Exhibit 10.2
CODORUS VALLEY BANCORP, INC.
LONG TERM NURSING CARE AGREEMENT
THIS AGREEMENT (“Agreement”) is made this 27th day December, 2005, between
CODORUS VALLEY BANCORP, INC., a Pennsylvania corporation (the “Corporation”),
PEOPLESBANK, A CODORUS VALLEY COMPANY, a Pennsylvania banking institution (the
“Bank”), and LARRY J. MILLER, an adult individual (the “Executive”).
WITNESSETH
WHEREAS, the Board of Directors of the Corporation, by resolutions duly adopted
at a special meeting of the Board held on May 27, 2003, did authorize the
purchase of a long term nursing care insurance policy for the benefit of the
Executive and his spouse; and
WHEREAS, the Corporation did purchase a long term nursing care insurance policy
from Lincoln Benefits Life Company (Policy No. 10700130734W) for the benefit of
the Executive and his spouse; and
WHEREAS, the Board of Directors of the Corporation also authorized the
Corporation, by resolution adopted on May 27, 2003, to enter into a contractual
relationship with the Executive to accelerate the 10-year annual premium
payments due under the Long Term Nursing Care Insurance Policy in the event of a
change of corporate control; and
WHEREAS, the Corporation, the Bank and the Executive desire to enter into this
Agreement to, among other things, provide for the acceleration of premium
payments due under the Long Term Nursing Care Insurance Policy in the event of a
change in corporate control, all as hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and intending to be legally bound hereby, the parties hereto agree
as follows:
1. CHANGE OF CONTROL. For purposes of this Agreement, the term “Change of
Control” shall mean: a Change in the Ownership of the Corporation or the Bank,
(as defined below), a Change in the Effective Control of the Corporation or the
Bank (as defined below), or a Change in the Ownership of a Substantial Portion
of the Assets of the Corporation or the Bank, (as defined below).
(a) Change in the Ownership of the Corporation or the Bank. A Change in the
Ownership of the Corporation or the Bank occurs on the date that any one person,
or more than one person acting as a group (as defined below), acquires ownership
of stock of the Corporation or the Bank that, together with stock held by such
person or group, constitutes more than 50 percent of the total fair market value
or total voting power of the stock of the Corporation or the Bank. However, if
any one person, or more than one person acting as a group, is considered to own
more than 50 percent of the total fair market value or total voting power of the
stock of the Corporation or the Bank, the acquisition of additional stock by the
same person or persons is not considered to cause a Change in the Ownership of
the Corporation or the Bank. An increase in the percentage of stock owned by any
one person, or persons acting as a group, as a result of a transaction in which
the Corporation or the Bank acquires its stock in exchange for property will be
treated as an acquisition of stock for these purposes. A change in ownership of
the Corporation or the Bank only occurs when there is a transfer or issuance of
stock of the Corporation or the Bank and the stock remains outstanding after the
transaction.

 

 

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(b) Change in Effective Control of the Corporation or the Bank. A Change in
Effective Control of the Corporation or the Bank occurs only on the date that
either:
(i) Any one person, or more than one person acting as a group (as defined
below), acquires (or has acquired during the 12-month period ending on the date
of the most recent acquisition by such person or persons) ownership of stock of
the Corporation or the Bank possessing 35 percent or more of the total voting
power of the stock of the Corporation or the Bank; or
(ii) A majority of members of the Corporation’s Board of Directors is replaced
during any 12-month period by directors whose appointment or election is not
endorsed by a majority of the members of the Corporation’s Board of Directors
prior to the date of the appointment or election.
If any one person, or more than one person acting as a group, is considered to
effectively control the Corporation or the Bank, the acquisition of additional
control of the Corporation or the Bank by the same person or persons is not
considered to cause a Change in the Effective Control of the Corporation or the
Bank.
(c) Change in Ownership of a Substantial Portion of the Corporation’s or the
Bank’s Assets. A Change in Ownership of a Substantial Portion of the
Corporation’s or the Bank’s Assets occurs on the date that any one person, or
more than one person acting as a group (as defined below), acquires (or has
acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) assets from the Corporation or the Bank
that have a total gross fair market value equal to or more than 40 percent of
the total gross fair market value of all of the assets of the Corporation or the
Bank immediately prior to such acquisition or acquisitions. For this purpose,
gross fair market value means the value of assets of the Corporation or the
Bank, or the value of the assets being disposed of, determined without regard to
any liabilities associated with such assets.
There is no Change in Control under this Paragraph 1(c) if there is a transfer
of assets to an entity that is:
(i) A shareholder of the Corporation or the Bank (immediately before the asset
transfer) in exchange for or with respect to its stock;

