Document:

Exhibit
10.9

 

AMENDED
AND RESTATED

EMPLOYMENT
AGREEMENT

 

THIS
AGREEMENT is made as of the 31st day of December, 2008, between ACNB Corporation (“Corporation”), a Pennsylvania business
corporation having a place of business at 16 Lincoln Square, Gettysburg,
Pennsylvania, 17325, ADAMS COUNTY NATIONAL BANK
(“Bank”), a national banking association having a place of business
at 16 Lincoln Square, Gettysburg, Pennsylvania, 17325, and Thomas A. Ritter
(“Executive”), an individual residing in Pennsylvania.

 

WITNESSETH:

 

WHEREAS,
Corporation is a registered financial holding company;

 

WHEREAS, Bank
is a subsidiary of the Corporation;

 

WHEREAS, Executive,
Corporation and Bank entered into an employment agreement dated July 3,
2006 (“2006 Employment Agreement”); and,

 

WHEREAS, Executive,
Corporation and Bank wish to amend and restate the 2006 Employment Agreement to
reflect changes made in the final Treasury Regulations promulgated under the
Internal Revenue Code of 1986 as amended (“Code”) Section 409A.

 

AGREEMENT:

 

NOW, THEREFORE,
the parties hereto, intending to be legally bound, agree as follows:

 

1.                                       Employment.   Corporation and Bank hereby employ Executive
and Executive hereby accepts employment with Corporation and Bank, under the
terms and conditions set forth in this Agreement.

 

2.                                       Duties of Executive.  Executive shall serve as the President and
Chief Executive Officer of Bank and Corporation and as a member of the Boards
of Directors of Corporation and Bank, reporting only to the Boards of
Directors.  Executive shall have such
other duties and hold such other titles as may be given to him from time to
time by the Boards of Directors of Corporation and Bank provided that such
duties are consistent with the Executive’s position as President and Chief
Executive Officer of Bank and Corporation.

 

3.                                       Engagement in Other Employment.  Executive shall devote all of his working
time, ability and attention to the business of the Corporation, Bank and/or
their subsidiaries or affiliates, during the term of this Agreement.  The Executive shall notify the Boards of
Directors of Corporation and Bank in writing before the Executive engages in
any other business or commercial duties or pursuits, including but not limited
to, directorships of other companies. 
Under no circumstances may the Executive engage in any business or
commercial activities, duties or pursuits which compete with the business or
commercial activities of the Corporation, Bank and/or any of their subsidiaries
or affiliates, nor may the Executive serve as a director or officer or in any
other capacity in a company which 

 

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competes with the
Corporation, Bank and/or any of their subsidiaries or affiliates.  Executive shall not be precluded, however,
upon written notification to the Boards of Directors, from engaging in
voluntary or philanthropic endeavors, from engaging in activities designed to
maintain and improve his professional skills, or from engaging in activities
incident or necessary to personal investments, so long as they are, in the
Boards’ reasonable opinion, not in conflict with or detrimental to the
Executive’s rendition of services on behalf of the Corporation, Bank and/or any
of their subsidiaries or affiliates.

 

4.                                       Term of Agreement.

 

(a)                                  This
Agreement shall be for a three (3) year period (the “Employment Period”)
beginning on the date first written above, and if not previously terminated
pursuant to the terms of this Agreement, the Employment Period shall end three (3) years
later (the “Initial Term”).  The
Employment Period shall be extended automatically for one (1) additional
year on the first annual anniversary date of the commencement of the Initial
Term (the date first above written), and then on each anniversary date of this
Agreement thereafter, unless any of Corporation, Bank or Executive gives
contrary written notice to the other(s) not less than one hundred eighty
(180) days before any such anniversary date so that upon the anniversary date
if notice had not been previously given as provided in this Section 4(a),
the Employment Period shall be and continue for a three (3) year period
thereafter.  References in the Agreement
to “Employment Period” shall refer to the Initial Term of this Agreement and
any extensions to the Initial Term of this Agreement.  It is the intention of the parties that this
Agreement be “Evergreen” unless (i) either party gives written notice to
the other party of his or its intention not to renew this Agreement as provided
above or (ii) this Agreement is terminated pursuant to Section 4(b) hereof.

 

(b)                                 Notwithstanding
the provisions of Section 4(a) of this Agreement, this Agreement
shall terminate automatically for Cause (as defined herein) upon written notice
from the Board of Directors of each of Corporation and Bank to Executive.  As used in this Agreement, “Cause” shall mean
any of the following:

 

(i)                                     Executive’s
conviction of or plea of guilty or nolo contendere to a felony, a crime of
falsehood or a crime involving moral turpitude, or the actual incarceration of
Executive for a period of twenty (20) consecutive days or more;

 

(ii)                                  Executive’s
failure to follow the good faith lawful instructions of the Board of Directors
of Corporation or Bank with respect to its operations, after written notice
from Corporation or Bank and a failure to cure such violation within  thirty (30) days of said written notice;

 

(iii)                               Executive’s
willful failure to substantially perform Executive’s duties to Corporation or
Bank, other than a failure resulting from Executive’s incapacity because of
physical or mental illness, as provided in subsection (d) of this Section 4,
after written notice from Corporation or Bank and a failure to cure such
violation within thirty (30) days of said written notice;

 

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(iv)                              Executive’s
intentional violation of the provisions of this Agreement, after written notice
from Corporation or Bank and a failure to cure such violation within thirty
(30) days of said written notice;

 

(v)                                 dishonesty
or gross negligence of the Executive in the performance of his duties;

 

(vi)                              Executive’s
removal or prohibition from being an institutional-affiliated party by a final
order of an appropriate federal banking agency pursuant to Section 8(e) or
8(g) of the Federal Deposit Insurance Act or by the Office of the
Comptroller of the Currency pursuant to national law;

 

(vii)                           conduct
by the Executive as determined by an affirmative vote of seventy-five percent
(75%) of the disinterested members of the Board of Directors of Corporation or
Bank which brings public discredit to Corporation or Bank and which results or
may be reasonably expected to result in material financial or other harm to the
Corporation or Bank;

 

(viii)                        Executive’s breach of fiduciary
duty involving personal profit;

 

(ix)                                unlawful
harassment by the Executive against employees, customers, business associates,
contractors, or vendors of Corporation or Bank which results or may be
reasonably expected to result in material liability to Corporation or Bank, as
determined by an affirmative vote of seventy-five percent (75%) of the
disinterested independent members of the Board of Directors of Corporation or
Bank, following an investigation of the claims by a third party unrelated to
the Corporation or Bank chosen by the Executive, Corporation and Bank.  If the Executive, Corporation and Bank do not
agree on said third party, then as chosen by an affirmative vote of
seventy-five percent (75%) of the disinterested independent members of the Board
of Directors of the Corporation;

 

(x)                                   the
willful violation by the Executive of the provisions of Sections 9, 10 or 11
hereof, after written notice from the Corporation or Bank and a failure to cure
such violation within thirty (30) days of said written notice;

 

(xi)                                the
willful violation of any law, rule or regulation governing banks or bank
officers or any final cease and desist order issued by a bank regulatory
authority;

 

(xii)                             theft
or abuse by Executive of the Corporation’s or Bank’s property or the property
of Corporation’s or Bank’s customers, employees, contractors, vendors, or
business associates;

 

(xiii)                          any act of fraud,
misappropriation or personal dishonesty;

 

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(xiv)                         insubordination as determined
by an affirmative vote of seventy-five percent (75%) of the Board of Directors
of Corporation or Bank, after written notice from the Corporation or Bank and a
failure to cure such violation within thirty (30) days of said written notice;
or,

 

(xv)                            the
existence of any material conflict between the interests of the Corporation or
Bank and the Executive that is not disclosed in writing by the Executive to the
Corporation and Bank and approved in writing by the Boards of Directors of
Corporation and Bank.

 

(xvi)                         Before taking any vote under subparagraphs
(vii), (ix) or (xiv) above, all which require notice, Executive shall be
entitled to appear before the Boards and present Executive’s position as to any
issues about which Executive has been notified by the Boards in writing.  Such appearance shall be within a reasonable
period of time following written notice to Executive of the issues but in no
event longer than thirty (30) days after the date of said written notice.

 

If this Agreement is
terminated for Cause, all of Executive’s rights under this Agreement shall
cease as of the effective date of such termination, except for the rights under
Paragraph 19 hereof with respect to arbitration.

