As filed with the Securities and Exchange Commission on April 11, 2000
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
ORRSTOWN FINANCIAL SERVICES, INC.
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(Exact Name of Registrant as Specified in its Charter)
Pennsylvania 23-2530374
------------------------ ----------------------
(State of Incorporation) I.R.S. Employer
Identification Number)
77 East King Street
Shippensburg, Pennsylvania 17257
(717) 532-6114
-----------------------------------------------------------------------
(Address, including Zip Code, and Telephone Number, including Area Code,
of Principal Executive Offices)
--------------------
Orrstown Financial Services, Inc.
Employee Stock Purchase Plan
--------------------------------
(Full Title of the Plan)
Kenneth R. Shoemaker
President and Chief Executive Officer
Orrstown Financial Services, Inc.
77 East King Street
Shippensburg, Pennsylvania 17257
---------------------------------------------------------
(Name, Address and Telephone Number of Agent for Service)
---------------------
Copy to:
Dean H. Dusinberre, Esquire
Rhoads & Sinon LLP
One South Market Square, 12th Floor
P.O. Box 1146
Harrisburg, PA 17108-1146
(717) 233-5731
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================
Proposed Proposed
Title of Securities Maximum Maximum
Registration Amount to be Offering Price Aggregate Amount of
to be Registered Registered Per Share(1) Offering Price(1) Fee
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value... 75,000 shares $39.13 $2,934,750 $775
====================================================================================================
</TABLE>
(1) Estimated solely for the purposes of calculating the amount of the
registration fee, pursuant to Rule 457(c), on the basis of $39.13 per share,
which was the average of the bid and asked price of the Common Stock on
April 6, 2000.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
----------------------------------------
The following documents have been filed by Orrstown Financial Services,
Inc. with the Securities and Exchange Commission ("SEC") and are incorporated
herein by reference:
(a) Registrant's Annual Report on Form 10-K for the year ended
December 31, 1999.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") since the end of
Registrant's fiscal year covered by the annual report referred to in
(a) above.
(c) The description of Registrant's Common Stock contained in its
registration statement filed under the Exchange Act, and any amendment
or report filed for the purpose of updating such description.
All documents subsequently filed by Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the date of filing such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein or in any
other subsequently filed incorporated document modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part hereof.
ITEM 4. DESCRIPTION OF SECURITIES.
--------------------------
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
---------------------------------------
Not applicable.
II-1
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
------------------------------------------
Sections 1741-1743 of the Pennsylvania Business Corporation Law of 1988, as
amended (the "BCL"), provide that a business corporation may indemnify directors
and officers against liabilities they may incur in such capacities provided
certain standards are met, including good faith and the belief that the
particular action is in the best interests of the corporation. In general, this
power to indemnify does not exist in the case of actions against a director or
officer by or in the right of the corporation if the person entitled to
indemnification shall have been adjudged to be liable to the corporation unless
and only to the extent a court determines that the person is fairly and
reasonably entitled to indemnification. A corporation is required to indemnify
directors and officers against expenses they may incur in defending actions
against them in such capacities if they are successful on the merits or
otherwise in the defense of such actions. Section 1746 of the BCL provides that
the foregoing provisions shall not be deemed exclusive of any other rights to
which a person seeking indemnification may be entitled under, among other
things, any by-law provision, provided that no indemnification may be made in
any case where the act or failure or act giving rise to the claim for
indemnification is determined by a court to have constituted willful misconduct
or recklessness. Section 1747 of the BCL authorizes a corporation to purchase
insurance for directors and other representatives. The foregoing statement is
subject to the detailed provisions of Section 1741-1850 of the BCL.
The By-laws of Orrstown Financial Services, Inc. (the "Company") provide
for indemnification of directors and officers to the extent provided in the BCL.
In accordance with Section 1713 of the BCL, the By-laws of the Company also
include a provision that the directors of the Company shall not be personally
liable for monetary damages as such for any action taken, or failure to take any
action, unless: (1) the director has breached or failed to perform the duties of
his office in good faith, in a manner he reasonably believes to be in the best
interests of the Company and with such care, including reasonable inquiry, skill
and diligence, as a person of ordinary prudence would use under similar
circumstances; and (2) the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness. Pursuant to Section 1713 of
the BCL, this limitation of personal liability does not apply to (i) the
responsibility or liability of a director pursuant to any criminal statute or
(ii) the liability of a director for the payment of taxes pursuant to federal,
state or local law.
