Document:

EXHIBIT 10.1 

Bridge Loan Agreement

 

THIS BRIDGE LOAN AGREEMENT is dated as of March 4, 2015, by and between New Energy Technologies, Inc., a corporation organized under the laws of the State of Nevada (“Borrower”), and 1420468 Alberta Ltd., a corporation organized under the laws of the Province of Alberta, Canada (“Creditor”).

 

W I T N E S S E T H:

 

WHEREAS, Borrower wishes to induce Creditor to loan to Borrower, and Creditor is willing to loan to Borrower, subject to the terms and conditions set forth herein, SIX HUNDRED THOUSAND DOLLARS ($600,000).

 

NOW, THEREFORE, the parties hereto, in consideration of their mutual covenants hereinafter set forth and intending to be legally bound hereby, agree as follows:

 

ARTICLE I 

DEFINITIONS

 

1.01. Certain Definitions. In addition to other words and terms defined elsewhere in this Agreement, as used herein the following words and terms shall have the following meanings, respectively:

 

“Agreement” shall mean this Bridge Loan Agreement as the same may be amended, modified or supplemented from time to time.

 

“Closing” shall mean the execution and delivery of the Loan Documents by Borrower and Creditor.

 

“Closing Date” shall mean the date of the Closing.

 

“Event of Default” shall mean any of the events of default described in Section 6.01.

 

“Loan” shall mean the $600,000 loan to be made by Creditor to Borrower pursuant to this Agreement.

 

“Loan Documents” shall mean, collectively, this Agreement, the Promissory Note, and any and all other documents delivered by or on behalf of Borrower in connection with the Loan, as the same may be amended, modified or supplemented from time to time.

 

“Note” or “Promissory Note” shall mean Borrower’s $600,000 promissory note to Creditor dated the date hereof and attached hereto as Exhibit A, as said Note may be extended, renewed, refinanced, refunded, amended, modified or supplemented from time to time, and any replacement or successor note.

 

“Official Body” shall mean any government or political subdivision or any agency, authority, bureau, department or instrumentality of either, or any court, tribunal, grand jury or arbitrator, in each case whether foreign or domestic.

 

“Potential Default” shall mean any condition, event, act or omission which, with the giving of notice or passage of time or both, would constitute an Event of Default as described in Article VI below.

 

1.02. Construction of Agreement. Unless the context of this Agreement otherwise clearly requires, references to the plural include the singular and vice versa. References in this Agreement to “judgments” of Creditor include good faith estimates by Creditor (in the case of quantitative judgments) and good faith beliefs by Creditor (in the case of qualitative judgments). The words “hereof,” “herein,” “hereunder,” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. The section and other headings contained in this Agreement are for reference purposes only and shall not control or affect the construction of this Agreement or the interpretation hereof in any respect. Section and subsection references are to this Agreement unless otherwise specified.

 

	 
	
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ARTICLE II 

THE LOAN

 

2.01. Agreement to Lend; Use of Proceeds. Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, Creditor agrees to make a $600,000 loan to Borrower, such funds to be disbursed to Borrower on even date herewith. The proceeds of the Loan will be used for general administrative purposes as Borrower sees fit.

 

2.02. Note. The obligation of Borrower to repay the principal and interest of the Loan shall be evidenced by the Note.

 

ARTICLE III 

REPRESENTATIONS AND WARRANTIES

 

Borrower represents and warrants to Creditor that:

 

3.01. Authority and Authorization. Borrower has the power and authority to execute and deliver this Agreement, to make the borrowing provided for herein, to execute and deliver the Note in evidence of such borrowing, to execute and deliver the other Loan Documents to which Borrower is a party and to perform its obligations hereunder and under the Note and the other Loan Documents, and all such action has been duly and validly authorized.

 

3.02. Execution and Binding Effect. This Agreement, the Note and the other Loan Documents to which Borrower is a party have been duly and validly executed and delivered by Borrower and constitute legal, valid and binding obligations of Borrower, enforceable in accordance with the terms hereof and thereof, subject to the effect of bankruptcy, insolvency, reorganization, arrangement, moratorium, or other similar laws relating to or affecting the rights of creditors generally.

 

3.03. Authorizations and Filings. No authorization, consent, approval, license, exemption or other action by, and no registration, qualification, designation, declaration or filing with, any Official Body is or will be necessary or advisable in connection with the execution and delivery of this Agreement, the Note or the other Loan Documents, consummation of the transactions herein or therein contemplated or performance of or compliance with the terms and conditions hereof or thereof.

 

3.04. Absence of Conflicts. Neither the execution and delivery of this Agreement, the Note or the other Loan Documents nor consummation of the transactions herein or therein contemplated nor performance of or compliance with the terms and conditions hereof or thereof will (a) violate any law, (b) conflict with or result in a breach of or a default under any agreement or instrument to which Borrower is a party or by which either of them or any of their properties (now owned or hereafter acquired) may be subject or bound or (c) result in the creation or imposition of any lien, charge, security interest or encumbrance upon any property (now owned or hereafter acquired) of Borrower.

 

3.05. Financial Condition. Borrower has not applied for or consented to the appointment of a receiver, trustee or liquidator of itself or any of its property, admitted in writing its inability to pay its debts as they mature, made a general assignment for the benefit of creditors, been adjudicated a bankrupt or insolvent or filed a voluntary petition in bankruptcy, or a petition or an answer seeking reorganization or an arrangement with creditors or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law, and no action has been taken by Borrower for the purpose of effecting any of the foregoing. No order, judgment or decree has been entered by any court of competent jurisdiction approving a petition seeking reorganization of Borrower or all or a substantial part of the assets of Borrower, or appointing a receiver, sequestrator, trustee or liquidator of it or any of its property.

