Document:

Exhibit
10.31

 

AMENDMENT
TO SALARY CONTINUATION AGREEMENT

  

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

 

WITNESSETH

 

WHEREAS,
the Bank and the Executive entered into a certain Salary Continuation Agreement effective the 1st day of October, 2002
(the “Salary Continuation Agreement”), which is attached hereto;

 

WHEREAS,
as a result of action by the Board of Directors, the Bank and the Executive desire to amend the Salary Continuation Agreement
provisions regarding the definition of “Change in Control” and “Change in Control Benefits,” which describes
the payment of the Executive’s benefit following a Change in Control, and certain other provisions of the Salary Continuation
Agreement;

 

WHEREAS,
in recognition of the valued services provided by the Executive in the past to the Bank and the Corporation, the Bank desires
to amend the Salary Continuation Agreement, as an incentive for the Executive to continue to provide such valued services in the
future;

 

NOW
THEREFORE, in consideration of the mutual covenants and agreements set forth herein, for good and valuable consideration,
and intending to be legally bound hereby, the Bank and the Executive agree as follows:

 

1.             The
Amendment is incorporated into the Salary Continuation Agreement by the Bank, the Corporation and the Executive, in accordance
with Article 7 of the Salary Continuation Agreement, entitled “Amendments and Termination.”

 

2.             All
terms set forth in the Amendment shall be defined and interpreted by the definitions, construction and intent of the Salary Continuation
Agreement and shall have the same meaning as therein provided unless the context clearly requires a different meaning.

 

3.             Section
1.1.1 of the Salary Continuation Agreement is hereby amended by deleting the existing definition of “Change in Control”
in its entirety and by adding a new definition of “Change in Control” as follows:

  

1.1.1       CHANGE
OF CONTROL. For purposes of this Agreement, the term “Change of Control” shall mean: a Change in the
Ownership of the Corporation or the Bank, (as defined below), a Change in the Effective Control of the Corporation or the
Bank (as defined below), or a Change in the Ownership of a Substantial Portion of the Assets of the Corporation or the Bank,
(as defined below).

 

    	

     

    

  

(a)           Change
in the Ownership of the Corporation or the Bank. A Change in the Ownership of the Corporation or the Bank occurs on the date
that any one person, or more than one person acting as a group (as defined below), acquires ownership of stock of the Corporation
or the Bank that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market
value or total voting power of the stock of the Corporation or the Bank. However, if any one person, or more than one person acting
as a group, is considered to own more than 50 percent of the total fair market value or total voting power of the stock of the
Corporation or the Bank, the acquisition of additional stock by the same person or persons is not considered to cause a Change
in the Ownership of the Corporation or the Bank. An increase in the percentage of stock owned by any one person, or persons acting
as a group, as a result of a transaction in which the Corporation or the Bank acquires its stock in exchange for property will
be treated as an acquisition of stock for these purposes. A change in ownership of the Corporation or the Bank only occurs when
there is a transfer or issuance of stock of the Corporation or the Bank and the stock remains outstanding after the transaction.

 

(b)           Change
in Effective Control of the Corporation or the Bank. A Change in Effective Control of the Corporation or the Bank occurs only
on the date that either:

 

(i)          Any
one person, or more than one person acting as a group (as defined below), acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Corporation or the Bank
possessing 35 percent or more of the total voting power of the stock of the Corporation or the Bank; or

 

(ii)         A
majority of members of the Corporation’s Board of Directors is replaced during any 12-month period by directors whose appointment
or election is not endorsed by a majority of the members of the Corporation’s Board of Directors prior to the date of the
appointment or election.

 

If
any one person, or more than one person acting as a group, is considered to effectively control the Corporation or the Bank,
the acquisition of additional control of the Corporation or the Bank by the same person or persons is not considered to cause
a Change in the Effective Control of the Corporation or the Bank.

