Exhibit 10.5


 


EXECUTIVE EMPLOYMENT AGREEMENT


 


AGREEMENT made
this 1st day of December,
2006, by and between HALIFAX NATIONAL BANK,
a Pennsylvania Corporation, having its principal place of business at P.O. Box
A, Halifax, Pennsylvania (“Halifax National Bank”); and KIRK D. FOX,
of 1575 Shippen Dam Road, Millersburg, Pennsylvania (“ Employee”).


 


WHEREAS,
Employee is an Executive Vice President of Halifax National Bank and has
developed an intimate and thorough knowledge of Halifax National Bank’s
business methods and operations; and


 


WHEREAS, the
retention of Employee’s services for and on behalf of Halifax National Bank is
of material importance to the preservation and enhancement of the value of the
Halifax National Bank business;


 


NOW THEREFORE,
in consideration of the mutual covenants set forth below, Halifax National Bank
and the Employee agree as follows:


 


I. 
TERM OF EMPLOYMENT


 


1.1                                Halifax
National Bank hereby employs the Employee as Executive Vice President as set
forth below, and Employee hereby accepts this employment and agrees to render
such services to Halifax National Bank on the terms and conditions set forth in
this Agreement.  The initial term of
employment under this Agreement shall commence on December 1, 2006 and
shall terminate on December 31, 2011, unless further extended or sooner
terminated in accordance with the terms and conditions of this Agreement.  After the initial five-year term, this
Agreement shall be renewed automatically for the same term unless either the
Board of Directors of Halifax National Bank or Employee gives contrary written notice
to the other not less than 45 gays in advance of the date on which this
Agreement would otherwise terminate.  References
to the term of this Agreement shall refer both to the initial term and
successive terms.


 


1.2                                During
the term of this Agreement, the Employee shall perform such executive services
for Halifax National Bank as are consistent with Employee’s title and as are
assigned to Employee by the Halifax National Bank Board of Directors (“Board of
Directors”).


 

















 


II. 
COMPENSATION


 


2.1                                Halifax National Bank
will compensate Employee for Employee’s services during the term of the
Agreement at a minimum base salary of $90,000.00 per year for the year lending
2006 with annual salary increases, and bonuses, if any, in an amount determined
by the Board of Directors each year, less withholding required by law or agreed
to by Employee, payable in installments at such times as Halifax National Bank
customarily pays its other executive officers.


 


2.2                                Employee Benefit Plans
or Arrangements.  During the term of employment,
Employee shall be entitled to participate in all employee benefit plans of
Halifax National Bank as presently in effect or as they may be modified by
Halifax National Bank from time to time.


 


2.3                                Expenses.  During the Term of Employment, Employee shall
be reimbursed for reasonable travel and other expenses (including telecommunications
equipment) incurred or paid by Executive in connection with the performance of
his services under this Agreement, upon presentation of expense statements or
vouchers or such other supporting information as may from time to time be
required.


 


III. 
TERMINATION


 


3.1                                Halifax National Bank
shall have the right, at any time upon prior written notice               of termination satisfying the
requirements of this Agreement to terminate Employee’s employment for just
cause.  For the purpose of this Agreement,
“termination for just cause” shall mean termination for personal dishonesty,
willful misconduct, breach of fiduciary duty involving personal profit.  For purposes of this paragraph, no act, or failure
to act, on the Employee’s part shall be considered “willful” unless done or
omitted to be done by Employee in bad faith and without reasonable belief that
his action or omission was in the best interest of Halifax National Bank.  Any act or omission to act by the Employee in reliance
upon an opinion of counsel to Halifax National Bank or counsel to the Employee
shall not be deemed to be willful.


 


3.2                                In the event that the Term
of Employment shall be terminated for just cause, the employee shall be only
entitled to the following:


 


I.                                        Any
salary payable pursuant to Section 2.1 hereof which shall be accrued as of
the Termination Date; and


 

















 


II.                                    Such
rights as Employee shall have accrued as of the Termination Date under the
terms of any plans, programs or arrangements in which he participates pursuant
to this Agreement hereof, any right to reimbursement for expenses accrued as of
the Termination Date and the right to receive the cash equivalent of paid
annual vacation, personal and sick leave accrued as of the Termination Date.


 


3.3                                In the event that the
Term of Employment shall be terminated for any other reason than just cause as
set forth in Section 3.1 hereof at any time during the term of this
Agreement, Employee shall be entitled to receive:


 


I.                                        Severance
pay in an amount equal to three (3) times Employee’s annual compensation
which for purposes of this section means Employee’s annual compensation
including gross income for federal income tax purpose for the current year
immediately proceeding the year in which the termination date occurs, including
base salary, non-deferred amounts under annual incentive, long- term
performance, and profit sharing plans, distributions of previously deferred
amounts under such plans.  The employee,
at Employee’s election, ) will be paid the severance pay in either (ii) 36
equal monthly installments, or (ii) a lump sum equal to the present value
of the amounts payable under this subsection; commencing within 30 days after
his termination of employment. For purposes of the preceding sentence, present
value will be determined by using the short-term applicable federal rate under Section 1274
of the Internal Revenue Code of 1986, as amended (the “Code”), in effect on the
Termination Date.


 


II.                                    For
three-years after the Termination Date, continued participation in all non­cash
employee benefit plans, programs or arrangements (including, without
limitation, pension and retirement plans and arrangements, stock option plans,
life insurance and health and accident plans and arrangements, medical
insurance plans, disability plans, and vacation plans) in which Employee was entitled
to participate immediately prior to the Termination Date.


 


III.                                Notwithstanding
any other provision hereof to the contrary, in the event any payments or
benefits Employee may become entitled to pursuant to this Agreement will be
subject to the tax (the “Excise Tax”) imposed by section 4999 of the Internal
Revenue Code of 1986, as amended (the “Code”), Halifax National Bank shall pay
to Employee an additional amount (the “Gross-Up Payments”) so that the net
amount retained by Executive, after deduction of the Excise Tax (but before
deduction for any federal, state or local income tax) on the Severance Payments
and after deduction for the aggregate of any federal, state, or local income
tax and Excise Tax


 

















 


upon the
Gross-Up Payment, shall be equal to the Severance Payments.  For purposes of determination whether any of
the Severance Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (A) the entire amount of the Severance Payments shall be
treated as “parachute payments” within the meaning of section 280G(b)(2) of
the Code and as subject to the Excise Tax unless and to the extent, in the
written opinion of outside tax counsel and reasonably acceptable to Executive,
such payments (in whole or in part) are not subject to the Excise Tax; and (B) the
value of any non-cash benefits or any deferred payment or benefit (constituting
a part of the severance Payments) shall be determined by Halifax National Bank’s
independent auditors in accordance with the principles of the Internal Revenue Code.
For purposes of determining the amount of the Gross-Up Payment, Employee shall
be deemed to pay federal income taxes at the highest marginal rate of federal
income taxation applicable to individuals (without taking into account surtaxes
or loss or reduction of deductions) for the calendar year in which the Gross- Up
Payment is to be made and state and local income taxes at the highest marginal
rates of taxation in the state and locality of Employee’s residence on the Termination
Date.  In the event that the amount of
Excise Tax Employee is required to pay is subsequently determined to be less
than the amount taken into account hereunder, Employee shall repay to the
Halifax National Bank promptly after the time that the amount of such reduction
in Excise Tax is finally determined the amount of the reduction, together with
interest on the amount of such reduction at the rate of six percent per annum
from the date of the Gross-Up Payment, plus, if in the written opinion of
outside tax counsel selected by Halifax National Bank and reasonably acceptable
to Employee, such payment (or a portion thereof) was not taxable income to Employee
when reported or is deductible by Employee for federal income tax purposes, the
net federal income tax benefit Employee actually realized as a result of making
such payment pursuant to this sentence.  In
the event that the amount of Excise Tax Executive is required to pay is
subsequently determined to exceed the amount taken into account hereunder, the
Halifax National Bank shall make an additional Gross-Up Payment in the manner set
forth above in respect of such excess (plus any interest, additions to tax, or
penalties payable to Employee with respect to such excess) promptly after the
time that the amount can be reasonably determined.


 


i.                                         The
payments provided for in the above-section, shall be made not later than the
fifth (5th) business day following the Termination Date; provided,


 

















 


however, that if the amounts of such payments cannot be finally determined
on or before such day, the Bank shall pay to Employee on such day an estimate,
as determined in good faith by the Bank, of the minimum amount of such
payments, and shall pay the remainder of such payments (together with interest
at the rate of six percent per annum) as soon as the amount thereof can be determined.


 


IV.  CHANGE OF CONTROL


 


4.1                                 I.                                       For
purposes of this Agreement, a “change in control of Halifax National Bank”
shall mean a change in control of nature that would be required to be reported
promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”).  Such a change in control shall be deemed to
have occurred if (a) any “person” as such term is used in Sections 13(d) and
14(d) of the Exchange Act in effect on the date first written above, other
than Halifax National Bank or any “person” who on this date is a direct or
officer of the Halifax National Bank is or becomes the “beneficial owner” as defined
in Rule 13d-3 under the Exchange Act, directly or indirectly, of
securities of Halifax National Bank representing 35% or more of the combined
voting power of the Halifax National Bank then outstanding securities, or (b) during
any period of two consecutive years during the term of this Agreement, individuals
who at the beginning of such period constitute the Board of Directors of
Halifax National Bank cease for any reason to constitute at least a majority,
unless the election of each director who was not a director at the beginning of
the 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.


 


II.                                    The
occurrence of, or execution of an Agreement providing for, a sale of all or
substantially all of the assets of the Halifax National Bank.


 


III.                                The
occurrence of, or execution of an agreement providing for a reorganization, merger,
consolidation or similar transaction involving Halifax National Bank, unless (A) the
shareholders of the Bank, as the case may be, immediately prior to the consummation
of any such transaction will initially own securities representing a majority
of the voting power of the surviving or resulting corporation, and (B) the
directors of Halifax National Bank, as the case may be, immediately prior to
the consummation


 

















 


of any such transaction will initially represent a majority of the directors
of the surviving or resulting corporation.


 


IV.                                Upon
the occurrence of change of control as defined herein, any supplemental executive
retirement plan which the Employee is a participant shall be fully funded by
the Bank and the Employee shall become fully vested.


 


4.2                                Notice
of Termination.  Upon the occurrence of a
Bank Change in Control, the Employee may, within one (l) year after the
occurrence of any such event resign from employment by a notice in writing (“Notice
of Termination”) delivered to Bank, whereupon Employee will become entitled to
the payments described in Section 4.3.


 


4.3                                Rights
of the Employee in the Event of Certain Terminations Following Bank Change in
Control.  In the event the Employee
validly and timely delivers a Notice of Termination to Bank, the Employee will
be entitled to receive the following payments and benefits:


 


I.              Basic
Payments.  The Employee will be paid an
amount equal to three (3) times the Base Amount. “Base Amount”, for
purposes of this agreement shall mean an amount equal to the average annual compensation
payable by Halifax National Bank to the Employee and includable by the Employee
in gross income for the most recent five (5) taxable years or such shorter
period as the Employee shall have been employed by the Halifax National Bank, ending
before the date on which the Bank Change of Control occurred.  The Employee, at Employee’s election, will be
paid the Basic Payments in either (i) 36 equal monthly installments, or (ii) a
lump sum equal to the present value of the amounts payable under this
subsection; commencing within 30 days after his termination of employment.  For purposes of the preceding sentence,
present value will be determined by using the short-term applicable federal rate
under Section 1274 of the Internal Revenue Code of 1986, as amended (the “Code”),
in effect on the Termination Date., For purposes of this subsection, to the
extent necessary, base salary and bonuses with any predecessor of the Bank or
an affiliate thereof shall be taken in account.


 


II.                                    For
three-years after the Termination Date, continued participation in all non­cash
employee benefit plans, programs or arrangements (including, without
limitation, pension and retirement plans and arrangements, stock option plans,
life insurance and health and accident plans and arrangements, medical
insurance plans, disability plans, and vacation plans) in which Employee was entitled
to participate immediately prior to the Termination Date.


 

















 


III.                                Stock
Options.  Upon a Bank Change in Control,
all stock options therefore granted to the Employee by Bank and not previously exercisable
shall become fully exercisable to the same extent and in the same manner as if they
had become exercisable by passage of time or by virtue of Employee or the Bank
achieving certain performance objectives in accordance with the relevant
provisions of any, plan or any agreement.


 


4.4                                Voluntary
Termination, Retirement or Death.  Notwithstanding
any other provisions of this Agreement to the contrary, except as expressly provided
herein, the respective rights and obligations of the parties thereunder will terminate
automatically upon the voluntary termination of the Employee’s employment,
Employee’s retirement or Employee’s death.


 


4.5.                             Disability.
 Notwithstanding any other provisions of
this Agreement to the contrary, section 4 of this Agreement and the respective
rights and obligations of the parties thereunder will terminate automatically
upon the termination of the Employee’s employment by reason of disability.  The term “disability” as used in this
agreement mean incapacitation, by accident, sickness or otherwise, such that
the Employee is rendered unable to perform the services required of Employee by
Employee’s then position with Halifax National Bank for a period for six (6) consecutive
months.


 


5.                                      Confidential
Business Information; Non-Competition.


 


I.                                        Executive
hereby acknowledges and recognizes the highly competitive nature of the
business of Halifax National Bank and accordingly agrees that during the term
of employment with the Halifax National Bank and for two (2) years
following termination of the Term of Employment for any reason set forth herein
then, in consideration of the benefits to which Employee would then be entitled,
Employee shall not, except as otherwise permitted in writing by Halifax
National Bank:


 


(i) be engaged, directly or indirectly,
either for his own account or as agent, consultant, employee, partner, officer,
director, proprietor, investor (except as an investor owning less than 5% of
the stock of a publicly owned company) or otherwise of any person, firm,
corporation or enterprise engaged in (1) the banking (including financial
or bank holding company) or financial services industry, or in the County of
Dauphin, Commonwealth of Pennsylvania.


 

















 


V. SUCCESSORS, ETC.


 


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


 


6.2                               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.


 


VI.  APPLICABLE LAW


 


7.                                     This
Agreement shall be governed in all respect and be interpreted by and under the
laws of the Commonwealth of Pennsylvania.


 


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


 


	
   

  	
   

  	
  HALIFAX NATIONAL BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
        /s/ David A. Troutman

  
	
   

  	
   

  	
                            Board
  Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
        /s/ Paul R. Reigle

  
	
   

  	
   

  	
   

  	
  Board Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
        /s/ David W. Hoover

  
	
   

  	
   

  	
   

  	
  Board Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
        /s/ Joseph D. Kerwin

  
	
   

  	
   

  	
   

  	
  Board Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
        /s/ James M. Lebo

  
	
   

  	
   

  	
   

  	
  Board Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WITNESS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
               /s/
  David A. Troutman

  	
   

  	
   

  	
        /s/ Kirk D. Fox

  
	
   

  	
   

  	
   

  	
  KIRK D. FOX, Executive Vice President

  



 














 


AMENDMENT TO EMPLOYMENT AGREEMENT


 


This Amendment
to the Employment Agreement between Kirk D. Fox (“Fox”) and Halifax National
Bank (“Bank”) dated December 1, 2006 is made this 18th day of June,
2008.


 


WHEREAS, Bank
and Fox entered into an employment agreement dated December 1, 2006 (“Employment
Agreement”);


 


WHEREAS, First
Perry Bancorp, Inc. (“First Perry”) and HNB Bancorp, Inc. (“HNB”)
intend to enter into an Agreement and Plan of Consolidation on or about June 18,
2008 (“Consolidation Agreement”) pursuant to which First Perry and HNB shall
consolidate into a new holding company (the “Consolidation”);


 


WHEREAS, the
parties wish to amend the Employment Agreement to provide that the Consolidation
Agreement will not and does not constitute a change of control under the
Employment Agreement;


 


NOW, THEREFORE, in
consideration of the covenants hereinafter set forth, and intending to be
legally bound hereby, the Parties agree, effective the date hereof, as follows:


 


1.  The consolidation of the Bank through the Agreement
and Plan of Consolidation between First Perry Bancorp, Inc. and HNB
Bancorp, Inc. does not constitute a change of control under the Employment
Agreement.


 


IN WITNESS WHEREOF,
the Parties, intending to be legally bound hereby, have caused this Amendment
to be duly executed in their respective names or by their authorized
representative, on the day and year first above written.


 


 


	
  ATTEST:

  	
   

  	
  HNB BANCORP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
       /s/ David A. Troutman

  	
   

  	
  By:

  	
        /s/ Paul R. Reigle

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HALIFAX NATIONAL BANK

  
	
   

  	
   

  	
   

  
	
       /s/ David A. Troutman

  	
   

  	
  By:

  	
        /s/ Paul R. Reigle

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
        /s/ Kirk D. Fox

  
	
   

  	
   

  	
  Kirk D. Fox