 

(c)                                  Notwithstanding
the provisions of Section 4(a) of this Agreement, this Agreement
shall terminate automatically upon Executive’s voluntary termination of
employment (other than in accordance with Section 6 of this Agreement) for
Good Reason.  The term “Good Reason”
shall mean (i) the assignment of duties and responsibilities inconsistent
with Executive’s status as President and Chief Executive Officer of Bank and
Corporation, (ii) a reassignment which requires Executive to move his
principal residence or his office more than fifty (50) miles from the
Corporation’s and Bank’s principal executive office immediately prior to this
Agreement, (iii) any removal of the Executive from office or any adverse
change in the terms and conditions of the Executive’s employment, except for
any termination of the Executive’s employment under the provisions of Section 4(b) hereof,
(iv) any reduction in the Executive’s Annual Base Salary as in effect on
the date hereof or as the same may be increased from time to time, or (v) any
failure of Corporation and Bank to provide the Executive with benefits at least
as favorable as those enjoyed by the Executive during the Employment Period
under any of the pension, life insurance, medical, health and accident,
disability or other employee plans of Corporation and Bank, or the taking of
any action that would materially reduce any of such benefits unless such
reduction is part of a reduction applicable to all employees.

 

Executive shall, within
ninety (90) days of the occurrence of any of the foregoing events, provide
notice to Corporation and Bank of the existence of the condition and provide
Corporation and Bank thirty (30) days in which to cure such condition.  In the event that Corporation and Bank do not
cure the condition within thirty (30) days of such notice, Executive may resign
from employment for Good Reason by delivering written notice (“Notice of
Termination”) to Corporation and Bank.

 

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If such termination
occurs for Good Reason, then Corporation or Bank shall pay Executive an amount
equal to the greater of the remaining balance of the Agreed Compensation, as
defined in subsection 4(g), otherwise due to the Executive for the remainder of
the then existing Employment Period or 2.0 times the Executive’s Agreed
Compensation, payable in twenty-four (24) equal monthly installments and shall
be subject to federal, state and local tax withholdings.  In addition, for a period of two (2) years
from the date of termination of employment, or until Executive secures
substantially similar benefits through other employment, whichever shall first
occur, Executive shall receive a continuation of all life, disability, medical
insurance and other normal health and welfare benefits in effect with respect
to Executive during the two (2) years prior to his termination of
employment, or, if Corporation and Bank cannot provide such benefits because
Executive is no longer an employee, Corporation and Bank shall reimburse
Executive in an amount equal to the monthly premium paid by him to obtain
substantially similar employee benefits which he enjoyed prior to termination,
subject to Code Section 409A if applicable.

 

However, in the event the
payment described herein, when added to all other amounts or benefits provided
to or on behalf of the Executive in connection with his termination of
employment, would result in the imposition of an excise tax under Code Section 4999,
Corporation or Bank will pay to Executive an additional cash payment (“Gross-up
Payment”) in an amount such that the after-tax proceeds of such Gross-up
Payment (including any income tax or excise tax on such Gross-up Payment) will
be equal to the amount of the excise tax. 
Notwithstanding any other provision, in the event that Executive is
determined to be a specified employee as that term is defined in Section 409A
of the Code, no payment that is determined to be deferred compensation subject
to Section 409A of the Code shall be made until one (1) day following
six (6) months from the date of separation of service as that term is
defined in Section 409A of the Code.

 

(d)                                 Notwithstanding
the provisions of Section 4(a) of this Agreement, this Agreement
shall terminate automatically upon Executive’s Disability and Executive’s
rights under this Agreement shall cease as of the date of such termination;
provided, however, that Executive shall nevertheless be entitled to receive an
amount equal to and no greater than seventy-five percent (75%)  of the Executive’s Agreed Compensation as defined in
subsection (g) of this Section 4, less amounts payable under any
disability plan of Corporation and Bank, until the earliest of  (i)  Executive’s return to employment, (ii) his
attainment of age sixty-five (65),  (iii) his
death, or (iv) the end of the then existing Employment Period.  In addition, Executive shall receive for such
period a continuation of all life, disability, medical insurance and other
normal health and welfare benefits in effect with respect to Executive during
the two (2) years prior to his disability, or, if Corporation and Bank
cannot provide such benefits because Executive is no longer an employee,
Corporation and Bank shall reimburse Executive in an amount equal to the
monthly premium paid by him to obtain substantially similar employee benefits
which he enjoyed prior to termination, subject to Code Section 409A if
applicable.  For purposes of this
Agreement, the Executive shall have a Disability if, the Executive is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last
for a continuous period of 

 

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not less than twelve (12) months or the Executive is,
by reason of any medically determinable physical or mental impairment that can
be expected to result in death or can be expected to last for a continuous
period of not less than twelve (12) months, receiving income replacement
benefits for a period of not less than three (3) months under an accident and
health plan covering employees of the Corporation and Bank.  The Executive shall have no duty to mitigate
any payment provided for in this Section 4(d) by seeking other employment.

 

(e)                                  In
the event that Executive terminates his employment without Good Reason as
defined in Section 4(c), all of Executive’s rights under this Agreement
shall cease as of the effective date of such termination, except for the rights
under Paragraph 19 hereof with respect to arbitration.

 

(f)                                    Executive
agrees that in the event his employment under this Agreement is terminated,
Executive shall resign as a director of Corporation and Bank, or any affiliate
or subsidiary thereof, if he is then serving as a director of any of such
entities.

 

(g)                                 The
term “Agreed Compensation” shall equal the sum of (i) the Executive’s
highest Annual Base Salary under the Agreement, and (ii) the average of
the Executive’s annual bonuses with respect to the three (3) calendar
years immediately preceding the Executive’s termination.

 

5.                                       Employment Period Compensation.

 

(a)                                  Annual
Base Salary.  For services performed
by Executive under this Agreement, Corporation or Bank shall pay Executive an
Annual Base Salary during the Employment Period at the rate of $235,000 per
year, minus applicable withholdings and deductions,  payable at the same times as salaries are payable
to other executive employees of Corporation or Bank.  Corporation or Bank may, from time to time,
increase Executive’s Annual Base Salary, and any and all such increases shall
be deemed to constitute amendments to this Section 5(a) to reflect
the increased amounts, effective as of the date established for such increases
by the Board of Directors of Corporation or Bank or any committee of such Board
in the resolutions authorizing such increases.

 

(b)                                 Bonus.  For services performed by Executive under this
Agreement, Corporation or Bank may, from time to time, pay a bonus or bonuses
to Executive as Corporation or Bank or an affiliate thereof, in their sole
discretion, deems appropriate.  The
payment of any such bonuses shall not reduce or otherwise affect any other
obligation of Corporation or Bank to Executive provided for in this Agreement.

 

(c)                                  Paid
Time-off.  During the term of this
Agreement, Executive shall be entitled to paid time-off in accordance with the
manner and amount provided under the paid time-off plan currently in effect.
Executive shall be able to accumulate unused paid time-off from one (1) year
to the next not to exceed forty-five (45) days in total. However, Executive
shall not be entitled to receive any additional compensation from Corporation
and Bank for failure to take a vacation, except to the extent authorized by the
Boards of Directors of Corporation and Bank.

 

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(d)                                 Automobile.  During the term of
this Agreement, Corporation and Bank shall reimburse Executive for
transportation expenses in an amount allowable under IRS Guidelines or allow
for Executive to lease or purchase a vehicle for the terms of the Agreement as
mutually agreed by Executive, Corporation and Bank.

 

(e)                                  Employee
Benefit Plans.  During the term of
this Agreement, Executive shall be entitled to participate in or receive the
benefits of any employee benefit plan currently in effect at Corporation and
Bank, subject to the terms of said plan, until such time that the Boards of
Directors of Corporation and Bank authorize a change in such benefits.  Corporation and Bank shall not make any
changes in such plans or benefits which would adversely affect Executive’s
rights or benefits thereunder, unless such change occurs pursuant to a program
applicable to all executive officers of Corporation and Bank and does not
result in a proportionately greater adverse change in the rights of or benefits
to Executive as compared with any other executive officer of Corporation and Bank.  Nothing paid to Executive under any plan or
arrangement presently in effect or made available in the future shall be deemed
to be in lieu of the salary payable to Executive pursuant to Section 5(a) hereof.

 

(f)                                    Business
Expenses.  During the term of this
Agreement, Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by him, which are properly accounted for, in
accordance with the policies and procedures established by the Boards of
Directors of Corporation and Bank for their executive officers.

 

6.                                       Termination of Employment Following Change in
Control.

 

(a)                                  If
a Change in Control (as defined in Section 6(b) of this Agreement)
shall occur and (1) Executive is involuntarily terminated without Cause or
(2) at the option of Executive, exercisable by Executive within one
hundred eighty (180) days of the Change in Control, the Executive terminates
employment and gives notice of the intention to collect benefits under this
Agreement by delivering written notice (the “Notice of Termination”) to
Corporation and Bank, then the provisions of Section 7 of this Agreement
shall apply.