 

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(c)           Change
in Ownership of a Substantial Portion of the Corporation’s or the Bank’s Assets. A Change in Ownership of a Substantial
Portion of the Corporation’s or the Bank’s Assets occurs on the date that any one person, or more than one person
acting as a group (as defined below), acquires (or has acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) assets from the Corporation or the Bank that have a total gross fair market value equal
to or more than 40 percent of the total gross fair market value of all of the assets of the Corporation or the Bank immediately
prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of assets of the Corporation
or the Bank, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

 

There
is no Change in Control under this Section 1.1.1 if there is a transfer of assets to an entity that is:

 

(i)           A
shareholder of the Corporation or the Bank (immediately before the asset transfer) in exchange for or with respect to its stock;

 

(ii)          An
entity, 50 percent or more of the total value or voting power of which is owned, directly or indirectly, by the Corporation or
the Bank;

 

(iii)         A
person, or more than one person acting as a group, that owns, directly or indirectly, 50 percent or more of the total value or
voting power of all the outstanding stock of the Corporation or the Bank; or

 

(iv)         An
entity, at least 50 percent of the total value or voting power of which is owned, directly or indirectly, by a person described
in (i), (ii) or (iii) above.

 

(d)           For
purposes of this Section 1.1.1, persons will not be considered to be acting as a group solely because they purchase or own stock
or purchase assets of the Corporation or the Bank at the same time. However, persons will be considered to be acting as a group
if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of assets, or similar transaction,
such shareholder is considered to be acting as a group with other shareholders in a corporation only to the extent of the ownership
in that corporation prior to the transaction giving rise to the change and not with respect to the ownership interest in the other
corporation.

 

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4.            Section
1.1.2 of the Salary Continuation Agreement is hereby amended by deleting the existing definition of “Date of Change of Control”
in its entirety and by adding a new definition of “Date of Change of Control” as follows:

 

1.1.2         “Date
of Change of Control” means the date on which a “Change of Control” event occurs under Section 1.1.1.

 

5.            Section
1.1.4 of the Salary Continuation Agreement is hereby amended by deleting the existing definition of “Disability” in
its entirety and by adding a new definition of “Disability” as follows:

 

1.1.4         “Disability”
means, if the Executive is covered by a Company sponsored disability policy, total disability as defined in such policy without
regard to any waiting period, provided that the definition of disability applied under such policy complies with the requirement
of Section 1.409A-3(g)(4) of the Treasury regulations. If the Executive is not covered by such policy, Disability means that the
Executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment
that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. As a condition
to any benefit, the Company may require the Executive to submit to such physical or mental evaluations and tests as the Company’s
Board of Directors deems appropriate.

 

6.            Article
2 of the Salary Continuation Agreement is hereby amended by adding a new Section 2.5 to read as follows:

 

2.5            Key
Employee. Notwithstanding anything in this Article to the contrary, in the event Executive is determined to be a Key Employee,
as that term is defined in Section 409A of the Code and the regulations promulgated thereunder, payments to the Executive under
Section 2.1 or 2.2 of this Agreement shall begin not earlier than the first day of the seventh month following termination of
employment. For purposes of the foregoing, the date upon which a determination is made as to the Key Employee status of the Executive,
the Indemnification Date (as defined in Section 409A of the Code and the regulations promulgated thereunder) shall be December
31.

 

7.            Article
5 of the Salary Continuation Agreement is hereby amended by adding a new Section 5.3.4 to read as follows:

 

5.3.4         Termination
Following Change of Control. Notwithstanding the foregoing, it is the intention of the parties that the restrictions set forth
in Sections 5.3.1(i). (ii), (iii) and (iv) shall not apply in the event Executive’s employment terminates following a Change
of Control, as defined in the Agreement.

 

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8.             Article
2 of the Salary Continuation Agreement is hereby amended by deleting existing Section 2.4.4 in its entirety and by adding a new
Section 2.4.4 to read as follows:

 

2.4.4         RABBI
TRUST. The Corporation is establishing contemporaneously herewith a rabbi trust (the “Trust”), to which it
is contributing an initial corpus of $100. In the event of a change of control as defined herein, the Corporation shall, in accordance
with the terms of the Trust, contribute thereto the amount described in Section 1(e) thereof. Thereafter, amounts payable hereunder
shall be paid first from the assets of such Trust and the income thereon. To the extent that the assets of the Trust and the income
thereon are insufficient, the Corporation or any successor of the Corporation shall pay Executive the amount due hereunder.

