Exhibit
10.1


 


BANK
CONTRIBUTION DEFERRED COMPENSATION AGREEMENT


 


THIS
BANK CONTRIBUTION DEFERRED COMPENSATION AGREEMENT (this “Agreement”), adopted this 21st day of February, 2019, by
and between PeoplesBank, A Codorus Valley Company, a state-chartered commercial bank located in York, Pennsylvania (the “Employer”),
and Craig Kauffman (the “Executive”), formalizes the agreements and understanding between the Employer and the Executive.


 


WITNESSETH:


 


WHEREAS,
the Executive is employed by the Employer;


 


WHEREAS,
the Employer recognizes the valuable services the Executive has performed for the Employer and wishes to encourage the Executive’s
continued employment and to provide the Executive with additional incentive to achieve corporate objectives;


 


WHEREAS,
the Employer wishes to provide the terms and conditions upon which the Employer shall pay additional retirement benefits to the
Executive;


 


WHEREAS,
the Employer and the Executive intend this Agreement shall at all times be administered and interpreted in compliance with Code
Section 409A; and


 


WHEREAS,
the Employer intends this Agreement shall at all times be administered and interpreted in such a manner as to constitute an unfunded
nonqualified deferred compensation arrangement, maintained primarily to provide supplemental retirement benefits for the Executive,
a member of a select group of management or highly compensated employees of the Employer;


 


NOW
THEREFORE, in consideration of the premises and of the mutual promises herein contained, the Employer and the Executive agree
as follows:


 


ARTICLE
1


DEFINITIONS


 


For
the purpose of this Agreement, the following phrases or terms shall have the indicated meanings:


 


1.1         
“Accumulation Period Crediting Rate” means seventy-five percent (75%) of the Employer’s return on equity
from the immediately preceding calendar year. Notwithstanding the foregoing, at no time shall the Accumulation Period Crediting
Rate be less than zero percent (0%) or more than fifteen percent (15%).


 



    


     


    




 


1.2         
“Administrator” means the Board or its designee.


 


1.3         
“Affiliate” means any business entity with whom the Employer would be considered a single employer under Section
414(b) and 414(c) of the Code. Such term shall be interpreted in a manner consistent with the definition of “service recipient”
contained in Code Section 409A.


 


1.4         
“Base Annual Salary” means the cash compensation relating to services performed during any calendar year, excluding
bonuses, commissions, distributions from nonqualified deferred compensation plans, fringe benefits, incentive payments, non-monetary
awards, overtime, relocation expenses, stock options and other fees, and automobile and other allowances paid to the Executive
for services rendered (whether or not such allowances are included in the Executive’s gross income). Base Annual Salary
shall be calculated before reduction for amounts voluntarily deferred or contributed by the Executive pursuant to qualified or
non-qualified plans and shall be calculated to include amounts not otherwise included in the Executive’s gross income under
Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by the Employer; provided, however, that all such
amounts will be included in compensation only to the extent that had there been no such plan, the amount would have been payable
in cash to the Executive.


 


1.5         
“Beneficiary” means the person or persons designated in writing by the Executive to receive benefits hereunder
in the event of the Executive’s death.


 


1.6         
“Board” means the Board of Directors of the Employer.


 


1.7         
“Cause” has the same meaning as it does in the Employment Agreement.


 


1.8         
“Change in Control” has the same meaning as “Change of Control” in the Employment Agreement, provided
that such definition complies with Code Section 409A and regulations thereunder.


 


1.9         
“Claimant” means a person who believes that he or she is being denied a benefit to which he or she is entitled
hereunder.


 


1.10       
“Code” means the Internal Revenue Code of 1986, as amended.


 


1.11       
“Contributions” means the amounts contributed by the Employer to the Deferral Account, determined according
to Article 2 hereof.


 


1.12        “Corporation” means Codorus Valley Bancorp, Inc., the Employer’s parent company.


 






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1.13       
“Deferral Account” means the Employer’s accounting of the accumulated Contributions plus accrued interest.


 


1.14       
“Disability” means a condition of the Executive whereby the Executive either: (i) 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, or (ii) is, 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, receiving income replacement benefits for a period of not less than three months under an accident
and health plan covering employees of the Employer. The Administrator will determine whether the Executive has incurred a Disability
based on its own good faith determination and may require the Executive to submit to reasonable physical and mental examinations
for this purpose. The Executive will also be deemed to have incurred a Disability if determined to be totally disabled by the
Social Security Administration or in accordance with a disability insurance program, provided that the definition of disability
applied under such disability insurance program complies with the initial sentence of this Section.


 


1.15       
“Distribution Election Form” means the form established by the Administrator that the Executive completes,
signs and returns to the Administrator to designate the timing of schedule of benefit distributions hereunder.


 


1.16       
“Distribution Period Crediting Rate” means four percent (4%).


 


1.17       
“Early Termination” means Separation from Service before Normal Retirement Age except when such Separation
from Service occurs following a Change in Control or due to termination for Cause.