 

(b)                                 As
used in this Agreement, “Change in Control” shall mean the occurrence of any of
the following, provided the event constitutes a change in control within the
meaning of Code Section 409A and the rules, regulations, and guidance
promulgated thereunder:

 

(i)                                     (A) a
merger, consolidation or division involving Corporation or Bank, (B) a
sale, exchange, transfer or other disposition of substantially all of the
assets of Corporation or Bank, or (C) a purchase by Corporation or Bank of
substantially all of the assets of another entity, unless such merger,
consolidation, division, sale, exchange, transfer, purchase or disposition
results in a majority of the members of the Board of Directors of the legal
entity resulting from or existing after any such transaction and of the Board
of Directors of such entity’s parent corporation, if any, are former members of
the Board of Directors of Corporation or Bank; or,

 

7

 

(ii)           any “person” (as such term is defined
in Code Section 409A and any Revenue Guidance or Treasury Regulations
issued thereunder), other than Corporation or Bank or any “person” who on the
date hereof is a director or officer of Corporation or Bank, is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of Corporation or Bank representing
thirty (30%) percent or more of the total voting power of Corporation’s or
Bank’s then outstanding securities; or,

 

(iii)          during any period of one (1) year
during the term of Executive’s employment under this Agreement, individuals who
at the beginning of such period constitute the Board of Directors of
Corporation or Bank cease for any reason to constitute at least a majority
thereof, unless the election of each director who was not a director at the
beginning of such period has been approved in advance by directors representing
at least two-thirds (2/3) of the directors then in office who were directors at
the beginning of the period.

 

7.             Rights in Event of Change
in Control.

 

(a)                                  In
the event that Executive delivers a Notice of Termination (as defined in Section 6(a) of
this Agreement) to Corporation and Bank or Executive is involuntarily
terminated without Cause after a Change in Control (as defined in Section 6(b) of
this Agreement), Executive shall be entitled to receive the compensation and
benefits set forth below:

 

Corporation and Bank
shall pay Executive a lump sum amount equal to and no greater than 2.99 times
the Executive’s Agreed Compensation as defined in subsection (g) of Section 4,
minus applicable taxes and withholdings. In addition, for a period of  two (2) years from the date of
termination of employment, or until Executive secures substantially similar
benefits through other employment, whichever shall first occur, Executive shall
receive a continuation of all life, disability, medical insurance and other
normal health and welfare benefits in effect with respect to Executive during the
two (2) years prior to his termination of employment, or, if Corporation
and Bank cannot provide such benefits because Executive is no longer an
employee, Corporation and Bank shall reimburse Executive in an amount equal to
the monthly premium paid by him to obtain substantially similar employee
benefits which he enjoyed prior to termination, subject to Code Section 409A
if applicable.  However, in the event the
payment described herein, when added to all other amounts or benefits provided
to or on behalf of the Executive in connection with his termination of
employment, would result in the imposition of an excise tax under Section 4999
of the Code, Corporation or Bank will pay to Executive an additional cash
payment (“Gross-up Payment”) in an amount such that the after-tax proceeds of
such Gross-up Payment (including any income tax or excise tax on such Gross-up
Payment) will be equal to the amount of the excise tax.

 

Notwithstanding any other
provision, in the event that Executive is determined to be a specified employee
as that term is defined in Section 409A of the Code, no payment that is
determined to be deferred compensation subject to Section 409A 

 

8

 

of the Code shall be made
until one (1) day following six (6) months from the date of
separation of service as that term is defined in Section 409A of the Code.

 

(b)                                 Executive
shall not be required to mitigate the amount of any payment provided for in
this Section 7 by seeking other employment or otherwise.  Unless otherwise agreed to in writing, the
amount of payment or the benefit provided for in this Section 7 shall not
be reduced by any compensation earned by Executive as the result of employment
by another employer or by reason of Executive’s receipt of or right to receive
any retirement or other benefits after the date of termination of employment or
otherwise.

 

8.             Rights in Event of
Termination of Employment Absent Change in Control.

 

(a)                                  In
the event that Executive’s employment is involuntarily terminated by
Corporation and/or Bank without Cause and no Change in Control shall have
occurred at the date of such termination, Corporation and Bank shall pay
Executive an amount equal to and no greater than 2.99 times the Executive’s
Agreed Compensation as defined in subsection (g) of Section 4, and
shall be payable in thirty-six (36) equal monthly installments and shall be
subject to federal, state and local tax withholdings. In addition, for a period
of two (2) years from the date of termination of employment, or until
Executive secures substantially similar benefits through other employment,
whichever shall first occur, Executive shall receive a continuation of all
life, disability, medical insurance and other normal health and welfare
benefits in effect with respect to Executive during the two (2) years
prior to his termination of employment, or, if Corporation and Bank cannot
provide such benefits because Executive is no longer an employee, Corporation
and Bank shall reimburse Executive in an amount equal to the monthly premium
paid by him to obtain substantially similar employee benefits which he enjoyed
prior to termination, subject to Code Section 409A if applicable. However,
in the event the payment described herein, when added to all other amounts or
benefits provided to or on behalf of the Executive in connection with his
termination of employment, would result in the imposition of an excise tax
under Section 4999 of the Code, Corporation or Bank will pay to Executive
an additional cash payment (“Gross-up Payment”) in an amount such that the
after-tax proceeds of such Gross-up Payment (including any income tax or excise
tax on such Gross-up Payment) will be equal to the amount of the excise tax.

 

Notwithstanding any other
provision, in the event that Executive is determined to be a specified employee
as that term is defined in Section 409A of the Code, no payment that is
determined to be deferred compensation subject to Section 409A of the Code
shall be made until one (1) day following six (6) months from the
date of separation of service as that term is defined in Section 409A of
the Code.

 

(b)                                 Executive
shall not be required to mitigate the amount of any payment provided for in
this Section 8 by seeking other employment or otherwise.  Unless otherwise agreed to in writing, the
amount of payment or the benefit provided for in this Section 8 shall not
be reduced by any compensation earned by Executive as the result of employment
by another employer or by reason of Executive’s receipt of or right to receive
any retirement or other benefits after the date of termination of employment or
otherwise.

 

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9.             Covenant Not to Compete.

 

(a)                                  Executive
hereby acknowledges and recognizes the highly competitive nature of the
business of Corporation and Bank and accordingly agrees that, during and for
the applicable period set forth in Section 9(c) hereof, Executive
shall not, except as otherwise permitted in writing by the Corporation and the
Bank:

 

(i)            be engaged, directly or indirectly,
either for his own account or as agent, consultant, employee, partner, officer,
director, proprietor, investor (except as an investor owning less than 5% of
the stock of a publicly owned company) or otherwise of any person, firm, corporation
or enterprise engaged in (1) the banking (including bank holding company)
or financial services industry, or (2) any other activity in which
Corporation or Bank or any of their subsidiaries are engaged during the
Employment Period, and remain so engaged at the end of the Employment Period,
within a  fifty (50) mile radius of
Bank’s principal place of business at 16 Lincoln Square, Gettysburg,
Pennsylvania (the “Non-Competition Area”);

 

(ii)           provide financial or other assistance
to any person, firm, corporation, or enterprise engaged in (1) the banking
(including bank holding company) or financial services industry, or (2) any
other activity in which Corporation or Bank or any of their subsidiaries are
engaged during the Employment Period, in the Non-Competition Area;

 

(iii)          directly or indirectly solicit persons
or entities who were customers or referral sources of Corporation, Bank or
their subsidiaries within six (6) months of Executive’s termination of
employment, to become a customer or referral source of a person or entity other
than Corporation, Bank or their subsidiaries; 
or,

 

(iv)          directly or indirectly solicit
employees of Corporation, Bank or their subsidiaries who were employed within
two (2) years of Executive’s termination of employment to work for anyone
other than Corporation, Bank or their subsidiaries.

 

(b)                                 It
is expressly understood and agreed that, although Executive and Corporation and
Bank consider the restrictions contained in Section 9(a) hereof
reasonable for the purpose of preserving for Corporation and Bank and their
subsidiaries their goodwill and other proprietary rights, if a final judicial
determination is made by a court having jurisdiction that the time or territory
or any other restriction contained in Section 9(a) hereof is an
unreasonable or otherwise unenforceable restriction against Executive, the
provisions of Section 9(a) hereof shall not be rendered void but
shall be deemed amended to apply as to such maximum time and territory and to
such other extent as such court may judicially determine or indicate to be
reasonable.

