<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant /_/
Check the appropriate box:
/_/ Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CODORUS VALLEY BANCORP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
/_/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
/_/ $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(1)(3).
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
/X/ No Fee Required.
1) Title of each class of securities to which transaction applies:
_____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
/_/ Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
1) Amount previously paid: _________________________________________________
2) Form, Schedule or Registration No. ______________________________________
3) Filing party: ___________________________________________________________
4) Date filed: _____________________________________________________________
___________
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
<PAGE>
[LOGO]
April 8, 1998
DEAR SHAREHOLDER:
It is my pleasure to invite you to attend the 1998 Annual Meeting of
Shareholders of Codorus Valley Bancorp, Inc. to be held on Tuesday, May 19,
1998, at 10:00 a.m., prevailing time. The Annual Meeting this year will be held
at The Inn at Heritage Hills, The Links Center, 2700 Mount Rose Avenue, York,
Pennsylvania 17402.
The Notice of the Annual Meeting and the Proxy Statement on the following
pages address the formal business of the meeting. The formal business schedule
includes: the election of three (3) Class B Directors, consideration and action
upon a proposal to approve and adopt the Codorus Valley Bancorp, Inc. 1998
Independent Directors' Stock Option Plan, and the ratification of the selection
of the independent auditors for 1998. At the meeting, members of the
Corporation's management will review the Corporation's operations during the
past year and be available to respond to questions.
We strongly encourage you to vote your shares, whether or not you plan to
attend the meeting. It is very important that you sign, date and return the
accompanying Proxy as soon as possible, in the postage prepaid envelope. If you
do attend the meeting and wish to vote in person, you must give written notice
thereof to the Secretary of the Corporation so that your Proxy will be
superseded by any ballot that you submit at the meeting. If you are a
participant in the Corporation's Dividend Reinvestment and Stock Purchase Plan,
you will receive separate voting instructions with respect to your shares held
in the Dividend Reinvestment and Stock Purchase Plan.
Sincerely,
/s/ Larry J. Miller
-------------------------------------
Larry J. Miller, President and
Chief Executive Officer
Codorus Valley Bancorp, Inc., 105 Leader Heights Road, P.O. Box 2887, York, PA
17405-2887
- --------------------------------------------------------------------------------
<PAGE>
[This Page Intentionally Left Blank]
<PAGE>
CODORUS VALLEY BANCORP, INC.
------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 19, 1998
------------------------------------------------------
TO THE SHAREHOLDERS OF CODORUS VALLEY BANCORP, INC.:
Notice is hereby given that the Annual Meeting of Shareholders of CODORUS
VALLEY BANCORP, INC. (the "Corporation") will be held at 10:00 a.m., prevailing
time, on Tuesday, May 19, 1998, at The Inn at Heritage Hills, The Links Center,
2700 Mount Rose Avenue, York, Pennsylvania 17402, for the following purposes:
1. To elect three (3) Class B Directors to serve for a three-year term
and until their successors are elected and qualified;
2. To approve and adopt the Codorus Valley Bancorp, Inc. 1998
Independent Directors' Stock Option Plan;
3. To ratify the selection of Ernst & Young LLP, as the independent
auditors for the Corporation for the year ending December 31, 1998; and
4. To transact such other business as may properly come before the
Annual Meeting and any adjournment or postponement thereof.
In accordance with the Bylaws of the Corporation and action of the Board of
Directors, only those shareholders of record at the close of business on March
27, 1998, will be entitled to notice of and to vote at the Annual Meeting and
any adjournment or postponement thereof.
A copy of the Corporation's Annual Report for the fiscal year ended
December 31, 1997, is enclosed with this Notice. Copies of the Corporation's
Annual Report for the 1996 fiscal year may be obtained at no cost by contacting
Jann Allen Weaver, Assistant Treasurer, Codorus Valley Corporate Center, 105
Leader Heights Road, P.O. Box 2887, York, Pennsylvania 17405-2887, telephone:
(717) 747-1519.
You are urged to mark, sign, date and promptly return your Proxy in the
enclosed envelope so that your shares may be voted in accordance with your
wishes and in order that the presence of a quorum may be assured. The prompt
return of your signed Proxy (and voting instruction card, if applicable),
regardless of the number of shares you hold, will aid the Corporation in
reducing the expense of additional proxy solicitation. The giving of such Proxy
does not affect your right to vote in person if you attend the meeting and give
written notice to the Secretary of the Corporation. If you are a participant in
the Corporation's Dividend Reinvestment and Stock Purchase Plan, you will
receive separate instructions with respect to your shares held in the Dividend
Reinvestment and Stock Purchase Plan.
By Order of the Board of Directors,
/s/ Larry J. Miller
-------------------------------------
Larry J. Miller, President and
Chief Executive Officer
April 8, 1998
<PAGE>
CODORUS VALLEY BANCORP, INC.
PROXY STATEMENT FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON MAY 19, 1998
GENERAL
INTRODUCTION, DATE, TIME AND PLACE OF ANNUAL MEETING
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of CODORUS VALLEY BANCORP, INC. (the "Corporation"), a
Pennsylvania business corporation, of proxies to be voted at the Annual Meeting
of Shareholders of the Corporation to be held on Tuesday, May 19, 1998, at 10:00
a.m., prevailing time, at The Inn at Heritage Hills, The Links Center, 2700
Mount Rose Avenue, York, Pennsylvania 17402, and at any adjournment or
postponement of the Annual Meeting.
The principal executive office of the Corporation is located at the Codorus
Valley Corporate Center, 105 Leader Heights Road, P.O. Box 2887, York,
Pennsylvania 17405-2887. The telephone number for the Corporation is: (717)
747-1519. All inquiries should be directed to Larry J. Miller, President and
Chief Executive Officer of the Corporation. PeoplesBank, A Codorus Valley
Company (the "Bank") is a wholly-owned subsidiary of the Corporation.
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement and the enclosed form of proxy (the "Proxy") are first
being sent to shareholders of the Corporation on or about April 8, 1998.
Shares represented by proxies on the accompanying Proxy, if properly signed
and returned, will be voted in accordance with the specifications made thereon
by the shareholders. Any Proxy not specifying to the contrary will be voted FOR
the election of the nominees for Class B Director named below, FOR the proposal
to approve and adopt the Codorus Valley Bancorp, Inc. 1998 Independent
Directors' Stock Option Plan (the "Plan"), and FOR the ratification of the
selection of Ernst & Young LLP, as the independent auditors for the Corporation
for the year ending December 31, 1998. Execution and return of the enclosed
Proxy will not affect a shareholder's right to attend the Annual Meeting and
vote in person, after giving written notice to the Secretary of the Corporation.
If a shareholder is a participant in the Codorus Valley Bancorp, Inc.
Dividend Reinvestment and Stock Purchase Plan (the "Plan"), the enclosed Proxy
will not serve as a voting instruction card for the shares held in the Plan.
Instead, these participants will receive from Registrar and Transfer Company, as
the administrator of the Plan, separate voting instruction cards covering the
shares held within the Plan. These separate voting instruction cards MUST BE
SIGNED AND RETURNED OR THE SHARES HELD IN THE PLAN WILL NOT BE VOTED.
The cost of preparing, assembling, printing, mailing and soliciting
proxies, and any additional material that the Corporation may furnish
shareholders in connection with the Annual Meeting, will be borne by the
Corporation. In addition to the use of the mails, certain directors, officers
and employees of the Corporation and the Bank may solicit proxies personally, by
telephone, telegraph and telecopier. Arrangements will be made with brokerage
houses and other custodians, nominees and fiduciaries to forward proxy
solicitation material to the beneficial owners of stock held of record by these
persons and, upon request therefor, the Corporation will reimburse them for
their reasonable forwarding expenses.
1
<PAGE>
REVOCABILITY OF PROXY
A shareholder who returns a Proxy (and a voting instruction card, if
applicable) may revoke the Proxy (and a voting instruction card, if applicable)
at any time before it is voted only: (1) by giving written notice of revocation
to Dallas L. Smith, Secretary of Codorus Valley Bancorp, Inc., at Codorus Valley
Corporate Center, 105 Leader Heights Road, P.O. Box 2887, York, Pennsylvania
17405-2887; (2) by executing a later-dated proxy (and a voting instruction card,
if applicable) and giving written notice thereof to the Secretary of the
Corporation; or (3) by voting in person after giving written notice to the
Secretary of the Corporation.
VOTING SECURITIES, RECORD DATE AND QUORUM
The Corporation is currently authorized to issue 10,000,000 shares of
common stock, par value $2.50 per share and 1,000,000 shares of preferred stock,
par value $2.50 per share.
At the close of business on March 27, 1998, the Corporation had outstanding
2,194,518 shares of common stock, par value $2.50 per share, the only issued and
outstanding class of stock (the "Common Stock"). The number of shares of Common
Stock outstanding reflects the two for one split of the Corporation's Common
Stock effected in the form of a 100% stock dividend, paid January 26, 1998 (the
"Stock Dividend"). As of March 27, 1998, none of the shares of preferred stock
were issued.
Only holders of Common Stock of record at the close of business on March
27, 1998, will be entitled to notice of and to vote at the Annual Meeting.