The Company maintains directors and officers liability insurance providing
insurance under certain circumstances for directors and certain officers.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
------------------------------------
Not Applicable.
II-2
<PAGE>
ITEM 8. EXHIBITS.
---------
5 Opinion of Rhoads & Sinon LLP.
23.1 Consent of Rhoads & Sinon LLP (included as part of Exhibit 5).
23.2 Consent of Smith Elliott Kearns & Company.
24 Powers of Attorney (included as part of signature page).
99.1 Orrstown Financial Services, Inc. Employee Stock Purchase Plan.
ITEM 9. UNDERTAKINGS.
-------------
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraph (A)(1)(i) and (A)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
the foregoing paragraph is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that
are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-3
<PAGE>
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Shippensburg, Commonwealth of Pennsylvania, on April
6, 2000.
ORRSTOWN FINANCIAL SERVICES, INC.
(Registrant)
By: /s/ Kenneth R. Shoemaker
-------------------------------------
Kenneth R. Shoemaker
President and Chief Executive Officer
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<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth R. Shoemaker and Joel R. Zullinger, and
each of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for such person and in such person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to the Registration Statement to which
this power of attorney is attached, and to file all those amendments and all
exhibits to them and other documents to be filed in connection with them, with
the Securities and Exchange Commission, granting unto such attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully and to
all intents and purposes as they might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated below.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Kenneth R. Shoemaker President and CEO and April 6, 2000
- ----------------------------- Director
Kenneth R. Shoemaker
/s/ Bradley S. Everly Senior Vice President April 6, 2000
- ----------------------------- (Chief Financial Officer)
Bradley S. Everly
/s/ Robert B. Russell Vice President April 6, 2000
- ----------------------------- (Chief Accounting Officer)
Robert B. Russell
/s/ Anthony F. Ceddia Director April 6, 2000
- -----------------------------
Anthony F. Ceddia
/s/ Jeffrey W. Coy Director April 6, 2000
- -----------------------------
Jeffrey W. Coy
</TABLE>
II-6
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Andrea Pugh Director April 6, 2000
- -----------------------------
Andrea Pugh
/s/ Gregory A. Rosenberry Director April 6, 2000
- -----------------------------
Gregory A. Rosenberry
/s/ Glenn W. Snoke Director April 6, 2000
- -----------------------------
Glenn W. Snoke
- ----------------------------- Director
Denver L. Tuckey
- ----------------------------- Director
John S. Ward
/s/ Joel R. Zullinger Director April 6, 2000
- -----------------------------
Joel R. Zullinger
</TABLE>
II-7
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit
- ----------- -------
5 Opinion of Rhoads & Sinon LLP.
23.1 Consent of Rhoads & Sinon LLP (included as part of Exhibit 5).
23.2 Consent of Smith Elliott Kearns & Company, LLC.
24 Powers of Attorney (included as part of signature page).
99.1 Orrstown Financial Services, Inc. Employee Stock Purchase Plan.
[LETTERHEAD]
Board of Directors
Orrstown Financial Services, Inc.
77 East King Street
Shippensburg, PA 17257
Ladies and Gentlemen:
Reference is made to your Registration Statement on Form S-8, which is to
be filed with the Securities and Exchange Commission regarding the registration
of 75,000 shares of common stock, no par value per share, of Orrstown Financial
Services, Inc. (the "Company") in connection with the Company's Employee Stock
Purchase Plan (the "Plan").
We have examined the records relating to the organization of the Company,
its Articles of Incorporation, By-laws and all amendments thereto, and the
records of proceedings of its stockholders and directors.
Based upon the foregoing, and upon the examination of such other documents
as we have deemed necessary to express the opinions hereinafter set forth, we
are of the opinion that:
1. The Company is a corporation duly organized and in good standing under
the Laws of the Commonwealth of Pennsylvania; and
2. The shares of the Company's Common Stock to be registered will, when
issued pursuant to and in accordance with the Plan, be duly authorized, fully
paid and non-assessable.
We hereby consent to the filing of this opinion as an Exhibit to the
said Registration Statement and to all references to us therein.
In giving such consent, we do not thereby admit that we are experts
within the meaning of Section 7 of the Securities Act of 1933.
Very truly yours,
RHOADS & SINON LLP
By: /s/ Dean H. Dusinberre
----------------------
Dean H. Dusinberre
[LETTERHEAD]
Exhibit 23.2
The Board of Directors and Stockholders
Orrstown Financial Services, Inc.