 

3.06. Defaults. No Event of Default and no Potential Default has occurred and is continuing or exists.

 

	 
	
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3.07. Litigation. There is no pending or (to Borrower’s knowledge) threatened proceeding by or before any Official Body against or affecting Borrower which if adversely decided would have a material adverse effect on the business, operations or condition, financial or otherwise, of Borrower or on the ability of Borrower to perform its obligations under the Loan Documents.

 

3.08. Power to Carry On Business. Borrower has all requisite power and authority to own and operate its properties and to carry on its business as now conducted and as presently planned to be conducted.

 

ARTICLE IV 

CONDITIONS OF LENDING

 

The obligation of Creditor to consummate the Closing and to make the Loan is subject to the satisfaction of the following conditions:

 

4.01. Representations and Warranties. The representations and warranties contained in Article III hereof and in the other Loan Documents shall be true on and as of the Closing Date. No Event of Default and no Potential Default shall have occurred and be continuing or shall exist or shall occur and exist after the consummation of the Closing.

 

4.02. Warrants. On or before the Closing Date Borrower shall issue to Creditor such documentation as required to evidence warrants (the “Warrants”) to purchase up to 500,000 shares of the Borrower’s common stock at an exercise price per share of $1.20. The Warrants shall contain, at a minimum: (i) a term of five (5) years; (ii) a provision for cashless exercise; and (iii) such other anti-dilution provisions as are customary.

 

4.03. Miscellaneous. Borrower shall have furnished to Creditor such other instruments, documents and opinions as Creditor shall reasonably require to evidence and secure the Loan and to comply with this Agreement, the Promissory Note and the requirements of regulatory authorities to which Borrower is subject.

 

4.04. Details, Proceedings and Documents. All legal details and proceedings in connection with the transactions contemplated by this Agreement shall be satisfactory to Creditor and Creditor shall have received all such counterpart originals or certified or other copies of such documents and proceedings in connection with such transactions, in form and substance satisfactory to Creditor, as Creditor may from time to time request.

 

ARTICLE V 

AFFIRMATIVE COVENANTS

 

Borrower covenants to Creditor as follows:

 

5.01. Notices. Promptly upon becoming aware thereof, Borrower shall give Creditor notice of:

 

(a) any Event of Default or Potential Default, together with a written statement setting forth the details thereof, and the action being taken by Borrower to remedy the same; or

 

(b) the commencement, existence or threat of any proceeding by or before any Official Body against or affecting Borrower which, if adversely decided, would have a material adverse effect on the business, operations or condition, financial or otherwise, of Borrower or on its ability to perform its obligations under the Loan Documents.

 

5.02. Books and Records. Borrower shall maintain and keep proper records and books of account in which full, true and correct entries shall be made of all its dealings and business affairs.

 

5.03. Right to Participate in Future Financings. Creditor shall have the right, but not the obligation, so long as any part of the principal of the Loan (or any accrued and unpaid interest thereon) remains outstanding to participate, on the same terms and conditions as other investors, in any equity or debt financings effected by Borrower; and, in any such which the Creditor may elect, in its sole discretion, to participate and apply the then outstanding principal of the Loan (and accrued and unpaid interest thereon) towards the purchase price of the securities acquired by it such financings.

 

5.05. Other Obligations. Borrower shall maintain all obligations of Borrower in whatsoever manner incurred, including but not limited to obligations for borrowed money or for services or goods purchased by Borrower, in a current status.

 

	 
	
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ARTICLE VI 

DEFAULTS

 

6.01. Events of Default. An Event of Default shall mean the occurrence or existence of one or more of the events or conditions (whatever the reason for such Event of Default and whether voluntary, involuntary or effected by operation of law) described below which continues and persists for thirty (30) days beyond the required date of notice of such Event of Default specified in Section 5.01:

 

i.  Failure to pay any required principal repayment on the Loan when due or failure to pay any cash interest (if applicable) on the Loan within 10 days of the date upon which such interest is due;

 

ii. Failure to pay, or any default in the payment of, any principal of or any interest on any debt for money borrowed (other than the Loan, which is covered by (i) above) of Borrower, which remains uncured for a period of 30 days.

 

iii.  Any material breach of representations and warranties made by Borrower, which remains uncured for a period of 30 days after notice by Creditor;

 

iv.  Bankruptcy or insolvency of Borrower; and

 

v. And final judgment, writ or warrant of attachment in an amount greater than $100,000 filed against Borrower or its assets which remains unbonded, uninsured or unstayed for 120 days.

 

6.02. Consequences of an Event of Default. If an Event of Default specified in Section 6.01 shall occur and continue after the expiration of applicable notice and grace periods, if any, set forth therein, Creditor may, by notice to Borrower, declare the unpaid principal amount of the Note and all other amounts owing by Borrower hereunder or under the Note or the other Loan Documents to be immediately due and payable without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived, and an action therefor shall immediately accrue.

 

ARTICLE VII 

MISCELLANEOUS

 

7.01. Further Assurances. From time to time upon the request of Creditor, Borrower shall promptly and duly execute, acknowledge and deliver any and all such further instruments and documents as Creditor may reasonably deem necessary or desirable to confirm this Agreement and the Note, to carry out the purpose and intent hereof and thereof or to enable Creditor to enforce any of its rights hereunder or thereunder.

