EXHIBIT 10.1

CODORUS VALLEY BANCORP, INC.
TARP RESTRICTION AGREEMENT

This TARP RESTRICTION AGREEMENT (this “Agreement”) is made and entered into as
of      , 2009, by and between CODORUS VALLEY BANCORP, INC., a Pennsylvania
business corporation having its principal place of business in York,
Pennsylvania and PEOPLESBANK, A CODORUS VALLEY COMPANY, a Pennsylvania banking
corporation (collectively the “Company”), and              (the “Executive”).

BACKGROUND

1. Executive is currently employed as             of the Company.

2. On January 9, 2009, the Company issued and sold to the U.S. Treasury
Department (“Treasury”) under the Troubled Asset Relief Program Capital Purchase
Program (the “TARP Program”), established under the Emergency Economic
Stabilization Act of 2008 (Pub.L. 110-343, Div. A, enacted October 3, 2008), and
amended by the American Recovery and Reinvestment Act of 2009 (Pub.L. 111-5,
enacted February 17, 2009) and subsequent Treasury guidance (the “TARP Interim
Final Rules”), 16,500 shares of the Company’s Fixed Rate Cumulative Perpetual
Preferred Stock, Series A and a Warrant to purchase up to 263,859 shares of the
Company’s common stock, for an aggregate purchase price of $16,500,000 in cash.

3. As required to participate in the TARP Program, the Company must adopt the
Treasury standards for executive compensation and corporate governance, for the
period during which Treasury holds equity or debt securities of the Company
issued under this Program (the “TARP Compliance Period”).

4. Under the TARP Program, Treasury’s standards apply to the senior executive
officers (the “SEOs”) of the Company and other “most highly compensated
employees” (as such terms are defined under the TARP Interim Final Rules).

AGREEMENT

NOW, THEREFORE, as required to participate in the TARP Program, and in
consideration of the mutual promises contained herein, and each intending to be
legally bound, Executive and Company agree as follows:

1. Background. The matters set forth in the “Background” section of this
Agreement are incorporated by reference herein.

2. SEO and Top 5. During any time period in which Executive is classified by the
Company as (i) an SEO or (ii) one of the next 5 “most highly compensated
employees,” as defined in the TARP Interim Final Rules (the “Top 5’), he or she
agrees as follows:

a. Golden Parachute Restrictions. Executive agrees to forfeit all “Golden
Parachute” payments, whether Executive is entitled to such payment, or solely
obtains a legally enforceable right to such payment during the TARP Compliance
Period. “Golden Parachute” payments are defined as payments resulting from
Executive’s departure from the Company for any reason (except for services
performed or benefits already accrued), and payments made on account of the
Company’s “change in control” (as defined in 26 CFR 1.280G-1, Q&A-27 through
Q&A-29 or as a change in control event as defined in 26 CFR 1.409A-3(i)(5)(i)).
Such payments shall be determined in a manner that is consistent with the TARP
Interim Final Rules; and

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3. SEO and Top 20. During any time period in which Executive is classified by
the Company as (i) an SEO or (ii) one of the next 20 “most highly compensated
employees,” as defined in the TARP Interim Final Rules (the “Top 20”), he or she
agrees as follows:

a. Incentive Compensation Recovery. Executive agrees that Executive shall repay
to the Company any bonus and incentive compensation paid to Executive during the
TARP Compliance Period, if the payments were based on materially inaccurate
financial statements or any other materially inaccurate performance metric
criteria. This repayment shall not be limited to a specific recovery period,
material inaccuracies in financial reporting statements, or inaccuracies that
result in account restatements. The recovery encompasses all incentive
compensation paid to Executive as a result of any determination of achievement
of a performance metric that is later determined to have been based on material
inaccuracies related to financial reporting. For purposes of this paragraph and
without limiting the foregoing, financial statements or performance metric
criteria are treated as being materially inaccurate with respect to Executive
if, Executive either knowingly engages in providing inaccurate information or
knowingly fails to timely correct inaccurate information relating to those
financial statements or performance metrics;

b. Gross-Up Payment Restrictions. Executive agrees to forfeit all “Gross-Up”
payments or legally enforceable rights to such payments, during the TARP
Compliance Period. “Gross-Up” payments are defined as any reimbursement by the
Company of taxes owed to Executive with respect to any compensation, provided
that such payment does not include a payment under an agreement or other
arrangement that provides payments intended to compensate Executive for some or
all of the excess of the taxes actually imposed by a foreign jurisdiction.

4. Most Highly Compensated Employee. During any time period in which Executive
is classified by the Company as the “most highly compensated employee” of the
Company, as defined in the TARP Interim Final Rules (the “Most Highly
Compensated Employee”), he or she shall forfeit the payment or accrual of any
bonuses or retention awards accrued after June 15, 2009, except for restricted
stock, which vests no earlier than in 25% vesting tranches conditioned on 25% of
total senior preferred stock being repurchased form Treasury, until the final
preferred stock is repurchased (as provided in the TARP Interim Final Rules)
during the TARP Compliance Period, and has a value of no more than one-third of
Executive’s total “annual compensation” (as defined under the TARP Interim Final
Rules) for that fiscal year (as valued using grant-date fair market value).

5. Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic internal law of the Commonwealth of Pennsylvania.

6. Termination of this Agreement. During the TARP COMPLIANCE PERIOD, the terms
and conditions of this Agreement shall supersede the terms and conditions of
Executive’s Employment Agreement, to the extent inconsistent therewith. This
Agreement shall terminate automatically and become null and void upon the
expiration of the TARP Compliance Period.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

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              CODORUS VALLEY BANCORP, INC.
 
       
 
  By:    
 
       
 
            PEOPLESBANK, A CODORUS VALLEY COMPANY
 
       
 
  By:    
 
       

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