EMPLOYMENT AGREEMENT

Exhibit 10.8

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) made this 7th day of January, 2005, by and among COMMUNITY BANKS, INC., a Pennsylvania corporation, COMMUNITY BANKS, a Pennsylvania bank and trust company (hereinafter collectively referred to as the “Company”), and JOSEPH C. SPADA, an adult individual residing at 1985 Glendower Drive, Lancaster, Pennsylvania 17601 (hereinafter referred to as “Executive”).

BACKGROUND:

A. On April 13, 2000, Executive entered into an Employment Agreement with Blue Ball National Bank (“Blue Ball Employment Agreement”).

B. PennRock Financial Services Corp. (“PRFS”) has entered into an Agreement (“Merger Agreement”) with Community Banks, Inc. (“CMTY”), in which PRFS has agreed to merge with and into CMTY, with CMTY to be the surviving corporation (“Merger”). Simultaneously, Blue Ball National Bank (“Blue Ball”) has entered into a Bank Plan of Merger, in which Blue Ball has agreed to merge with and into Community Banks (“CB”), with CB to be the surviving bank.

C. The Company wishes to employ Executive, and Executive wishes to be employed by the Company, following the Merger, and the parties desire to set forth the terms and conditions of their agreement herein.

NOW, THEREFORE, in consideration of the foregoing recitals and the agreements hereinafter contained, and intending to be legally bound hereby, the parties agree as follows:

1. Duties as Executive. Company shall employ Executive and Executive shall serve Company as an Executive Vice President of CB and a Senior Vice President of CMTY, or to such comparable executive positions to which he may be reasonably appointed by the Company’s board of directors in light of his experience and abilities. During his employment by the Company, Executive shall serve Company under the direction of, and in a manner satisfactory to the CEO and the Board of Directors of the Company. He shall perform his duties faithfully, diligently, and to the best of his ability and shall devote his full time and best efforts to the affairs of the Company.

2. Compensation as Executive. As compensation for all services performed by Executive for Company while employed thereby, Company shall:

a. Pay Executive in regular installments, a salary fixed from time to time by the Company (which, for the first twelve-month period of the Agreement, will not be less than the annual salary Executive received in the last year of the Blue Ball Employment Agreement);

b. Pay Executive bonuses as declared from time to time by the Company; and

c. Provide Executive with such health, accident, disability, life insurance, retirement benefits and such other benefits as are now in force or as may be authorized by the board of directors.

3. Reimbursement of Expenses. Company shall reimburse Executive within thirty (30) days from billing date for necessary and properly documented travel and business expenses, not otherwise reimbursed, incurred by Executive on behalf of Company.

4. Term of Employment. The initial term of the Executive’s employment under this Agreement shall commence upon the effective date of this Agreement (as set forth in Section 13 hereof) and shall continue for a period of three (3) years. On each anniversary of the effective date of this Agreement (“Anniversary”), the term of this Agreement and the period of the Executive’s employment hereunder will be automatically extended for successive two-year periods unless, no later than ninety (90) days prior to an Anniversary, either the Company or the Executive gives written notification to the other of an intention not to renew this Agreement. Notwithstanding the foregoing provisions, upon the occurrence of a Change of Control (as hereinafter defined), the term of this Agreement shall automatically renew and be extended for two (2) years from the date thereof.

5. Termination of Employment.

a. Disability. If the Executive becomes permanently disabled (as certified by a licensed physician chosen by the Company and the Executive or in the event that the Company and the Executive cannot agree upon a physician, each shall designate a licensed physician, and the licensed physicians so designated shall appoint a third physician whose decision shall be binding upon the parties) because of sickness, physical or mental disability, or any other reason, and is unable to perform or complete his duties under this Agreement for a period of ninety (90) consecutive days (or time equal to the elimination period under any disability insurance program provided by the Company to the Executive), the Company shall have the option to terminate this Agreement by giving written notice of termination to the Executive. Such termination shall be without prejudice to any right the Executive has under any disability insurance program maintained by the Company.

b. Cause. The Company may terminate this Agreement and the Executive’s employment hereunder for Cause at any time. For the purposes of this Agreement, the Board shall have “Cause” to terminate the Executive’s employment upon (1) the willful failure by the Executive to substantially perform his duties hereunder, other than any such failure resulting from the Executive’s incapacity due to physical or mental illness (after the Board’s notice to the Executive and the Executive’s failure to cure same within thirty (30) days of such notice); (2) the engaging by the Executive in willful misconduct materially injurious to Community; (3) gross negligence, malfeasance, or dishonesty of the Executive in the performance of his duties (after the Board’s notice to the Executive and the Executive’s failure to cure same within thirty (30) days of such notice); (4) the conviction of the Executive of an act constituting a felony or the conviction of the Executive of a misdemeanor based on dishonesty; (5) the willful and material breach by the Executive of any of his other obligations under this Agreement (after the Board’s notice to the Executive and the Executive’s failure to cure same within thirty (30) days of such notice); (6) the refusal or failure of the Executive to carry out reasonable directives of the Board (after the Board’s notice to the Executive and the Executive’s failure to cure same within thirty (30) days of such notice); (7) receipt of a final written directive or order of any governmental body or entity having jurisdiction over Community requiring termination or removal of the Executive as an officer of the Company; (8) repeated and consistent failure of the Executive to be present and work during normal business hours unless the absence is due to disability described in Section 7(a) below (after the Board’s notice to the Executive and the Executive’s failure to cure same within thirty (30) days of such notice); or (9) insubordinate, gross incompetence or misconduct in the performance of, or gross neglect of, the Executive’s duties hereunder (after the Board’s notice to the Executive and the Executive’s failure to cure same within thirty (30) days of such notice).

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c. Good Reason. The Executive may terminate his employment hereunder for Good Reason. The term “Good Reason” shall mean (i) any assignment to the Executive, without his consent, of any duties other than those contemplated by Section 1 hereof, or any reduction in the Executive’s duties or responsibilities for the Company; (ii) any removal of the Executive from any of the positions indicated in Section 1 hereof, except in connection with termination of the Executive’s employment for Cause, a promotion of Executive to a higher position or an assignment to Executive of a title and duties and responsibilities approximately comparable to the those involved in the positions indicated in Section 1 above; (iii) a reduction of the Executive’s annual salary; (iv) breach by the Company of its obligations under Section 2 hereof (after the Executive’s notice to the Company and the Company’s failure to cure such breach within thirty (30) days of such notice); (v) without the prior consent of Executive, transfer or relocate the office in which Executive performs the bulk of his duties to any location more than fifty (50) miles from Executive’s residence address as set forth in the first paragraph of this Agreement or (vi) any other willful and material breach by the Company of this Agreement (after the Executive’s notice to the Company and the Company’s failure to cure such breach within thirty (30) days of such notice).

6. Payments Upon Termination.

a. Death, Disability or for Cause. If the Executive’s employment shall be terminated because of death, disability or for Cause, the Company shall pay the Executive his full salary through the date of termination at the rate in effect at the time of termination, and other amounts owing to the Executive at the date of termination, and the Company shall have no further obligations to the Executive under this Agreement.

b. Unilateral and Good Reason Termination (Not Including Change of Control). If the Executive’s employment is terminated by the Company (other than for Cause or as a result of disability or nonrenewal of this Agreement), or if the Executive shall terminate his employment for Good Reason (except for a termination by the Executive for Good Reason following a Change of Control), then the Company shall pay the Executive his full salary from the date of termination for the remaining term of this Agreement, provided that the obligation to pay the compensation provided for in this Section 6(b) shall terminate immediately upon the Executive’s violation of the te