EXHIBIT 10.9
PEOPLESBANK, A CODORUS VALLEY COMPANY
SALARY CONTINUATION AGREEMENT
THIS AGREEMENT is made this 1st day of October, 1998, by and between
PEOPLESBANK, A CODORUS VALLEY COMPANY, a Pennsylvania state bank located in
York, Pennsylvania (the "Company") and a wholly owned subsidiary of Codorus
Valley Bancorp, Inc. (The "Corporation") and LARRY J. MILLER (the "Executive").
INTRODUCTION
To encourage the Executive to remain an employee of the Company, the
Company is willing to provide salary continuation benefits to the Executive. The
Company will pay the benefits from its general assets.
AGREEMENT
The Executive and the Company agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. Whenever used in this Agreement, the following words and
phrases shall have the meanings specified:
1.1.1 "Change of Control," shall mean: A change in control of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A and any successor rule or regulation promulgated
under the Securities Exchange Act of 1934 (the "Exchange Act"); provided that,
without limitation, such a change in control shall be deemed to have occurred if
(a) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than the Corporation or any "person" who on the date hereof
is a director or officer of the Corporation is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing twenty-five percent (25%) or more of
the combined voting power of the Corporation's then outstanding securities, or
(b) during any period of two consecutive years during the term of this
Agreement, individuals who at the beginning of such period constitute the Board
of Directors of the Bank or Corporation cease for any reason to constitute at
least a majority thereof, unless the election of each director who was not a
director at the beginning of such period has been approved in advance by
directors representing at least two-thirds of the directors then in office who
were
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directors at the beginning of the period, or (c) the sale or transfer of all or
substantially all of the Company or Corporation's assets.
1.1.2 "Date of Change of Control" means any of the following:
(a) the first date on which a single person and/or entity, or group
of affiliated persons and/or entities, acquire the beneficial ownership of
twenty-five percent (25%) or more of the Company's voting securities; or
(b) the date of the transfer of all or substantially all of the
Company or Corporation's assets; or
(c) the date on which a merger, consolidation or combination is
consummated, as applicable; or
(d) the date on which individuals who formerly constituted a
majority of the Incumbent Board of Directors of the Bank ceased to be a
majority thereof. For these purposes, "Incumbent Board" means the members
of the Board of Directors of the Company on the effective date of the
Plan, provided that any person becoming a member of the Board of Directors
subsequent to such effective date, whose election was approved by a vote
of at least three-quarters of the members of the Board of Directors
comprising the Incumbent Board, or whose nomination for election by
members or stockholders was approved by the same nominating committee
serving under an Incumbent Board, shall be considered as though he were a
member of the Incumbent Board.
1.1.3 "Code" means the Internal Revenue Code of 1986, as amended.
1.1.4 "Disability" means, if the Executive is covered by a Company
sponsored disability policy, total disability as defined in such policy
without regard to any waiting period. If the Executive is not covered by
such a policy, Disability means the Executive suffering a sickness,
accident or injury which, in the judgment of a physician satisfactory to
the Company, prevents the Executive from performing substantially all of
the Executive's normal duties for the Company. As a condition to any
benefits, the Company may require the Executive to submit to such physical
or mental evaluations and tests as the Company's Board of Directors deems
appropriate.
1.1.5 "Early Termination" means the Termination of Employment before
Normal Retirement Age for reasons other than death, Disability,
Termination for Cause or following a Change of Control.
1.1.6 "Early Termination Date" means the month, day and year in
which Early Termination occurs.
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1.1.7 "Normal Retirement Age" means the Executive's 60th birthday.
1.1.8 "Normal Retirement Date" means the later of the Normal
Retirement Age or Termination of Employment.
1.1.9 "Plan Year" means a twelve-month period commencing on October
1st and ending on September 30th of each year. The initial Plan Year shall
commence on the effective date of this Agreement.
1.1.10 "Termination for Cause" See Section 5.2.
