Exhibit 10.35


 


AMERICAN HOME
BANK, NATIONAL ASSOCIATION


 


2001 STOCK OPTION INCENTIVE PLAN


 


As adopted by the Board of Directors on August 20, 2001


 


1.                                       Purpose. American Home Bank, N.A., a national banking association (“Bank”),
has adopted this 2001 Stock Option Incentive Plan (the “Plan”). The Plan is
intended to recognize the contributions made to Bank by employees (including
employees who are members of the Board of Directors) of Bank or any Affiliate,
to provide such persons with additional incentive to devote themselves to the
future success of Bank or an Affiliate, and to improve the ability of Bank or
an Affiliate to attract, retain and motivate individuals upon whom Bank’s
sustained growth and financial success depend. Through the Plan, Bank will provide
such persons with an opportunity to acquire or increase their proprietary
interest in Bank, and to align their interest with the interests of
shareholders, through receipt of rights to acquire Bank’s Common Stock, par
value $1.00 per Share (the “Common Stock”), and through the transfer or
issuance of Common Stock or other Awards. In addition, the Plan is intended as
an additional incentive to directors of Bank who are not employees of Bank or
an Affiliate to serve on the Board of Directors and to devote themselves to the
future success of Bank by providing them with an opportunity to acquire or
increase their proprietary interest in Bank through the receipt of rights to
acquire Common Stock. Furthermore, the Plan may be used to encourage
consultants and advisors of Bank to further the success of Bank.


 


2.                                       Definitions. Unless the context clearly indicates otherwise, the following terms
shall have the following meanings:


 


“Affiliate” shall mean a corporation which is a parent corporation or a
subsidiary corporation with respect to Bank within the meaning of Section 424(e) or
(f) of the Code, or any successor provision.


 


“Award” shall mean a transfer of Common Stock made pursuant to the
terms of the Plan or the grant to a person of performance units or other rights
containing such terms, benefits or restrictions as the Committee shall specify
in the Award Agreement.


 


“Award Agreement” shall mean the agreement between Bank and a Grantee
with respect to an Award made pursuant to the Plan.


 


“Bank” shall mean American Home Bank, N.A., a national banking
association.


 


“Board” shall mean the Board of Directors of Bank.


 


“Change of Control” shall have the meaning as set forth in Section 9
of the Plan.


 

















 


“Code” shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute, and the rules and regulations issued pursuant to that
statute or any successor statute.


 


“Committee” shall have the meaning set forth in Section 3 of the
Plan.


 


“Common Stock” shall have the meaning set forth in Section 1 of
the Plan.


 


“Disability” shall mean the inability of an Optionee or Award holder to
perform the essential duties of his or her position with Bank, as determined in
good faith by the Committee.


 


“Employee” shall mean an employee of Bank or an Affiliate.


 


“Fair Market Value” shall have the meaning set forth in Subsection 8(b) of
the Plan.


 


“Grantee” shall mean a person to whom an Award has been granted
pursuant to the Plan.


 


“ISO” shall mean an Option granted under the Plan which qualifies and
is intended to qualify as an “incentive stock option” within the meaning of Section 422(b) of
the Code.


 


“Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations issued
pursuant to that statute or any successor statute.


 


“Non-Employee Director” shall mean a member of the Board who is a “non-employee
director”, as that term is defined in paragraph (b)(3) of Rule 16b-3,
and an “outside director”, as that term is defined in Treasury Regulations Section 1.162-27
promulgated under the Code.


 


“Non-qualified Stock Option” shall mean an Option granted under the
Plan which is not intended to qualify, or otherwise does not qualify, as an
ISO.


 


“Option” shall mean either an ISO or a Non-qualified Stock Option granted
under the Plan.


 


“Optionee” shall mean a person to whom an Option has been granted under
the Plan, which Option has not been exercised and has not expired or
terminated.


 


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“Option Document” shall mean the document described in Section 8
of the Plan, which sets forth the terms and conditions of each grant of
Options.


 


“Option Price” shall mean the price at which Shares may be purchased
upon exercise of an Option, as calculated pursuant to Subsection 8(b) of
the Plan.