 


1.18       
“Effective Date” means February 1, 2019.


 


1.19      
“Employment Agreement” means that certain Employment Agreement between Codorus Valley Bancorp, Inc., the Employer
and the Executive dated August 6, 2018, as amended, or any successor agreement thereto.


 


1.20       
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.


 


1.21       
“Normal Retirement Age” means the Executive attaining age sixty-five (65).


 






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1.22       
“Plan Year” means each twelve (12) month period commencing on January 1 and ending on December 31 of each year.
The initial Plan Year shall commence on the Effective Date and end on the following December 31.


 


1.23       
“Separation from Service” means a termination of the Executive’s employment with the Employer and its
Affiliates for reasons other than death or Disability. A Separation from Service may occur as of a specified date for purposes
of the Agreement even if the Executive continues to provide some services for the Employer or its Affiliates after that date,
provided that the facts and circumstances indicate that the Employer and the Executive reasonably anticipated at that date that
either no further services would be performed after that date, or that the level of bona fide services the Executive would perform
after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than twenty percent
(20%) of the average level of bona fide services performed over the immediately preceding thirty-six (36) month period (or the
full period during which the Executive performed services for the Employer, if that is less than thirty-six (36) months). A Separation
from Service will not be deemed to have occurred while the Executive is on military leave, sick leave, or other bona fide leave
of absence if the period of such leave does not exceed six (6) months or, if longer, the period for which a statute or contract
provides the Executive with the right to reemployment with the Employer. If the Executive’s leave exceeds six (6) months
but the Executive is not entitled to reemployment under a statute or contract, the Executive incurs a Separation from Service
on the next day following the expiration of such six (6) month period. In determining whether a Separation from Service occurs
the Administrator shall take into account, among other things, the definition of “service recipient” and “employer”
set forth in Treasury regulation §1.409A-1(h)(3). The Administrator shall have full and final authority, to determine conclusively
whether a Separation from Service occurs, and the date of such Separation from Service.


 


1.24       
“Specified Employee” means an individual that satisfies the definition of a “key employee” of the
Employer as such term is defined in Code §416(i) (without regard to Code §416(i)(5)), provided that the stock of the
Employer is publicly traded on an established securities market or otherwise, as defined in Code §1.897-1(m). If the Executive
is a key employee at any time during the twelve (12) months ending on December 31, the Executive is a Specified Employee for the
twelve (12) month period commencing on the first day of the following April.


 



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Article
2


CONTRIBUTIONS


 


2.1           Monthly
Contributions. On the first day of each month, until the earliest of Normal Retirement Age, Separation from Service, Disability,
Change in Control, or the Executive’s death, the Employer intends to make monthly Contributions to the Deferral Account
which, on an annual basis, will total fifteen percent (15%) of Base Annual Salary. If the Executive remains actively employed
by the Employer following Normal Retirement Age, the Employer may, but shall not be required to, continue to make monthly Contributions
to the Deferral Account. The Employer may increase or decrease the amount of monthly Contributions under this Section 2.1 at its
discretion.


 


2.2           Initial
Contribution. As of the Effective Date, the Employer shall make a Contribution to the Deferral Account in the amount of Five
Thousand Thirty-Four Dollars ($5,034).


 


Article
3


DEFFERAL
ACCOUNT


 


3.1           Establishing
and Crediting. The Employer shall establish a Deferral Account on its books for the Executive and shall credit to the Deferral
Account the following amounts:


 


(a)          Any
Contributions hereunder; and


(b)          Interest
as follows.


(i)       On
the last day of each month prior to Separation from Service, Disability, Change in Control or the Executive’s death, interest
shall be credited on the Deferral Account balance at an annual rate equal to the Accumulation Period Crediting Rate, compounded
monthly.


(ii)       On
the last day of each month following Separation from Service, Disability, Change in Control or the Executive’s death, interest
shall be credited on the Deferral Account balance at an annual rate equal to the Distribution Period Crediting Rate, compounded
monthly.


 


3.2           Recordkeeping
Device Only. The Deferral Account is solely a device for measuring amounts to be paid under this Agreement and is not a trust
fund of any kind.


 


ARTICLE
4


PAYMENT
OF BENEFITS


    


4.1           Normal
Retirement Benefit. Upon Separation from Service after Normal Retirement Age, the Employer shall pay the Executive the Deferral
Account balance calculated at Separation from Service. This benefit shall be paid in consecutive monthly installments as elected
by the Executive on the Distribution Election Form, commencing the month following Separation from Service. During any payment
period, interest shall be credited on the remaining Deferral Account balance in accordance with Section 3.1(b)(ii).


 



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4.2           Early
Termination Benefit. If Early Termination occurs, the Employer shall pay the Executive the Deferral Account balance calculated
at Separation from Service. This benefit shall be paid in consecutive monthly installments as elected by the Executive on the
Distribution Election Form, commencing the month following Separation from Service. During any payment period, interest shall
be credited on the remaining Deferral Account balance in accordance with Section 3.1(b)(ii).


