Exhibit 10.11
FIRST AMENDMENT TO THE
GRANGE NATIONAL BANK
AMENDED AND RESTATED
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
This First Amendment to the Grange National Bank Amended and Restated
Supplemental Executive Retirement Agreement is entered into as of March 26,2003
by and between GRANGE NATIONAL BANK, a nationally-chartered commercial bank
located in Laceyville, Pennsylvania (the "Company"), and THOMAS A. McCULLOUGH
(the "Executive").
On January 17,2003, the Company and the Executive entered into an Amended
and Restated Supplemental Retirement Agreement (the "Agreement"). The parties
now desire to amend the Agreement as set forth herein.
The parties hereto, intending to be legally bound hereby, agree as
follows:
1. Section 2.5 of the Agreement is amended by adding the following
sentence at the end of the Section:
Notwithstanding any other provisions to the contrary in this Section 2.5,
the Company shall not pay the Change of Control Benefit but shall instead
pay the Early Retirement Benefit in the amounts and at the times provided
in Section 2.3 hereof if (a) the payment of the Change of Control Benefit
would cause the amount of any other payments that the Executive otherwise
has the right to receive from the Company to be reduced as a result of
such other payments and the Change of Control Benefit being limited to the
largest amount as will result in no portion of them being subject to
excise tax imposed under Section 4999 of the Code, or (b) the payment of
the Change of Control Benefit would cause the sum of (i) any other
payments that the Executive has the right to receive from the Company and
(ii) the Change in Control Benefits to be a "parachute payment," as
defined by Section 280G of the Code.
2. All other terms and conditions of the Agreement remain in full force
and effect.
IN WITNESS WHEREOF, the Company and the Executive have caused this First
Amendment to be duly executed as of the date first above written.
EXECUTIVE GRANGE NATIONAL BANK
/s/ Thomas A. McCullough By: /s/ Sally A. Steele, Secretary
- ------------------------------ ---------------------------------
Thomas A. McCullough Sally A. Steele
As its Secretary
(C) 2002 Clark/Bardes Consulting-Banking Practice
This document is provided to assist your legal counsel in documenting your
specific arrangement. The laws 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 Executives, 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.
GRANGE NATIONAL BANK
AMENDED AND RESTATED
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
GRANGE NATIONAL BANK
AMENDED AND RESTATED
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
This Agreement is entered into this January 17, 2003, by and between
GRANGE NATIONAL BANK, a nationally-chartered commercial bank located in
Laceyville, Pennsylvania (the "Company"), and THOMAS A. MCCULLOUGH (the
"Executive").
On January 1, 1996, the Company and the Executive entered into an
Executive Supplemental Income Agreement (the "Prior Agreement"). Pursuant to its
powers to amend the Prior Agreement, the Company hereby amends and restates the
Prior Agreement in its entirety.
The purpose of this Agreement is to provide specified benefits to the
Executive, a member of a select group of management or highly compensated
employees who contribute materially to the continued growth, development and
future business success of the Company. This Agreement shall be unfunded for tax
purposes and for purposes of Title I of ERISA.
ARTICLE 1
DEFINITIONS
The following words and phrases shall have the following meanings, unless
the context requires otherwise:
1.1 "Accrual Balance" means the liability accrued on the books of the Company
for the Company's obligation for the Normal Retirement Benefit, using
generally accepted accounting principles.
1.2 "Beneficiary" means each designated person, or the estate of the
Executive, entitled to benefits, if any, upon the death of the Executive
determined pursuant to Article 3.
1.3 "Beneficiary Designation Form" means the form established from time to
time by the Plan Administrator that the Executive completes, signs and
returns to the Plan Administrator to designate one or more Beneficiaries.
1.4 "Board" means the Board of Directors of the Company as from time to time
constituted.
