STOCK OPTION CANCELLATION AGREEMENT
Exhibit
(a)(3)
If you wish to exercise your cash
election right described in the Notice Letter dated October 16, 2007 and in
the
Additional Information Regarding the Cash Election, please complete, sign and
return this Stock Option Cancellation Agreement along with the attached Optionee
Statement (with all or some Grant Dates checked) in the enclosed return
envelope, or by mail or courier, to Community Banks, Inc., Xxxxxxx Xxxxxxx,
Senior Vice President, Director of Human Resources, 000 Xxxx Xxxx Xxxxx,
Xxxxxxxxxx, XX 00000. To be effective, this form must be received by
Community before 5:00 p.m., Harrisburg, Pennsylvania time, on November 14,
2007.
If you do not wish to exercise your cash election right, you do not need
to return this form.
To calculate an estimated cash value, using
your Optionee Statement, do the following:
(1) For each Grant Date on your Optionee Statement, multiply your
number of outstanding options by $34.00. (Disregard the column
designated “Granted or Transferred To” as well as the column designated
“Exercisable.” All outstanding options, even those that are not yet vested, are
included in the cash election right.
(2) For each Grant Date on your Optionee
Statement, multiply the outstanding options by the associated Xxxxx Xxxxx.
(3) Subtract the number calculated in (2) above from the number
calculated in (1) above in order to arrive at your cash value for each Grant
Date.
You must perform this calculation separately
for each Grant Date and add the estimated cash values for each Grant Date
together because the Xxxxx Xxxxx differs for each Grant Date.
AGREEMENT
By signing and returning this Stock Option
Cancellation Agreement, along with the attached Optionee Statement (with all
or
some Grant Dates checked), you hereby acknowledge and agree to the following,
intending to be legally bound:
1.
I hereby elect to exercise
my cash election right as described in the letter to
Community option holders dated October 16, 2007 from Community (and the
accompanying materials) with respect to the options to purchase shares of common
stock of Community, par value $5.00 per share, which have been granted to me
pursuant to Community’s stock option plans on the Grant Date(s) checked on the
attached Optionee Statement. I understand that signing and returning this
form, along with the attached Optionee Statement, is my agreement to the terms
and conditions specified in those documents and authorizes the cancellation
of
all such selected options in exchange for cash, if the exercise price of the
option is less than or equal to $34.00. I understand that if I exercise my
cash
election right for certain options and the exercise price for those particular
options exceeds $34.00, the election with respect to those particular options
will not be recognized, and those options will be converted into Susquehanna
options notwithstanding my election.
2.
I acknowledge that
Community has advised me to consult with my own legal,
financial and accounting advisors as to the consequences of making, or not
making, this cash election. I agree that, with respect to all options
granted to me for which the cash election is made and accepted, payment in
connection with the cancellation of such options will automatically terminate
my
option agreement with respect to such options.
3.
I hereby represent and warrant that I have full right, power and authority
to
make the cash election with respect to my outstanding Community options and
that
those options are free and clear of all security interests, liens, restrictions,
charges, encumbrances, conditional sales agreements or other restrictions or
obligations relating to the sale or transfer thereof, and the same are not
subject to any adverse claims. By
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signing
this election form, I agree upon request to execute and deliver any additional
documents or instruments deemed by Community to be necessary or desirable to
complete the cancellation of my options.
4.
Please insert a check xxxx next to the Grant Date(s) on the attached Optionee
Statement to indicate the Community option grant(s) for which you would like
to
accept the cash election right. By checking the respective Grant Date(s)
on the attached Optionee Statement, I hereby accept my cash election right
with
respect to all of my outstanding Community options granted on the Grant Date(s)
checked.
5.
I agree that the method of delivery of this Stock Option Cancellation Agreement
and accompanying Optionee Statement is at my option and risk and that the
delivery will be deemed made only when actually received by Community
Banks, Inc., Xxxxxxx Xxxxxxx, Senior Vice President, Director of Human
Resources, 000 Xxxx Xxxx Xxxxx, Xxxxxxxxxx, XX 00000. I
acknowledge that sufficient time must be allowed to ensure timely delivery.
6.
I agree that all questions as to the validity, form and eligibility of any
election to accept the cash election right shall be determined by Community,
and
such determination shall be final and binding.
Date:
Signature of Option Holder
Please sign exactly as your name
appears on the attached Optionee Statement evidencing your Community
options.
Name:
(Please
Print)
Address:
(Zip/Postal
Code)
Area Code and Telephone Number:
Tax Identification or Social Security Number:
Please specify the percent you wish withheld
from the cash amount due you. If you do not specify a percent, 25% of the
cash amount will be withheld for federal taxes. Please note that you may
be subject to a penalty by the Internal Revenue Service if you do not pay
sufficient tax through withholdings or estimated payments.
_____________ % to be withheld
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