Cumulative voting rights do not exist with respect to the election of directors.
On all matters to come before the Annual Meeting, each share of Common Stock is
entitled to one vote.
Under Pennsylvania law and the Bylaws of the Corporation, the presence of a
quorum is required for each matter to be acted upon at the Annual Meeting.
Pursuant to Article 3, Section 3.1, of the Bylaws of the Corporation, the
presence, in person or by proxy, of shareholders entitled to cast at least a
majority of the votes that all shareholders are entitled to cast constitutes a
quorum for the transaction of business at the Annual Meeting. Votes withheld and
abstentions will be counted in determining the presence of a quorum for the
particular matter. Broker non-votes will not be counted in determining the
presence of a quorum for the particular matter as to which the broker withheld
authority.
Assuming the presence of a quorum, the three nominees for director
receiving the highest number of votes cast by shareholders entitled to vote for
the election of directors shall be elected. Votes withheld from a nominee and
broker non-votes will not be cast for such nominee.
Assuming the presence of a quorum, the affirmative vote of a majority of
all votes cast by shareholders is required for the approval and adoption of the
Codorus Valley Bancorp, Inc. 1998 Independent Directors' Stock Option Plan.
Abstentions and broker non-votes are not votes cast and therefore do not count
either for or against adoption of the Plan. Abstentions and broker non-votes,
however, have the practical effect of reducing the number of affirmative votes
required to achieve a majority by reducing the total number of shares voted from
which the required majority is calculated.
Assuming the presence of a quorum, the affirmative vote of a majority of
all votes cast by shareholders is required for ratification of the selection of
independent auditors. Abstentions and broker non-votes are not deemed to
constitute "votes cast" and, therefore, do not count either for or against
ratification. Abstentions and broker non-votes, however, have the practical
effect of reducing the number of affirmative votes required to achieve a
majority for the matter by reducing the total number of shares voted from which
the required majority is calculated.
2
<PAGE>
PRINCIPAL BENEFICIAL OWNERS OF THE CORPORATION'S STOCK
PRINCIPAL OWNERS
The following table sets forth, as of March 27, 1998, the name and address
of each person who owns of record or who is known by the Board of Directors to
be the beneficial owner of more than 5 percent of the Corporation's outstanding
Common Stock, the number of shares beneficially owned by such person and the
percentage of the Corporation's outstanding Common Stock so owned. The numbers
of shares reported reflects the Stock Dividend.
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
SHARES COMMON STOCK
NAME AND ADDRESS BENEFICIALLY OWNED BENEFICIALLY OWNED
- ---------------- ------------------ -------------------
<S> <C> <C>
PBT Company 182,193(1) 8.30%
PeoplesBank, A Codorus Valley Company
Trust and Investment Services
Codorus Valley Corporate Center
105 Leader Heights Road
York, Pennsylvania 17403
</TABLE>
- ------------------
(1) 136,372 shares of Common Stock beneficially owned by the Bank are held by
the Bank's Trust and Investment Services Department (the "Trust Department")
in its fiduciary capacity. The Trust Department has sole voting and
dispositive power over these shares of Common Stock. 37,558 shares of Common
Stock beneficially owned by the Bank are held by the Trust Department in one
trust account which provides for the Bank to exercise sole dispositive
power. The Trust Department has shared voting power over these shares of
Common Stock. 8,263 shares of Common Stock beneficially owned by the Bank
are held by the Trust Department in agency accounts which provides for the
Bank to exercise sole voting power. The Trust Department has no dispositive
power over these shares of Common Stock. The Bank's Trust Department intends
to cast all shares under its control FOR the election of the nominees for
director named below, FOR approval and adoption of the Plan, and FOR the
ratification of Ernst & Young LLP, as the independent auditors for the
Corporation.
3
<PAGE>
BENEFICIAL OWNERSHIP BY OFFICERS, DIRECTORS AND NOMINEES
The following table sets forth, as of March 27, 1998, and from information
received from the respective individuals, the amount and percentage of the
Common Stock beneficially owned by each director, each nominee and all officers,
directors and nominees of the Corporation as a group. The percent of outstanding
stock is less than 1%, unless otherwise indicated. The number of shares reported
reflects the Stock Dividend.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE
NAME OF INDIVIDUAL OF BENEFICIAL PERCENT
OR IDENTITY OF GROUP OWNERSHIP(1)(2) OF CLASS
- -------------------- --------------- --------
<S> <C> <C>
CURRENT CLASS B DIRECTORS
(To Serve Until 1998) and
- ---------------------
NOMINEES FOR CLASS B DIRECTOR
(To Serve Until 2001)
M. Carol Druck 1,748(3) --
Barry A. Keller 29,491 1.34%
Donald H. Warner 884 --
CLASS C DIRECTORS
(To Serve Until 1999)
- --------------------
D. Reed Anderson, Esq. 1,529 --
MacGregor S. Jones 10,570(4) --
Larry J. Miller 16,455(5) --
CLASS A DIRECTORS
(To Serve Until 2000)
- ---------------------
Rodney L. Krebs 6,132(6) --
Dallas L. Smith 4,126 --
George A. Trout, D.D.S. 47,837(7) 2.18%
All Officers and Directors, as a group (11 persons) 119,029 5.42%
</TABLE>
- ------------------
(1) Includes Common Stock held in fiduciary accounts in the Bank's Trust and
Investment Services Department.
(2) The securities "beneficially owned" by an individual are determined in
accordance with the definitions of "beneficial ownership" set forth in the
General Rules and Regulations of the Securities and Exchange Commission and
may include securities owned by or for the individual's spouse and minor
children and any other relative who has the same home, as well as securities
to which the individual has, or shares, voting or investment power or has
the right to acquire beneficial ownership within 60 days after March 27,
1998. Beneficial ownership may be disclaimed as to certain of the
securities.
(3) Includes 838 shares held jointly with Mrs. Druck's spouse and 231 shares
held in trust for grandchildren.
(4) Includes 4,082 shares held jointly with Mr. Jones's spouse and 1,583 shares
held individually by his spouse.
4
<PAGE>
(5) Includes 6,152 shares held jointly with Mr. Miller's spouse, 191 shares held
jointly with his mother, 500 shares held jointly with his daughter, and 500
shares held jointly with his son. Includes 7,800 options which are currently
exercisable. The percentage of ownership reported assumes the exercise of
all outstanding and exercisable options. The number of options reported
reflects the Stock Dividend.
(6) Includes 2,315 shares held jointly with Mr. Kreb's spouse.
(7) Includes 41,347 shares held jointly with Dr. Trout's spouse.
ELECTION OF DIRECTORS
The Bylaws of the Corporation provide that the Corporation's business shall
be managed by its Board of Directors. Section 10.2 of the Bylaws provides that
the number of directors that constitutes the whole Board of Directors shall not
be less than five nor more than twenty-five and that the Board of Directors
shall be classified into three classes, each class to be elected for a term of
three years. Within the foregoing limits, the Board of Directors may, from time
to time, fix the number of directors and their respective classifications. No
person shall be elected as a director who has not attained the age of 21 years.
No person shall serve as a director after he or she has attained the age of 70
years. Each director shall also hold solely, in his or her name, at least 100
shares of Common Stock, which shares shall be free of any liens or other forms
of encumbrances. The Board of Directors has fixed the number of Board members at
nine, with three directors in each class. Pursuant to Section 11.1 of the
Bylaws, vacancies on the Board of Directors, including vacancies resulting from
an increase in the number of directors, shall be filled by a majority of the
remaining members of the Board of Directors, though less than a quorum, and each
person so appointed shall be a director until the expiration of the term of
office of the class of directors to which he or she was appointed.
In accordance with Section 10.3 of the Bylaws, at the 1998 Annual Meeting
of Shareholders, three (3) Class B Directors shall be elected to serve for a
three-year term and until their successors are elected and qualified. Therefore,
the Bylaws provide for a classified Board of Directors with staggered three-year
terms of office.
Unless otherwise instructed, the Proxyholders will vote the Proxies
received by them for the election of the three nominees named below. If any
nominee should become unavailable for any reason, Proxies will be voted in favor
of a substitute nominee as the Board of Directors of the Corporation determines.
The Board of Directors has no reason to believe that the nominees named will be
unable to serve, if elected.
There is no cumulative voting for the election of directors. Each share of
Common Stock is entitled to cast only one vote for each nominee. For example, if
a shareholder owns 10 shares of Common Stock, he or she may cast up to ten votes
for each of the three directors in the class to be elected.
5
<PAGE>
INFORMATION AS TO NOMINEES AND DIRECTORS
The following table contains certain information with respect to the
executive officers, nominees for Class B Director, current directors of the
Corporation and the committees of the Bank's Board of Directors.
