CHANGE OF CONTROL AGREEMENT
THIS CHANGE OF CONTROL AGREEMENT (hereinafter "Agreement") is made as of
the 1st day of October, 1997, between PeoplesBank, A Codorus Valley Company, a
Pennsylvania banking institution (the "Bank"), Codorus Valley Bancorp, Inc., a
Pennsylvania business corporation (the "Corporation") and Xxxxx X. Xxxxx, an
adult individual (the "Executive").
WHEREAS, the Bank employs the Executive as General Counsel and Chief
Administrative Officer; and
WHEREAS, the Executive will provide valued services to the Bank and
Corporation; and
WHEREAS, in recognition of the services which the Executive will provide to
the Bank and the Corporation, the Bank and Corporation desire to provide some
measure of financial security to the Executive in the event of a Change of
Control (as defined herein); and
WHEREAS, the purpose of this Agreement is to define certain severance
benefits that will be paid by the Bank and the Corporation in the event of a
Change of Control (as defined herein). This Agreement is not intended to affect
the terms of the Executive's employment at will, in the absence of a Change of
Control (as defined herein) of the Bank and the Corporation. Accordingly,
although this Agreement will take effect upon Executive as a binding legal
obligation of the Bank and the Corporation, it will become operative only upon a
Change in Control of the Bank and the Corporation, as that concept is defined
below.
NOW THEREFORE, in consideration of the Executive's service to the
Corporation and the Bank and of the mutual covenants, undertakings and
agreements set forth herein and intending to be legally bound hereby, the
parties agree as follows:
1. TERM. The initial term of this Agreement shall be for a period of
thirty-nine (39) months and shall be deemed to have commenced on October 1,
1997. Accordingly, the initial term
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shall continue until December 31, 2000. Each term thereafter shall consist of a
thirty-six (36) month period, which shall begin on January 1, of each year. The
renewal date of the initial term shall be January 1, 1999 and January 1, shall
be the renewal date each year thereafter. On the initial renewal date of January
1, 1999 and on each subsequent renewal date, this Agreement shall automatically
renew for an additional one (1) year period unless written notice of non-renewal
is provided to the Executive by the Corporation and/or the Bank, at least sixty
(60) days prior to such renewal date. For example: (1)if the Corporation and/or
the Bank do not provide written notice of non-renewal, at least sixty (60) days
prior to the January 1, 1999 renewal date, the Agreement will be extended an
additional one (1) year period, until December 31, 2001; (2) if the Corporation
and/or the Bank provide notice to the Executive of non-renewal on November 1,
1998, which is at least sixty days prior to January 1, 1999, the Agreement shall
terminate on December 31, 2000; or (3) if the Corporation and/or the Bank
provide notice to the Executive of non-renewal on November 1, 2001, which is at
least sixty days prior to January 1, 2002, the Agreement shall terminate on
December 31, 2003.
2. DEFINITION OF CHANGE OF CONTROL. For purposes of this Agreement, the
term "Change of Control" shall mean: A change in control of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A and any successor rule or regulation promulgated under the
Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); provided that, without
limitation, such a change in control shall be deemed to have occurred if (a) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act),
other than the Corporation or any "person" who on the date hereof is a director
or officer of the Corporation is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or
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indirectly, of securities of the Corporation representing twenty-five percent
(25%) or more of the combined voting power of the Corporation's then outstanding
securities, or (b) during any period of two consecutive years during the term of
this Agreement, individuals who at the beginning of such period constitute the
Board of Directors of the Bank or Corporation cease for any reason to constitute
at least a majority thereof, unless the election of each director who was not a
director at the beginning of such period has been approved in advance by
directors representing at least two-thirds of the directors then in office who
were directors at the beginning of the period, or (c) the sale or transfer of
all or substantially all of the Bank or Corporation's assets.
3. DEFINITION OF DATE OF CHANGE OF CONTROL. For purposes of this Agreement,
the date of Change of Control shall mean:
(a) the first date on which a single person and/or entity, or group of
affiliated persons and/or entities, acquire the beneficial ownership of
twenty-five percent (25%) or more of the Corporation's voting securities,
or
(b) the date of the transfer of all or substantially all of the Bank
or Corporation's assets, or
(c) the date on which a merger, consolidation or combination between
the Bank and the Corporation and a third party is consummated, as
applicable, or
(d) the date on which individuals who formerly constituted a majority
of the Board of Directors of the Bank or Corporation, ceased to be a
majority.
4. PAYMENTS UPON TERMINATION. If a Change of Control (as defined herein)
occurs, the Executive shall receive an amount equal to his current "Annual
Direct Salary" from the Date of the Change of Control as defined in paragraph 3
through the last day of the term of this
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Agreement. Annual Direct Salary shall be defined herein as the fixed, gross,
base annual salary paid to the Executive in installments at such time as the
Bank and Corporation customarily pays its other senior officers and shall not
include any benefits, bonuses, incentives or other compensation. Provided,
however, that in no event shall the Executive receive an amount less than two
(2) times his current Annual Direct Salary as of the Date of the Change of
Control as defined herein.