 

 

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(ii) An entity, 50 percent or more of the total value or voting power of which
is owned, directly or indirectly, by the Corporation or the Bank;
(iii) A person, or more than one person acting as a group, that owns, directly
or indirectly, 50 percent or more of the total value or voting power of all the
outstanding stock of the Corporation or the Bank; or
(iv) An entity, at least 50 percent of the total value or voting power of which
is owned, directly or indirectly, by a person described in (i), (ii) or
(iii) above.
(d) For purposes of this Paragraph 1, persons will not be considered to be
acting as a group solely because they purchase or own stock or purchase assets
of the Corporation or the Bank at the same time. However, persons will be
considered to be acting as a group if they are owners of a corporation that
enters into a merger, consolidation, purchase or acquisition of assets, or
similar transaction, such shareholder is considered to be acting as a group with
other shareholders in a corporation only to the extent of the ownership in that
corporation prior to the transaction giving rise to the change and not with
respect to the ownership interest in the other corporation.
2. ACCELERATION OF ANNUAL PREMIUMS. Following the date of a Change in Control,
the Executive shall be entitled to a lump sum payment equal to the amount of any
remaining unpaid annual premiums ($16,675.22 per annum) under the Long Term
Nursing Care Insurance Policy referenced above (Lincoln Benefits Life Company —
Policy No. 10700130734W). At the election of the Executive, the Corporation
shall pay the aggregate amount due directly to the Executive, or to the Lincoln
Benefits Life Company, or any successor thereto, within ten (10) days following
the date of the Change in Control. In the event the amount due is paid directly
to the Executive, the insurance policy shall, with the consent of Lincoln
Benefits Life Company, be assigned to the Executive and his spouse, and,
thereafter, the Corporation, the Bank, and any successors thereto by merger or
otherwise, shall have no further obligation or liability for annual premium
payments under the insurance policy.
3. EXCISE TAX MATTERS. In the event that the amounts and benefits payable under
this Agreement, when added to other amounts and benefits which may become
payable to the Executive by the Corporation and/or Bank, are such that he
becomes subject to the excise tax provisions of Section 4999 of the Internal
Revenue Code of 1986, as amended (the “Code”), the Corporation and the Bank
shall pay him such additional amount or amounts as will result in his retention
(after the payment of all federal, state and local excise, employment, and
income taxes on such payments and the value of such benefits) of a net amount
equal to the net amount he would have retained had the initially calculated
payments and benefits been subject only to income and employment taxation. For
purposes of the preceding sentence, the Executive shall be deemed to be subject
to the highest marginal federal, state and local tax rates. All calculations
required to be made under this subparagraph shall be made by the Corporation’s
independent certified public accountants, subject to the right of Executive’s
representative to review the same. All such amounts required to be paid shall be
paid at the time any withholding may be required under applicable law, and any
additional amounts to which the Executive may be entitled shall be paid or
reimbursed no later than fifteen (15) days following confirmation of such amount
by the Corporation’s accountants. In the event any amounts paid hereunder are
subsequently determined to be in error because estimates were required or
otherwise, the parties agree to reimburse each other to correct such error, as
appropriate, and to pay interest thereon at the applicable federal rate (as
determined under Code Section 1274A for the period of time such erroneous amount
remained outstanding and unreimbursed). The parties recognize that the actual
implementation of the provisions of this subparagraph are complex and agree to
deal with each other in good faith to resolve any questions or disagreements
arising hereunder.

 

 