<TABLE>
<CAPTION>
AGE AS OF PRINCIPAL OCCUPATION FOR
MARCH 27, PAST FIVE YEARS AND POSITIONS
NAME 1998 HELD WITH THE CORPORATION AND THE BANK DIRECTOR SINCE
- ---- --------- -------------------------------------- --------------
<S> <C> <C> <C>
CURRENT CLASS B DIRECTORS
(To Serve Until 1998) and
- ---------------------
NOMINEES FOR CLASS B DIRECTOR
(To Serve Until 2001)
M. Carol Druck(1)(2) 49 President, Druck Realty, Inc. d/b/a 1988/1988
RE/MAX Advanced Realty; Assistant
Secretary of Corporation, April, 1990
-April, 1997; Assistant Treasurer of
Corporation, January, 1994 - April,
1997.
Barry A. Keller(1) 64 Insurance Broker/Consultant, Keller- 1986/1977
Brown Insurance Services; Vice
Chairman of Corporation, since
January, 1994; Secretary of
Corporation November, 1988 - January,
1994; Chairman of Bank, since January,
1994.
Donald H. Warner(3) 59 President, Warner Services, Inc. 1990/1990
(moving and storage company); Vice
President of Corporation since
January, 1993.
CLASS C DIRECTORS
(To Serve Until 1999)
- ---------------------
D. Reed Anderson, Esq.(3) 55 Attorney-at-Law, Stock and 1994/1994
Leader, P.C.
MacGregor S. Jones(2) 52 President, Mac Jones Ford, Inc.; 1993/1993
Assistant Secretary of Corporation,
January, 1994 - April, 1997.
Larry J. Miller(1)(4) 46 Commercial Banker; President and Chief 1986/1981
Executive Officer of Corporation,
since 1986 and of Bank, since 1981.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
AGE AS OF PRINCIPAL OCCUPATION FOR
MARCH 27, PAST FIVE YEARS AND POSITIONS
NAME 1998 HELD WITH THE CORPORATION AND THE BANK DIRECTOR SINCE
- ---- --------- -------------------------------------- --------------
<S> <C> <C> <C>
CLASS A DIRECTORS
(To Serve Until 2000)
- ---------------------
Rodney L. Krebs(1)(3) 57 President, Springfield Contractors, 1988/1988
Inc.; Treasurer of Corporation, since
February, 1990.
Dallas L. Smith(2) 52 President, Bruce V. Smith, Inc. 1986/1983
(furniture and appliances); Secretary
of Corporation, since January, 1994;
Assistant Treasurer and Assistant
Secretary of Corporation, November,
1988 - January, 1994.
George A. Trout, D.D.S.(1)(4) 63 Dentist; Chairman of Corporation, 1986/1975
since January, 1994; Vice Chairman of
Corporation January, 1993 - January,
1994; Vice President of Corporation
November, 1988 - January, 1993; Vice
Chairman of Bank, since 1992.
</TABLE>
- ------------------
(1) Member of the Bank's Executive Committee. This committee is authorized to
meet at the call of an officer, primarily to take action regarding the
purchase and sale of securities and consider loans between regular meetings
of the Board of Directors. This committee did not meet in 1997. All matters
of this committee were considered by the entire Board of Directors. Mr.
Barry A. Keller is Chairman of the Executive Committee.
(2) Member of the Bank's and Corporation's Audit Committee. The Audit Committee
has as its primary functions the recommendation of an outside auditor for
each fiscal year and the oversight of the Bank's audit function. This
committee is also the source for reports concerning factual conflicts of
interest, and reviews circumstances regarding conflicts of interest and
reports same to the full Board of Directors, if necessary. This committee
met three (3) times in 1997. Mrs. M. Carol Druck is Chairperson of the Audit
Committee.
(3) Member of the Bank's Trust and Investment Services Committee. This committee
makes recommendations and supervises the operation of the Trust and
Investment Services Department. There were eleven (11) meetings of the Trust
and Investment Services Committee in 1997. Mr. Rodney L. Krebs is Chairman
of the Trust and Investment Services Committee.
(4) Members of the Bank's Asset-Liability Committee (ALCO). This committee met
nine (9) times in 1997 to review asset and liability management of the Bank.
Other members of the committee include the following bank officers: Messrs.
Todd A. Tyson and Jann Allen Weaver. Mr. Larry J. Miller is Chairman of the
committee.
With the exception of the Audit Committee, the aforementioned committees
are committees of the Bank and not of the Corporation.
7
<PAGE>
During 1997, the Bank's Board of Directors held twenty-six (26) meetings
and the Corporation's Board of Directors held eleven (11) meetings. Each of the
Directors attended at least 75 percent of the combined total number of meetings
of the Corporation's and the Bank's Boards of Directors and the committees of
which he or she is a member.
The Board of Directors of the Corporation has, at present, no standing
committees. The Corporation does not have a compensation or a nominating
committee. A shareholder who desires to propose an individual for consideration
by the Board of Directors as a nominee for director should submit a proposal in
writing to the Secretary of the Corporation in accordance with Section 10.1 of
the Corporation's Bylaws. Any shareholder who intends to nominate any candidate
for election to the Board of Directors must notify the Secretary of the
Corporation in writing not less than ninety (90) days prior to the date of any
meeting of shareholders called for the election of directors.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that the Corporation's officers and directors, and persons who own more than 10
percent of the registered class of the Corporation's equity securities, file
reports of ownership and changes in ownership with the Securities and Exchange
Commission (the "SEC"). Officers, directors and greater than 10 percent
shareholders are required by SEC regulation to furnish the Corporation with
copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Corporation believes that during the period from
January 1, 1997, through December 31, 1997, its officers and directors were in
compliance with all filing requirements applicable to them, with the exception
of Mr. Warner who inadvertently filed a late Form to report one transaction
during 1997.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual
compensation for services in all capacities to the Corporation and to the Bank
for the fiscal years ended December 31, 1997, 1996 and 1995 of those persons who
were, at December 31, 1997, (i) Chief Executive Officer, and (ii) the other four
most highly compensated executive officers of the Corporation and of the Bank to
the extent such persons' total annual salary and bonus exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------- --------------------- -------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
OTHER
NAME ANNUAL RESTRICTED ALL OTHER
AND COMPEN- STOCK OPTIONS/ COMPEN-
PRINCIPAL SALARY BONUS SATION AWARDS SARS PAYOUTS SATION
POSITION YEAR ($) ($) ($) ($) (#)(1) ($) ($)(2)(3)(4)
--------- ---- ------ ----- ------- ---------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Larry J. Miller 1997 155,161 0 0 0 28,000 0 14,941
President and Chief 1996 143,252 10,000 0 0 12,600 0 14,322
Executive Officer of the 1995 136,499 10,000 0 0 0 0 12,032
Corporation and the Bank
</TABLE>
- ------------------
(1) As adjusted for the Stock Dividend.
(2) Includes Bank contributions to 401(k) Plan of $3,107, $2,798 and $2,678 for
1997, 1996 and 1995, respectively.
(3) Includes Life Insurance Premiums of $1,562, $1,288 and $1,302 for 1997, 1996
and 1995, respectively.
(4) Includes the payment of Club dues in the amount of $1,020, $984 and $800 for
each of 1997, 1996 and 1995, respectively, as well as the value of Mr.
Miller's use of a vehicle, estimated at $9,252 for each of 1997 and 1996 and
$7,252 for 1995.
8
<PAGE>
The following table sets forth certain information relating to options
granted by the Corporation in 1997. No options were exercised during the fiscal
year ended December 31, 1997.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
------------------------------------ AT ASSUMED ANNUAL RATES
NUMBER OF % OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS/ APPRECIATION FOR
UNDERLYING SARS GRANTED TO EXERCISE OR OPTION TERM
OPTIONS/ EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------
NAME SARS GRANTED (#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ---------------- --------------- ----------- ---------- ----- ------
(A) (B) (C) (D) (E) (F) (G)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Larry J. Miller, 28,000/0(1) 100% $18.75(1) 10/28/07 $330,169.68 $838,714.79
President and
CEO of the
Corporation and
the Bank
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) As adjusted for the Stock Dividend.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
NUMBER OF SECURITIES
UNDERLYING UNEXERCISABLE VALUE OF UNEXERCISED
SHARES OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
ACQUIRED ON AT FY-END(#)(1) AT FY-END($)(1)(2)
EXERCISE VALUE
NAME (#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Larry J. Miller, -- -- 2,100/38,500 $18,228/$188,510
President and CEO of
the Corporation and
the Bank
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) As adjusted for the Stock Dividend.
(2) Market value of underlying securities based on the closing price of the
Corporation's Common Stock on the NASDAQ Stock Exchange on December 31,
1997, minus the exercise price.
9
<PAGE>
STOCK OPTION PLAN
The Corporation maintains the 1996 Stock Incentive Plan (the "SIP"), which
SIP was approved by shareholders at the 1996 Annual Meeting, to advance the
development, growth and financial condition of the Corporation and its
subsidiaries. The Corporation originally reserved 50,000 shares under the SIP,
or 70,600 shares, as adjusted for the Stock Dividend. The SIP provides for
awards of qualified stock options and non-qualified stock options and is
administered by a disinterested committee of the Corporation's Board of
Directors. In 1997, 14,000 qualified stock options were granted under the Plan
or, as adjusted for Stock Dividend, 28,000 qualified stock options.
RETIREMENT PLAN
The Corporation does not have a defined benefit retirement or pension plan.
