EMPLOYMENT AGREEMENT
Exhibit 10.4
This employment Agreement (this “Agreement”) is made and entered into between Xxxx X. Xxxxxx
(“Xxxxxx”) and Farmers National Bank of Xxxxxxxx, its affiliates and/or subsidiaries (the “Bank”),
effective as of the last date set forth below. In consideration of the mutual covenants herein,
Xxxxxx and the Bank hereby agree as follows:
1. Job Title and Duties. Xxxxxx will be employed as the Senior Vice President and
Senior Loan Officer of the Bank and will report to the Chief Operating Officer of the Bank. Xxxxxx
will timely, faithfully and diligently perform all such duties as are customarily associated with
and incidental to the employment of a Senior Loan Officer within the banking industry, including
all specific duties which may be assigned to him from time to time by the Bank. Xxxxxx understands
and agrees that he will have no authority, express or implied, to perform any acts on behalf of the
Bank, except as specifically outlined in this Agreement. Xxxxxx will not engage in any activity
inconsistent with his duties and/or the business objectives of the Bank. Xxxxxx will refrain from
conduct or practices harmful to the Bank’s good will, business reputation, patents, trademarks and
service marks.
2. Compensation. Beginning on October 1, 2008, Xxxxxx will be paid a base salary of
U.S. $115,692.00 per annum, payable in twenty-four (24) bi-monthly installments of $4,820.50 each,
less applicable tax withholdings and benefit deductions. Xxxxxx’x base salary will be reviewed on
an annual basis, consistent with the Bank’s normal compensation review practices for executive
employees. Xxxxxx will also be eligible to participate in the Executive Management Incentive
Program, according to the same terms and conditions applicable to all other executive employees of
the Bank.
3. Term. Xxxxxx’x employment under this Agreement will commence on October 1, 2008
and will continue for a period of thirty-six (36) months, unless earlier terminated in accordance
with any of the provisions of Paragraph 12 of this Agreement. The term of this Agreement shall
automatically be renewed in 36-month increments, unless written notice of termination is provided
by either party at least 90 days prior to the expiration of the original term or any 36-month
renewal term.
4. Compliance with Bank Policies. Xxxxxx acknowledges receipt of the Bank’s Personnel
Manual and Code of Ethics. Xxxxxx understands and agrees to be bound by all rules and regulations
contained therein, as well as all other written policies, rules and regulations which may be
established by the Bank from time to time.
5. Benefit Plans. While employed by the Bank, Xxxxxx will be eligible to participate
in all such benefit plans (including, without limitation, medical and dental plans, disability and
life insurance, and 401(K) plans) according to the same terms and conditions as all other executive
employees of the Bank. The Bank reserves the right to modify, amend or terminate all or part of
its employee benefit plans at any time. If such a change occurs,
Xxxxxx will receive notice of the change and an explanation of how the change will affect his
benefit coverage.
1
6. Vacation Benefits. Xxxxxx will be eligible for vacation benefits in the amount of
four (4) weeks per year, which may be taken in accordance with the same terms and conditions as
other executive employees of the Bank. There will be no carryover of unused vacation time from
year-to-year. Xxxxxx will be paid for any accrued but unused vacation time remaining at the
termination of his employment, unless his employment is terminated “for cause,” as defined in
Paragraph 12 (B) of this Agreement.
7. Expense Reimbursement. Xxxxxx will receive prompt reimbursement for all reasonable
and necessary expenses incurred in the performance of his duties as Senior Loan Officer, including
mileage, airfare, and reasonable meal and hotel expenses incurred while traveling on business to
locations other than the Bank’s headquarters in Canfield, Ohio. All such expenses must be
documented and accounted for in accordance with the Bank’s reimbursement policies and procedures.
8. Indemnification. To the fullest extent permitted under the applicable laws of the
State of Ohio and federal banking laws, the Bank will indemnify and hold Xxxxxx harmless from any
and all expenses, judgments, fines, penalties, and amounts paid in settlement as a result of his
service to, or actions (other than actions which are determined by a court of competent
jurisdiction to be made without business judgment or outside the scope of his employment) on behalf
of, the Bank.