 

7.02. Amendments and Waivers. Creditor and Borrower may from time to time enter into agreements amending, modifying or supplementing this Agreement or the Note or any other Loan Document or changing the rights of Creditor or of Borrower hereunder or thereunder, and Creditor may from time to time grant waivers or consents to a departure from the due performance of the obligations of Borrower hereunder or thereunder. Any such agreement, waiver or consent must be in writing and shall be effective only to the extent specifically set forth in such writing. In the case of any such waiver or consent relating to any provision hereof any Event of Default or Potential Default so waived or consented to shall be deemed to be cured and not continuing, but no such waiver or consent shall extend to any other or subsequent Event of Default or Potential Default or impair any right consequent thereto.

 

7.03. No Implied Waiver; Cumulative Remedies. No course of dealing and no delay or failure of Creditor in exercising any right, power or privilege under any of the Loan Documents shall affect any other exercise thereof or exercise of any other right, power or privilege. The rights and remedies of Creditor under this Agreement are cumulative and not exclusive of any rights or remedies which Creditor would otherwise have under the other Loan Documents, at law or in equity.

 

	 
	
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7.04. Notices. Any notice or other communication required or permitted hereunder shall be in writing and, unless delivery instructions are otherwise expressly set forth above herein, either delivered personally (effective upon delivery), by facsimile transmission (effective on the next day after transmission), by recognized overnight delivery service (effective on the next day after delivery to the service), or by registered or certified mail, postage prepaid and return receipt requested (effective on the third Business Day after the date of mailing), at the following addresses (or at such other address(es) for a party as shall be specified by like notice, effective day of transmission):

 

If to the Borrower, at:

 

New Energy Technologies, Inc. 

10632 Little Patuxent Parkway 

Suite 406 

Columbia, Maryland 21044 

Attention: President & CEO 

Email: JConklin@newenergytechnologiesinc.com

 

If to Creditor, at: 

1420468 Alberta Ltd. 

 

or to such other persons or at such other addresses as shall be furnished by any party by like notice to the others. No change in any of such addresses shall be effective insofar as notices under this Section 7.04 are concerned unless such changed address shall have been given to such other party hereto as provided in this Section 7.04. For purposes hereof, the term “Business Day” means any day other than a Saturday, Sunday or any day on which banks in the State of New York are authorized or required by federal law to be closed in New York, New York.

 

7.05. No Third Party Rights. Except as contemplated by Section 7.08 hereof, nothing in this Agreement, whether express or implied, shall be construed to give to any person other than the parties hereto any legal or equitable right, remedy or claim under or in respect of this Agreement, which is intended for the sole and exclusive benefit of the parties hereto.

 

7.06. Severability. The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.

 

7.07. Number and Gender. For purposes of this Agreement, the singular shall be deemed to include the plural and the neuter shall be deemed to include the masculine and feminine, and vice versa, as the context may require.

 

7.08. Heirs, Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of Creditor, Borrower and their respective heirs, successors and assigns, except that Borrower may not assign or transfer any of its rights hereunder without the prior written consent of Creditor. Except to the extent otherwise required by the context of this Agreement, the term “Creditor” where used in this Agreement shall mean and include any holder of the Note originally issued to Creditor hereunder, and the holder of such Note shall be bound by and have the benefits of this Agreement the same as if such holder had been a signatory hereto.

 

	 
	
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7.09 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. The exchange of copies of this Agreement or amendments thereto and of signature pages by facsimile transmission or by email transmission in portable digital format, or similar format, shall constitute effective execution and delivery of such instrument(s) as to the parties and may be used in lieu of the original Agreement or amendment for all purposes. Signatures of the parties transmitted by facsimile or by email transmission in portable digital format, or similar format, shall be deemed to be their original signatures for all purposes.

 

7.10. Governing Law. This Agreement shall be governed by and interpreted and enforced in accordance with the laws of the State of New York without giving effect to the choice of law provisions thereof. The parties to this Agreement, acting for themselves and for their respective successors and assigns, without regard to domicile, citizenship or residence, hereby expressly and irrevocably elect as the sole judicial forum for the adjudication of any matters arising under or in connection with this Agreement, and consent and subject themselves to the jurisdiction of, the courts of the State of New York located in County of New York, and/or the United States District Court for the Southern District of New York, in respect of any matter arising under this Agreement. Service of process, notices and demands of such courts may be made upon any party to this Agreement by personal service at any place where it may be found or giving notice to such party as provided in Section 7.04.

 

[Signature Page Follows]

 

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

 

	 	
New Energy Technologies, Inc.

	 
	 	 	 	 
		By:	/s/ John Conklin	 
	 	 	Name: John Conklin	 
	 	 	Title: President and Chief Executive Officer	 

 

	 	1420468 Alberta Ltd.	 
	 	 	 	 
		By:	/s/ Jasbinder Chohan	 
	 	 	Name: Jasbinder Chohan	 
	 	 	Title: President	 

 

	 
	
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EXHIBIT A

 

PROMISSORY NOTE

 

	
$600,000

	
 

	
March 4, 2015

 

FOR VALUE RECEIVED, the undersigned New Energy Technologies, Inc., a Nevada corporation having its principal place of business at 10632 Little Patuxent Parkway, Suite 406, Columbia, Maryland 21044 (“Maker”), hereby promises to pay to the order of 1420468 Alberta Ltd., an Alberta, Canada corporation having its principal place of business at 15495 111A, Surrey, BC V3R 0J6 (“Payee”), in lawful money of the United States of America , the principal sum of SIX HUNDRED THOUSAND DOLLARS ($600,000), together with interest thereon, payable as set forth below.