1.5 "Change of Control" means
(a) A change in the ownership of the capital stock of the Company or the
Corporation, whereby another corporation, person, or group acting in
concert
(hereinafter this Agreement shall collectively refer to any combination of
these three [another corporation, person, or group acting in concert] as a
"Person") as described in Section 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), acquires, directly or
indirectly, beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of a number of shares of capital stock
of the Company or the Corporation which constitutes fifty percent (50%) or
more of the combined voting power of the Company's or the Corporation's
then outstanding capital stock then entitled to vote generally in the
election of directors; or
(b) The persons who were members of the Board of Directors of the Company
or the Corporation's immediately prior to a tender offer, exchange offer,
contested election or any combination of the foregoing, cease to
constitute a majority of the Board of Directors; or
(c) The adoption by the Board of Directors of the Company or the
Corporation of a merger, consolidation or reorganization plan involving
the Company or the Corporation in which the Company or the Corporation is
not the surviving entity, or a sale of all or substantially all of the
assets of the Company or the Corporation. For purposes of this Agreement,
a sale of all or substantially all of the assets of the Company or the
Corporation shall be deemed to occur if any Person acquires (or during the
12-month period ending on the date of the most recent acquisition by such
Person, has acquired) gross assets of the Company or the Corporation that
have an aggregate fair market value equal to fifty percent (50%) or more
of the fair market value of all of the respective gross assets of the
Company or the Corporation immediately prior to such acquisition or
acquisitions; or
(d) A tender offer or exchange offer is made by any Person which results
in such Person beneficially owning (within the meaning of Rule 13d-3
promulgated under the Exchange Act) either fifty percent (50%) or more of
the Company's or the Corporation's outstanding shares of Common Stock or
shares of capital stock having fifty percent (50%) or more the combined
voting power of the Company's or the Corporation's then outstanding
capital stock (other than an offer made by the Company or the
Corporation), and sufficient shares are acquired under the offer to cause
such person to own fifty percent (50%) or more of the voting power; or
(e) Any other transactions or series of related transactions occurring
which have substantially the same effect as the transactions specified in
any of the preceding clauses of this Section I.5.
Notwithstanding the above, certain transfers are permitted within Section
318 of the Code and such transfers shall not be deemed a Change of
Control under this Section 1.5.
1.6 "Code" means the Internal Revenue Code of 1986, as mended.
1.7 "Compensation" means the annual compensation, including bonuses,
commissions, overtime, relocation expenses, incentive payments,
non-monetary awards, and including automobile allowances paid to the
Executive for employment services rendered to the Company, before
reduction for compensation deferred pursuant to all qualified,
non-qualified and Code ss. 125 plans of the Company.
1.8 "Corporation" means Grange National Banc Corp., a Pennsylvania
corporation.
1.9 "Disability" means a condition whereby the Executive, because of a
physical or mental sickness, accident or injury, is or will be unable to
perform the duties of the Executive's customary position of employment
with the Company or any other employer. The Board, in its sole discretion,
shall determine whether the Executive is disabled and may require the
Executive to submit to a physical examination in order to determine
disability.
1.10 "Disability Benefit" means the benefit as set forth in Section 2.4.
1.12 "Early Retirement Benefit" means the benefit as set forth in Section 2.3.
1.13 "Effective Date" means 1/1/96.
1.14 "Final Compensation" means the average of the Executive's Compensation for
his or last five calendar years of employment (including the annualized
compensation for the calendar year in which the event that entitled the
Executive to a distribution of benefits under this Agreement occurred).
1.15 "Normal Retirement Age" means the Executive's sixty-second (62nd)birthday.
1.16 `Normal Retirement Benefit" means the benefit as set forth in Section 2.2,
1.17 "Normal Retirement Date" means the later of the Normal Retirement Age or
Termination of Employment.
1.18 "Pension Benefit" means the balance in the Executive's 401(k) (as of the
date any benefits are being determined) attributed to all Company
contributions, plus the return on those contributions, amortized over a
two hundred forty (240) month period with interest calculated on the
unpaid balance at an annual rate of eight ' percent (8%), compounded
monthly.
1.19 "Plan Administrator" means the plan administrator described in Article 5.
1.20 "Plan Year" means the twelve (12) month period from January 1 to December
3I.