9. Stock Option Plan. As an officer of the Bank, Xxxxxx will be eligible to
participate in that certain 1999 Stock Option Plan of Farmers National Banc Corp., the parent of
the Bank (the “Company”), as amended, and as the same may be further amended, modified, or restated
from time to time, and any successor plan, pursuant to which Xxxxxx may receive compensation in an
amount determined by the Company in its discretion.
10. Confidential Information. Xxxxxx acknowledges and agrees that he will not, while
employed by the Bank and at all times thereafter, directly or indirectly communicate or divulge any
Confidential Information relating to the Bank to any other person or business entity. For purposes
of this Agreement, “Confidential Information” shall refer to any proprietary information relating
to the conduct of the business of the Bank, including the Bank’s unique business methods and
compilations of information that has caused or continues to cause the Bank to enjoy a competitive
advantage over companies engaged in the same or a similar business, including but not limited to
the Bank’s methods of operations, customer relations, customer lists, contacts, confidential price
policies and confidential price characteristics, lists of employees, vendors and suppliers,
confidential information relating to marketing plans, quotations and contracts, order processing,
procedures, purchasing and pricing methods and procedures, supplies, personnel information,
financial data, future business plans, and the like.
All records, files, plans, documents and the like relating to the business of the Bank, including
but not limited to Confidential Information which Xxxxxx has or will prepare, use or come into
contact with shall remain the sole property of the Bank, shall not be copied
2
without written
permission, and shall be returned immediately to the Bank upon termination of Xxxxxx’x employment
with the Bank, or at the Bank’s request at any time. Further, Xxxxxx will not directly or
indirectly use or disclose to any other person or business entity the Bank’s secret or Confidential
Information without the prior written consent of an officer of the Bank. Xxxxxx further agrees to
take all reasonable precautions to protect against the negligent or inadvertent disclosure of the
Bank’s secret or Confidential Information to any other person or business entity. If Xxxxxx does
improperly use or disclose any secret or Confidential Information, he understands that his
employment will be subject to termination. Xxxxxx also recognizes that all writings,
illustrations, drawings and other similar materials that embody or otherwise contain Confidential
Information which he may produce or which may be given to him in connection with his employment,
are the property of the Bank and it shall be Xxxxxx’x obligation to deliver the same to the Bank
upon request, and upon termination of his employment with the Bank for any reason.
11. Intellectual Property Rights. Xxxxxx acknowledges and agrees that any procedure,
design feature, schematic, invention, improvement, development, discovery, know how, concept, idea
or the like (whether or not patentable, registrable, under copyright or trademark laws, or
otherwise protectable under similar laws) that he may conceive of, suggest, make, invent, develop
or implement during the course of his employment with the Bank (whether individually or jointly
with any other person), relating in any way to the business of the Bank, and all physical
embodiments and manifestations thereof, and all patent rights, copyrights, trademarks (or
application therefore) and similar protections therein (all of which consists of “Work Product”),
shall be the sole, exclusive and absolute property of the Bank. All such Work Product shall be
deemed to be works for hire and, further, Xxxxxx hereby assigns to the Bank all rights, title and
interest in, to and under such Work Product, including but not limited to, the right to obtain such
patents, copyright registrations, trademark registrations or similar protections as the Bank may
desire to obtain. Xxxxxx will immediately disclose all Work Product to the Bank and agrees, at any
time upon the Bank’s request and without additional compensation, to execute any documents and to
otherwise cooperate with the Bank respecting the perfection of its rights, title and interest in,
to and under such Work Product, and in any litigation or other controversy in connection therewith,
all reasonable expenses incident thereto to be borne by the Bank.
12. Termination of the Employment Relationship.
A. “Without Cause” Either party may terminate Xxxxxx’x employment “without cause” at
any time and for any reason, provided that 30 days’ advance written notice is provided to the other
party.
