Exhibit 10.9


 


ORANGE BANK & TRUST COMPANY ANNUAL
INCENTIVE PLAN


 


Introduction and Objectives


 


The Orange Bank & Trust Company Annual
Incentive Plan (“AIP” or “Plan”) is designed to recognize and reward management for their collective and individual
contributions to the success of Orange Bank & Trust Company (the “Bank”) and its affiliates. The Plan focuses
on performance measures that are critical to the Bank’s growth and profitability.


 


The objectives of the AIP are to:


 


		·	Align executive performance with the Bank’s
Five-Year Strategic Plan, budget and shareholder interests



 


		·	Motivate and reward executives for achieving
/exceeding performance goals



 


		·	Align pay with Bank and individual performance



 


		·	Position the Bank’s total compensation
to be competitive with the market.



 


		·	Enable the Bank to attract and retain talent
needed to drive its success



 


Eligibility/Participation


 


All officers of the Bank are eligibile to participate
in the Plan.


 


New officers must be employed by September 30th
of the Plan Year (January  1 – December 31) to be eligible for that year’s incentive and will receive a prorated
award.


 


Effective Date


 


This Plan is effective January 1, 2019.
The Bank retains the right as described below to amend, modify or discontinue the Plan at any time during the specified period.


 


Performance Period


 


The performance period and the Plan operate on
a calendar year basis (January 1 – December 31). The initial performance period for this Plan will be January 1,
2019 – December 31, 2019.


 


Administration


 


This Plan has been approved by the Compensation
Committee and the approval ratified by the Board of Directors. At least annually, the Compensation Committee will review the Plan to insure
the performance criteria and compensation goals set forth in the Plan and the Appendices attached hereto continue to both: (i) align
the Bank’s Five Year Strategic Plan with Incentive Award payouts, and (ii) create an appropriate balance between risk and reward.


 


The Compensation Committee has designated the
Chief Executive Officer and the Director of Human Resources as the “Plan Administrator”.


 






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Annual Incentive Award Opportunity


 


Each Plan participant will have a Threshold,
Target and Optimum Incentive Award Opportunity based on competitive market practice for his/her role. The Incentive Award Opportunities
will reflect a percentage of base pay for the applicable performance period. Actual Incentive Awards will vary based on Bank and individual
performance.


 


Exclusively for purposes of this Plan, “base
pay” is defined as the compensation earned by a participant during the Plan Year for services rendered to the Bank, excluding
the following items:


 


Overtime pay


KSOP employer contributions


Equity awards and other incentive compensation


Cell phone and automobile allowances


Fringe benefits


 


Performance Measures


 


The Bank performance goals for Plan participants
may be based on reported Net Income, Efficiency Ratio or both Net Income and Efficiency Ratio. All Plan participants will receive a performance
score card that will set forth the Bank performance goals and the additional individual performance measures, as appropriate for each
participant.


 


Calculation of Incentive Awards


 


Annual Incentive Awards are calculated as a percentage
of a Plan participant’s effective base pay as of December 31st for a given performance period and paid in cash. Awards will
be determined based on a combination of Bank performance and individual performance. Generally, the Bank must satisfy at least one (1) of
its performance measures at a minimum Threshold level for an Incentive Award to be earned. However, if no Bank performance goals are achieved
at the minimum Threshold level, the Board of Directors may, in its sole discretion, approve an Incentive Award based solely on individual
performance.


 


After the close of the applicable performance
period, the Plan Administrator will report the results of the Bank’s performance goals to the Compensation Committee. The achievement
of the individual performance goals for all participants, other than the Chief Executive Officer, will be reviewed with the Chief Executive
Officer and the Human Resources Department and reported to the Compensation Committee. The Compensation Committee will review the Chief
Executive Officer’s individual performance results and determine the Chief Executive Officer’s level of achievement. The Compensation
Committee (in consultation with the Board of Directors) has the authority to increase the Chief Executive’s Incentive Award for
exceptional performance during a Plan Year.


 


Distribution of Incentive Awards


 


Incentive Awards will be earned and distributed
following Compensation Committee approval. Incentive Awards are considered taxable income to participants in the year paid and will be
subject to withholding for required income and other applicable taxes.


 


Incentive Awards will generally be distributed
no later than March 15th following the Plan Year.


 






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Plan participants must be actively employed
by the Bank on the date the Incentive Award is distributed in order to earn an Incentive Award.


 


Changes or Discontinuance


 


The Bank developed the Plan based on existing
business, market and economic conditions; current services; and staff assignments. If substantial changes occur that affect these conditions,
services, assignments, or forecasts, the Compensation Committee may, at its sole discretion, waive, change or amend the Plan as it deems
appropriate.


 


The Board of Directors of the Bank may terminate
the Plan at any time.


 


Termination of Employment


 


Participants must be an active employee of the
Bank on the date an Incentive Award is paid to receive earn an award. (See exceptions for death and disability below.)


 


Reduced Work Schedules, Promotions, and Transfers


 


If a Participant changes his/her role or is promoted
during the Plan Year such that the Incentive Award Opportunity changes, he/she will be eligible for the new role’s Incentive Award
Opportunity on a pro rata basis (i.e. the award will be prorated based on the number of months employed in the respective positions.)


 


In the event of an approved leave of absence,
the Incentive Award Opportunity level for the Plan Year will be adjusted to reflect the time in active status. For example, a participant
on leave status for 13 weeks during the Plan Year will have his or her calculated award reduced by one-fourth (13 weeks/52 weeks) to reflect
the period of leave. Employees on an approved FMLA leave will not be reduced for the first 12 weeks.


 


Disability, Death or Retirement


 


If a participant is disabled by an accident or
illness, his/her Incentive Award for the Plan Year will be prorated so that the award is based on the period of active employment only
(i.e. the award will be reduced by the period of time of disability). Disability will be determined in accordance with the Bank’s
KSOP.


 


In the event of death, the Bank will pay to the
Plan participant’s estate the pro rata portion of the Incentive Award that had been earned by the participant as of the date of
death. The pro-rated Incentive Award will be distributed to the estate at the same time distributions are made to other Plan participants
in the applicable Plan Year.


 


Individuals who retire prior to December 31st
of any Plan Year will not be eligible for a Incentive Award in their year of retirement.


 


Ethics and Interpretation/Forefeiture


 


If there is any ambiguity as to the meaning of
any terms or provisions of this Plan or any questions as to the correct interpretation of any information contained therein, the Bank’s
interpretation expressed by the Compensation Committee will be final and binding.


 


The altering, inflating, and/or inappropriate
manipulation of performance/financial results or any other infraction of recognized ethical business standards, will subject the Plan
participant to disciplinary action up to and including termination of employment. In addition, any incentive compensation as provided
by the Plan to which the participant would otherwise be entitled will be revoked.


 






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Participants who have willfully engaged in any
activity, injurious to the Bank, will upon termination of employment, death, or retirement, forfeit any Incentive Award earned during
the award period in which the termination occurred.


 


Miscellaneous


 


The Plan will not be deemed to give any participant
the right to be retained in the employ of the Bank or an affiliate, nor will the Plan interfere with the right of the Bank or an affiliate
of the Bank to discharge any participant at any time.


 


The relationship between Bank employees and the
Bank is one of at-will employment. The Plan does not alter the relationship.


 


This Plan and the transactions and payments hereunder
shall, in all respect, be governed by, and construed and enforced in accordance with the laws of the state of New York.


 


Each provision in this Plan is severable, and
if any provision is held to be invalid, illegal, or unenforceable, the validity, legality and enforceability of the remaining provisions
shall not, in any way, be affected or impaired thereby.


 









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