 


4.3           Disability
Benefit. If the Executive experiences a Disability prior to Separation from Service, Change in Control and Normal Retirement
Age, the Employer shall pay the Executive the Deferral Account balance calculated at Disability. This benefit shall be paid in
a lump sum or in consecutive monthly installments as elected by the Executive on the Distribution Election Form, commencing the
month following Disability. During any payment period, interest shall be credited on the remaining Deferral Account balance in
accordance with Section 3.1(b)(ii).


 


4.4           Change
in Control Benefit. If a Change in Control occurs prior to Separation from Service, Disability, Normal Retirement Age and
the Executive’s death, the Employer shall pay the Executive the Deferral Account balance calculated at Change in Control.
This benefit shall be paid in a lump sum or in consecutive monthly installments as elected by the Executive on the Distribution
Election Form, commencing the month following Change in Control. During any payment period, interest shall be credited on the
remaining Deferral Account balance in accordance with Section 3.1(b)(ii).


 


4.5           Death
Prior to Commencement of Benefit Payments. In the event the Executive dies prior to Separation from Service, Disability and
Change in Control, the Employer shall pay the Beneficiary the Deferral Account balance calculated at the Executive’s death.
This benefit shall be paid in a lump sum or in consecutive monthly installments as elected by the Executive on the Distribution
Election Form, commencing the month following the Executive’s death. During any payment period, interest shall be credited
on the unpaid balance in accordance with Section 3.1(b)(ii).


 


4.6           Death
Subsequent to Commencement of Benefit Payments. In the event the Executive dies while receiving payments, but prior to receiving
all payments due and owing hereunder, the Employer shall pay the Beneficiary the same amounts at the same times as the Employer
would have paid the Executive, had the Executive survived.


 



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4.7           Rabbi
Trust. The Corporation has established a rabbi trust (the “Trust”), to which it previously contributed an initial
corpus of $100. In the event of a Change in Control, the Employer or the Corporation shall, in accordance with the terms of the
Trust, contribute thereto an amount equal to the Deferral Account balance, or, if greater the present value of the remaining benefits
payments to be made hereunder. 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, the Employer
or any successor of the Corporation or Employer shall pay the Executive the amount due hereunder.


 


4.8           Termination
for Cause. If the Employer terminates the Executive’s employment for Cause, then the Executive shall forfeit all benefits
hereunder.


 


4.9            Restriction
on Commencement of Distributions.  Notwithstanding any provision of this Agreement to the contrary, if the Executive
is considered a Specified Employee at the time of Separation from Service, the provisions of this Section shall govern all distributions
hereunder. Distributions which would otherwise be made to the Executive due to Separation from Service shall not be made during
the first six (6) months following Separation from Service. Rather, any distribution which would otherwise be paid to the Executive
during such period shall be accumulated and paid to the Executive in a lump sum on the first day of the seventh month following
Separation from Service, or if earlier, upon the Executive’s death. All subsequent distributions shall be paid as they would
have had this Section not applied.


 


4.10         Acceleration
of Payments. Except as specifically permitted herein, no acceleration of the time or schedule of any payment may be made hereunder.
Notwithstanding the foregoing, payments may be accelerated, in accordance with the provisions of Treasury Regulation §1.409A-3(j)(4)
in the following circumstances: (i) as a result of certain domestic relations orders; (ii) in compliance with ethics agreements
with the federal government; (iii) in compliance with the ethics laws or conflicts of interest laws; (iv) in limited cashouts
(but not in excess of the limit under Code §402(g)(1)(B)); (v) to pay employment-related taxes; or (vi) to pay any taxes
that may become due at any time that the Agreement fails to meet the requirements of Code Section 409A.


 


4.11         Delays
in Payment by Employer. A payment may be delayed to a date after the designated payment date under any of the circumstances
described below, and the provision will not fail to meet the requirements of establishing a permissible payment event. The delay
in the payment will not constitute a subsequent deferral election, so long as the Employer treats all payments to similarly situated
participants on a reasonably consistent basis.


 



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(a)       Payments
subject to Code Section 162(m). If the Employer reasonably anticipates that the Employer’s deduction with respect to
any distribution under this Agreement would be limited or eliminated by application of Code Section 162(m), then to the extent
deemed necessary by the Employer to ensure that the entire amount of any distribution from this Agreement is deductible, the Employer
may delay payment of any amount that would otherwise be distributed under this Agreement. The delayed amounts shall be distributed
to the Executive (or the Beneficiary in the event of the Executive’s death) at the earliest date the Employer reasonably
anticipates that the deduction of the payment of the amount will not be limited or eliminated by application of Code Section 162(m).


(b)       Payments
that would violate Federal securities laws or other applicable law. A payment may be delayed where the Employer reasonably
anticipates that the making of the payment will violate Federal securities laws or other applicable law provided that the payment
is made at the earliest date at which the Employer reasonably anticipates that the making of the payment will not cause such violation.
The making of a payment that would cause inclusion in gross income or the application of any penalty provision of the Internal
Revenue Code is not treated as a violation of law.


