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EXHIBIT
10.1
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Filed by Orrstown Financial Services, Inc.
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Commission File No.: 033-18888 |
FORM
CHANGE IN CONTROL
AGREEMENT
THIS CHANGE IN CONTROL
AGREEMENT is made as of
, 20
, 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
an individual residing at
,
, Pennsylvania
(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 acquiror or successor of
the Bank without “Good Cause” (as defined below);
or
(B) Any of the following
events occurs and Executive thereafter terminates Executive’s
employment:
(i) any reduction in
Executive’s responsibilities, including reporting
responsibilities, or authority including such responsibilities or
authority as may be increased from time to time; or
(ii) the assignment to
Executive of duties inconsistent with Executive’s office as
the same may be increased from time to time; or
(iii) any reassignment of
Executive, without his consent, to a principal place of employment
which is more than fifty (50) miles from the office of the
Bank that was Executive’s principal place of employment
immediately preceding the Termination Pursuant to a Change in
Control; or
(iv) any reduction in
Executive’s annual base salary as the same may be increased
from time to time; or
(v) any failure to provide
Executive with benefits at least as favorable as those enjoyed by
Executive under the Bank’s retirement or pension, life
insurance, medical, health and accident, disability or other
employee or incentive compensation plans in which Executive
participated at the termination of employment, or the taking of any
action that would materially reduce any of such benefits;
or
(vi) any requirement that
Executive travel in performance of his duties on behalf of Bank for
a significantly greater period of time during any year than was
required of Executive during the year preceding the year in which
the Change of Control occurred.
For purposes of this
Section 1.1, “Good Cause” shall mean (i) the
commission of gross malfeasance in office constituting dishonesty
or the commission of a crime involving fraud, misappropriation,
embezzlement, dishonesty or other violation of law of a similar
nature and severity or (ii) the willful breach of a fiduciary
duty owed to the Corporation or the Bank. No act, or failure to
act, on Executive’s part shall be considered
“willful” unless done, or omitted to be done, by
Executive, not in good faith and without reasonable belief that
Executive’s action or omission was in the best interest of
the Corporation or the Bank. The burden of establishing the
validity of any termination for Good Cause shall rest upon the
Corporation and the Bank.
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 acquiror 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
( ) 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
( ) year(s), 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
( ) year(s) 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 i
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