SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant /_/
Check the appropriate box:
/_/ Preliminary Proxy Statement
/x/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CODORUS VALLEY BANCORP, INC.
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(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No Fee Required.
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_____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
_____________________________________________________________________________
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_____________________________________________________________________________
/_/ Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
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*Set forth the amount on which the filing fee is calculated and state how it was
determined.
[GRAPHIC OMITTED]
April 5, 2000
Dear Fellow Shareholders of Codorus Valley Bancorp, Inc.:
On behalf of the corporation's Board of Directors, I am pleased to invite
you to attend Codorus Valley Bancorp, Inc.'s Annual Meeting of Shareholders to
be held on Tuesday, May 16, 2000 at 9:00 a.m., Eastern Time. The location of the
annual meeting is the Codorus Valley Corporate Center, 105 Leader Heights Road,
York, Pennsylvania 17403. At the annual meeting, you will have the opportunity
to ask questions and to make comments. Enclosed with the proxy statement and
notice of meeting is your proxy and Codorus Valley Bancorp, Inc.'s 1999 Annual
Report to Shareholders.
The principal business of the meeting is to: elect 3 Class A Directors to
serve a term of 3 years; approve and adopt the Codorus Valley Bancorp, Inc. 2000
Stock Incentive Plan; ratify the selection of Ernst & Young LLP as the
independent auditors for the 2000 fiscal year; and, transact any other business
that is properly presented at the annual meeting. The notice of meeting and
proxy statement accompanying this letter describe the specific business to be
acted upon in more detail.
I am delighted that you have invested in Codorus Valley Bancorp, Inc., and
I hope that, whether or not you plan to attend the annual meeting, you will vote
as soon as possible by completing, signing and returning the enclosed proxy in
the envelope provided. The prompt return of your proxy will save Codorus Valley
Bancorp, Inc. expenses involved in further communications. Your vote is
important. Voting by written proxy will ensure your representation at the annual
meeting if you do not attend in person.
I look forward to seeing you on May 16, 2000, at the corporation's annual
meeting.
Sincerely,
/s/ Larry J. Miller
--------------------------------------
Larry J. Miller
President and Chief Executive Officer
Codorus Valley Bancorp, Inc., 105 Leader Heights Road, P.O. Box 2887, York, PA
17405-2887
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CODORUS VALLEY BANCORP, INC.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 16, 2000
------------------------------------------------------
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that Codorus Valley Bancorp, Inc. will hold its
Annual Meeting of Shareholders on Tuesday, May 16, 2000, at 9:00 a.m., Eastern
Time, at the Codorus Valley Corporate Center, 105 Leader Heights Road, York,
Pennsylvania 17403, to consider and vote upon the following proposals:
1. To elect the following individuals as Class A Directors, each to
serve a 3 year term:
o Rodney L. Krebs
o Dallas L. Smith
o George A. Trout, D.D.S.
2. To approve and adopt the Codorus Valley Bancorp, Inc. 2000 Stock
Incentive Plan.
3. To ratify the selection of Ernst & Young LLP as the independent
auditors for the fiscal year ending December 31, 2000.
4. To transact any other business properly presented at the annual
meeting.
Shareholders of record as of March 16, 2000 are entitled to notice of the
meeting and may vote at the annual meeting, either in person or by proxy.
Management welcomes your attendance at the annual meeting. Whether or not
you expect to attend the annual meeting in person, you are requested to
complete, sign, date and promptly return the enclosed proxy in the accompanying
postage-paid envelope. The prompt return of your proxy will save the corporation
expenses involved in further communications. Even if you return a proxy, you may
vote in person if you give written notice to the Secretary of the corporation
and attend the annual meeting. Returning your proxy will ensure that your shares
will be voted in accordance with your wishes and that the presence of a quorum
will be assured.
The corporation's Board of Directors is distributing the proxy statement,
form of proxy and Codorus Valley Bancorp, Inc.'s 1999 Annual Report to
Shareholders on or about April 5, 2000.
By Order of the Board of Directors,
/s/ Harry R. Swift
-------------------------------------
Harry R. Swift
Secretary
York, Pennsylvania
April 5, 2000
YOUR VOTE IS IMPORTANT.
TO VOTE YOUR SHARES, PLEASE SIGN, DATE AND COMPLETE THE
ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED,
POSTAGE-PAID ENVELOPE.
CODORUS VALLEY BANCORP, INC.
CORORUS VALLEY CORPORATE CENTER
105 LEADER HEIGHTS ROAD
YORK, PENNSYLVANIA 17403
NASDAQ TRADING SYMBOL: CVLY
PROXY STATEMENT
2000 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 16, 2000
Mailed to Shareholders on or about April 5, 2000
TABLE OF CONTENTS
PAGE
----
PROXY STATEMENT
GENERAL INFORMATION. ...................................................................................... 1
Date, Time and Place of the Annual Meeting ............................................................. 1
Description of Codorus Valley Bancorp, Inc ............................................................. 1
VOTING PROCEDURES ......................................................................................... 2
Solicitation and Voting of Proxies ..................................................................... 2
Quorum and Vote Required For Approval .................................................................. 3
Revocability of Proxy .................................................................................. 4
Methods of Voting ...................................................................................... 4
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS. ................................................................ 5
Governance. ............................................................................................ 5
Directors and Executive Officers of Codorus Valley Bancorp, Inc. ....................................... 5
Executive Officers of PeoplesBank ...................................................................... 6
Committees and Meetings of the Corporation's and the Bank's Board of Directors 6
Committees of the Bank's Board of Directors ............................................................ 7
Compensation of the Boards of Directors ................................................................ 7
Independent Directors' Deferred Compensation Plan ...................................................... 8
Independent Directors' Stock Option Plan ............................................................... 8
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION ....................................................... 8
Compensation Committee Report .......................................................................... 8
Chief Executive Officer Compensation ................................................................... 9
Executive Officers Compensation ........................................................................ 10
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION ............................................... 10
EXECUTIVE COMPENSATION .................................................................................... 11
Summary Compensation Table ............................................................................. 11
Qualified Stock Options ................................................................................ 12
Option/SAR Grants in Last Fiscal Year .................................................................. 12
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values ....................... 12
Stock Incentive Plan ................................................................................... 12
401(k) Plan ............................................................................................ 13
Employment Contract with Change of Control Provision ................................................... 13
Change of Control Agreement ............................................................................ 14
Salary Continuation Agreements ......................................................................... 14
Supplemental Retirement Plans .......................................................................... 14
i
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ............................................................ 14
ELECTION OF DIRECTORS ..................................................................................... 15
Qualification and Nomination of Directors .............................................................. 15
Information as to Nominees and Directors ............................................................... 16
BENEFICIAL OWNERSHIP OF CODORUS VALLEY BANCORP, INC.'S STOCK OWNED BY PRINCIPAL OWNERS AND MANAGEMENT ..... 18
Principal Shareholders ................................................................................. 18
Share Ownership by the Directors, Officers and Nominees ................................................ 19
PROPOSAL TO APPROVE AND ADOPT THE CODORUS VALLEY BANCORP, INC. 2000 STOCK INCENTIVE PLAN .................. 20
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE ................................................... 23
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING ............................................................. 23
PERFORMANCE GRAPH ......................................................................................... 24
PROPOSALS ................................................................................................. 25
Election of 3 Class A Directors ........................................................................ 25
Approval and Adoption of the Codorus Valley Bancorp, Inc. 2000 Stock Incentive Plan .................... 25
Ratification of Ernst & Young LLP, as the Corporation's Independent Auditors ........................... 25
ANNUAL REPORT ............................................................................................. 26
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING ..................................................... 26
ADDITIONAL INFORMATION..................................................................................... 26
APPENDIX "A" -- CODORUS VALLEY BANCORP, INC. 2000 STOCK INCENTIVE PLAN .................................... A-1
ii
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
CODORUS VALLEY BANCORP, INC.
TO BE HELD ON MAY 16, 2000
GENERAL INFORMATION
Date, Time and Place of the Annual Meeting
Codorus Valley Bancorp, Inc., a Pennsylvania business corporation and
registered bank holding company, is furnishing this proxy statement in
connection with the solicitation by the board of directors of proxies to be
voted at the corporation's annual meeting of shareholders. The annual meeting
will be held at the Codorus Valley Corporate Center, 105 Leader Heights Road,
York, Pennsylvania 17403 on Tuesday, May 16, 2000 at 9:00 a.m., Eastern Time.
The corporation's principal executive office is located at the Codorus
Valley Corporate Center, 105 Leader Heights Road, York, Pennsylvania 17403. The
corporation's telephone number is (717) 747-1519 or (800) 646-1970. All
inquiries regarding the annual meeting should be directed to Harry R. Swift,
Secretary and General Counsel of Codorus Valley Bancorp, Inc.
Description of Codorus Valley Bancorp, Inc.
Codorus Valley Bancorp, Inc. was incorporated in October 1986 under
Pennsylvania law; and, in March 1987 it became a one-bank holding company
pursuant to the Bank Holding Company Act of 1956. PeoplesBank, A Codorus Valley
Company and SYC Realty Company, Inc. are the corporation's wholly-owned
subsidiaries. PeoplesBank is a Pennsylvania chartered banking institution with
deposits insured by the FDIC. PeoplesBank wholly-owns SYC Settlement Services,
Inc. and SYC Insurance Services, Inc.
Included with this proxy statement is a copy of the corporation's annual
report to shareholders for the fiscal year ended December 31, 1999. You may
obtain a copy of the corporation's annual report for the 1998 fiscal year at no
cost by contacting the Chief Financial Officer, Codorus Valley Bancorp, Inc.,
Codorus Valley Corporate Center, 105 Leader Heights Road, P.O. Box 2887, York,
Pennsylvania 17405-2887, or by calling (717) 747-1519.
We have not authorized anyone to provide you with information about the
corporation; therefore, you should rely only on the information contained in
this document or on documents to which we refer. Although we believe we have
provided you with all the information helpful to you in your decision to vote,
events may occur at Codorus Valley Bancorp, Inc. subsequent to printing this
proxy statement that might affect your decision or the value of your stock.
1
VOTING PROCEDURES
Solicitation and Voting of Proxies
The board of directors solicits this proxy for use at the corporation's
2000 annual meeting of shareholders. The corporation's directors, officers and
other employees may solicit proxies in person or by telephone, facsimile,
telegraph or mail, but only for use at the annual meeting. The corporation will
pay the cost of preparing, assembling, printing, mailing and soliciting proxies
and any additional material that the corporation sends to its shareholders.
Codorus Valley Bancorp, Inc. will make arrangements with brokerage firms and
other custodians, nominees, and fiduciaries to forward proxy solicitation
materials to the owners of stock held by these persons. The corporation will
reimburse these persons for their reasonable forwarding expenses.
Only shareholders of record as of the close of business on Thursday, March
16, 2000, (the voting record date), may vote at the annual meeting. The
corporation's records show that, as of the voting record date, 2,340,283 shares
of the corporation's common stock were outstanding. On all matters to come
before the annual meeting, shareholders may cast one vote for each share held.
Cumulative voting rights do not exist with respect to the election of directors.
See "Principal Shareholders" on page 18 for a list of the persons known by the
corporation to be the beneficial owner of 5% or more of the corporation's
outstanding common stock as of the voting record date.
If you are also a participant in the Codorus Valley Bancorp, Inc. Dividend
Reinvestment and Stock Purchase Plan, the enclosed proxy will not serve as a
voting instruction card for your shares held in the plan. Instead, Norwest Bank
Minnesota, N.A., the plan administrator, will provide plan participants with a
separate voting instruction card/proxy representing those shares held in the
Dividend Reinvestment and Stock Purchase Plan. The separate voting instruction
cards must be signed and returned to Norwest or your shares held in the plan
will not be voted.
If your voting instruction card is signed but does not indicate your voting
preferences, the plan administrator will vote your shares FOR the 3 nominees for
Class A Director and FOR the proposals. Whole and fractional shares credited to
your dividend reinvestment account as of March 16, 2000, are included on your
voting instruction card.