1.1.11 "Termination of Employment" means that the Executive ceases
to be employed by the Company for any reason whatsoever other than by
reason of a leave of absence which is approved by the Company. For
purposes of this Agreement, if there is a dispute over the employment
status of the Executive or the date of the Executive's Termination of
Employment, the Company shall have the sole and absolute right to decide
the dispute.
ARTICLE 2
LIFETIME BENEFITS
2.1 Normal Retirement Benefit. Upon Termination of Employment on or after
the Normal Retirement Age for reasons other than death, the Company shall pay to
the Executive the benefit described in this Section 2.1 in lieu of any other
benefit under this Agreement.
2.1.1 Amount of Benefit. The annual benefit under this Section 2.1
is $100,000 (One Hundred Thousand Dollars and no/100). The Company's Board
of Directors, in its sole discretion, may increase the annual benefit
under this Section 2.1.1; however, any increase shall require the
recalculation of Schedule A.
2.1.2 Payment of Benefit. The Company shall pay the annual benefit
to the Executive in 12 equal monthly installments payable on the first day
of each month commencing with the month following the Executive's Normal
Retirement Date and continuing for 239 additional months.
2.1.3 Benefit Increases. Commencing on the first anniversary of the
first benefit payment, and continuing on each subsequent anniversary, the
Company's Board of Directors, in its sole discretion, may increase the
benefit.
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2.2 Early Termination Benefit. Upon Early Termination, the Company shall
pay to the Executive the benefit described in this Section 2.2 in lieu of any
other benefit under this Agreement.
2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the
Early Termination Annual Benefit amount set forth in Schedule A for the
Plan Year ending immediately prior to the Early Termination Date. However,
any increase in the annual benefit under Section 2.1.1 shall require the
recalculation of the Early Termination benefit on Schedule A. The Early
Termination Annual Benefit amount is determined by calculating a fixed
annuity which is payable in 240 equal monthly installments, crediting
interest on the unpaid balance of the Accrual Balance at an annual rate of
8.0%, compounded monthly.
2.2.2 Payment of Benefit. The Company shall pay the annual benefit
to the Executive in 12 equal monthly installments payable on the first day
of each month commencing with the month following the Normal Retirement
Age and continuing for 239 additional months.
2.2.3 Benefit Increases. Benefit payments may be increased as
provided in Section 2.1.3.
2.3 Disability Benefit. If the Executive terminates employment due to
Disability prior to Normal Retirement Age, the Company shall pay to the
Executive the benefit described in this Section 2.3 in lieu of any other benefit
under this Agreement, provided however, in the event the Company determines (1)
the Executive could have been Terminated for Cause as provided in Section 5.2
for conduct or omissions occurring during the term of employment or (2) the
Executive has violated the restrictive covenant set forth in Section 5.3, the
Company shall have no obligation to make future payments as of the date of the
Company's determination.
2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the
Disability Annual Benefit amount set forth in Schedule A for the Plan Year
ending immediately prior to the date in which the Termination of
Employment occurs. However, any increase in the annual benefit under
Section 2.1.1 would require the recalculation of the Disability benefit on
Schedule A. The Disability Annual Benefit amount is determined by
calculating a fixed annuity which is payable in 240 equal monthly
installments, crediting interest on the unpaid balance of the Accrual
Balance at an annual rate of 8.0%, compounded monthly.
2.3.2 Payment of Benefit. The Company shall pay the annual benefit
amount to the Executive in 12 equal monthly installments payable on the
first day of each month commencing with the month following the
Termination of Employment and continuing for 239 additional months.
2.3.3 Benefit Increases. Benefit payments may be increased as
provided in Section 2.1.3.
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2.4 Change of Control Benefit. Following the Date of a Change of Control,
the Executive shall be entitled to the benefit described in this Section 2.4 in
lieu of any other benefit under this Agreement.
2.4.1 Amount of Benefit. The annual benefit under this Section 2.4
is the Normal Retirement Benefit amount described in Section 2.1.1.
