EXHIBIT 10.4

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made as of the 31st day of December 2008, among Riverview
Financial Corporation (“Corporation”), with principal offices at 3rd and Market
Streets Halifax, PA 17032, Riverview National Bank (“Bank”) with principal
offices at 101 Lincoln Street, Marysville, Pennsylvania, 17053, and PAUL B.
ZWALLY, a Pennsylvania resident residing at 4439 Augusta Drive, Harrisburg,
Pennsylvania 17112 (hereinafter referred to as “EXECUTIVE”).

 

WITNESSETH:

 

WHEREAS, The First National Bank of Marysville (“Marysville”) is the wholly
owned subsidiary of First Perry Bancorp, Inc. (“First Perry”);

 

WHEREAS, Halifax National Bank (“Halifax”) is the wholly owned subsidiary of HNB
Bancorp, Inc. (“HNB”);

 

WHEREAS, the Executive is Senior Vice President, Chief Loan Officer;

 

WHEREAS, Executive entered into an Executive Employment Agreement with
Marysville on or about June 18, 2008;

 

WHEREAS, First Perry and HNB entered into an Agreement and Plan of Consolidation
dated on or about June 18, 2008 (“Consolidation Agreement”) pursuant to which
First Perry and HNB shall consolidate into Corporation and Marysville and
Halifax shall consolidate into the Bank (“Consolidation”);

 

WHEREAS, the parties desire to amend and restate Executive’s employment
agreement as a result of the Consolidation;

 

WHEREAS, this Executive Employment Agreement shall become effective upon the
Effective Date of the Consolidation as defined in the Consolidation Agreement;

 

NOW THEREFORE, in consideration of the mutual covenants set forth below, and
intending to be legally bound, the Bank and the Executive agree as follows:

 

I.  TERM OF EMPLOYMENT

 

1.             The Bank hereby employs the Executive as Senior Vice President,
Chief Loan Officer as set forth below, and Executive hereby accepts this
employment and agrees to render such services to the Bank on the terms and
conditions as set forth in this Agreement.  This Agreement shall be for a one
(1) year period (the “Employment Period”) beginning on the Effective Date of the
Consolidation (the “Initial Term”).  The

 

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Employment Period shall be extended automatically for one (1) additional year on
the first anniversary date of this agreement (“Renewal Date”), and then on each
anniversary of the Renewal Date of this Agreement thereafter, unless Bank or
Executive gives contrary written notice to the other sixty (60) days before the
anniversary of the Renewal Date.  If notice had not been previously given as
provided in this Section I.1, the Employment Period shall continue for a one
(1) year period thereafter.  References in the Agreement to “Employment Period”
shall refer to the Initial Term of this Agreement and any extensions to the
Initial Term.  It is the intention of the parties that this Agreement be
“Evergreen” unless (i) either party gives written notice to the other party of
his or its intention not to renew this Agreement as provided above or (ii) this
Agreement is terminated pursuant to Section VI of this Agreement.

 

2.             During the term of this Agreement the Executive shall perform
such executive services for the Bank as are consistent with his title and as are
assigned to him by the Bank’s Chief Executive Officer or the President of the
Bank.

 

3.             During the term of this Agreement, the Executive shall devote his
best efforts, including such portion of his time and effort to the affairs and
business of the Bank.

 

4.             The services of Executive shall be rendered principally in
Pennsylvania, but he shall do such traveling on behalf of the Bank as may be
reasonably required.

 

II.  COMPETITIVE ACTIVITIES

 

Executive agrees that during the term of his employment except with the express
consent of the Chief Executive Officer or the President, he will not, directly
or indirectly, engage or participate in, become a director of, or render
advisory or other services for, or make any financial investment in any firm,
corporation, business entity or business enterprise competitive with the Bank or
its parent or any of their successors; provided, however, that Executive shall
not thereby be precluded or prohibited from owning passive investments,
including investments in the securities of other financial institutions, so long
as such ownership does not require him to devote substantial time to management
or control of the business or activities in which he has invested.