 

10

 

(c)                                  The
provisions of this Section 9 shall be applicable, commencing on the date
of this Agreement and ending on one of the following dates as applicable:

 

(i)            if Executive voluntarily terminates
his employment in accordance with the provisions of Section 4(e) of
this Agreement (relating to termination without Good Reason), the first
anniversary date of the effective date of termination of employment;

 

(ii)           if Executive’s employment terminates
in accordance with the provisions of Section 4(b) of this Agreement
(relating to termination for Cause), the first anniversary date of the
effective date of termination of employment;

 

(iii)          if the Executive voluntarily
terminates his employment in accordance with the provisions of Section 4(c) of
this Agreement (relating to termination by Executive for Good Reason), the
second anniversary date of the effective date of termination of employment;

 

(iv)          if the Executive’s employment is
involuntarily terminated in accordance with the provisions of Section 6 of
this Agreement (relating to involuntary termination without Cause following a
Change in Control), the second anniversary date of the effective date of
termination of employment;  or,

 

(v)           if the Executive’s employment is
involuntarily terminated in accordance with the provisions of Section 8 of
this Agreement (relating to involuntary termination without Cause absent a
Change in Control), the second anniversary date of the effective date of
termination of employment.

 

10.                                 Unauthorized Disclosure.  During the term of his employment hereunder,
or at any later time, the Executive shall not, without the written consent of
the Boards of Directors of Corporation and Bank or a person authorized thereby,
knowingly disclose to any person, other than an employee of Corporation or Bank
or a person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Executive of his duties as an executive
of Corporation and Bank, any material confidential information obtained by him
while in the employ of Corporation and Bank with respect to any of
Corporation’s and Bank’s services, products, improvements, formulas, designs or
styles, processes, customers, methods of business or any business practices the
disclosure of which could be or will be damaging to Corporation or Bank;
provided, however, that confidential information shall not include any
information known generally to the public (other than as a result of
unauthorized disclosure by the Executive or any person with the assistance,
consent or direction of the Executive) or any information of a type not
otherwise considered confidential by persons engaged in the same business or a
business similar to that conducted by Corporation and Bank or any information
that must be disclosed as required by law.

 

11.                                 Work Made for Hire. Any work performed by the Executive under this Agreement
should be considered a “Work Made for Hire” as the phrase is defined by the
U.S. patent laws and shall be owned by and for the express benefit of
Corporation, Bank and their subsidiaries and affiliates.  In the event it should be established that
such work does not 

 

11

 

qualify as a Work Made
for Hire, the Executive agrees to and does hereby assign to Corporation, Bank,
and their affiliates and subsidiaries, all of his rights, title, and/or
interest in such work product, including, but not limited to, all copyrights,
patents, trademarks, and propriety rights.

 

12.                                 Return of Company Property and Documents.  The Executive agrees that, at the time of
termination of his employment, regardless of the reason for termination, he
will deliver to Corporation, Bank and their subsidiaries and affiliates, any
and all company property, including, but not limited to, keys, security codes
or passes, mobile telephones, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, software programs,
equipment, other documents or property, or reproductions of any of the
aforementioned items developed or obtained by the Executive during the course
of his employment.

 

13.                                 Liability Insurance.  Corporation and Bank shall obtain liability
insurance coverage for the Executive under an insurance policy with similar
terms as that which is currently covering officers and directors of Corporation
and Bank against lawsuits, arbitrations or other legal or regulatory
proceedings.

 

14.                                 Notices.  Except as otherwise provided in this
Agreement, any notice required or permitted to be given under this Agreement
shall be deemed properly given if in writing and if mailed by registered or
certified mail, postage prepaid with return receipt requested, to Executive’s residence,
in the case of notices to Executive, and to the principal executive offices of
Corporation and Bank, in the case of notices to Corporation and Bank.

 

15.                                 Waiver.  No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by Executive and an executive officer
specifically designated by the Boards of Directors of Corporation and
Bank.  No waiver by either party hereto
at any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.

 

16.                                 Assignment.  This Agreement shall not be assignable by any
party, except by Corporation and Bank to any successor in interest to their
respective businesses.

 

17.                                 Entire Agreement.  This Agreement supersedes any and all
agreements, either oral or in writing, between the parties with respect to the
employment of the Executive by the Bank and/or Corporation and this Agreement
contains all the covenants and agreements between the parties with respect to
employment.  This Agreement specifically
releases all parties of any rights and obligations under the Executive
Employment Agreements of January 1, 2000, and July 3, 2006, and all
amendments thereto, between Adams County National Bank, ACNB Corporation and
Thomas A. Ritter and said agreements and amendments are hereafter null and
void.

 

12

 

18.                                 Successors; Binding Agreement.

 

(a)                                  Corporation
and Bank will require any successor (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the
businesses and/or assets of Corporation and Bank to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that
Corporation and Bank would be required to perform it if no such succession had
taken place.  Failure by Corporation and
Bank to obtain such assumption and agreement prior to the effectiveness of any
such succession shall constitute a breach of this Agreement and the provisions
of Section 7 of this Agreement shall apply.  As used in this Agreement, “Corporation” and
“Bank” shall mean Corporation and Bank, as defined previously and any successor
to their respective businesses and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law or otherwise.

 

(b)                                 This
Agreement shall inure to the benefit of and be enforceable by Executive’s
personal or legal representatives, executors, administrators, heirs,
distributees, devisees and legatees.  If
Executive should die after a Notice of Termination is delivered by Executive,
after a Change in Control, or following termination of Executive’s employment
without Cause, and any amounts would be payable to Executive under this
Agreement if Executive had continued to live, all such amounts shall be paid in
accordance with the terms of this Agreement to Executive’s devisee, legatee, or
other designee, or, if there is no such designee, to Executive’s estate.

 

19.                                 Arbitration.   Corporation, Bank and Executive recognize
that in the event a dispute should arise between them concerning the
interpretation or implementation of this Agreement, lengthy and expensive
litigation will not afford a practical resolution of the issues within a
reasonable period of time.  Consequently,
each party agrees that all disputes, disagreements and questions of
interpretation concerning this Agreement (except for any enforcement sought
with respect to Sections 9, 10, 11 or 12 which may be litigated in court,
including an action for injunction or other relief) are to be submitted for
resolution, in Gettysburg, Pennsylvania, to the American Arbitration
Association (the “Association”) in accordance with the Association’s National Rules for
the Resolution of Employment Disputes or other applicable rules then in
effect (“Rules”).  Corporation, Bank or
Executive may initiate an arbitration proceeding at any time by giving notice
to the other in accordance with the Rules. 
Corporation, Bank and Executive may, as a matter of right, mutually
agree on the appointment of a particular arbitrator from the Association’s pool.  The arbitrator shall not be bound by the rules of
evidence and procedure of the courts of the Commonwealth of Pennsylvania but
shall be bound by the substantive law applicable to this Agreement.  The decision of the arbitrator, absent fraud,
duress, incompetence or gross and obvious error of fact, shall be final and
binding upon the parties and shall be enforceable in courts of proper
jurisdiction.  Following written notice
of a request for arbitration, Corporation, Bank and Executive shall be entitled
to an injunction restraining all further proceedings in any pending or
subsequently filed litigation concerning this Agreement, except as otherwise
provided herein or any enforcement sought with respect to Sections 9, 10, 11 or
12 of this Agreement, including an action for injunction or other relief.

 

13

 

20.                                 Validity.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

 

21.                                 Applicable Law.  This Agreement shall be governed by and
construed in accordance with the domestic, internal laws of the Commonwealth of
Pennsylvania, without regard to its conflicts of laws principles.

 

22.                                 Headings.  The section headings of this Agreement are
for convenience only and shall not control or affect the meaning or
construction or limit the scope or intent of any of the provisions of this
Agreement.

 

IN WITNESS WHEREOF,
the parties have executed this Agreement as of the date first above written.

 

 

	
  ATTEST:

  	
   

  	
   

  	
  ACNB CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
    /s/ Lynda
  L. Glass

  	
   

  	
  By

  	
    /s/ Ronald
  L. Hankey

  
	
   

  	
   

  	
   

  	
  Ronald L. Hankey

  
	
   

  	
   

  	
   

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  ADAMS COUNTY NATIONAL
  BANK

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
    /s/ Lynda
  L. Glass

  	
   

  	
  By

  	
    /s/ Ronald
  L. Hankey

  
	
   

  	
   

  	
   

  	
  Ronald L. Hankey

  
	
   

  	
   

  	
   

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WITNESS:

  	
   

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
    /s/ D. W.
  Cathell

  	
   

  	
   

  	
    /s/ Thomas
  A. Ritter

  
	
   

  	
   

  	
   

  	
  Thomas A. Ritter

  

 

14Exhibit
10.10

 

AMENDED
AND RESTATED

EMPLOYMENT
AGREEMENT

 

THIS
AGREEMENT is made as of the 31st day of December, 2008, between ACNB  Corporation (“Corporation”),
a Pennsylvania business corporation having a place of business at 16 Lincoln
Square, Gettysburg, Pennsylvania, 17325, ADAMS COUNTY NATIONAL BANK
(“Bank”), a national banking association having a place of business
at 16 Lincoln Square, Gettysburg, Pennsylvania, 17325, and Lynda L. Glass
(“Executive”), an individual residing in 
Pennsylvania.