1.21 "Termination for Cause" means termination of the Executive's employment
for: (a) gross negligence or gross neglect of duties; (b) commission of a
felony or of a gross misdemeanor involving moral turpitude; or (c) actions
inimical to the
interests of the Company, including but not limited to fraud, disloyalty,
dishonesty or willful violation of any law or significant Company policy
committed in connection with the Executive's employment and resulting in a
material adverse effect on the Company.
1.22 "Termination of Employment" means the date on which the Executive (i)
retires, resigns or ceases to be an employee; (ii) dies while in the
active employ of the Company; or (iii) departs from the service of the
Company for any reason; provided, that the Executive will not be deemed to
have terminated the Executive's employment solely by reason of a leave of
absence duly approved by the Company.
1.23 "Years of Service" means the twelve consecutive month period beginning on
the Executive's date of hire and any twelve (12) month anniversary
thereof, during the entirety of which time the Executive is an employee of
the Company. The Plan Administrator in its discretion may also grant
additional Years of Service in such circumstances where it deems such
additional service appropriate.
ARTICLE 2
RETIREMENT AND DEATH BENEFITS
2.1 Agreement Benefits. The Executive's benefits under this Agreement shall be
limited to those described in this Article 2, and shall be subject to any
conditions and limitations set forth in Article 4 and contained elsewhere
in this Agreement.
2.2 Normal Retirement Benefit. Upon the Normal Retirement Date, the Company
shall pay to the Executive an annual Normal Retirement Benefit equal to
eighty- five percent (85%) of the Executive's Final Compensation reduced
by the (a) Pension Benefit, and (b) fifty percent (50%) of the Social
Security benefit that would be receivable by the Executive calculated as
if the Executive's Normal Retirement Age were also his normal retirement
age or age at which unreduced Social Security benefits were available
under the Social Security law (regardless of whether any Social Security
benefits are actually payable currently on the Executive's Normal
Retirement Date). The Company shall pay the Normal Retirement Benefit to
the Executive in twelve (12) equal monthly installments commencing as of
the first day of the month following the Executive's Normal Retirement
Date and payable during the Executive's lifetime on or around the first
day of each successive month thereafter until the Executive has received
one hundred eighty (180) installments. Upon making all of such
installments, the Company's obligation to provide such payments will
cease. No further benefit under this Agreement is to be provided.
2.3 Earls Retirement Benefit Upon the Executive's Termination of Employment
before the Normal Retirement Date, the Company shall pay to the Executive
an annual Early Retirement Benefit, determined by amortizing the Accrual
Balance over one hundred eighty (180) equal monthly installments at an
annual rate of
interest equal to the Prime Rate as published in the Wall Street Journal
on the last business day immediately preceding the Executive's Termination
of Employment. The Company shall pay the Early Retirement Benefit to the
Executive commencing as of the first day of the month following the
Executive's Termination of Employment and payable during the Executive's
lifetime on or around the first day of each successive month thereafter
until the Executive has received one hundred eighty (180) installments.
Upon making all of such installments, the Company's obligation to provide
such payments will cease. No further benefit under this Agreement is to be
provided.
2.4 Disability Benefit. Upon Termination of Employment due to Disability prior
to Normal Retirement Age, the Company shall pay to the Executive an annual
Disability Benefit, determined by amortizing the Accrual Balance over one
hundred eighty (180) equal monthly installments at an annual rate of
interest equal to the Prime Rate as published in the Wall Street Journal
on the last business day immediately preceding the Executive's Termination
of Employment. The Company shall pay the Disability Benefit to the
Executive commencing as of the first day of the month following the
Executive's Termination of Employment and payable during the Executive's
lifetime on or around the first day of each successive month thereafter
until the Executive has received one hundred eighty (180) installments.
Upon making all of such installments, the Company's obligation to provide
such payments will cease. No further benefit under this Agreement is to be
provided.
