**EXHIBIT 10.4**

 

**EXECUTIVE EMPLOYMENT AGREEMENT**

 

THISAGREEMENT is made as of the 31st day of December 2008,among Riverview Financial Corporation (“Corporation”), with principal officesat 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 residentresiding at 4439 Augusta Drive, Harrisburg, Pennsylvania 17112 (hereinafterreferred to as “EXECUTIVE”).

 

WITNESSETH:

 

WHEREAS,The First National Bank of Marysville (“Marysville”) is the wholly ownedsubsidiary 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 orabout June 18, 2008;

 

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

 

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

 

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

 

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

 

I.  TERM OF EMPLOYMENT

 

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

 

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EmploymentPeriod shall be extended automatically for one (1) additional year on thefirst anniversary date of this agreement (“Renewal Date”), and then on each anniversaryof the Renewal Date of this Agreement thereafter, unless Bank or Executivegives contrary written notice to the other sixty (60) days before theanniversary of the Renewal Date.  Ifnotice had not been previously given as provided in this Section I.1, theEmployment Period shall continue for a one (1) year periodthereafter.  References in the Agreementto “Employment Period” shall refer to the Initial Term of this Agreement andany extensions to the Initial Term.  Itis the intention of the parties that this Agreement be “Evergreen” unless (i) eitherparty gives written notice to the other party of his or its intention not torenew this Agreement as provided above or (ii) this Agreement isterminated pursuant to Section VI of this Agreement.

 

2.             During the term of this Agreementthe Executive shall perform such executive services for the Bank as areconsistent with his title and as are assigned to him by the Bank’s ChiefExecutive 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 timeand effort to the affairs and business of the Bank.

 

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

 

II.  COMPETITIVE ACTIVITIES

 

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

 

III.  COMPENSATION

 

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

 

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

 

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

 

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

 

3.             For purposes of this Agreement, “Disability”means the Executive is unable to engage in any substantial gainful activity byreason of any medically determinable physical or mental impairment that can beexpected to result in death or can be expected to last for a continuous periodof not less than twelve (12) months. The Executive will be deemed disabled ifthe Social Security Administration has determined that he is disabled or if acarrier of any group disability insurance policy provided by the Bank or madeavailable by the Bank to its employees and covering the Executive determinesthat he is disabled provided that the policy’s definition of disabilitycomplies with the definition of disability under Internal Revenue Code (“Code”)Section 409A.

 

V.  ADDITIONAL COMPENSATION ANDBENEFITS

 

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

 

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

 

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

 

VI. TERMINATION

 

1.             In the event Executive’s employmentis terminated, Executive’s right to compensation and other benefits under thisagreement shall be as set forth hereinafter in this Section VI. In theevent the Executive is terminated in a manner which violates the provisions ofthis Agreement, as determined by a court of competent jurisdiction, Bank shallreimburse Executive for all reasonable costs, including attorney’s fees inchallenging such termination.  Suchreimbursement shall be in addition to all rights to which the Executive isotherwise entitled under this Agreement.

 

2.             Executive may terminate hisemployment upon thirty (30) days prior written notice to the Board ofDirectors.

 

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 shallbe:

 

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

 

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

 

(3)  a change in Executive’s reporting responsibilities, titles oroffices in effect immediately prior to a CIC of the Bank, including any removalof the Executive from, or any failure to reelect Executive to any of suchpositions, except in connection with a termination for disability orretirement;

 

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

 

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

 

thenat 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 aninvoluntary termination), give notice (“Notice of Termination”) to collectbenefits under this Agreement by delivering written notice to Bank and theprovisions of Section VI.4 of this Agreement shall apply.

 

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

 

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

 

(2)  any “person” (as such term is used in Sections 13(d) and14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”)), otherthan Bank or any “person” who on the date hereof is a director or officer ofBank is or becomes the “beneficial owner” (as defined in Rule 13d-3 underthe Exchange Act), directly or indirectly, of securities of Bank or its parentcompany representing thirty five (35%) percent or more of the combined votingpower of Bank’s or its parent company’s then outstanding securities; or

 

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

 

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

 

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

 

Ifa “Change in Control” (as defined in Section VI.3.(b) of thisAgreement) has also occurred, Bank shall pay Executive a lump sum amount equalto 1.0****times Executive’s Annual Compensationminus applicable taxes and withholdings. For purposes of this paragraph, AnnualCompensation shall be defined as Executive’s Annual Base Salary plus thehighest bonus received within the previous two years plus the amount which Bankpays for employee benefits for Executive for a one year period.   In addition, Bank shall reimburse Executivefor his and his family’s COBRA premiums until the earlier of (a) Executiveis 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 orbenefits provided to or on behalf of the Executive in connection with histermination of employment, would result in the imposition of an excise taxunder Section 4999 of the Code, Bank will pay to Executive an additionalcash payment (“Gross-up Payment”) in an amount such that the after-tax proceedsof such Gross-up Payment (including any income tax or Excise Tax on suchGross-up Payment) will be equal to the amount of the Excise Tax.