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4. PRIMARY OBLIGOR. The obligation to make payments and provide benefits under
this Agreement shall primarily be those of the Executive’s Employer. In the
event the Employer is not the Corporation or the Bank, the Corporation will
cause such Employer to make required payments and provide required benefits. To
the extent the Corporation fails or is unable to do so, it shall make such
payments and provide such benefits.
5. KEY EMPLOYEE. Notwithstanding anything in this Agreement to the contrary, in
the event Executive is determined to be a Key Employee, as that term is defined
in Section 409A of the Code and the regulations promulgated thereunder, payments
to or on behalf of such Key Employee under this Agreement shall not begin
earlier than the first day of the seventh month following the date of the Change
in Control. For purposes of the foregoing, the date upon which a determination
is made as to the Key Employee status of the Executive, the Indemnification Date
(as defined in Section 409A of the Code and the regulations promulgated
thereunder) shall be December 31.
6. LEGAL EXPENSES. The Corporation will pay (or cause to be paid) to the
Executive all reasonable legal fees and expenses when incurred by the Executive
in seeking to obtain or enforce any right or benefit provided by this Agreement,
provided he acts in good faith with respect to issues raised.
7. RABBI TRUST. The Corporation is establishing contemporaneously herewith a
rabbi trust (the “Trust”), to which it is contributing an initial corpus of
$100. In the event of a change of control as defined herein, the Corporation
shall, in accordance with the terms of the Trust, contribute thereto the amount
described in Section 1(e) thereof. Thereafter, amounts payable hereunder shall
be paid first from the assets of such Trust and the income thereon. To the
extent that the assets of the Trust and the income thereon are insufficient, the
Corporation or any successor of the Corporation shall pay Executive the amount
due hereunder.
8. NOTICES. Any notice required or permitted to be given under this Agreement
will, to be effective hereunder, be given to the Corporation, in the case of
notices given by the Executive, and will, to be effective hereunder, be given by
the Corporation, in the case of notices given to the Executive. Any such notice
will be deemed properly given if in writing and if mailed by registered or
certified mail, postage prepaid with return receipt requested, to the last known
residence address of the Executive, in the case of notices to the Executive, and
to the principal office of the Corporation, in the case of notice to the
Corporation.
9. WAIVER. No provision of this Agreement may be modified, waived, or discharged
unless such waiver, modification, or discharge is agreed to in writing and
signed by the Executive and an executive officer of the Corporation designated
for such purpose by the Board of Directors of the Corporation. No waiver by any
party hereto at any time of any breach by another party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party will be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time.

 

 

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10. ASSIGNMENT. This Agreement is not assignable by any party hereto, except by
the Corporation and the Bank to any successor in interest to the respective
business of the Corporation and the Bank.
11. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties relating to the subject matter hereof and supersedes any prior agreement
of the parties.
12. SUCCESSORS; BINDING EFFECT.
(a) Successors. The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of the business and/or assets of the Corporation and/or the
Bank to expressly assume and agree to perform this Agreement (or cause it to be
performed) in the same manner and to the same extent that the Corporation, the
Bank or any affiliated company of either would be required to perform it if no
such succession had taken place. Failure by the Corporation to obtain such
assumption and agreement prior to the effectiveness of any such succession shall
constitute a material breach of this Agreement. As used in this Agreement, the
“Corporation” and the “Bank” means the Corporation and the Bank as hereinbefore
defined and any successor to the business and/or assets of the Corporation
and/or the Bank as aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
(b) Binding Effect. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s personal or legal representatives, executors,
administrators, heirs, distributes, devisees, and legatees. If the Executive
should die while any amount is payable to the Executive under this Agreement if
the Executive had continued to live, all such amounts, unless otherwise provided
herein, will be paid in accordance with the terms of this Agreement to the
Executive’s devisee, legatee, or other designee, or, if there is no such person,
to the Executive’s estate.
13. VALIDITY. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which will remain in full force and effect.
14. APPLICABLE LAW. Except to the extent preempted by federal law, this
Agreement shall be governed by and construed in accordance with the domestic
internal law of the Commonwealth of Pennsylvania.
15. REFERENCE TO ENTITIES. All references to the Corporation shall be deemed to
include references to the Bank, or any affiliate of either, as appropriate in
the relevant context, and vice versa; provided, however, that this paragraph
shall not be construed in the manner that results in a determination that a
transaction constitutes a Change in Control unless such transaction is literally
described in the definition of such term.

 

 

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IN WITNESS WHEREOF, the parties, each intending to be legally bound, have
executed the Agreement as of this date, month and year first above written.

          ATTEST:   CODORUS VALLEY BANCORP, INC.
 
       
/s/ Harry R. Swift
  By:   /s/ Rodney L. Krebs
 
       
Secretary
       
 
        ATTEST:   PEOPLESBANK,     A CODORUS VALLEY COMPANY
 
       
/s/ Barbara J. Myers
  By:   /s/ Rodney L. Krebs
 
       
Secretary
       
 
       
WITNESS:
       
 
        /s/ Matthew A. Clemens   /s/ Larry J. Miller           Larry J. Miller