2.5 Chance of Control Benefit. Following a Change of Control, upon the
Executive's Termination of Employment for reasons other than death,
Disability or attaining Normal Retirement Age, the Company shall pay to
the Executive an annual Change of Control Benefit equal to eighty-five
percent (85%)of the Executive's Final Compensation reduced by the (a)
Pension Benefit, and (b) fifty percent (50%) of the Social Security
benefit that would be receivable by the Executive calculated as if the
Executive's age at Termination of Employment were also his normal
retirement age or age at which unreduced Social Security benefits were
available under the Social Security law (regardless of whether any Social
Security benefits are actually payable currently on the Executive's Normal
Retirement Date). The Company shall pay the Change of Control Benefit to
the Executive in twelve (12) equal monthly installments commencing as of
the first day of the month following the Executive's Termination of
Employment and payable during the Executive's lifetime on or around the
first day of each successive month thereafter until the Executive has
received one hundred eighty (180) installments. Upon making all of such
installments, the Company's obligation to provide such payments will
cease. No further benefit under this Agreement is to be provided.
2.6 Pre-Retirement Death Benefit. If the Executive dies while in the active
employ by the Company, the Company shall pay to the Beneficiary the
following benefits:
Year 1: 100% of Compensation
Years 2-5: 75% of Compensation
Years 6-15: 50% of Compensation
The Company shall pay the Pre-Retirement Death Benefit to the Beneficiary
in twelve (12) monthly installments commencing as of the first day of the
month following the Executive's death and on or around the first day of
each successive month thereafter until the Executive's beneficiary has
received one hundred eighty (180) installments. Upon making all of such
installments, the Company's obligation to provide such payments will
cease. No further benefit under this Agreement is to be provided.
2.7 Post-Commencement Death Benefit. If the Executive dies after any benefit
payments have commenced under this Article but before receiving all such
payments, the Company shall pay to the Beneficiary the remaining benefits
at the same time, for such duration and in the same amounts they would
have been paid to the Executive had the Executive survived.
2.8 Post-Retirement, Commencement Death Benefit. If the Executive is entitled
to a benefit under this Article, but dies prior to the commencement of
said benefit payments, the Company shall pay the same benefit payments to
the Beneficiary that the Executive was entitled to prior to death except
that the benefit payments shall commence on the first day of the month
following the date of the Executive's death.
2.9 Withholding and Payroll Taxes. The Company shall withhold from any and all
benefits made under this Article 2, all federal, state and local income
taxes, employment and other taxes required to be withheld by the Company
in connection with the benefits hereunder, in amounts to be determined in
the sole discretion of the Company.
ARTICLE 3
BENEFICIARIES
3.1 Beneficiary. The Executive shall have the right, at any time, to designate
a Beneficiary(ies) to receive any benefits payable under this Agreement to
a beneficiary upon the death of the Executive. The Beneficiary designated
under this Agreement may be the same as or different from the Beneficiary
designation under any other plan of the Company in which the Executive
participates.
3.2 Beneficiary Designation; Change. The Executive shall designate a
Beneficiary by completing and signing the Beneficiary Designation Form,
and delivering it to the Plan Administrator or its designated agent. 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. The
Executive 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, as in effect from time to time. 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 Executive and accepted by the Plan Administrator prior to the
Executive's death.
3.3 Acknowledgement. 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.
3.4 No Beneficiary Designation. If the Executive dies without a valid
beneficiary designation, or if all designated Beneficiaries predecease the
Executive, then the Executive's spouse shall be the designated
Beneficiary. If the Executive has no surviving spouse, the benefits shall
be made to the personal representative of the Executive's estate.
3.5 Facility of Payment. If the Plan Administrator determines in its
discretion that a benefit is to be paid 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 payment 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
payment of a benefit shall be a payment for the account of the Executive
and the Executive's Beneficiary, as the case may be, and shall be a
complete discharge of any liability under the Agreement for such payment
amount.
ARTICLE 4
GENERAL LIMITATIONS ON BENEFITS
4.1 Termination for Cause. If there is a Termination for Cause by the Company
of the Executive, the Executive shall cease participation hereunder as of
the date of such termination and no benefits shall be paid to the
Executive or the Executive's Beneficiary.