(c)       Solvency.
Notwithstanding the above, a payment may be delayed where the payment would jeopardize the ability of the Employer to continue
as a going concern.


 


4.12       Treatment
of Payment as Made on Designated Payment Date. Solely for purposes of determining compliance with Code Section 409A, any payment
under this Agreement made after the required payment date shall be deemed made on the required payment date provided that such
payment is made by the latest of: (i) the end of the calendar year in which the payment is due; (ii) the 15th day of
the third calendar month following the payment due date; (iii) if Employer cannot calculate the payment amount on account of administrative
impracticality which is beyond the Executive’s control, the end of the first calendar year which payment calculation is
practicable; and (iv) if Employer does not have sufficient funds to make the payment without jeopardizing the Employer’s
solvency, in the first calendar year in which the Employer’s funds are sufficient to make the payment.


 


4.13       Facility
of Payment. If a distribution is to be made to a minor, or to a person who is otherwise incompetent, then the Administrator
may make such distribution: (i) to the legal guardian, or if none, to a parent of a minor payee with whom the payee maintains
his or her residence; or (ii) to the conservator or administrator or, if none, to the person having custody of an incompetent
payee. Any such distribution shall fully discharge the Employer and the Administrator from further liability on account thereof.


 



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4.14       Excise
Tax Limitation. Notwithstanding any provision of this Agreement to the contrary, if any benefit payment hereunder would be
treated as an “excess parachute payment” under Code Section 280G, the Employer shall reduce such benefit payment to
the extent necessary to avoid treating such benefit payment as an excess parachute payment. The Executive shall be entitled to
only the reduced benefit and shall forfeit any amount over and above the reduced amount.


 


4.15       Changes
in Form or Timing of Benefit Payments. The Employer and the Executive may, subject to the terms hereof, amend this Agreement
to delay the timing or change the form of payments. Any such amendment:


 


(a)       must
take effect not less than twelve (12) months after the amendment is made;


(b)       must,
for benefits distributable due solely to the arrival of a specified date, or on account of Separation from Service or Change in
Control, delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally
scheduled to be made;


(c)       must,
for benefits distributable due solely to the arrival of a specified date, be made not less than twelve (12) months before distribution
is scheduled to begin; and


(d)       may
not accelerate the time or schedule of any distribution.


 


Article
5


Beneficiaries


 


5.1           Designation
of Beneficiaries. The Executive may designate any person to receive any benefits payable under the Agreement upon the Executive’s
death, and the designation may be changed from time to time by the Executive by filing a new designation. Each designation will
revoke all prior designations by the Executive, shall be in the form prescribed by the Administrator and shall be effective only
when filed in writing with the Administrator during the Executive’s lifetime. If the Executive names someone other than
the Executive’s spouse as a Beneficiary, the Administrator may, in its sole discretion, determine that spousal consent is
required to be provided in a form designated by the Administrator, executed by the Executive’s spouse and returned to the
Administrator. The Executive’s beneficiary designation shall be deemed automatically revoked if the Beneficiary predeceases
the Executive or if the Executive names a spouse as Beneficiary and the marriage is subsequently dissolved.


 






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5.2           Absence
of Beneficiary Designation. In the absence of a valid Beneficiary designation, or if, at the time any benefit payment is due
to a Beneficiary, there is no living Beneficiary validly named by the Executive, the Employer shall pay the benefit payment to
the Executive’s spouse. If the spouse is not living then the Employer shall pay the benefit payment to the Executive’s
living descendants per stirpes, and if there are no living descendants, to the Executive’s estate. In determining
the existence or identity of anyone entitled to a benefit payment, the Employer may rely conclusively upon information supplied
by the Executive’s personal representative, executor, or administrator.


 


Article
6


ADMINISTRATION


 


6.1           Administrator
Duties. The Administrator shall be responsible for the management, operation, and administration of the Agreement. When making
a determination or calculation, the Administrator shall be entitled to rely on information furnished by the Employer, Executive
or Beneficiary. No provision of this Agreement shall be construed as imposing on the Administrator any fiduciary duty under ERISA
or other law, or any duty similar to any fiduciary duty under ERISA or other law.


 


6.2           Administrator
Authority. The Administrator shall enforce this Agreement in accordance with its terms, shall be charged with the general
administration of this Agreement, and shall have all powers necessary to accomplish its purposes.


 


6.3           Binding
Effect of Decision. The decision or action of the Administrator with respect to any question arising out of or in connection
with the administration, interpretation or application of this Agreement and the rules and regulations promulgated hereunder shall
be final, conclusive and binding upon all persons having any interest in this Agreement.