 

III.  COMPENSATION

 

The Bank will compensate Executive for Executive’s services during the term of
the Agreement at an Annual Base Salary of One Hundred Eighteen Thousand Four
Hundred and Fifty Dollars ($118,450.00) per year, payable at the same times as
salaries are payable to other executive employees.  Bank may from time to time
increase Executive’s Annual Base Salary, and any and all such increases shall be
deemed to constitute amendments to this Section to reflect the increased
amounts.

 

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IV.  PARTICIPATION IN RETIREMENT AND MEDICAL PLANS,
LIFE INSURANCE AND DISABILITY

 

1.             Executive shall be entitled to participate in any employee
benefit plan of the Bank relating to pension, profit-sharing or other retirement
benefits and health or medical coverage or reimbursement plans that the Bank may
adopt for the benefit of its employees.

 

2.             In the event the Executive suffers from a Disability as defined
in Section IV.3, he shall nevertheless continue to receive an amount equal to
and no greater than 100% of his annual base salary, less amounts payable under
any disability plan of the Bank, for the first three months of his disability.
 Thereafter, he shall only be entitled to any amount provided for in the Bank’s
long-term disability policy in effect at the time of the payments determined
therein.

 

3.             For purposes of this Agreement, “Disability” means 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 twelve (12) months. The Executive will be deemed disabled if the Social
Security Administration has determined that he is disabled or if a carrier of
any group disability insurance policy provided by the Bank or made available by
the Bank to its employees and covering the Executive determines that he is
disabled provided that the policy’s definition of disability complies with the
definition of disability under Internal Revenue Code (“Code”) Section 409A.

 

V.  ADDITIONAL COMPENSATION AND BENEFITS

 

1.             During the term of the Agreement, Executive will be entitled to
participate in and receive the benefits of any stock option, profit sharing, or
other plan, benefit or privilege given to employees and executives of the Bank
or its subsidiaries and affiliates which may come into existence hereafter, to
the extent commensurate with his duties and responsibilities, as fixed by the
Bank’s Board of Directors or any committee of such Board or of the Bank selected
for such purpose.  To the extent Executive is otherwise eligible and qualifies,
he shall participate in and receive such benefits or privileges. The Bank shall
not make any changes in such plans, benefits or privileges which would adversely
affect Executive’s rights or benefits, unless such change occurs pursuant to a
program applicable to all executive officers of the Bank and does not result in
a proportionately greater adverse change in the rights or benefits to Executive
as compared with any other executive officer of the Bank.  Nothing paid to
Executive under any plan or arrangement presently in effect or made available in
the future shall be deemed to be in lieu of the salary payable to Executive
pursuant to Section  III.

 

2.             For services performed by Executive under this Agreement, Bank
has established a bonus program for Executive which is attached hereto as
Exhibit A.  The payment of any such bonuses shall not reduce or otherwise affect
any other obligation of Bank to Executive provided for in this Agreement.

 

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3.             During the term of this Agreement, Executive shall be entitled to
receive prompt reimbursement for his monthly membership dues to a country club
of his choice in the approximate annual amount of $5,000.

 

VI. TERMINATION

 

1.             In the event Executive’s employment is terminated, Executive’s
right to compensation and other benefits under this agreement shall be as set
forth hereinafter in this Section VI. In the event the Executive is terminated
in a manner which violates the provisions of this Agreement, as determined by a
court of competent jurisdiction, Bank shall reimburse Executive for all
reasonable costs, including attorney’s fees in challenging such termination. 
Such reimbursement shall be in addition to all rights to which the Executive is
otherwise entitled under this Agreement.

 

2.             Executive may terminate his employment upon thirty (30) days
prior written notice to the Board of Directors.

