Exhibit 10.1

REVOLVING LINE OF CREDIT PROMISSORY NOTE
(UNSECURED)

Borrower:
 
Orrstown Financial Services, Inc.
Lender:
 
Atlantic Community Bankers Bank
 
 
77 E. King Street
 
 
1400 Market Street
 
 
Shippensburg, PA 17257
 
 
P.O. Box 1109
 
 
 
 
 
Camp Hill, PA 17001-1109

 

PRINCIPAL AMOUNT: $5,000,000                DATE OF NOTE: August 3, 2015

PROMISE TO PAY. For value received, Orrstown Financial Services, Inc.
(“Borrower”), a Pennsylvania corporation organized as the holding company of
Orrstown Bank (the “Bank”), hereby agrees to pay to Atlantic Community Bankers
Bank, a state banking institution chartered in the Commonwealth of Pennsylvania,
(“Lender”) the sum of Five Million and No/100 Dollars ($5,000,000.00), or so
much of the principal as may be outstanding, together with interest on the
outstanding principal balance of each advance made by Lender under this
Revolving Line of Credit Promissory Note (“Note”) at the rate set forth in this
Note from the date of each advance by Lender under this Note until the principal
balance of each advance under this Note is paid in full.

1.INTEREST. The interest rate on the principal of this Note is subject to change
from time to time based on changes in the Index set forth in this Note. The
interest rate on the Loan (as herein defined) may or may not be the lowest rate
available at any given time by Lender to its customers. Borrower understands
that Lender may make other similar loans to other customers at interest rates
different than the interest rate provided for in this Note. The interest rate is
floating at Wall Street Journal Prime. Under no circumstances will the interest
rate on this Note exceed the maximum interest permitted under the laws of the
Commonwealth of Pennsylvania.

2.PAYMENT. Borrower will pay regular monthly payments of all accrued unpaid
interest due as of each payment date, beginning             , 2015, with all
subsequent interest payments to be due on the first day of each month
thereafter. All outstanding principal, accrued but unpaid interest and any other
sums due and payable under this Note shall be due and payable in full
on             , 2016 (the “Maturity Date”). Unless otherwise agreed or required
by applicable law, payments will be applied first to accrued unpaid interest,
then to principal and any remaining amount to any unpaid collection costs and
late charges. The annual interest rate for this Note is computed on a 365/360
basis; that is, by applying the ratio of the annual interest rate over a year of
360 days, multiplied by the outstanding principal balance, multiplied by the
actual number of days the principal balance is outstanding. Borrower will pay
Lender at Lender’s address shown above or at such other place as Lender may
designate in writing.

3.PREPAYMENT PENALTY. Borrower may at any time prepay any part or the entire
principal due under this Note without any premium or penalty. Any prepayments
shall first be applied to interest, late charges and costs, if any, and then to
principal.

4.LATE CHARGE. If any payment to be made under this Note, including any balloon
payment, is fifteen (15) or more days late, a late charge will be automatically
assessed on the sixteenth day. The late charge will be the greater of $25.00 or
5% of the payment not made.

5.REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to the best
of its knowledge, information and belief as follows:

5.1    Organization and Qualification of Borrower. The Borrower is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and is duly qualified as a

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foreign corporation and in good standing under the laws of each jurisdiction in
which the conduct of its business or the ownership of its assets requires such
qualification.