 

WITNESSETH:

 

WHEREAS,
Corporation is a registered financial holding company;

 

WHEREAS, Bank
is a subsidiary of the Corporation;

 

WHEREAS,
Executive, Corporation and Bank entered into an employment agreement dated July 3,
2006 (“2006 Employment Agreement”); and,

 

WHEREAS,
Executive, Corporation and Bank wish to amend and restate the 2006 Employment
Agreement to reflect changes made in the final Treasury Regulations promulgated
under the Internal Revenue Code of 1986 as amended (“Code”) Section 409A.

 

AGREEMENT:

 

NOW, THEREFORE,
the parties hereto, intending to be legally bound, agree as follows:

 

1.                                       Employment.   Corporation and Bank hereby employ Executive
and Executive hereby accepts employment with Corporation and Bank, under the
terms and conditions set forth in this Agreement.

 

2.                                       Duties of Executive.  Executive shall serve as the Executive Vice
President and Chief Operating Officer of Bank and Executive Vice President and
Secretary of Corporation reporting only to the Boards of Directors and
President and CEO of Bank.  Executive
shall have such other duties and hold such other titles as may be given to her
from time to time by the Boards of Directors of Corporation and Bank provided
that such duties are consistent with the Executive’s position as Executive Vice
President and Chief Operating Officer of Bank and Executive Vice President and
Secretary of Corporation.

 

3.                                       Engagement in Other Employment.  Executive shall devote all of her working
time, ability and attention to the business of the Corporation, Bank and/or
their subsidiaries or affiliates, during the term of this Agreement.  The Executive shall notify the Boards of
Directors of Corporation and Bank in writing before the Executive engages in
any other business or commercial duties or pursuits, including but not limited
to, directorships of other companies. 
Under no circumstances may the Executive engage in any business or
commercial activities, duties or pursuits which compete with the business or
commercial activities of the Corporation, Bank and/or any of their subsidiaries
or affiliates, nor may 

 

1

 

the Executive serve as a
director or officer or in any other capacity in a company which competes with
the Corporation, Bank and/or any of their subsidiaries or affiliates.  Executive shall not be precluded, however,
upon written notification to the Boards of Directors, from engaging in
voluntary or philanthropic endeavors, from engaging in activities designed to
maintain and improve her professional skills, or from engaging in activities
incident or necessary to personal investments, so long as they are, in the
Boards’ reasonable opinion, not in conflict with or detrimental to the
Executive’s rendition of services on behalf of the Corporation, Bank and/or any
of their subsidiaries or affiliates.

 

4.             Term of Agreement.

 

(a)                                  This
Agreement shall be for a three (3) year period (the “Employment Period”)
beginning on the date first written above, and if not previously terminated
pursuant to the terms of this Agreement, the Employment Period shall end three (3) years
later (the “Initial Term”).  The
Employment Period shall be extended automatically for one (1) additional
year on the first annual anniversary date of the commencement of the Initial
Term (the date first above written), and then on each anniversary date of this
Agreement thereafter, unless any of Corporation, Bank or Executive gives
contrary written notice to the other(s) not less than one hundred eighty
(180) days before any such anniversary date so that upon the anniversary date
if notice had not been previously given as provided in this Section 4(a),
the Employment Period shall be and continue for a three (3) year period
thereafter.  References in the Agreement
to “Employment Period” shall refer to the Initial Term of this Agreement and
any extensions to the Initial Term of this Agreement.  It is the intention of the parties that this
Agreement be “Evergreen” unless (i) either party gives written notice to
the other party of her or its intention not to renew this Agreement as provided
above or (ii) this Agreement is terminated pursuant to Section 4(b) hereof.

 

(b)                                 Notwithstanding
the provisions of Section 4(a) of this Agreement, this Agreement
shall terminate automatically for Cause (as defined herein) upon written notice
from the Board of Directors of each of Corporation and Bank to Executive.  As used in this Agreement, “Cause” shall mean
any of the following:

 

(i)            Executive’s conviction of or plea of
guilty or nolo contendere to a felony, a crime of falsehood or a crime
involving moral turpitude, or the actual incarceration of Executive for a
period of twenty (20) consecutive days or more;

 

(ii)           Executive’s failure to follow the
good faith lawful instructions of the Board of Directors of Corporation or Bank
with respect to its operations, after written notice from Corporation or Bank
and a failure to cure such violation within 
thirty (30) days of said written notice;

 

(iii)          Executive’s willful failure to
substantially perform Executive’s duties to Corporation or Bank, other than a
failure resulting from Executive’s incapacity because of physical or mental
illness, as provided in subsection (d) of this Section 4, after
written notice from Corporation or Bank and a failure to cure such violation
within thirty (30) days of said written notice;

 

2

 

(iv)          Executive’s intentional violation of
the provisions of this Agreement, after written notice from Corporation or Bank
and a failure to cure such violation within thirty (30) days of said written
notice;

 

(v)           dishonesty or gross negligence of the
Executive in the performance of her duties;

 

(vi)          Executive’s removal or prohibition
from being an institutional-affiliated party by a final order of an appropriate
federal banking agency pursuant to Section 8(e) or 8(g) of the
Federal Deposit Insurance Act or by the Office of the Comptroller of the
Currency pursuant to national law;

 

(vii)         conduct by the Executive as determined
by an affirmative vote of seventy-five percent (75%) of the disinterested
members of the Board of Directors of Corporation or Bank which brings public
discredit to Corporation or Bank and which results or may be reasonably
expected to result in material financial or other harm to the Corporation or Bank;

 

(viii)        Executive’s
breach of fiduciary duty involving personal profit;

 

(ix)           unlawful harassment by the Executive
against employees, customers, business associates, contractors, or vendors of
Corporation or Bank which results or may be reasonably expected to result in
material liability to Corporation or Bank, as determined by an affirmative vote
of seventy-five percent (75%) of the disinterested independent members of the
Board of Directors of Corporation or Bank, following an investigation of the
claims by a third party unrelated to the Corporation or Bank chosen by the Executive,
Corporation and Bank.  If the Executive,
Corporation and Bank do not agree on said third party, then as chosen by an affirmative
vote of seventy-five percent (75%) of the disinterested independent members of
the Board of Directors of the Corporation;

 

(x)            the willful violation by the
Executive of the provisions of Sections 9, 10 or 11 hereof, after written
notice from the Corporation or Bank and a failure to cure such violation within
thirty (30) days of said written notice;

 

(xi)           the willful violation of any law, rule or
regulation governing banks or bank officers or any final cease and desist order
issued by a bank regulatory authority;

 

(xii)          theft or abuse by Executive of the
Corporation’s or Bank’s property or the property of Corporation’s or Bank’s
customers, employees, contractors, vendors, or business associates;

 

(xiii)                          any act of fraud,
misappropriation or personal dishonesty;

 

3

 

(xiv)        insubordination
as determined by an affirmative vote of seventy-five percent (75%) of the Board
of Directors of Corporation or Bank, after written notice from the Corporation
or Bank and a failure to cure such violation within thirty (30) days of said
written notice; or,

 

(xv)         the
existence of any material conflict between the interests of the Corporation or
Bank and the Executive that is not disclosed in writing by the Executive to the
Corporation and Bank and approved in writing by the Boards of Directors of
Corporation and Bank.

 

(xvi)        Before
taking any vote under subparagraphs (vii), (ix) or (xiv) above, all which
require notice, Executive shall be entitled to appear before the Boards and
present Executive’s position as to any issues about which Executive has been
notified by the Boards in writing.  Such
appearance shall be within a reasonable period of time following written notice
to Executive of the issues but in no event longer than thirty (30) days after
the date of said written notice.

 

If this Agreement is
terminated for Cause, all of Executive’s rights under this Agreement shall
cease as of the effective date of such termination, except for the rights under
Paragraph 19 hereof with respect to arbitration.

