Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS
AGREEMENT
is made as of the 17th day of September, 2015, between CODORUS VALLEY BANCORP, INC., a Pennsylvania business
corporation (the “Corporation”), PEOPLESBANK, A Codorus Valley Company (the
“
Bank
”
)
and A. Dwight Utz (the “Executive”), an adult individual.
WITNESSETH:
WHEREAS,
the Corporation
,
the Bank and the Executive desire to
enter into an Employment Agreement regarding, among other things, the employment of the Executive by the Corporation and the Bank
as Executive Vice President and Chief Operating Officer of the Corporation and the Bank.
AGREEMENT:
NOW,
THEREFORE
,
in consideration of the mutual covenants and
agreements set forth herein, the parties hereto, intending to be legally bound, agree as follows:
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1.
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Employment
.
The Corporation and
the
Bank each hereby employ Executive and Executive hereby accepts employment with the Corporation
and the Bank, under the terms and conditions set forth in this Agreement.
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2.
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Duties
of Employee
.
Executive shall perform and discharge well and faithfully
such duties as an executive officer of the Corporation and the Bank as may be assigned
to Executive from time to time by the Chairman of the Board of the Corporation and/or
the Bank. Executive shall be appointed as a member of the Board of Directors of the Bank
and shall be employed as Executive Vice President and Chief Operating Officer of Corporation
and the Bank, and shall hold such other titles as may be given to him from time to time
by the Board of Directors of the Corporation or the Bank. Executive shall devote his
full time, attention, ability and energies to the business of the Corporation and the
Bank during the Employment Period (as defined in Section 3 of this Agreement); provided,
however, that this Section 2 shall not be construed as preventing Executive from (a)
engaging in activities incident or necessary to personal investments so long as it does
not exceed 5% of the outstanding shares of any publicly held company, (b) acting as a
member of the Board of Directors of any non-profit association or corporation or as a
member of the Board of Directors or Trustees of any other such organization, with the
prior written approval of the Audit Committee of the Board of Directors of the Bank,
or (c) being involved in any other activity with the prior written approval of the Board
of Directors of the Bank. The Executive shall not engage in any business or commercial
activities (including investment in an existing or prospective customer), duties or pursuits
which compete with the business or commercial activities of the Corporation or the Bank,
or their respective subsidiaries nor may the Executive serve as a director or officer
or in any other capacity in a company which competes with the Corporation, the Bank or
their respective subsidiaries.
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(a)
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The Corporation and the Bank hereby shall employ the Executive and
the Executive hereby accepts employment with the Corporation and the Bank for a term of two years (the
“
Employment
Period”), beginning on September 17, 2015, and ending September 17, 2017 subject, however, to prior termination of this Agreement
as set forth below. Unless written notice of nonrenewal is given by May 31st of 2017 and by May 31st of each successive calendar
year thereafter, the Employment Period shall be automatically extended an additional twelve months.
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(b)
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Notwithstanding the provisions of Section 3(a) of this Agreement,
this Agreement shall terminate automatically for Cause (as defined herein and as determined by the Bank in its reasonable discretion)
upon written notice from the Chairman of the Board of the Corporation and/or the Bank to Executive. As used in this Agreement,
“Cause” shall mean any of the following:
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(i)
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Executive’s conviction of or plea of guilty or nolo contendere to a felony, a crime of falsehood
or a crime involving moral turpitude, or the actual incarceration of Executive for a period of thirty (30) consecutive days or
more;
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(ii)
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Executive’s failure to follow the good faith, lawful instructions
of the Chairman of the Board of the Corporation and/or the Bank following written notice of such instructions;
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(iii)
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Executive’s failure to substantially perform Executive’s duties to
the Corporation or the Bank, other than a failure resulting from Executive’s incapacity because of physical or mental illness,
as provided in subsection (e) of this Section 3, which failure results in injury to the Corporation or the Bank, monetarily or
otherwise;
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(iv)
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Executive’s intentional violation of the provisions of this Agreement;
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(v)
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dishonesty or gross negligence of the Executive in the performance
of his duties;
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(vi)
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conduct on the part of the Executive bringing public discredit to
the Corporation or the Bank;
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(vii)
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Executive’s breach of fiduciary
duty involving personal profit;
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(viii)
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Executive’s material violation
of Corporation or Bank policies and procedures; and
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(ix)
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Executive’s violation of any law, rule or regulation governing Banks
or Bank officers or any final cease and desist order issued by a Bank regulatory authority, any of which materially jeopardizes
the business of the Corporation or the Bank.
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If this Agreement is terminated for Cause,
all of Executive’s rights under this Agreement shall cease as of the effective date of such termination.