 


6.4           Compensation,
Expenses and Indemnity. The Administrator shall serve without compensation for services rendered hereunder. The Administrator
is authorized at the expense of the Employer to employ such legal counsel and recordkeeper as it may deem advisable to assist
in the performance of its duties hereunder. Expense and fees in connection with the administration of this Agreement shall be
paid by the Employer.


 






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6.5           Employer
Information. The Employer shall supply full and timely information to the Administrator on all matters relating to the Executive’s
compensation, death, Disability or Separation from Service, and such other information as the Administrator reasonably requires.


 


6.6           Termination
of Participation. If the Administrator determines in good faith that the Executive no longer qualifies as a member of a select
group of management or highly compensated employees, as determined in accordance with ERISA, the Administrator shall have the
right, in its sole discretion, to prohibit the Executive from making any additional Deferrals hereunder.


 


6.7           Compliance
with Code Section 409A. The Employer and the Executive intend that the Agreement comply with the provisions of Code Section
409A to prevent the inclusion in gross income of any amounts deferred hereunder in a taxable year prior to the year in which amounts
are actually paid to the Executive or Beneficiary. This Agreement shall be construed, administered and governed in a manner that
affects such intent, and the Administrator shall not take any action that would be inconsistent therewith.


 


Article
7


Claims
and Review Procedures


 


7.1           Claims
Procedure. A Claimant who believes that he or she is being denied a benefit to which he or she is entitled hereunder shall
make a claim for such benefits as follows.


 


(a)       Initiation
– Written Claim. The Claimant initiates a claim by submitting to the Administrator a written claim for the benefits.
If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within sixty (60) days after
such notice was received by the Claimant. All other claims must be made within one hundred eighty (180) days of the date on which
the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the Claimant.


(b)       Timing
of Administrator Response. The Administrator shall respond to such Claimant within forty-five (45) days after receiving the
claim. If the Administrator determines that special circumstances require additional time for processing the claim, the Administrator
can extend the response period by an additional thirty (30) days by notifying the Claimant in writing, prior to the end of the
initial forty-five (45) day period, that an additional period is required. The extension notice shall specifically explain the
standards on which entitlement to a disability benefit is based, the unresolved issues that prevent a decision on the claim and
the additional information needed from the Claimant to resolve those issues, and the Claimant shall be afforded at least forty-five
(45) days within which to provide the specified information.


 






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(c)       Notice
of Decision. If the Administrator denies all or a part of the claim, the Administrator shall notify the Claimant in writing
of such denial in a culturally and linguistically appropriate manner. The Administrator shall write the notification in a manner
calculated to be understood by the Claimant. The notification shall set forth: (i) the specific reasons for the denial; (ii) a
reference to the specific provisions of this Agreement on which the denial is based; (iii) a notice that the Claimant has a right
to request a review of the claim denial and an explanation of the Plan’s review procedures and the time limits applicable
to such procedures; (iv) a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following
an adverse benefit determination on review, and a description of any time limit for bringing such an action; (v) for any Disability
claim, a discussion of the decision, including an explanation of the basis for disagreeing with or not following: (A) the views
presented by the Claimant of health care professionals treating the Claimant and vocational professionals who evaluated the Claimant;
(B) the views of medical or vocational experts whose advice was obtained on behalf of the Employer in connection with a Claimant’s
adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination; or (C)
a disability determination regarding the Claimant presented by the Claimant made by the Social Security Administration (vi) for
any Disability claim, the specific internal rules, guidelines, protocols, standards or other similar criteria relied upon in making
the adverse determination or, alternatively, a statement that such rules, guidelines, protocols, standards or other similar criteria
do not exist; and (viii) for any Disability claim, a statement that the Claimant is entitled to receive, upon request and free
of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant’s
claim for benefits. Whether a document, record, or other information is relevant to a claim for benefits shall be determined by
Department of Labor Regulation Section 2560.503-1(m)(8).


 


7.2           Review
Procedure. If the Administrator denies all or a part of the claim, the Claimant shall have the opportunity for a full and
fair review by the Administrator of the denial as follows.


 


(a)       Additional
Evidence. Prior to the review of the denied claim, the Claimant shall be given, free of charge, any new or additional evidence
considered, relied upon, or generated by the Administrator, or any new or additional rationale, as soon as possible and sufficiently
in advance of the date on which the notice of adverse benefit determination on review is required to be provided, to give the
Claimant a reasonable opportunity to respond prior to that date.


 






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(b)       Initiation
– Written Request. To initiate the review, the Claimant, within sixty (60) days after receiving the Administrator’s
notice of denial, must file with the Administrator a written request for review.


(c)       Additional
Submissions – Information Access. After such request the Claimant may submit written comments, documents, records and
other information relating to the claim. The Administrator shall also provide the Claimant, upon request and free of charge, reasonable
access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to
the Claimant’s claim for benefits.