 

(c)                                  Notwithstanding
the provisions of Section 4(a) of this Agreement, this Agreement
shall terminate automatically upon Executive’s voluntary termination of
employment (other than in accordance with Section 6 of this Agreement) for
Good Reason.  The term “Good Reason”
shall mean (i) the assignment of duties and responsibilities inconsistent
with Executive’s status as Executive Vice President and Chief Operating Officer
of Bank and Executive Vice President and Secretary of Corporation, (ii) a
reassignment which requires Executive to move her principal residence or her
office more than fifty (50) miles from the Corporation’s and Bank’s principal
executive office immediately prior to this Agreement, (iii) any removal of
the Executive from office or any adverse change in the terms and conditions of
the Executive’s employment, except for any termination of the Executive’s
employment under the provisions of Section 4(b) hereof, (iv) any
reduction in the Executive’s Annual Base Salary as in effect on the date hereof
or as the same may be increased from time to time, or (v) any failure of
Corporation and Bank to provide the Executive with benefits at least as
favorable as those enjoyed by the Executive during the Employment Period under
any of the pension, life insurance, medical, health and accident, disability or
other employee plans of Corporation and Bank, or the taking of any action that
would materially reduce any of such benefits unless such reduction is part of a
reduction applicable to all employees.

 

Executive shall, within
ninety (90) days of the occurrence of any of the foregoing events, provide
notice to Corporation and Bank of the existence of the condition and provide
Corporation and Bank thirty (30) days in which to cure such condition.  In the event that Corporation and Bank do not
cure the condition within thirty (30) days of such notice, Executive may resign
from employment for Good Reason by delivering written notice (“Notice of
Termination”) to Corporation and Bank.

 

4

 

If such termination
occurs for Good Reason, then Corporation or Bank shall pay Executive an amount
equal to the greater of the remaining balance of the Agreed Compensation, as
defined in subsection 4(g), otherwise due to the Executive for the remainder of
the then existing Employment Period or 1.0 times the Executive’s Agreed
Compensation, payable in twelve (12) equal monthly installments and shall be
subject to federal, state and local tax withholdings.  In addition, for a period of one (1) year
from the date of termination of employment, or until Executive secures
substantially similar benefits through other employment, whichever shall first
occur, Executive shall receive a continuation of all life, disability, medical
insurance and other normal health and welfare benefits in effect with respect
to Executive during the two (2) years prior to her termination of
employment, or, if Corporation and Bank cannot provide such benefits because
Executive is no longer an employee, Corporation and Bank shall reimburse
Executive in an amount equal to the monthly premium paid by her to obtain
substantially similar employee benefits which she enjoyed prior to termination,
subject to Code Section 409A if applicable.

 

However, in the event the
payment described herein, when added to all other amounts or benefits provided
to or on behalf of the Executive in connection with her termination of
employment, would result in the imposition of an excise tax under Code Section 4999,
Corporation or Bank will pay to Executive an additional cash payment (“Gross-up
Payment”) in an amount such that the after-tax proceeds of such Gross-up
Payment (including any income tax or excise tax on such Gross-up Payment) will
be equal to the amount of the excise tax. 
Notwithstanding any other provision, in the event that Executive is
determined to be a specified employee as that term is defined in Section 409A
of the Code, no payment that is determined to be deferred compensation subject
to Section 409A of the Code shall be made until one (1) day following
six (6) months from the date of separation of service as that term is
defined in Section 409A of the Code.

 

(d)                                 Notwithstanding
the provisions of Section 4(a) of this Agreement, this Agreement
shall terminate automatically upon Executive’s Disability and Executive’s
rights under this Agreement shall cease as of the date of such termination;
provided, however, that Executive shall nevertheless be entitled to receive an
amount equal to and no greater than seventy-five percent (75%)  of the Executive’s Agreed Compensation as defined in
subsection (g) of this Section 4, less amounts payable under any
disability plan of Corporation and Bank, until the earliest of  (i)  Executive’s return to employment, (ii) her
attainment of age sixty-five (65),  (iii) her
death, or (iv) the end of the then existing Employment Period.  In addition, Executive shall receive for such
period a continuation of all life, disability, medical insurance and other
normal health and welfare benefits in effect with respect to Executive during
the two (2) years prior to her disability, or, if Corporation and Bank
cannot provide such benefits because Executive is no longer an employee,
Corporation and Bank shall reimburse Executive in an amount equal to the
monthly premium paid by her to obtain substantially similar employee benefits
which she enjoyed prior to termination, subject to Code Section 409A if
applicable. For purposes of this Agreement, the Executive shall have a
Disability if, the Executive is unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than
twelve (12) months or the Executive is, by reason of any 

 

5

 

medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than twelve (12) months,
receiving income replacement benefits for a period of not less than three (3)
months under an accident and health plan covering employees of the Corporation
and Bank. The Executive shall have no duty to mitigate any payment provided for
in this Section 4(d) by seeking other employment.

 

(e)                                  In
the event that Executive terminates her employment without Good Reason as
defined in Section 4(c), all of Executive’s rights under this Agreement
shall cease as of the effective date of such termination, except for the rights
under Paragraph 19 hereof with respect to arbitration.

 

(f)                                    Executive
agrees that in the event her employment under this Agreement is terminated,
Executive shall resign as a director of Corporation and Bank, or any affiliate
or subsidiary thereof, if she is then serving as a director of any of such
entities.

 

(g)                                 The
term “Agreed Compensation” shall equal the sum of (i) the Executive’s
highest Annual Base Salary under the Agreement, and (ii) the average of
the Executive’s annual bonuses with respect to the three (3) calendar
years immediately preceding the Executive’s termination.

 

5.                                       Employment Period Compensation.

 

(a)                                  Annual
Base Salary.  For services performed
by Executive under this Agreement, Corporation or Bank shall pay Executive an
Annual Base Salary during the Employment Period at the rate of $180,000 per
year, minus applicable withholdings and deductions,  payable at the same times as salaries are
payable to other executive employees of Corporation or Bank.  Corporation or Bank may, from time to time,
increase Executive’s Annual Base Salary, and any and all such increases shall
be deemed to constitute amendments to this Section 5(a) to reflect
the increased amounts, effective as of the date established for such increases
by the Board of Directors of Corporation or Bank or any committee of such Board
in the resolutions authorizing such increases.

 

(b)                                 Bonus.  For services performed by Executive under
this Agreement, Corporation or Bank may, from time to time, pay a bonus or
bonuses to Executive as Corporation or Bank or an affiliate thereof, in their
sole discretion, deems appropriate.  The
payment of any such bonuses shall not reduce or otherwise affect any other
obligation of Corporation or Bank to Executive provided for in this Agreement.

 

(c)                                  Paid
Time-off.  During the term of this
Agreement, Executive shall be entitled to paid time-off in accordance with the
manner and amount provided under the paid time-off plan currently in effect.
Executive shall be able to accumulate unused paid time-off from one (1) year
to the next not to exceed forty-five (45) days in total. However, Executive
shall not be entitled to receive any additional compensation from Corporation
and Bank for failure to take a vacation, except to the extent authorized by the
Boards of Directors of Corporation and Bank.

 

6

 

(d)                                 Employee
Benefit Plans.  During the term of
this Agreement, Executive shall be entitled to participate in or receive the
benefits of any employee benefit plan currently in effect at Corporation and
Bank, subject to the terms of said plan, until such time that the Boards of
Directors of Corporation and Bank authorize a change in such benefits.  Corporation and Bank shall not make any
changes in such plans or benefits which would adversely affect Executive’s
rights or benefits thereunder, unless such change occurs pursuant to a program
applicable to all executive officers of Corporation and Bank and does not
result in a proportionately greater adverse change in the rights of or benefits
to Executive as compared with any other executive officer of Corporation and
Bank.  Nothing paid to Executive under
any plan or arrangement presently in effect or made available in the future
shall be deemed to be in lieu of the salary payable to Executive pursuant to Section 5(a) hereof.

 

(e)                                  Business
Expenses.  During the term of this
Agreement, Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by her, which are properly accounted for, in
accordance with the policies and procedures established by the Boards of
Directors of Corporation and Bank for their executive officers.

 

6.             Termination of Employment
Following Change in Control.

 

(a)                                  If
a Change in Control (as defined in Section 6(b) of this Agreement)
shall occur and (1) Executive is involuntarily terminated without Cause or
(2) at the option of Executive, exercisable by Executive within one
hundred eighty (180) days of the Change in Control, the Executive terminates
employment and gives notice of the intention to collect benefits under this
Agreement by delivering written notice (the “Notice of Termination”) to
Corporation and Bank, then the provisions of Section 7 of this Agreement
shall apply.

