EXHIBIT 10.9

 

AMENDMENT TO SALARY CONTINUATION AGREEMENT
 
This Amendment to Salary Continuation Agreement (the “Amendment”) is made this
27th day of December, 2005, by and among PeoplesBank, A Codorus Valley Company,
a Pennsylvania banking institution (the “Bank”), and a wholly owned subsidiary
of Codorus Valley Bancorp, Inc., a Pennsylvania business corporation (the
“Corporation”) and Larry J. Miller, an adult individual (the “Executive”).
 
WITNESSETH

WHEREAS, the Bank and the Executive entered into a certain Salary Continuation
Agreement effective the 1st day of October, 1998 (the “Salary Continuation
Agreement”), which is attached hereto;
 
WHEREAS, as a result of action by the Board of Directors, the Bank and the
Executive desire to amend the Salary Continuation Agreement provisions regarding
the definition of “Change in Control” and “Change in Control Benefits,” which
describes the payment of the Executive’s benefit following a Change in Control,
and certain other provisions of the Salary Continuation Agreement;
 
WHEREAS, in recognition of the valued services provided by the Executive in the
past to the Bank and the Corporation, the Bank desires to amend the Salary
Continuation Agreement, as an incentive for the Executive to continue to provide
such valued services in the future;
 
NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, for good and valuable consideration, and intending to be legally bound
hereby, the Bank and the Executive agree as follows:
 
1.            The Amendment is incorporated into the Salary Continuation
Agreement by the Bank, the Corporation and the Executive, in accordance with
Article 7 of the Salary Continuation Agreement, entitled “Amendments and
Termination.”
 
2.            All terms set forth in the Amendment shall be defined and
interpreted by the definitions, construction and intent of the Salary
Continuation Agreement and shall have the same meaning as therein provided
unless the context clearly requires a different meaning.
 
3.            Section 1.1.1 of the Salary Continuation Agreement is hereby
amended by deleting the existing definition of “Change in Control” in its
entirety and by adding a new definition of “Change in Control” as follows:
 
1.1.1           CHANGE OF CONTROL. For purposes of this Agreement, the term
“Change of Control” shall mean: a Change in the
 

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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.
 
(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
 

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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 Section 1.1.1 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;
 
(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 Section 1.1.1, 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.
 

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4.            Section 1.1.2 of the Salary Continuation Agreement is hereby
amended by deleting the existing definition of “Date of Change of Control” in
its entirety and by adding a new definition of “Date of Change of Control” as
follows:
 
1.1.2        “Date of Change of Control” means the date on which a “Change of
Control” event occurs under Section 1.1.1.
 
5.            Section 1.1.4 of the Salary Continuation Agreement is hereby
amended by deleting the existing definition of “Disability” in its entirety and
by adding a new definition of “Disability” as follows:
 
1.1.4        “Disability” means, if the Executive is covered by a Company
sponsored disability policy, total disability as defined in such policy without
regard to any waiting period, provided that the definition of disability applied
under such policy complies with the requirement of Section 1.409A-3(g)(4) of the
Treasury regulations. If the Executive is not covered by such policy, Disability
means that the Executive is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment that can
be expected to result in death or can be expected to last for a continuous
period of not less than 12 months. As a condition to any benefit, the Company
may require the Executive to submit to such physical or mental evaluations and
tests as the Company’s Board of Directors deems appropriate.
 
6.            Section 2.4 of the Salary Continuation Agreement is hereby amended
to add a new subsection 2.4.4 “Excise Tax Matters” as follows:
 
2.4.4        Excise Tax Matters.
 
In the event that the amounts and benefits payable under this Section 2.4, 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
 

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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 provision of this
subparagraph are complex and agree to deal with each other in good faith to
resolve any questions or disagreements arising hereunder.
 
7.            Article 2 of the Salary Continuation Agreement is hereby amended
by adding a new Section 2.5 to read as follows:
 
2.5         Key Employee. Notwithstanding anything in this Article 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 the Executive under Section 2.1 or 2.2 of this Agreement
shall begin not earlier than the first day of the seventh month following
termination of employment. 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.
 
8.            Article 5 of the Salary Continuation Agreement is hereby amended
by adding a new Section 5.3.4 to read as follows:
 
5.3.4     Termination Following Change of Control. Notwithstanding the
foregoing, it is the intention of the parties that the restrictions set forth in
Sections 5.3.1(i). (ii), (iii) and (iv) shall not apply in the event Executive’s
employment terminates following a Change of Control, as defined in the
Agreement.
 
9.            Article 8 of the Salary Continuation Agreement is hereby amended
by adding a new Section 8.12 to read as follows:
 
8.12       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.
 

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10.           In all other respects, the Salary Continuation Agreement, as
amended above, is hereby ratified and confirmed by the Bank, the Corporation and
the Executive All other provisions of the Salary Continuation Agreement shall
remain in full force and effect as amended hereby.
 
IN WITNESS WHEREOF, the parties, each intending to be legally bound, have
executed the amendment as of the date, month and year first above written.

       
ATTEST:
 
PEOPLESBANK, A CODORUS VALLEY COMPANY
         /s/ Barbara J. Myers
 
By:
 /s/ Rodney L. Krebs    Secretary     Chairman of the Board

 

      WITNESS:           /s/ Matthew A. Clemens      /s/ Larry J, Miller      
Larry J. Miller

 

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