5.2    Organization and Qualification of Bank. The Bank is a state chartered
commercial bank duly organized, validly existing and in good standing under the
laws of the State of Pennsylvania and is duly qualified and in good standing
under the laws of each jurisdiction in which the conduct of its business or the
ownership of its assets requires such qualification.
5.3    Power and Authority. The Borrower has the corporate power and authority
to execute, deliver and perform this Note, to borrow under this Note and to
consent to the negative pledge covenant outlined in Sections 7.1. No consent of
any other party (including stockholders of the Borrower) and no consent,
license, approval or authorization of, or registration or declaration with, any
governmental authority, bureau or agency is required in connection with the
execution, delivery, performance, validity or enforceability of such agreements.
5.4    Enforceability. This Note constitutes valid obligations of the Borrower,
legally binding upon it and enforceable in accordance with their respective
terms, except as such enforceability may be limited by bankruptcy, insolvency or
other laws of general application relating to or affecting the enforcement of
creditors’ rights.
5.5    Conflict with Other Instruments. The execution, delivery and performance
of this Note will not violate or contravene any provision of (i) any existing
law or regulation or decree of any court, governmental authority, bureau or
agency having jurisdiction over the Borrower or the Bank , (ii) the Certificate
of Incorporation or Charter or By-laws of the Borrower or the Bank, or (iii) any
mortgage, indenture, security agreement, contract, undertaking or other to which
the Borrower or the Bank is a party or which purports to be binding upon it or
any of its properties or assets, and will not result in the creation or
imposition of any lien, charge, encumbrance on, or security interest in, any of
its properties or assets pursuant to the provisions of any such mortgage,
indenture, security agreement, contract, undertaking or other agreement.
5.6    Judgments. There are no judgments, injunctions or similar orders or
decrees outstanding against Borrower and there are no claims, actions, suits or
proceedings pending or, to the knowledge of Borrower, threatened against or
affecting Borrower or its properties which, if determined adversary to Borrower,
could result in any material adverse change in Borrower’s financial condition,
property or ability to perform its obligations under this Note and other
agreements, and Borrower is not, to its knowledge, in violation of or default
under any judgment, order, writ, injunction, decree, rule or regulation of any
court or governmental agency.

5.7    Default. The Borrower is not in default under any material existing
agreement, and no Default hereunder has occurred and is continuing.
5.8    Taxes. The Borrower and the Bank have filed or caused to be filed all tax
returns (including, without limitation, those relating to Federal and state
income taxes) required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against either of them (other
than those being contested in good faith by appropriate proceedings for which
adequate reserves have been provided on its books). No tax liens have been filed
against the property or assets of the Borrower or the Bank, and no claims are
being asserted with respect to such taxes which, if adversely determined, would
have a material adverse effect upon the financial condition, business or
operations of the Borrower or the Bank.
5.9    Financial Condition. All balance sheets, profit and loss statements, and
other financial statements of the Borrower and the Bank which have heretofore
been delivered to Lender are true and correct and present fairly, accurately and
completely the consolidated financial position of the Borrower and the Bank and
the results of their respective operations as of the dates and for the periods
for which the same are furnished. All such financial statements have been
prepared in accordance with GAAP applied on a consistent basis. Neither the
Borrower nor any subsidiary possesses any “loss contingency” (as that term is
defined in Financial Accounting Standards Board, Accounting Standards
Codification Subtopic 450.20 – “ASC Topic 450.20”) which is required to be
accrued, reflected, or reserved against in its balance sheet or disclosed in the
footnotes to such balance sheet and which is not so accrued, reflected or
reserved against or so disclosed. There has been no material adverse change in
the business, properties,

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operations or condition (financial or otherwise) of the Borrower or the Bank
since the date of the financial statements which were most recently furnished by
the Borrower to Lender. No event has occurred which could reasonably be expected
to interfere substantially with the normal business operations of the Borrower,
except as disclosed in writing to Lender heretofore or concurrently herewith.
5.10    Use of Proceeds. The proceeds of the loan made by the Lender to Borrower
evidenced by this Note (the “Loan”) shall be used by the Borrower solely to make
loans or capital contributions to the Bank to enable the Bank to maintain strong
capital ratios and to leverage its balance sheet by making loans and
investments, and for the Bank’s general corporate purposes.

5.11    Operations of Borrower. All operations of the Borrower and the Bank have
been carried on in accordance in all material respects with all applicable laws,
statutes, ordinances, rules and regulations. No investigation by any
governmental authority, federal, state or local, is pending or threatened
against Borrower or the Bank.

5.12    Regulation U. The Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of the Loan will be used by the Borrower to
purchase or carry any margin stock or to reduce or retire any indebtedness
incurred for such purpose or to extend credit to others for such purpose.