 


“Rule 16b-3” shall mean Rule 16b-3 promulgated under the
Exchange Act, or any successor rule.


 


“Section 16 Officers” shall mean any person who is an “officer”
within the meaning of Rule 16a-1(f) promulgated under the Exchange
Act or any successor rule, and who is subject to the reporting requirements
under Section 16 of the Exchange Act with respect to Bank’s Common Stock.


 


“Securities Act” shall mean the Securities Act of 1933, as amended, or
any successor statute, and the rules and regulations issued pursuant to
that statute or any successor statute.


 


“Shares” shall mean the shares of Common Stock of Bank which are the
subject of Options or granted as Awards under the Plan.


 


3.                                       Administration of the Plan. The Board may administer the Plan and/or it
may, in its discretion, designate a committee composed of two or more directors
to operate and administer the Plan with respect to all or a designated portion
of the participants. To the extent that the Committee is empowered to grant
Options to Section 16 Officers or persons whose compensation might have
limits on deductibility under Code Section 162(m), each member of the
Committee designated by the Board shall be a Non-Employee Director. Any such
committee designated by the Board, and the Board itself in its administrative
capacity with respect to the Plan, is referred to as the “Committee.”


 


(a)                                  Meetings. The Committee shall hold meetings at such times and places as it may
determine and shall keep minutes of its meetings. The Committee may take action
only upon the agreement of a majority of the whole Committee. Any action which
the Committee shall take through a written instrument signed by all of its
members shall be as effective as though it had been taken at a meeting duly
called and held.


 


(b)                                 Exculpation. No member of the Committee shall be personally liable for monetary
damages for any action taken or any failure to take any action in connection
with the administration of the Plan or the granting of Options or Awards under
the Plan, unless (i) the member has breached or failed to perform the
duties of such member’s office under Subchapter B of Chapter 17 of the
Pennsylvania Business Corporation Law, and (ii) the breach or failure to
perform constitutes self-dealing, wilful misconduct or


 


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recklessness;
provided, however, that the provisions of this Subsection 3(b) shall not
apply to the responsibility or liability of a member pursuant to any criminal
statute, or to the liability of a member for the payment of taxes pursuant to
local, Pennsylvania or federal law.


 


(c)                                  Indemnification. Service on the Committee shall constitute
service as a member of the Board. Each member of the Committee shall be
entitled, without further act on the member’s part, to indemnity from Bank and
to limitation of liability, to the fullest extent provided by applicable law
and by Bank’s Articles of Association and/or Bylaws, in connection with or
arising out of any action, suit or proceeding with respect to the administration
of the Plan or the granting of Options or Awards thereunder in which the member
may be involved by reason of the member being or having been a member of the
Committee, whether or not the member continues to be a member of the Committee
at the time of the action, suit or proceeding.


 


(d)                                 Interpretation. The Committee shall have the power and
authority to (i) interpret the Plan, (ii) adopt, amend and revoke rules and
regulations for its administration that are not inconsistent with the express
terms of the Plan including, without limitation, rules and interpretations
to determine the number of Shares remaining available for issuance under the
Plan, and (iii) waive requirements relating to formalities or other
matters that do not either modify the substance of the rights intended to be
granted by Options and Awards or constitute a material amendment for any
purpose under the Code. Any such actions by the Committee shall be final,
binding and conclusive on all parties in interest.


 


(e)                                  Amendment of Options and Awards. Subject to the provisions of the Plan, the
Committee shall have the right to amend any Option Document or Award Agreement
issued to an Optionee or Award holder, subject to the Optionee’s or Award
holder’s consent, if such amendment is not favorable to the Optionee or Award
holder or if such amendment has the effect of changing an ISO to a
Non-Qualified Stock Option; provided, however, that the consent of the Optionee
or Award holder shall not be required for any amendment made pursuant to Subsection
8(e)(i)(C) or Section 9 of the Plan, as applicable.


 


4.                                       Grants of Options under the Plan. Grants of Options under the Plan may be in
the form of a Non-qualified Stock Option, an ISO or a combination thereof, at
the discretion of the Committee.


