Exhibit 10.1(b)
CHANGE IN CONTROL
AGREEMENT
THIS CHANGE IN CONTROL
AGREEMENT is made to be
effective as of March 1, 2009, by and among ORRSTOWN
FINANCIAL SERVICES, INC. , a Pennsylvania business corporation
(the “Corporation”), ORRSTOWN BANK , a
Pennsylvania state charted bank having its principal place of
business at 77 East King Street, Shippensburg, Pennsylvania 17257
(the “Bank”), and THOMAS RODNEY QUINN, JR. an
individual residing at 4400 Deerwood Court, Bonita Springs, FL
34134 (the “Executive”).
W I T N E S S E T
H:
WHEREAS , Executive is now serving as an executive of
the Bank, a wholly-owned subsidiary of the Corporation;
and
WHEREAS , the Corporation and the Bank consider the
continued services of Executive to be in the best interests of the
Corporation and the Bank; and
WHEREAS , the Corporation, the Bank and Executive desire
to enter into this Agreement whereby the Corporation agrees to make
certain payments to Executive upon termination under specific
conditions in order to induce Executive to continue in
employment.
NOW , THEREFORE , in consideration of the
continued employment of Executive and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, intending to be legally bound hereby, Executive and
the Corporation and the Bank agree as follows:
ARTICLE I
TERMINATION PURSUANT TO A
CHANGE IN CONTROL
1.1 Definition: Termination
Pursuant to a Change in Control . Any of the following
events occurring during the period commencing with the date of a
“Change in Control” (as defined in ARTICLE II hereof)
and ending on the second anniversary of the date of the Change in
Control, shall constitute a “Termination Pursuant to a Change
in Control”:
(A) Executive’s employment is
terminated by the Bank or an acquirer or successor of the Bank
without “Cause” (as defined in the Executive Employment
Agreement of even date herewith by and among the Corporation, the
Bank and the Executive (the “Employment Agreement”));
or
(B) Executive terminates
Executive’s employment for Good Reason (as defined in the
Employment Agreement).
1.2 Compensation Upon
Termination Pursuant to a Change in Control . If
Executive’s employment is terminated and such termination is
a Termination Pursuant to a Change in Control (as defined in
Section 1.1), the Corporation (or any acquirer or successor
thereto) shall provide (or cause to be provided) the following to
Executive:
(A) The Bank shall pay Executive
within twenty (20) days following the termination of
Executive’s employment, a lump sum payment in an amount equal
to and no greater than two and 99/100 (2.99) times the sum of
the Executive’s (i) annualized base salary, and
(ii) cash bonus and other annual incentive cash compensation,
in each case with respect to the calendar year immediately
preceding the calendar year in which the Termination Pursuant to a
Change in Control occurs.
(B) Executive shall be provided, for
a period of three (3) years, commencing as of the termination
of Executive’s employment, with life, disability,
medical/health insurance and other health and welfare benefits in
effect with respect to Executive immediately prior to the
Termination Pursuant to a Change in Control, or, if the Bank is not
permitted by insurance carriers to provide such benefits because
Executive is no longer an employee, a dollar amount equal to the
cost to
Executive to obtain such benefits;
provided that Executive shall continue to be responsible for the
cost of such insurance coverages following his Termination Pursuant
to a Change in Control to the same extent as other similarly
situated active employees of the Bank as of the Termination
Pursuant to a Change in Control or, if there are no similarly
situated employees, then to the same extent, on a percentage of
total cost basis, that Executive was responsible for the cost of
available insurance coverages prior to the Termination Pursuant to
a Change in Control. With respect to health insurance coverage,
Executive’s spouse and/or eligible dependents, if covered
under any employer sponsored accident and health insurance plan in
effect for Executive as of Executive’s Termination Pursuant
to a Change in Control, shall also be provided with health
insurance coverage for the three (3) year term set forth above
and under the same cost sharing method as described
above.
(C) If the total of all payments and
benefits to be made and provided under the terms of this Agreement,
together with any other payments and benefits which the Executive
has the right to receive from the Corporation and the Bank upon a
Termination Pursuant to a Change in Control, would result in the
imposition of an excise tax under Section 4999 (or any
successor provision thereto) of the Internal Revenue Code of 1986,
as amended, and the regulations promulgated thereunder (the
“Code”), Executive shall be entitled to an additional
“excise tax” adjustment payment in an amount such that,
after the payment of all federal and state income and excise taxes,
Executive will be in the same after-tax position as if no excise
tax had been imposed. Any payment or benefit which is required to
be included under Sections 280G or 4999 (or any successor
provisions thereto) of the Code for purposes of determining whether
a deduction is to be disallowed or an excise tax is payable shall
be deemed a payment or benefit “made or provided to
Executive” or a payment or benefit “which Executive has
a right to receive” for purposes of this provision. The
Corporation (or its successor) shall be responsible for the costs
of calculation of the deductibility of payments and benefits and
the amount of the excise tax due, if any, by the
Corporation’s independent certified accountant and tax
counsel and shall notify Executive of the amount of excise tax due,
if any, prior to the time such excise tax is due. If at any time it
is determined that the additional “excise tax”
adjustment payment previously made to Executive was insufficient to
cover the effect of the excise tax, the gross-up payment pursuant
to this provision shall be increased to make Executive whole,
including an amount to cover the payment of any penalties resulting
from any incorrect or late payment of the excise tax resulting from
the prior calculation. All amounts required to be paid pursuant to
this paragraph (C) shall be paid at the time any withholding
may be required (or, if earlier, the time Executive shall be
required to pay such amounts) under applicable law, and any
additional amounts to which Executive may be entitled shall be paid
or reimbursed no later than fifteen (15) days following
confirmation of such amount by the Corporation’s independent
certified accountant provided, however, that any payments to be
made under this paragraph (C) shall in all events be made no
later than the end of Executive’s taxable year next following
the taxable year in which the Executive remits such excise tax
payments. The parties recognize that the actual implementation of
the provisions of this paragraph (C) are complex and agree to
deal with each other in good faith to resolve any questions or
disagreements arising hereunder.
1.3 Other Benefits .
Except as otherwise provided in this Section 1.3, the payments
provided by this ARTICLE I shall not affect Executive’s
rights to receive any payments or benefits to which Executive may
be or become entitled under any other existing or future agreement
or arrangement of the Corporation, the Bank or any successor
thereto with the Executive, or under any existing or future benefit
plan or arrangement of the Corporation, the Bank or any successor
in which Executive is or becomes a participant, or under which
Executive has or obtains rights, including without limitation, any
qualified or nonqualified deferred compensation or retirement plans
or programs or any outstanding stock options or similar agreements.
Any such rights of Executive shall be determined in accordance with
the terms and conditions of the applicable agreement, arrangement
or plan and applicable law, provided , however , that
Executive shall not be entitled to any severance payments pursuant
to the Employment Agreement or otherwise in addition to those
provided hereunder.
1.4 Withholding for
Taxes . All payments required to be made under this
Agreement will be subject to withholding of such amounts relating
to tax and/or other payroll deductions as may be required by
law.
ARTICLE II
DEFINITION OF CHANGE IN
CONTROL
2.1 Change in Control
. For purposes of this Agreement, the term “Change
in