6.AFFIRMATIVE COVENANTS. The Borrower covenants and agrees that from and after
the Closing Date and so long as the Note remains outstanding and unpaid, in
whole or in part, it will observe the following covenants unless Lender shall
otherwise consent in writing:
6.1    Corporate Existence, Properties. The Borrower will maintain, and cause
the Bank to maintain, (a) its corporate existence, its qualification to do
business and its good standing in each jurisdiction in which qualification is
necessary for the proper conduct of its businesses, (b) all licenses, permits
and other authorizations necessary for the ownership and operation of its
properties and businesses, and (c) its properties in good repair and condition
and to make all necessary or appropriate repairs, renewals, replacements and
substitutions, so that the efficiency of all such property shall at all times be
properly preserved and maintained.

6.2    Insurance. The Borrower will maintain, and will cause the Bank to
maintain, with respect to all its properties, assets and businesses, insurance
with financially sound and reputable insurers against loss or damage of the
kinds customarily insured against by banks and bank holding companies, in such
types and amounts as are customarily carried under similar circumstances by
other banks and bank holding companies and as are required by Lender.

6.3    Books and Records. The Borrower will maintain, and will cause each
subsidiary to maintain, accurate and complete records and books of account with
respect to all its operations in accordance with GAAP, and will permit, and will
cause each subsidiary to permit, officers or representatives of Lender to
examine and make excerpts from such books and records and to visit and inspect
its properties, both real and personal, at all reasonable times.

6.4    Financial Statements. The Borrower will furnish to Lender:

a.as soon as available, but in any event not later than 120 days after the close
of each fiscal year of the Borrower, the annual audit report of the Borrower
containing a consolidated balance sheet of the Borrower and its Subsidiaries as
of the end of such fiscal year and related consolidated statements of income,
cash flow, and changes in shareholders’ equity of the Borrower and its
Subsidiaries for such fiscal year, all in reasonable detail, prepared in
accordance with GAAP applied on a consistent basis, and certified without
exception or qualification by independent certified public accountants selected
by the Borrower and satisfactory to Lender;

b.as soon as available, but in any event not later than 45 days after the close
of each quarter of each fiscal year of the Borrower, a consolidated balance
sheet of the Borrower and its Subsidiaries as at the end of such quarterly
period and related consolidated statement of income for such quarterly period
and for the period from

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the beginning of the current fiscal year to the end of such quarterly period,
prepared in accordance with GAAP applied on a consistent basis (excluding
disclosures in footnotes), and certified by the principal financial or
accounting officer of the Borrower (subject to normal year‑end adjustments);
c.concurrently with the delivery of the financial statements referred to in
clause (a) above, a certificate of the officer who certified such statements,
setting forth the Bank’s (i) total risk-based capital ratio, (ii) Tier 1
risk-based capital ratio, and (iii) Tier 1 leverage ratio, computed in
accordance with the regulations and policies of the Federal Reserve; and
d.from time to time, such additional financial and other information as Lender
may reasonably request.
6.5    Capital. The Borrower will cause the Bank at all times to be “well
capitalized” as determined in accordance with the regulations of the Federal
Reserve. The Borrower will also cause the Bank to (i) have total risk-based
capital of at least 10% at all times, (ii) to have a Tier 1 risk-based capital
ratio of at least 6.0% at all times, and (iii) to have a Tier 1 leverage ratio
of at least 5.0% at all times
6.6    Notice of Regulatory Action. The Borrower shall promptly notify the
Lender of any action or proposed action taken by any federal or state bank
regulatory agency with respect to the Borrower, the Bank or any of its directors
or officers, including without limitation any cease and desist order, civil
monetary penalty, memorandum of understanding, written agreement and or
memorandum of understanding or any other regulatory actions will constitute an
event of default.
6.7    Additional Requirements. The Borrower must provide ACBB an opinion of
counsel, as well as any regulatory approvals that are required, if applicable,
regarding the Borrower’s ability to engage in the proposed transaction.
6.8    Commitment Fees.  The Borrower will pay to the Lender in consideration of
the Lender agreeing to provide the credit facility described herein, a
non-refundable fee of $10,000 on the Closing Date. 
7 NEGATIVE COVENANTS. The Borrower covenants and agrees that from and after the
Closing Date and so long as the Note remains outstanding and unpaid, in whole or
in part, it will observe the following covenants unless Lender shall otherwise
consent in writing.