 

5.             If Executive’s employment with Bankis 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 equalto 1.0****times Executive’s Annual Compensationminus applicable taxes and withholdings. For purposes of this paragraph, AnnualCompensation shall be defined as Executive’s Annual Base Salary plus thehighest bonus received within the previous two years plus the amount which Bankpays for employee benefits for Executive for a one year period.   In addition, Bank shall reimburse Executivefor his and his family’s COBRA premiums until the earlier of (a) Executiveis no longer eligible for COBRA benefits or (b) one year.  However, in the event the payment describedherein, when added to all other amounts or benefits provided to or on behalf ofthe Executive in connection with his termination of employment, would result inthe imposition of an excise tax under Section 4999 of the Code, Bank willpay to Executive an additional cash payment (“Gross-up Payment”) in an amountsuch that the after-tax proceeds of such Gross-up Payment (including any incometax or Excise Tax on such Gross-up Payment) will be equal to the amount of theExcise Tax.

 

6.             If Executive’s employment with Bankis terminated pursuant to the nonrenewal provisions of Section I.1 of thisAgreement, then Executive shall be entitled to an amount equal to a lump sumamount equal to six (6) months of Executive’s Annual Compensation asdefined in Section VI.5 minus applicable taxes and withholdings.

 

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

 

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

 

9.             Termination for Cause. The Board ofDirectors of the Bank may terminate Executive’s employment at any time forcause. 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 thisAgreement;

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

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

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

 

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

 

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

 

VII MISCELLANEOUS

 

1.             Notwithstanding any other provisioncontained in this agreement, the payment or obligation to pay monies orgranting of any rights or privileges to Executive as provided in this Agreementshall not be in lieu or derogation of the rights and privileges that Executivenow 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 theExecutive or by his duly authorized representative, and by a duly authorizedofficer of the Bank.

 

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

 

4.             This Agreement amends andsupersedes all previous employment agreements between First Perry andMarysville and Executive.

 

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VIII. SUCCESSORS, ETC.

 

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

 

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

 

IX APPLICABLE LAW.

 

ThisAgreement shall be governed in all respects and be interpreted by and under thelaws of the Commonwealth of Pennsylvania, except to the extent that such lawmay be preempted by applicable federal law, in which event this Agreement shallbe governed and interpreted by and under federal law. This Agreement shall alsobe interpreted as is minimally required to qualify any payment hereunder as nottriggering any penalty on the Executive or the Bank pursuant to Code Section 409Aand the regulations promulgated thereunder.

 

X. SEVERABILITY

 

Ifany provision in this Agreement is held by a court of competent jurisdiction tobe invalid, void, or unenforceable, the remaining provisions nevertheless shallcontinue in full force and effect.

 

XI ARBITRATION

 

Eachparty agrees that all disputes, disagreements and questions of interpretationconcerning this Agreement (except the question of Executive’s disability whichis governed in Section IV), are to be submitted for resolution, inMarysville, Pennsylvania, to the American Arbitration Association (the “Association”)in accordance with the Association’s National Rules for the Resolution ofEmployment Disputes or other applicable rules then in effect (“Rules”).  Bank or Executive may initiate an arbitrationproceeding at any time by giving notice to the other in accordance with theRules.  Bank and Executive may, as a matterof right, mutually agree on the appointment of a particular arbitrator from theAssociation’s pool.  The arbitrator shallnot be bound by the rules of evidence and procedure of the courts of theCommonwealth of Pennsylvania but

 

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shallbe 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 andbinding upon the parties and shall be enforceable in courts of properjurisdiction.  Following written noticeof a request for arbitration, Bank and Executive shall be entitled to aninjunction restraining all further proceedings in any pending or subsequentlyfiled litigation concerning this Agreement.

 

INWITNESS WHEREOF, the parties have duly executed this Agreement as of the dayand 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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