2.4.2 Payment of Benefit. The Company shall pay the annual benefit
amount to the Executive in 12 equal monthly installments payable on the
first day of each month commencing with the month following the
Executive's Normal Retirement Date and continuing for 239 additional
months.
2.4.3 Benefit Increases. Benefit payments may be increased as
provided in Section 2.1.3.
ARTICLE 3
DEATH BENEFITS
3.1 Death During Active Service. If the Executive dies while in the active
service of the Company, the Company shall pay to the Executive's beneficiary the
benefit described in this Section 3.1. This benefit shall be paid in lieu of the
Lifetime Benefits of Article 2.
3.1.1 Amount of Benefit. The annual benefit under this Section 3.1
is the Normal Retirement Benefit amount described in Section 2.1.1.
3.1.2 Payment of Benefit. The Company shall pay the annual benefit
to the beneficiary in 12 equal monthly installments payable on the first
day of each month commencing with the month following the Executive's
death and continuing for 239 additional months.
3.2 Death During Benefit Period. If the Executive dies after the benefit
payments have commenced under this Agreement but before receiving all such
payments, the Company shall pay the remaining benefits to the Executive's
beneficiary at the same time and in the same amounts they would have been paid
to the Executive had the Executive survived.
3.3 Death After Termination of Employment But Before Benefit Payments
Commence. If the Executive is entitled to benefit payments under this Agreement,
but dies prior to the commencement of said benefit payments, the Company shall
pay the benefit payments to the Executive's beneficiary that the Executive was
entitled to prior to death except that the benefit payments shall commence on
the first day of the month following the date of the Executive's death.
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ARTICLE 4
BENEFICIARIES
4.1 Beneficiary Designations. The Executive shall designate a beneficiary
by filing a written designation with the Company. The Executive may revoke or
modify the designation at any time by filing a new designation. However,
designations will only be effective if signed by the Executive and accepted by
the Company during the Executive's lifetime. The Executive's beneficiary
designation shall be deemed automatically revoked if the beneficiary predeceases
the Executive, or if the Executive names a spouse as beneficiary and the
marriage is subsequently dissolved. If the Executive dies without a valid
beneficiary designation, all payments shall be made to the Executive's estate.
4.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incapacitated, or to a person incapable of handling the disposition of
his or her property, the Company may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incapacitated
person or incapable person. The Company may require proof of incapacity,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit. Such distribution shall completely discharge the Company from all
liability with respect to such benefit.
ARTICLE 5
GENERAL LIMITATIONS
5.1 Excess Parachute Payment. Notwithstanding any provision of this
Agreement to the contrary, the Company shall not pay any benefit under this
Agreement to the extent the benefit would be a prohibited golden parachute
payment pursuant to 12 C.F.R. Section 359.2 and for which the appropriate
federal banking agency has not given written consent to pay pursuant to 12
C.F.R. Section 359.4.
5.2 Termination for Cause. Notwithstanding any provision of this Agreement
to the contrary, the Company shall not pay any benefit under this Agreement if
the Company terminates the Executive's employment for:
(a) Gross negligence or gross neglect of duties;
(b) Commission of a felony or of a gross misdemeanor involving moral
turpitude; or
(c) Fraud, disloyalty, dishonesty or willful violation of any
significant law or significant Company policy committed in connection with
the Executive's employment and resulting in a material adverse effect on
the Company.
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5.2.1 Removal. Notwithstanding any provision of this Agreement to
the contrary, the Company shall not pay any benefit under this
Agreement if the Executive is subject to a final removal or
prohibition order issued by an appropriate federal banking
agency pursuant to Section 8(e) of the Federal Deposit
Insurance Act or by the Pennsylvania Department of Banking
pursuant to state law.
5.3 Competition After Termination of Employment. No benefits shall be
payable if the Executive, without the prior written consent of the Company,
violates the following described restrictive covenants.