 

3.             (a)  If a change in control (hereinafter referred to as “CIC”) of
the Bank shall occur, as defined in VI.3 (b), and without Executive’s express
written consent, thereafter, there shall be:

 

(1)  an involuntary termination of Executive without Cause as defined in
Section VI.8;

 

(2)  an assignment to Executive of duties inconsistent with Executive’s
position, duties, responsibilities and status with the Bank immediately prior to
a CIC;

 

(3)  a change in Executive’s reporting responsibilities, titles or offices in
effect immediately prior to a CIC of the Bank, including any removal of the
Executive from, or any failure to reelect Executive to any of such positions,
except in connection with a termination for disability or retirement;

 

(4)  a reduction by the Bank in Executive’s annual salary in effect immediately
prior to a CIC or as the same may be increased from time to time; or

 

(5)  the failure of the Bank to continue in effect any bonus, benefit or
compensation plan, life insurance plan, health and accident plan or disability
plan in which the Executive is participating at the time of a CIC of the Bank,
or the taking of any action by Bank which would adversely affect Executive’s
participation in or materially reduce Executive’s benefits under any of such
plans;

 

then at the option of the Executive, exercisable by Executive within twelve (12)
months of the Change in Control or occurrence of the foregoing events, Executive
may resign from employment with Bank ( or in the case of an involuntary
termination), give notice (“Notice of Termination”) to collect benefits under
this Agreement by delivering written notice to Bank and the provisions of
Section VI.4 of this Agreement shall apply.

 

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(b)  For purposes of this Agreement, the definition of a CIC of the Bank shall
mean

 

(1)(a)  a merger, consolidation or division involving Bank or its parent
company, (b) a sale, exchange, transfer or other disposition of substantially
all of the assets of Bank, or (c) a purchase by Bank of substantially all of the
assets of another entity, unless such merger, consolidation, division, sale,
exchange, transfer, purchase or disposition a majority of the members of the
Board of Directors of the legal entity resulting from or existing after any such
transaction and of the Board of Directors of such entity’s parent corporation,
if any, are former members of the Board of Directors of Bank; or

 

(2)  any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the “Exchange Act”)), other than Bank or any
“person” who on the date hereof is a director or officer of Bank is or becomes
the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of Bank or its parent company representing
thirty five (35%) percent or more of the combined voting power of Bank’s or its
parent company’s then outstanding securities; or

 

(3)  during any period of one (1) year during the term of Executive’s employment
under this Agreement, individuals who at the beginning of such period constitute
the Board of Directors of Bank cease for any reason to constitute at least a
majority thereof, unless the election of each director who was not a director at
the beginning of such period has been approved in advance by directors
representing at least two-thirds of the directors then in office who were
directors at the beginning of the period.

 

Notwithstanding b(1), (2), or (3) or any  other provision above, the
consolidation of First Perry Bancorp, Inc. and HNB Bancorp, Inc, pursuant to the
Agreement and Plan of Consolidation dated on or about June 18, 2008 between
First Perry Bancorp, Inc. and HNB Bancorp, Inc. shall not constitute a change in
control under this Section or this Agreement.

 

4.  In the event that Executive delivers a Notice of Termination (as defined in
Section VI.3  of this Agreement) to Bank, Executive shall be entitled to receive
the compensation and benefits set forth below:

 

If a “Change in Control” (as defined in Section VI.3.(b) of this Agreement) has
also occurred, Bank shall pay Executive a lump sum amount equal to 1.0 times
Executive’s Annual Compensation minus applicable taxes and withholdings. For
purposes of this paragraph, Annual Compensation shall be defined as Executive’s
Annual Base Salary plus the highest bonus received within the previous two years
plus the amount which Bank pays for employee benefits for Executive for a one
year period.   In addition, Bank shall reimburse Executive for his and his
family’s COBRA premiums until the earlier of (a) Executive is no longer eligible
for COBRA benefits or (b) one year.