 


5.                                       Eligibility. All Employees, members of the Board and consultants and advisors to
Bank shall be eligible to receive Options and Awards hereunder. Consultants and
advisors shall be eligible only if they render bona fide services to Bank
unrelated to the offer or sale of securities. The Committee, in its sole
discretion, shall determine whether an individual qualifies as an Employee. Notwithstanding
the foregoing, only


 


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individuals
who qualify as employees of Bank or an Affiliate under Treasury Regulations Section 1.421-7(h) shall
be eligible to receive an ISO.


 


6.                                       Shares Subject to Plan. The aggregate maximum number of Shares for
which Awards or Options may be granted pursuant to the Plan is 260,000*. The
number of Shares which may be issued under the Plan shall be subject to
adjustment in accordance with Section 10. The Shares shall be issued from
authorized and unissued Common Stock or Common Stock held in or hereafter
acquired for the treasury of Bank. If an Option terminates or expires without
having been fully exercised for any reason or if Shares subject to an Award
have been conveyed back to Bank pursuant to the terms of an Award Agreement,
the Shares for which the Option was not exercised or the Shares that were
conveyed back to Bank (in either case, as the number of such Shares may have
been adjusted pursuant to Section 10 of the Plan or otherwise) shall again
be available for issuance pursuant to the terms of one or more Options, or one
or more Awards, granted pursuant to the Plan.


 


7.                                       Term of the Plan. The Plan is effective as of August 20,
2001, the date on which it was adopted by the Board. No ISO may be granted
under the Plan after August 19, 2001.


 


8.                                       Option Documents and Terms. Each Option granted under the Plan shall be
a Non-qualified Stock Option unless the Option shall be specifically designated
at the time of grant to be an ISO. If any Option designated an ISO is
determined for any reason not to qualify as an incentive stock option within
the meaning of Section 422 of the Code, such Option shall be treated as a
Non-qualified Stock Option for all purposes under the provisions of the Plan. Options
granted pursuant to the Plan shall be evidenced by the Option Documents in such
form as the Committee shall approve from time to time, which Option Documents
shall comply with and be subject to the following terms and conditions and such
other terms and conditions as the Committee shall require from time to time
which are not inconsistent with the terms of the Plan.


 


(a)                                  Number of Option Shares. Each Option Document shall state the number
of Shares to which it pertains. An Optionee may receive more than one Option,
which may include Options which are intended to be ISOs and Options which are
not intended to be ISOs, but only on the terms and subject to the conditions
and restrictions of the Plan. Notwithstanding anything herein to the contrary,
no Optionee shall be granted Options during one fiscal year of Bank for more
than 35,000 Shares (such number to be subject to adjustment in accordance with Section 10).


 






* As
originally adopted, the aggregate maximum number of Shares for which Awards or
Options may be granted pursuant to the plan equaled 160,000. Bank shareholders
adopted an amendment to the Plan that increased the maximum number of Shares
for which Awards or Options may be granted pursuant to the Plan to 260,000 on
April 21, 2003.


 


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(b)                                 Option Price. Each Option Document shall state the Option
Price, which, for a Non-qualified Stock Option, need not be the Fair Market
Value of the Shares on the date the Option is granted and, for an ISO, shall be
at least 100% of the Fair Market Value of the Shares on the date the Option is
granted, as determined by the Committee in accordance with this Subsection
8(b); provided, however, that if an ISO is granted to an Optionee who then
owns, directly or by attribution under Section 424(d) of the Code, Shares
possessing more than ten percent of the total combined voting power of all
classes of stock of Bank or an Affiliate, then, to the extent required by Section
424(d) of the Code, the Option Price shall be at least 110% of the Fair Market
Value of the Shares on the date the Option is granted. If the Common Stock is
traded in a public market, then the Fair Market Value per Share shall be: (i) if
the Common Stock is listed on a national securities exchange or included in the
NASDAQ System, the last reported sale price thereof on the relevant date, (ii) if
the Common Stock is not so listed or included, the mean between the last
reported “bid” and “asked” prices thereof on the relevant date, as reported on
NASDAQ, or (iii) if not so reported, as reported by the National Daily
Quotation Bureau, Inc. or as reported in a customary financial reporting
service, as applicable and as the Committee determines. If the Common Stock is
not traded in a public market, then the Fair Market Value per Share shall be
determined in good faith by the Committee in accordance with Section 422(c)(1) of
the Code and the rules and principles of valuation set forth in Treasury
Regulations Section 20.2031-2(f) relating to the valuation of stocks and
bonds not actively traded. Subject to the foregoing, the Committee shall have
full authority and discretion and may rely on the opinion of a qualified
business valuation consultant.