5.3.1 Non-compete Provision. The Executive shall not, for a period
of three (3) years after termination either directly or
indirectly, either as an individual or as a proprietor,
stockholder, partner, officer, director, employee, agent,
consultant or independent contractor of any individual,
partnership, corporation or other entity (excluding an
ownership interest of one percent (1%) or less in the stock of
a publicly traded company):
(i) become employed by, participate in, or be connected in
any manner with the ownership, management, operation or
control of any bank, savings and loan or other similar
financial institution if the Executive's
responsibilities will include providing banking or other
financial services in York County or within fifty (50)
mile of any office maintained by the Company as of the
date of the termination of the Executive's employment or
if the Executive regularly conducts business in or from
an office or branch in York County or any other county
or city in which the Company has an office or branch as
of the date of the termination of the Executive's
employment; or
(ii) participate in any way in hiring or otherwise engaging,
or assisting any other person or entity in hiring or
otherwise engaging, on a temporary, part-time or
permanent basis, any individual who was employed by the
Company during the three (3) year period immediately
prior to the termination of the Executive's employment;
or
(iii) assist, advise, or serve in any capacity, representative
or otherwise, any third party in any action against the
Company or transaction involving the Company; or
(iv) sell, offer to sell, provide banking or other financial
services, assist any other person in selling or
providing banking or other financial services, or
solicit or otherwise compete for, either directly or
indirectly, any orders, contract, or accounts for
services of a kind or nature like or substantially
similar to the
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services performed or products sold by the Company (the
preceding hereinafter referred to as "Services"), to or
from any person or entity from whom the Executive or the
Company provided banking or other financial services,
sold, offered to sell or solicited orders, contracts or
accounts for Services during the three (3) year period
immediately prior to the termination of the Executive's
employment; or
(v) divulge, disclose, or communicate to others in any
manner whatsoever, any confidential information of the
Company, including, but not limited to, the names and
addresses of customers of the Company, as they may have
existed from time to time or of any of the Company's
prospective customers, work performed or services
rendered for any customer, any method and/or procedures
relating to projects or other work developed for the
Company, earnings or other information concerning the
Company. The restrictions contained in this subparagraph
(v) apply to all information regarding the Company,
regardless of the source who provided or compiled such
information. Notwithstanding anything to the contrary,
the terms of this subparagraph (v) shall not be limited
to the three (3) year restriction set forth above and
all information referred to herein shall not be
disclosed unless and until it becomes known to the
general public from sources other than the Executive.
5.3.2 Judicial Remedies. In the event of a breach or threatened
breach by the Executive of any provision of these
restrictions, the Executive recognizes the substantial and
immediate harm that a breach or threatened breach will impose
upon the Company, and further recognizes that in such event
monetary damages may be inadequate to fully protect the
Company. Accordingly, in the event of a breach or threatened
breach of this Agreement, the Executive consents to the
Company's entitlement to such ex parte, preliminary,
interlocutory, temporary or permanent injunctive, or any other
equitable relief, protecting and fully enforcing the Company's
rights hereunder and preventing the Executive from further
breaching any of his obligations set forth herein. The
Executive expressly waives any requirement, based on any
statute, rule of procedure, or other source, that the Company
post a bond as a condition of obtaining any of the
above-described remedies. Nothing herein shall be construed as
prohibiting the Company from pursuing any other remedies
available to the Company at law or in equity for such breach
or threatened breach, including the recovery of damages from
the Executive. The Executive expressly acknowledges and agrees
that: (i) the restrictions set forth in Section 5.3.1 are
reasonable, in terms of scope, duration, geographic area, and
otherwise, (ii) the protections afforded the Company in
Section 5.3.1 are necessary to protect its legitimate business
interest, (iii) the restrictions set forth in Section 5.3.1
will not be materially adverse to the
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Executive's employment with the Company, and (iv) his
agreement to observe such restrictions forms a material part
of the consideration for this Agreement.
5.3.3 Overbreadth of Restrictive Covenant. It is the intention of
the parties that if any restrictive covenant in this Agreement
is determined by a court of competent jurisdiction to be
overly broad, then the court should enforce such restrictive
covenant to the maximum extent permitted under the law as to
area, breadth and duration.
