Exhibit 10.16

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).

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(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 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.

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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;

(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.

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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.

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.

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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.

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.

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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.

 

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  

 

 

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