7.1    Liens. The Borrower will not create, assume, or suffer to exist any lien,
pledge, charge, security interest or encumbrance of any kind upon any of the
capital stock of the Bank.
7.2    Issuance of Capital Stock by Bank. The Bank shall not issue any
additional shares of capital stock or any instruments convertible or exercisable
into capital stock, with the exclusion of stock issued to employees, directors
or under the dividend reinvestment plan (DRIP) program. In addition, the Bank
will not issue any warrants or options or other rights to purchase or otherwise
acquire any capital stock of the Bank, with the exclusion of warrants or options
issued to employees or directors.
7.3    Disposition of Assets. The Borrower will not permit the Bank to liquidate
or dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease, pledge, or otherwise transfer or dispose of all or substantially all of
its assets or business.
7.4    Continuance of Business. The Borrower will not engage in any line of
business other than those permitted to be engaged in by a bank holding company.
The Borrower will not permit the Bank to engage in any line of business other
than those permitted to be engaged in by a bank chartered under the laws of the
State of Pennsylvania.
7.5    Acquisition of a Financial Institution. The Borrower shall not merge or
consolidate with or acquire all or substantially all of the assets or operations
of any financial institution whose deposits are insured by the

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FDIC. The Borrower shall not acquire securities of any financial institution
that have the right to cast more than 20% of all of the votes entitled to be
cast for the election of directors of that financial institution. In addition,
the Borrower shall not acquire or enter into any business or line of business
that the Borrower is not engaged in at the Closing Date. Neither the Borrower
nor the Bank shall enter into any agreement to or otherwise acquire any business
or financial institution or any controlling interest in any business or
financial institution without the prior written consent of the Lender, except
that the Borrower or the Bank may acquire the business of or equity interests in
other financial services companies (excluding interests in or the assets or
deposits of failed banks) so long as the investment of the Borrower and the Bank
in all such acquired businesses after the date of this Agreement does not exceed
$1,000,000 in the aggregate (including any loans assumed by the Borrower or the
Bank), and the Borrower and the Bank may make such acquisitions as the Lender,
in its sole discretion, may agree to in writing. The Lender agrees to respond to
any request by the Borrower with respect to any such acquisition within five (5)
Business Days after receipt by the Lender of all information with respect to
such acquisition as is reasonably requested by the Lender.
7.6    Indebtedness. Neither the Borrower nor the Bank will incur any
indebtedness for borrowed money other than (a) borrowings incurred in the
ordinary course of business.
8 EVENTS OF DEFAULT. A default under this Note shall be defined to include one,
several or all of the following (“Events of Default”):

8.1    Payment Default. If the Borrower fails to make any payment of principal
and/or interest when due under this Note.

8.2    Failure to Perform Certain Covenants. Failure by the Borrower to observe
or perform any other covenants, conditions or provisions contained in this Note,
provided that such default shall continue for a period of 30 days after the
earlier of (i) an officer of the Borrower has knowledge of such default, and
(ii) written notice thereof from Lender to the Borrower.

8.3    Enforcement Action. The Borrower, the Bank or any of its directors or
officers shall have agreed to, entered into or become subject to any cease or
desist order, memorandum of understanding, or consent agreement or any other
formal or informal enforcement action with any federal or state bank regulatory
authority having jurisdiction with respect to the Bank or the Borrower,
including without limitation the Federal Deposit Insurance Corporation, The
Federal Reserve Bank or the Pennsylvania Department of Banking with respect to
the financial condition or operations of the Bank or the Borrower.

8.4    Other Defaults. If the Borrower fails to: (a) comply with or to perform
any other term,
obligation, covenant, commitment or condition contained in this Note or in any
documents executed by Borrower in connection with this Note or in connection
with the Loan; or (b) fails to comply with or perform any term, obligation,
covenant, commitment or condition contained in any other agreement between
Borrower and Lender.

8.5    Default in Favor of Third Parties. Borrower defaults under any loan,
extension of credit, security agreement, purchase or sales agreement, or any
other agreement, in favor of any other creditor or person that may materially
affect Borrower’s ability to repay this Note or perform Borrower’s obligations
under this Note or any of the related documents.