ARTICLE 6
CLAIMS AND REVIEW PROCEDURES
6.1 Claims Procedure. The Company shall notify any person or entity that
makes a claim against the Agreement (the "Claimant") in writing, within ninety
(90) days of Claimant's written application for benefits, of his or her
eligibility or noneligibility for benefits under the Agreement. If the Company
determines that the Claimant is not eligible for benefits or full benefits, the
notice shall set forth (1) the specific reasons for such denial, (2) a specific
reference to the provisions of the Agreement on which the denial is based, (3) a
description of any additional information or material necessary for the Claimant
to perfect his or her claim, and a description of why it is needed, and (4) an
explanation of the Agreement's claims review procedure and other appropriate
information as to the steps to be taken if the Claimant wishes to have the claim
reviewed. If the Company determines that there are special circumstances
requiring additional time to make a decision, the Company shall notify the
Claimant of the special circumstances and the date by which a decision is
expected to be made, and may extend the time for up to an additional ninety-day
period.
6.2 Review Procedure. If the Claimant is determined by the Company not to
be eligible for benefits, or if the Claimant believes that he or she is entitled
to greater or different benefits, the Claimant shall have the opportunity to
have such claim reviewed by the Company by filing a petition for review with the
Company within sixty (60) days after receipt of the notice issued by the
Company. Said petition shall state the specific reasons which the Claimant
believes entitle him or her to benefits or to greater or different benefits.
Within sixty (60) days after receipt by the Company of the petition, the Company
shall afford the Claimant (and counsel, if any) an opportunity to present his or
her position to the Company orally or in writing, and the Claimant (or counsel)
shall have the right to review the pertinent documents. The Company shall notify
the Claimant of its decision in writing within the sixty-day period, stating
specifically the basis of its decision, written in a manner calculated to be
understood by the Claimant and the specific provisions of the Agreement on which
the decision is based. If, because of the need for a hearing, the sixty-day
period is not sufficient, the decision may be deferred for up to another
sixty-day period at the election of the Company, but notice of this deferral
shall be given to the Claimant.
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ARTICLE 7
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Executive.
ARTICLE 8
MISCELLANEOUS
8.1 Binding Effect. This Agreement shall bind the Executive and the
Company, and their beneficiaries, survivors, executors, successors,
administrators and transferees.
8.2 No Guarantee of Employment. This Agreement is not an employment policy
or contract. It does not give the Executive the right to remain an employee of
the Company, nor does it interfere with the Company's right to discharge the
Executive. It also does not require the Executive to remain an employee nor
interfere with the Executive's right to terminate employment at any time.
8.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
8.4 Reorganization. The Company shall not merge or consolidate into or
with another company, or reorganize, or sell substantially all of its assets to
another company, firm, or person unless such succeeding or continuing company,
firm, or person agrees to assume and discharge the obligations of the Company
under this Agreement. Upon the occurrence of such event, the term "Company" as
used in this Agreement shall be deemed to refer to the successor or survivor
company.
8.5 Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
8.6 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of the Commonwealth of Pennsylvania, except to the extent
preempted by the laws of the United States of America.
8.7 Unfunded Arrangement. The Executive and beneficiary are general
unsecured creditors of the Company for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Company to pay such
benefits. The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors. Any insurance on the Executive's life is a general
asset of the Company to which the Executive and beneficiary have no preferred or
secured claim.
8.8 Recovery of Estate Taxes. If the Executive's gross estate for federal
estate tax purposes includes any amount determined by reference to and on
account of this Agreement, and if the
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beneficiary is other than the Executive's estate, then the Executive's estate
shall be entitled to recover from the beneficiary receiving such benefit under
the terms of the Agreement, an amount by which the total estate tax due by the
Executive's estate, exceeds the total estate tax which would have been payable
if the value of such benefit had not been included in the Executive's gross
estate. If there is more than one person receiving such benefit, the right of
recovery shall be against each such person. In the event the beneficiary has a
liability hereunder, the beneficiary may petition the Company for a lump sum
payment in an amount not to exceed the beneficiary's liability hereunder.