B. “For Cause” The Bank may terminate Xxxxxx’x employment without advance notice “for
cause,” which shall mean the occurrence of any one of the following events: (i) Xxxxxx’x commission
of any intentional, reckless, or grossly negligent act
which may result in material injury to the good will, business or business reputation of the
Bank; (ii) Xxxxxx’x participation in any fraud, dishonesty, theft, conviction of a crime, or
unethical business conduct; (iii) Xxxxxx’x violation of any of the covenants of this
3
Agreement or
any written policy, rule or regulation of the Bank; or (iv) Xxxxxx’x failure to adequately perform
his job duties or to follow lawful and ethical directions provided to him, which failure has not
been cured in all material respects within twenty (20) days after receiving notice of such failure
from the Bank.
C. “Good Reason” Xxxxxx may terminate his employment with fourteen (14) days advance
written notice for “good reason,” which shall mean the occurrence of any one of the following
events: (i) a material diminution of the duties, authority or responsibilities of his position;
(ii) a reduction in his base salary of more than 20% of the annual rate set forth in Paragraph 2 of
this Agreement; (iii) any change in Xxxxxx’x principal place of work which would increase Xxxxxx’x
commute by fifty (50) miles or more from Xxxxxx’x current principal place of work; or (iv) a
material breach by the Bank of its obligations under this Agreement, which failure has not been
cured in all material respects within twenty (20) days after receiving written notice of such
failures from Xxxxxx.
D. “Change in Control” Xxxxxx may terminate his employment upon a “change in control”
of the Bank, which will be deemed to have occurred if: (i) any person (as defined in the
securities laws) becomes a direct or indirect beneficial owner of securities of the Bank
representing 20% or more of the combined voting power of the Bank’s then outstanding securities; or
(ii) the Bank is merged or consolidated with another entity, and as a result of such merger or
consolidation, less than 75% of the outstanding voting securities of the surviving or resulting
entity shall be owned in the aggregate by the former shareholders of the Bank; or (iii) during any
two (2) consecutive years during the term of this Agreement, individuals who at the beginning of
such period constitute the Board, cease for any reason to constitute at least a majority thereof,
unless the election of each director who is not a director at the beginning of such period has been
approved in advance by directors representing at least two-thirds of the directors at the beginning
of the period. A “change in control” will only be deemed to have occurred if one of the three
above-listed scenarios occurs and, as a result thereof, Xxxxxx is not offered a position that is
substantially similar to his position as Senior Loan Officer of the Bank, in terms of duties,
responsibilities, pay and benefits.
E. “Disability” Xxxxxx’x employment with the Bank will automatically terminate if
Xxxxxx becomes Totally and Permanently Disabled. For purposes of this Agreement, Xxxxxx will be
deemed to be “Totally and Permanently Disabled” if he is, in the opinion of a majority of the
directors of the Bank, unable to fulfill the responsibilities specified in this Agreement on behalf
of the Bank on a full-time basis for a period of one hundred twenty (120) consecutive days as a
result of a complete and irremediable physical or mental incapacity caused by disease or bodily
injury. In the event of any disagreement as to whether Xxxxxx suffers from a complete and
irremediable mental or physical incapacity, he shall be examined by a physician selected by the
mutual agreement of Xxxxxx and a majority of the
Bank’s board of directors and the determination of such physician will be final and binding on
all parties.
F. “Death” Xxxxxx’x employment will terminate upon his death.
4
13. Severance Pay.
A. Following the termination of Xxxxxx’x employment by the Bank “without cause,” by him for
“good reason,” or due to a “change in control” as defined in Paragraph 12(A), (C) and (D) above,
Xxxxxx will receive (i) a lump sum payment payable within thirty (30) days of termination equal to
any unused vacation time, (ii) seventy-two (72) bi-monthly severance installment payments equal to
the greater of (A) $4,820.50 each, or (B) 1/24 of Xxxxxx’x highest annual salary in effect within
twelve (12) months of Xxxxxx’x termination, less appropriate withholding (the “Severance
Payments”), and (iii) participation in the Executive Management Incentive Program or any other
similar program then in effect on a pro-rata basis for the portion of the incentive period
preceding termination.