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(c)
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Notwithstanding the provisions of Section 3(a) of this Agreement,
this Agreement shall terminate automatically upon Executive’s voluntary termination of employment (other than in accordance with
Section 5 of this Agreement) for Good Reason. The term “Good Reason” shall mean any of the following without the Executive’s
consent:
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(i)
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Any material reduction in title or a material reduction in the Executive’s
responsibilities or authority which are inconsistent with, or the assignment to the Executive of duties inconsistent with, the
Executive’s status as Executive Vice President and Chief Operating Officer of the Corporation and the Bank;
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(ii)
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Any geographical reassignment of the Executive which, in the exercise
of his reasonable discretion, necessitates that the Executive move his principal residence more than fifty (50) miles from his
current office or requires Executive to commute more than fifty (50) miles one way from his current office;
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(iii)
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Any material reduction in the Executive’s Annual Base Salary
as in effect on the date hereof or as the same may be increased from time to time; and
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(iv)
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Any other action or inaction that constitutes a material breach of
this Agreement on the part of the Bank;
provided, however
, that “Good Reason” shall not be deemed to exist unless:
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(A) the Executive
has provided notice in writing (the “Notice of Termination”) to the Bank of the existence if one or more of the conditions
listed in (i) through (iv) above within 90 days after the initial occurrence of such condition or conditions;
(B) such condition
or conditions have not been cured by the Bank within 30 days after receipt of such Notice of Termination; and
(C) the Executive
actually terminates his employment with the Bank within 60 days after the Executive’s receipt of such Notice of Termination.
If such termination occurs for Good Reason,
then Bank shall pay Executive an amount equal to the greater of 1.0 times the Executive’s Annual Base Salary or the remainder of
the Executive’s Annual Base Salary for the remaining term of the Agreement as defined in Section 4(a) and, in each case, the continuation
of employee benefits for one year, subject to the Bank’s receipt of a release agreement executed by the Executive and acceptable
to the Bank. Said amount shall be payable in equal monthly installments over a term equal to the term for which Executive is being
paid, i.e., twelve (12) to twenty-four (24) months and shall be subject to federal, state and local tax withholdings.
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(d)
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Notwithstanding the provisions of Section 3(a) of this Agreement, this Agreement shall terminate
automatically upon Executive’s death and Executive’s rights under this Agreement shall cease as of the date of such termination.
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(e)
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Executive and Bank agree that if Executive becomes Disabled, within the meaning of Section 409A
of the Internal Revenue Code of 1986 as amended (the “Code”), and the regulations thereunder, and becomes eligible for
employer-provided short-term and/or long-term disability benefits, or worker’s compensation benefits, then the Bank’s obligation
to pay Executive his Annual Base Salary shall be reduced by the amount of the disability or worker’s compensation benefits received
by Executive.
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Executive and Bank agree that if, in the judgment
of the Bank’s Board of Directors, the Executive is unable, as a result of illness or injury, to perform the essential functions
of his position on a full-time basis with or without a reasonable accommodation and without posing a direct threat to himself or
others for a period of six months, the Bank will suffer an undue hardship in continuing the Executive’s employment as set forth
in this Agreement. Accordingly, this Agreement shall terminate at the end of the six-month period, and all of Executive’s rights
under this Agreement shall cease, with the exception of those rights which Executive may have under the Bank’s benefit plans.
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(f)
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Executive agrees that in the event his employment under this Agreement is terminated for any reason,
Executive shall resign as a director of the Bank, the Corporation or any affiliate or subsidiary thereof, if he is then serving
as a director of any of such entities.
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4.
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Employment
Period Compensation
.
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(a)
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Annual Base Salary
. For services performed by Executive under
this Agreement, the Bank shall pay Executive an Annual Base Salary during the Employment Period at the rate of three hundred fifty
thousand dollars ($350,000) per year, minus applicable withholdings and deductions, payable at the same times as salaries are payable
to other executive employees of the Bank. The Bank may, from time to time, increase Executive’s Annual Base Salary, and any and
all such increases shall be deemed to constitute amendments to this Section 4(a) to reflect the increased amounts, effective as
of the date established for such increases by the Board of Directors of the Bank or any committee of such Board of Directors in
the resolutions authorizing such increases.
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(b)
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Vacation, Holidays, Sick Days and Personal Days
. The Executive
shall be entitled to the number of paid vacation days in each calendar year determined by the Bank from time to time for its senior
executive officers, but not less than Five (5) weeks in any calendar year (prorated in any calendar year during which the Executive
is employed hereunder for less than the entire such year in accordance with the number of days in such calendar year during which
he is so employed). The Executive shall also be entitled to all paid holidays, sick days and personal days given by the Bank to
its employees.
