EXHIBIT 4.2
Form of Stock Option Agreement to be entered into with respect to
Incentive Stock Options
NORWOOD FINANCIAL CORP. STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
Incentive Stock Option Agreement made this _____ day of _______, 199__
between Norwood Financial Corp. (Norwood) and ________(Employee).
WHEREAS, Wayne desires to afford the Employee an Opportunity to
purchase shares of common stock of Wayne (Common Stock) as hereinafter provided,
in accordance with the provisions of the Norwood Financial Corp. Stock Option
Plan (Plan), a copy of which is attached.
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto,
intending to legally bound hereunder, agree as follows:
1. Grant of Option. Wayne hereby grants to the employee the right and
option (Option) to purchase all or any part of an aggregate of shares of ______
Common Stock. The Option is in all respects limited and conditioned, as
hereinafter provided, and is subject in all respects to the Plan's terms and
conditions, which are incorporated herein by reference and are made a part
hereof.
2. Purchase Price. The purchase price of the share of Common Stock
covered by the Option shall be $ . The date of this Option Agreement is the date
of grant of the Option and it is the determination of the Committee that on this
date the fair market value of said Common Stock was not greater than the Option
price above stated.
3. Term. This Option shall expire on _________, which date is not less
than one nor more than (i) ten years from the date of grant if the Employee does
not own more than 1O% of the combined voting power of all the shares of stock of
Wayne or any subsidiary on the date of grant, or (ii) five years from the date
of grant if the Employee owns more than 10% of the combined voting power of all
the shares of stock of Wayne or any subsidiary on the date of grant.
4. Exercise of Option. This Option may not be exercised earlier than
one year from the date of grant. Thereafter this Option may be exercised in
whole or in part, subject to the provisions of Paragraph 3.
5. Methods of Exercising Option. Subject to the terms and conditions of
this Option Agreement, the Option may be exercised by written notice to Wayne,
at its principal office, which is located at 717 Main Street, Honesdale,
Pennsylvania 18431. Such notice shall state the election to exercise the Option
and the number of shares with respect to which it is being exercised; shall be
signed by the person or persons exercising the Option; and shall be accompanied
by the payment of the full purchase price of such shares. The purchase price
shall be paid in cash or its equivalent, or, in whole or in part through the
transfer of shares of
Common Stock previously acquired by Employee, provided that if such shares of
Common Stock were acquired through the exercise of an incentive stock option,
such shares were held by the Employee for a period not less than the holding
period described in section 422A(a)(1) of the Code and if such shares were
acquired through the exercise of nonqualified stock option, such shares of
Common Stock have been held by Employee for more than one year. Upon receipt of
such notice and payment, Wayne shall deliver a certificate or certificates
representing the shares with respect to which the Option is so exercised. The
certificate or certificates for the shares as to which the Option shall have
been so exercised shall be registered in the name of the person or persons so
exercising the Option (or, if the Option shall be exercised by the Employee and
if the Employee shall so request in the notice exercising the Option, shall be
registered in the name of the Employee and his spouse, jointly, with the right
of survivorship) and shall be delivered as provided above to, or upon the
written order of, the person or persons exercising the Option. In the event the
Option shall be exercised by any person or persons after the death of the
Employee, such notice shall be accompanied by appropriate proof of the right of
such person or persons to exercise the Option. All shares that shall be
purchased upon the exercise of the Option as provided herein shall be fully paid
and non-assessable.
6. Shares to be Purchased for Investment. Unless Wayne has theretofore
notified the Employee that a registration statement covering the shares to be
acquired upon the exercise of the Option has become effective under the
Securities Act of 1933 and Wayne has not thereafter notified the Employee that
such registration statement is no longer effective, it shall be a condition to
any exercise of this Option that the shares acquired upon such exercise be
acquired for investment and not with a view to distribution, and the person
effecting such exercise shall submit to Wayne a certificate of such investment
intent, together with such other evidence supporting the same as Wayne may
request. Wayne shall be entitled to restrict the transferability of the shares
issued upon any such exercise to the extent necessary to avoid a risk of
violation of the Securities Act of 1933 or of any rules or regulations
promulgated thereunder. Such registrations may, at the option of Wayne, be noted
or set forth in full on the share certificates.
7. Non-Transferability of Option. This Option is not transferable by
Employee otherwise than by will or by the laws of descent and distribution, and
during the lifetime of the Employee, the Option shall be exercisable only by
Employee.
8. Termination of Employment. If Employee's employment with Wayne and
all subsidiary corporations is terminated for any reason other than death or
disability, this Option shall be exercisable at any time prior to the earlier of
the expiration date set forth in Paragraph 3 or three months after the date of
termination, but only to the extent of the accrued right to purchase Common
Stock at the date of such termination.
9. Death. If Employee dies during his employment and prior to the
expiration of this Option as set forth in Paragraph 3, this Option may be
exercised, but only to the extent of the accrued right to purchase Common Stock
at the date of death by Employee's estate, personal representative or
beneficiary who acquired the right to exercise the Option by bequest or
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inheritance or by reason of Employee's death, at any time prior the earlier of
two years following the Employee's death or the expiration date set forth in
Paragraph 3.
10. Disability. If Employee becomes disabled, as defined in the Plan,
during his employment and, prior to the expiration date of the Option as set
forth in Paragraph 3, Employee's employment is terminated as a consequence of
such disability, this Option shall be exercisable by Employee at any time prior
to the earlier of one year following the Employee's termination of employment by
reason of disability or the expiration date specified in Paragraph 3, but only
to the extent of the accrued right to purchase Common Stock at the date of such
termination.
11. Miscellaneous.
(a) The invalidity or unenforceability of any particular provision of
this Agreement shall not affect the other provisions hereof, and the Agreement
shall be construed in all respects as if such invalid or unenforceable provision
were omitted.
(b) No change or modification of this Agreement shall be valid unless
the same be in writing and signed by the party against whom the said
modification is to be enforced.
(c) This agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, Wayne has caused this Incentive Option Agreement to
be duly executed by its officers thereunto duly authorized, and the Employee has
hereunto set his hand and seal, all on the day and year first above written.
ATTEST NORWOOD FINANCIAL CORP.
(Corporate seal)
_____________________ By:________________________________
Pauline A. Kovatch William W. Davis, Jr.
Assistant Secretary President and CEO
________________________________
Employee
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NORWOOD FINANCIAL CORP. STOCK OPTION PLAN
NOTICE OF EXERCISE OF GRANTED OPTIONS
Pursuant to the Incentive Stock Option Agreement (the "Agreement")
entered into on the day of , 199__ between Norwood Financial Corp. (Norwood) and
(Employee), notice is hereby given of my election to purchase _________________
shares at per share as granted to me under the Agreement (copy attached).
Accompanying this notice is payment of $___________ which represents the full
purchase price of the shares covered by this election.
_____ In accordance with Paragraph 5 of the Agreement, I request that the
shares be registered in my name.
_____ In accordance with Paragraph 5 of the Agreement, I request that the
shares be registered in joint name, with right of survivorship, with my
spouse, ________________________.
________________________________
Employee
________________________________
Date
Check one of the following:
_____ This exercise represents the total shares granted to me under the
above Agreement.
_____ This exercise represents _____ shares of the total share granted to me
under the above Agreement. I have _____ shares remaining that I may
exercise within the period covered by the Agreement.