B. The provision of Severance Payments will be contingent upon Xxxxxx’x execution of a general
release and waiver agreement in a form that is reasonably satisfactory to the Bank.
X. Xxxxxx will not be entitled to any Severance Payments if his employment is terminated by
the Bank “for cause” or by him “without cause,” or due to “disability” or “death,” as defined in
Paragraph 12(A), (B), (E) and (F) above. However, upon Xxxxxx’x termination for disability or
death he or his estate will be entitled to receive a lump sum payment for any unused vacation time
and participation in the Executive Management Incentive Program or any other similar program then
in effect on a pro-rata basis for the portion of the incentive period preceding termination.
D. In the event that Xxxxxx holds a Board position at the time of termination, then Xxxxxx
shall immediately resign from that position.
14. Post-Employment Restrictions.
A. Definition of “the Business”. The Business of the Bank includes, but is not limited
to, the business of providing financial, banking, insurance, investment, personal and commercial
lending, internet cash management and other similar services to individuals and companies.
B. Non-Competition. Following the termination of employment by him or the Bank for any
reason whatsoever, Xxxxxx will not, for a period of twelve (12) consecutive months after the date
of termination, directly or indirectly, as owner, partner, joint venturer, stockholder (excluding
the ownership of publicly-traded securities where such ownership does not exceed 1% of such
securities outstanding), employee, officer, director, agent, principal, trustee or any other
business capacity whatsoever, engage in, become
financially interested in, become employed by, render any consulting or business advice with
respect to, or have any other connection with, any person or business entity engaged in the same
Business as the Bank in any county where the Bank maintains a branch or loan production office at
the time of termination of Xxxxxx’x employment. The provisions of this
5
Paragraph 14(B) will not
apply in the event that the Bank terminates Xxxxxx’x employment at the end of the initial term or
any renewal term, in accordance with the provisions of Paragraph 3 of this Agreement.
C. Non-Solicitation Customers. Following the termination of Xxxxxx’x employment by him
or the Bank for any reason whatsoever, Xxxxxx will not, for a period of twelve (12) consecutive
months after the date of termination, directly or indirectly solicit business from any customers,
clients or business patrons of the Bank who were customers, clients or business patrons of the Bank
at the time of termination of Xxxxxx’x employment.
D. Non-Solicitation of Employees. Following the termination of Xxxxxx’x employment by
him or the Bank for any reason whatsoever, Xxxxxx will not, for a period of twenty-four (24)
consecutive months after the date of termination, directly or indirectly employ or attempt to
employ or solicit for employment any other individual who is employed by the Bank at the
time of termination of Xxxxxx’x employment.
15. No Waiver. The failure of the Bank to enforce any provision of this Agreement
shall not be construed as a waiver of such provision or of the right of the Bank thereafter to
enforce any other provision of this Agreement.
16. No Third-Party Obligations. Xxxxxx warrants and represents to the Bank that he is
not a party to any agreement or understanding with any third party which would preclude or prevent
him from legally performing any of his obligations under this Agreement.
17. Assignability. This Agreement is not assignable by either party without the prior
written consent of the other, except that the Bank may assign this Agreement without prior written
consent to any purchaser, assignee of, or successor to substantially all of the business or assets
of the Bank, or any direct or indirect subsidiary or affiliate of the Bank.
18. Arbitration. Except as set forth in Paragraph 19 of this Agreement, any
controversy or dispute which arises in connection with the validity, construction, application,
enforcement or breach of this Agreement shall be submitted to final and binding arbitration
pursuant to the commercial arbitration rules of the American Arbitration Association (the “AAA”).
The fees and costs of arbitration (other than attorney fees and costs) shall be borne equally by
the parties. A neutral arbitrator shall be jointly chosen by the parties from a list of
arbitrators provided by the AAA, and any arbitration under this Paragraph 18 shall take place in
the Cleveland, Ohio office of the AAA. Judgment upon an award rendered by an arbitrator under this
Paragraph 18 may be entered in any court of competent jurisdiction.
