Exhibit 10.4


 


EXECUTIVE EMPLOYMENT AGREEMENT


 


AGREEMENT made
this 9th day of January, 2007,
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 THOMAS N.
WASSON, of P.O. Box W, Halifax, Pennsylvania (“ Employee”).


 


WHEREAS,
Employee is an 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 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 January 1, 2007 and shall terminate on December 31,
2010, unless further extended or sooner terminated in accordance with the terms
and conditions of this Agreement. After the initial three-year term, this
Agreement shall be renewed automatically for a one-year term unless either the
Board of Directors of Halifax National Bank or Employee gives contrary written
notice to the other not less than 45 days 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 salary determined by the Board of Directors each year, at
a salary/bonus set by the Board of Directors of Halifax National Bank 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 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 two (2) 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) 24 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
two-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 (1) 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 two (2) 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) 24 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
two-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/ Paul R. Reigle

  
	
   

  	
   

  	
                      Board
  Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
               /s/
  David A. Troutman

  
	
   

  	
   

  	
  Board Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
               /s/
  James M. Lebo

  
	
   

  	
   

  	
  Board Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
               /s/
  Joseph D. Kerwin

  
	
   

  	
   

  	
  Board Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
               /s/
  David W. Hoover

  
	
   

  	
   

  	
  Board Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WITNESS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
            /s/ David
  A. Troutman

  	
   

  	
               /s/
  Thomas N. Wasson

  
	
   

  	
   

  	
         THOMAS N. WASSON, President