4.2 Requirement of Non-Competition. The Company shall not pay to the Executive
any benefit under this Agreement if, during the term that benefits
payments are being made, the Executive, without the prior written consent
of the Board 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, director, officer, principal, agent, trustee or in any other
capacity whatsoever, any enterprise conducted within twenty-five (25)
miles of any office of the Company existing as of the date of the
Executive's Termination of Employment, which
enterprise is, or may deemed to be, competitive with any business carried
on by the Company as of the date of the Executive's Termination of
Employment. This section shall not apply following a Change of Control.
4.3 Services. Payment of the Early Retirement Benefit or Normal Retirement
Benefit is conditioned upon the Executive, while receiving payments under
this Agreement, rendering such reasonable business consulting and advisory
services to the Company as requested by the Board. Such services shall not
require the Executive to be active in the Company's day-to-day activities,
and the Executive shall be compensated for such services in an amount to
be then agreed upon, and shall be reimbursed for all expenses incurred in
performing such services.
4.4 Executive's Suicide or Misstatement. The Company shall not pay any benefit
under this Agreement if the Executive commits suicide within two years of
the Effective Date of this Agreement. In addition, the Company shall not
pay any benefit under this Agreement if the Executive has made any
material misstatement of fact on any application for insurance or any
benefits provided by the Company to the Executive.
ARTICLE 5
ADMINISTRATION OF AGREEMENT
5.1 Plan Administrator Duties. This Agreement shall be administered by a Plan
Administrator which shall consist of the Board, or such committee as the
Board shall appoint. The Executive may be a member of the Plan
Administrator. The Plan Administrator 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 the Agreement.
5.2 Agents. In the administration of this Agreement, the Plan Administrator
may employ agents and delegate to them such administrative duties as it
sees fit, (including acting through a duly appointed representative), and
may from time to time consult with counsel who may be counsel to the
Company.
5.3 Binding Effect of Decisions. The decision or action of the Plan
Administrator with respect to any question arising out of or in connection
with the administration, interpretation and application of the Agreement
and the rules and regulations promulgated hereunder shall be final and
conclusive and binding upon all persons having any interest in the
Agreement.
5.4 Indemnity of Plan Administrator. The Company shall indemnify and hold
harmless the members of 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 or any of its members.
5.5 Company Information. To enable the Plan Administrator to perform its
functions, the Company shall supply full and timely information to the
Plan Administrator on all matters relating to the compensation of the
Executive, the date and circumstances of the retirement, Disability, death
or Termination of Employment of the Executive, and such other pertinent
information as the Plan Administrator may reasonably require.
ARTICLE 6
CLAIMS AND REVIEW PROCEDURE
6.1 For all claims other than Disability benefits:
6.l.1 Claims Procedure. Any individual ("Claimant") who has not received
benefits under this Agreement that he or she believes should be paid
shall make a claim for such benefits as follows:
6.1.1.1 Initiation - Written Claim. The Claimant initiates a
claim by submitting to the Company a written claim for
the benefits.
6.1.1.2 Timing of Company Response. The Company shall respond to
such Claimant within 90 days after receiving the claim.
If the Company determines that special circumstances
require additional time for processing the claim, the
Company can extend the response period by an additional
90 days by notifying the Claimant in writing, prior to
the end of the initial 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 Company expects to render its decision.
6.1.1.3 Notice of Decision. If the Company denies part or all of
the claim, the Company shall notify the Claimant in
writing of such denial. The Company 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.
6.1.2 Review Procedure. If the Company denies part or all of the claim,
the Claimant shall have the opportunity for a full and fair review
by the Company of the denial, as follows:
6.1.2.4 Initiation - Written Request. To initiate the review,
the Claimant, within 60 days after receiving the
Company's notice of denial, must file with the Company a
written request for review.
6.1.2.5 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 Company 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.
6.1.2.6 Considerations on Review. In considering the review, the
Company shall take into account all materials and
information the Claimant submits relating to the claim,
without regard to whether such information was submitted
or considered in the initial benefit determination.