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(c)
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Employee Benefit Plans
. During the term of this Agreement, Executive shall be entitled to
participate in or receive the benefits of any employee benefit plan currently in effect at the Bank, subject to the terms of said
plan, until such time that the Board of Directors of the Bank authorizes a change in such benefits.
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(d)
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Automobile
. During the term of this Agreement, the Bank shall
provide Executive with exclusive use of an automobile. Bank shall be responsible for and pay all costs of insurance coverage, repairs,
maintenance and other incidental expenses, including license. A vehicle is provided for Executive’s use as a Bank employee and,
therefore, may only be driven by Executive or other Bank employees.
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(e)
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Business Expenses
. During the term of this Agreement, Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by him, which are properly accounted for,
in accordance with the policies and procedures established by the Board of Directors of the Bank for its executive officers.
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(f)
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Membership Dues.
While serving as Executive Vice President
and Chief Operating Officer of the Corporation and the Bank, Executive shall be reimbursed for initiation fees and membership dues
to a country club (or similar establishment located within the Bank’s market area and as agreed to by the Chairman of the Board)
along with reasonable club expenses incurred during the conduct of Bank or Corporation business.
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(g)
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Bonus
. The Board of Directors of the Bank, in its sole discretion, may provide for payment
of a periodic bonus to the Executive in such amount or nature as the Board deems appropriate to provide incentive to the Executive
and to reward Executive for his performance.
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(h)
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Stock Compensation Plans
. The Executive also shall be eligible during the term of this Agreement
for grants or awards of stock options or restricted stock pursuant to the Corporation’s stock based incentive plans which shall
be consistent with grants or awards to other senior officers generally.
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(i)
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Director Fees
. The Executive shall not be entitled to director’s fees or other compensation
for services as a director of the Bank or the Corporation or for services as a member of a Committee of the Board of Directors
of the Bank or the Corporation.
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5.
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Termination
of Employment Following Change of Control
.
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(a)
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If a Change of Control (as defined in Section 5(b) of this Agreement) shall occur and if thereafter
at any time during the term of this Agreement there shall be:
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(i)
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any involuntary termination of Executive’s employment (other than for the reasons set forth in
Section 3(b) of this Agreement); or
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(ii)
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if Executive terminates his employment for “Good Reason” during the period commencing
with the date of any “Change of Control”, as defined herein, and ending on the second anniversary of the date of the
Change of Control, by delivering a notice in writing (the “Notice of Termination”) to the Bank, then, in either case,
the provisions of Section 6 of this Agreement shall apply.
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(b)
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As used in this Agreement, “Change of Control” shall mean: a Change in the Ownership
of Codorus Valley Bancorp, Inc. (the “Corporation”) or the Bank, (as defined below), a Change in the Effective Control
of the Corporation or the Bank (as defined below), or a Change in the Ownership of a Substantial Portion of the Assets of the Corporation
or the Bank, (as defined below).
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(i)
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Change in the Ownership of the Corporation or the Bank
. A
Change in the Ownership of the Corporation or the Bank occurs on the date that any one person, or more than one person acting as
a group (as defined below), acquires ownership of stock of the Corporation or the Bank that, together with stock held by such person
or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Corporation
or the Bank. However, if any one person, or more than one person acting as a group, is considered to own more than 50 percent of
the total fair market value or total voting power of the stock of the Corporation or the Bank, the acquisition of additional stock
by the same person or persons is not considered to cause a Change in the Ownership of the Corporation or the Bank. An increase
in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the Corporation
or the Bank acquires its stock in exchange for property will be treated as an acquisition of stock for these purposes. A change
in ownership of the Corporation or the Bank only occurs when there is a transfer or issuance of stock of the Corporation or the
Bank and the stock remains outstanding after the transaction.
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(ii)
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Change in Effective Control of the Corporation or the Bank
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A Change in Effective Control of the Corporation or the Bank occurs only on the date that either:
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(A)
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Any one person, or more than one person acting as a group (as defined
below), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or
persons) ownership of stock of the Corporation or the Bank possessing 35 percent or more of the total voting power of the stock
of the Corporation or the Bank; or
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(B)
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A
majority of members of the Corporation’s Board of Directors is replaced during
any 12-month period by directors whose appointment or election is not endorsed by a majority
of the members of the Corporation’s Board of Directors prior to the date of the
appointment or election.
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If any one person,
or more than one person acting as a group, is considered to effectively control the Corporation or the Bank, the acquisition of
additional control of the Corporation or the Bank by the same person or persons is not considered to cause a Change in the Effective
Control of the Corporation or the Bank.
