EMBASSY BANK
2001 OPTION PLAN
The purpose of the Embassy Bank 2001
Option Plan (the “Plan”) is to provide for the grant of
incentive stock options and non-qualified stock options to
designated officers (including officers who are also directors),
other employees and directors who are not employees
(“Non-Employee Directors”) of Embassy Bank For The
Lehigh Valley (the “Company”). The Company
believes that the Plan will cause the participants to contribute
materially to the growth of the Company, thereby benefiting the
Company’s shareholders and will align the economic interests
of the participants with those of the shareholders.
The Plan shall be administered and interpreted
by the Board of Directors of the Company.
The Board shall have the sole authority to
determine (i) the individuals to whom options shall be granted
under the Plan, (ii) the type, size and terms of the options to be
granted to each such individual, (iii) the duration of the exercise
period and (iv) any other matter arising under the Plan.
The Board shall have full power and authority to
make factual determinations and to adopt or amend such rules,
regulations, agreements and instruments for implementing the Plan
as it deems necessary or advisable, in its sole
discretion. The Board’s interpretations of the
Plan shall be conclusive and binding on all persons having any
interests in the Plan or in any options granted
hereunder.
Options under the Plan shall consist of
incentive stock options and non-qualified stock
options (hereinafter collectively referred to as
“Grants”). All Grants shall be subject to
the terms and conditions set forth herein and to those other terms
and conditions consistent with this Plan as the Board deems
appropriate and as are specified in writing to the employee (the
“Grant Letter”). The Board shall approve the
form and provisions of each Grant Letter to an
employee. Grants need not be uniform as among the
employees.
3.
Shares Subject to the
Plan
(a)
Subject to the adjustment
specified below, the aggregate number of shares of common stock of
the Company (“Company Stock”) that have been or may be
issued or transferred under the Plan is 300,000. In
compliance with Section 162(m) of the Internal Revenue Code, (the
“Code”) during the term of the Plan, the maximum
aggregate number of shares of Company Stock that shall be subject
to options or awards under the Plan to any single individual shall
be 40% of the shares specified above. The shares may be
authorized but unissued shares of Company Stock or reacquired
shares of Company Stock, including shares repurchased by the
Company. If and to the extent options granted under the
Plan terminate, expire, or cancel without having been exercised,
the shares subject to such option or such award shall again be
available for purposes of the Plan.
(b)
If there is any
change in the number or kind of shares of Company Stock issuable
under the Plan through the declaration of stock dividends, or
through a recapitalization, stock splits, or combinations or
exchanges of such shares, or merger, reorganization or
consolidation of the Company, reclassification or change in par
value or by reason of any other extraordinary or unusual events
affecting the outstanding Company Stock as a class without the
Company’s receipt of consideration, the maximum number of
shares of Company Stock available for Grants, the maximum number of
shares of Company Stock for which any one individual participating
in the Plan may be granted over the term of the Plan, the number of
shares covered by outstanding Grants and the price per share or the
applicable market value of such Grants, shall be proportionately
adjusted by the Board to reflect any increase or decrease in the
number or kind of issued shares of Company Stock to preclude the
enlargement or dilution of rights and benefits under such Grants;
provided, however, that any fractional shares resulting from such
adjustment shall be eliminated. The adjustments
determined by the Board shall be final, binding and
conclusive.
4.
Eligibility for
Participation
Officers and other employees and
Non-Employee Directors of the Company shall be eligible to
participate in the Plan (hereinafter referred to individually as
the “Participant” and collectively as the
“Participants”). The Board shall select the
individuals to receive Grants (the “Grantees”) from
among the Participants and determine the number of shares of
Company Stock subject to a particular Grant in such manner as the
Board determines. Nothing contained in this Plan shall
be construed to limit the right of the Company to grant options
otherwise than under this Plan in connection with the acquisition,
by purchase, lease, merger, consolidation or otherwise, of the
business or assets of any corporation, firm or association,
including options granted to employees thereof who become employees
of the Company, or for other proper corporate purpose.
(a)
Number of Shares
. The Board shall grant to each Grantee a number of
stock options as the Board shall determine.