 

The entire balance, interest and principal, will be payable in full on the earlier of: (a) the closing of any debt or equity financing by Maker in excess of SIX HUNDRED THOUSAND DOLLARS, or (b) September 4, 2015 (the “Maturity Date”). Interest on this Note shall compound quarterly and shall accrue at the annual rate of eight and one-half percent (7%) as computed on the basis of a 365-day year. Interest will begin to accrue as of the date hereof and is payable on the Maturity Date, accelerated or otherwise, when the principal and remaining accrued but unpaid interest shall be due and payable. Following the occurrence and during the continuance of an Event of Default, which, if susceptible to cure is not cured within the cure periods (if any) set forth in Section 6.01 of the Bridge Loan Agreement, otherwise then from the first date of such occurrence until cured, the annual interest rate on this Note shall be the lesser of fifteen percent (15%), or the maximum rate allowable by law and be due on demand.

 

This Note may be prepaid at any time, in whole or in part, without interest, penalty or premium of any kind.

 

If any payment of principal or interest on this Note shall become due on a day which is a Saturday, Sunday or holiday, such payment shall be made on the next succeeding business day.

 

Maker hereby waives presentment for payment, demand, notice of nonpayment or dishonor, protest and notice of protest.

 

No delay or omission on the part of Payee or any holder hereof in exercising its rights under this Note, or course of conduct relating thereto, shall operate as a waiver of such rights or any other right of Payee or any holder hereof, nor shall any waiver by Payee or any holder hereof of any such right or rights on any one occasion be deemed a bar to, or waiver of, the same right or rights on any future occasion.

 

Maker shall pay Payee on demand any reasonable out-of-pocket expenses (including reasonable legal fees) arising out of or in connection with any action or proceeding (including any action or proceeding arising in or related to any insolvency, bankruptcy or reorganization involving or affecting Maker) taken to protect, enforce, collect, determine or assert any right or remedy under this Note.

 

This Note shall bind Maker and the heirs and assigns of Maker, and the benefits hereof shall inure to the benefit of Payee and the heirs and assigns of Payee. All references herein to “Maker” shall be deemed to apply to Maker and its heirs and assigns, and all references herein to “Payee” shall be deemed to apply to Payee and its heirs and assigns.

 

In the event one person or a group of related persons acquires more than 50% of the voting stock of Maker (other than the current principal shareholders or Maker’s current senior management or trusts created for the benefit of the families of either the principal shareholders or the current senior management), a Change of Control will have been deemed to have occurred. In the event of a Change of Control, the Payee shall have the right, but not the obligation, to require Maker to repurchase all or any part of Maker’s Loan at a price equal to 100% of the aggregate principal amount thereof, plus accrued and unpaid interest remaining.

 

This Note shall be governed by and construed in accordance with the laws of the State of New York, including, but not limited to, New York statutes of limitations. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the civil or state courts of New York or in the federal courts located in the State and county of New York. Both parties and the individual signing this Agreement on behalf of the Maker agree to submit to the jurisdiction of such courts. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or unenforceability of any other provision of this Note. Nothing contained herein shall be deemed or operate to preclude the Payee from bringing suit or taking other legal action against the Maker in any other jurisdiction to collect on the Maker’s obligations to Payee, or to enforce a judgment or other decision in favor of the Payee.

 

	 
	
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IN WITNESS WHEREOF, Maker, intending to be legally bound, has executed this Note as of the date and year first above written with the intention that this Note shall constitute a sealed instrument.

 

	 	
New Energy Technologies, Inc.

	 
	 	 	 	 
	 	By:	/s/ John Conklin	 
	 	 	Name: John Conklin	 
	 	 	Title: President and Chief Executive Officer	 

 

9EXHIBIT 10.6

 

PEOPLESBANK, A CODORUS VALLEY COMPANY

SALARY CONTINUATION AGREEMENT

THIS AGREEMENT is made this 1st day of October, 1998, by and between PEOPLESBANK, A CODORUS VALLEY COMPANY, a Pennsylvania state bank located in York, Pennsylvania (the “Company”) and a wholly owned subsidiary of Codorus Valley Bancorp, Inc. (The “Corporation”) and LARRY J. MILLER (the “Executive”).

INTRODUCTION

To encourage the Executive to remain an employee of the Company, the Company is willing to provide salary continuation benefits to the Executive. The Company will pay the benefits from its general assets.

AGREEMENT

The Executive and the Company agree as follows:

Article 1

Definitions

1.1      Definitions. Whenever used in this Agreement, the following words and phrases shall have the meanings specified:

1.1.1“Change of Control,” shall mean: A change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A and any successor rule or regulation promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”); provided that, without limitation, such a change in control shall be deemed to have occurred if (a) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than the Corporation or any “person” who on the date hereof is a director or officer of the Corporation is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing twenty-five percent (25%) or more of the combined voting power of the Corporation’s then outstanding securities, or (b) during any period of two consecutive years during the term of this Agreement, individuals who at the beginning of such period constitute the Board of Directors of the Bank or Corporation cease for any reason to constitute at least a majority thereof, unless the election of each director who was not a director at the beginning of such period has been approved in advance by directors representing at least two-thirds of the directors then in office who were

 

    	  

    	 

    
 

 

directors at the beginning of the period, or (c) the sale or transfer of all or substantially all of the Company or Corporation’s assets.

1.1.2     “Date of Change of Control” means any of the following:

(a)     the first date on which a single person and/or entity, or group of affiliated persons and/or entities, acquire the beneficial ownership of twenty-five percent (25%) or more of the Company’s voting securities; or

(b)        the date of the transfer of all or substantially all of the Company or Corporation’s assets; or

(c)        the date on which a merger, consolidation or combination is consummated, as applicable; or

(d)     the date on which individuals who formerly constituted a majority of the Incumbent Board of Directors of the Bank ceased to be a majority thereof. For these purposes, “Incumbent Board” means the members of the Board of Directors of the Company on the effective date of the Plan, provided that any person becoming a member of the Board of Directors subsequent to such effective date, whose election was approved by a vote of at least three-quarters of the members of the Board of Directors comprising the Incumbent Board, or whose nomination for election by members or stockholders was approved by the same nominating committee serving under an Incumbent Board, shall be considered as though he were a member of the Incumbent Board. 