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(iii)
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Change in Ownership of a Substantial Portion of the Corporation’s or the Bank’s
Assets
. A Change in Ownership of a Substantial Portion of the Corporation’s or the Bank’s Assets occurs on the
date that any one person, or more than one person acting as a group (as defined below), acquires (or has acquired during the 12-month
period ending on the date of the most recent acquisition by such person or persons) assets from the Corporation or the Bank that
have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all of the assets
of the Corporation or the Bank immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value
means the value of assets of the Corporation or the Bank, or the value of the assets being disposed of, determined without regard
to any liabilities associated with such assets.
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There is no Change in
Control under this Paragraph 5(b) if there is a transfer of assets to an entity that is:
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(i)
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A shareholder of the Corporation or the Bank (immediately before
the asset transfer) in exchange for or with respect to its stock;
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(ii)
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An entity, 50 percent or more of the total value or voting power
of which is owned, directly or indirectly, by the Corporation or the Bank;
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(iii)
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A person, or more than one person acting as a group, that owns, directly
or indirectly, 50 percent or more of the total value or voting power of all the outstanding stock of the Corporation or the Bank;
or
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(iv)
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An entity, at least 50 percent of the total value or voting power of which is owned, directly or
indirectly, by a person described in (i), (ii) or (iii) above.
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For purposes of this
Paragraph 5(b), persons will not be considered to be acting as a group solely because they purchase or own stock or purchase assets
of the Corporation or the Bank at the same time. However, persons will be considered to be acting as a group if they are owners
of a corporation that enters into a merger, consolidation, purchase or acquisition of assets, or similar transaction, such shareholder
is considered to be acting as a group with other shareholders in a corporation only to the extent of the ownership in that corporation
prior to the transaction giving rise to the change and not with respect to the ownership interest in the other corporation.
For purposes of this
Paragraph 5(b) the obligation to make payments and provide benefits under this Agreement shall primarily be those of the Executive’s
Employer as of the date of his termination of employment. In the event the Employer is not the Corporation or the Bank, the Bank
will cause such Employer to make required payments and provide required benefits. To the extent the Bank fails or is unable to
do so, it shall make such payments and provide such benefits.
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6.
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Rights
in Event of Termination of Employment Following Change in Control
.
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(a)
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In the event of a termination of employment following a change of control (as described in Section
5(a) of this Agreement), Executive shall be entitled to receive the compensation and benefits set forth below:
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(i)
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Basic Payments
. The Executive will be paid an amount equal
to two times the sum of (A) his then current Annual Base Salary, and (B) the highest bonus paid to him with respect to one of the
three calendar years immediately preceding the year of termination. Such amount will be paid to the Executive in a lump sum within
ten (10) days following the date of termination of employment.
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(ii)
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Continuation of Employee Benefits
. For a period of two (2) years from the date of termination
of employment, the Bank also shall maintain in full force and effect, for the continued benefit of the Executive, all employee
benefit plans and programs to which the Executive was entitled prior to the date of termination, if the Executive’s continued
participation is possible under the general terms and provisions of such plans, and programs, except that if the Executive’s
participation in any health, medical, life insurance, or disability plan or program is barred, the Bank shall obtain and pay for,
on the Executive’s behalf, individual insurance plans, policies or programs which provide to the Executive health, medical,
life and disability insurance coverage which is substantially equivalent to the insurance coverage to which Executive was entitled
prior to the date of termination.
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(b)
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Executive shall not be required to mitigate the amount of any payment provided for in this Section
6 by seeking other employment or otherwise. Except as provided in this Section 6(a), unless otherwise agreed to in writing, the
amount of payment or the benefit provided for in this Section 6 shall not be reduced by any compensation earned by Executive as
the result of employment by another employer or by reason of Executive’s receipt of or right to receive any retirement or other
benefits after the date of termination of employment or otherwise.
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(c)
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Anything in this Agreement to the contrary notwithstanding, in the event that a Change in Control
occurs and it shall be determined that any payment or distribution by the Corporation or the Bank to or for the benefit of the
Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (‘Total
Payments”) would otherwise exceed the amount (the “Safe Harbor Amount”) that may be received by the Executive without
the imposition of an excise tax under section 4999 of the Code, then the Total Payments shall be reduced to the extent, and only
to the extent, necessary to assure that their aggregate present value, as determined in accordance with the applicable provisions
of section 280G of the Code, does not exceed the greater of the following dollar amounts (the “Benefit Limit”):
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(i)
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the Safe Harbor Amount, or
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(ii)
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the greatest after-tax amount payable to the Executive after taking into account any excise tax
imposed under section 4999 of the Code on the Total Payments.
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7.
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Rights
in Event of Termination of Employment Absent Change in Control
.