Until April 30, 1997, however, the Bank maintained a retirement plan (the
"Retirement Plan") for officers and employees. All officers and employees who
met the service requirements were eligible for the Retirement Plan after the
first full year of service with the Bank.
The Retirement Plan was terminated, effective April 30, 1997. The Board
took this action after determining that the costs associated with the Retirement
Plan exceeded the eventual benefit to employees, and that there are more
beneficial alternatives available. Upon termination of the Retirement Plan,
excess assets were distributed to plan participants in the form of cash or
deposited to another retirement plan. Retirees received an irrevocable annuity.
Assets of the Retirement Plan were adequate to fund all benefit liabilities.
Termination of the Retirement Plan did not have a material impact on the
Corporation during 1997.
401(K) PLAN
The Bank maintains a defined contribution-profit sharing 401(k) Plan (the
"401(k) Plan"). The 401(k) Plan Sponsor is PeoplesBank. The 401(k) Plan is
administered by a committee designated by the 401(k) Plan Sponsor. Larry J.
Miller, President and Chief Executive Officer of the Corporation and the Bank,
and Bruce A. Lamborne, Senior Vice President and Trust Officer of the Bank, are
the 401(k) Plan Trustees. The 401(k) Plan is subject to the Internal Revenue
Code of 1986, as amended (the "Code") and to the regulations promulgated
thereunder. Participants are entitled to certain rights and protection under the
Employee Retirement Income Security Act of 1974.
To be eligible to become a participant in the 401(k) Plan, an employee must
attain the age of 21 and work one year during which the employee completes 1,000
hours of service. An eligible employee may elect to contribute certain portions
of salary, wage, bonus (other than year-end bonus), or other direct remuneration
to the 401(k) Plan. Generally, eligible employees may not contribute more than
20 percent of such compensation. The Bank matches a certain percentage of the
employee's contribution. In 1995, 1996 and 1997, the Bank matched 50 percent of
the first 6 percent of the employee's contribution. The Bank's contributions to
the 401(k) Plan for each participant vest in three years. The employee's
contributions to the 401(k) Plan vest immediately. The Bank incurred expenses of
$51,000, $44,000, and $44,000, for financial reporting purposes during 1997,
1996 and 1995, respectively, in connection with the 401(k) Plan.
10
<PAGE>
EMPLOYMENT CONTRACT
During 1993, the Corporation, the Bank and Mr. Larry J. Miller, President
and Chief Executive Officer of the Corporation and the Bank, entered into an
employment agreement for a term of three (3) years, which term renews
automatically for an additional twelve months at the end of each calendar year
unless the Corporation and Bank provide written notice to Mr. Miller of
non-renewal. The agreement specifies Mr. Miller's position and duties,
compensation and benefits, and indemnification and termination provisions. The
agreement also contains a non-competition provision and a confidentiality
provision.
Under the terms of his employment agreement, Mr. Miller serves as the
President and Chief Executive Officer of the Corporation and of the Bank and as
a member of the Boards of Directors of the Corporation and of the Bank. Pursuant
to the employment agreement, Mr. Miller was entitled to an annual direct salary
of $155,000 in 1997. This salary may be increased in subsequent years as the
Board of Directors deems appropriate. In addition, the Boards of Directors of
the Corporation and the Bank have discretion to pay a periodic bonus to Mr.
Miller. Mr. Miller is not entitled to receive director's fees or other
compensation for serving on the Corporation's and the Bank's Boards of Directors
or the committees thereof. Mr. Miller is also entitled to receive the employee
benefits made available by the Bank to its employees and to use of a Bank
vehicle.
As amended in October of 1997, the agreement with Mr. Miller provides that
if his employment is terminated by the Corporation or the Bank, due to death,
disability or for cause (as defined therein), then he is entitled to the full
annual direct salary through the date of termination. If Mr. Miller's employment
is terminated by the Corporation or the Bank other than pursuant to death,
disability or for cause (as defined therein), then he is entitled to his full
annual direct salary from the date of termination through the last day of the
term of the agreement, or an amount equal to his current annual direct salary,
whichever is greater. If Mr. Miller terminates his employment for good reason
(as defined therein), then he is entitled to an amount equal to his direct
annual salary. As amended in 1997, if Mr. Miller's employment is terminated as a
result of a change in control (as defined therein), then he is entitled to
receive a lump sum payment equal to 2.99 times his then current direct annual
salary (as defined therein) and will continue his eligibility to participate in
all employee benefit plans and programs in which he was previously entitled to
participate.
COMPENSATION OF DIRECTORS
During 1997, non-employee Bank directors received $250 for each Directors'
regular or special meeting attended, $75.00 per hour for each committee meeting
attended, and a monthly retainer of $500.00. The Chairman of the Bank's Board of
Directors received a monthly retainer of $600.00. In addition, the Bank pays
life insurance premiums on behalf of the non-employee Bank directors which
amounted to $1,344 in 1997. In the aggregate, the members of the Board of
Directors received $108,519, including $7,200 deferred by Mr. Keller, pursuant
to the Independent Directors' Deferred Compensation Plan, described below, for
all Board of Directors' meetings and committee meetings attended in 1997,
including all fees, retainers and premiums paid to and on behalf of all
non-employee Bank directors in 1997.
Directors received no remuneration for attendance at the meetings of the
Board of Directors of the Corporation.
INDEPENDENT DIRECTORS' DEFERRED COMPENSATION PLAN
The Corporation maintains a Deferred Compensation Plan for certain
independent directors. Plan participants may elect to defer receipt of
compensation in order to provide certain benefits taxable under Section 451 of
the Internal Revenue Code. This is an unfunded plan of the Corporation.
11
<PAGE>
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
The Board of Directors of the Corporation is responsible for the governance
of the Corporation and its subsidiaries. In fulfilling its fiduciary duties, the
Board of Directors endeavors to act in the best interests of the Corporation's
shareholders, customers and the communities served by the Corporation and its
subsidiaries. To accomplish the strategic goals and objectives of the
Corporation, the Board of Directors engages a competent staff of executive
officers, including the Chief Executive Officer. The authority to accomplish
these objectives and manage the resources of the Corporation with integrity and
in a cost-effective manner is delegated to the executive officers and the Chief
Executive Officer. The compensation of these individuals is part of the Board of
Directors' fulfillment of its duties to accomplish the Corporation's strategic
mission. The Bank, the wholly-owned financial services subsidiary of the
Corporation, provides compensation to the employees of the Corporation and the
Bank.
The fundamental philosophy of the Corporation's and the Bank's compensation
program is to offer competitive compensation opportunities for all employees
based on the individual's contribution and personal performance. The
compensation program is administered by the entire Board of Directors. The
objectives are to establish a fair compensation policy to govern executive
officers' base salaries and incentive plans to attract and motivate competent,
dedicated, and ambitious managers, whose efforts will enhance the products and
services of the Corporation, the results of which will be improved
profitability, increased dividends to our shareholders and subsequent
appreciation in the market value of our shares.
The compensation of the Corporation's and Bank's top executives is reviewed
and approved annually by the Board of Directors. The top executives whose
compensation is determined by the Board include the chief executive officer,
general counsel, the senior vice presidents, and all other vice presidents. As a
guideline for review in determining base salaries, the Board uses information
composed of a Pennsylvania bank peer group. This peer group of banks with assets
of $200 million to $500 million includes bank holding companies and banks listed
on NASDAQ which may not be located in Pennsylvania. Pennsylvania peer group
banks have been utilized because of common industry issues and competition for
the same executive talent group. This peer group is not the same peer group used
to prepare the Shareholders Performance Graph.
The Board of Directors has determined that the Chief Executive Officer's
1997 compensation of $155,000, a ten and seven-tenths (10.7%) increase in
aggregate Chief Executive Officer compensation over 1996, was appropriate in
light of the following 1996 Corporation performance accomplishments: (1) a four
percent (4%) increase in Net Income; (2) a twelve and four-tenths percent
(12.4%) Return on Equity; and (3) a one and fourteen one-hundredths percent
(1.14%) Return on Average Assets. There is, however, no direct correlation
between the Chief Executive Officer's compensation, the Chief Executive
Officer's increase in compensation and any of the above criteria, nor is there
any weight given by the Board to any of the above specific individual criteria.
Such increase in the Chief Executive Officer's compensation is based on the
Board's subjective determination after review of all information, including the
above, that it deems relevant.
12
<PAGE>
EXECUTIVE OFFICERS
The Board of Directors established that the 1998 compensation of the
Corporation's and the Bank's executive officers increased by approximately five
percent (5%) over 1996 compensation. Compensation increases are determined by
the Board based on its subjective analysis of the individual's contribution to
the Corporation's strategic goals and objectives. In determining whether
strategic goals have been achieved, the Board of Directors consider among
numerous factors the following: the Corporation's performance as measured by
earnings, revenues, return on assets, return on equity, market share, total
assets and non-performing loans. Although the performance and increases in
compensation were measured in light of these factors, there is no direct
correlation between any specific criterion and an employee's compensation, nor
is there any specific weight provided to any such criteria in the Board's
analysis. The determination by the Board is subjective after review of all
information, including the above, it deems relevant.