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

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. If the Executive is not covered by such a policy, Disability means the Executive suffering a sickness, accident or injury which, in the judgment of a physician satisfactory to the Company, prevents the Executive from performing substantially all of the Executive’s normal duties for the Company. As a condition to any benefits, 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.

1.1.5“Early Termination” means the Termination of Employment before Normal Retirement Age for reasons other than death, Disability, Termination for Cause or following a Change of Control.

1.1.6 “Early Termination Date” means the month, day and year in which Early Termination occurs.

 

    	  

    	 

    
 

 

1.1.7“Normal Retirement Age” means the Executive’s 60th birthday.

1.1.8“Normal Retirement Date” means the later of the Normal Retirement Age or Termination of Employment.

1.1.9     “Plan Year” means a twelve-month period commencing on October 1st and ending on September 30th of each year. The initial Plan Year shall commence on the effective date of this Agreement.

1.1.10   “Termination for Cause” See Section 5.2.

1.1.11   “Termination of Employment” means that the Executive ceases to be employed by the Company for any reason whatsoever other than by reason of a leave of absence which is approved by the Company. For purposes of this Agreement, if there is a dispute over the employment status of the Executive or the date of the Executive’s Termination of Employment, the Company shall have the sole and absolute right to decide the dispute.

Article 2

Lifetime Benefits

2.1 Normal Retirement Benefit. Upon Termination of Employment on or after the Normal Retirement Age for reasons other than death, the Company shall pay to the Executive the benefit described in this Section 2.1 in lieu of any other benefit under this Agreement. 

2.1.1    Amount of Benefit. The annual benefit under this Section 2.1 is $100,000 (One Hundred Thousand Dollars and no/100). The Company’s Board of Directors, in its sole discretion, may increase the annual benefit under this Section 2.1.1; however, any increase shall require the recalculation of Schedule A.

2.1.2   Payment of Benefit. The Company shall pay the annual benefit to the Executive in 12 equal monthly installments payable on the first day of each month commencing with the month following the Executive’s Normal Retirement Date and continuing for 239 additional months.

2.1.3     Benefit Increases. Commencing on the first anniversary of the first benefit payment, and continuing on each subsequent anniversary, the Company’s Board of Directors, in its sole discretion, may increase the benefit.

 

    	  

    	 

    
 

 

2.2      Early Termination Benefit. Upon Early Termination, the Company shall pay to the Executive the benefit described in this Section 2.2 in lieu of any other benefit under this Agreement.

2.2.1      Amount of Benefit. The benefit under this Section 2.2 is the Early Termination Annual Benefit amount set forth in Schedule A for the Plan Year ending immediately prior to the Early Termination Date. However, any increase in the annual benefit under Section 2.1.1 shall require the recalculation of the Early Termination benefit on Schedule A. The Early Termination Annual Benefit amount is determined by calculating a fixed annuity which is payable in 240 equal monthly installments, crediting interest on the unpaid balance of the Accrual Balance at an annual rate of 8.0%, compounded monthly.

2.2.2      Payment of Benefit. The Company shall pay the annual benefit to the Executive in 12 equal monthly installments payable on the first day of each month commencing with the month following the Normal Retirement Age and continuing for 239 additional months.

2.2.3      Benefit Increases. Benefit payments may be increased as provided in Section 2.1.3. 

2.3      Disability Benefit. If the Executive terminates employment due to Disability prior to Normal Retirement Age, the Company shall pay to the Executive the benefit described in this Section 2.3 in lieu of any other benefit under this Agreement, provided however, in the event the Company determines (1) the Executive could have been Terminated for Cause as provided in Section 5.2 for conduct or omissions occurring during the term of employment or (2) the Executive has violated the restrictive covenant set forth in Section 5.3, the Company shall have no obligation to make future payments as of the date of the Company’s determination.

2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the Disability Annual Benefit amount set forth in Schedule A for the Plan Year ending immediately prior to the date in which the Termination of Employment occurs. However, any increase in the annual benefit under Section 2.1.1 would require the recalculation of the Disability benefit on Schedule A. The Disability Annual Benefit amount is determined by calculating a fixed annuity which is payable in 240 equal monthly installments, crediting interest on the unpaid balance of the Accrual Balance at an annual rate of 8.0%, compounded monthly.

2.3.2      Payment of Benefit. The Company shall pay the annual benefit amount to the Executive in 12 equal monthly installments payable on the first day of each month commencing with the month following the Termination of Employment and continuing for 239 additional months. 

2.3.3      Benefit Increases. Benefit payments may be increased as provided in Section 2.1.3.

 

    	  

    	 

    
 

 

2.4 Change of Control Benefit. Following the Date of a Change of Control, the Executive shall be entitled to the benefit described in this Section 2.4 in lieu of any other benefit under this Agreement. 

 

2.4.1      Amount of Benefit. The annual benefit under this Section 2.4 is the Normal Retirement Benefit amount described in Section 2.1.1. 

 

2.4.2      Payment of Benefit. The Company shall pay the annual benefit amount to the Executive in 12 equal monthly installments payable on the first day of each month commencing with the month following the Executive’s Normal Retirement Date and continuing for 239 additional months.