By properly completing a proxy, the shareholder appoints Dallas L. Darr,
Mildred L. Lackey and George E. McCullough as proxy holders to vote his or her
shares as specified on the proxy. The proxy holders will vote any signed proxy
not specifying to the contrary as follows:
FOR the election of the following individuals as Class A Directors for a
term of 3 years expiring in 2003:
o Rodney L. Krebs
o Dallas L. Smith
o George A. Trout, D.D.S.
2
FOR the approval and adoption of the Codorus Valley Bancorp, Inc. 2000
Stock Incentive Plan; and
FOR the ratification of the selection of Ernst & Young LLP as the
corporation's independent auditors for the fiscal year ending December 31,
2000.
Codorus Valley Bancorp, Inc.'s board of directors proposes to mail this
proxy statement to the corporation's shareholders on or about April 5, 2000.
Quorum and Vote Required For Approval
Codorus Valley Bancorp, Inc.'s Articles of Incorporation authorize the
corporation to issue up to 10,000,000 shares of common stock, par value $2.50
per share.
At the close of business on March 16, 2000, the corporation had 2,340,283
shares of common stock issued and outstanding. The corporation's common stock is
the only issued and outstanding class of stock.
In order to hold the annual meeting, a "quorum" of shareholders must be
present. Under Pennsylvania law and the corporation's Bylaws, the presence, in
person or by proxy, of the holders of a majority of the shares entitled to vote
(meaning a majority of the number of shares outstanding on the voting record
date) is required to constitute a quorum for the transaction of business at the
meeting. The proxy holders will count votes withheld and abstentions when
determining the presence of a quorum. However, the proxy holders will not count
broker non-votes when determining the presence of a quorum for the particular
matter as to which the broker withheld authority.
Assuming the presence of a quorum, the affirmative vote of a majority of
the number of shares that constitutes a quorum for the transaction of business
at the annual meeting is required to elect the director candidates. The proxy
holders will not cast votes for or against any director candidates where the
broker withheld authority. Cumulative voting rights do not exist for the
election of directors. Each share of common stock is entitled to cast only one
vote for each nominee. For example, if a shareholder owns 10 shares of common
stock, he or she may cast up to 10 votes for each of the 3 Class A Director
nominees.
Assuming the presence of a quorum, the affirmative vote of a majority of
the number of shares that constitutes a quorum for the transaction of business
at the annual meeting is required to approve and adopt the Codorus Valley
Bancorp, Inc. 2000 Stock Incentive Plan. Abstentions and broker non-votes do not
constitute "votes cast" and, therefore, do not count either FOR or AGAINST the
plan's approval. However, abstentions and broker non-votes have the practical
effect of reducing the number of affirmative votes required to achieve a
majority for the matter by reducing the total number of shares voted from which
the required majority is calculated.
Assuming the presence of a quorum, the affirmative vote of a majority of
the number of shares that constitutes a quorum for the transaction of business
at the annual meeting is required to ratify the selection of independent
auditors. Abstentions and broker non-votes do not constitute "votes cast" and,
therefore, do not count either FOR or AGAINST ratification. However, abstentions
and broker non-votes have the practical effect of
3
reducing the number of affirmative votes required to achieve a majority for the
matter by reducing the total number of shares voted from which the required
majority is calculated.
Revocability of Proxy
Shareholders who sign proxies may revoke them at any time before they are
voted by:
o delivering written notice of the revocation or delivering a properly
executed later-dated proxy to Harry R. Swift, Secretary of Codorus Valley
Bancorp, Inc., at Codorus Valley Corporate Center, 105 Leader Heights
Road, York, Pennsylvania, 17403 or by mailing the notice or proxy to
Harry R. Swift, Secretary, at Codorus Valley Bancorp, Inc., P.O. Box
2887, York, Pennsylvania 17405-2887; or
o attending the meeting and voting in person after giving written notice to
the Secretary of Codorus Valley Bancorp, Inc.
You have the right to vote and, if desired, to revoke your proxy any time
before the annual meeting. Should you have any questions, please call Harry R.
Swift, Secretary, at (717) 747-1519 or (800) 646-1970.
Methods of Voting
Voting by Proxy
---------------
o Mark your selections.
o Date your proxy and sign your name exactly as it appears on your proxy.
o Mail the proxy to Norwest Bank Minnesota, N.A. in the enclosed postage-
paid envelope.
Voting in Person
----------------
o Attend the annual meeting and show proof of eligibility to vote.
o Obtain a ballot.
o Mark your selections.
o Date your ballot and sign your name exactly as it appears in the
corporation's transfer books.
4
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
Governance
The board of directors oversees all of the corporation's business,
property, and affairs. The chairman and officers keep the members of the board
informed of the corporation's business through discussions at board meetings and
by providing them reports and other materials. The members also keep themselves
informed by attending board and committee meetings.
During 1999, the corporation's board of directors held 11 meetings and the
bank's board of directors held 25 meetings. Each director attended at least 75%
of the combined total number of meetings of the corporation's and the bank's
boards and the committees of which he or she was a member.
Directors and Executive Officers of Codorus Valley Bancorp, Inc.
The following table sets forth (in alphabetical order) selected information
about the corporation's directors and executive officers. The officers are
elected by the board of directors and each holds office at the board's
discretion.
POSITION AGE AS OF
NAME POSITION HELD SINCE MARCH 16, 2000
---- -------- ---------- --------------
D. Reed Anderson, Esq. Class C Director 1994 57
M. Carol Druck Class B Director 1988 51
MacGregor S. Jones Class C Director 1993 54
Barry A. Keller Class B Director 1986 66
Vice Chairman of the Board 1994
Rodney L. Krebs Class A Director 1988 59
Treasurer 1990
Larry J. Miller Class C Director 1986 48
President 1986
Chief Executive Officer 1986
Dallas L. Smith Class A Director 1986 54
George A. Trout, D.D.S. Class A Director 1986 65
Chairman of the Board 1994
Donald H. Warner Class B Director 1990 61
Vice President 1993
Harry R. Swift, Esq. Secretary 1998 52
Vice President 1998
General Counsel 1997
Jann Allen Weaver Assistant Treasurer 1991 50
Assistant Secretary 1991
Chief Financial Officer 1989
5
Executive Officers of PeoplesBank
The following table sets forth (in alphabetical order) selected information
about the bank's executive officers, each of whom is elected by the bank's board
of directors and each of whom holds office at the board's discretion.
POSITION AGE AS OF
NAME POSITION HELD SINCE MARCH 16, 2000
---- -------- ---------- --------------
Barry A. Keller Chairman of the Board 1994 66
Larry J. Miller President 1981 48
Chief Executive Officer 1981
Harry R. Swift, Esq. General Counsel 1997 52
Executive Vice President 1999
Cashier 1999
George A. Trout, D.D.S. Vice Chairman of the Board 1989 65
Jann Allen Weaver Chief Financial Officer 1989 50
Senior Vice President 1994
Committees and Meetings of the Corporation's and the Bank's Board of Directors
The corporation's board of directors has, at present, no standing
committees, except the audit committee, which jointly serves the corporation and
the bank. The corporation does not maintain a compensation or a nominating
committee. A shareholder who intends to nominate a candidate for election to the
board of directors must provide written notice to the corporation's Secretary in
accordance with the informational requirements of Section 10.1 of the
corporation's bylaws. The shareholder's notice must be delivered or received at
the corporation's principal executive office not less than 90 days prior to the
anniversary date of the preceding shareholder meeting called for the election of
directors.
During 1999, the bank's board of directors maintained 5 standing
committees: executive, audit, trust and investment services, asset-liability
(ALCO) and marketing steering. The function and composition of each of these
committees is described below.
EXECUTIVE: This committee is authorized to meet at the call of an officer, primarily to take action
regarding the purchase and sale of securities and to pass on loans presented for discount
between regularly scheduled board meetings. This committee did not meet in 1999. All matters
were considered by the entire board of directors. Barry A. Keller chairs this committee.
AUDIT: This committee jointly serves the corporation and the bank. It recommends the outside
auditor for each fiscal year and oversees the bank's audit function. This committee is also
the source for reports concerning factual conflicts of interest. It reviews circumstances
regarding conflicts of interest and reports to the full board of directors. This committee
met 4 times in 1999. MacGregor S. Jones chairs this committee.
6
TRUST AND This committee provides general oversight and supervises the operation of the bank's trust
INVESTMENT and investment services division. This committee met 12 times in 1999. D. Reed Anderson
SERVICES: chairs this committee.
ASSET-LIABILITY: This committee reviews the bank's asset-liability and interest rate risk management. This
committee met 7 times in 1999. Larry J. Miller chairs this committee.
MARKETING This committee provides broad oversight and guidance to the bank's marketing activities. Its
STEERING: goals are to increase the bank's identity in the marketplace, increase market share and
profitability. This committee met 11 times in 1999. Cheryl L. Keener chairs this committee.
COMMITTEES OF THE BANK'S BOARD OF DIRECTORS
MEETINGS HELD
COMMITTEE MEMBERS IN 1999
- ---------------------------------------------------------------------------------------------------------
Executive Barry A. Keller, chair, MacGregor S. Jones, Larry J. 0
Miller, George A. Trout, D.D.S., and Donald H. Warner
- ---------------------------------------------------------------------------------------------------------
Audit MacGregor S. Jones, chair, Rodney L. Krebs, and Dallas 4
L. Smith
- ---------------------------------------------------------------------------------------------------------
Trust and Investment Services D. Reed Anderson, chair, M. Carol Druck, and Donald H. 12
Warner
- ---------------------------------------------------------------------------------------------------------
Asset-Liability Larry J. Miller, chair, George A. Trout, D.D.S., and 7
non-directors Todd A. Tyson, and Jann A. Weaver
- ---------------------------------------------------------------------------------------------------------
Marketing Steering Cheryl L. Keener, non-director chair, D. Reed Anderson, 11
Esq., MacGregor S. Jones, and non-directors James W.
Coombes, Stephanie R. Covahey, Kent A. Ketterman, and
Jann A. Weaver
- ---------------------------------------------------------------------------------------------------------
Compensation of the Boards of Directors
In 1999, members of the corporation's board of directors were not paid for
attendance at board meetings or committee meetings. The bank does not compensate
employee directors for attendance at board of directors meetings or committee
meetings.
In 1999, the bank's non-employee directors were compensated for their
services rendered as follows:
o a monthly retainer of $600;
o directors fees of $350 for each regular or special meeting attended; and
7
o committee meeting fees paid at the rate of $100 per hour for attendance.
The bank's chairman of the board received a monthly retainer of $700 in
1999. In addition, the bank paid life insurance premiums on behalf of the
non-employee bank directors, which amounted to $1,891 in 1999. In the aggregate,
the bank paid $129,241 to the board of directors, which does not include $7,200
deferred by Mr. Keller and $8,250 deferred by Dr. Trout, pursuant to the
Independent Directors' Deferred Compensation Plan.
Independent Directors' Deferred Compensation Plan
The corporation maintains a deferred compensation plan for non-employee, or
"independent", directors. Plan participants may elect to defer receipt of
compensation in order to gain certain tax benefits under Internal Revenue Code
Section 451. This plan is not funded by the corporation.
Independent Directors' Stock Option Plan
The corporation maintains the Codorus Valley Bancorp, Inc. 1998 Independent
Directors Stock Option Plan. The corporation's shareholders approved the plan at
the 1998 annual meeting and the Board of Directors originally reserved 100,000
shares, or 105,000 shares as of December 31, 1999, as adjusted for stock
dividends, for issuance under the plan. The purposes of the plan are to advance
the corporation's and the bank's development, growth and financial condition by
providing additional incentives to non-employee members of the corporation's
board of directors by encouraging them to acquire stock ownership in the
corporation and to secure, retain and motivate non-employee directors.