6.1.2.7 Timing of Company Response. The Company shall respond in
writing to such Claimant within 60 days after receiving
the request for review. If the Company determines that
special circumstances require additional time for
processing the claim, the Company can extend the
response period by an additional 60 days by notifying
the Claimant in writing, prior to the end of the initial
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 Company expects
to render its decision.
6.1.2.8 Notice of Decision. The Company shall notify the
Claimant in writing of its decision on review. The
Company 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).
6.2 For Disability claims:
6.2.1 Claims Procedures. Any individual ("Claimant") who has not received
benefits under this Agreement that he or she believes should be paid
shall make a claim for such benefits as follows:
6.2.1.2 Initiation - Written Claim. The Claimant initiates a
claim by submitting to the Company a written claim for
the benefits.
6.2.1.3 Timing of Company Response. The Company shall notify the
Claimant in writing or electronically of any adverse
determination as set out in this Section.
6.2.1.4 Notice of Decision. If the Company denies part or all of
the claim, the Company shall notify the Claimant in
writing of such denial. The Company 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) (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 the Agreement's review
procedures and the time limits applicable to such
procedures,
(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,
(f) [See ss.2560.503-l(g)(v) Any internal rule,
guideline, protocol, or other similar criterion
relied upon in making the adverse determination,
or a statement that such a rule, guideline,
protocol, or other similar criterion was relied
upon in making the adverse determination and that
the Claimant can request and receive free of
charge a copy of such rule, guideline, protocol or
other criterion from the Company, and
(g) If the adverse benefit determination is based on a
medical necessity or experimental treatment or
similar exclusion or limit, either an explanation
of the scientific or clinical judgment for the
determination, applying the terns of this
Agreement to the Claimant's medical circumstances,
or a statement that such explanation will be
provided free of charge upon request.
6.2.1.5 Timing of Notice of Denial/Extensions. The Company shall
notify the Claimant of denial of benefits in writing or
electronically not later than 45 days after receipt of
the claim by the Company. The Company may elect to
extend notification by two 30-day periods subject to the
following requirements:
(a) For the first 30-day extension, the Company shall
notify the Claimant (1) of the necessity of the
extension and the factors beyond the Company's
control requiring an extension; (2) prior to the
end of the initial 45-day period; and (3) of the
date by which the Company expects to render a
decision.
(b) If the Company determines that a second 30-day
extension is necessary based on factors beyond the
Company's control, the Company shall follow the
same procedure in (a> above, with the exception
that the notification must be provided to the
Claimant before the end of the first 30-day
extension period.
(c) For any extension provided under this section, the
Notice of Extension shall specifically explain the
standards upon which entitlement to a benefit is
based, the unresolved issues that prevent a
decision on the claim, and the additional
information needed to resolve those issues. The
Claimant shall be afforded 45 days within which to
provide the specified information.
6.2.2 Review Procedures - Denial of Benefits. If the Company denies part
or all of the claim, the Claimant shall have the opportunity for a
full and fair review by the Company of the denial, as follows:
6.2.2.1 Initiation of Appeal. Within 180 days following notice
of denial of benefits, the Claimant shall initiate an
appeal by submitting a written notice of appeal to
Company.
6.2.2.2 Submissions on Appeal - Information Access. The Claimant
shall be allowed to provide written comments, documents,
records, and other information relating to the claim for
benefits. The Company shall provide to 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.