We consent to the use of our report, dated January 31, 2000, on our audits of
the financial statements of Orrstown Financial Services, Inc. incorporated by
reference to the Registration Statement on Form S-3, and to the reference to our
firm under the heading "Experts" in the Prospectus, in connection with the
Employee Stock Purchase Plan for Orrstown Financial Services, Inc.
/s/ SMITH ELLIOTT KEARNS & COMPANY, LLC
Chambersburg, Pennsylvania
March 28, 2000
EXHIBIT 99.1
ORRSTOWN FINANCIAL SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
TABLE OF CONTENTS
-----------------
Section I Definitions
Section II Purpose
Section III Available Shares; Adjustments
Section IV Grants and Terms of Options
Section V Payment For and Delivery of Shares
Section VI Termination and Amendment
Section VII Limitation on Resale
Section VIII Miscellaneous Provisions
Section IX Effective Date
<PAGE>
ORRSTOWN FINANCIAL SERVICES, INC.
EMPLOYEE STOCK PURCHASE PLAN
SECTION I
DEFINITIONS
ss.1.1. "Account" shall mean the book entry account established by the
Corporation for a participating Employee pursuant to ss.5.1 hereto.
ss.1.2. "Code" shall mean the Internal Revenue Code of 1986, as amended, and
any successor statute thereto.
ss.1.3. "Committee" shall mean that Committee appointed by the Corporation's
Board of Directors as described in Section 8.1 hereof or, if the Board
of Directors does not appoint such a Committee, the Board of Directors
itself in its capacity as administrator of the Plan.
ss.1.4. "Corporation" shall mean Orrstown Financial Services, Inc.
ss.1.5. "Employee" shall mean any employee of the Corporation, or any
Subsidiary of the Corporation who is customarily scheduled to work at
least 20 hours per week and has been employed by the Corporation, or
any Subsidiary of the Corporation, for at least one (1) year and who is
still employed on an Offering Date. Any employee of the Corporation or
Subsidiary whose customary employment is for not more than five months
in any calendar year shall not be eligible to participate in the Plan.
ss.1.6. "Fair Market Value" as of any date shall be determined on a per share
basis by the Board of Directors as follows:
(a) If the Shares were traded over-the-counter on the date in
question and the Shares were classified by Nasdaq as a
national market issue (or, in the judgment of the Board of
Directors, a comparable designation), then the Fair Market
Value shall be equal to the average of the high and low sales
prices of the Shares reported in Nasdaq trading for that date
or if no reported sale of Shares shall have occurred on such
date, then on the next preceding day on which there was a
reported sale.
(b) If the Shares were traded over-the-counter on the date in
question but the Shares were not classified by Nasdaq as a
national market issue (or, in the judgment of the Board of
Directors, a comparable designation), then the Fair Market
Value shall be equal to the mean between the last reported
representative bid and asked prices quoted by the Nasdaq
system for such date.
<PAGE>
(c) If the Shares were traded on a stock exchange on the date in
question, then the Fair Market Value shall be equal to the
closing price reported by the applicable composite
transactions reported for such date.
(d) If none of the above are applicable, then the Fair Market
Value shall equal the average of the daily high bid
and low offer quotations for the Shares reported through
the National Association of Securities Dealers, Inc.'s OTC
Bulletin Board service for the ten (10) trading days
immediately preceding the applicable date (the "Pricing
period"). If, however, no bid or no offer quotation for the
Shares is reported through the OTC Bulletin Board service
during the Pricing Period, then the Fair Market Value will be
the price of the last trade reported for the Shares through
the OTC Bulletin Board service.
(e) If none of the foregoing provisions are applicable, then the
Fair Market Value shall be determined by the Board of
Directors in good faith on such basis as it deems appropriate.
ss.1.7. "Offering Date(s)" shall be May 1 and November 1 of each year.
ss.1.8. "Plan" shall mean the Orrstown Financial Services, Inc. Employee Stock
Purchase Plan.
ss.1.9. "Purchase Dates" shall be April 30th and October 31st of each year.
ss.1.10. "Shares" shall mean shares of the Common Stock, no par value, of the
Corporation.
ss.1.11. "Subsidiary" shall, subject to the determination to be made by the
Board of Directors of the Corporation pursuant to Section 8.3 hereof,
have the meaning that is ascribed to that term in Section 424 (f) of
the Code.