 

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However, in the event the payment described herein, when added to all other
amounts or benefits provided to or on behalf of the Executive in connection with
his termination of employment, would result in the imposition of an excise tax
under Section 4999 of the Code, Bank will pay to Executive an additional cash
payment (“Gross-up Payment”) in an amount such that the after-tax proceeds of
such Gross-up Payment (including any income tax or Excise Tax on such Gross-up
Payment) will be equal to the amount of the Excise Tax.

 

5.             If Executive’s employment with Bank is terminated by Bank for any
reason other than Cause as defined in Section VI.8, then Executive shall be
entitled to an amount equal to a lump sum amount equal to 1.0 times Executive’s
Annual Compensation minus applicable taxes and withholdings. For purposes of
this paragraph, Annual Compensation shall be defined as Executive’s Annual Base
Salary plus the highest bonus received within the previous two years plus the
amount which Bank pays for employee benefits for Executive for a one year
period.   In addition, Bank shall reimburse Executive for his and his family’s
COBRA premiums until the earlier of (a) Executive is no longer eligible for
COBRA benefits or (b) one year.  However, in the event the payment described
herein, when added to all other amounts or benefits provided to or on behalf of
the Executive in connection with his termination of employment, would result in
the imposition of an excise tax under Section 4999 of the Code, Bank will pay to
Executive an additional cash payment (“Gross-up Payment”) in an amount such that
the after-tax proceeds of such Gross-up Payment (including any income tax or
Excise Tax on such Gross-up Payment) will be equal to the amount of the Excise
Tax.

 

6.             If Executive’s employment with Bank is terminated pursuant to the
nonrenewal provisions of Section I.1 of this Agreement, then Executive shall be
entitled to an amount equal to a lump sum amount equal to six (6) months of
Executive’s Annual Compensation as defined in Section VI.5 minus applicable
taxes and withholdings.

 

7.             Any termination of Executive’s employment by the Bank or by the
Executive shall be communicated by written notice of termination to the other
party by means of United States certified mail return receipt requested pursuant
to Section VII.3 of this Agreement. For purposes of this Agreement, a “notice of
termination” shall mean a dated notice which shall (i) indicate the specific
termination provision in the Agreement relied upon; (ii) set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
Executive’s employment under the provision so indicated; and (iii) specify a
date of termination, which shall not be less than thirty nor more than ninety
days after such notice of termination.

 

8.             Executive shall not be required to mitigate the amount of any
payment period provided for in Sections VI.4 or VI.5 if he is seeking other
employment.

 

9.             Termination for Cause. The Board of Directors of the Bank may
terminate Executive’s employment at any time for cause. For purposes of this
agreement “cause” includes,

 

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(a)  the Executive’s failure to perform or to comply with any term or provision
of this Agreement;

(b)  the Executive’s failure to perform or to comply fully with any lawful
directive of the Bank’s Board of Directors or of any duly constituted committee
thereof;

(c) Executive’s violation of Bank’s EBO policy;  or

(d)  Executive’s removal from office or permanently prohibited from
participating in the conduct of the Bank’s affairs by a final order issued by an
appropriate federal banking agency pursuant to Section 8(e) or 8(g) of the
Federal Deposit Insurance Act or by the Comptroller of the Currency pursuant to
national law.

 

10.           In the event that Executive is terminated for “Cause” as defined
in Section VI.8,  all obligations of Bank under this Agreement shall terminate.

 

11.           Notwithstanding any other provision, in the event that Executive
is determined to be a specified employee (“key employee”) as that term is
defined in Section 409A of the Code, no payment that is determined to be
deferred compensation subject to Section 409A of the Code shall be made until
one day following six months from the date of separation of service as that term
is defined in Section 409A of the Code.

 

VII MISCELLANEOUS

 

1.             Notwithstanding any other provision contained in this agreement,
the payment or obligation to pay monies or granting of any rights or privileges
to Executive as provided in this Agreement shall not be in lieu or derogation of
the rights and privileges that Executive now has under any plan or benefit
presently outstanding.