In addition to base salary, executive officers of the Corporation and the
Bank may participate in annual and long-term incentive plans, including the
401(k) Plan. The Stock Option Plan has been approved and implemented, and the
Board of Directors governs awards made under such plan.
Total compensation opportunities available to employees of the Bank are
influenced by general labor market conditions, the specific responsibilities of
the individual, and the individual's contributions to the Corporation's success.
Individuals are reviewed annually on the anniversary of their date of hire. The
Bank strives to offer compensation that is competitive with that offered by
employers of comparable size in our industry. Through these compensation
policies, the Corporation strives to meet its strategic goals and objectives to
its constituencies and provide compensation that is fair and meaningful to its
employees.
M. Carol Druck Barry A. Keller Larry J. Miller
Donald H. Warner D. Reed Anderson, Esquire Rodney L. Krebs
MacGregor S. Jones George A. Trout, D.D.S. Dallas L. Smith
COMPENSATION COMMITTEE INTERLOCKS
Larry J. Miller, who serves as the Chief Executive Officer of the
Corporation and the Bank, participates in the discussion relating to the
compensation of all employees of the Bank, but does not participate in
discussions or decisions relating to his compensation.
13
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly change in the
cumulative total shareholder return on the Corporation's Common Stock against
the cumulative total return of the S&P 500 Stock Index and the NASDAQ Bank Index
for the period of five fiscal years commencing January 1, 1993 and ending
December 31, 1997. The Shareholder return shown on the graph below is not
necessarily indicative of future performance.
Codurus Valley Bancorp, Inc.
Stock Price Performance Graph Data
[GRAPHIC]
In the printed version of the document, a line graph appears which depicts
the following plot points:
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
NASDAQ Bank 532.93 689.43 697.07 1009.44 1273.46 2083.22
NASDAQ Bank Index 100.00 129.37 130.80 189.41 238.95 390.90
Codorus Valley Bancorp, Inc. 100.00 144.28 150.46 201.13 219.30 353.46
S&P 500 Total Return 100.00 110.02 111.51 153.26 188.36 251.12
S&P 500 Total Return Index 100.00 110.02 111.51 153.26 188.36 251.12
</TABLE>
14
<PAGE>
CERTAIN TRANSACTIONS
There have been no material transactions between the Corporation and the
Bank, nor any material transactions proposed, with any director or executive
officer of the Corporation and the Bank, or any associate of the foregoing
persons. The Corporation and the Bank have had and intend to continue to have
banking and financial transactions in the ordinary course of business with
directors and officers of the Corporation and the Bank and their associates on
comparable terms and with similar interest rates as those prevailing from time
to time for other customers of the Corporation and the Bank.
Total loans outstanding from the Corporation and the Bank at December 31,
1997, to the Corporation's and the Bank's officers and directors as a group and
to members of their immediate families and companies in which they had an
ownership interest of 10 percent or more was $3,443,553, or approximately 17.8
percent of the total equity capital of the Bank. Loans to such persons were made
in the ordinary course of business, were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and did not involve more than the
normal risk of collectibility or present other unfavorable features. The largest
aggregate amount of indebtedness outstanding at any time during fiscal year 1997
to officers and directors of the Corporation and the Bank as a group was
$4,029,708. The aggregate amount of indebtedness outstanding as of the latest
practicable date, March 12, 1998, to the above described group was $3,342,496.
PRINCIPAL OFFICERS OF THE CORPORATION
The following table sets forth selected information about the principal
officers of the Corporation, each of whom is elected by the Board of Directors
and each of whom holds office at the discretion of the Board of Directors. The
number of shares reported reflects the Stock Dividend.
<TABLE>
<CAPTION>
CORPORATION NUMBER OF SHARES AGE AS OF
HELD EMPLOYEE BENEFICIALLY MARCH 27,
NAME AND POSITION SINCE SINCE(1) OWNED(2) 1998
----------------- ----- ----------- ---------------- ---------
<S> <C> <C> <C> <C>
George A. Trout, D.D.S. -- 1994 -- 47,837 63
Chairman of the Board
Barry A. Keller -- 1994 -- 29,491 64
Vice Chairman of the Board
Larry J. Miller -- President 1986 -- 16,455(3) 46
and Chief Executive Officer
Donald H. Warner -- 1993 -- 884 59
Vice President
Dallas L. Smith -- 1994 -- 4,126 52
Secretary
Rodney L. Krebs -- 1990 -- 6,132 57
Treasurer
Jann Allen Weaver -- 1991 -- 257(4) 48
Assistant Treasurer
and Assistant Secretary
Harry R. Swift, Esquire -- 1997 -- 0 50
Assistant Secretary
</TABLE>
- ------------------
(1) The Corporation does not have any employees.
(2) Rounded to the nearest whole share.
(3) For information concerning the beneficial ownership of this individual, see
footnote 4 to "Beneficial Ownership by Officers, Directors and Nominees,"
supra.
(4) Shares held jointly by Mr. Weaver and his spouse.
15
<PAGE>
PRINCIPAL OFFICERS OF THE BANK
The following table sets forth selected information about the principal
officers of the Bank, each of whom is elected by the Board of Directors and each
of whom holds office at the discretion of the Board of Directors. The number of
shares reported reflects the Stock Dividend.
<TABLE>
<CAPTION>
NUMBER OF
BANK SHARES AGE AS OF
HELD EMPLOYEE BENEFICIALLY MARCH 27,
NAME OFFICE AND POSITION WITH THE BANK SINCE SINCE OWNED 1998
---- --------------------------------- ----- -------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Barry A. Keller Chairman of the Board 1994 (1) 29,491 64
Larry J. Miller President and Chief Executive 1981 1971 16,455(2) 46
Officer
Jann Allen Weaver Senior Vice President and Chief 1989 1986 257(3) 48
Financial Officer
Bruce A. Lamborne Senior Vice President/Trust and 1989 1988 440(4) 51
Investment Services
Harry R. Swift, General Counsel and Chief 1997 1997 0 50
Esquire Administrative Officer
</TABLE>
- ------------------
(1) Mr. Keller is not an employee of the Bank.
(2) For information concerning the beneficial ownership of this individual, see
footnote 4 to "Beneficial Ownership by Officers, Directors and Nominees,"
supra.
(3) Shares held jointly by Mr. Weaver and his spouse.
(4) Shares held jointly by Mr. Lamborne and his spouse.
PROPOSAL TO APPROVE AND ADOPT
THE CODORUS VALLEY BANCORP, INC.
1998 INDEPENDENT DIRECTORS' STOCK OPTION PLAN
On February 24, 1998, the Board of Directors adopted the Codorus Valley
Bancorp, Inc. 1998 Independent Directors' Stock Option Plan ("Plan") and
reserved 100,000 shares of Common Stock for issuance under the Plan. The purpose
of the Plan is to advance the interests of the Corporation by providing
incentives to attract, retain, and motivate non-employee members of the Board of
Directors of the Corporation through participation in the appreciation of the
capital stock of the Corporation.
The Plan will become effective upon approval by the shareholders and will
continue in effect until all awards under the Plan either have lapsed, been
exercised, satisfied or canceled according to the terms under the Plan. The
shares of stock that may be issued under the Plan shall not exceed, in the
aggregate, 100,000 shares of the Common Stock, as may be adjusted from time to
time due to stock splits, payments of stock dividends or other changes in the
structure of the Corporation's capital.
Persons eligible to receive awards under the Plan shall be those directors
who are not employees of either the Corporation or its subsidiaries ("Outside
Directors"). Each Outside Director who attended at least 75%, in the aggregate,
of the total number of meetings of the Board of Directors and the total number
of meetings of all committees of the Board of Directors of which he or she is a
member in the preceding fiscal year will be granted stock options under the
terms of the Plan. The purchase price of Common Stock subject to a Stock Option
shall be the fair market value (as defined in the Plan) at the time of grant. No
Stock Option shall be exercised after ten years from the date of grant thereof.
Furthermore, upon the occurrence of certain events as described in the Plan, any
and all Stock Options which a director would be entitled to receive under the
Plan shall be immediately granted to the director. Stock Options may be granted
according to the following schedule:
16
<PAGE>
YEAR NUMBER OF SHARES GRANTED
---- ------------------------
1998 4,000
1999 2,000
2000 2,000
2001 2,000
2002 2,000
In the event that a participant ceases to be a director of the Corporation
for any reason other than retirement because of the Corporation's mandatory
retirement requirement pursuant to the Corporation's Bylaws, the remaining
portion of a participant's unexercised Stock Options shall terminate one year
after the director's termination, subject to the ten year limitation on
exercisability.
In the event that a participant dies prior to the expiration of the
participant's Stock Options, and without having fully exercised such Stock
Options, and to the extent that the Stock Options are exercisable at the time of
death, the participant or his legal representative shall have the right to
exercise the Stock Options during their respective terms within one year after
such termination of Board membership. If the director retires due to the
mandatory retirement requirement, he or she may exercise any remaining stock
options for their remaining terms.
Except as otherwise provided by the Committee administering the Plan,
awards made under the Plan shall not be transferrable other than by Will or the
laws of descent and distribution or as otherwise described herein and during the
director's lifetime. Stock Options granted to him shall only be exercisable by
such director or, in the event of his disability or death, by his legal
representative.
FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
It is not intended that options issued pursuant to the Plan will qualify as
incentive stock options issued pursuant to a qualified plan within the meaning
of Sections 421 and 422 of the Code. Under the provisions of the Code as in
effect on the date hereof, a director who receives a Non-Qualified Option will
not recognize taxable income on the grant of the option; however, upon exercise,
he or she will recognize ordinary income in an amount equal to the excess of the
fair market value of the stock on the date that the option is exercised over the
purchase price paid for the stock. The Corporation will be entitled to an income
tax deduction in the year of exercise in an amount equal to the amount of income
recognized by the director.
NEW PLAN BENEFITS (1)
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE ($) NUMBER OF UNITS
- ----------------- ---------------- ---------------
<S> <C> <C>
Larry J. Miller $0 -0-
President and CEO
Executive Group $0 -0-
Non-Executive Director Group $22,000 4,000
Non-Executive Officer Employee Group $0 -0-
</TABLE>
- ------------------
(1) If this Plan had been in effect during calendar year 1997, the dollar value
of 4,000 Stock Options, issued on May 30, 1997, following the Board of
Directors' annual reorganization meeting, would be $22,000, or $5.50 per
share, based upon the increase in the price of the Corporation's Common
Stock from $16.75 to $22.25 per share during calendar year 1997. The number
of shares awarded and the per share information has been adjusted to give
effect to the Stock Dividend.
The foregoing discussion of the Plan consists of only a summary and is
qualified in its entirety by reference to the full text of the Plan attached as
Exhibit "A" to this Proxy Statement. Exhibit "A" is deemed to be an integral
part of this Proxy Statement and incorporated in its entirety by reference.
17
<PAGE>
The Board of Directors recommends a vote FOR the following resolution which
will be presented at the Annual Meeting:
"RESOLVED, that the Codorus Valley Bancorp, Inc. 1998 Independent
Directors' Stock Option Plan, the text of which is set forth in full and
its entirety in the Proxy Statement for the 1998 Annual Meeting of
Shareholders as Exhibit "A", is hereby approved, adopted, ratified and
confirmed by the shareholders of the Corporation."
The approval and adoption of the Plan requires the affirmative vote of at
least a majority of all votes cast by shareholders. Proxies solicited by the
Board of Directors will be voted for the foregoing resolution unless
shareholders specify to the contrary on their proxies.
The Board of Directors recommends a vote FOR the resolution approving and
adopting the Codorus Valley Bancorp, Inc. 1998 Independent Directors' Stock
Option Plan.
RATIFICATION OF INDEPENDENT AUDITORS
Unless instructed to the contrary, proxyholders intend to cast all votes
pursuant to proxies for ratification of the selection of Ernst & Young LLP as
the Corporation's independent auditors for the 1998 fiscal year. Ernst & Young
LLP advised the Corporation that none of its members has any financial interest
in the Corporation. Ratification of Ernst & Young LLP will require the
affirmative vote of a majority of the shares of Common Stock represented in
person or by proxy at the Annual Meeting. Ernst & Young LLP served as the
Corporation's independent auditors for the 1997 fiscal year, assisted the
Corporation and the Bank with preparation of their federal and state tax
returns, and provided assistance in connection with regulatory matters, charging
the Bank for such services at its customary hourly billing rates. These
non-audit services were approved by the Corporation's and the Bank's respective
Boards of Directors after due consideration of the effect of the performance
thereof on the independence of the auditors and after concluding that there was
no effect on the independence of the auditors.
In the event that the shareholders do not ratify the selection of Ernst &
Young LLP as the Corporation's independent auditors for the 1998 fiscal year,
another accounting firm may be chosen to provide independent audit services for
the 1998 fiscal year. The Board of Directors recommends that the shareholders
vote FOR the ratification of the selection of Ernst & Young LLP, as the
independent auditors for the Corporation for the year ending December 31, 1998.
ANNUAL REPORT
A copy of the Corporation's Annual Report for its fiscal year ended
December 31, 1997, is enclosed with this Proxy Statement. A representative of
Ernst & Young LLP, the accounting firm which examined the financial statements
in the Annual Report, will attend the meeting. The representative will have the
opportunity to make a statement, if he desires to do so, and will be available
to respond to any appropriate questions concerning the Annual Report presented
by shareholders at the Annual Meeting.
18
<PAGE>
SHAREHOLDER PROPOSALS
Any shareholder who, in accordance with and subject to the provisions of
the proxy rules of the Securities and Exchange Commission, wishes to submit a
proposal for inclusion in the Corporation's Proxy Statement for its 1999 Annual
Meeting of Shareholders must deliver such proposal in writing to the President
of Codorus Valley Bancorp, Inc. at its principal executive offices, Codorus
Valley Corporate Center, 105 Leader Heights Road, York, Pennsylvania 17403, not
later than Wednesday, December 9, 1998.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented for
consideration other than the matters described in the accompanying Notice of
Annual Meeting of Shareholders, but if any matters are properly presented, it is
the intention of the persons named in the accompanying Proxy to vote on such
matters in accordance with their best judgment.
ADDITIONAL INFORMATION
UPON WRITTEN REQUEST OF ANY SHAREHOLDER, A COPY OF THE CORPORATION'S REPORT
ON FORM 10-K FOR ITS FISCAL YEAR ENDED DECEMBER 31, 1997, INCLUDING THE
FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 13a-1 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, MAY BE OBTAINED, WITHOUT CHARGE, FROM JANN
ALLEN WEAVER, ASSISTANT TREASURER, CODORUS VALLEY BANCORP, INC., CODORUS VALLEY
CORPORATE CENTER, 105 LEADER HEIGHTS ROAD, YORK, PENNSYLVANIA 17403.
19
<PAGE>
EXHIBIT A
CODORUS VALLEY BANCORP, INC.
1998 INDEPENDENT DIRECTORS' STOCK OPTION PLAN
<PAGE>
EXHIBIT A
CODORUS VALLEY BANCORP, INC.
1998 INDEPENDENT DIRECTORS' STOCK OPTION PLAN
1. Purpose. The 1998 Independent Directors' Stock Option Plan (the "Plan")
was established to advance the development, growth and financial condition of
Codorus Valley Bancorp, Inc. (the "Corporation") and its subsidiaries, by
providing an incentive, through participation in the appreciation of capital
stock of the Corporation, and thereby to secure, retain and motivate members of
the Corporation's Board of Directors who are not officers or employees of the
Corporation or any subsidiary thereof ( the "non-employee directors").
2. Term. The Plan shall become effective as of the date the Corporation's
stockholders duly approve the Plan (the "Effective Date"). If the Plan is so
approved, it shall continue in effect until any stock options granted under the
Plan have either lapsed or been exercised, satisfied or canceled according to
their terms.
3. Stock. The shares of the Corporation's common stock, par value $2.50
per share (the "Common Stock") issuable under the Plan shall not exceed 100,000
shares. The amount of Common Stock issuable under the Plan may be adjusted
pursuant to paragraph 10 hereof. The Common Stock issuable hereunder may be
either authorized and unissued shares of Common Stock, or authorized shares of
Common Stock issued by the Corporation and subsequently reacquired by it as
treasury stock, or shares purchased in open market transactions. Under no
circumstances shall fractional shares be issued under the Plan. The
Corporation's failure to obtain any governmental authority deemed necessary by
the Corporation's legal counsel for the proper grant of the stock options under
this Plan and/or the issuance of Common Stock under the Plan shall relieve the
Corporation of any duty or liability for the failure to grant stock options
under the Plan and/or issue Common Stock under the Plan as to which such
authority has not been obtained.
4. Stock Options. Stock options shall be granted under the Plan, annually,
immediately following the reorganization meeting of the Corporation, to each
non-employee director of the Corporation, who, during the preceding fiscal year,
attended at least seventy-five (75%), in the aggregate, of the total number of
meetings of the Board of Directors (held during that year or the portion of the
year for which he has been a director) and the total number of meetings held by
all committees of the Board of Directors on which he served (held during that
year or the portion of the year for which he has been a director). Each such
director shall be granted stock options to purchase shares of Common Stock (the
"Stock Options") under the following terms and conditions:
(a) The time period during which any Stock Option is exercisable shall
be ten (10) years after the date of grant to the Director. The Stock
Options may be granted according to the following schedule:
NUMBER OF
YEAR SHARES GRANTED
---- --------------
1998 4,000
1999 2,000
2000 2,000
2001 2,000
2002 2,000
(b) If the Director ceases to be a member of the Board of Directors for
any reason other than retirement because of age pursuant to the
Corporation's Bylaws, the director may exercise the Stock Option not more
than twelve (12) months after such cessation; if the director dies at any
time, the director's qualified personal representative or any persons who
acquire the Stock Options pursuant to his or her Will or laws of descent
and distribution, may exercise any Stock Options during their remaining
terms for a period of not more than twelve (12) months after the director's
death to the extent that the Stock Options would then be and remains
exercisable; if the
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<PAGE>
director retires because of the aforesaid mandatory age requirement, he or
she may exercise any Stock Options granted to him or her for their
remaining terms; in all of the above events, the director shall not receive
any further grants of Stock Options under the Plan.