6.2.2.3 Additional Company Responsibilities on Appeal. On
appeal, the Company shall:
(a) [See ss.2560.503-1(h)(3)(i)-(v)] Take into account
all materials and information the Claimant submits
relating to the claim, without regard to whether
such information was submitted or considered in
the initial benefit determination;
(b) Provide for a review that does not afford
deference to the initial adverse benefit
determination and that is conducted by an
appropriate named fiduciary of the Company who is
neither the individual who made the adverse
benefit determination that is the subject of the
appeal, nor the
subordinate of such individual;
(c) In deciding an appeal of any adverse benefit
determination that is based in whole or in part on
a medical judgment, including determinations with
regard to whether a particular treatment, drug, or
other item is experimental, investigational, or
not medically necessary or appropriate, consult
with a health care professional who has
appropriate training and experience in the field
of medicine involved in the medical judgment;
(d) Identify medical or vocational experts whose
advise was obtained on behalf of the Company in
connection with a Claimant's adverse benefit
determination, without regard to whether the
advice was relied upon in making the benefit
determination; and
(e) Ensure that the health care professional engaged
for purposes of a consultation under subsection
(c) above shall be an individual who was neither
an individual who was consulted in connection with
the adverse benefit determination that is the
subject of the appeal, nor the subordinate of any
such individual.
6.2.2.4 Timing of Notification of Benefit Denial - Appeal
Denial. The Company shall notify the Claimant not later
than 45 days after receipt of the Claimant's request for
review by the Company, unless the Company determines
that special circumstances require an extension of time
for processing the claim. If the Company determines that
an extension is required, written notice of such shall
be furnished to the Claimant prior to the termination of
the initial 45-day period, and such extension shall not
exceed 45 days. The Company shall indicate the special
circumstances requiring an extension of time and the
date by which the Company expects to render the
determination on review.
6.2.2.5 Content of Notification of Benefit Denial. The Company
shall provide the Claimant with a notice calculated to
be understood by the Claimant, which shall contain:
(a) The specific reason or reasons for the adverse
determination;
(b) Reference to the specific plan provisions on which
the benefit determination 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 relevant information (as
defined in applicable ERISA regulations);
(d) A statement of the Claimant's right to bring an
action under ERISA Section 502(a);
(e) [See ss.2560.503-1(j)(5)] Any internal rule,
guideline, protocol, or other similar criterion
relied upon in making the adverse determination,
or a statement that such a rule, guideline,
protocol, or other similar criterion was relied
upon in making the adverse determination and that
the Claimant can request and receive free of
charge a copy of such rule, guideline, protocol
or other criterion from the Company;
(f) If the adverse benefit determination is based on a
medical necessity or experimental treatment or
similar exclusion or limit, either an explanation
of the scientific or clinical judgment for the
determination, applying the terms of this
Agreement to the Claimant's medical circumstances,
or a statement that such explanation will be
provided free of charge upon request; and
(g) The following statement: "You and your Company may
have other voluntary alternative dispute
resolution options such as mediation. One way to
find out what may be available is to contact your
local U.S. Department of Labor Office and your
state insurance regulatory agency."
ARTICLE 7
AMENDMENT AND TERMINATION OF THE AGREEMENT
7.1 Amendment and Termination. Subject to Article 4, prior to the commencement
of benefit payments under this Agreement, the Company reserves the right
to amend or terminate this Agreement at any time by the action of the
Board.
ARTICLE 8
MISCELLANEOUS
8.1 Unsecured General Creditor. The Executive and the Executive's
Beneficiaries, successors and assigns shall have no legal or equitable
rights, interests or claims in any property or assets of the Company. Any
and all of the Company's assets shall be, and remain, the general,
unpledged unrestricted assets of the Company. The Company's obligation
under the Agreement shall be merely that of an unfunded and unsecured
promise to pay money in the future.
8.2 Not a Contract of Employment. The terms and conditions of this Agreement
shall not be deemed to constitute a contract of employment between the
Company and the Executive. Such employment is hereby acknowledged to be an
"at will" employment relationship that can be terminated at any time for
any reason, with or without cause, unless expressly provided in a written
employment agreement. Nothing in this Agreement shall be deemed to give a
Executive the right to be retained in the service of the Company or to
interfere with the right of the Company to discipline or discharge the
Executive at any time.
8.3 Participation in Other Plans. Nothing herein contained shall be construed
to alter, abridge, or in any manner affect the rights and privileges of
the Executive to participate in and be covered by any pension, profit
sharing, group insurance, bonus or similar employee plans which the
Company may now or hereafter maintain.