 

2.             This Agreement may not be modified, changed, amended, extended,
or altered except in writing signed by the Executive or by his duly authorized
representative, and by a duly authorized officer of the Bank.

 

3.             All notices given or required to be given shall be in writing,
sent by United States certified mail return receipt requested, postage prepaid,
to Executive (or to Executive’s spouse or estate upon Executive’s death) at
Executive’s last known address, and to the Bank at its principal office. All
such notices shall be effective when deposited in the mail in the manner
specified in this Section VII.3. Either party by written notice may change or
designate the place for receipt of all such notices.

 

4.             This Agreement amends and supersedes all previous employment
agreements between First Perry and Marysville and Executive.

 

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VIII. SUCCESSORS, ETC.

 

1.             This Agreement shall inure to the benefit of and be binding upon
Executive, and, to the extent applicable, his heirs, assigns, executors, and
personal representatives and the Bank, its successors, and assigns, including,
without limitation, any person, partnership, or corporation which may acquire
all or substantially all of the Bank’s assets and business, or with or into
which the Bank or its parent may be consolidated or merged. This provision shall
apply in the event of any subsequent merger, consolidation, or transfer.

 

2.             This Agreement is personal to each of the parties and neither
party may assign or delegate any of its rights or obligations under this
Agreement without the prior written consent of the other party, except this
provision will not apply to the Bank or its parent in the event of a change in
control.

 

IX APPLICABLE LAW.

 

This Agreement shall be governed in all respects and be interpreted by and under
the laws of the Commonwealth of Pennsylvania, except to the extent that such law
may be preempted by applicable federal law, in which event this Agreement shall
be governed and interpreted by and under federal law. This Agreement shall also
be interpreted as is minimally required to qualify any payment hereunder as not
triggering any penalty on the Executive or the Bank pursuant to Code
Section 409A and the regulations promulgated thereunder.

 

X. SEVERABILITY

 

If any provision in this Agreement is held by a court of competent jurisdiction
to be invalid, void, or unenforceable, the remaining provisions nevertheless
shall continue in full force and effect.

 

XI ARBITRATION

 

Each party agrees that all disputes, disagreements and questions of
interpretation concerning this Agreement (except the question of Executive’s
disability which is governed in Section IV), are to be submitted for resolution,
in Marysville, Pennsylvania, to the American Arbitration Association (the
“Association”) in accordance with the Association’s National Rules for the
Resolution of Employment Disputes or other applicable rules then in effect
(“Rules”).  Bank or Executive may initiate an arbitration proceeding at any time
by giving notice to the other in accordance with the Rules.  Bank and Executive
may, as a matter of right, mutually agree on the appointment of a particular
arbitrator from the Association’s pool.  The arbitrator shall not be bound by
the rules of evidence and procedure of the courts of the Commonwealth of
Pennsylvania but

 

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shall be bound by the substantive law applicable to this Agreement.  The
decision of the arbitrator, absent fraud, duress, incompetence or gross and
obvious error of fact, shall be final and binding upon the parties and shall be
enforceable in courts of proper jurisdiction.  Following written notice of a
request for arbitration, Bank and Executive shall be entitled to an injunction
restraining all further proceedings in any pending or subsequently filed
litigation concerning this Agreement.

 

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and year first above written.

 

Attest:

 

Riverview Bancorp, Inc.

 

 

 

/s/ David A. Troutman

 

By:

/s/ David W. Hoover

 

 

 

Witness:

 

Riverview National Bank

 

 

 

/s/ David A. Troutman

 

By:

/s/ Robert M. Garst

 

 

 

Witness:

 

Executive

 

 

 

/s/ Robert M. Garst

 

/s/ Paul B. Zwally

Witness:

 

Paul B. Zwally

 

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