Directors who are not employees of the corporation or its subsidiaries are
eligible to receive awards under the plan. Pursuant to the terms of the plan,
each non-employee director who attended at least 75% of the total number of
board of directors and committee meetings during the previous fiscal year is
granted non-qualified stock options at each annual reorganization meeting of the
corporation. The first award under the plan was made at the 1998 organization
meeting. The purchase price of common stock subject to each stock option granted
is the fair market value at the time of grant. The recipient may exercise these
stock options for 10 years from the grant date. As of December 31, 1999, the
corporation had granted 49,600 non-qualified stock options under this plan.
BOARD OF DIRECTORS REPORT ON
EXECUTIVE COMPENSATION
Compensation Committee Report
The corporation's board of directors governs the corporation and its
subsidiaries. In fulfilling its fiduciary duties, the board of directors
endeavors to act in the best interests of the corporation's shareholders,
customers, and the communities served by the corporation and its subsidiaries.
To accomplish the corporation's strategic goals and objectives, the board of
directors engages competent persons, who undertake to accomplish these
objectives with integrity and with cost-effectiveness. The board of directors
fulfills part of
8
its strategic mission through the compensation of these individuals. The bank,
the corporation's wholly-owned financial subsidiary, provides compensation to
the corporation's and the bank's directors and employees.
The corporation seeks to offer competitive compensation opportunities for
all employees based on the individual's contribution and personal performance.
The entire board of directors (comprised of the individuals named below)
administers the compensation program. The board seeks to establish a fair
compensation policy to govern the executive officers base salaries and incentive
plans to attract and motivate competent, dedicated, and ambitious managers,
whose efforts will enhance the corporation's products and services and will
result in improved profitability, increased dividends to the shareholders, and
subsequent appreciation in the market value of the corporation's shares.
The board reviews and annually approves the compensation of the
corporation's and the bank's top executives, including the chief executive
officer, executive vice president, general counsel, chief financial officer,
senior vice president, and all other vice presidents. As a guideline in
determining base salaries, the board uses information composed of a Pennsylvania
bank peer group. This peer group of banks with assets of $200 million to $500
million is different than the peer group used for the performance graph. The
peer group on the performance graph includes bank holding companies and banks
listed on NASDAQ, which may not be located in Pennsylvania. The corporation uses
Pennsylvania peer group banks because of common industry issues and competition
for the same executive talent group.
The board of directors does not deem Section 162(m) of the Internal Revenue
Code (the IRC) to be applicable to the corporation at this time. The board of
directors intends to monitor the future application of IRC Section 162(m) to the
compensation paid to its executive officers; and, in the event that this section
becomes applicable, the board of directors intends to amend the corporation's
and the bank's compensation policies to preserve the deductibility of the
compensation payable under the policies.
Chief Executive Officer Compensation
The board of directors determined that the chief executive officer's 1999
compensation of $180,000, a 2.9% increase in compensation from 1998 was
appropriate in light of the following 1999 Codorus Valley Bancorp, Inc.
accomplishments: successful completion of the annual business plan, formation
and operation of SYC Settlement Services, Inc., technological advancements, and
completion of other long term strategic initiatives. No direct correlation
exists between the chief executive officer's compensation, the chief executive
officer's increase in compensation, and any of the above criteria, nor does the
board give any weight to any of the above specific individual criteria. The
board subjectively determines the increase in the chief executive officer's
compensation based on a review of all relevant information.
9
Executive Officers Compensation
The board of directors increased the 1999 compensation of the corporation's
and the bank's executive officers by approximately 4.1% over 1998 compensation.
The board determined these increases based on its subjective analysis of the
individual's contribution to the corporation's strategic goals and objectives.
In determining whether the strategic goals have been achieved, the board
considers numerous factors, including the following: the corporation's
performance as measured by earnings, revenues, return on assets, return on
equity, market share, total assets and non-performing loans. Although the board
measured the performance and increases in compensation in light of these
factors, no direct correlation exists between any specific criteria and an
employee's compensation, nor does the board, in its analysis, attribute specific
weight to any such criteria. The board makes a subjective determination after
review of all relevant information, including the above.
In addition to base salary, the corporation's and the bank's executive
officers may participate in annual and long-term incentive plans, including the
bank's 401(k) plan and the corporation's stock incentive plan. (See pages 12 and
13 for more information.)
General labor market conditions, the individual's specific responsibilities
and the individual's contributions to the corporation's success influence total
compensation opportunities available to the corporation's and the bank's
employees. The board reviews individuals annually on their anniversary date of
hire and strives to offer compensation that is competitive with that offered by
employers of comparable size in our industry. Through these compensation
policies, the corporation strives to meet its strategic goals and objectives to
its constituencies and provide compensation that is fair and meaningful to its
executive officers.
This report is furnished by Codorus Valley Bancorp, Inc.'s board of
directors, which performs the functions of a compensation committee.
BOARD OF DIRECTORS
D. Reed Anderson, Esq. Barry A. Keller Dallas L. Smith
M. Carol Druck Rodney L. Krebs George A. Trout, D.D.S.
MacGregor S. Jones Larry J. Miller Donald H. Warner
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Larry J. Miller, President and Chief Executive Officer of the corporation
and the bank, participated in the discussion relating to the compensation of all
bank employees; but, he neither participates in conducting his own review nor
takes part in determining his own compensation.
10
EXECUTIVE COMPENSATION
The following table sets forth information with regard to the annual
compensation for service in all capacities to the corporation and to the bank
for the fiscal years ended December 31, 1999, 1998, and 1997 for those persons
who were, at December 31, 1999:
o the chief executive officer; and
o the other four most highly compensated executive officers of the
corporation and of the bank, to the extent that these persons total
annual salary and bonus exceeded $100,000.
SUMMARY COMPENSATION TABLE
- ---------------------------------------------------------------------------------------------------------------------------------
LONG-TERM COMPENSATION
ANNUAL COMPENSATION SECURITIES UNDER-
NAME AND OTHER ANNUAL RESTRICTED STOCK LYING OPTIONS/
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) AWARD(S) ($) SARS (#)(1) LTIP PAYOUTS ($)
- ---------------------------------------------------------------------------------------------------------------------------------
Larry J. Miller, 1999 172,432 0 0 0 3,000 0
President and Chief 1998 167,003 0 0 0 4,200 0
Executive Officer of 1997 155,161 0 0 0 30,870 0
the corporation and
the bank
Harry R. Swift, 1999 146,251 500 0 0 1,500 0
Secretary, General 1998 137,560 0 0 0 2,100 0
Counsel and Vice 1997 N/A -- -- -- -- --
President of the
corporation, General
Counsel, Executive
Vice President and
Cashier of the bank
- ------------------------------------------------------------------------------------------------------------------------------
NAME AND ALL OTHER COMPEN-
PRINCIPAL POSITION SATION($)(2)(3)(4)
- --------------------
Larry J. Miller, 16,901
President and Chief 16,125
Executive Officer of 14,941
the corporation and
the bank
Harry R. Swift, 8,964
Secretary, General 9,476
Counsel and Vice --
President of the
corporation, General
Counsel, Executive
Vice President and
Cashier of the bank
- --------------------
(1) As adjusted for all stock dividends paid through December 31, 1999.
(2) Includes bank contributions to the 401(k) plan on behalf of Mr. Miller of
$4,593, $4,421, and $3,107 for 1999, 1998 and 1997, respectively.
(3) Includes life insurance premiums paid on behalf of Mr. Miller of $478,
$1,432, and $1,562 for 1999, 1998 and 1997, respectively; and life insurance
premiums paid on behalf of Mr. Swift of $505 and $1,226 for 1999 and 1998,
respectively.
(4) Includes the payment of club dues in the amount of $1,080 for 1999 and
$1,020 for each of 1998 and 1997; as well as a car for Mr. Miller, valued at
$10,750 for 1999 and $9,252 for each of 1998 and 1997. Also includes a
vehicle for Mr. Swift valued at $8,459 in 1999 and $8,250 in 1998.
11
Qualified Stock Options
The following table sets forth information relating to the corporation's
grants of qualified stock options to the executives named in the preceding table
during 1999, pursuant to the Codorus Valley Bancorp, Inc. 1996 Stock Incentive
Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES
NUMBER OF % OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION -----------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- ------------ ------------ ----------- ---------- ------- -------
(A) (B) (C) (D) (E) (F) (G)
Larry J. Miller 3,000/0 27.27 17.562 12/27/09 33,120 83,970
Harry R. Swift 1,500/0 13.64 17.562 12/27/09 16,560 41,985
The following table sets forth information relating to the exercise of and
year end value of qualified stock options granted to the executives named above.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISABLE VALUE OF UNEXERCISED
ACQUIRED ON OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
EXERCISE VALUE AT FY-END (#)(1) AT FY-END ($)(1)(2)
NAME (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- --------------- ------------------------- -------------------------
(A) (B) (C) (D) (E)
Larry J. Miller -0- -0- 16,758/35,203 55,302/43,053
Harry R. Swift -0- -0- 2,100/1,500 0/282
- ------------------
(1) As adjusted for all stock dividends paid through December 31, 1999.
(2) The fair market value of the corporation's common stock on December 31, 1999
was $17.75 per share.
Stock Incentive Plan
The corporation maintains the Codorus Valley Bancorp, Inc. 1996 Stock
Incentive Plan. The corporation's shareholders approved the plan at the 1996
annual meeting in order to advance the corporation's and its subsidiaries'
development, growth and financial condition. The corporation originally reserved
50,000 shares under the plan, or 75,711 shares as of December 31, 1999, as
adjusted for stock dividends. The plan provides for awards of qualified stock
options and non-qualified stock options to officers and is administered by a
disinterested committee of the corporation's board of directors. In 1999, 11,000
qualified stock options were granted under the plan. As of December 28, 1999,
all shares reserved under this plan had been awarded.
12
401(k) Plan
The bank maintains and sponsors a defined contribution 401(k) savings and
investment plan. The 401(k) plan is administered by trustees designated by the
401(k) plan sponsor. The 401(k) plan trustees are Larry J. Miller, President and
Chief Executive Officer of the corporation and the bank and Connie E.
Sohnleitner, Vice President/Human Resources Division of the bank. The 401(k)
plan is subject to the Internal Revenue Code of 1986 and to the regulations
promulgated thereunder. Participants are entitled to certain rights and
protection under the Employee Retirement Income Security Act of 1974.
Each bank employee who attains the age of 21, successfully completes any
probationary period(s) and, if part time, completes 1,000 hours of service per
year may participate in the 401(k) plan. An eligible employee may elect to
contribute certain portions of salary, wages, bonus (other than year-end bonus),
or other direct remuneration to the 401(k) plan. Generally, eligible employees
may not contribute more than 20% of their compensation. In 1999, 1998 and 1997,
the bank matched 50% of the first 6% of the employee's contributions. The bank's
contributions to the 401(k) plan for each participant vest in 3 years from plan
enrollment. The employee's contributions to the 401(k) plan vest immediately.
The bank incurred expenses of $57,000, $58,000, and $51,000, for financial
reporting purposes during 1999, 1998 and 1997, respectively, in connection with
the 401(k) plan.
Employment Contract with Change of Control Provision
In 1993, the corporation, the bank and Larry J. Miller, President and Chief
Executive Officer of the corporation and the bank, entered into an employment
agreement for a term of 3 years, which term renews automatically for an
additional 12 months at the end of each calendar year unless the corporation and
the bank provide written notice to Mr. Miller of non-renewal. The agreement
specifies Mr. Miller's positions and duties, compensation and benefits, and
indemnification and termination provisions. The agreement also contains a
non-competition provision and a confidentiality provision.
Under the terms of his employment agreement, Mr. Miller serves as the
President and Chief Executive Officer of the corporation and of the bank and as
a member of the boards of directors of the corporation and of the bank. Pursuant
to his employment agreement, Mr. Miller was entitled to an annual direct salary
of $180,000 in 1999. This salary may be increased in subsequent years as the
board of directors deems appropriate. In addition, the boards of directors of
the corporation and the bank have discretion to pay a periodic bonus to Mr.
Miller. Mr. Miller is not entitled to receive director's fees or other
compensation for serving on the corporation's or the bank's board of directors
or their committees. Mr. Miller is also entitled to receive the employee
benefits made available to bank employees and to use a vehicle provided by the
bank.