8.4 Alienability. Neither the Executive nor any Beneficiary under this
Agreement shall have any power or right to transfer, assign, anticipate,
hypothecate, mortgage, commute, modify, or otherwise encumber in advance
any of the benefits payable hereunder, nor shall any of said benefits be
subject to seizure for the payment of any debts, judgments, alimony, or
separate maintenance owed by the Executive or the Executive's Beneficiary
or any of them, to be transferable by operation of law in the event of
bankruptcy, insolvency, or otherwise. In the event the Executive or any
Beneficiary attempts assignment, commutation, hypothecation, transfer, or
disposal of the benefit hereunder, the Company's liabilities shall
forthwith cease and terminate.
8.5 Successors. The provisions of this Agreement shall bind and inure to the
benefit of the Company and its successors and assigns and the Executive
and the Executive's Beneficiary.
8.6 Reorganization. The Company shall not merge or consolidate into or with
another corporation, or reorganize, or sell substantially all of its
assets to another corporation, firm, or person unless and until such
succeeding or continuing corporation, firm, or person agrees to assume and
discharge the obligations of the Company under this Agreement. Upon the
occurrence of such event, the term "Company" as used in this Agreement
shall be deemed to refer to such succeeding or continuing company, firm,
or person.
8.7 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.
8.8 Alternative Action. In the event it shall become impossible for the
Company or the Plan Administrator to perform any act required by this
Agreement, the Company or Plan Administrator may in its discretion perform
such alternative act as most nearly carries out the intent and purpose of
this Agreement and is in the best interests of the Company.
8.9 Applicable Law. Subject to ERISA, the provisions of this Agreement shall
be construed and interpreted in accordance with the laws of the state of
Pennsylvania, without regard to its conflict of law principles.
8.10 Headings. Article and section headings are for convenient reference only
and shall not control or affect the meaning or construction of any of its
provisions.
8.11 Furnishing Information. The Executive or the Executive's Beneficiary will
cooperate with the Plan Administrator by furnishing any and all
information requested by the Plan Administrator and take such other
actions as may be requested in order to facilitate the administration of
the Agreement and the payments of benefits hereunder, including but not
limited to taking such physical examinations as the Plan Administrator may
deem necessary.
8.12 Validity. In case 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 and invalid provision has never been inserted herein.
8.13 Notice. Any notice or filing required or permitted to be given to the 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:
198 E. TIOGA ST.
TUNKHANNOCK PA.
18657
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 or the
receipt for registration or certification.
Any notice or filing required or permitted to be given to the Executive
under this Agreement shall be sufficient if in writing and hand-delivered,
or sent by mail, to the last known address of the Executive.
8.14 Signed Copies. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and such
counterparts taken together shall constitute one (1) and the same
instrument.
IN WITNESS WHEREOF, the Company and the Executive have caused this
Agreement to be duly executed as of the Effective Date above.
EXECUTIVE GRANGE NATIONAL BANK
/s/ Thomas A. McCullough By:
- ------------------------------ /s/ Sally A. Steele
---------------------------------
Thomas A. McCullough As its Secretary
- ------------------------
BENEFICIARY DESIGNATION FORM
I designate the following as beneficiary of benefits under this Agreement
payable following my death:
Primary:
Helen T. McCullough
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Contingent:
Thomas A. McCullough, Jr., Matthew H. McCullough, Mark M. McCullough,
------------------------------------------------------------------------
John P. McCullough, Luke M. McCullough each 20%
- --------------------------------------------------------------------------------
Note: To name a trust as beneficiary, please provide the name of the trustee(s)
and the exact name and date of the trust agreement.
I understand that I may change these beneficiary designations by filing a new
written designation with the Plan Administrator. I further understand that the
designations will be automatically revoked if the beneficiary predeceases me,
or, if I have named my spouse as beneficiary and our marriage is subsequently
dissolved.
Signature /s/ Thomas A. McCullough
------------------------
Thomas A. McCullough
Date January 17, 2003
Acknowledged by the Plan Administrator this 11 day of February, 2003
By /s/ [Illegible]
-------------------------------
Title ____________________________