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Exhibit 10.10
 
Embassy Bank For the Lehigh Valley
P.O. Box 20405
Lehigh Valley, PA 18002-0405

 
January 1, 2006

Mr. David M. Lobach, Jr.
Walnut Creek Farm
6932 Kings Highway South
Zionsville, PA 18092
 
Dear David:
 
This will set forth our understandings concerning your continued employment as
President and Chief Executive Officer 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 President and Chief
Executive Officer of the Bank. You shall also serve as Vice Chairman of the
Board of Directors. As President and Chief Executive Officer, you will be
responsible for all operational and business matters affecting the Bank. As Vice
Chairman, you agree that if the present Chairman resigns or is unable to serve
as such for any reason, you will serve as Chairman of the Board if elected by
the Board of Directors.
 
2.             Your compensation will be as follows:
 
(a)           A base annual salary of $240,000 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.

 
 

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Embassy Bank For the Lehigh Valley
2
January 1, 2006

 
 
(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.
 
(f)            You will receive six 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 including an automobile allowance
of $575.00 per month for the use of a personally owned automobile for bank
business.
 
(h)           You will receive stock options during each year of your 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 in the
subject to the terms of the existing SERP arrangements in place at that time.
 
(j)            The Bank will pay the initial membership fee and the minimum
monthly dues for your membership at the Saucon Valley Country Club.
 
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 President and CEO.
 
(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.

 
 

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Embassy Bank For the Lehigh Valley
3
January 1, 2006

 
 
(c)           If you voluntarily resign your employment, except as provided in
paragraph 3(d) below.
 
(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 any notice of termination under this paragraph 3(d), if you give
notice of your intent to resign within six months of your receipt of such
notice, you shall receive in lieu of any other compensation due you, an amount
equal to five times the base salary and minimum bonus you are receiving as of
the date of such resignation. Such amount shall be paid in five equal annual
installments, the first to be paid on the effective date of your resignation and
thereafter on the four successive anniversaries of such affective 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
4
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/ David M. Lobach
 
David M. Lobach, Jr.
 

 
COMMONWEALTH OF PENNSYLVANIA
 
Notarial Seal
 
Kristin A. Wannisky, Notary Public
 
Hanover Twp., Northamption County
 
My Commission Expires Dec. 26, 2009
 
Member, Pennsylvania Association of Notaries
         
/s/ Kristin A. Wannisky

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