As amended in October 1997, the agreement with Mr. Miller provides that if
his employment is terminated by the corporation or the bank, due to death,
disability or "for cause", then he is entitled to the full annual direct salary
through the date of termination. If Mr. Miller's employment is terminated by the
corporation or the bank other than pursuant to death, disability or "for cause",
then he is entitled to his full annual direct
13
salary from the date of termination through the last day of the term of the
agreement, or an amount equal to his current annual direct salary, whichever is
greater. If Mr. Miller terminates his employment for "good reason", then he is
entitled to an amount equal to his direct annual salary. As amended in 1997, if
Mr. Miller's employment is terminated as a result of a change in control, then
he is entitled to receive a lump sum payment equal to 2.99 times his then
current direct annual salary and will continue his eligibility to participate in
all employee benefit plans and programs in which he was previously entitled to
participate.
Change of Control Agreement
On October 1, 1997, the corporation, the bank and Harry R. Swift,
Secretary, General Counsel and Vice President of the corporation and General
Counsel, Executive Vice President and Cashier of the bank, entered into a change
of control agreement that provides certain benefits to Mr. Swift in the event of
a change of control. The agreement becomes operative only upon a change in
control of the corporation or the bank or other specified event. The initial
term of the agreement is 39 months and each subsequent term consists of a 36
month period, which term automatically renews for an additional 12 months at the
end of each calendar year unless the corporation and the bank provide written
notice to Mr. Swift of non-renewal. The agreement specifies payments upon
termination as of the date of the change of control at not less than 2 times Mr.
Swift's then current annual direct salary.
Salary Continuation Agreements
On October 1, 1998, the bank entered into salary continuation agreements
with Larry J. Miller and Harry R. Swift, respectively. These agreements provide
for certain payments to these named executives following the executive's normal
retirement date and continuing for 239 and 179 months, respectively. The
agreements contain provisions for early retirement, disability benefits, death
benefits and payments on specified changes of control. The agreements also
contain non-competition provisions.
Supplemental Retirement Plans
In 1998, the bank provided group term life insurance replacement plans for
specific executive officers. These plans are the funding vehicle for payments to
the executives upon certain specified events. The specified events include a
change of control and the executive's normal retirement. In addition, the bank
provided a director approved group term life insurance replacement plan for the
benefit of the corporation's directors. This plan provides for payments to
accrue to the directors following termination of their service as a member of
the board of directors. These supplemental retirement plans replaced, in part,
other insurance coverages.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The corporation and the bank have not entered into any material
transactions, proposed or consummated, with any director or executive officer of
the corporation or the bank, or any associate of the foregoing persons, with the
exception of that disclosed below. The corporation and the bank have engaged in
and intend to continue to engage in banking and financial transactions in the
ordinary course of business with directors and officers of
14
the corporation and the bank and their associates on comparable terms with
similar interest rates as those prevailing from time to time for other bank
customers.
Total loans outstanding from the bank at December 31, 1999, to the
corporation's and the bank's officers and directors as a group, members of their
immediate families and companies in which they had an ownership interest of 10%
or more amounted to $2,100,979, or approximately 8.3% of the bank's total equity
capital. The bank made these loans in the ordinary course of business, on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons, and did
not involve more than the normal risk of collection or present other unfavorable
features. The largest aggregate amount of indebtedness outstanding at any time
during fiscal year 1999 to officers and directors of the corporation and the
bank as a group was $3,437,436. The aggregate amount of indebtedness outstanding
as of the latest practicable date, March 16, 2000, to the above described group
was $2,050,274.
In 1999, on behalf of the bank, Director Druck's realty firm sold one of
the bank's other real estate owned (OREO) properties and earned a $1,200
commission. Director Druck was entitled to a portion of the commission paid.
ELECTION OF DIRECTORS
Qualification and Nomination of Directors
Section 10.2 of the corporation's bylaws authorizes the number of directors
to be not less than 5 nor more than 25. The bylaws provide for 3 classes of
directors with staggered 3 year terms of office. The board of directors may,
from time to time, fix the number of directors and their respective
classifications. All candidates for director must be at least 21 years of age.
No director may continue to serve after he or she attains the age of 70 years.
Each director must hold solely, in his or her name, at least 100 shares of
common stock, which shares must be free of any liens or other encumbrances.
The board of directors nominated the 3 persons named below to serve as
Class A Directors until the 2003 annual meeting of shareholders or until their
earlier death, resignation, or removal from office. All of the nominees are
presently members of the board of directors and all have consented to serve
another term as a director if re-elected. If any of the nominees should be
unavailable to serve for any reason, pursuant to Section 11.1 of the
corporation's bylaws, a majority of the board of directors then in office may
fill the vacancy until the expiration of the term of the class of directors to
which he or she was appointed.
In accordance with Section 10.3 of the corporation's bylaws, the board of
directors is divided into 3 classes whose terms expire at successive annual
meetings. Therefore, the corporation maintains a classified board with staggered
3 year terms of office. Currently, Class A consists of 3 directors, Class B
consists of 3 directors, and Class C consists of 3 directors. Shareholders will
elect 3 Class A Directors at the annual meeting to serve for a 3 year term that
expires at the corporation's 2003 annual meeting.
15
The proxy holders intend to vote all proxies for the election of each of
the 3 nominees named below, unless you indicate that your vote should be
withheld from any or all of them. Each nominee elected as a director will
continue in office until his or her successor has been duly elected and
qualified, or until his or her death, resignation or retirement.
The board of directors proposes the following nominees for election as
Class A Directors at the annual meeting:
o Rodney L. Krebs
o Dallas L. Smith
o George A. Trout, D.D.S.
The board of directors recommends that shareholders vote FOR the proposal
to elect the 3 nominees listed above as Class A Directors.
Information as to Nominees and Directors
Set forth below is the principal occupation and certain other information
regarding the nominees and other directors whose terms of office will continue
after the annual meeting. You will find information about their share ownership
on page 19.
CURRENT CLASS A DIRECTORS (to serve until 2000)
AND
NOMINEES FOR CLASS A DIRECTORS (to serve until 2003)
Rodney L. Krebs Mr. Krebs, age 59, has served as the corporation's Treasurer since 1990 and
has been a member of the corporation's and the bank's board of directors since
1988. Mr. Krebs is the President of Springfield Contractors, Inc., a heavy
equipment/earth moving firm located near Glen Rock, Pennsylvania.
Dallas L. Smith Mr. Smith, age 54, served as the corporation's Secretary from January 1994 to
May 1999. He has served as a bank director since 1983 and as a corporation
director since 1986. He is the President of Bruce V. Smith, Inc., a retail
furniture corporation located in Jacobus, Pennsylvania.
George A. Trout, D.D.S. Dr. Trout, age 65, has served as the corporation's Chairman since January
1994. Dr. Trout has served as the bank's Vice Chairman since 1992. He has been
a member of the bank's board of directors since 1975 and of the corporation's
board since 1986. Dr. Trout is a retired dentist.
16
BOARD OF DIRECTORS -- CONTINUING AS DIRECTORS
CLASS B DIRECTORS (to serve until 2001)
M. Carol Druck Ms. Druck, age 51, has been a member of the corporation's and the bank's board
of directors since 1988. She served as the corporation's Assistant Secretary
from April 1990 to April 1997 and as the corporation's Assistant Treasurer
from January 1994 to April 1997. Ms. Druck is the President of Druck Realty,
Inc. and is a realtor with Jack Gaughen Realty, Inc. located in Jacobus,
Pennsylvania.
Barry A. Keller Mr. Keller, age 66, has been a member of the corporation's board of directors
since 1986 and of the bank's board since 1977. He has served as the
corporation's Vice Chairman since 1994 and as the bank's Chairman since 1994.
He is a retired insurance broker/consultant, formerly with Keller-Brown
Insurance Services located in Shrewsbury, Pennsylvania.
Donald H. Warner Mr. Warner, age 61, has been a member of the corporation's and the bank's
board of directors since 1990. He has been a Vice President of the corporation
since 1993. Mr. Warner is the President of Warner Services, Inc., a moving and
storage company located in Red Lion, Pennsylvania.
CLASS C DIRECTORS (to serve until 2002)
D. Reed Anderson, Esq. Mr. Anderson, age 57, has served as a member of the corporation's and the
bank's board of directors since 1994. Mr. Anderson is an attorney-at-law with
the firm of Stock and Leader, P.C. located in York, Pennsylvania.
MacGregor S. Jones Mr. Jones, age 54, has served as a member of the corporation's and the bank's
board of directors since 1993. He served as the corporation's Assistant
Secretary from January 1994 to April 1997. Mr. Jones is a retired automobile
dealer.
Larry J. Miller Mr. Miller, age 48, has served as the corporation's President and Chief
Executive Officer and a director since 1986 and as the bank's President and
Chief Executive Officer and a director since 1981.
17
BENEFICIAL OWNERSHIP OF
CODORUS VALLEY BANCORP, INC.'S STOCK OWNED BY
PRINCIPAL OWNERS AND MANAGEMENT
Principal Shareholders
The following table sets forth, as of March 16, 2000, the name and address
of each person who owns of record or who is known by the board of directors to
be the beneficial owner of more than 5% of the corporation's outstanding common
stock, the number of shares beneficially owned by such person, and the
percentage of the corporation's outstanding common stock owned. The "beneficial
owner" of a security includes any person who directly or indirectly has or
shares: voting power, including the power to vote or to direct the voting of the
security; and/or investment power, including the power to dispose or direct the
disposition of the security.
AMOUNT AND
NATURE OF PERCENTAGE OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP CLASS
- ---------------- -------------------- -------------
PBT Company 241,992(1) 10.34%
PeoplesBank, A Codorus Valley Company
Trust and Investment Services Division
Codorus Valley Corporate Center
105 Leader Heights Road
York, PA 17403
- ------------------
(1) 174,492 shares of common stock beneficially owned by the bank are held in
its fiduciary capacity. The bank has sole voting and dispositive power over
these shares of common stock. 41,409 shares of common stock beneficially
owned by the bank are shares for which the bank exercises shared dispositive
power. 4,583 shares of common stock beneficially owned by the bank are
shares for which the bank exercises sole voting power. 21,508 shares of
common stock beneficially owned by the bank are shares for which the bank
exercises shared voting power and shared dispositive power. The bank intends
to cast all shares under its control FOR the election of the nominees for
Class A Director, FOR the approval and adoption of the Codorus Valley
Bancorp, Inc. 2000 Stock Incentive Plan, and FOR the ratification of Ernst &
Young LLP, as the corporation's independent auditors.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
18
Share Ownership by the Directors, Officers and Nominees
The following table sets forth, as of March 16, 2000, and from information
received from the respective individuals, the amount and percentage of the
common stock beneficially owned by each director, each nominee and all officers,
directors, and nominees as a group. All shares are held individually unless
otherwise indicated. The percentage of outstanding stock owned is less than 1%,
unless otherwise indicated.
AMOUNT AND
NATURE OF
NAME OF INDIVIDUAL OR BENEFICIAL PERCENTAGE OF
IDENTITY OF GROUP OWNERSHIP (1)(2) CLASS
- --------------------- ---------------- -------------
D. Reed Anderson, Esq. 2,430(3) --
M. Carol Druck 3,061(4) --
MacGregor S. Jones 15,638(5) --
Barry A. Keller 44,143(6) 1.89%
Rodney L. Krebs 11,963(7) --
Larry J. Miller 9,967(8) --
Dallas L. Smith 4,752 --
George A. Trout, D.D.S. 53,593(9) 2.29%
Donald H. Warner 974(10) --
Harry R. Swift, Esq. 0 --
Jann Allen Weaver, CPA 296(11) --
All Officers and Directors as a Group
(9 Directors, 7 Officers, 11 persons in total) 146,817(12) 6.27%
- ------------------
(1) The securities "beneficially owned" by an individual are determined in
accordance with the definitions of "beneficial ownership" set forth in the
General Rules and Regulations of the Securities and Exchange Commission and
may include securities owned by or for the individual's spouse and minor
children and any other relative who has the same home, as well as
securities that the individual has or shares voting or investment power, or
has the right to acquire beneficial ownership within 60 days after March
16, 2000. Beneficial ownership may be disclaimed as to certain of the
securities. All numbers here have been rounded to the nearest whole number.
