EMPLOYMENT AGREEMENT
EXHIBIT 10.1
This Employment Agreement (this “Agreement”) is made and entered into between Xxxx X. Xxxxx
(“Xxxxx”) and Farmers National Bank of Canfield, its affiliates and/or subsidiaries (the “Bank”),
effective as of the last date set forth below. In consideration of the mutual covenants herein,
Xxxxx and the Bank hereby agree as follows:
1. Job Title and Duties. Xxxxx will be employed as the Chief Operating Officer and he
will report directly to the President and Chief Executive Officer of the Bank. Xxxxx will timely,
faithfully and diligently perform all such duties as are customarily associated with and incidental
to the employment of a Chief Operating Officer within the banking industry, including all specific
duties which may be assigned to him from time to time by the Bank. Xxxxx will be expected to
attend all Board meetings, unless his business or personal circumstances do not permit his
attendance. Xxxxx 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. Xxxxx
will not engage in any activity inconsistent with his duties and/or the business objectives of the
Bank. Xxxxx will refrain from conduct or practices harmful to the Bank’s good will, business
reputation, patents, trademarks and service marks.
2. Compensation. Xxxxx will be paid a base salary of U.S. $175,000.00 per annum,
payable in twenty-four (24) bi-monthly installments of $7,291.67 each, less applicable tax
withholdings and benefit deductions. Xxxxx’ base salary will be reviewed on an annual basis,
consistent with the Bank’s normal compensation review practices for executive employees. Xxxxx
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. Xxxxx’ employment under this Agreement will commence on January 31, 2009 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. Xxxxx acknowledges receipt of the Bank’s Personnel
Manual and Code of Ethics. Xxxxx 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, Xxxxx 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, Xxxxx will receive notice of the
change and an explanation of how the change will affect his benefit coverage.
6. Vacation Benefits. Xxxxx 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. Xxxxx will be paid for any accumulated 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. Xxxxx will receive prompt reimbursement for all reasonable
and necessary expenses incurred in the performance of his duties as Chief Operating 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. Xxxxx will also be entitled to reimbursement of relocation expenses consistent with
the terms of the offer letter provided to him on June 30, 2008.
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 Xxxxx 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. Shares of Stock. As an officer of the Bank, Xxxxx 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 Xxxxx may receive compensation in an amount
determined by the Company in its discretion.
10. Confidential Information. Xxxxx 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, list 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 Xxxxx has or will prepare, use or come
into contact with shall remain the sole property of the Bank, shall not be copied without written
permission, and shall be returned immediately to the Bank upon termination of Xxxxx’ employment
with the Bank, or at the Bank’s request at any time. Further, Xxxxx will not directly or
indirectly use or disclose to any other person or business entity the Bank’s secret or Confidential
Information without prior written consent of an officer of the Bank. Xxxxx 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 Xxxxx does
improperly use or
disclose any secret or Confidential Information, he understands that his employment will be
subject to termination. Xxxxx 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
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Xxxxx’ 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. Xxxxx 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, Xxxxx 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. Xxxxx will immediately disclose all Work Product to the Bank and agree, at any
time upon the Bank’s request and without additional compensation, to execute any documents and
otherwise to 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 Xxxxx’ 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 Xxxxx’ employment without advance notice “for
cause,” which shall mean the occurrence of any one of the following events: (i) Xxxxx’ 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) Xxxxx’ participation in any fraud,
dishonesty, theft, conviction of a crime, or unethical business conduct; (iii) Xxxxx’ violation of
any of the covenants of this Agreement or any written policy, rule or regulation of the Bank; or
(iv) Xxxxx’ 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” Xxxxx 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 Xxxxx’ principal place of work which would increase Xxxxx’
commute by fifty (50) miles or more from Xxxxx’ 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 failure from
Xxxxx.
D. “Change in Control” Xxxxx 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
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20% of
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, Xxxxx is not offered a position that is substantially similar to
his position as COO of the Bank, in terms of duties, responsibilities, pay and benefits.
E. “Disability” Xxxxx’ employment with the Bank will automatically terminate if Xxxxx
becomes Totally and Permanently Disabled. For purposes of this Agreement, Xxxxx 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 Xxxxx suffers from a complete and irremediable mental or
physical incapacity, he shall be examined by a physician selected by the mutual agreement of Xxxxx
and a majority of the Bank’s board or directors and the determination of such physician will be
final and binding on all parties.
F. “Death" Xxxxx’ employment will terminate upon his death.
13. Severance Pay.
A. Following the termination of Xxxxx’ 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,
Xxxxx 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) $7,291.67 each, or (B) 1/24 of Xxxxx’ highest annual salary in effect within
twelve (12) months of Xxxxx’ 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 Xxxxx’ execution of a general
release and waiver agreement in a form that is reasonably satisfactory to the Bank.
X. Xxxxx 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 Xxxxx’ 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.
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D. In the event that Xxxxx holds a Board position at the time of termination, then Xxxxx 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, trust and estate services,
investment, personal and commercial lending, internet cash management and other similar services to
individuals and companies.
B. Non-Competition. Following the termination of Xxxxx’ employment by him or the Bank
for any reason whatsoever, Xxxxx 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 Xxxxx’ employment. The
provisions of this Paragraph 14(B) will not apply in the event that the Bank terminates Xxxxx’
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 of Customers. Following the termination of Xxxxx’ employment by
him or the Bank for any reason whatsoever, Xxxxx 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 Xxxxx’ employment.
D. Non-Solicitation of Employees. Following termination of Xxxxx’ employment by him
or the Bank for any reason whatsoever, Xxxxx 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
Xxxxx’ 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. Xxxxx 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.
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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. Xxxxx recognizes and understands that the
Bank may not have an adequate remedy at law for the breach or threatened breach by Xxxxx of the
confidentiality, intellectual property and post-employment restrictions set forth in this Agreement
and Xxxxx 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 Xxxxx 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, Xxxxx 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 Xxxxx expressly waives any objection or
defense relating to jurisdiction or forum non-conveniens or similar doctrine or theory. Xxxxx
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, Xxxxx acknowledges and agrees that in the event of a final judicial determination
against Xxxxx 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 revisions 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 which such securities laws, rules or
regulations.
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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. Xxxxx
[Address]
[Address]
Farmers National Bank of 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. Xxxxx 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.
| XXXX X. XXXXX | FARMERS NATIONAL BANK OF XXXXXXXX | |||||
/s/ Xxxx X. Xxxxx
|
By: | Xxxxx X. Xxxxxx | ||||
Signature |
||||||
1/27/09
|
Its: | Chairman of Compensation Committee | ||||
Date of Signature |
||||||
| 1/27/09 | ||||||
| Date of Signature | ||||||
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