 

(b)                                 As
used in this Agreement, “Change in Control” shall mean the occurrence of any of
the following, provided the event constitutes a change in control within the
meaning of Code Section 409A and the rules, regulations, and guidance
promulgated thereunder:

 

(i)            (A) a merger, consolidation or
division involving Corporation or Bank, (B) a sale, exchange, transfer or
other disposition of substantially all of the assets of Corporation or Bank, or
(C) a purchase by Corporation or Bank of substantially all of the assets
of another entity, unless such merger, consolidation, division, sale, exchange,
transfer, purchase or disposition results in a majority of the members of the
Board of Directors of the legal entity resulting from or existing after any
such transaction and of the Board of Directors of such entity’s parent
corporation, if any, are former members of the Board of Directors of Corporation
or Bank; or,

 

(ii)           any “person” (as such term is defined
in Code Section 409A and any Revenue Guidance or Treasury Regulations
issued thereunder), other than Corporation or Bank or any “person” who on the
date hereof is a director or officer of Corporation or Bank, is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), 

 

7

 

directly or indirectly,
of securities of Corporation or Bank representing thirty (30%) percent or more
of the total voting power of Corporation’s or Bank’s then outstanding
securities; or,

 

(iii)          during any period of one (1) year
during the term of Executive’s employment under this Agreement, individuals who
at the beginning of such period constitute the Board of Directors of
Corporation or Bank cease for any reason to constitute at least a majority
thereof, unless the election of each director who was not a director at the
beginning of such period has been approved in advance by directors representing
at least two-thirds (2/3) of the directors then in office who were directors at
the beginning of the period.

 

7.             Rights in Event of Change
in Control.

 

(a)                                  In
the event that Executive delivers a Notice of Termination (as defined in Section 6(a) of
this Agreement) to Corporation and Bank or Executive is involuntarily
terminated without Cause after a Change in Control (as defined in Section 6(b) of
this Agreement), Executive shall be entitled to receive the compensation and
benefits set forth below:

 

Corporation and Bank
shall pay Executive a lump sum amount equal to and no greater than 2.99  times the Executive’s Agreed Compensation as defined in
subsection (g) of Section 4, minus applicable taxes and withholdings.
In addition, for a period of two (2) years from the date of termination of
employment, or until Executive secures substantially similar benefits through
other employment, whichever shall first occur, Executive shall receive a
continuation of all life, disability, medical insurance and other normal health
and welfare benefits in effect with respect to Executive during the two (2) years
prior to her termination of employment, or, if Corporation and Bank cannot
provide such benefits because Executive is no longer an employee, Corporation
and Bank shall reimburse Executive in an amount equal to the monthly premium
paid by her to obtain substantially similar employee benefits which she enjoyed
prior to termination, subject to Code Section 409A if applicable.  However, in the event the payment described herein,
when added to all other amounts or benefits provided to or on behalf of the
Executive in connection with her termination of employment, would result in the
imposition of an excise tax under Section 4999 of the Code, Corporation or
Bank will pay to Executive an additional cash payment (“Gross-up Payment”) in
an amount such that the after-tax proceeds of such Gross-up Payment (including
any income tax or excise tax on such Gross-up Payment) will be equal to the
amount of the excise tax.

 

Notwithstanding any other
provision, in the event that Executive is determined to be a specified employee
as that term is defined in Section 409A of the Code, no payment that is
determined to be deferred compensation subject to Section 409A of the Code
shall be made until one (1) day following six (6) months from the
date of separation of service as that term is defined in Section 409A of
the Code.

 

(b)                                 Executive
shall not be required to mitigate the amount of any payment provided for in
this Section 7 by seeking other employment or otherwise.  Unless otherwise agreed to in writing, the
amount of payment or the benefit provided for in this 

 

8

 

Section 7 shall not
be reduced by any compensation earned by Executive as the result of employment
by another employer or by reason of Executive’s receipt of or right to receive
any retirement or other benefits after the date of termination of employment or
otherwise.

 

8.             Rights in Event of
Termination of Employment Absent Change in Control.

 

(a)                                  In
the event that Executive’s employment is involuntarily terminated by
Corporation and/or Bank without Cause and no Change in Control shall have
occurred at the date of such termination, Corporation and Bank shall pay
Executive an amount equal to and no greater than 2.99 times the Executive’s
Agreed Compensation as defined in subsection (g) of Section 4, and
shall be payable in thirty-six (36) equal monthly installments and shall be
subject to federal, state and local tax withholdings.  In addition, for a period of two (2) years
from the date of termination of employment, or until Executive secures
substantially similar benefits through other employment, whichever shall first
occur, Executive shall receive a continuation of all life, disability, medical
insurance and other normal health and welfare benefits in effect with respect
to Executive during the two (2) years prior to her termination of
employment, or, if Corporation and Bank cannot provide such benefits because
Executive is no longer an employee, Corporation and Bank shall reimburse
Executive in an amount equal to the monthly premium paid by her to obtain
substantially similar employee benefits which she enjoyed prior to termination,
subject to Code Section 409A if applicable.  However, in the event the payment described
herein, when added to all other amounts or benefits provided to or on behalf of
the Executive in connection with her termination of employment, would result in
the imposition of an excise tax under Section 4999 of the Code,
Corporation or Bank will pay to Executive an additional cash payment (“Gross-up
Payment”) in an amount such that the after-tax proceeds of such Gross-up
Payment (including any income tax or excise tax on such Gross-up Payment) will
be equal to the amount of the excise tax.

 

Notwithstanding any other
provision, in the event that Executive is determined to be a specified employee
as that term is defined in Section 409A of the Code, no payment that is
determined to be deferred compensation subject to Section 409A of the Code
shall be made until one (1) day following six (6) months from the
date of separation of service as that term is defined in Section 409A of
the Code.

 

(b)                                 Executive
shall not be required to mitigate the amount of any payment provided for in
this Section 8 by seeking other employment or otherwise.  Unless otherwise agreed to in writing, the
amount of payment or the benefit provided for in this Section 8 shall not
be reduced by any compensation earned by Executive as the result of employment
by another employer or by reason of Executive’s receipt of or right to receive
any retirement or other benefits after the date of termination of employment or
otherwise.

 

9.             Covenant Not to Compete.

 

(a)                                  Executive
hereby acknowledges and recognizes the highly competitive nature of the
business of Corporation and Bank and accordingly agrees that, during and for 

 

9

 

the applicable period set
forth in Section 9(c) hereof, Executive shall not, except as otherwise
permitted in writing by the Corporation and the Bank:

 

(i)            be engaged, directly or indirectly,
either for her own account or as agent, consultant, employee, partner, officer,
director, proprietor, investor (except as an investor owning less than 5% of the
stock of a publicly owned company) or otherwise of any person, firm,
corporation or enterprise engaged in (1) the banking (including bank
holding company) or financial services industry, or (2) any other activity
in which Corporation or Bank or any of their subsidiaries are engaged during
the Employment Period, and remain so engaged at the end of the Employment
Period, within a fifty (50) mile radius of Bank’s principal place of business
at 16 Lincoln Square, Gettysburg, Pennsylvania (the “Non-Competition Area”);

 

(ii)           provide financial or other assistance
to any person, firm, corporation, or enterprise engaged in (1) the banking
(including bank holding company) or financial services industry, or (2) any
other activity in which Corporation or Bank or any of their subsidiaries are
engaged during the Employment Period, in the Non-Competition Area;

 

(iii)          directly or indirectly solicit persons
or entities who were customers or referral sources of Corporation, Bank or
their subsidiaries within six (6) months of Executive’s termination of
employment, to become a customer or referral source of a person or entity other
than Corporation, Bank or their subsidiaries; 
or,

 

(iv)          directly or indirectly solicit
employees of Corporation, Bank or their subsidiaries who were employed within
two (2) years of Executive’s termination of employment to work for anyone
other than Corporation, Bank or their subsidiaries.

 

(b)                                 It
is expressly understood and agreed that, although Executive and Corporation and
Bank consider the restrictions contained in Section 9(a) hereof
reasonable for the purpose of preserving for Corporation and Bank and their
subsidiaries their goodwill and other proprietary rights, if a final judicial
determination is made by a court having jurisdiction that the time or territory
or any other restriction contained in Section 9(a) hereof is an
unreasonable or otherwise unenforceable restriction against Executive, the
provisions of Section 9(a) hereof shall not be rendered void but
shall be deemed amended to apply as to such maximum time and territory and to
such other extent as such court may judicially determine or indicate to be
reasonable.