(c) The purchase price of a share of Common Stock subject to a Stock
Option shall be the fair market value of the Common Stock on the date of
grant, as determined under paragraph 6 hereof.
(d) The Stock Option shall be made by a written agreement in the form,
attached hereto as Exhibit "A," with such changes therein as may be
determined by the Committee (as such term is defined in paragraph 12
hereof) (the "Stock Option Agreement").
5. Exercise. Except as otherwise provided in the Plan, the Stock Option
may be exercised in whole or in part by giving written notice thereof to the
Secretary of the Corporation, or his designee, identifying the Stock Option
being exercised, the number of shares of Common Stock with respect thereto, and
other information pertinent to the exercise of the Stock Option. The purchase
price of the shares of Common Stock with respect to which a Stock Option is
exercised shall be paid with the written notice of exercise, either in cash or
in Common Stock, which has been held by the director for at least six (6)
months, at its then current fair market value, or any combination of cash or
Common Stock. Funds received by the Corporation from the exercise of any Stock
Option shall be used for its general corporate purposes. The number of shares of
Common Stock subject to a Stock Option shall be reduced by the number of shares
of Common Stock with respect to which the director has exercised rights under
the related Stock Option Agreement.
If the Corporation or its stockholders execute an agreement to dispose of
all or substantially all of the Corporation's assets or capital stock by means
of sale, merger, consolidation, reorganization, liquidation or otherwise, as a
result of which the Corporation's stockholders as of immediately before such
transaction will not own at least fifty percent (50%) of the total combined
voting power of all classes of voting capital stock of the surviving entity (be
it the Corporation or otherwise) immediately after the consummation of such
transaction, thereupon any and all Stock Options which the director would be
entitled to receive under the Plan shall be immediately granted to the director
until the consummation of such transaction, or if not consummated, until the
agreement therefor expires or is terminated, in which case thereafter all Stock
Options shall be treated as if said agreement never had been executed. If during
any period of two (2) consecutive years, the individuals who at the beginning of
such period constituted the Board of Directors, cease for any reason to
constitute at least a majority of the Board of Directors, unless the election of
each director of the Board of Directors, who was not a director of the Board of
Directors at the beginning of such period, was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of such period, thereupon any and all Stock Options which the director
would be entitled to receive under the Plan shall be immediately granted to the
director. If there is an actual, attempted or threatened change in the ownership
of at least twenty-five percent (25%) of any classes of voting capital stock of
the Corporation through the acquisition of, or an offer to acquire such
percentage of the Corporation's voting capital stock by any person or entity, or
persons or entities acting in concert or as a group, and such acquisition or
offer has not been duly approved by the Board of Directors, thereupon any and
all Stock Options which the Director would be entitled to receive under the Plan
shall be immediately granted.
6. Value. Where used in the Plan, the "fair market value" of Common Stock
shall mean and be determined as follows: (i) in the event that the Common Stock
is listed on an established exchange, the closing price of the Common Stock on
the date when the Stock Option is granted to the Director (the "Relevant Date")
or, if no trade did occur on that day, on the next preceding day on which a
trade occurred; or (ii) in the event that the Common Stock is not listed on an
established exchange, but is then quoted on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"), the average of the
average of the closing bid and asked quotations of the Common Stock for the five
(5) trading days immediately preceding the Relevant Date. In either case, in the
event that no closing bid or asked quotation is available on one (1) or more of
such trading days, the fair
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<PAGE>
market value shall be determined by reference to the five (5) trading days
immediately preceding the Relevant Date on which closing bid and asked
quotations are available.
7. Continued Relationship. Nothing in the Plan or in any Stock Option
shall confer upon any director any right to continue his relationship with the
Corporation as a director, or limit or affect any rights, powers or privileges
that the Corporation or its affiliates may have to supervise, discipline and
terminate such director, and the relationships thereof.
8. General Restrictions. Each Stock Option shall be subject to the
requirement and provision that if at any time the Board of Directors determines
it necessary or desirable as a condition of or in consideration of making such
Stock Option, or the purchase or issuance or Common Stock thereunder, (a) the
listing, registration or qualification of the Common Stock subject to the Stock
Option, or the Stock Option itself, upon any securities exchange or under any
federal or state securities or other laws, (b) the approval of any governmental
authority, or (c) an agreement by the director with respect to disposition of
any Common Stock (including without limitation that at the time of the
director's exercise of the Stock Option, any Common Stock thereby acquired is
being and will be acquired solely for investment purposes and without any
intention to sell or distribute such Common Stock), then such Stock Option shall
not be exercised in whole or in part unless such listing, registration,
qualification, approval or agreement shall have been appropriately effected or
obtained to the satisfaction of the Board of Directors and legal counsel for the
Corporation. Notwithstanding anything to the contrary herein, a director shall
not sell, transfer or otherwise dispose of any shares of Common Stock acquired
pursuant to a Stock Option unless at least six (6) months have elapsed from the
date the Stock Option was granted and such transfer or disposition is made in
accordance with Section 16 of the Securities Exchange Act of 1934, as amended,
as the same may be amended from time to time.
9. Rights. Except as otherwise provided in the Plan, a director shall have
no rights as a holder of the Common Stock subject thereto unless and until one
or more certificates for the shares of such Common Stock are issued and
delivered to the director. No adjustments shall be made for dividends, either
ordinary or extraordinary, or any other distributions with respect to Common
Stock, whether made in cash, securities or other property, or any rights with
respect thereto, for which the record date is prior to the date that
certificates for shares of Common Stock subject to a Stock Option are issued to
the director pursuant to his exercise thereof. No Stock Option, or the grant
thereof, shall limit or affect the right or power of the Corporation or its
affiliates to adjust, reclassify, recapitalize, reorganize or otherwise change
its or their capital or business structure, or to merge, consolidate, dissolve,
liquidate or sell any or all of its or their business, property or assets.
10. Adjustments. In the event that the shares of Common Stock of the
Corporation, as presently constituted, shall be changed into or exchanged for a
different number or kind of shares of Common Stock or other securities of the
Corporation or of other securities of the Corporation or of another corporation
(whether by reason of merger, consolidation, recapitalization, reclassification,
split-up, combination of shares or otherwise) or if the number of such shares of
Common Stock shall be increased through the payment of a stock dividend, stock
split or similar transaction, then, there shall be substituted for or added to
each share of Common Stock of the Corporation which was theretofore
appropriated, or which thereafter may become subject to an option under the
Plan, the number and kind of shares of Common Stock or other securities into
which each outstanding share of the Common Stock of the Corporation shall be so
changed or for which each such share shall be exchanged or to which each such
shares shall be entitled, as the case may be. Each outstanding Stock Option
shall be appropriately amended as to price and other terms, as may be necessary
to reflect the foregoing events.
If there shall be any other change in the number or kind of the outstanding
shares of the Common Stock of the Corporation, or of any Common Stock or other
securities in which such Common Stock shall have been changed, or for which it
shall have been exchanged, and if a majority of the disinterested members of the
Committee shall, in its sole discretion, determine that such change equitably
requires an adjustment in any Stock Option which was theretofore granted or
which may thereafter may be granted under the Plan, then such adjustment shall
be made in accordance with such determination.
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<PAGE>
The grant of a Stock Option pursuant to the Plan shall not affect in any
way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure, to merge, to consolidate, to dissolve, to liquidate or to sell or
transfer all or any part of its business or assets.
Fractional shares resulting from any adjustment in Stock Options pursuant
to this paragraph 10 may be settled as a majority of the disinterested members
of the Board of Directors or of the Committee, as the case may be, shall
determine.
To the extent that the foregoing adjustments relate to Common Stock or
securities of the Corporation, such adjustments shall be made by a majority of
the members of the Board of Directors, whose determination in that respect shall
be final, binding and conclusive. Notice of any adjustment shall be given by the
Corporation to each holder of a Stock Option that is so adjusted.
11. Forfeiture. Notwithstanding anything to the contrary in this Plan, if
an option holder is engaged in fraud, embezzlement, theft, commission of a
felony, or dishonesty in the course of his relationship with the Corporation or
its affiliates, or has disclosed trade secrets of the Corporation or its
affiliates, the option holder shall forfeit all rights under and to all
unexercised Stock Options, and all exercised Stock Options for which the
Corporation has not yet delivered certificates for shares of Common Stock (as
the case may be), and all rights to receive Stock Options shall be automatically
canceled.
12. Administration. The ability to control and manage the operation and
administration of the Plan shall be vested in the Board of Directors or in a
committee of two or more members of the Board of Directors, selected by the
Board of Directors (the "Committee"). The Committee shall have the authority and
discretion to interpret the Plan, to establish, amend and rescind any rules and
regulations relating to the Plan, to determine the terms and provisions of any
agreements made pursuant to the Plan, and to make any and all determinations
that may be necessary or advisable for the administration of the Plan. Any
interpretation of the Plan by the Committee and any decision made by it under
the Plan is final and binding.