(2) Information furnished by the directors and the corporation.
(3) Includes 1,645 shares held in Mr. Anderson's 401(k) plan.
(4) Includes 2,015 shares held jointly with her spouse, and 430 shares held in
trust for her grandchildren.
(5) Includes 5,216 shares held in Mr. Jones' IRA, 7,823 shares held jointly
with his spouse, and 1,966 shares held individually in his spouse's IRA.
(6) Includes 2,862 shares held in Mr. Keller's IRA.
(7) Includes 3,262 shares held in Mr. Krebs' IRA, and 6,790 held jointly with
his spouse.
(8) Includes 7,085 shares held jointly with his spouse, 220 shares held jointly
with his mother, 576 shares held jointly with his daughter, 576 shares held
jointly with his son, and 675 shares held in Mr. Miller's IRA.
(9) Includes 5,933 shares held in Dr. Trout's Defined Benefit Pension Plan,
47,255 shares held in trust for his children, and 305 shares held jointly
with his spouse.
(10) Includes 441 shares held in Mr. Warner's IRA.
(11) These shares are held jointly with his spouse.
(12) Includes 36,423 shares reported in Schedule 13-G of PBT Co. (4,863 shares
are held for the benefit of MacGregor S. Jones, 21,508 shares are held for
the benefit of Barry A. Keller and 10,052 shares are held for the benefit
of Rodney L. Krebs).
19
PROPOSAL TO APPROVE AND ADOPT THE
CODORUS VALLEY BANCORP, INC.
2000 STOCK INCENTIVE PLAN
On March 14, 2000, the board of directors adopted the Codorus Valley
Bancorp, Inc. 2000 Stock Incentive Plan, subject to approval by the shareholders
at the annual meeting. The board of directors reserved 100,000 shares of common
stock for issuance under the stock incentive plan subject to future adjustment
for stock splits and stock dividends. The terms and effect of the stock
incentive plan are summarized below. This summary highlights selected
information from the stock incentive plan and may not contain all of the
information that is important to an individual shareholder. To understand the
stock incentive plan fully, and for more complete descriptions of the terms of
the plan, you should carefully read the stock incentive plan that is attached to
this proxy statement as Appendix "A". Appendix "A" is an integral part of this
proxy statement.
The purposes of the stock incentive plan are as follows:
o to advance the corporation's and its subsidiaries' development, growth
and financial condition by providing additional incentives to key
officers and other employees by encouraging them to acquire stock
ownership in the corporation;
o to secure, retain and motivate personnel who may be responsible for the
corporation's and its subsidiaries' operation and management; and
o to encourage employees to contribute to enhanced corporate performance.
Term
The stock incentive plan became effective on the date the board of
directors adopted it, subject to shareholder approval and will remain effective
until all awards under the plan either have lapsed, been exercised, satisfied or
canceled. The board may amend, suspend, or terminate the plan at any time so
long as the plan's amendment or termination does not alter or impair any rights
or obligations under any previously granted award. No awards may be granted
after the 10th anniversary of the plan's effective date, or March 14, 2010.
Administration
The non-employee members of the board, as a committee, administer and
interpret the stock incentive plan. The committee also determines which key
officers and other corporation and subsidiary employees qualify for awards under
the stock incentive plan and their associated terms and conditions. A person's
eligibility to receive an award will not prevent him or her from participation
in any other corporation or subsidiary incentive or benefit plan or program.
Awards
The committee may issue awards under the stock incentive plan in the form
of:
o Qualified Options -- options to purchase stock intended to qualify for
tax treatment as incentive stock options under Internal Revenue Code
Sections 421 and 422; these options have specific tax benefits to
recipients; or
20
o Non-Qualified Options -- options to purchase stock not intended to
qualify for tax treatment under Internal Revenue Code Sections 421
through 424; or
o Stock Appreciation Rights -- rights that entitle its holder, upon
exercise of the right, to receive from the issuer, in cash or common
stock, an amount equal to the excess of the market value of the
underlying common stock over the exercise price of the right; or
o Restricted Stock -- stock that is restricted as to transferability and
subject to forfeiture for a set period of time unless certain conditions
are met.
The non-employee members of the board, in their sole discretion, determine
the awards and their terms and conditions. Generally, awards may be exercised in
whole or in part. The corporation will use funds received from the exercise of
awards for its general corporate purposes. The committee may permit the
acceleration of any award's exercise terms when the situation warrants. However,
the committee may impose other requirements and conditions consistent with the
plan's objectives. In addition, the stock incentive plan provides for
acceleration of the exercise terms of all outstanding awards if a change of
control of the corporation occurs.
Federal Income Tax Consequences
An employee who receives qualified options will not recognize taxable
income on the grant or the exercise of the option. If the stock acquired by the
exercise of a qualified option is held until the later of (i) 18 months from the
award's grant date, and (ii) one year from the award's exercise date, any gain
(or loss) recognized on the stock's sale or exchange will be treated as
long-term capital gain (or loss), and the corporation will not receive any
income tax deduction. If stock acquired by the exercise of a qualified option is
sold or exchanged before the expiration of the required holding period, the
employee recognizes ordinary income in the year the disposition occurred in an
amount equal to the difference between the option price and the lesser of the
stock's fair market value on the exercise date, or the selling price. In the
event of a disqualifying disposition, the corporation is entitled to an income
tax deduction in the year the disposition occurred in an amount equal to the
amount of ordinary income the employee recognized.
An employee who receives a non-qualified option will not recognize taxable
income on the grant of the award. However, upon exercise, he or she will
recognize ordinary income in an amount equal to the excess of the fair market
value of the stock on the date that the option is exercised over the purchase
price paid for the stock. The corporation is entitled to an income tax deduction
in the year of exercise in an amount equal to the amount of income the employee
recognized.
An employee who receives a stock appreciation right will not recognize
taxable income on the grant of the award. However, upon the exercise of the
stock appreciation right, the employee will recognize ordinary income in an
amount equal to the cash or the fair market value of the stock received. The
corporation is entitled to an income tax deduction in the year the employee
exercises the stock appreciation in an amount equal to the amount of income the
employee recognized.
21
An employee who receives restricted stock will not recognize taxable income
on the grant of the award if the restricted stock is non-transferable and
subject to a substantial risk of forfeiture. The employee will recognize taxable
income the first time that the rights in the restricted stock are transferable,
or are not subject to a substantial risk of forfeiture, whichever occurs
earlier. The employee will recognize taxable income in an amount equal to the
excess of the fair market value of the restricted stock at that time, over the
amount paid for the restricted stock. However, an employee may elect to include
in his or her taxable income for the tax year when the stock is deemed
transferred to the employee, the excess of the fair market value of the
restricted stock at the time of the award, over the amount paid for the
restricted stock. The corporation is entitled to an income tax deduction, in an
amount equal to the taxable income the employee recognized, for the
corporation's taxable year in which the employee recognizes taxable income.
This tax discussion is only a summary. The federal income tax consequences
to any stock incentive plan recipient and to the corporation may vary from those
described above, depending upon individual actions and circumstances.
As of March 16, 2000, all executive officers and key employees were
eligible to participate in the stock incentive plan. No awards have been made
under the plan as of the date of this proxy statement. Future grants by the
committee are not presently determinable, nor is it possible to predict the
benefits that may be granted or allocated to particular individuals or groups
for 2000 and beyond. Currently, the board of directors has no definite plans to
issue any benefits under the stock incentive plan.
The board of directors recommends a vote FOR the following resolution that
will be presented at the annual meeting:
RESOLVED, that the Codorus Valley Bancorp, Inc. 2000 Stock
Incentive Plan, the text of which is set forth in its entirety in
Appendix "A" to the proxy statement for the 2000 Annual Meeting of
Shareholders, is hereby approved, adopted, ratified and confirmed by
the shareholders of the corporation.
The affirmative vote of a majority of the number of shares that constitutes
a quorum for the transaction of business at the annual meeting is required to
approve and adopt the Codorus Valley Bancorp, Inc. Stock Incentive Plan. The
proxy holders will vote FOR the above resolution unless shareholders specify
otherwise on their proxy cards.
The Board of Directors recommends that shareholders vote FOR the proposal
to approve and adopt the Codorus Valley Bancorp, Inc. 2000 Stock Incentive Plan.
22
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, requires that the
corporation's officers and directors, and persons who own more than 10% of the
registered class of the corporation's equity securities, file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than 10% shareholders are required by SEC
regulation to furnish the corporation with copies of all Section 16(a) forms
they file.
Based solely on its review of the copies of Forms 3, 4 and 5 and amendments
thereto received by it, or written representations from certain reporting
persons that no Form 5 was required for that reporting person, the corporation
believes that during the period from January 1, 1999 through December 31, 1999,
its officers and directors were in compliance with all filing requirements
applicable to them, with the exception of D. Reed Anderson who inadvertently
filed one late Form 5 to report one transaction during 1999.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Any shareholder who, in accordance with and subject to the provisions of
the proxy rules of the Securities and Exchange Commission, wishes to submit a
proposal for inclusion in the corporation's proxy statement for its 2001 Annual
Meeting of Shareholders must deliver the proposal in writing to the Secretary of
Codorus Valley Bancorp, Inc. at its principal executive offices, Codorus Valley
Corporate Center, 105 Leader Heights Road, P. O. Box 2887, York, Pennsylvania
17405-2887, not later than Friday, December 8, 2000. If a shareholder proposal
is submitted to the corporation after December 8, 2000, it is considered
untimely; and, although the proposal may be considered at the annual meeting, it
may not be included in the corporation's 2001 proxy statement. Any proposals
should be addressed to the Secretary. Section 10.1 of the corporation's bylaws
requires a shareholder to deliver a notice of nomination for election to the
board of directors to the Secretary no later than 90 days in advance of the
anniversary date of the preceding shareholders meeting. See page 15 for more
information on nomination procedures and requirements.
23
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly change in the
cumulative total shareholder return on the corporation's common stock against
the cumulative total return of the S&P 500 Stock Index and the NASDAQ Bank Index
for the period of 5 fiscal years commencing January 1, 1995 and ending December
31, 1999. The graph shows that the cumulative investment return to shareholders,
based on the assumption that a $100 investment was made on December 31, 1994, in
each of the corporation's common stock, the S&P 500 Stock Index and the NASDAQ
Bank Index, and that all dividends were reinvested in such securities over the
past 5 years, the cumulative total return on such investment would be $220.03,
$350.26 and $268.77, respectively. The shareholder return shown on the graph
below is not necessarily indicative of future performance.
[GRAPHIC]
In the printed version of the document, a line graph
appears which depicts the following plot points:
NASDAQ
Bank S & P 500
Index Codorus Index
Total Valley Total
Return Bancorp, Inc. Return
------ ------------- ---------
1994.......... 100 100 100
1995.......... 147.71 133.86 137.45
1996.......... 191 145.75 168.92
1997.......... 317.86 234.74 225.21
1998.......... 285.22 214.15 289.43
1999.......... 268.77 220.03 350.26
24
PROPOSALS
1. ELECTION OF 3 CLASS A DIRECTORS.
The nominees for election are:
o Rodney L. Krebs (director since 1988)
o Dallas L. Smith (director since 1986)
o George A. Trout, D.D.S. (director since 1986)
Each has consented to serve a 3 year term. (See page 16 for more
information.)
If any director is unable to stand for re-election, the board may designate
a substitute. The proxy holders will vote in favor of a substitute nominee. The
board of directors has no reason to believe the 3 nominees for Class A Director
will be unable to serve if elected.
Cumulative voting rights do not exist with respect to the election of
directors. The affirmative vote of a majority of the number of shares that
constitutes a quorum for the transaction of business at the annual meeting is
necessary to elect the director candidates.
The Board of Directors recommends that shareholders vote FOR the election
of the 3 nominees as Class A Directors.