 


(c)                                  Exercise. No Option shall be deemed to have been exercised prior to the receipt
by Bank of written notice of such exercise and, unless arrangements
satisfactory to Bank have been made for payment through a broker in accordance
with procedures permitted by rules or regulations of the Federal Reserve
Board, receipt of payment in full of the Option Price for the Shares to be
purchased. Each such notice shall specify the number of Shares to be purchased
and contain such other information as the Committee may require.


 


(d)                                 Medium of Payment. Subject to the terms of the applicable
Option Document, an Optionee shall pay for Shares (i) in cash, (ii) by
certified or cashier’s check payable to the order of Bank, or (iii) by
such other mode of payment as the Committee may approve, including, without
limitation, the Optionee’s note in form approved by the Committee and payment
through a broker in accordance with procedures permitted by rules or
regulations of the Federal Reserve Board.


 


(e)                                  Termination of Options.


 


(i)                                     No Option shall be exercisable after the
first to occur of the following:


 


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(A)                              Expiration of the Option term specified in the
Option Document, which, in the case of an ISO, shall not occur after (1) ten
years from the date of grant, or (2) five years from the date of grant if
the Optionee on the date of grant owns, directly or by attribution under Section 424(d) of
the Code, shares possessing more than ten percent of the total combined voting
power of all classes of stock of Bank or of an Affiliate;


 


(B)                                Except to the extent otherwise provided in an
Optionee’s Option Document, a finding by the Committee, after full consideration
of the facts presented on behalf of both Bank and the Optionee, that the
Optionee has been engaged in disloyalty to Bank or an Affiliate, including,
without limitation, fraud, embezzlement, theft, commission of a felony or
proven dishonesty in the course of employment or service, or has disclosed
trade secrets or confidential information of Bank or an Affiliate. In such
event, in addition to immediate termination of the Option, the Optionee shall
automatically forfeit all Shares for which Bank has not yet delivered the share
certificates upon refund by Bank of the Option Price. Notwithstanding anything
herein to the contrary, Bank may withhold delivery of share certificates
pending the resolution of any inquiry that could lead to a finding resulting in
a forfeiture;


 


(C)                                The date, if any, set by the Committee as an
accelerated expiration date in the event of the liquidation or dissolution of
Bank;


 


(D)                               The occurrence of such other event or events
as may be set forth in the Plan or the Option Document as causing an
accelerated expiration of the Option; or


 


(E)                                 Except as otherwise set forth in the Option
Document and subject to the foregoing provisions of this Subsection 8(e),
immediately upon termination of the Optionee’s employment or service with Bank
or its Affiliates for any reason other than Disability or death or six months
after such termination due to Optionee’s Disability or death. With respect to
this Subsection 8(e)(i)(E), the only Options that may be exercised during the
six-month period are Options which were exercisable on the last date of such
employment or service and not Options which, if the Optionee were still
employed or rendering service during such six-month period, would become
exercisable, unless the Option Document specifically provides to the contrary
or the Committee otherwise approves. The terms of an executive severance
agreement or other agreement between Bank and an Optionee, approved by the
Committee or the Board, whether entered into prior or subsequent to the grant
of an Option, which provide for Option exercise dates later than those set
forth in Subsection 8(e)(i) shall be deemed to be Option terms approved by
the Committee and consented to by the Optionee.


 


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(ii)                                  Notwithstanding
the foregoing, the Committee may extend the period during which all or any
portion of an Option may be exercised, provided that any change pursuant to
this Subsection 8(e)(ii) which would cause an ISO to become a
Non-qualified Stock Option may be made only with the consent of the Optionee.


