EMPLOYMENT AGREEMENT
Exhibit 10.3
This employment Agreement (this “Agreement”) is made and entered into between Xxxx X.Xxxx
(“Xxxx”) and Farmers National Bank of Canfield, its affiliates and subsidiaries (the “Bank”),
effective as of the last date set forth below. In consideration of the mutual covenants herein,
Xxxx and the Bank hereby agree as follows:
1. Job Title and Duties. Xxxx will be employed as the Executive Vice President and
Chief Financial Officer of the Bank and will report directly to the Chief Executive Officer of the
Bank. Xxxx will timely, faithfully and diligently perform all such duties as are customarily
associated with and incidental to the employment of a Chief Financial Officer within the banking
industry, including all specific duties which may be assigned to him from time to time by the Bank.
Xxxx 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. Xxxx will not engage in
any activity inconsistent with his duties and/or the business objectives of the Bank. Xxxx 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, Xxxx will be paid a base salary of U.S.
$140,800.00 per annum, payable in twenty-four (24) bi-monthly installments of $5,866.67 each, less
applicable tax withholdings and benefit deductions. Xxxx’x base salary will be reviewed on an
annual basis, consistent with the Bank’s normal compensation review practices for executive
employees. Xxxx 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. Xxxx’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. Xxxx acknowledges receipt of the Bank’s Personnel
Manual and Code of Ethics. Xxxx 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, Xxxx 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, Xxxx will receive notice of the
change and an explanation of how the change will affect his benefit coverage.
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6. Vacation Benefits. Xxxx 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. Xxxx 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. Xxxx will receive prompt reimbursement for all reasonable
and necessary expenses incurred in the performance of his duties as Chief Financial 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 Xxxx 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, Xxxx 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 Xxxx may receive compensation in an
amount determined by the Company in its discretion.
10. Confidential Information. Xxxx 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 Xxxx has or will prepare, use or come
into contact with shall remain the sole property of the Bank, shall not be copied
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without written permission, and shall be returned immediately to the Bank upon termination of
Xxxx’x employment with the Bank, or at the Bank’s request at any time. Further, Xxxx 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. Xxxx 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 Xxxx does improperly use or disclose any secret or Confidential Information, he understands
that his employment will be subject to termination. Xxxx 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 Xxxx’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. Xxxx 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, Xxxx 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. Xxxx 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 Xxxx’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 Xxxx’x employment without advance notice “for
cause,” which shall mean the occurrence of any one of the following events: (i) Xxxx’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) Xxxx’x participation in any fraud,
dishonesty, theft, conviction of a crime, or unethical business conduct; (iii) Xxxx’x violation of
any of the covenants of this Agreement or any
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written policy, rule or regulation of the Bank; or (iv) Xxxx’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” Xxxx 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 Xxxx’x principal place of work which would increase Xxxx’x
commute by fifty (50) miles or more from Xxxx’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
Xxxx.
D. “Change in Control” Xxxx 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, Xxxx is not offered a position that is
substantially similar to his position as CFO of the Bank, in terms of duties, responsibilities, pay
and benefits.
E. “Disability” Xxxx’x employment with the Bank will automatically terminate if Xxxx
becomes Totally and Permanently Disabled. For purposes of this Agreement, Xxxx 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 Xxxx suffers from a complete and irremediable mental or
physical incapacity, he shall be examined by a physician selected by the mutual agreement of Xxxx
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” Xxxx’x employment will terminate upon his death.
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13. Severance Pay.
A. Following the termination of Xxxx’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,
Xxxx 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) $5,866.67each, or (B) 1/24 of Xxxx’x highest annual salary in effect within
twelve (12) months of Xxxx’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 Xxxx’x execution of a general
release and waiver agreement in a form that is reasonably satisfactory to the Bank.
X. Xxxx will not be entitled to any Severance Payments if his employment is terminated by the
Bank “for cause,” by him “without cause,” or due to “disability” or “death,” as defined in
Paragraph 12(A), (B), (E) and (F) above; however, upon Xxxx’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 Xxxx holds a Board position at the time of termination, then Xxxx 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, Xxxx 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 Xxxx’x employment. The provisions of this
Paragraph 14(B) will not apply in the event that the Bank terminates Xxxx’x employment at the
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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 Xxxx’x employment by him
or the Bank for any reason whatsoever, Xxxx 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 Xxxx’x employment.
D. Non-Solicitation of Employees. Following the termination of Xxxx’x employment by
him or the Bank for any reason whatsoever, Xxxx 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 Xxxx’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. Xxxx 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. Xxxx recognizes and understands that the
Bank may not have an adequate remedy at law for the breach or threatened breach by Xxxx of the
confidentiality, intellectual property and post-employment restrictions set forth in this Agreement
and Xxxx 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 Xxxx from violation and breach of this
Agreement. In the event the Bank obtains a permanent
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injunction against him after notice and the opportunity to appear, Xxxx 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 Xxxx expressly waives any objection or defense relating to jurisdiction or forum
non-conveniens or similar doctrine or theory. Xxxx 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, Xxxx acknowledges and agrees that
in the event of a final judicial determination against Xxxx 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. Xxxx
00 Xxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
00 Xxxxxxx Xxxxx
Xxxxxx, 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. Xxxx 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. Xxxx
|
/s/ Xxxxx X. Xxxxxx
|
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December 23, 2008
|
Compensation Committee Chairman of the BOD | |||
| December 23, 2008 |
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