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(a)
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If Executive’s employment is involuntarily terminated by Bank without Cause and no Change in Control
shall have occurred at the date of such termination, then Bank shall pay Executive an amount equal to the greater of 1.0 times
the Executive’s Annual Base Salary or the remainder of the Executive’s Annual Base Salary for the remaining term of the Agreement
as defined in Section 4(a) and, in each case, the continuation of employee benefits for one year, subject to the Bank’s receipt
of a release agreement executed by the Executive and acceptable to the Bank. Said
amount shall be payable in equal monthly
installments over a term equal to the term for which the Executive is being paid, i.e. twelve (12) to twenty-four (24) months and
shall be subject to federal, state and local tax withholdings.
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(b)
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Executive shall not be required to mitigate the amount of any payment provided for in this Section
7 by seeking other employment or otherwise. Except as provided in this Section 7(a), unless otherwise agreed to in writing, the
amount of payment or the benefit provided for in this Section 7 shall not be reduced by any compensation earned by Executive as
the result of employment by another employer or by reason of Executive’s receipt of or right to receive any retirement or
other benefits after the date of termination of employment or otherwise.
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8.
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Post-Employment
Covenants
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For purposes of this section, “Trade
Secrets” shall include information not otherwise known to persons not employed by the Bank relating to the Corporation’s or
the Bank’s financial data, marketing and business plans, profit margins, contracts, services, products, personnel, improvements,
formulas, designs, styles, processes, customers, vendors, referral sources, suppliers, business methods, practices and policies.
Trade Secrets shall not include any information known generally to the public (other than as a result of an unauthorized disclosure
of such information by any person) or any information that must be disclosed as required by law.
Executive acknowledges that, in the course
of Executive’s employment with the Bank, Executive is likely to develop and/or have access to the Corporation’s or the Bank’s
Trade Secrets, the misuse, misapplication and/or disclosure of which is likely to cause substantial and irreparable damage to the
business and asset value of the Bank. Accordingly, Executive agrees that, without the written consent of the Corporation’s and
the Bank’s Board of Directors, he will not, during the term of his employment with Bank or at any time thereafter (and regardless
of the reason for termination of employment), and other than in furtherance of his duties as an Executive of the Corporation and
the Bank, knowingly use or disclose to any person, any Trade Secrets of the Corporation or the Bank. Executive will also not copy,
duplicate, transfer, transmit, disclose or permit any unauthorized person access to the Corporation’s or the Bank’s Trade Secrets.
Upon request of the Bank, and in any event
upon the termination of employment with the Bank (whether such termination is voluntary or involuntary), Executive will deliver
to the Bank all materials, including, but not limited to, memoranda, notes, records, tapes, documentation, discs, manuals, files,
other documents, and all copies thereof in any form (“Bank Property”) that belong to the Bank or that concern or contain
Trade Secrets, that are in Executive’s possession, whether made or compiled by Executive, furnished to Executive or otherwise
obtained by Executive or in his possession or control.
Executive affirms and acknowledges that he
is not subject to any employment, non-disclosure, confidentiality, non-compete, or other agreement with any third party which would
prevent or prohibit Executive from fulfilling his duties for the Corporation or the Bank. If Executive is the subject of any such
agreement, and has any doubt as to its applicability to Executive’s position with the Bank, Executive will provide a copy
of such agreement to the Bank prior to the date on which Executive executes this Agreement so the Bank can make a determination
as to its effect on Executive’s ability to work for the Corporation and the Bank.
Executive acknowledges specifically that
he has been provided adequate and reasonable consideration for the promises made by him
within this Section and further
specifically agrees that he intends to be legally bound by these restrictions.
The intent of this Section (a) is to provide
the Bank with all remedies afforded to it under applicable law, including, but not limited to, those remedies available under the
Pennsylvania Uniform Trade Secrets Act.
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(b)
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Non-Competition
and Non-Solicitation
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Executive acknowledges and agrees that during
his employment with the Corporation and the Bank, Executive will be introduced to and otherwise have contact with the Bank’s customers,
vendors, suppliers and referral sources. Executive acknowledges and agrees that the Bank’s goodwill, as reflected in its
relationship with its customers, vendors, suppliers and referral sources, is of tremendous value to the Bank, and that the Bank
is allowing Executive access to these customers, vendors, suppliers and referral sources for the single and sole purpose of furthering
the Bank’s business relationship with them. Additionally, Executive’s access to the Corporation’s and the Bank’s Trade Secrets
make it highly likely that such information would be of use to a competitor of the Bank should Executive work for such a competitor.