19. Injunctive Relief and Other Remedies. Xxxxxx recognizes and understands that the
Bank may not have an adequate remedy at law for the breach or threatened breach by Xxxxxx of the
confidentiality, intellectual property and post-employment restrictions set forth in this Agreement
and Xxxxxx agrees that in the event of any such breach, the Bank may, in addition to the other
remedies which may be available to it, file a suit to enjoin Xxxxxx
6
from violation and breach of
this Agreement. In the event the Bank obtains a permanent injunction against him after notice and
the opportunity to appear, Xxxxxx will be liable to pay all costs, including reasonable attorneys’
fees, which the Bank may incur in enforcing, to any extent, the provisions of this Agreement,
whether or not litigation is actually commenced and including litigation of any appeal taken or
defended by the Bank in any action to enforce this Agreement and which affirms and/or results in a
permanent injunction. Any proceedings brought to enforce Paragraphs 10, 11 or 14 this Agreement
shall be brought in the courts of Mahoning County, Ohio and Xxxxxx expressly waives any objection
or defense relating to jurisdiction or forum non-conveniens or similar doctrine or theory. Xxxxxx
acknowledges and agrees that the remedy at law for any breach of Paragraphs 10, 11 or 14 of this
Agreement will be inadequate, and that the Bank shall be entitled to injunctive relief without
bond. Such injunctive relief shall not be exclusive, but shall be in addition to any other rights
or remedies which the Bank may have for any such breach. In addition to the injunctive remedies
described herein, Xxxxxx acknowledges and agrees that in the event of a final judicial
determination against Xxxxxx with respect to an actual or threatened breach by him of Paragraphs
10, 11 or 14 of this Agreement, the Bank shall be entitled to withhold any remaining Severance
Payments payable under Paragraph 13 of this Agreement.
20. Choice of Law. It is understood that the provisions of this Agreement shall be
governed by and construed in accordance with the laws of the State of Ohio without giving effect to
the principles of conflict of laws.
21. Severability. It is understood that the provisions of this Agreement are severable
and independent. In the event any of the provisions or parts hereof shall be held to be invalid or
unenforceable, all other provisions shall remain in full force and effect. In the event a court
should determine not to enforce a covenant as written due to overbreadth, the parties specifically
agree that said covenant shall be enforced to the maximum extent as allowed by law, whether said
restrictions are in time, territory or scope of prohibited activities.
22. Legal Reformation. It is understood and agreed that, should any term of this
Agreement cause the Bank or its successor to be in violation of any applicable securities law, rule
or regulation, or any amendment thereto, then the .parties will cooperate in good faith
to amend the terms of this Agreement as may be required to comply with such securities laws, rules
or regulations.
23. Notice. All written communications provided for in this Agreement shall be deemed
to have been duly served when delivered by U.S. registered mail, return receipt requested, postage
prepaid, to the following addresses:
Xxxx X. Xxxxxx
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxx, Xxxx 00000
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxx, Xxxx 00000
0
Xxxxxxx Xxxxxxxx Xxxx xx Xxxxxxxx
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attn: Xxxxx X. Xxxxx
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attn: Xxxxx X. Xxxxx
24. Complete Agreement. This Agreement contains the complete understanding of the
parties, and supersedes any previous agreements. Any modifications, amendments or other changes
must be in writing and signed by the parties.
25. Full Understanding and Consent. Xxxxxx hereby represents that, prior to signing
this Agreement, he has read, fully understands and voluntarily agrees to the terms and conditions
stated above, that he was not coerced into signing this Agreement, that he was not under duress at
the time he signed this Agreement, and that prior to signing this Agreement, he had adequate time
to consider and discuss its terms with an attorney of his choice.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date(s) set forth
below.
/s/ Xxxx X. Xxxxxx
|
/s/ Xxxxx X. Xxxxxx | ||||
XXXX X. XXXXXX December 23, 2008 |
XXXXX X. XXXXXX Compensation Committee Chairman of the BOD December 23, 2008 |
8