 


(iii)                               Notwithstanding anything to the contrary
contained in the Plan or an Option Document, an ISO shall be treated as a
Non-qualified Stock Option to the extent such ISO is exercised at any time after
the expiration of the time period permitted under the Code for the exercise of
an ISO.


 


(f)                                    Transfers. Except as otherwise provided in this Subsection 8(f), no Option
granted under the Plan may be transferred, except by will or by the laws of
descent and distribution, and, during the lifetime of the person to whom an
Option is granted, such Option may be exercised only by the Optionee. Notwithstanding
the foregoing, an Option, other than an ISO, shall be transferable pursuant to
a “domestic relations order” as defined in the Code or Title I of the Employee
Retirement Income Security Act, or the rules thereunder, and also shall be
transferable, without payment of consideration, to (i) immediate family
members of the holder (i.e.,
spouse or former spouse, parents, issue, including adopted and “step” issue, or
siblings), (ii) trusts for the benefit of immediate family members, (iii) partnerships
whose only partners are such family members, and (iv) to any transferee
permitted by a rule adopted by the Committee or approved by the Committee
in an individual case. Any transferee will be subject to all of the conditions
set forth in the Option prior to its transfer.


 


(g)                                 Limitation on ISO Grants. To the extent that the aggregate Fair
Market Value of the Shares of Common Stock (determined at the time the ISO is
granted) with respect to which ISOs under all incentive stock option plans of
Bank or its Affiliates are exercisable for the first time by the Optionee
during any calendar year exceeds $100,000, such ISOs shall, to the extent of
such excess, be treated as Non-qualified Stock Options.


 


(h)                                 Other Provisions. Subject to the provisions of the Plan, the
Option Document shall contain such other provisions, including, without
limitation, provisions authorizing the Committee to accelerate the
exercisability of all or any portion of an Option granted pursuant to the Plan,
additional restrictions upon the exercise of the Option or additional
limitations upon the term of the Option, as the Committee deems advisable.


 


9.                                       Change of Control. In the event of a Change of Control, the
Committee may take whatever actions it deems necessary or desirable with
respect to any of the Options outstanding or Award Shares not yet fully vested
or paid for, all of which need not be treated identically, including, without
limitation, accelerating (a) the expiration or termination date in the
respective Option Documents to a date no earlier than 30 days


 


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after
notice of such acceleration is given to the Optionees, or (b) the
exercisability of the Option. Notwithstanding the foregoing, in the event of a
Change of Control, Options granted pursuant to the Plan will become
automatically exercisable in full.


 


A “Change of Control” shall be deemed to have occurred upon the
earliest to occur of any of the following events, each of which shall be
determined independently of the others:


 


(i)                                     any Person (as defined below) becomes a “beneficial
owner,” as such term is used in Rule 13d-3 promulgated under the Exchange
Act, of fifty percent or more (as determined by the Committee) of Bank’s stock
entitled to vote in the election of directors. For purposes of the Plan, the
term “Person” is used as such term is used in Sections 13(d) and 14(d) of
the Exchange Act; provided, however, that, unless the Committee determines to
the contrary, the term shall not include Bank, any trustee or other fiduciary
holding securities under an employee benefit plan of Bank, or any corporation
owned, directly or indirectly, by the shareholders of Bank in substantially the
same proportions as their ownership of stock of Bank;


 


(ii)                                  individuals who are Continuing Directors
cease to constitute a majority of the members of the Board (“Continuing
Directors” for this purpose being the members of the Board on the date of
adoption of the Plan, provided that any person becoming a member of the Board
subsequent to such date whose election or nomination for election was supported
by two-thirds of the directors who then comprised the Continuing Directors
shall be considered to be a Continuing Director);


 


(iii)                               shareholders of Bank adopt a plan of complete
or substantial liquidation or an agreement providing for the distribution
of all or substantially all of its assets;


 


(iv)                              Bank is party to a merger, consolidation,
other form of business combination or a sale of all or substantially all of its
assets, unless the business of Bank is continued following any such transaction
by a resulting entity (which may be, but need not be, Bank) and the
shareholders of Bank immediately prior to such transaction (the “Prior
Shareholders”) hold, directly or indirectly, at least two-thirds of the voting
power of the resulting entity (there being excluded from the voting power held
by the Prior Shareholders, but not from the total voting power of the resulting
entity, any voting power received by Affiliates of a party to the transaction
(other than Bank) in their capacities as shareholders of Bank);