13. Miscellaneous. Any reference contained in this Plan to a particular
section or provision of law, rule or regulation shall include any subsequently
enacted or promulgated section or provision of law, rule or regulation, as the
case may be. With respect to persons subject to Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with all applicable
conditions of the Rule and the regulations promulgated thereunder or any
successor rule that may be promulgated by the Securities and Exchange
Commission. To the extent any provision of this Plan fails to so comply, it
shall be deemed null and void, to the extent permitted by applicable law,
subject to the provisions of paragraph 15 below. Where used in this Plan: the
plural shall include the singular, and unless the context otherwise clearly
requires, the singular shall include the plural and the masculine shall include
the feminine. The captions of the numbered paragraphs contained in this Plan are
for convenience only, and shall not limit or affect the meaning, interpretation
or construction of any of the provisions of the Plan.
14. Transferability. Except as otherwise provided by the Committee, Stock
Options granted under the Plan are not transferable except as designated by the
participant by Will and the laws of descent and distribution.
15. Amendment. The Plan may be amended, suspended or terminated, without
notice, by a majority vote of the Board of Directors of the Corporation.
16. Taxes. The issuance of shares of Common Stock under the Plan shall be
subject to any applicable taxes or other laws or regulations of the United
States of America and any state or local authority having jurisdiction there
over.
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<PAGE>
EXHIBIT A
CODORUS VALLEY BANCORP, INC.
1998 INDEPENDENT DIRECTORS' STOCK OPTION PLAN
STOCK OPTION AGREEMENT
A STOCK OPTION (the "Stock Option") for __________ (______) shares of
common stock, par value $2.50 (the "Common Stock"), of Codorus Valley Bancorp,
Inc., a Pennsylvania business corporation is hereby granted to _________________
_________________________ (the "Director"), subject in all respects to the terms
and provisions of Codorus Valley Bancorp, Inc. 1998 Independent Directors' Stock
Option Plan (the "Plan"). The option price as determined under Section 6 of the
Plan is $______ per share.
This Stock Option shall vest and become exercisable six (6) months from the
date of this Agreement. This Option may not be exercised more than ten (10)
years from the date of grant, and may be exercised during such term only in
accordance with the terms of the Plan and this Agreement.
ATTEST: CODORUS VALLEY BANCORP, INC.
By
- ----------------------------------- ----------------------------------
, Secretary , President
Dated:
----------------------------
The Director acknowledges receipt of a copy of the Plan, and represents
that he or she is familiar with the terms and provisions thereof. The Director
hereby accepts this Stock Option subject to all the terms and provisions of the
Plan.
-------------------------------------
Director
Dated:
----------------------------
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<PAGE>
CODORUS VALLEY BANCORP, INC.
PROXY
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 19, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Dallas L. Darr, Mildred L.
Lackey and George E. McCullough and each or any of them, proxies of the
undersigned, with full power of substitution, to vote all of the shares of
Codorus Valley Bancorp, Inc. (the "Corporation") that the undersigned may be
entitled to vote at the Annual Meeting of Shareholders of the Corporation to be
held at The Inn at Heritage Hills, The Links Center, 2700 Mount Rose Avenue,
York, Pennsylvania 17402, on Tuesday, May 19, 1998 at 10:00 a.m., prevailing
time, and at any adjournment or postponement thereof as follows:
1. ELECTION OF CLASS B For Withhold For All Except
DIRECTORS TO SERVE /_/ /_/ /_/
FOR A THREE-YEAR TERM.
M. Carol Druck, Barry A. Keller, Donald H. Warner
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
2. PROPOSAL TO APPROVE AND ADOPT
THE CODORUS VALLEY BANCORP, For Against Abstain
INC. 1998 INDEPENDENT DIRECTORS' /_/ /_/ /_/
STOCK OPTION PLAN.
The Board of Directors recommends a vote FOR this proposal.
- --------------------------------------------------------------------------------
3. PROPOSAL TO RATIFY THE
SELECTION OF ERNST & YOUNG LLP For Against Abstain
AS THE INDEPENDENT AUDITORS /_/ /_/ /_/
FOR THE CORPORATION FOR THE
YEAR ENDING DECEMBER 31, 1998.
The Board of Directors recommends a vote FOR this proposal.
- --------------------------------------------------------------------------------
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting and any adjournment or
postponement thereof.
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL NOMINEES LISTED ABOVE, FOR PROPOSAL 2 AND FOR PROPOSAL 3.
Number of Shares Held of
Record on March 27, 1998
- -----------------------
Please be sure to sign and date Date
this Proxy in the box below.
Plan Participants sign above Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
Codorus Valley Bancorp, Inc.
THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDER AND RETURNED PROMPTLY
TO REGISTRAR & TRANSFER COMPANY IN THE ENCLOSED ENVELOPE. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE.
IF MORE THAN ONE TRUSTEE, ALL SHOULD SIGN. IF STOCK IS HELD JOINTLY, EACH OWNER
SHOULD SIGN.
PLEASE DATE, SIGN AND RETURN YOUR PROXY TO USE PROMPTLY IN THE RETURN
ENVELOPE PROVIDED.
<PAGE>
[LOGO]
April 8, 1998
Dear Dividend Reinvestment and Stock Purchase Plan Participant:
As a participant in the Codorus Valley Bancorp, Inc. Dividend Reinvestment
and Stock Purchase Plan ("Plan"), you are entitled to instruct the Plan
Administrator, Registrar and Transfer Company, to vote the shares that are held
on your behalf in the Plan at the 1998 Annual Meeting of Shareholders of the
Corporation. To instruct the Plan Administrator as to how you would like these
shares voted at the Annual Meeting, please complete the enclosed Voting
Instruction Card/Proxy. At the Annual Meeting, in accordance with the Plan, the
Plan Administrator will vote the shares held in the Plan for which participants
have executed and returned a Voting Instruction Card/Proxy.
Enclosed is a copy of the Corporation's Notice of Annual Meeting and Proxy
Statement in connection with the 1998 Annual Meeting of Shareholders and a copy
of the Corporation's 1997 Annual Report. Also enclosed is a Voting Instruction
Card/Proxy which should be completed and returned to the Plan Administrator in
the enclosed envelope.
If you have any questions, please contact the undersigned.
Sincerely,
/s/ Larry J. Miller
----------------------------------
Larry J. Miller
President
Codorus Valley Bancorp, Inc., 105 Leader Heights Road, P.O. Box 2887, York, PA
17405-2887
- --------------------------------------------------------------------------------
<PAGE>
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
VOTING INSTRUCTION CARD/PROXY
CODORUS VALLEY BANCORP, INC.
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 19, 1998
The undersigned hereby constitutes and appoints Registrar and Transfer
Company, proxy of the undersigned, with full power of substitution, to vote all
of the shares of Codorus Valley Bancorp, Inc. (the "Corporation") that the
Codorus Valley Bancorp, Inc. Dividend Reinvestment and Stock Purchase Plan (the
"Plan"), holds on behalf of the undersigned and may be entitled to vote at the
Annual Meeting of Shareholders of the Corporation to be held at The Inn at
Heritage Hills, The Links Center, 2700 Mount Rose Avenue, York, Pennsylvania
17402, on Tuesday, May 19, 1998 at 10:00 a.m., prevailing time, and at any
adjournment or postponement thereof as follows:
1. ELECTION OF CLASS B For Withhold For All Except
DIRECTORS TO SERVE /_/ /_/ /_/
FOR A THREE-YEAR TERM.
M. Carol Druck, Barry A. Keller, Donald H. Warner
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
2. PROPOSAL TO APPROVE AND ADOPT
THE CODORUS VALLEY BANCORP, For Against Abstain
INC. 1998 INDEPENDENT DIRECTORS' /_/ /_/ /_/
STOCK OPTION PLAN.
The Board of Directors recommends a vote FOR this proposal.
- --------------------------------------------------------------------------------
3. PROPOSAL TO RATIFY THE
SELECTION OF ERNST & YOUNG LLP For Against Abstain
AS THE INDEPENDENT AUDITORS /_/ /_/ /_/
FOR THE CORPORATION FOR THE
YEAR ENDING DECEMBER 31, 1998.
The Board of Directors recommends a vote FOR this proposal.
- --------------------------------------------------------------------------------
4. In his discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting and any adjournment or
postponement thereof.
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL NOMINEES LISTED ABOVE, FOR PROPOSAL 2 AND FOR PROPOSAL 3.
Number of Shares Held of
Record on March 27, 1998
- -----------------------
Please be sure to sign and date Date
this Proxy in the box below.
Plan Participants sign above Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
Codorus Valley Bancorp, Inc.
THE VOTING INSTRUCTIONS REQUEST PERTAINS TO SHARES OF COMMON STOCK HELD IN
YOUR PLAN ACCOUNT BUT NOT REGISTERED IN YOUR NAME. SUCH SHARES OF COMMON STOCK
CAN BE VOTED ONLY BY THE PLAN ADMINISTRATOR AS THE HOLDER OF RECORD OF THE
SHARES.
PLEASE DATE, SIGN AND RETURN YOUR VOTING INSTRUCTION CARD/PROXY TO USE
PROMPTLY IN THE RETURN ENVELOPE PROVIDED.
