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Embassy Bank For the Lehigh Valley

P.O. Box 20405

Lehigh Valley, PA 18002-0405

 

 

January 1, 2006

 

 

Ms. Judith A. Hunsicker

328 West Street

Bethlehem, PA 18018

 

Dear Judith:

 

This will set forth our understandings concerning your continued employment as
Chief Operating Officer, Chief Financial Officer, Secretary and Treasurer of
Embassy Bank, This Agreement shall supercede and replace all prior agreements
and understandings concerning the terms of your employment.

 

1.              You are retained by the Board of Directors as Chief Operating
Officer, Chief Financial Officer, Secretary and Treasuer of the Bank. You will
be responsible for all operational, business and financial matters affecting the
Bank under the direction of David M. Lobach, Jr., the CEO, and the Board of
Directors.

 

2.              Your compensation will be as follows:

 

(a)       A base annual salary of $165,000 during 2006.

 

(b)       You will receive an annual bonus as determined by the Board of
Directors annually.

 

(c)       After 2006,  you  will  receive  salary and bonus increases as
approved by the Board of Directors. For 2007, it is contemplated that the
increase will be in the area of 10% to 15%. Your future bonuses will be limited
to a maximum of 30% of salary.

 

(d)       You may elect to defer a portion of your compensation prior to the
commencement of any year pursuant to any Deferred Compensation Plan adopted by
the Bank.

 

(e)       You will participate in the 401(k) plan, health, disability, group
life insurance and any other employee benefit plans established by the Bank on
the same basis as other full-time employees of the Bank.

 

   

   

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Embassy Bank For the Lehigh Valley

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January 1, 2006

 

(f)       You will receive five weeks of paid vacation per year.

 

(g)       You will be reimbursed for all ordinary and necessary business
expenses incurred by you on behalf of the Bank.

 

(h)       You will receive stock options during each year of you. employment by
the Bank as awarded by the Board of Directors. At a minimum you shall receive
annually options to purchase that number of shares determined by dividing 30% of
your salary by the current market value of the Common Stock on the date the
options are granted. The option exercise price will be the fair market value of
the stock on the date the options are granted. These options will have a term of
nine (9) years from the date of grant. All of the options will be qualified
stock options which will be issued pursuant to the qualified stock option plan
adopted by the Bank.

 

(i)        You will receive a SERP benefit upon your retirement subject to the
terms of the existing SERP arrangements in place at that time.

 

3.             The term of your employment shall be perpetual until you attain
age 70, unless earlier terminated by you or the Bank in accordance with the
provisions set forth below. At age 70 and thereafter, your employment will be on
such terms as mutually agreed.

 

The Bank shall have the right to terminate your employment prior to your
attaining age 70 and pay no further compensation:

 

(a)      Upon thirty (30) days prior written notice for "cause".    For purposes
of this Agreement, "cause" is defined as theft, fraud or dishonesty in
connection with your duties, your willful failure to follow the lawful and
reasonable directives of the Board or your willful and persistent failure to
perform your duties as Chief Operating Officer, Chief Financial Officer,
Secretary and Treasurer.

 

(b)       If you become unable to perform substantially all of your duties due
to your permanent disability or death. You will be considered permanently
disabled if you are considered as such under the Bank's disability benefit plan
in which you participate,

 

(c)       If you voluntarily resign your employment, except as provided in
paragraph 3(d) below.

 

   

   

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Embassy Bank For the Lehigh Valley

3

January 1, 2006

 

(d)       Upon written notice from the Board of Directors for any other reason
effective five years from the date of the notice. Provided, however that in the
case of (i) any notice of termination under this paragraph 3(d) or (ii) the
election of any person other than David M. Lobach, Jr. or yourself as Chief
Executive Officer of the Bank, if you give written notice of your intent to
resign within six months of either of such events, you shall receive in lieu of
any other compensation due you, an amount equal to five times the base salary
and bonus you are receiving as of the date of such resignation. Such amount
shall be paid in five equal installments, the first to be paid on the effective
date of youR resignation and thereafter on the four successive anniversaries of
such effective date.  In addition, for a period of five years following such
resignation, you shall receive all 401(k) benefits and health insurance
coverages you are receiving as of the date of your resignation.  You agree to
give at least six months prior written notice of your intent to resign under the
provisions of this paragraph 3(d).

 

4.             You will cooperate with the Bank by appearing for any required
physical examinations and providing any required medical information so that the
Bank may obtain "key man" life insurance on your life naming the Bank as
beneficiary.

 

5.              In consideration of our commitment to you, you agree that for a
period of one year from any termination of your employment, you will not become
employed by or associated with any other bank or group of persons or entities
forming a bank if the new bank or your place of employment is within fifty (50)
miles of the principal office of the Bank at 100 Gateway Plaza.

 

6.              At the request of either party, all disputes concerning the
employment relationship, except for the non-compete clause contained in
Paragraph 5  above, will be settled by binding arbitration to be held in
Bethlehem, Pennsylvania pursuant to the rules and regulations of the American
Arbitration Association.

 

7.              We have agreed to a severance pay arrangement in the event the
Bank (or a bank holding company controlling the Bank) is acquired by or merges
into or with another banking institution, bank holding company or any other
entity. In the event such a transaction is consummated during your employment
and results in another entity obtaining control (through stock ownership, board
membership, or otherwise) of the operation and management of the Bank (or a bank
holding company controlling the Bank), the following severance arrangements
shall apply:

 

(a)       If within two years of the change in control (i) you receive notice
that your employment is being terminated under paragraph 3(d) above; or (ii) you
voluntarily resign for any reason, you will receive in a single lump sum, in
lieu of any other compensation due you, five times the annual base salary and
minimum bonus you are receiving as of the date of your termination. In addition,
for a period of five years from such termination or resignation after a change
in control you will continue to receive all 401(k) benefits and health insurance
coverages which you are receiving as of the date of such termination.

 

   

   

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Embassy Bank For the Lehigh Valley

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January 1, 2006

 

8.             In the event you die during the payout period of any termination
pay due you under paragraph 3(d) above, any remaining installments shall be paid
to your estate.

 

9.             If the foregoing correctly sets forth our understandings, please
sign and return one copy of the letter to me.

 

 

   

Embassy Bank For the Lehigh Valley

   

 

   

   

By 

/s/ Elmer Gates

   

 

Elmer Gates

   

 

Chairman of the Board

 

 

The foregoing is agreed and accepted.

   

   

   

/s/ Judith A. Hunsicker

   

Judith A. Hunsicker

   

 

   

COMMONWEALTH OF PENNSYLVANIA

Notarial Seal

Kristin A. Wannisky, Notary Public

Hanover Twp., Northampton County

My Commission Expires Dec. 26, 2009

   

Member, Pennsylvania Association of Notaries

 

 

 

 

   

/s/ Kristin A. Wannisky

 

   

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