5. UNAUTHORIZED DISCLOSURE. During the term of this Agreement, or at any
later time, the Executive shall not, without the written consent of the Board of
Directors of the Corporation or Bank or a person authorized thereby, knowingly
disclose to any person, other than an employee of the Corporation or Bank or a
person to whom disclosure is reasonably necessary or appropriate in connection
with the performance by the Executive of his duties as an executive of the
Corporation or Bank, any material confidential information obtained by him while
in the employ of the Corporation or Bank with respect to any of the Corporation
or Bank's services, products, improvements, formulas, designs or styles,
processes, customers, methods of business or any business practices the
disclosure of which could be or will be materially damaging to the Corporation
or Bank provided, however, that confidential information shall not include any
information known generally to the public (other than as a result of
unauthorized disclosure by the Executive or any person with the assistance,
consent or direction of the Executive) or any information of a type not
otherwise considered confidential by persons engaged in the same business or a
business similar to that conducted by the Corporation or Bank or any information
that must be disclosed as required by law.
6. RESTRICTIVE COVENANT. The Executive covenants and agrees that the
Executive shall not directly or indirectly, within the marketing area of the
Bank (defined as an area
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within twenty-five (25) miles of the registered office of the Bank), enter into
or engage generally in direct or indirect competition with the Corporation or
Bank or any subsidiary of the Corporation, either as an individual on his own or
as a partner or joint venturer, or as a director, officer, greater than five
percent (5%) shareholder, employee, agent, independent contractor, lessor or
creditor of or for any person, for a period of one (1) year after the date of
termination of his employment if the Executive's employment is terminated as a
result of a Change of Control (as defined herein). The existence of any claim or
cause of action of the Executive against the Corporation or Bank, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Corporation or Bank of this covenant. The Executive agrees
that any breach of the restrictions set forth in this Agreement will result in
irreparable injury to the Corporation or Bank for which it shall have no
adequate remedy at law and the Corporation or Bank shall be entitled to
injunctive relief in order to enforce the provisions hereof. In the event that
this paragraph shall be determined by any court of competent jurisdiction to be
unenforceable in part by reason of it being too great a period of time or
covering too great a geographical area, it shall be in full force and effect as
to that period of time or geographical area determined to be reasonable by the
court. The restriction set forth in this Agreement shall not apply to the
Executive in the event that he is terminated as a result of a Change in Control
(as defined herein), and is subsequently employed in the private practice of
law.
7. DAMAGES FOR BREACH OF CONTRACT. In the event of a breach of this
Agreement by either the Corporation, Bank or the Executive resulting in damages
to another party to this Agreement, that party may recover from the party
breaching the Agreement only those
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damages as set forth herein. In no event shall any party be entitled to the
recovery of attorney's fees or costs.
8. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given whenhand-delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive: H. Xxxxxx Xxxxx
000 Xxxxxx Xxxxx
Xxxx, XX 00000
If to the Bank: Xxxxx X. Xxxxxx, President
PeoplesBank, A Codorus Valley Company
000 Xxxxxx Xxxxxxx Xxxx
Xxxx, Xxxxxxxxxxxx 00000
If to the Corporation: Xxxxx X. Xxxxxx, President
Codorus Valley Bancorp, Inc.
000 Xxxxxx Xxxxxxx Xxxx
Xxxx, Xxxxxxxxxxxx 00000
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
9. SUCCESSORS. This Agreement shall inure to the benefit of and be binding
upon the Executive, the Corporation and the Bank and any of their successors or
assigns, provided however, that the Executive may not commute, anticipate,
encumber, dispose or assign any payment except as set forth in paragraph 12.
10. SEVERABILITY. If any provision of this Agreement is declared
unenforceable for any reason, the remaining provisions of this Agreement shall
be unaffected thereby and shall remain in full force and effect.
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11. AMENDMENT. This Agreement may be amended or canceled only by mutual
agreement of the parties in writing.
12. PAYMENT OF MONEY DUE DECEASED EXECUTIVE. In the event of Executive's
death, any moneys that may be due him from the Bank under this Agreement as of
the date of death shall be paid to the person designated by him in writing for
this purpose, or in the absence of any such designation to his estate.
13. LAW GOVERNING. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
14. ENTIRE AGREEMENT. This Agreement supersedes any and all agreements,
either oral or in writing, between the parties with respect to compensation
resulting from a Change of Control (as defined herein), and this Agreement
contains all the covenants and agreements between the parties with respect to
compensation resulting from a Change of Control (as defined herein).
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Agreement to be duly executed in their respective names
and, in the case of the Corporation and Bank, by its authorized representatives
the day and year above mentioned.
ATTEST: PEOPLESBANK,
A CODORUS VALLEY COMPANY
/s/ Xxxxxxx X. Xxxxx By:/s/ Xxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxx Xxxxx X. Xxxxxx
Secretary Chairman of the Board
ATTEST: CODORUS VALLEY BANCORP, INC.
/s/ Xxxxxx X. Xxxxx By:/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx Xx. Xxxxxx X. Xxxxx
Secretary Chairman of the Board
WITNESS:
/s/ Xxxxx X. Xxxxx /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx Xxxxx X. Xxxxx
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