8.6    False Statements. If any warranty, representation or statement made,
furnished or extended by Borrower, or on behalf of Borrower, to Lender set forth
in this Note or in any documents executed by and/or delivered by Borrower to
Lender in connection with this Note or in connection with the Loan: (a) is
untrue, false and/or misleading in any material respect at the time the
warranty, representation or statement is made; or (b) subsequently becomes
untrue, false and/or misleading in any material respect.

8.7    Voluntary Bankruptcy, Etc. The commencement by the Borrower of a
voluntary case under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal or state bankruptcy,
insolvency, reorganization, rehabilitation or other similar law, or the consent
by it to the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official) of the
Borrower

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or for any substantial part of its property, or the making by it of any
assignment for the benefit of creditors, or the failure of the Borrower
generally to pay its debts as such debts become due, or the taking of corporate
action by the Borrower in furtherance of any of the foregoing.

8.8    Involuntary Bankruptcy, Etc. The entry of a decree or order for relief by
a court having jurisdiction in the premises in respect of the Borrower in an
involuntary case under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy, insolvency or
other similar law, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of the Borrower or for any
substantial part of its property, or ordering the winding‑up or liquidation of
its affairs and the continuance of any such decree or order undismissed and in
effect for a period of 60 consecutive days.

8.9    Events Affecting Guarantor. Intentionally omitted.

8.10    Change in Ownership. Any change in ownership interest of twenty-five
percent (25%) or more of the common stock of Borrower.

8.11    Adverse Change. If there is an adverse change in the financial condition
of Borrower, which, in the reasonable discretion of Lender, materially impairs
the prospect of payment in full of this Note.

8.12    Loan to Value & Margin Requirement. Intentionally omitted.

8.13    Insecurity. Intentionally omitted.

8.14    Entry of Judgment. Entry of any judgment against Borrower and a
determination by Lender that the same, when taken together with all other
judgments outstanding against Borrower, could result in any material adverse
change in Borrower’s financial condition, property or ability to pay and perform
its obligations to Lender, unless such judgment shall have been discharged or
execution thereof stay within thirty (30) days after entry thereof or discharged
within thirty (30) days after the expiration of any such stay.

8.15    INTEREST AFTER DEFAULT. Upon default, including failure to pay upon
final maturity, Lender, at its option, may, if permitted under applicable law,
increase the variable interest rate on this Note to three percentage points (3%)
over the Index. The interest rate will not exceed the maximum rate permitted by
applicable law. If judgment is entered in connection with this Note, interest
will continue to accrue on this Note after judgment at the interest rate
applicable to this Note at the time judgment is entered.

8.16    Acceleration. (a) Upon the occurrence of an Event of Default, then, and
in such event, Lender may, by written notice to the Borrower, (i) cease to make
any further advances to the Borrower under the Loan, and (ii) declare the Note
and all other instruments evidencing obligations of the Borrower to Lender to be
due and payable, whereupon the principal amount of all outstanding obligations
of the Borrower to Lender, together with accrued interest thereon, shall become
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived, anything contained herein
or in the documents evidencing the same to the contrary notwithstanding.

(b) Any other provision of this Note to the contrary notwithstanding, upon the
occurrence of an Event of Default described in Sections (8.7) or (8.8), (i) the
Lender shall have no obligation to make any loan or advance to the Borrower
under this Note, and (ii) the unpaid principal amount of the Note and the
interest accrued thereon and all other obligations of the Borrower to Lender
shall automatically and immediately become due and payable, in all cases without
any action whatsoever on the part of Lender.
8.17    No Marshalling, Etc. Required. Intentionally omitted.

8.18    LENDERS RIGHTS. Upon a default, and without the need for Lender to issue
any notice to or demand upon Borrower, except as may be required by law: (1) the
entire amount of unpaid principal and all accrued and unpaid interest, as well
as all late charges and costs, if any, shall be immediately due and payable in
full, thus

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abrogating any amortization provisions set forth in Section 2 of this Note; and
(2) Lender may exercise any and all rights and remedies available to Lender
under the statutes and Rules of Civil Procedure of the Commonwealth of
Pennsylvania and as provided for in this Note. All remedies available to Lender
are cumulative.