8.9 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Executive as to the subject matter hereof. No rights
are granted to the Executive by virtue of this Agreement other than those
specifically set forth herein.
8.10 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
8.10.1 Interpreting the provisions of the Agreement;
8.10.2 Establishing and revising the method of accounting for the
Agreement;
8.10.3 Maintaining a record of benefit payments; and
8.10.4 Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
8.11 Named Fiduciary. For purposes of the Employee Retirement Income
Security Act of 1974, if applicable, the Company shall be the named fiduciary
and plan administrator under the Agreement. The named fiduciary may delegate to
others certain aspects of the management and operation responsibilities of the
plan including the employment of advisors and the delegation of ministerial
duties to qualified individuals.
IN WITNESS WHEREOF, the Executive and a duly authorized Company officer
have signed this Agreement.
EXECUTIVE: COMPANY:
PEOPLESBANK, A CODORUS VALLEY CO.
/s/ Larry J. Miller By: /s/ Barry A. Keller
- ------------------- -------------------
Larry J. Miller Barry A. Keller
Title: Chairman of the Board of Directors
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BENEFICIARY DESIGNATION
PEOPLESBANK, A CODORUS VALLEY COMPANY
SALARY CONTINUATION AGREEMENT
LARRY J. MILLER
I designate the following as beneficiary of any death benefits under this Salary
Continuation Agreement:
Primary: Sally Marie Miller (spouse)
Contingent: Michelle Marie Miller and Timothy James Miller (children)
NOTE: TO NAME A TRUST AS BENEFICIARY, PLEASE PROVIDE THE NAME OF THE TRUSTEE(S)
AND THE EXACT NAME AND DATE OF THE TRUST AGREEMENT.
I understand that I may change these beneficiary designations by filing a new
written designation with the Company. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or, if I have
named my spouse as beneficiary and our marriage is subsequently dissolved.
Signature: /s/ Larry J. Miller
-------------------
Date: October 1, 1998
Accepted by the Company this 1st day of October, 1998.
By: /s/ Barry A. Keller
-------------------
Barry A. Keller
Title: Chairman of the Board of Directors
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PEOPLESBANK, A CODORUS VALLEY COMPANY
LARRY J. MILLER
SALARY CONTINUATION PLAN - SCHEDULE A
EARLY EARLY DISABILITY
TERMINATION VESTED TERMINATION CHANGE OF CONTROL ANNUAL BENEFIT
PLAN BENEFIT ACCRUAL VESTING ACCRUAL ANNUAL BENEFIT ANNUAL BENEFIT PAYABLE
YEAR LEVEL BALANCE SCHEDULE BALANCE PAYABLE AT 60 PAYABLE AT 60 IMMEDIATELY
- ---- ------- ------- ----------- ------- -------------- ----------------- --------------
1 100,000 45,448 100.00% 45,448 11,876 100,000 4,562
2 100,000 94,668 100.00% 94,668 22,842 100,000 9,502
3 100,000 147,974 100.00% 147,974 32,967 100,000 14,853
4 100,000 205,703 100.00% 205,703 42,317 100,000 20,647
5 100,000 268,225 100.00% 268,225 50,950 100,000 26,922
6 100,000 335,935 100.00% 335,935 58,921 100,000 33,719
7 100,000 409,265 100.00% 409,265 66,281 100,000 41,079
8 100,000 488,682 100.00% 488,682 73,078 100,000 49,050
9 100,000 574,691 100.00% 574,691 79,353 100,000 57,683
10 100,000 667,838 100.00% 667,838 85,147 100,000 67,033
11 100,000 768,716 100.00% 768,716 90,498 100,000 77,158
12 100,000 877,967 100.00% 877,967 95,438 100,000 88,124
13 100,000 996,286 100.00% 996,286 100,000 100,000 100,000
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