 

9.            In
all other respects, the Salary Continuation Agreement, as amended above, is hereby ratified and confirmed by the Bank, the Corporation
and the Executive All other provisions of the Salary Continuation Agreement shall remain in full force and effect as amended hereby.

  

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

 

	ATTEST:	 	PEOPLESBANK, A CODORUS VALLEY
    COMPANY
	 	 	 
	 	 	By:	
	 	 	 	Chairman of the Board
	 	 	 	 
	WITNESS:	 	 	 
	 	 	 
	 	 	Matthew A. Clemens

  

     - 5 -Exhibit 10.32
	PEOPLESBANK, A CODORUS VALLEY COMPANY
	Salary Continuation Agreement
	

 

SECOND AMENDMENT

TO THE

PEOPLESBANK, A CODORUS VALLEY COMPANY

SALARY CONTINUATION AGREEMENT

DATED OCTOBER 1, 2002

AND AMENDED DECEMBER 27, 2005

FOR 

MATTHEW CLEMENS

 

THIS SECOND
AMENDMENT is adopted this 23rd day of December, 2008, and is effective January 1, 2009, by and between PeoplesBank, A
Codorus Valley Company, a Pennsylvania banking institution located in York, Pennsylvania (the “Bank”) and a
wholly owned subsidiary of Codorus Valley Bancorp, Inc. (the “Corporation”) and Matthew Clemens (the
“Executive”).

 

The Bank and the Executive executed
the Salary Continuation Agreement effective October 1, 2002, and executed a First Amendment on DECEMBER 27, 2005 (the “Agreement”).

 

The
undersigned hereby amend the Agreement for the purpose of revising the Normal Retirement Benefit, removing the Discount Rate, and
updating for consistency between documents. Therefore, the following changes shall be made:

 

Section 1.1.9 of the Agreement
shall be deleted in its entirety and replaced with the following:

 

		1.1.9	“Plan Year” means the twelve month period beginning on January 1 and ending
on December 31.

 

Section 1.1.11 of the Agreement
shall be deleted in its entirety and replaced with the following:

 

		1.1.11	“Termination of Employment” means termination of the Executive’s employment
with the Bank for reasons other than death, Change in Control or Disability. Whether a termination of employment has occurred is
determined based on whether the facts and circumstances indicate that the Bank and the Executive reasonably anticipated that no
further services would be performed after a certain 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 (whether as an employee or an independent contractor) over the immediately
preceding thirty-six (36) month period (or the full period of services to the Bank if the Executive has been providing services
to the Bank less than thirty-six (36) months).

 

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	Exhibit 10.32
	PEOPLESBANK, A CODORUS VALLEY COMPANY
	Salary Continuation Agreement
	 

Section 2.1.1 of the Agreement
shall be deleted in its entirety and replaced with the following:

 

		2.1.1	Amount of Benefit. The annual benefit under this Section 2.1 is Fifty Thousand Dollars ($50,000).
For the first five (5) year period after Normal Retirement Age but prior to Termination of Employment, the Bank shall increase
the annual Normal Retirement Benefit by .3274%, compounded monthly, for each complete month prior to Termination of Employment.

 

Section 2.1.3 of the Agreement
shall be deleted in its entirety.

 

Sections 2.2.1 and 2.2.2 of the
Agreement shall be deleted in their entirety and replaced with the following:

 

		2.2.1	Amount of Benefit. The benefit under this Section 2.2 is the Early Termination Annual Benefit
set forth on Schedule A. For any Separation from Service which occurs other than at the end of the Plan Year, the benefit shall
be pro rated to take into account the Executive’s service during such partial Plan Year by dividing the difference in the
balance at the end of the current Plan Year and the balance at the end of the preceding Plan Year into twelve (12) and multiplying
this amount by the number of completed months since the last complete Plan Year. This amount will be added to the Annual Benefit
amount at the end of the preceding Plan Year on Schedule A.