Because the Bank would be unable to assure compliance with nondisclosure requirements, the parties hereto agree to the restrictions
set forth in this Section. Finally, Executive acknowledges that he will be provided specialized training and develop unique skills
by the Bank, all of which would be of significant value to a competitor. Accordingly, in addition to any other limitation imposed
by law and/or this Agreement, Executive agrees as follows:
(i) During the course
of his employment with the Corporation and the Bank, and for a period of twelve (12) months following the termination of Executive’s
employment with the Corporation and the Bank for any reason (whether such termination is voluntary or involuntary), Executive will
not, except in furtherance of his duties as an employee of the Corporation and the Bank, either on his own behalf or on behalf
of any other person, entity, firm, or corporation, whether as a principal, agent, executive, stockholder, partner, officer, member,
director, sole proprietor, or otherwise, contact or solicit (either directly or indirectly) any of the Bank’s customers, vendors,
suppliers and referral sources.
(ii) During the course
of Executive’s employment with the Bank, and for a period of twelve (12) months following the termination of Executive’s
employment with the Corporation and the Bank for any reason (whether such termination is voluntary or involuntary), Executive will
not, except in furtherance of his duties as an employee of the Corporation and the Bank, either on his own behalf or on behalf
of any other person, entity, firm, or corporation, whether as a principal, agent, Executive, employee, stockholder, partner, officer,
member, director, sole proprietor, or otherwise, engage in business with or otherwise provide (either directly or indirectly) services
to any of the Bank’s customers, suppliers, vendors and referral sources that are the same or similar to any services provided by
the Bank.
(iii) For a period
of twelve (12) months following the termination of Executive’s employment with the Corporation and the Bank for any reason
(whether such termination is voluntary or involuntary), Executive will not, either on Executive’s own behalf or on behalf
of any other person, entity, firm, or corporation, whether as a principal, employee, stockholder, partner, or sole proprietor (except
as an investor owning less than 5% of the stock of a publicly owned company), compete with the Bank, the Corporation or any of
their respective subsidiaries or affiliates, or otherwise engage in lending, banking or financial services within a fifty (50)
mile radius of any branch banking office of the Bank.
(iv) For a period
of twelve (12) months following the termination of Executive’s employment with the Corporation and the Bank for any reason
(whether such termination is voluntary or involuntary), Executive will not provide financial or other assistance to any person,
entity, firm, or corporation engaged the banking, lending, financial services or insurance business.
(v) Executive acknowledges
specifically that he has been provided adequate and reasonable consideration for the promises made by him
within
this Section and further specifically agrees that he intends to be legally bound by these restrictions.
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(c)
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Non-Solicitation
of Employees
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Executive acknowledges and agrees that the
Bank’s relationship with its employees is of tremendous value to the Bank, and that the Bank allows Executive access to these employees
for the single and sole purpose of furthering its business objectives. Accordingly, in addition to any other limitation imposed
by law and/or this Agreement, Executive agrees that during the period of Executive’s employment with the Corporation and
the Bank and for a period of twelve (12) months following the termination of Executive’s employment with the Corporation
and the Bank for any reason (whether voluntary or involuntary), Executive will not recruit or otherwise encourage any of the Bank’s
employees (including temporary employees) to terminate their relationship with the Bank or to seek employment with any other entity.
Executive acknowledges that the Corporation and the Bank would suffer significant financial harm as a result of losing any employee.
Executive acknowledges specifically that
he has been provided adequate and reasonable consideration for the promises made by him
within this Section and further
specifically agrees that he intends to be legally bound by these restrictions.
Executive and the Corporation and the Bank
agree that, to the fullest extent allowed by law, neither will make any disparaging or negative remarks to any person concerning
the other, its business practices, its business plans, Executive’s employment, or the termination of this Agreement.
Executive acknowledges that he has carefully
read and considered Sections (a), (b), (c) and (d)
above
and, having done so, agrees that the restrictions set forth in
these Sections are fair and reasonable, and are legitimately required for the protection of the Corporation’s and the Bank’s
business, interests and goodwill. In the event that any part or portion of Section (a), (b), (c) and/or (d) is deemed by a court
of competent jurisdiction to be overbroad or otherwise invalid, Executive authorizes said court to enforce the Section(s) at issue
to the fullest extent possible to protect the interests of the Corporation and the Bank. In addition, Executive specifically agrees
and understands that the covenants set forth in Sections (a), (b), (c) and (d),
above
, shall survive the termination of
Executive’s employment relationship with the Corporation and the Bank.
Notwithstanding the provisions of Section
16 of this Agreement, the parties agree that the Bank may seek and obtain injunctive relief in the Court of Common Pleas of York
County, Pennsylvania, should the Corporation and the Bank believe that Executive has breached any part of Section 8 of this Agreement.