(d)       Considerations
on Review. In considering the review, the Administrator shall consider all materials and information the Claimant submits
relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.
Additional considerations shall be required in the case of a claim for Disability benefits. The claim shall be reviewed by an
individual or committee who did not make the initial determination that is subject of the appeal and who is not a subordinate
of the individual who made the determination. Additionally, the review shall be made without deference to the initial adverse
benefit determination. If the initial adverse benefit determination was based in whole or in part on a medical judgment, the Administrator
will consult with a health care professional with appropriate training and experience in the field of medicine involving the medical
judgment. The health care professional who is consulted on appeal will not be the same individual who was consulted during the
initial determination and will not be the subordinate of such individual. If the Administrator obtained the advice of medical
or vocational experts in making the initial adverse benefits determination (regardless of whether the advice was relied upon),
the Administrator will identify such experts.


(e)       Timing
of Administrator Response. The Administrator shall respond in writing to such Claimant within forty-five (45) days after receiving
the request for review. If the Administrator determines that special circumstances require additional time for processing the
claim, the Administrator can extend the response period by an additional forty-five (45) days by notifying the Claimant in writing,
prior to the end of the initial forty-five (45) day period, that an additional period is required. The notice of extension must
set forth the special circumstances and the date by which the Administrator expects to render its decision.


 



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(f)       Notice
of Decision. The Administrator shall notify the Claimant in writing of its decision on review. The Administrator shall write
the notification in a culturally and linguistically appropriate manner calculated to be understood by the Claimant. The notification
shall set forth: (i) the specific reasons for the denial; (ii) a reference to the specific provisions of this Agreement on which
the denial is based; (iii) a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access
to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the Claimant’s
claim for benefits; (iv) a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a); (v) for
any Disability claim, a discussion of the decision, including an explanation of the basis for disagreeing with or not following:
(A) the views presented by the Claimant of health care professionals treating the Claimant and vocational professionals who evaluated
the Claimant; (B) the views of medical or vocational experts whose advice was obtained on behalf of the Employer in connection
with a Claimant’s adverse benefit determination, without regard to whether the advice was relied upon in making the benefit
determination; or (C) a disability determination regarding the Claimant presented by the Claimant made by the Social Security
Administration; and (vi) for any Disability claim, the specific internal rules, guidelines, protocols, standards or other similar
criteria relied upon in making the adverse determination or, alternatively, a statement that such rules, guidelines, protocols,
standards or other similar criteria do not exist.


 


7.3           Exhaustion
of Remedies. The Claimant must follow these claims review procedures and exhaust all administrative remedies before taking
any further action with respect to a claim for benefits.


 


7.4           Failure
to Follow Procedures. In the case of a claim for Disability benefits, if the Administrator fails to strictly adhere to all
the requirements of this claims procedure with respect to a Disability claim, the Claimant is deemed to have exhausted the administrative
remedies available under the Agreement, and shall be entitled to pursue any available remedies under ERISA Section 502(a) on the
basis that the Administrator has failed to provide a reasonable claims procedure that would yield a decision on the merits of
the claim, except where the violation was: (a) de minimis; (b) non-prejudicial; (c) attributable to good cause or matters beyond
the Administrator’s control; (d) in the context of an ongoing good-faith exchange of information; and (e) not reflective
of a pattern or practice of noncompliance. The Claimant may request a written explanation of the violation from the Administrator,
and the Administrator must provide such explanation within ten (10) days, including a specific description of its basis, if any,
for asserting that the violation should not cause the administrative remedies to be deemed exhausted. If a court rejects the Claimant’s
request for immediate review on the basis that the Administrator met the standards for the exception, the claim shall be considered
as re-filed on appeal upon the Administrator’s receipt of the decision of the court. Within a reasonable time after the
receipt of the decision, the Administrator shall provide the claimant with notice of the resubmission.


 



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Article
8


AMENDMENT
AND TERMINATION


 


8.1           Agreement
Amendment Generally. Except as provided in Section 8.2, this Agreement may be amended only by a written agreement signed by
both the Employer and the Executive.


 


8.2          Amendment
to Insure Proper Characterization of Agreement. Notwithstanding anything in this Agreement to the contrary, the Agreement
may be amended by the Employer at any time, if found necessary in the opinion of the Employer, i) to ensure that the Agreement
is characterized as plan of deferred compensation maintained for a select group of management or highly compensated employees
as described under ERISA, ii) to conform the Agreement to the requirements of any applicable law or iii) to comply with the written
instructions of the Employer’s auditors or banking regulators. 


 


8.3           Agreement
Termination Generally. Except as provided in Section 8.4, this Agreement may be terminated only by a written agreement signed
by the Employer and the Executive. Such termination shall not cause a distribution of benefits under this Agreement. Rather, upon
such termination benefit distributions will be made at the earliest distribution event permitted under Article 4.


 


8.4           Effect
of Complete Termination. Notwithstanding anything to the contrary in Section 8.3, and subject to the requirements of Code
Section 409A and Treasury Regulations §1.409A-3(j)(4)(ix), at certain times the Employer may completely terminate and liquidate
the Agreement. In the event of such a complete termination, the Employer shall pay the Executive the Deferral Account balance.
Such complete termination of the Agreement shall occur only under the following circumstances and conditions.