ss.1.12. "Trust Officer" shall be such person or persons (including vice or
assistant officers) as the Board of Directors shall from time to time
appoint to administer the Plan as contemplated by Section 8.1 of the
Plan, subject to the authority and responsibility of the Board or the
Committee
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<PAGE>
SECTION II
PURPOSE
ss.2.1. The purpose of the Employee Stock Purchase Plan (the "Plan") is to
provide Employees of the Corporation and its subsidiaries, who wish to
become shareholders, an opportunity to purchase stock of the
Corporation. The Board of Directors of the Corporation believes that
Employee participation in the ownership of the Corporation will be to
the mutual benefit of both the Employees and the Corporation. The Plan
is intended to qualify as an "employee stock purchase plan" within the
meaning of Section 423 of Code.
SECTION III
AVAILABLE SHARES; ADJUSTMENTS
ss.3.1. A total of 75,000 Shares (subject to anti-dilution adjustments provided
in Section 3.2) may be sold pursuant to options to purchase granted
under the Plan. Either authorized and unissued Shares or issued Shares
heretofore or hereafter reacquired by the Corporation may be made
available for purchase under the Plan.
ss.3.2. Appropriate adjustments in the Fair Market Value per share as of a
particular Offering Date or Purchase Date and/or in the number and kind
of shares of stock which are available for the grant of options under
this Plan, shall be made to give effect to any mergers, consolidations,
acquisitions, stock splits, stock dividends, or other relevant changes
in the capitalization occurring after the effective date of the Plan.
No fractional Shares shall be subject to an option to purchase and each
Employee's option to purchase shall be adjusted downward to the nearest
full Share. In the case of adjustments to Fair Market Value, the Fair
Market Value shall be adjusted downward to the nearest whole cent. Any
agreement of merger or consolidation will include appropriate
provisions for protection of the then existing rights of Employees
under the Plan.
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<PAGE>
SECTION IV
GRANTS AND TERMS OF OPTIONS
ss.4.1. All Employees granted options to purchase under this Plan shall have
the same rights and privileges, except as set forth herein.
ss.4.2. On the Offering Dates each year while this Plan is in effect, the
Corporation will grant options to purchase Shares to all Employees. By
way of such options, each Employee shall be entitled to purchase up to
a maximum number of Shares each calendar year as determined in
ss.4.4-ss.4.8 below. In order to exercise the option to purchase, an
Employee must complete and file with the Trust Officer, on or before
the applicable Purchase Date, an enrollment form and any other papers
prescribed by the Corporation.
ss.4.3. The purchase price of Shares acquired pursuant to the above-described
options shall be the lower of 85 percent of the Fair Market Value of
the Shares on the applicable Offering Date or related Purchase Date.
For example, the lower of the Fair Market Values on the November 1st
Offering Date or the subsequent April 30th Purchase Date times 85% will
be the purchase price for the April 30th Purchase Date. The lower of
the Fair Market Values on May 1st or October 31st times 85% will be the
purchase price for the October 31st Purchase Date. The Board of
Directors may choose to use an alternative valuation method provided
that such valuation method is considered an appropriate method of
determining the fair market value of the Shares for the purposes of
Section 423 of the Code.
ss.4.4. Each Employee shall be limited in the number of Shares which can be
acquired in any calendar year to that number of Shares the total
purchase price of which does not exceed 10 percent of such Employee's
annual compensation during such calendar year. For the purposes of this
Plan, annual compensation shall mean basic annual salary plus payments
for overtime work but shall not include bonuses, profit sharing or any
other form of additional compensation.
ss.4.5. No employee shall be granted an option or have the right to acquire
Shares if immediately after the option is granted the Employee owns,
actually or constructively (as determined with reference to Section 424
(d) of the Code), 5 percent or more of the total combined voting power
or value of all classes of Stock of the Corporation or any Subsidiary
at the time of the Offering Date. In making such determinations, shares
of stock which the Employee may purchase under outstanding options
shall be treated as stock owned by the Employee.
ss.4.6. If at any time during the term of this Plan the available Shares are
oversubscribed, pursuant to any applicable rules, laws, and regulations
of any government agency imposing limitations on the number of Shares
which may be issued, or by reason of the limitations in ss.3.1 above,
then the total purchase price which in ss.4.4 fixes the maximum number
of shares available for purchase by each Employee shall be reduced to
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<PAGE>
that percentage of each Employee's compensation as may be necessary to
eliminate such over subscription on a pro rata basis.