 


(v)                                 there is a Change of Control of Bank of a
nature that would be required to be reported in response to item 1(a) of
Current Report on Form 8-K or item 6(e) of Schedule 14A of Regulation
14A or any similar item, schedule or form under the Exchange Act, as in effect
at the time of the change, whether or not Bank is then subject to such
reporting requirement;


 


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(vi)                              the Bank is a subject of a “Rule 13e-3
transaction” as that term is defined in Exchange Act Rule 13e-3; or


 


(vii)                           there has occurred a “change of control,” as
such term (or any term of like import) is defined in any of the following
documents which is in effect with respect to Bank at the time in question:  any note, evidence of indebtedness or
agreement to lend funds to Bank, any option, incentive or employee benefit plan
of Bank or any employment, severance, termination or similar agreement with any
person who is then an employee of Bank.


 


10.                                 Adjustments on Changes in Capitalization.


 


(a)                                  In the event that the outstanding Shares are
changed by reason of a reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination or exchange of Shares and the
like (not including the issuance of Common Stock on the conversion of other
securities of Bank which are convertible into Common Stock) or dividends
payable in Shares, an equitable adjustment may be made by the Committee as it
deems appropriate in the aggregate number of Shares available under the Plan
and in the number of Shares and price per Share subject to outstanding Options.
Unless the Committee makes other provisions for the equitable settlement of
outstanding Options, if Bank shall be reorganized, consolidated, or merged with
another corporation, or if all or substantially all of the assets of Bank shall
be sold or exchanged, an Optionee shall at the time of issuance of the stock
under such corporate event be entitled to receive, upon the exercise of his or
her Option, the same number and kind of Shares of stock or the same amount of
property, cash or securities as the Optionee would have been entitled to
receive upon the occurrence of any such corporate event as if the Optionee had
been, immediately prior to such event, the holder of the number of Shares
covered by his or her Option.


 


(b)                                 Any adjustment under this Section 10 in
the number of Shares subject to Options shall apply proportionately to only the
unexercised portion of any Option granted hereunder. If a fraction of a Share
would result from any such adjustment, the fraction shall be eliminated, unless
the Committee otherwise determines.


 


(c)                                  The Committee shall have authority to
determine the adjustments to be made under this Section 10, and any such
determination by the Committee shall be final, binding and conclusive.


 


11.                                 Terms and Conditions of Awards. Awards granted pursuant to the Plan shall
be evidenced by written Award Agreements in such form as the Committee shall
approve from time to time, which Award Agreements shall comply with and be
subject to the following terms and conditions and such other terms and
conditions which the


 


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Committee
shall require from time to time which are not inconsistent with the terms of
the Plan.


 


(a)                                  Number of Shares. Each Award Agreement shall state the number
of Shares or other units or rights to which it pertains.


 


(b)                                 Purchase Price. Each Award Agreement shall specify the
purchase price, if any, which applies to the Award. If the Board specifies a
purchase price, the Grantee shall be required to make payment on or before the
payment date specified in the Award Agreement. A Grantee shall make payment (i) in
cash, (ii) by certified check payable to the order of Bank, or (iii) by
such other mode of payment as the Committee may approve.


 


(c)                                  Grant. In the case of an Award which provides for a grant of Shares without
any payment by the Grantee, the grant shall take place on the date specified in
the Award Agreement. In the case of an Award which provides for a payment, the
grant shall take place on the date the initial payment is delivered to Bank,
unless the Committee or the Award Agreement otherwise specifies. Notwithstanding
the foregoing, as a precondition to a grant, Bank may require an acknowledgment
by the Grantee as required with respect to Options under Subsection 8(c).