Executive recognizes and agrees that damages
in the event of a breach by Executive of Sections (a), (b), (c) and/or (d),
above
, would be difficult, if not impossible,
to ascertain, and Executive therefore agrees that, if such breach occurs, the Corporation and the Bank, in addition to and without
limiting any other remedy or right they may have, shall have the right to an injunction or other equitable relief, in any court
of competent jurisdiction, enjoining any such breach, and Executive hereby waives any and all defenses Executive may have on the
grounds of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief. (Executive agrees
that the Corporation and the Bank shall not be required to post more than a nominal bond or surety in order to obtain such injunction
or relief.) The existence of this right shall not preclude any other rights and remedies at law or in equity which the Bank may
possess.
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9.
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Liability
Insurance
.
The Corporation and the Bank shall use their best efforts
to obtain insurance coverage for the Executive under an insurance policy covering officers
and directors of the Corporation and the Bank against lawsuits, arbitrations or other
legal or regulatory proceedings; however, nothing herein shall be construed to require
the Corporation or the Bank to obtain such insurance, if the Board of Directors of the
Bank determines that such coverage cannot be obtained at a reasonable price.
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10.
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Specified
Employee Status
. Notwithstanding anything in this Agreement to the contrary,
in the event Executive is determined to be a Specified Employee, as that term is defined
in Section 409A of the Code and the regulations promulgated thereunder, payments to such
Specified Employee under paragraphs 3(c), 6 or 7, other than payments qualifying as short
term deferrals or an exempt pay arrangement under Section 409A, shall not begin earlier
than the first day of the seventh month after the date of termination. If any payments
are postponed due to such requirements, such postponed amounts shall be paid in a lump
sum to the Executive on the first payroll date that occurs after the date that is six
months following the Executive’s separation of service with the Bank.
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For purposes of the foregoing, the date upon
which a determination is made as to the Specified Employee status of the Executive, the Identification Date (as defined in Section
409A of the Code and the regulations promulgated thereunder) shall be December 31.
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11.
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Notices
.
Except as otherwise provided in this Agreement, any notice required or permitted
to be given under this Agreement shall be in writing and deemed properly given when hand-delivered
or mailed by registered or certified mail, postage prepaid with return receipt requested,
to Executive’s residence, in the case of notices to Executive, and to the principal
executive office of the Bank, to the attention of the Chairman of the Board of Directors,
in the case of notice to the Bank, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notices of change
of address shall be effective only upon receipt.
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12.
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Waiver
.
No provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by Executive and
an executive officer specifically designated by the Board of Directors of the Bank. No
waiver by either party hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.
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13.
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Assignment
.
This Agreement shall not be assignable by any party, except by the Bank or Corporation
to any successor in interest to its business.
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14.
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Entire
Agreement
.
This Agreement contains the entire agreement of the parties
relating to the subject matter of this Agreement. Upon the execution and delivery of
this Agreement, any prior agreement relating to the subject matter hereof will be deemed
automatically terminated and be of no further force or effect.
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15.
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Successors;
Binding Agreement
.
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(a)
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Bank will require any successor (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the businesses and/or assets of the Bank to expressly assume
and agree to perform this Agreement in the same manner and to the same extent that the Bank would be required to perform it if
no such succession had taken place. Failure by the Bank to obtain such assumption and agreement prior to the effectiveness of any
such succession shall constitute a breach of this Agreement and the provisions of Section 3 of this Agreement shall apply. As used
in this Agreement, “Bank” shall mean Bank, as defined previously and any successor to its respective business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise.
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(b)
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This Agreement shall inure to the benefit of and be enforceable by
Executive’s personal or legal representatives, executors, administrators, heirs, distributees, devisees and legatees. If Executive
should die after a Notice of Termination is delivered by Executive, or following termination of Executive’s employment without
Cause, and any amounts would be payable to Executive under this Agreement if Executive had continued to live, all such amounts
shall be paid in accordance with the terms of this Agreement to Executive’s devisee, legatee, or other designee, or, if there is
no such designee, to Executive’s estate.
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16.
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Arbitration
.
Bank and Executive recognize that in the event a dispute should arise between
them concerning the interpretation or implementation of this Agreement, lengthy and expensive
litigation will not afford a practical resolution of the issues within a reasonable period
of time. Consequently, each party agrees that all disputes, disagreements and questions
of interpretation concerning this Agreement are to be submitted for resolution, in York,
Pennsylvania, to the American Arbitration Association (the “Association”)
in accordance with the Association’s National Rules for the Resolution of Employment
Disputes or other applicable rules then in effect (“Rules”). Bank or Executive
may initiate an arbitration proceeding at any time by giving notice to the other in accordance
with the Rules. Bank and Executive may, as a matter or right, mutually agree on the appointment
of a particular arbitrator from the Association’s pool. The arbitrator shall not
be bound by the rules of evidence and procedure of the courts of the Commonwealth of
Pennsylvania but shall be bound by the substantive law applicable to this Agreement.