ss.4.7. The right to purchase Shares shall terminate upon an Employee's
termination of employment for any reason. Any amounts credited to an
Employee's account, pursuant to ss.5.1, shall be paid to the terminated
Employee or Employee's estate, if applicable, as soon as
administratively feasible following the Employee's termination.
ss.4.8. Notwithstanding any other provision of this Plan, no Employee shall be
granted options which would result in such Employee's right to purchase
stock to accrue at a rate which exceeds $25,000 of fair market value
(determined as of the beginning of the six month offering period ) for
the calendar year in which the option to purchase under this Plan is
outstanding.
ss.4.9. Rights and options under this Plan are not assignable or transferable
by an Employee and are exercisable only by the Employee.
SECTION V
PAYMENT FOR AND DELIVERY OF SHARES
ss.5.1. Each Employee shall, upon enrollment in the Plan, designate a
contribution amount to be withheld from each paycheck. Deductions will
be taken on an after-tax basis. The minimum contribution that can be
deducted from each paycheck is $10.00. The payroll deductions will be
credited to an Account established in each employee's name on the
Corporation's, or one of its subsidiaries' books with said funds being
held in a non-interest bearing escrow account established by the
Corporation for purpose of this Plan. Except as provided below, all
amounts credited to an Employee's Account shall be applied toward the
purchase of Shares on the applicable Purchase Date. The Corporation
shall pay all administrative expenses of the Plan. The full amount of
payroll deductions will be used to purchase Shares. However, no
interest will be paid on the balance credited to employee accounts on
each pay date. Only amounts available via payroll deductions may be
utilized to purchase Shares on the April 30th Purchase Date each year.
Any purchase of Shares under this Plan will be only for whole shares.
In addition to the payroll deductions, an Employee may file a
Subscription Agreement whereby the Employee may apply additional funds
to purchase Shares on the October 31st Purchase Date, but not, however,
in excess of an amount equal to the annual maximum determined pursuant
toss.4.4-ss.4.8. Any amounts remaining in an Employee's Account
following a purchase of Shares on an applicable Purchase Date, due to
the requirement of purchasing whole Shares, shall remain credited to
the Employee's Account and applied toward the purchase of Shares on the
next Purchase Date. Any amounts remaining in an Employee's account
immediately following a purchase of Shares on an applicable Purchase
Date, shall be paid to the Employee if he/she elects to cease
participation in the Plan. An Employee may cease participation in the
Plan no later than seven (7) days prior to a Purchase Date. In the
event an Employee ceases participation, the Employee may request, in
writing, that his Account be paid to him/her in lieu of being applied
toward the purchase of Shares. Alternatively, an Employee may allow
-5-
<PAGE>
funds credited to his/her Account to be applied toward the purchase of
Shares as of a Purchase Date and elect to cease participation with
respect to any future Purchase Date. In order to re-participate in the
Plan, an Employee must re-submit documents as required by ss.9.2.
ss.5.2. The Shares so purchased shall by issued to such Employee within thirty
days after the Purchase Date.
SECTION VI
TERMINATION AND AMENDMENT
ss.6.1. The Board of Directors of the Corporation reserves the right to make
any amendment to this Plan which it deems to be required or appropriate
to qualify the Plan as "employee stock purchase plan" under the Code or
the regulations adopted thereunder by the Internal Revenue Service.
ss.6.2. The Board of Directors of the Corporation shall have complete power and
the authority to terminate or amend the Plan; provided, however, that
the Board of Directors shall not, without the approval of the
shareholders of the Corporation increase the maximum number of shares
which are or may be available pursuant to ss.3.1 hereof except for
adjustments permitted by this Agreement.
ss.6.3. This Plan does not have a specified termination date. The Board of
Directors of the Corporation reserves the right to terminate the Plan
at any time without notice provided that no such termination can affect
a Participant's right to purchase Shares, with funds credited to his
Account, up through the effective date of the termination of the Plan.
In the event of the termination of the Plan after an Offering Date but
prior to the subsequent Purchase Date, the effective date of the
termination of the Plan shall constitute the Purchase Date for the then
applicable Offering Date.