 


(a)       Corporate
Dissolution or Bankruptcy. The Employer may terminate and liquidate this Agreement within twelve (12) months of a corporate
dissolution taxed under Code Section 331, or with the approval of a bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A),
provided that all benefits paid under the Agreement are included in the Executive’s gross income in the latest of: (i) the
calendar year which the termination occurs; (ii) the calendar year in which the amount is no longer subject to a substantial risk
of forfeiture; or (iii) the first calendar year in which the payment is administratively practicable.


 






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(b)       Change
in Control. The Employer may terminate and liquidate this Agreement by taking irrevocable action to terminate and liquidate
within the thirty (30) days preceding or the twelve (12) months following a Change in Control. This Agreement will then be treated
as terminated only if all substantially similar arrangements sponsored by the Employer which are treated as deferred under a single
plan under Treasury Regulations §1.409A-1(c)(2) are terminated and liquidated with respect to each participant who experienced
the Change in Control so that the Executive and any participants in any such similar arrangements are required to receive all
amounts of compensation deferred under the terminated arrangements within twelve (12) months of the date the Employer takes the
irrevocable action to terminate the arrangements.


(c)       Discretionary
Termination. The Employer may terminate and liquidate this Agreement provided that: (i) the termination does not occur proximate
to a downturn in the financial health of the Employer; (ii) all arrangements sponsored by the Employer and Affiliates that would
be aggregated with any terminated arrangements under Treasury Regulations §1.409A-1(c) are terminated; (iii) no payments,
other than payments that would be payable under the terms of this Agreement if the termination had not occurred, are made within
twelve (12) months of the date the Employer takes the irrevocable action to terminate this Agreement; (iv) all payments are made
within twenty-four (24) months following the date the Employer takes the irrevocable action to terminate and liquidate this Agreement;
and (v) neither the Employer nor any of its Affiliates adopt a new arrangement that would be aggregated with any terminated arrangement
under Treasury Regulations §1.409A-1(c) if the Executive participated in both arrangements, at any time within three (3)
years following the date the Employer takes the irrevocable action to terminate this Agreement.


 


Article
9


MISCELLANEOUS


 


9.1           No
Effect on Other Rights. This Agreement constitutes the entire agreement between the Employer and the Executive as to the subject
matter hereof. No rights are granted to the Executive by virtue of this Agreement other than those specifically set forth herein.
Nothing contained herein will confer upon the Executive the right to be retained in the service of the Employer nor limit the
right of the Employer to discharge or otherwise deal with the Executive without regard to the existence hereof.


 






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9.2           State
Law. This Agreement and all rights hereunder shall be governed by and construed according to the laws of the Commonwealth
of Pennsylvania, except to the extent preempted by the laws of the United States of America.


 


9.3           Validity.
In case any provision of this Agreement shall be illegal or invalid for any reason, said illegality or invalidity shall not affect
the remaining parts hereof, but this Agreement shall be construed and enforced as if such illegal or invalid provision had never
been inserted herein.


 


9.4           Nonassignability.
Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.


 


9.5          Unsecured
General Creditor Status. Payment to the Executive or any Beneficiary hereunder shall be made from assets which shall continue,
for all purposes, to be part of the general, unrestricted assets of the Employer and no person shall have any interest in any
such asset by virtue of any provision of this Agreement. The Employer’s obligation hereunder shall be an unfunded and unsecured
promise to pay money in the future. In the event that the Employer purchases an insurance policy insuring the life of the Executive
to recover the cost of providing benefits hereunder, neither the Executive nor the Beneficiary shall have any rights whatsoever
in said policy or the proceeds therefrom.


 


9.6           Life
Insurance. If the Employer chooses to obtain insurance on the life of the Executive in connection with its obligations under
this Agreement, the Executive hereby agrees to take such physical examinations and to truthfully and completely supply such information
as may be required by the Employer or the insurance company designated by the Employer.


 


9.7          Unclaimed
Benefits. The Executive shall keep the Employer informed of the Executive’s current address and the current address
of the Beneficiary. If the location of the Executive is not made known to the Employer within three years after the date upon
which any payment of any benefits may first be made, the Employer shall delay payment of the Executive’s benefit payment(s)
until the location of the Executive is made known to the Employer; however, the Employer shall only be obligated to hold such
benefit payment(s) for the Executive until the expiration of three (3) years. Upon expiration of the three (3) year period, the
Employer may discharge its obligation by payment to the Beneficiary. If the location of the Beneficiary is not made known to the
Employer by the end of an additional two (2) month period following expiration of the three (3) year period, the Employer may
discharge its obligation by payment to the Executive’s estate. If there is no estate in existence at such time or if such
fact cannot be determined by the Employer, the Executive and Beneficiary shall thereupon forfeit all rights to any benefits provided
under this Agreement.