The decision of the arbitrator, absent fraud, duress, incompetence or gross and obvious
error of fact, shall be final and binding upon the parties and shall be enforceable in
courts of proper jurisdiction. Following written notice of a request for arbitration,
Bank and Executive shall be entitled to an injunction restraining all further proceedings
in any pending or subsequently filed litigation concerning this Agreement, except as
otherwise provided herein.
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17.
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RABBI
TRUST
. The Corporation is establishing contemporaneously herewith a rabbi
trust (the “Trust”), to which it is contributing an initial corpus of $100.
In the event of a Change of Control as defined herein, the Corporation shall, in accordance
with the terms of the Trust, contribute thereto the amount described in Section 6 thereof.
Thereafter, amounts payable hereunder shall be paid first from the assets of such Trust
and the income thereon. To the extent that the assets of the Trust and the income thereon
are insufficient, the Corporation, the Bank or any successor of the Corporation or Bank
shall pay Executive the amount due hereunder.
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18.
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Clawback
.
Executive acknowledges that the Executive is subject to any Clawback Policy that may
be adopted by the Corporation’s Board. Absent any formal Clawback Policy, the Executive
agrees that the Executive shall be required to forfeit and pay back to the Corporation
any bonus or other incentive compensation paid to the Executive if: (a) a court makes
a final determination that the Executive directly or indirectly engaged in fraud or misconduct
that caused or partially caused the need for a material financial restatement by the
Corporation or (b) the independent members of the Corporation’s Board determine
that the Executive has committed a material violation of the Corporation’s Code
of Conduct.
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19.
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Validity
.
The invalidity or unenforceability of any provision of this Agreement shall not affect
the validity or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
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20.
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Applicable
Law
.
This Agreement shall be governed by and construed in accordance with
the domestic, internal laws of the Commonwealth of Pennsylvania, without regard to its
conflicts of laws principles.
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21.
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Headings
.
The section headings of this Agreement are for convenience only and shall not
control or affect the meaning or construction or limit the scope or intent of any of
the provisions of this Agreement.
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22.
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Continuation
of Certain Provisions
. Any termination of Executive’s employment
under this Agreement or of the Agreement will not affect the benefit, trade secret and
non-competition provisions and clawback provisions of paragraphs 4, 8 and 18, which will
survive any such termination and remain in full force and effect in accordance with their
respective terms.
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23.
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Section
409A of the Code
. This Agreement shall be interpreted to avoid any penalty
sanctions under section 409A of the Code. If any payment or benefit cannot be provided
or made at the time specified herein without incurring sanctions under section 409A of
the Code, then such benefit or payment shall be provided in full at the earliest time
thereafter when such sanctions shall not be imposed. The Executive shall be solely responsible
for any tax imposed under section 409A of the Code and in no event shall the Corporation
have any liability with respect to any tax, interest or other penalty imposed under section
409A of the Code. For purposes of section 409A of the Code, all payments to be made upon
a termination of employment under this Agreement may only be made upon the Executive’s
“separation from service” (within the meaning of such term under section
409A of the Code). In no event shall the Executive, directly or indirectly, designate
the calendar year of payment, except as permitted under section 409A of the Code. All
reimbursements and in kind benefits provided under this Agreement shall be made or provided
in accordance with the requirements of section 409A of the Code, including, where applicable,
the requirement that: (i) any reimbursement shall be for expenses incurred during the
Executive’s lifetime (or during a shorter period of time specified in this Agreement),
(ii) the amount of expenses eligible for reimbursement, or in kind benefits provided,
during a calendar year may not affect the expenses eligible for reimbursement, or in
kind benefits to be provided, in any other calendar year, (iii) the reimbursement of
an eligible expense shall be made on or before the last day of the calendar year following
the year in which the expense is incurred and (iv) the right to reimbursement or in kind
benefits is not subject to liquidation or exchange for another benefit.
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IN
WITNESS WHEREOF
,
the parties have executed this Agreement as of the date first above written.
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ATTEST:
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CODORUS VALLEY BANCORP, INC.
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By:
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Secretary
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Chairman, President & CEO
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ATTEST:
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PEOPLESBANK, A Codorus Valley Company
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By:
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Secretary
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Chairman, President & CEO
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WITNESS:
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By:
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A. Dwight Utz
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