 

(c)                                  The
provisions of this Section 9 shall be applicable, commencing on the date
of this Agreement and ending on one of the following dates as applicable:

 

(i)            if Executive voluntarily terminates
her employment in accordance with the provisions of Section 4(e) of
this Agreement (relating to termination without Good Reason), the first
anniversary date of the effective date of termination of employment;

 

10

 

(ii)           if Executive’s employment terminates
in accordance with the provisions of Section 4(b) of this Agreement
(relating to termination for Cause), the first anniversary date of the
effective date of termination of employment;

 

(iii)          if the Executive voluntarily
terminates her employment in accordance with the provisions of Section 4(c) of
this Agreement (relating to termination by Executive for Good Reason), the
second anniversary date of the effective date of termination of employment;

 

(iv)          if the Executive’s employment is
involuntarily terminated in accordance with the provisions of Section 6 of
this Agreement (relating to involuntary termination without Cause following a
Change in Control), the second anniversary date of the effective date of
termination of employment;  or,

 

(v)           if the Executive’s employment is
involuntarily terminated in accordance with the provisions of Section 8 of
this Agreement (relating to involuntary termination without Cause absent a
Change in Control), the second anniversary date of the effective date of
termination of employment.

 

10.                                 Unauthorized Disclosure.  During the term of her employment hereunder,
or at any later time, the Executive shall not, without the written consent of
the Boards of Directors of Corporation and Bank or a person authorized thereby,
knowingly disclose to any person, other than an employee of Corporation or Bank
or a person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Executive of her duties as an executive
of Corporation and Bank, any material confidential information obtained by her
while in the employ of Corporation and Bank with respect to any of
Corporation’s and Bank’s services, products, improvements, formulas, designs or
styles, processes, customers, methods of business or any business practices the
disclosure of which could be or will be damaging to Corporation or Bank;
provided, however, that confidential information shall not include any
information known generally to the public (other than as a result of
unauthorized disclosure by the Executive or any person with the assistance,
consent or direction of the Executive) or any information of a type not
otherwise considered confidential by persons engaged in the same business or a
business similar to that conducted by Corporation and Bank or any information
that must be disclosed as required by law.

 

11.                                 Work Made for Hire. Any work performed
by the Executive under this Agreement should be considered a “Work Made for
Hire” as the phrase is defined by the U.S. patent laws and shall be owned by
and for the express benefit of Corporation, Bank and their subsidiaries and
affiliates.  In the event it should be
established that such work does not qualify as a Work Made for Hire, the
Executive agrees to and does hereby assign to Corporation, Bank, and their
affiliates and subsidiaries, all of her rights, title, and/or interest in such
work product, including, but not limited to, all copyrights, patents,
trademarks, and propriety rights.

 

12.                                 Return of Company Property and Documents.  The Executive agrees that, at the time of
termination of her employment, regardless of the reason for termination, she
will deliver to Corporation, Bank and their subsidiaries and affiliates, any
and all company 

 

11

 

property, including, but
not limited to, keys, security codes or passes, mobile telephones, records,
data, notes, reports, proposals, lists, correspondence, specifications,
drawings, blueprints, sketches, software programs, equipment, other documents
or property, or reproductions of any of the aforementioned items developed or
obtained by the Executive during the course of her employment.

 

13.                                 Liability Insurance.  Corporation and Bank shall obtain liability
insurance coverage for the Executive under an insurance policy with similar
terms as that which is currently covering officers and directors of Corporation
and Bank against lawsuits, arbitrations or other legal or regulatory
proceedings.

 

14.                                 Notices.  Except as otherwise provided in this
Agreement, any notice required or permitted to be given under this Agreement
shall be deemed properly given if in writing and if mailed by registered or certified
mail, postage prepaid with return receipt requested, to Executive’s residence,
in the case of notices to Executive, and to the principal executive offices of
Corporation and Bank, in the case of notices to Corporation and Bank.

 

15.                                 Waiver.  No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by Executive and an executive officer
specifically designated by the Boards of Directors of Corporation and Bank.  No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time.

 

16.                                 Assignment.  This Agreement shall not be assignable by any
party, except by Corporation and Bank to any successor in interest to their
respective businesses.

 

17.                                 Entire Agreement.  This Agreement supersedes any and all
agreements, either oral or in writing, between the parties with respect to the
employment of the Executive by the Bank and/or Corporation and this Agreement
contains all the covenants and agreements between the parties with respect to
employment.  This Agreement specifically
releases all parties of any rights and obligations under the Executive
Employment Agreement of July 3, 2006, and all amendments thereto, between
Adams County National Bank, ACNB Corporation and Lynda L. Glass and said
agreement and amendments are hereafter null and void.

 

18.                                 Successors; Binding Agreement.

 

(a)                                  Corporation
and Bank will require any successor (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the
businesses and/or assets of Corporation and Bank to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that
Corporation and Bank would be required to perform it if no such succession had
taken place.  Failure by Corporation and
Bank to obtain such assumption and agreement prior to the effectiveness of any
such succession shall constitute a breach of this Agreement and the provisions
of Section 7 of this Agreement shall apply. As used in this Agreement,
“Corporation” and “Bank” shall mean Corporation and Bank, as defined previously
and any successor to their respective 

 

12

 

businesses and/or assets
as aforesaid which assumes and agrees to perform this Agreement by operation of
law or otherwise.

 

(b)                                 This
Agreement shall inure to the benefit of and be enforceable by Executive’s
personal or legal representatives, executors, administrators, heirs,
distributees, devisees and legatees.  If
Executive should die after a Notice of Termination is delivered by Executive,
after a Change in Control, or following termination of Executive’s employment
without Cause, and any amounts would be payable to Executive under this
Agreement if Executive had continued to live, all such amounts shall be paid in
accordance with the terms of this Agreement to Executive’s devisee, legatee, or
other designee, or, if there is no such designee, to Executive’s estate.

 

19.                                 Arbitration.   Corporation, Bank and Executive recognize
that in the event a dispute should arise between them concerning the
interpretation or implementation of this Agreement, lengthy and expensive
litigation will not afford a practical resolution of the issues within a
reasonable period of time.  Consequently,
each party agrees that all disputes, disagreements and questions of
interpretation concerning this Agreement (except for any enforcement sought
with respect to Sections 9, 10, 11 or 12 which may be litigated in court,
including an action for injunction or other relief) are to be submitted for
resolution, in Gettysburg, Pennsylvania, to the American Arbitration
Association (the “Association”) in accordance with the Association’s National Rules for
the Resolution of Employment Disputes or other applicable rules then in
effect (“Rules”).  Corporation, Bank or
Executive may initiate an arbitration proceeding at any time by giving notice
to the other in accordance with the Rules. 
Corporation, Bank and Executive may, as a matter of right, mutually
agree on the appointment of a particular arbitrator from the Association’s
pool.  The arbitrator shall not be bound
by the rules of evidence and procedure of the courts of the Commonwealth
of Pennsylvania but shall be bound by the substantive law applicable to this
Agreement.  The decision of the
arbitrator, absent fraud, duress, incompetence or gross and obvious error of
fact, shall be final and binding upon the parties and shall be enforceable in
courts of proper jurisdiction.  Following
written notice of a request for arbitration, Corporation, Bank and Executive
shall be entitled to an injunction restraining all further proceedings in any
pending or subsequently filed litigation concerning this Agreement, except as
otherwise provided herein or any enforcement sought with respect to Sections 9,
10, 11 or 12 of this Agreement, including an action for injunction or other
relief.

 

20.                                 Validity.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

 

21.                                 Applicable Law.  This Agreement shall be governed by and
construed in accordance with the domestic, internal laws of the Commonwealth of
Pennsylvania, without regard to its conflicts of laws principles.

 

22.                                 Headings.  The section headings of this Agreement are
for convenience only and shall not control or affect the meaning or
construction or limit the scope or intent of any of the provisions of this
Agreement.

 

13

 

IN
WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.

 

 

	
  ATTEST:

  	
   

  	
   

  	
  ACNB CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
    /s/ Thomas
  A. Ritter

  	
   

  	
  By

  	
    /s/ Ronald
  L. Hankey

  
	
   

  	
   

  	
   

  	
  Ronald L. Hankey

  
	
   

  	
   

  	
   

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  ADAMS COUNTY NATIONAL
  BANK

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
    /s/ Thomas
  A. Ritter

  	
   

  	
  By

  	
    /s/ Ronald
  L. Hankey

  
	
   

  	
   

  	
   

  	
  Ronald L. Hankey

  
	
   

  	
   

  	
   

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WITNESS:

  	
   

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
    /s/ D. W.
  Cathell

  	
   

  	
   

  	
    /s/ Lynda
  L. Glass

  
	
   

  	
   

  	
   

  	
  Lynda L. Glass

  

 

14

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