(b)
Type of Option and Price . The
Board may grant options qualifying as incentive stock options
(“Incentive Stock Options”) within the meaning of
Section 422 of the Code or stock options which are not intended to
so qualify (“Non-qualified Stock Options”) in
accordance with the terms and conditions set forth herein or any
combination of Incentive Stock Options and Non-qualified Stock
Options (hereinafter referred to collectively as “Stock
Options”); provided, however, that Non-Employee Directors
shall not be eligible to receive grants of Incentive Stock
Options. The purchase price of Company Stock subject to
an Incentive Stock Option or a Non-qualified Stock Option shall be
the fair market value of a share of such Stock on the date such
Stock Option is granted. Notwithstanding the foregoing,
with respect to a Stock Option other than an Incentive Stock
Option, the price at which Company Stock may be purchased may be
equal to either (i) the fair market value of Company Stock as of a
date subsequent to the date of grant as specified by the Board in
the Grant Letter or (ii) the average of such fair market value over
a period of time as specified by the Board in the Grant Letter, but
only when the price so established would not result in the
disallowance of the company’s expense deduction pursuant to
Section 162(m) of the Code. During such time that the
Company Stock is not listed upon an established stock exchange or
traded in the over-the-counter-market, the “fair market
value” of Company Stock shall be determined by the Board at
least annually after taking into account such factors as it shall
deem appropriate. If the Company Stock is listed upon an
established stock exchange or other market source, as determined by
the Board, “fair market value” on any date of reference
shall be the closing price of a share of Company Stock on the stock
exchange or other recognized market source, as determined by the
Board on such date, or if there is no sale on such date, then the
closing price of a share of Company Stock on the last previous day
on which a sale is reported.
(c)
Exercise Period . The Board
shall determine the option exercise period of each Stock
Option. The exercise period shall not exceed ten years
from the date of grant. Notwithstanding any
determinations by the Board regarding the exercise period of any
Stock Option, all outstanding Stock Options shall become
immediately exercisable upon a Change in Control of the Company (as
defined herein).
(d)
Vesting of Options . The
vesting period for Stock Options shall be not less than three years
in approximately equal percentages commencing on the date of grant
and as determined by the Board and specified in the Grant
Letter. Notwithstanding any determinations by the Board
regarding the vesting period of any Stock Option, all outstanding
Stock Options shall become immediately exercisable upon a Change in
Control of the Company (as defined herein).
(e)
Manner of Exercise . A Grantee
may exercise a Stock Option by delivering a notice of exercise to
the Board with accompanying payment of the option
price. Should a Stock Option become exercisable on and
after the date on which the initial registration of the Company
Stock under Section 12(g) of the Securities Exchange Act of 1934
(Exchange Act) becomes effective, such notice may instruct the
Company to deliver shares of Company Stock upon the exercise of the
Stock Option to any registered broker or dealer designated by the
Company (“Designated Broker”) in lieu of delivery to
the Grantee. Such instructions must designate the
account into which the shares are to be deposited.
(f)
Termination of Employment, Disability or
Death .
(1)
In the event the Grantee during
his lifetime ceases to be an employee of the Company or
Non-Employee Director for any reason other than death or a
termination for cause by the Company, any Stock Option which is
otherwise exercisable by the Grantee shall terminate unless
exercised within sixty (60) days of the date on which he ceases to
be an employee or Non-Employee Director, but in any event no later
than the date of expiration of the option exercise
period.
(2)
In the event the Grantee ceases to be an employee
of the Company or Non-Employee Director on account of a termination
for cause by the Company, any Stock Option held by the Grantee
shall terminate as of the date he ceases to be an employee or
Non-Employee Director. For purposes of this Plan, a
termination for cause shall mean a termination resulting from a
person’s dishonesty, theft or willful and persistent failure
to follow the lawful directions of the Board or his or her
supervisors.
(3)
In the event of the
death of the Grantee while he is an employee or Non-Employee
Director of the Company, any Stock Option which was otherwise
exercisable by the Grantee at the date of death may be exercised by
his personal representative at any time prior to the expiration of
six (6) months from the date of death, but in any event no later
than the date of expiration of the option exercise
period.
(g)
Satisfaction of Option Price
. The Grantee shall pay the option price in cash or,
with the approval of the Board, by delivering shares of Company
Stock already owned by the Grantee for the period necessary to
avoid a charge to the Company’s earnings for financial
reporting purposes and having a fair market value on the date of
exercise equal to the option price or with a combination of cash
and shares. The Grantee shall pay the option price and
the amount of withholding tax due, if any, at the time of
exercise. Shares of Company Stock shall not be issued or
transferred upon exercise of a Stock Option until the option price
is fully paid.
(h)
Rule 16b-3 Restrictions
. Unless a Grantee could otherwise transfer Company
Stock issued pursuant to a Stock Option granted hereunder without
incurring liability under Section 16(b) of the Excha
