affiliates. In the event it should be established that such work does not qualify as a Work Made for Hire, the Employee agrees to and does hereby assign to Bank and Corporation, and their affiliates and subsidiaries, all of his rights, title, and/or interest in such work product, including, but not limited to, all copyrights, patents, trademarks, and propriety rights.

 

12.                               Return of Company Property and Documents. The Employee agrees that, at the time of termination of his employment, regardless of the reason for termination, he will deliver to Bank

 

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and Corporation and its subsidiaries and affiliates, any and all company property, including, but not limited to, keys, security codes or passes, mobile telephones, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, software programs, equipment, other documents or property, or reproductions of any of the aforementioned items developed or obtained by the Employee during the course of his employment.

 

13.                               Liability Insurance. Bank and Corporation shall obtain liability insurance coverage for the Employee under an insurance policy with similar terms as that which is currently covering officers and directors of Bank and Corporation against lawsuits, arbitrations or other legal or regulatory proceedings.

 

14.                               Notices. Except as otherwise provided in this Agreement, any notice required or permitted to be given under this Agreement shall be deemed properly given if in writing and if mailed by registered or certified mail, postage prepaid with return receipt requested, to Employee’s residence, in the case of notices to Employee, and to the principal Employee offices of Bank and Corporation, in the case of notices to Bank and Corporation.

 

15.                               Waiver. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Employee and an Employee officer specifically designated by the Boards of Directors of Bank and Corporation. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

 

16.                               Assignment. This Agreement shall not be assignable by any party, except by Bank and Corporation to any successor in interest to their respective businesses.

 

17.                               Entire Agreement. This Agreement supersedes any and all agreements, either oral or in writing, between the parties with respect to the employment of the Employee by the Bank and Corporation and this Agreement contains all the covenants and agreements between the parties with respect to employment.

 

18 .                            Successors, Binding Agreement.

 

(a)                                 Bank and Corporation will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the businesses and/or assets of the Bank and Corporation to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Bank and Corporation would be required to perform it if no such succession had taken place. Failure by Bank and Corporation to obtain such assumption and agreement prior to the effectiveness of any such succession shall constitute a breach of this Agreement and the provisions of Section 7 of this Agreement shall apply. As used in this Agreement, “Bank and Corporation” shall mean Bank and Corporation, as defined previously and any successor to its respective businesses and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise.

 

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(b)                                 This Agreement shall inure to the benefit of and be enforceable by Employee’s personal or legal representatives, executors, administrators, heirs, distributees, devisees and legatees. If Employee should die after a Notice of Termination is delivered by Employee, or following termination of Employee’s employment without Cause, and any amounts would be payable to Employee under this Agreement if Employee had continued to live, all such amounts shall be paid in accordance with the terms of this Agreement to Employee’s devisee, legatee, or other designee, or, if there is no such designee, to Employee’s estate.

 

19.                               Arbitration. Bank and Corporation and Employee recognize that in the event a dispute should arise between them concerning the interpretation or implementation of this Agreement, lengthy and expensive litigation will not afford a practical resolution of the issues within a reasonable period of time. Consequently, each party agrees that all disputes, disagreements and questions of interpretation concerning this Agreement (except for any enforcement sought with respect to Sections 9,10, 11 or 12 which may be litigated in court, including an action for injunction or other relief) are to be submitted for resolution, in Gratz, Pennsylvania, to the American Arbitration Association (the “Association”) in accordance with the Association’s National Rules for the Resolution of Employment Disputes or other applicable rules then in effect (“Rules”). Bank and Corporation or Employee may initiate an arbitration proceeding at any time by giving notice to the other in accordance with the Rules. Bank and Corporation and Employee may, as a matter of right, mutually agree on the appointment of a particular arbitrator from the Association’s pool. The arbitrator shall not be bound by the rules of evidence and procedure of the Courts of the Commonwealth of Pennsylvania but shall be bound by the substantive law applicable to this Agreement. The decision of the arbitrator, absent fraud, duress, incompetence or gross and obvious error of fact, shall be final and binding upon the parties and shall be enforceable in courts of proper jurisdiction. Following written notice of a request for arbitration, Bank and Corporation and Employee shall be entitled to an injunction restraining all further proceedings in any pending or subsequently filed litigation concerning this Agreement, except as otherwise provided herein or any enforcement sought with respect to this Agreement, except as otherwise provided herein or any enforcement sought with respect to Sections 9, 10, 11 or 12 of this Agreement, including an action for injunction or other relief

 

20.                               Validity.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

 

21.                               Applicable Law.  This Agreement shall be governed by and construed in accordance with the domestic, internal laws of the Commonwealth of Pennsylvania without regard to its conflicts of laws principles provided that this Agreement is intended to be administered in a manner consistent with the requirements, where applicable, of Section 409A of the Code.

 

22.                               Headings.  The section headings of this Agreement are for convenience only and shall not control of affect the meaning or construction or limit the scope or intent of any of the provisions of this Agreement.

 

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23.                               Recission.  This Agreement nullifies, rescinds and declares void the Employment Agreement of October 5th, 2010.  This Agreement supercedes and is the controlling document for the employment relationship between the parties.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

	
ATTEST:
    	
GNB   Financial Services, Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/   Cindy L. Shade
    	
 
    	
/s/   David H. Koppenhaver
    
	
 
    	
David   H. Koppenhaver, Chairman
    
	
 
    	
 
    
	
 
    	
 
    
	
ATTEST:
    	
The   Gratz Bank
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/   Cindy L. Shade
    	
 
    	
/s/   David H. Koppenhaver
    
	
 
    	
David   H. Koppenhaver, Chairman
    
	
 
    	
 
    
	
WITNESS:
    	
 
    
	
 
    	
 
    
	
/s/   Cindy L. Shade
    	
 
    	
/s/   Jeremy A. Dobbin
    
	
 
    	
Jeremy   A. Dobbin
    

 

13Exhibit 10.4

 

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 

 

2

 

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 date 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 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-l (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 § 1.897-1(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:

 

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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
    	
 
    

 

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 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
    	
 
    

 

2.4                               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:

 

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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 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.

 

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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)(1)(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 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.

 

6

 

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 Employee shall pay the benefit payment to the Executive’s spouse.  If the spouse is not living then the Employer shall pay the benefit payment

 

7

 

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.

 

8

 

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 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 the 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

 

9

 

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).

 

ARTICLE 6

AMENDMENT AND TERMINATION

 

6.1                               Agreement Amendment Generally. Except as provided in Section 6.2, this Agreement may be 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.

 

10

 

(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)(1)(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-l(c) if the Executive participated in both arrangements, at any time 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.

 

11

 

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 payment(s) 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 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 

 

12

 

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 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.

 

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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:

 

	
Executive:
    	
Employer:
    
	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
/s/   Wesley M. Weymers
    	
 
    	
By:   
    	
/s/   Joseph C. Michetti
    
	
 
    	
Its:   
    	
Vice   Chairman
    

 

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