2.4.3      Benefit Increases. Benefit payments may be increased as provided in Section 2.1.3.

Article 3

Death Benefits

3.1      Death During Active Service. If the Executive dies while in the active service of the Company, the Company shall pay to the Executive’s beneficiary the benefit described in this Section 3.1. This benefit shall be paid in lieu of the Lifetime Benefits of Article 2.

3.1.1 Amount of Benefit. The annual benefit under this Section 3.1 is the Normal Retirement Benefit amount described in Section 2.1.1. 

3.1.2 Payment of Benefit. The Company shall pay the annual benefit to the beneficiary in 12 equal monthly installments payable on the first day of each month commencing with the month following the Executive’s death and continuing for 239 additional months.

3.2      Death During Benefit Period. If the Executive dies after the benefit payments have commenced under this Agreement but before receiving all such payments, the Company shall pay the remaining benefits to the Executive’s beneficiary at the same time and in the same amounts they would have been paid to the Executive had the Executive survived.

3.3      Death After Termination of Employment But Before Benefit Payments Commence. If the Executive is entitled to benefit payments under this Agreement, but dies prior to the commencement of said benefit payments, the Company shall pay the benefit payments to the Executive’s beneficiary that the Executive was entitled to prior to death except that the benefit payments shall commence on the first day of the month following the date of the Executive’s death.

 

    	  

    	 

    
 

 

Article 4

Beneficiaries

4.1      Beneficiary Designations. The Executive shall designate a beneficiary by filing a written designation with the Company. The Executive may revoke or modify the designation at any time by filing a new designation. However, designations will only be effective if signed by the Executive and accepted by the Company during the Executive’s lifetime. 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. If the Executive dies without a valid beneficiary designation, all payments shall be made to the Executive’s estate.

 

4.2      Facility of Payment. If a benefit is payable to a minor, to a person declared incapacitated, or to a person incapable of handling the disposition of his or her property, the Company may pay such benefit to the guardian, legal representative or person having the care or custody of such minor, incapacitated person or incapable person. The Company may require proof of incapacity, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Company from all liability with respect to such benefit.

Article 5

General Limitations

5.1      Excess Parachute Payment. Notwithstanding any provision of this Agreement to the contrary, the Company shall not pay any benefit under this Agreement to the extent the benefit would be a prohibited golden parachute payment pursuant to 12 C.F.R. §359.2 and for which the appropriate federal banking agency has not given written consent to pay pursuant to 12 C.F.R. §359.4. 

5.2      Termination for Cause. Notwithstanding any provision of this Agreement to the contrary, the Company shall not pay any benefit under this Agreement if the Company terminates the Executive’s employment for:

(a)     Gross negligence or gross neglect of duties;

(b)     Commission of a felony or of a gross misdemeanor involving moral turpitude; or

(c)         Fraud, disloyalty, dishonesty or willful violation of any significant law or significant Company policy committed in connection with the Executive’s employment and resulting in a material adverse effect on the Company.

 

    	  

    	 

    
 

 

	 	5.2.1	Removal. Notwithstanding any provision of this Agreement to the contrary, the Company shall not pay any benefit under this Agreement if the Executive is subject to a final removal or prohibition order issued by an appropriate federal banking agency pursuant to Section 8(e) of the Federal Deposit Insurance Act or by the Pennsylvania Department of Banking pursuant to state law.

 

5.3      Competition After Termination of Employment. No benefits shall be payable if the Executive, without the prior written consent of the Company, violates the following described restrictive covenants.

 

	 	5.3.1	Non-compete Provision. The Executive shall not, for a period of three (3) years after termination either directly or indirectly, either as an individual or as a proprietor, stockholder, partner, officer, director, employee, agent, consultant or independent contractor of any individual, partnership, corporation or other entity (excluding an ownership interest of one percent (1%) or less in the stock of a publicly traded company):

 

	 	
(i)

	
become employed by, participate in, or be connected in any manner with the ownership, management, operation or control of any bank, savings and loan or other similar financial institution if the Executive’s responsibilities will include providing banking or other financial services in York County or within fifty (50) mile of any office maintained by the Company as of the date of the termination of the Executive’s employment or if the Executive regularly conducts business in or from an office or branch in York County or any other county or city in which the Company has an office or branch as of the date of the termination of the Executive’s employment; or 

 

	 	(ii)	
participate in any way in hiring or otherwise engaging, or assisting any other person or entity in hiring or otherwise engaging, on a temporary, part-time or permanent basis, any individual who was employed by the Company during the three (3) year period immediately prior to the termination of the Executive’s employment; or

 

	
  

	
(iii)

	
assist, advise, or serve in any capacity, representative or otherwise, any third party in any action against the Company or transaction involving the Company; or

 

	
  

	(iv)	
sell, offer to sell, provide banking or other financial services, assist any other person in selling or providing banking or other financial services, or solicit or otherwise compete for, either directly or indirectly, any orders, contract, or accounts for services of a kind or nature like or substantially similar to the

    	  

    	 

    
 

services performed or products sold by the Company (the preceding hereinafter referred to as “Services”), to or from any person or entity from whom the Executive or the Company provided banking or other financial services, sold, offered to sell or solicited orders, contracts or accounts for Services during the three (3) year period immediately prior to the termination of the Executive’s employment; or

 

	
  

	(v)	
divulge, disclose, or communicate to others in any manner whatsoever, any confidential information of the Company, including, but not limited to, the names and addresses of customers of the Company, as they may have existed from time to time or of any of the Company’s prospective customers, work performed or services rendered for any customer, any method and/or procedures relating to projects or other work developed for the Company, earnings or other information concerning the Company. The restrictions contained in this subparagraph (v) apply to all information regarding the Company, regardless of the source who provided or compiled such information. Notwithstanding anything to the contrary, the terms of this subparagraph (v) shall not be limited to the three (3) year restriction set forth above and all information referred to herein shall not be disclosed unless and until it becomes known to the general public from sources other than the Executive.

