Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
OnSeptember 17, 2020 ,Orrstown Bank (the "Bank"), the wholly-owned bank subsidiary ofOrrstown Financial Services, Inc. (the "Company"), entered into a Deferred Compensation Agreement withThomas R. Brugger (the "Executive"). The Deferred Compensation Agreement, as previously disclosed in the Executive's Employment Agreement datedJune 25, 2019 , is intended to provide the Executive with the potential for certain retirement benefits payable in monthly installments over a 15 year period beginning the month following the Executive's separation from service upon or after he reaches normal retirement age (age 65), the month following his reaching normal retirement age in the cases of early termination and change in control, or the month following a separation from service in the case of disability. The agreement provides for the establishment of a deferral account into which the Bank will make contributions. Provided that the Company's Return on Average Tangible Equity, as defined in the Deferred Compensation Agreement, is at least 8.00% for 2020, the Bank will make a contribution in the amount of$55,700 onDecember 31, 2020 . Each year thereafter, provided that Company's Return on Average Tangible Equity is at least 8.00% for such year, the Bank will make a Contribution to the Deferral Account in the amount of$133,680 eachDecember 31 , until the earliest of Separation from Service, Disability, Normal Retirement Age or the Executive's death. Prior to the earliest to occur of: (i) a separation from service, (ii) disability, (iii) death and (iv) the Executive attaining age 65, interest will accrue on amounts credited to the deferral account at the "accumulation period crediting rate," compounded monthly. Following any of the aforementioned events, interest will accrue at the rate of four percent, except in the event of a change in control, in which case no interest will accrue until normal retirement age and, thereafter, interest will accrue at the rate of four percent. In order to further link the amount of the benefit to overall corporate performance, the "accumulation period crediting rate" will mirror the Company's Return on Average Tangible Equity (computed annually as described in the agreement); provided, that in no event will the rate be less than zero nor more than fifteen percent. The total benefit payable in the event of normal retirement, early termination or disability is equal to the deferral account balance as of such date, with interest accruing as described above. In the event of a separation from service in connection with a change in control and prior to normal retirement age, the Bank shall pay the Executive the Deferral Account balance calculated at Separation from Service, in lieu of any other benefit hereunder. This benefit shall be paid in 180 consecutive equal monthly installments commencing the month following Normal Retirement Age, with interest credited on the unpaid balance at the Distribution Period Crediting Rate, beginning at Separation from Service. In the event the Executive dies prior to Separation from Service and Disability, the Bank shall pay the Beneficiary the greater of (i) the Deferral Account balance or (ii)$2,543,890 , in lieu of any other benefit hereunder. This benefit shall be paid in 180 consecutive equal monthly installments commencing the month following the Executive's death, with interest credited on the unpaid balance at the Distribution Period Crediting Rate. If the Executive's employment is terminated for Cause, then the Executive shall forfeit all benefits hereunder. The foregoing summary of the Deferred Compensation Agreement is not complete and is qualified in its entirety by reference to the full text of such agreements, which are attached hereto as Exhibit 10.1 and is incorporated herein by reference.
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Item 9.01 Financial Statements and Exhibits
(d) Exhibits
The following exhibit is furnished as part of this Current Report on Form 8-K:
Exhibit No. Description Deferred Compensation Agreement betweenOrrstown Bank and Thomas R. 10.1 Brugger Cover Page Interactive Data File (embedded within the inline XBRL 104 document)
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