8.19    RIGHT OF SET OFF. Borrower grants to Lender a contractual security
interest in, and hereby assigns, conveys, delivers, pledges and transfers to
Lender all of Borrower’s right, title and interest in and to all of Borrower’s
present and future accounts, funds and assets of Borrower in possession of
Lender, except any trust accounts or funds or assets which Lender holds as a
fiduciary, to secure this Note. Borrower hereby authorizes and empowers Lender,
to the extent permitted by law and by this Note, to charge or setoff all sums
owing on this Note against any and all such accounts, funds and assets, and, at
Lender’s option, to administratively freeze all such accounts to allow Lender to
protect Lender’s charge and setoff rights provided for in this paragraph.

8.20    CROSS DEFAULT. A default under this Note is a default under all present
and future obligations, agreements, instruments and commitments of Borrower to
Lender.

8.21    NONRECOURSE TO BANK. Notwithstanding anything contained in this
Agreement, the Lender agrees that (i) upon the occurrence of an Event of Default
it shall not be entitled to seek any monetary damages from the Bank, and (ii)
the Bank shall not be responsible for any payment due under the Loan Documents.

9.CONFESSION OF JUDGMENT. Intentionally omitted.

10.
COLLATERAL. Intentionally omitted.

 
11.CROSS COLLATERAL. Intentionally omitted.

12.LOAN TO VALUE RATIO. Intentionally omitted.

13.INTEREST RATE ON JUDGMENT. The interest rate on any judgment entered on this
Note by confession or otherwise shall be the default rate as defined in Section
8.15 provided for in this Note, which is in effect as of the date of judgment.

14. SUCCESSORS. This Note shall be binding upon and inure to the benefit of the
Borrower and Lender and their respective successors and assigns, except that the
Borrower may not assign or transfer its rights hereunder without the prior
written consent of Lender.

15. JURISDICTION AND VENUE. Borrower acknowledges that this Note was executed
and delivered to Lender and accepted by Lender at Lender’s office in Camp Hill,
Pennsylvania. If there is a lawsuit arising directly or indirectly out of or
based directly or indirectly on this Note or the Loan, Borrower agrees that the
exclusive and sole jurisdiction and venue for any lawsuit involving Borrower,
whether as plaintiff or defendant, shall reside either in the Court of Common
Pleas of Cumberland County, Pennsylvania or the United States District Court for
the Middle District of Pennsylvania. This Note shall be construed and
interpreted under the laws of the Commonwealth of Pennsylvania.

16. WAIVER OF JURY TRIAL. Borrower knowingly and intelligently waives any trial
by jury with regards to any lawsuit arising directly or indirectly out of or
based directly or indirectly on this Note or the Loan, whether the lawsuit
involves Borrower as a defendant or plaintiff.

17. COUNSEL FEES AND COSTS. Borrower agrees to pay upon demand all of Lender’s
costs and expenses, including attorneys’ fees and Lender’s legal expenses,
incurred in connection with the enforcement of this Note and all documents
executed by Borrower in connection with the Loan. Lender may pay someone else to
help enforce this Note and all documents and instruments executed by Borrower in
connection with the Loan, and Borrower shall pay the costs and expenses of such
enforcement. Costs and expenses include Lender’s attorneys’ fees and legal
expenses, whether or not there is a lawsuit, and attorneys’ fees and legal
expenses for any bankruptcy proceedings (including efforts to modify or vacate
any automatic stay or injunction), appeals, and any anticipated post-judgment or
post-appeal collection services. Borrower also shall pay all court costs and
such additional fees as may be directed by the court.

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18. DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $30.00 if Borrower
makes a payment on Borrower’s loan and the check or preauthorized charge with
which Borrower pays is later dishonored.

19. NATURE OF LOAN. The obligation evidenced by this Note does not represent or
evidence a “consumer credit transaction” as that term is defined in Rule 2950 of
Pennsylvania Rules of Civil Procedure but rather a business lending transaction.