 

	 	5.3.2	
Judicial Remedies. In the event of a breach or threatened breach by the Executive of any provision of these restrictions, the Executive recognizes the substantial and immediate harm that a breach or threatened breach will impose upon the Company, and further recognizes that in such event monetary damages may be inadequate to fully protect the Company. Accordingly, in the event of a breach or threatened breach of this Agreement, the Executive consents to the Company’s entitlement to such ex parte, preliminary, interlocutory, temporary or permanent injunctive, or any other equitable relief, protecting and fully enforcing the Company’s rights hereunder and preventing the Executive from further breaching any of his obligations set forth herein. The Executive expressly waives any requirement, based on any statute, rule of procedure, or other source, that the Company post a bond as a condition of obtaining any of the above-described remedies. Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to the Company at law or in equity for such breach or threatened breach, including the recovery of damages from the Executive. The Executive expressly acknowledges and agrees that: (i) the restrictions set forth in Section 5.3.1 are reasonable, in terms of scope, duration, geographic area, and otherwise, (ii) the protections afforded the Company in Section 5.3.1 are necessary to protect its legitimate business interest, (iii) the restrictions set forth in Section 5.3.1 will not be materially adverse to the

 

    	  

    	 

    
 

 

Executive’s employment with the Company, and (iv) his agreement to observe such restrictions forms a material part of the consideration for this Agreement.

 

	 	5.3.3	
Overbreadth of Restrictive Covenant. It is the intention of the parties that if any restrictive covenant in this Agreement is determined by a court of competent jurisdiction to be overly broad, then the court should enforce such restrictive covenant to the maximum extent permitted under the law as to area, breadth and duration. 

 

Article 6

Claims and Review Procedures

6.1  Claims Procedure. The Company shall notify any person or entity that makes a claim against the Agreement (the “Claimant”) in writing, within ninety (90) days of Claimant’s written application for benefits, of his or her eligibility or noneligibility for benefits under the Agreement. If the Company determines that the Claimant is not eligible for benefits or full benefits, the notice shall set forth (1) the specific reasons for such denial, (2) a specific reference to the provisions of the Agreement on which the denial is based, (3) a description of any additional information or material necessary for the Claimant to perfect his or her claim, and a description of why it is needed, and (4) an explanation of the Agreement’s claims review procedure and other appropriate information as to the steps to be taken if the Claimant wishes to have the claim reviewed. If the Company determines that there are special circumstances requiring additional time to make a decision, the Company shall notify the Claimant of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional ninety-day period. 

6.2  Review Procedure. If the Claimant is determined by the Company not to be eligible for benefits, or if the Claimant believes that he or she is entitled to greater or different benefits, the Claimant shall have the opportunity to have such claim reviewed by the Company by filing a petition for review with the Company within sixty (60) days after receipt of the notice issued by the Company. Said petition shall state the specific reasons which the Claimant believes entitle him or her to benefits or to greater or different benefits. Within sixty (60) days after receipt by the Company of the petition, the Company shall afford the Claimant (and counsel, if any) an opportunity to present his or her position to the Company orally or in writing, and the Claimant (or counsel) shall have the right to review the pertinent documents. The Company shall notify the Claimant of its decision in writing within the sixty-day period, stating specifically the basis of its decision, written in a manner calculated to be understood by the Claimant and the specific provisions of the Agreement on which the decision is based. If, because of the need for a hearing, the sixty-day period is not sufficient, the decision may be deferred for up to another sixty-day period at the election of the Company, but notice of this deferral shall be given to the Claimant.

    	  

    	 

    
 

 

Article 7

Amendments and Termination

This Agreement may be amended or terminated only by a written agreement signed by the Company and the Executive.

 

Article 8

Miscellaneous

8.1  Binding Effect. This Agreement shall bind the Executive and the Company, and their beneficiaries, survivors, executors, successors, administrators and transferees.

8.2       No Guarantee of Employment. This Agreement is not an employment policy or contract. It does not give the Executive the right to remain an employee of the Company, nor does it interfere with the Company’s right to discharge the Executive. It also does not require the Executive to remain an employee nor interfere with the Executive’s right to terminate employment at any time.

8.3       Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.

8.4       Reorganization. The Company shall not merge or consolidate into or with another company, or reorganize, or sell substantially all of its assets to another company, firm, or person unless such succeeding or continuing company, firm, or person agrees to assume and discharge the obligations of the Company under this Agreement. Upon the occurrence of such event, the term “Company” as used in this Agreement shall be deemed to refer to the successor or survivor company.

8.5       Tax Withholding. The Company shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement.

8.6       Applicable Law. The Agreement and all rights hereunder shall be governed by the laws of the Commonwealth of Pennsylvania, except to the extent preempted by the laws of the United States of America.

8.7    Unfunded Arrangement. The Executive and beneficiary are general unsecured creditors of the Company for the payment of benefits under this Agreement. The benefits represent the mere promise by the Company to pay such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors. Any insurance on the Executive’s life is a general asset of the Company to which the Executive and beneficiary have no preferred or secured claim.