2. APPROVAL AND ADOPTION OF THE CODORUS VALLEY BANCORP, INC. 2000 STOCK
INCENTIVE PLAN.
The affirmative vote of a majority of the number of shares that constitutes
a quorum for the transaction of business at the annual meeting is necessary to
approve and adopt the Codorus Valley Bancorp, Inc. 2000 Stock Incentive Plan.
The Board of Directors recommends that shareholders vote FOR the approval
and adoption of the Codorus Valley Bancorp, Inc. 2000 Stock Incentive Plan.
3. RATIFICATION OF ERNST & YOUNG LLP, AS THE CORPORATION'S INDEPENDENT AUDITORS.
The Audit Committee and the corporation's and the bank's board of directors
believe that Ernst & Young's knowledge of the corporation and the bank is
invaluable. Ernst & Young advised the corporation that none of its members has
any financial interest in the corporation. Ernst & Young served as the
corporation's independent auditors for the 1999 fiscal year. They assisted the
corporation and the bank with the preparation of their federal and state tax
returns and provided assistance in connection with regulatory matters, charging
the bank for such services at its customary hourly billing rates. The
corporation's and the bank's board of directors approved these non-audit
services after due consideration of the auditors' objectivity and after finding
them to be wholly independent.
In the event that the shareholders do not ratify the selection of Ernst &
Young LLP as the corporation's independent auditors for the 2000 fiscal year,
the board of directors may choose another accounting firm to provide independent
audit services for the 2000 fiscal year.
25
The affirmative vote of a majority of the number of shares that constitutes
a quorum for the transaction of business at the annual meeting is necessary to
ratify Ernst & Young LLP as the corporation's independent auditors for 2000.
The Board of Directors recommends that shareholders vote FOR the
ratification of Ernst & Young LLP as the independent auditors of Codorus Valley
Bancorp, Inc. for the year ending December 31, 2000.
ANNUAL REPORT
A copy of the corporation's annual report for its fiscal year ended
December 31, 1999 is enclosed with this proxy statement. A representative of
Ernst & Young LLP, the independent auditors who examined the financial
statements in the annual report, will attend the meeting. The representative
will have the opportunity to make a statement, if he desires to do so, and will
be available to respond to any appropriate shareholder questions concerning the
annual report.
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The board of directors knows of no business other than that referred to in
the accompanying Notice of Annual Meeting of Shareholders that may be presented
at the annual meeting. However, if any other matter should be properly presented
for consideration and voting at the annual meeting or any adjournments of the
meeting, the proxy holders will vote the proxies in what they determine to be
the corporation's best interests.
ADDITIONAL INFORMATION
Upon written request of any shareholder, a copy of the corporation's annual
report on Form 10-K for its fiscal year ended December 31, 1999, including the
financial statements, schedules and exhibits, required to be filed with the
Securities and Exchange Commission pursuant to Rule 13a-1 under the Securities
Exchange Act of 1934, may be obtained, without charge by writing to Chief
Financial Officer, Codorus Valley Bancorp, Inc., Codorus Valley Corporate
Center, 105 Leader Heights Road, P.O. Box 2887, York, Pennsylvania 17405-2887 or
via the Internet at www.peoplesbanknet.com, select Codorus Valley Bancorp, Inc.,
then select the Securities and Exchange Commission link, or visit the SEC's
website at www.sec.gov/edgarhp.htm.
26
APPENDIX "A"
CODORUS VALLEY BANCORP, INC.
2000 STOCK INCENTIVE PLAN
APPENDIX "A"
CODORUS VALLEY BANCORP, INC.
2000 STOCK INCENTIVE PLAN
1. Purpose. The purpose of this Stock Incentive Plan (the "Plan") is to
advance the development, growth and financial condition of Codorus Valley
Bancorp, Inc. (the "Corporation") and each subsidiary thereof, as defined in
Section 424 of the Internal Revenue Code of 1986, as amended (the "Code"), by
providing incentives through participation in the appreciation of the common
stock of the Corporation to secure, retain and motivate personnel who may be
responsible for the operation and for management of the affairs of the
Corporation and any subsidiary now or hereafter existing ("Subsidiary").
2. Term. The Plan shall become effective as of the date it is adopted by the
Corporation's Board of Directors (the "Board"), and shall be presented for
approval at the next meeting of the Corporation's shareholders. Any and all
options and rights awarded under the Plan (the "Awards") before it is approved
by the Corporation's shareholders shall be conditioned upon, and may not be
exercised before, receipt of shareholder approval, and shall lapse upon failure
to receive such approval. Unless previously terminated by the Board, the Plan
shall terminate on, and no options shall be granted after the tenth anniversary
of the effective date of the Plan.
3. Stock. Shares of the Corporation's common stock, that may be issued under
the Plan shall not exceed, in the aggregate, 100,000 shares of common stock, par
value $2.50 per share ("the Stock") as may be adjusted pursuant to Section 19
hereof. Shares may be either authorized and unissued shares, or authorized
shares, issued by and subsequently reacquired by the Corporation as treasury
stock. Under no circumstances shall any fractional shares be awarded under the
Plan. Except as may be otherwise provided in the Plan, any Stock subject to an
Award that, for any reason, lapses or terminates prior to exercise, shall again
become available for grant under the Plan. While the Plan is in effect, the
Corporation shall reserve and keep available the number of shares of Stock
needed to satisfy the requirements of the Plan. The Corporation shall apply for
any requisite governmental authority to issue shares under the Plan. The
Corporation's failure to obtain any such governmental authority, deemed
necessary by the Corporation's legal counsel for the lawful issuance and sale of
Stock under the Plan, shall relieve the Corporation of any duty, or liability
for the failure to issue or sell the Stock.
4. Administration. The ability to control and manage the operation and
administration of the Plan shall be vested in a Committee of the Board comprised
of all members of the Board who are disinterested outside Board members who
shall not be eligible to receive grants under the Plan (the "Committee"). The
Committee shall have the authority and discretion to interpret the Plan, to
establish, amend and rescind any rules and regulations relating to the Plan, to
determine the terms and provisions of any agreements made pursuant to the Plan,
and to make any and all determinations that may be necessary or advisable for
the administration of the Plan. Any interpretation of the Plan by the Committee
and any decision made by the Committee under the Plan is final and binding.
The Committee shall be responsible and shall have full, absolute and final power
of authority to determine what, to whom, when and under what facts and
circumstances Awards shall be made, and the form, number, terms, conditions and
duration thereof,
including but not limited to when exercisable, the number of shares of Stock
subject thereto, and the stock option exercise prices. The Committee shall make
all other determinations and decisions, take all actions and do all things
necessary or appropriate in and for the administration of the Plan. No member of
the Committee or of the Board shall be liable for any decision, determination or
action made or taken in good faith by such person under or with respect to the
Plan or its administration.
5. Awards. Awards may be made under the Plan in the form of: (a) "Qualified
Options" to purchase Stock, which are intended to qualify for certain tax
treatment as incentive stock options under Sections 421 and 422 of the Code, (b)
"Non-Qualified Options" to purchase Stock, which are not intended to qualify
under Sections 421 through 424 of the Code, (c) Stock Appreciation Rights
("SARs"), or (d) "Restricted Stock". More than one Award may be granted to an
eligible person, and the grant of any Award shall not prohibit the grant of
another Award, either to the same person or otherwise, or impose any obligation
to exercise on the participant. All Awards and the terms and conditions thereof
shall be set forth in written agreements, in such form and content as approved
by the Committee from time to time, and shall be subject to the provisions of
the Plan whether or not contained in such agreements. Multiple Awards for a
particular person may be set forth in a single written agreement or in multiple
agreements, as determined by the Committee, but in all cases each agreement for
one or more Awards shall identify each of the Awards thereby represented as a
Qualified Option, Non-Qualified Option or Stock Appreciation Right, as the case
may be.
6. Eligibility. Persons eligible to receive Awards shall be those key officers
and other employees of the Corporation and each Subsidiary, as determined by the
Committee. A person's eligibility to receive an Award shall not confer upon him
or her any right to receive an Award. Except as otherwise provided, a person's
eligibility to receive, or actual receipt of an Award under the Plan shall not
limit or affect his or her benefits under or eligibility to participate in any
other incentive or benefit plan or program of the Corporation or of its
affiliates.
7. Qualified Options. In addition to other applicable provisions of the Plan,
all Qualified Options and Awards thereof shall be under and subject to the
following terms and conditions:
(a) The maximum number of shares of Stock that may be issued by options
intended to be Qualified Options shall be 100,000 shares.
(b) No Qualified Option shall be awarded more than ten (10) years after
the date the Plan is adopted by the Board or the date the Plan is approved
by the Corporation's shareholders, whichever is earlier;
(c) The time period during which any Qualified Option is exercisable,
as determined by the Committee, shall not commence before the expiration of
six (6) months or continue beyond the expiration of ten (10) years after
the date the Qualified Option is awarded;
(d) If a participant, who was awarded a Qualified Option, ceases to be
employed by the Corporation or any Subsidiary for any reason other than his
or her death, the
A-2
Committee may permit the participant thereafter to exercise the option
during its remaining term for a period of not more than three (3) months
after cessation of employment to the extent that the Qualified Option was
then and remains exercisable, unless such employment cessation was due to
the participant's disability, as defined in Section 22(e)(3) of the Code,
in which case the three (3) month period shall be twelve (12) months; if
the participant dies while employed by the Corporation or a Subsidiary, the
Committee may permit the participant's qualified personal representatives,
or any persons who acquire the Qualified Option pursuant to his or her Will
or laws of descent and distribution, to exercise the Qualified Option
during its remaining term for a period of not more than twelve (12) months
after the participant's death to the extent that the Qualified Option was
then and remains exercisable; the Committee may impose terms and conditions
upon and for the exercise of a Qualified Option after the cessation of the
participant's employment or his or her death;
(e) The purchase price of Stock subject to any Qualified Option shall
not be less than the Stock's fair market value at the time the Qualified
Option is awarded and shall not be less than the Stock's par value; and
(f) Qualified Options may not be sold, transferred or assigned by the
participant except by will or the laws of descent and distribution.
8. Non-Qualified Options. In addition to other applicable provisions of the
Plan, all Non-Qualified Options and Awards thereof shall be under and subject to
the following terms and conditions:
(a) The time period during which any Non-Qualified Option is
exercisable shall not commence before the expiration of six (6) months or
continue beyond the expiration of ten (10) years after the date the
Non-Qualified Option is awarded;
(b) If a participant, who was awarded a Non-Qualified Option, ceases to
be eligible under the Plan, before lapse or full exercise of the option,
the Committee may permit the participant to exercise the option during its
remaining term, to the extent that the option was then and remains
exercisable, or for such time period and under such terms and conditions as
may be prescribed by the Committee;
(c) The purchase price of a share of Stock subject to any Non-Qualified
Option shall not be less than the Stock's par value; and
(d) Except as otherwise provided by the Committee, Non-Qualified Stock
Options granted under the Plan are not transferable except as designated by
the participant by Will and the laws of descent and distribution.