 

		2.2.2	Payment of Benefit. The Bank shall pay the annual benefit to the Executive in twelve (12)
equal monthly installments payable on the first day each month commencing with the month following Normal Retirement Age and continuing
for one hundred seventy-nine (179) additional months.

 

Section 2.2.3 of the Agreement
shall be deleted in its entirety.

 

Sections 2.3, 2.3.1 and 2.3.2
of the Agreement shall be deleted in their entirety and replaced with the following:

 

		2.3	Disability Benefit. If the Executive experiences a Disability prior to Normal Retirement
Age, the Bank shall pay to the Executive the benefit described in this Section 2.3 in lieu of any other benefit under this Agreement.

  

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	Exhibit 10.32
	PEOPLESBANK, A CODORUS VALLEY COMPANY
	Salary Continuation Agreement
	 

 

		2.3.1	Amount of Benefit. The benefit under this Section 2.3 is the Disability
                                                                                                                                                                                                                                                                           Annual Benefit set forth on Schedule A. For any Disability which occurs other than at the end of the Plan Year, the benefit
                                                                                                                                                                                                                                                                           shall be pro rated to take into account the Executive’s service during such partial Plan Year by dividing the difference in the balance at the end of the current Plan Year and the balance at the end of the preceding Plan Year into twelve (12) and multiplying this amount by the number of completed months since the last complete Plan Year. This amount will be added to the Annual Benefit amount at the end of the preceding Plan Year on Schedule A.

                                                                                

                                                                                

 

		2.3.2	Payment of Benefit. The Bank shall pay the annual benefit amount to the Executive in twelve
(12) equal monthly installments payable on the first day of each month commencing with the month following the Disability and continuing
for one hundred seventy-nine (179) additional months.

 

Section 2.3.3 of the Agreement
shall be deleted in its entirety.

 

Section 2.4.2 of the Agreement
shall be deleted in its entirety and replaced with the following:

 

		2.4.2	Payment of Benefit. The Bank shall pay the annual benefit amount to the Executive in twelve
(12) equal monthly installments payable on the first day of each month commencing with the month following the Executive’s
Normal Retirement Age and continuing for one hundred seventy-nine (179) additional months.

 

Section 2.4.3 of the Agreement
shall be deleted in its entirety.

 

The following Sections 2.6 and
2.7shall be added to the Agreement immediately following Section 2.5:

 

		2.6	Distributions Upon Taxation of Amounts Deferred. If, pursuant to Code Section 409A, the
Federal Insurance Contributions Act or other state, local or foreign tax, the Executive becomes subject to tax on the amounts deferred
hereunder, then the Bank may make a limited distribution to the Executive in a manner that conforms to the requirements of Code
Section 409A. Any such distribution will decrease the Executive’s benefits distributable under this Agreement.

 

		2.7	Change in Form or Timing of Distributions.  For distribution of benefits under this
Article 2, the Executive and the Bank may, subject to the terms of Section 8.1, amend this Agreement to delay the timing or change
the form of distributions.  Any such amendment:

 

		(a)	may not accelerate the time or schedule of any distribution, except as provided in Code Section
409A;

 

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	Exhibit 10.32
	PEOPLESBANK, A CODORUS VALLEY COMPANY
	Salary Continuation Agreement
	 

 

		(b)	must, for benefits distributable under Sections 2.2 and 2.4 be made at least twelve (12) months
prior to the first scheduled distribution;

		(c)	must, for benefits distributable under Sections 2.1, 2.2 and 2.4 delay the commencement of distributions
for a minimum of five (5) years from the date the first distribution was originally scheduled to be made; and

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

 

Section 8.8 of the Agreement shall be deleted
in its entirety.

 

IN WITNESS OF THE ABOVE, the
Executive and the Bank hereby consent to this Second Amendment.

 

	 	 	 	 	 	 
	Executive:	 	 PeoplesBank, A Codorus Valley Company
	 	 	 	 
	 	 	By	 	 	 
	Matthew Clemens	 	Title	 	 	 

  

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