8.8       Recovery of Estate Taxes. If the Executive’s gross estate for federal estate tax purposes includes any amount determined by reference to and on account of this Agreement, and if the

 

    	  

    	 

    
 

 

beneficiary is other than the Executive’s estate, then the Executive’s estate shall be entitled to recover from the beneficiary receiving such benefit under the terms of the Agreement, an amount by which the total estate tax due by the Executive’s estate, exceeds the total estate tax which would have been payable if the value of such benefit had not been included in the Executive’s gross estate. If there is more than one person receiving such benefit, the right of recovery shall be against each such person. In the event the beneficiary has a liability hereunder, the beneficiary may petition the Company for a lump sum payment in an amount not to exceed the beneficiary’s liability hereunder.

8.9    Entire Agreement. This Agreement constitutes the entire agreement between the Company 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.

8.10    Administration. The Company shall have powers which are necessary to administer this Agreement, including but not limited to:

8.10.1      Interpreting the provisions of the Agreement;

8.10.2      Establishing and revising the method of accounting for the Agreement;

8.10.3      Maintaining a record of benefit payments; and

8.10.4      Establishing rules and prescribing any forms necessary or desirable to administer the Agreement.

8.11    Named Fiduciary. For purposes of the Employee Retirement Income Security Act of 1974, if applicable, the Company shall be the named fiduciary and plan administrator under the Agreement. The named fiduciary may delegate to others certain aspects of the management and operation responsibilities of the plan including the employment of advisors and the delegation of ministerial duties to qualified individuals.

IN WITNESS WHEREOF, the Executive and a duly authorized Company officer have signed this Agreement.

	 	 	 	 	 	 	 
	EXECUTIVE:	 	COMPANY:
	 	 	 	 
	 	 	PEOPLESBANK, A CODORUS VALLEY CO.
	 	 	 	 
	/s/ Larry J. Miller 	 	 	By:	/s/ Barry A. Keller	 
	Larry J. Miller	 	 	Barry A. Keller
	 	 	 	 
	 	 	Title: 	Chairman of the Board of Directors	 

 

    	  

    	 

    
 

 

BENEFICIARY DESIGNATION

PEOPLESBANK, A CODORUS VALLEY COMPANY

 SALARY CONTINUATION AGREEMENT

Larry J. Miller

 

I designate the following as beneficiary of any death benefits under this Salary Continuation Agreement:

 

	
Primary:

	 	 

 

	
Contingent:

	 	 

 

Note: To name a trust as beneficiary, please provide the name of the trustee(s) and the exact name and date of the trust agreement.

I understand that I may change these beneficiary designations by filing a new written designation with the Company. I further understand that the designations will be automatically revoked if the beneficiary predeceases me, or, if I have named my spouse as beneficiary and our marriage is subsequently dissolved.

 

	Signature: 	/s/ Larry J. Miller	 

 

	Date: 	October 1, 1998	 

 

Accepted by the Company this 1st day of October, 1998.

 

	By:	  /s/ Barry A. Keller	 
	 	Barry A. Keller	 

 

	Title: 	
 Chairman of the Board of Directors

	 

 

    	  

    	 

    
 

Peoplesbank, A Codorus Valley Company

Larry J. Miller

Salary Continuation Plan – Schedule A

	  	 	  	 	  	 	
Early

	 	  	 	
Early

	 	  	 	
Disability

	 
	  	 	  	 	  	 	
Termination

	 	
Vested

	 	
Termination

	 	
Change of Control

	 	
Annual Benefit

	 
	
Plan

	 	
Benefit

	 	
Accrual

	 	
Vesting

	 	
Accrual

	 	
Annual Benefit

	 	
Annual Benefit

	 	
Payable

	 
	
Year

	 	
Level

	 	
Balance

	 	
Schedule

	 	
Balance

	 	
Payable at 60

	 	
Payable at 60

	 	
Immediately

	 
	
1

	 	
100,000

	 	
45,448

	 	
100.00%

	 	
45,448

	 	
11,876

	 	
100,000

	 	
4,562

	 
	
2

	 	
100,000

	 	
94,668

	 	
100.00%

	 	
94,668

	 	
22,842

	 	
100,000

	 	
9,502

	 
	
3

	 	
100,000

	 	
147,974

	 	
100.00%

	 	
147,974

	 	
32,967

	 	
100,000

	 	
14,853

	 
	
4

	 	
100,000

	 	
205,703

	 	
100.00%

	 	
205,703

	 	
42,317

	 	
100,000

	 	
20,647

	 
	
5

	 	
100,000

	 	
268,225

	 	
100.00%

	 	
268,225

	 	
50,950

	 	
100,000

	 	
26,922

	 
	
6

	 	
100,000

	 	
335,935

	 	
100.00%

	 	
335,935

	 	
58,921

	 	
100,000

	 	
33,719

	 
	
7

	 	
100,000

	 	
409,265

	 	
100.00%

	 	
409,265

	 	
66,281

	 	
100,000

	 	
41,079

	 
	
8

	 	
100,000

	 	
488,682

	 	
100.00%

	 	
488,682

	 	
73,078

	 	
100,000

	 	
49,050

	 
	
9

	 	
100,000

	 	
574,691

	 	
100.00%

	 	
574,691

	 	
79,353

	 	
100,000

	 	
57,683

	 
	
10

	 	
100,000

	 	
667,838

	 	
100.00%

	 	
667,838

	 	
85,147

	 	
100,000

	 	
67,033

	 
	
11

	 	
100,000

	 	
768,716

	 	
100.00%

	 	
768,716

	 	
90,498

	 	
100,000

	 	
77,158

	 
	
12

	 	
100,000

	 	
877,967

	 	
100.00%

	 	
877,967

	 	
95,438

	 	
100,000

	 	
88,124

	 
	
13

	 	
100,000

	 	
996,286

	 	
100.00%

	 	
996,286

	 	
100,000

	 	
100,000

	 	
100,000

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