 






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9.8           Suicide
or Misstatement. No benefit shall be distributed hereunder if the Executive commits suicide within two (2) years after the
Effective Date, or if an insurance company which issued a life insurance policy covering the Executive and owned by the Employer
denies coverage (i) for material misstatements of fact made by the Executive on an application for life insurance, or (ii) for
any other reason.


 


9.9           Removal.
Notwithstanding anything in this Agreement to the contrary, the Employer shall not distribute any benefit under this Agreement
if the Executive is subject to a final removal or prohibition order issued pursuant to Section 8(e) of the Federal Deposit Insurance
Act. Furthermore, any payments made to the Executive pursuant to this Agreement shall, if required, comply with 12 U.S.C. 1828,
FDIC Regulation 12 CFR Part 359 and any other regulations or guidance promulgated thereunder.


 


9.10         Forfeiture
Provision. The Executive shall forfeit any non-distributed benefits under this Agreement if, after Separation from Service
or Disability, the Executive:


 


(i)        violates
any of the Post-Employment Covenants described in Section 8(a) or 8(d) of the Employment Agreement;


 


(ii)       either
on his own behalf or on behalf of any other person, entity, firm, or corporation, whether as a principal, agent, executive, stockholder,
partner, officer, member, director, sole proprietor, or otherwise, contacts or solicits (either directly or indirectly) any of
the Employer's customers, vendors, suppliers and referral sources;


 


(iii)      either
on his own behalf or on behalf of any other person, entity, firm, or corporation, whether as a principal, agent, executive, employee,
stockholder, partner, officer, member, director, sole proprietor, or otherwise, engages in business with or otherwise provides
(either directly or indirectly) services to any of the Employer's customers, suppliers, vendors and referral sources that are
the same or similar to any services provided by the Employer;


 


(iv)     either
on his own behalf or on behalf of any other person, entity, firm, or corporation, whether as a principal, agent, executive, stockholder,
partner, officer, member, director, sole proprietor, or otherwise, competes (either directly or indirectly) with the Employer
or any of its subsidiaries or affiliates, or otherwise engages in lending, banking or financial services within a fifty (50) mile
radius of any branch banking office of the Employer;


 






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(v)       provides
financial or other assistance to any person, entity, firm, or corporation engaged the banking, lending, financial services or
insurance business; or


 


(vi)      recruits
or otherwise encourages any of the Employer’s employees (including temporary employees) to terminate their relationship
with the Employer or to seek employment with any other entity.


 


9.11         Notice.
Any notice, consent or demand required or permitted to be given to the Employer or Administrator under this Agreement shall be
sufficient if in writing and hand-delivered or sent by registered or certified mail to the Employer’s principal business
office. Any notice or filing required or permitted to be given to the Executive or Beneficiary under this Agreement shall be sufficient
if in writing and hand-delivered or sent by mail to the last known address of the Executive or Beneficiary, as appropriate. Any
notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark
or on the receipt for registration or certification.


 


9.12         Headings
and Interpretation. Headings and sub-headings in this Agreement are inserted for reference and convenience only and shall
not be deemed part of this Agreement. Wherever the fulfillment of the intent and purpose of this Agreement requires, and the context
will permit, the use of the masculine gender includes the feminine and use of the singular includes the plural.


 


9.13         Alternative
Action. In the event it becomes impossible for the Employer or the Administrator to perform any act required by this Agreement
due to regulatory or other constraints, the Employer or Administrator may perform such alternative act as most nearly carries
out the intent and purpose of this Agreement and is in the best interests of the Employer, provided that such alternative act
does not violate Code Section 409A.


 


9.14         Coordination
with Other Benefits. The benefits provided for the Executive or the Beneficiary under this Agreement are in addition to any
other benefits available to the Executive under any other plan or program for employees of the Employer. This Agreement shall
supplement and shall not supersede, modify, or amend any other such plan or program except as may otherwise be expressly provided
herein.


 






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9.15         Inurement.
This Agreement shall be binding upon and shall inure to the benefit of the Employer, its successor and assigns, and the Executive,
the Executive’s successors, heirs, executors, administrators, and the Beneficiary.


 


9.16         Tax
Withholding. The Employer may make such provisions and take such action as it deems necessary or appropriate for the withholding
of any taxes which the Employer is required by any law or regulation to withhold in connection with any benefits under the Agreement.
The Executive shall be responsible for the payment of all individual tax liabilities relating to any benefits paid hereunder.


 



9.17         Aggregation of Agreement. If the Employer offers other non-qualified deferred compensation plans in addition to
this Agreement, this Agreement and those plans shall be treated as a single plan to the extent required under Code Section 409A.


 


IN
WITNESS WHEREOF, the Executive and a representative of the Employer have executed this Agreement document as indicated below:


 





	Executive:	 	


Employer:


 
	 	 	 	 
	/s/Craig Kauffman	 	By:	/s/ Larry J. Miller
	 	 	 	 
	 	 	


Its:


	Executive Chairman












 






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