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<PAGE>
SECTION VII
LIMITATION ON RESALE
ss.7.1. The Shares so purchased shall not be resold by the registered owner
or owners thereof within one year of purchase, except in case of death
of any registered owner or as otherwise permitted by the Board of
Directors. There shall be no other limitation on resale of shares
purchased under this Plan, except as provided under applicable federal
or state laws, rules or regulations. However, notwithstanding anything
to the contrary contained in this Plan, Shares shall be distributed
pursuant to the Plan only if the Shares are registered under such
federal and state securities laws as the Corporation may deem
necessary, or if exemptions from such registration are deemed to be
available; but in no event shall distributions be made during any
period of time in which the Corporation deems that the same may violate
a federal, state or securities exchange rule, regulation or law.
Further, in the absence of registration under federal and state
securities laws as referenced above, each participant may be required
by the Corporation to execute such acknowledgment and agreements as may
be deemed necessary or appropriate by the Corporation to secure
compliance with exemptions from registration under federal or state
securities laws, which compliance may involve regulation of the manner
in which the Shares may be sold or transferred by the participant, and
may prohibit the sale of Shares for a period of time. Certificates for
Shares issued under this Plan may bear an appropriate legend making
reference to any applicable resale, transfer and other restrictions.
SECTION VIII
MISCELLANEOUS PROVISIONS
ss.8.1. Subject to the express provisions of the Plan, the Board of Directors
or a Committee of two or more directors appointed by the Board, shall
have plenary authority to administer, interpret and construe all
provisions of the Plan, to adopt rules and regulations for
administering the Plan, and to make all other determinations deemed
necessary or appropriate for administering the Plan; and the
determinations of the Board (or the Committee, as the case may be) as
to the foregoing matters shall be final and conclusive and binding upon
all participants. Subject to the authority and responsibility of the
Board of Directors or Committee as aforesaid, the Trust Officer shall
administer, interpret and apply all provisions of the Plan. Nothing
contained in this Plan shall be deemed to authorize amendments to the
Plan or administration of the Plan in a manner inconsistent with the
provisions of Section 423 of the Code.
ss.8.2. No member of the Board of Directors or the Committee shall be liable
for any act or omission (whether or not negligent) taken or omitted in
good faith, or for the exercise of authority or discretion granted in
connection with this Plan to the Board of Directors or the Committee,
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or for the acts or omissions of any other members of the Board of
Directors or the Committee. Subject to any numerical limitations on
Committee membership set forth in Section 8.1 hereof, the Board of
Directors may at any time appoint additional members of the Committee
and may at any time remove any member of the Committee with or without
cause. Vacancies in the Committee, however caused, may be filled by the
Board of Directors if it so desiresss.8.3. Employees of any corporation
or other entity which becomes a subsidiary (within the meaning of
Section 424 (f) of the Code) of the Corporation after the effective
date of this Plan shall not be eligible to participate in the Plan
unless and until the Board of Directors of the Corporation shall
designate such corporation or entity as one whose employees may be
offered options under the Plan. At the time this Plan is adopted, the
only subsidiary designated by the Board of Directors is Orrstown Bank.
New designations of employer corporations from time to time from among
the Corporation and its subsidiaries, including corporations that
subsequently become its parent or subsidiaries, shall not require
shareholder approval.
ss.8.3. Nothing contained in this Plan or any option granted pursuant to this
Plan shall confer upon any Employee the right to continue in the employ
of the Corporation or any present or future subsidiary, or interfere in
any way with the rights of the Corporation and any subsidiary to
terminate his employment in any way.
ss.8.4. The provisions of the Plan shall, in accordance with its terms, be
binding upon, and inure to the benefit of, all successors of each
Employee participating in the Plan, including, without limitation, such
Employee's estate and the executors, administrators or trustees
thereof, heirs and legatees, and any receiver, trustee in bankruptcy or
representative of creditors of such Employee.
ss.8.5. The laws of the Commonwealth of Pennsylvania will govern all matters
relating to this Plan except to the extent superseded by the laws of
the United States.
SECTION IX
EFFECTIVE DATE
ss.9.1. The Plan shall become effective upon approval by the shareholders of
the Corporation at the Annual Meeting of Shareholders in the Year 2000.
The Corporation's obligation to offer, sell and deliver its Shares
under this Plan is subject to the approval of any governmental
authority required in connection with the authorized issuance or sale
of such Shares and is further subject to the Corporation receiving,
should it determine to do so, the advice of its counsel that all
applicable laws and regulations have been complied with.
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