9. Stock Appreciation Rights. In addition to other applicable provisions of
the Plan, all SARs and Awards thereof shall be under and subject to the
following terms and conditions:
(a) SARs may be granted either alone, or in connection with another
previously or contemporaneously granted Award (other than another SAR) so
as to operate in tandem therewith by having the exercise of one affect the
right to exercise the other,
A-3
as and when the Committee may determine; however, no SAR shall be awarded
in connection with a Qualified Option more than ten (10) years after the
date the Plan is adopted by the Board or the date the Plan is approved by
the Corporation's stockholders, whichever date is earlier;
(b) Each SAR shall entitle the participant to receive upon exercise of
the SAR all or a portion of the excess of (i) the fair market value at the
time of such exercise of a specified number of shares of Stock as
determined by the Committee, over (ii) a specified price as determined by
the Committee of such number of shares of Stock that, on a per share basis,
is not less than the Stock's fair market value at the time the SAR is
awarded, or if the SAR is connected with another Award, such lesser
percentage of the Stock purchase price thereunder as may be determined by
the Committee;
(c) Upon exercise of any SAR, the participant shall be paid either in
cash or in Stock, or in any combination thereof, as the Committee shall
determine; if such payment is to be made in Stock, the number of shares
thereof to be issued pursuant to the exercise shall be determined by
dividing the amount payable upon exercise by the Stock's fair market value
at the time of exercise;
(d) The time period during which any SAR is exercisable, as determined
by the Committee, shall not commence before the expiration of six (6)
months; however, no SAR connected with another Award shall be exercisable
beyond the last date that such other connected Award may be exercised;
(e) If a participant holding a SAR, before its lapse or full exercise,
ceases to be eligible under the Plan, the Committee may permit the
participant thereafter to exercise such SAR during its remaining term, to
the extent that the SAR was then and remains exercisable, for such time
period and under such terms and conditions as may be prescribed by the
Committee;
(f) No SAR shall be awarded in connection with any Qualified Option
unless the SAR (i) lapses no later than the expiration date of such
connected Option, (ii) is for not more than the difference between the
Stock purchase price under such connected Option and the Stock's fair
market value at the time the SAR is exercised, (iii) is transferable only
when and as such connected Option is transferable and under the same
conditions, (iv) may be exercised only when such connected Option may be
exercised, and (v) may be exercised only when the Stock's fair market value
exceeds the Stock purchase price under such connected Option.
10. Restricted Stock. In addition to other applicable provisions of the Plan,
all Restricted Stock and Awards thereof shall be under and subject to the
following terms and conditions:
(a) Restricted Stock shall consist of shares of Stock that may be
acquired by and issued to a participant at such time, for such or no
purchase price, and under and subject to such transfer, forfeiture and
other restrictions, conditions or terms as shall be determined by the
Committee, including but not limited to prohibitions against transfer,
substantial risks of forfeiture within the meaning of Section 83 of the
Code,
A-4
and attainment of performance or other goals, objectives or standards, all
for or applicable to such time periods as determined by the Committee;
(b) Except as otherwise provided in the Plan or the Restricted Stock
Award, a participant holding shares of Restricted Stock shall have all the
rights as does a holder of Stock, including without limitation the right to
vote such shares and receive dividends with respect thereto; however,
during the time period of any restrictions, conditions or terms applicable
to such Restricted Stock, the shares thereof and the right to vote the same
and receive dividends thereon shall not be sold, assigned, transferred,
exchanged, pledged, hypothecated, encumbered or otherwise disposed of
except as permitted by the Plan or the Restricted Stock Award;
(c) Each certificate issued for shares of Restricted Stock shall be
deposited with the Secretary of the Corporation, or the office thereof, and
shall bear a legend in substantially the following form and content:
THIS CERTIFICATE AND THE SHARES OF STOCK HEREBY REPRESENTED ARE SUBJECT TO
THE PROVISIONS OF CODORUS VALLEY BANCORP, INC.'S 2000 STOCK INCENTIVE PLAN
AND A CERTAIN AGREEMENT ENTERED INTO BETWEEN THE HOLDER AND THE
CORPORATION PURSUANT TO THE PLAN. THE RELEASE OF THIS CERTIFICATE AND THE
SHARES OF STOCK HEREBY REPRESENTED FROM SUCH PROVISIONS SHALL OCCUR ONLY
AS PROVIDED BY THE PLAN AND AGREEMENT, A COPY OF WHICH ARE ON FILE IN THE
OFFICE OF THE SECRETARY OF THE CORPORATION.
Upon the lapse or satisfaction of the restrictions, conditions and
terms applicable to the Restricted Stock, a certificate for the shares of
Stock free of restrictions and without the legend shall be issued to the
participant;
(d) If a participant's employment with the Corporation or a Subsidiary
ceases for any reason prior to the lapse of the restrictions, conditions or
terms applicable to his or her Restricted Stock, all of the participant's
Restricted Stock still subject to unexpired restrictions, conditions or
terms shall be forfeited absolutely by the participant to the Corporation
without payment or delivery of any consideration or other thing of value by
the Corporation or its affiliates, and thereupon and thereafter neither the
participant nor his or her heirs, personal or legal representatives,
successors, assigns, beneficiaries, or any claimants under the
participant's Last Will or laws of descent and distribution, shall have any
rights or claims to or interests in the forfeited Restricted Stock or any
certificates representing shares thereof, or claims against the Corporation
or its affiliates with respect thereto.
11. Exercise. Except as otherwise provided in the Plan, Awards may be
exercised in whole or in part by giving written notice thereof to the Secretary
of the Corporation, or his or her designee, identifying the Award to be
exercised, the number of shares of Stock with respect thereto, and other
information pertinent to exercise of the Award. The purchase price of the shares
of Stock with respect to which an Award is exercised shall be paid with the
written notice of exercise, either in cash or in securities of the Corporation,
including securities issuable hereunder, at its then current fair market value,
or in any combination thereof, as the Committee shall determine. Funds received
by the Corporation from the exercise of any Award shall be used for its general
corporate purposes.
A-5
The number of shares of Stock subject to an Award shall be reduced by the
number of shares of Stock with respect to which the participant has exercised
rights under the Award. If a SAR is awarded in connection with another Award,
the number of shares of Stock that may be acquired by the participant under the
other connected Award shall be reduced by the number of shares of Stock with
respect to which the participant has exercised his or her SAR, and the number of
shares of Stock subject to the participant's SAR shall be reduced by the number
of shares of Stock acquired by the participant pursuant to the other connected
Award.
The Committee may permit an acceleration of previously established exercise
terms of any Awards as, when, under such facts and circumstances, and subject to
such other or further requirements and conditions as the Committee may deem
necessary or appropriate. In addition:
(a) if the Corporation or its shareholders execute an agreement to
dispose of all or substantially all of the Corporation's assets or stock by
means of sale, merger, consolidation, reorganization, liquidation or
otherwise, as a result of which the Corporation's shareholders, immediately
before the transaction, will not own at least fifty percent (50%) of the
total combined voting power of all classes of voting stock of the surviving
entity (be it the Corporation or otherwise) immediately after the
consummation of the transaction, then any and all outstanding Awards shall
immediately become and remain exercisable or, if the transaction is not
consummated, until the agreement relating to the transaction expires or is
terminated, in which case, all Awards shall be treated as if the agreement
was never executed;
(b) if there is an actual, attempted or threatened change in the
ownership of at least twenty-five percent (25%) of all classes of voting
stock of the Corporation through the acquisition of, or an offer to acquire
such percentage of the Corporation's voting stock by any person or entity,
or persons or entities acting in concert or as a group, and such
acquisition or offer has not been duly approved by the Board, then any and
all outstanding awards shall immediately become and remain exercisable; or
(c) if during any period of two (2) consecutive years, the individuals
who at the beginning of such period constituted the Board cease, for any
reason, to constitute at least a majority of the Board (unless the election
of each director of the Board, who was not a director of the Board at the
beginning of such period, was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the beginning of
such period) then any and all Awards shall immediately become and remain
exercisable.
12. Right of First Refusal. Each written agreement for an Award may contain a
provision that requires as a condition to exercising a Qualified Option or a Non
Qualified Option that the participant agree prior to selling, transferring or
otherwise disposing of any shares of Stock obtained through the exercise of the
Award to first offer such shares of Stock to the Corporation for purchase. The
terms and conditions of such right of first refusal shall be determined by the
Committee in its sole and absolute discretion, provided that the purchase price
shall be at least equal to the Stock's fair market value as determined under
paragraph
A-6
14 below, and shall be subject to all applicable federal and state laws, rules
and regulations.
13. Withholding. When a participant exercises a stock option or Stock
Appreciation Right awarded under the Plan, the Corporation, in its discretion
and as required by law, may require the participant to remit to the Corporation
an amount sufficient to satisfy fully any federal, state and other
jurisdictions' income and other tax withholding requirements prior to the
delivery of any certificates for shares of Stock. At the Committee's discretion,
remittance may be made in cash, shares already held by the participant or by the
withholding by the Corporation of sufficient shares issuable pursuant to the
option to satisfy the participant's withholding obligation.
14. Value. Where used in the Plan, the "fair market value" of Stock or any
options or rights with respect thereto, including Awards, shall mean and be
determined by (a) the average of the highest and lowest reported sales prices
thereof on the principal established domestic securities exchange on which
listed, and if not listed, then (b) the average of the dealer "bid" and "ask"
prices thereof on the over-the-counter market, as reported by the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"), in
either case as of the specified or otherwise required or relevant time, or if
not traded as of such specified, required or relevant time, then based upon such
reported sales or "bid" and "ask" prices before and/or after such time in
accordance with pertinent provisions of and principles under the Code and the
regulations promulgated thereunder.
15. Amendment. To the extent permitted by applicable law, the Board may amend,
suspend, or terminate the Plan at any time. The amendment or termination of this
Plan shall not, without the consent of the participants, alter or impair any
rights or obligations under any Award previously granted hereunder.
From time to time, the Committee may rescind, revise and add to any of the
terms, conditions and provisions of the Plan or of an Award as necessary or
appropriate to have the Plan and any Awards thereunder be or remain qualified
and in compliance with all applicable laws, rules and regulations, and the
Committee may delete, omit or waive any of the terms conditions or provisions
that are no longer required by reason of changes of applicable laws, rules or
regulations, including but not limited to, the provisions of Sections 421 and
422 of the Code, Section 16 of the Securities Exchange Act of 1934, as amended,
(the "1934 Act") and the rules and regulations promulgated by the Securities and
Exchange Commission. Without limiting the generality of the preceding sentence,
each Qualified Option shall be subject to such other and additional terms,
conditions and provisions as the Committee may deem necessary or appropriate in
order to qualify as a Qualified Option under Section 422 of the Code, including,
but not limited to, the following provisions:
(a) At the time a Qualified Option is awarded, the aggregate fair
market value of the Stock subject thereto and of any Stock or other capital
stock with respect to which incentive stock options qualifying under
Sections 421 and 422 of the Code are exercisable for the first time by the
participant during any calendar year under the Plan and any other plans of
the Corporation or its affiliates, shall not exceed $100,000.00; and
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(b) No Qualified Option, shall be awarded to any person if, at the time
of the Award, the person owns shares of the stock of the Corporation
possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Corporation or its affiliates, unless, at
the time the Qualified Option is awarded, the exercise price of the
Qualified Option is at least one hundred and ten percent (110%) of the fair
market value of the Stock on the date of grant and the option, by its
terms, is not exercisable after the expiration of five (5) years from the
date it is awarded.
16. Continued Employment. Nothing in the Plan or any Award shall confer upon
any participant or other persons any right to continue in the employ of, or
maintain any particular relationship with, the Corporation or its affiliates, or
limit or affect any rights, powers or privileges that the Corporation or its
affiliates may have to supervise, discipline and terminate the participant.
However, the Committee may require, as a condition of making and/or exercising
any Award, that a participant agree to, and in fact provide services, either as
an employee or in another capacity, to or for the Corporation or any Subsidiary
for such time period as the Committee may prescribe. The immediately preceding
sentence shall not apply to any Qualified Option, to the extent such application
would result in disqualification of the option under Sections 421 and 422 of the
Code.
17. General Restrictions. If the Committee or Board determines that it is
necessary or desirable to: (a) list, register or qualify the Stock subject to
the Award, or the Award itself, upon any securities exchange or under any
federal or state securities or other laws, (b) obtain the approval of any
governmental authority, or (c) enter into an agreement with the participant with
respect to disposition of any Stock (including, without limitation, an agreement
that, at the time of the participant's exercise of the Award, any Stock thereby
acquired is and will be acquired solely for investment purposes and without any
intention to sell or distribute the Stock), then such Award shall not be
consummated in whole or in part unless the listing, registration, qualification,
approval or agreement, as the case may be, shall have been appropriately
effected or obtained to the satisfaction of the Committee and legal counsel for
the Corporation.
18. Rights. Except as otherwise provided in the Plan, participants shall have
no rights as a holder of the Stock unless and until one or more certificates for
the shares of Stock are issued and delivered to the participant.