20. SEVERABILITY. Any provision contained in this Note which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provisions in any
other jurisdiction.

21. WAIVERS. Borrower hereby waives all notices with regards to this Note,
including but not limited to presentment, demand for payment, protest, notice of
dishonor and/or any notices relating to commercial paper under Article 3 of the
Uniform Commercial Code, as enacted in the Commonwealth of Pennsylvania.

22. INDEMNITY. The Borrower hereby agrees, whether or not any of the
transactions contemplated in the Note shall be consummated, to pay, assume
liability for, and indemnify, protect, defend, save and keep harmless the Lender
from and against, any and all liabilities, obligations, losses, damages,
settlements, claims, actions, suits, penalties, costs and expenses (including,
but not limited to, legal and investigative fees and expenses) of whatsoever
kind and nature, including, but not limited to claims based upon negligence,
strict or absolute liability, liability in tort, latent and other defects
(whether or not discoverable), and any claim for patent, trademark or copyright
infringement which may from time to time be imposed on, incurred by or asserted
against the Lender (whether or not any such claim is also indemnified or insured
against by any other person) in any way relating to or resulting from this Note
or any of the transactions contemplated herein. The provisions of this Section
8.11 (i) shall not apply if a court of law having jurisdiction over the Lender
finds in a nonappealable order that such liabilities, obligations, losses,
damages, costs and expenses arise out of the gross negligence or willful
misconduct of the Lender, and (ii) shall survive the payoff, release, or other
disposition, as applicable, of this Note.

23. MISCELLANEOUS PROVISIONS. The failure of Lender to enforce any right under
this Note or under any documents executed by Borrower in connection with the
Loan shall not be deemed a waiver of Lender’s right under this Note or
otherwise. Caption headings in this Note are for convenience purposes only and
are not to be used to interpret or define the provisions of this Note and do not
constitute any part of the terms of this Note. This Note shall be binding upon
the heirs, successors, personal representatives and assigns of Borrower. This
Note shall inure to the benefit of Lender and its successors and assigns. In the
event any one or more of the provisions contained in this Note shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Note, but the Note shall be construed as if such invalid, illegal or
unenforceable provision had never been contained therein. This Note shall be
governed by, construed, interpreted and enforced according to the laws of the
Commonwealth of Pennsylvania.

24. LINE OF CREDIT. This Note evidences a revolving line of credit. Advances
under this Note, as well as directions for payment from Borrower’s accounts,
must be requested in writing by Borrower or by an authorized person. Borrower
agrees to be liable for all sums either: (a) advanced in accordance with the
instructions of an authorized person or (b) credited to any of Borrower’s
accounts with Lender. The unpaid principal balance owing on this Note at any
time may be evidenced by endorsements on this Note or by Lender’s internal
records, including daily computer printouts. Lender will have no obligation to
advance funds under this Note if: (a) Borrower is in default under the terms of
this Note or any agreement that Borrower has with Lender, including any
agreement made in connection with the signing of this Note; (b) Borrower ceases
doing business or is insolvent; or (c) Borrower has applied funds provided
pursuant to this Note for purposes other than those authorized by Lender.

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PRIOR TO SIGNING THIS NOTE, BORROWER HAS READ AND UNDERSTOOD ALL OF THE
PROVISIONS OF THIS NOTE. BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF
THIS NOTE. THIS NOTE IS EXECUTED UNDER SEAL AND IT IS INTENDED THAT THIS NOTE IS
AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO
LAW.

BORROWER:

Orrstown Financial Services, Inc.

By:    /s/ David P. Boyle            

Name:    David P. Boyle                

Title:    Executive Vice President & CFO        

Business Address: 77 E. King Street, Shippensburg, PA
17257                        

Business Phone #:                        Cell Phone #:                

ACKNOWLEDGEMENT OF SECTIONS 5.8, 5.9, 5.11, 7.2 AND 8.21:

Orrstown Bank

By:    /s/ David P. Boyle            

Name:    David P. Boyle                

Title:    Executive Vice President & CFO        

Business Address: 77 E. King Street, Shippensburg, PA
17257                        

Business Phone #:                        Cell Phone #: