Exhibit 10.9


 


Execution Copy 6-17-08


 


EXECUTIVE EMPLOYMENT AGREEMENT


 


THIS
AGREEMENT made this 17th day of June, 2008, by and between THE FIRST
NATIONAL BANK OF MARYSVILLE and its successors ( hereinafter referred to as “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 Executive has accepted the position of  Senior Vice President, Chief Loan Officer; and


 


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


 


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


 


I.  TERM OF EMPLOYMENT


 


I.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 June 17, 2008, and if not
previously terminated pursuant to the terms of this Agreement, shall end on June 17,
2009 (the “Initial Term”).  The
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.


 


I.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.


 

















 


I.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.


 


I.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 First
National Bank of Marysville 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 Fifteen Thousand and 00/100 Dollars
($115,000.00) 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.


 


IV.  PARTICIPATION IN RETIREMENT
AND MEDICAL PLANS, 

LIFE INSURANCE AND DISABILITY


 


IV.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.


 


IV.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.


 

















 


IV.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


 


V.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.


 


V.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.


 


V.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


 


VI.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.


 

















 


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


 


VI.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:


 


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


 


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


 


(iii) 
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;


 


(iv) 
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


 


(v) 
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.


 


(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.


 


VI.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.  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.


 


VI.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.


 


VI.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.


 


VI.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.


 


VI.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.


 


VI.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,


 


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


 


(ii) 
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;


 


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


 


(iv) 
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.


 


VI.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.


 


VI.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


 


VII.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.


 


VII.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.


 


VII.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.


 


VIII. SUCCESSORS, ETC.


 


VIII.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.


 


VIII.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 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:

  	
   

  	
  The
  First National Bank of Marysville

  
	
              /s/
  Larry Somin

  	
   

  	
  By:

  	
       /s/
  Robert M. Garst

  
	
   

  	
   

  	
  Robert
  M. Garst, President

  



 


 


	
  Witness:                

  	
   

  	
  Executive

  
	
   

  	
   

  	
   

  
	
              /s/
  Robert Weidler

  	
   

  	
   

  	
       /s/
  Paul B. Zwally

  
	
   

  	
   

  	
  Paul
  B. Zwally