19. Adjustments. In the event that the shares of common stock of the
Corporation, as presently constituted, shall be changed into or exchanged for a
different number or kind of shares of common stock or other securities of the
Corporation or of other securities of the Corporation or of another corporation
(whether by reason of merger, consolidation, recapitalization, reclassification,
split-up, combination of shares or otherwise) or if the number of such shares of
common stock shall be increased through the payment of a stock dividend, stock
split or similar transaction, then, there shall be substituted for or added to
each share of common stock of the Corporation that was theretofore appropriated,
or which thereafter may become subject to an option under the Plan, the number
and kind of shares of common stock or other securities into which each
outstanding share of the common stock of the Corporation shall be so changed or
for which each such share shall be exchanged or to which each such shares shall
be entitled, as the case may be. Each
A-8
outstanding Award shall be appropriately amended as to price and other terms, as
may be necessary to reflect the foregoing events.
If there shall be any other change in the number or kind of the outstanding
shares of the common stock of the Corporation, or of any common stock or other
securities in which such common stock shall have been changed, or for which it
shall have been exchanged, and if a majority of the disinterested members of the
Committee shall, in its sole discretion, determine that such change equitably
requires an adjustment in any Award that was theretofore granted or that may
thereafter be granted under the Plan, then such adjustment shall be made in
accordance with such determination.
The grant of an Award under the Plan shall not affect in any way the right
or power of the Corporation to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge, to
consolidate, to dissolve, to liquidate or to sell or transfer all or any part of
its business or assets.
Fractional shares resulting from any adjustment in Awards pursuant to this
Section 19 may be settled as a majority of the members of the Board of Directors
or of the Committee, as the case may be, shall determine.
To the extent that the foregoing adjustments relate to common stock or
securities of the Corporation, such adjustments shall be made by a majority of
the members of the Board or of the Committee, as the case may be, whose
determination in that respect shall be final, binding and conclusive. Notice of
any adjustment shall be given by the Corporation to each holder of an Award that
is so adjusted.
20. Forfeiture. Notwithstanding anything to the contrary in this Plan, if the
Committee finds, after full consideration of the facts presented on behalf of
the Corporation and the involved participant, that he or she has been engaged in
fraud, embezzlement, theft, commission of a felony, or dishonesty in the course
of his or her employment by the Corporation or by any Subsidiary and such action
has damaged the Corporation or the Subsidiary, as the case may be, or that the
participant has disclosed trade secrets of the Corporation or its affiliates,
the participant shall forfeit all rights under and to all unexercised Awards,
and under and to all exercised Awards under which the Corporation has not yet
delivered payment or certificates for shares of Stock (as the case may be), all
of which Awards and rights shall be automatically canceled. The decision of the
Committee as to the cause of the participant's discharge from employment with
the Corporation or any Subsidiary and the damage thereby suffered shall be final
for purposes of the Plan, but shall not affect the finality of the participant's
discharge by the Corporation or Subsidiary for any other purposes. The preceding
provisions of this paragraph shall not apply to any Qualified Option to the
extent such application would result in disqualification of the option as an
incentive stock option under Sections 421 and 422 of the Code.
21. Indemnification. In and with respect to the administration of the Plan,
the Corporation shall indemnify each member of the Committee and/or of the
Board, each of whom shall be entitled, without further action on his or her
part, to indemnification from the Corporation for all damages, losses,
judgments, settlement amounts, punitive damages, excise taxes, fines, penalties,
costs and expenses (including without limitation attorneys'
A-9
fees and disbursements) incurred by the member in connection with any
threatened, pending or completed action, suit or other proceedings of any
nature, whether civil, administrative, investigative or criminal, whether formal
or informal, and whether by or in the right or name of the Corporation, any
class of its security holders, or otherwise, in which the member may be or may
have been involved, as a party or otherwise, by reason of his or her being or
having been a member of the Committee and/or of the Board, whether or not he or
she continues to be a member of the Committee or of the Board. The provisions,
protection and benefits of this Section shall apply and exist to the fullest
extent permitted by applicable law to and for the benefit of all present and
future members of the Committee and/or of the Board and their respective heirs,
personal and legal representatives, successors and assigns, in addition to all
other rights that they may have as a matter of law, by contract, or otherwise,
except (a) to the extent there is entitlement to insurance proceeds under
insurance coverages provided by the Corporation on account of the same matter or
proceeding for which indemnification hereunder is claimed, or (b) to the extent
there is entitlement to indemnification from the Corporation, other than under
this Section, on account of the same matter or proceeding for which
indemnification hereunder is claimed.
22. Taxes. The issuance of shares of Common Stock under the Plan shall be
subject to any applicable taxes or other laws or regulations of the United
States of America and any state or local authority having jurisdiction
thereover.
23. Miscellaneous. (a) Any reference contained in this Plan to particular
section or provision of law, rule or regulation, including but not limited to
the Code and the 1934 Act, shall include any subsequently enacted or promulgated
section or provision of law, rule or regulation, as the case may be. With
respect to persons subject to Section 16 of the 1934 Act, transactions under
this Plan are intended to comply with all applicable conditions of Section 16
and the rules and regulations promulgated thereunder, or any successor rules and
regulations that may be promulgated by the Securities and Exchange Commission,
and to the extent any provision of this Plan or action by the Committee fails to
so comply, it shall be deemed null and void, to the extent permitted by
applicable law and deemed advisable by the Committee.
(a) Where used in this Plan: the plural shall include the singular, and
unless the context otherwise clearly requires, the singular shall include
the plural; and the term "affiliates" shall mean each and every Subsidiary
and any parent of the Corporation.
(b) The captions of the numbered Sections contained in this Plan are
for convenience only, and shall not limit or affect the meaning,
interpretation or construction of any of the provisions of the Plan.
-----------
END
-----------
A-10
CODORUS VALLEY BANCORP, INC.
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 16, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Dallas L. Darr, Mildred L.
Lackey and George E. McCullough and each or any of them, proxies of the
undersigned, with full power of substitution to vote all of the shares of
Codorus Valley Bancorp, Inc. that the undersigned may be entitled to vote at the
corporation's Annual Meeting of Shareholders to be held on Tuesday, May 16,
2000, at 9:00 a.m., Eastern Time, at the Codorus Valley Corporate Center, 105
Leader Heights Road, York, Pennsylvania 17403, and at any adjournment or
postponement of the meeting as follows:
1. ELECTION OF 3 CLASS A DIRECTORS TO SERVE FOR A 3 YEAR TERM.
Rodney L. Krebs Dallas L. Smith George A. Trout, D.D.S.
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed above (except to vote for all
as marked to the contrary below) nominees listed above
The Board of Directors recommends a vote FOR these nominees.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
2. APPROVAL AND ADOPTION OF THE CODORUS VALLEY BANCORP, INC. 2000 STOCK
INCENTIVE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote FOR this proposal.
- --------------------------------------------------------------------------------
3. RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS THE CORPORATION'S
INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote FOR this proposal.
- --------------------------------------------------------------------------------
4. In their discretion, the proxy holders are authorized to vote upon such
other business as may properly come before the meeting and any adjournment
or postponement of the meeting.
THIS PROXY, WHEN PROPERLY SIGNED AND DATED, WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED SHAREHOLDERS. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES LISTED ABOVE AND FOR PROPOSALS 2 AND 3.
Dated: ____________, 2000 ___________________________
Signature
Number of Shares Held of Record on
March 16, 2000 ___________________________
Signature
THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDERS AND RETURNED PROMPTLY TO
NORWEST BANK MINNESOTA, N.A. IN THE ENCLOSED ENVELOPE. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE. IF MORE
THAN ONE TRUSTEE, ALL SHOULD SIGN. IF STOCK IS HELD JOINTLY, EACH OWNER SHOULD
SIGN.
[LETTERHEAD OF CODORUS VALLEY BANCORP, INC.]
April 5, 2000
Dear Dividend Reinvestment and Stock Purchase Plan Participant:
As a participant in Codorus Valley Bancorp, Inc.'s Dividend Reinvestment
and Stock Purchase Plan, you are entitled to instruct the plan's administrator,
Norwest Bank Minnesota, N.A., to vote the plan shares held on your behalf at
Codorus Valley Bancorp, Inc.'s 2000 Annual Meeting of Shareholders. To instruct
the plan administrator as to how you would like these shares voted at the annual
meeting, please complete the enclosed Voting Instruction Card/Proxy and return
it to Norwest Bank. At the annual meeting, if a participant executed and
returned a Voting Instruction Card/Proxy, the plan administrator will vote the
participant's whole and fractional interests credited to his or her account.
The Board of Directors encloses a copy of Codorus Valley Bancorp, Inc.'s
Notice of Annual Meeting and proxy statement in connection with the 2000 annual
meeting of shareholders and a copy of Codorus Valley Bancorp, Inc.'s 1999 annual
report to shareholders. Also enclosed is your Voting Instruction Card/Proxy
which you should complete and promptly return to the plan administrator in the
enclosed envelope.
If you have any questions, please contact Norwest Bank's Shareowner
Services at (800) 4689716 or the undersigned at (717) 747-1519 or (800)
646-1970.
Sincerely,
/s/ Larry J. Miller
--------------------------------------
Larry J. Miller, President
and Chief Executive Officer
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
VOTING INSTRUCTION CARD/PROXY
CODORUS VALLEY BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 16, 2000
The undersigned hereby constitutes and appoints Norwest Bank Minnesota, N. A.
proxy of the undersigned, with full power of substitution, to vote all of the
shares of Codorus Valley Bancorp, Inc. that the Codorus Valley Bancorp, Inc.
Dividend Reinvestment and Stock Purchase Plan, holds on behalf of the
undersigned and may be entitled to vote at Codorus Valley Bancorp, Inc.'s Annual
Meeting of Shareholders to be held at the Codorus Valley Corporate Center, 105
Leader Heights Road, York, Pennsylvania 17403, on Tuesday, May 16, 2000 at 9:00
a.m., Eastern Time, and at any adjournment or postponement of the meeting as
follows:
1. LECTION OF 3 CLASS A DIRECTORS TO SERVE FOR A 3 YEAR TERM.
Rodney L. Krebs Dallas L. Smith George A. Trout, D.D.S.
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed above (except to vote for all nominees
as marked to the listed above
contrary below)
The Board of Directors recommends a vote FOR these nominees.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
2. APPROVAL AND ADOPTION OF THE CODORUS VALLEY BANCORP, INC. 2000 STOCK
INCENTIVE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote FOR this proposal.
- --------------------------------------------------------------------------------
3. RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS THE INDEPENDENT
AUDITORS FOR THE YEAR ENDING DECEMBER 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote FOR this proposal.
- --------------------------------------------------------------------------------
4. In their discretion, the proxy holders are authorized to vote upon
such other business as may properly come before the meeting and any
adjournment or postponement of the meeting.
THIS VOTING INSTRUCTION CARD/PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE
MANNER DIRECTED BY THE UNDERSIGNED PLAN PARTICIPANT. IF NO DIRECTION IS MADE,
THIS VOTING INSTRUCTION CARD/PROXY WILL BE VOTED FOR ALL NOMINEES LISTED ABOVE
AND FOR PROPOSALS 2 AND 3.
Dated: , 2000
---------------
---------------------------------------
Signature(s) of Shareholders
Plan Participant
---------------------------------------
Signature(s) of Shareholders
Plan Participant
Number of Shares Held of
Record on March 16, 2000
- --------------------
THE VOTING INSTRUCTIONS REQUEST PERTAINS TO SHARES OF COMMON STOCK HELD IN YOUR
PLAN ACCOUNT BUT NOT REGISTERED IN YOUR NAME. THESE SHARES OF COMMON STOCK CAN
BE VOTED ONLY BY THE PLAN ADMINISTRATOR AS THE RECORD HOLDER OF THE SHARES.
PLEASE DATE, SIGN AND PROMPTLY RETURN YOUR VOTING INSTRUCTION CARD/PROXY TO
NORWEST BANK MINNESOTA, N.A. IN THE RETURN ENVELOPE PROVIDED.