 


(d)                                 Conditions. The Committee may specify in an Award Agreement any conditions under
which the Grantee of that Award shall be required to convey to Bank the Shares
covered by the Award. Upon the occurrence of any such specified condition, the
Grantee shall forthwith surrender and deliver to Bank the certificates
evidencing such Shares as well as completely executed instruments of conveyance.
The Committee, in its discretion, may provide that certificates for Shares
transferred pursuant to an Award be held in escrow by Bank or its designee
until such time as every condition has lapsed and that the Grantee be required,
as a condition of the Award, to deliver to such escrow agent or Bank officer
stock transfer powers covering the Award Shares duly endorsed by the Grantee. Unless
otherwise provided in the Award Agreement or determined by the Committee,
dividends and other distributions made on Shares held in escrow shall be
deposited in escrow, to be distributed to the party becoming entitled to the
Shares on which the distribution was made. Stock certificates evidencing Shares
subject to conditions shall bear a legend to the effect that the Shares
evidenced thereby are subject to repurchase by, or conveyance to, Bank in
accordance with the terms applicable to such Shares under an Award made
pursuant to the Plan, and that the Shares may not be sold or otherwise
transferred.


 


(e)                                  Lapse of Conditions. Upon termination or lapse of all forfeiture
conditions, Bank shall cause certificates without the legend referring to Bank’s
repurchase or acquisition right (but with any other legends that may be
appropriate) evidencing the


 


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Shares
covered by the Award to be issued to the Grantee upon the Grantee’s surrender
to Bank of the legended certificates held by the Grantee.


 


(f)                                    Rights as Shareholder. Upon payment of the purchase price, if any,
for Shares covered by an Award and compliance with the acknowledgment
requirement of Subsection 11(c), the Grantee shall have all of the rights of a
shareholder with respect to the Shares covered thereby, including the right to
vote the Shares and (subject to the provisions of Subsection 11(d)) receive all
dividends and other distributions paid or made with respect thereto, except to
the extent otherwise provided by the Committee or in the Award Agreement.


 


12.                                 Amendment of the Plan. The Board may amend the Plan from time to
time in such manner as it may deem advisable. Nevertheless, the Board may not
change the class of persons eligible to receive an ISO or increase the maximum
number of Shares as to which Options may be granted under the Plan, or to any
individual under the Plan in any year, without obtaining approval, within
twelve months before or after such action, by the shareholders in the manner
required by state law. No amendment to the Plan shall adversely affect any
outstanding Option or Award, however, without the consent of the Optionee or
Grantee, as the case may be.


 


13.                                 No Commitment to Retain. The grant of an Option or Award pursuant to
the Plan shall not be construed to imply or to constitute evidence of any
agreement, express or implied, on the part of Bank or any Affiliate to retain
the Optionee or Grantee as an employee, director, consultant or advisor of Bank
or any Affiliate, or in any other capacity.


 


14.                                 Withholding of Taxes. In connection with any event relating to an
Option or Award, Bank shall have the right to (a) require the recipient to
remit or otherwise make available to Bank an amount sufficient to satisfy any
federal, state and/or local withholding tax requirements prior to the delivery
or transfer of any certificates for such Shares, or (b) take whatever
other action it deems necessary to protect its interests with respect to tax
liabilities, including, without limitation, withholding any Shares, funds or
other property otherwise due to the Optionee or Grantee. The Bank’s obligations
under the Plan shall be conditioned on the Optionee’s or Grantee’s compliance,
to Bank’s satisfaction, with any withholding requirement.


 


15.                                 Forfeiture of Rights. Notwithstanding anything to the contrary
contained in the Plan or any Option Document or Award Agreement, if directed to
do so by Bank’s primary federal regulator in the event that Bank’s capital
falls below certain minimum requirements, Bank will notify all Optionees and
Award holders that they must exercise all of their rights under such documents
within 30 days after receipt of such notice (or such longer or shorter period
as such regulator may prescribe) or forfeit such rights after


 


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the
expiration of such period. To the extent not timely exercised prior to the
expiration of such period, all such rights shall become void.


 


16.                                 Governing Law. The validity, construction, interpretation
and effect of the Plan shall be governed exclusively by and determined in
accordance with the law of the Commonwealth of Pennsylvania, except to the
extent preempted by federal law, which under such circumstances shall govern.


 


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