Exhibit 10.1
 
AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”), is made and
entered into as of the 16th day of November 2011, between Emclaire Financial
Corp., a Pennsylvania-chartered bank holding company (the “Corporation”), The
Farmers National Bank of Emlenton, a national banking association (the “Bank”)
and William C. Marsh (the “Executive”).

WITNESSETH

WHEREAS, the Executive is currently employed as Chairman of the Board, President
and Chief Executive Officer of each of the Bank and the Corporation (the
Corporation and the Bank are referred to together herein as the “Employers”);

WHEREAS, the Executive and the Employers previously entered into an employment
agreement dated as of July 1, 2007 (the “Prior Agreement”) pursuant to which the
Executive served as the President and Chief Executive Officer of the Bank and
the Treasurer and Chief Financial Officer of the Corporation;

WHEREAS, the Prior Agreement currently extends until June 30, 2014, and the
Executive and the Employers now desire to amend and restate the Prior Agreement
to reflect the Executive’s current titles with the Bank and the Corporation and
to update the Prior Agreement for certain other purposes;

WHEREAS, the Employers desire to be ensured of the Executive’s continued active
participation in the business of the Employers; and

WHEREAS, the Executive is willing to serve the Employers on the terms and
conditions hereinafter set forth;

NOW THEREFORE, in consideration of the mutual agreements herein contained, and
upon the other terms and conditions hereinafter provided, the Employers and the
Executive hereby agree as follows:

1.           Definitions.  The following words and terms shall have the meanings
set forth below for the purposes of this Agreement:

(a)           Average Annual Compensation.  The Executive’s “Average Annual
Compensation” for purposes of this Agreement shall be deemed to mean the average
level of compensation paid to the Executive by the Employers or any subsidiary
thereof during the most recent five taxable years preceding the year in which
the Date of Termination occurs (or such shorter period as the Executive was
employed) and included in the Executive’s gross income for tax purposes and any
income earned and deferred by the Executive pursuant to any plan or arrangement
of the Employers.

 
 

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(b)           Base Salary.  “Base Salary” shall have the meaning set forth in
Section 3(a) hereof.

(c)           Cause. Termination of the Executive’s employment for “Cause” shall
mean termination because of personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist order or material breach of any provision of this Agreement.

(d)           Change in Control.  “Change in Control” shall mean a change in the
ownership of the Corporation or the Bank, a change in the effective control of
the Corporation or the Bank or a change in the ownership of a substantial
portion of the assets of the Corporation or the Bank, in each case as provided
under Section 409A of the Code and the regulations thereunder.

(e)           Code.  “Code” shall mean the Internal Revenue Code of 1986, as
amended.

(f)           Date of Termination.  “Date of Termination” shall mean (i) if the
Executive’s employment is terminated for Cause, the date on which the Notice of
Termination is given, and (ii) if the Executive’s employment is terminated for
any other reason, the date specified in such Notice of Termination.

(g)           Disability.  “Disability” shall mean the Executive (i) is unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, or (ii) is, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, receiving income replacement
benefits for a period of not less than three months under an accident and health
plan covering employees of the Employers.

(h)           Good Reason.  Termination by the Executive of the Executive’s
employment for “Good Reason” shall mean termination by the Executive following a
Change in Control based on:

(i)           any material breach of this Agreement by the Employers, including
without limitation any of the following: (A) a material diminution in the
Executive’s base compensation, (B) a material diminution in the Executive’s
authority, duties or responsibilities, or (C) any requirement that the Executive
report to a corporate officer or employee of the Corporation instead of
reporting directly to the Board of Directors of the Corporation, or

(ii)          any material change in the geographic location at which the
Executive must perform his services under this Agreement;

provided, however, that prior to any termination of employment for Good Reason,
the Executive must first provide written notice to the Corporation within ninety
(90) days of the initial

 
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existence of the condition, describing the existence of such condition, and the
Corporation shall thereafter have the right to remedy the condition within
thirty (30) days of the date the Corporation received the written notice from
the Executive.  If the Corporation remedies the condition within such thirty
(30) day cure period, then no Good Reason shall be deemed to exist with respect
to such condition.  If the Corporation does not remedy the condition within such
thirty (30) day cure period, then the Executive may deliver a Notice of
Termination for Good Reason at any time within sixty (60) days following the
expiration of such cure period.
 
(i)           Notice of Termination.  Any purported termination of the
Executive’s employment by the Employers for any reason, including without
limitation for Cause, Disability or Retirement, or by the Executive for any
reason, including without limitation for Good Reason, shall be communicated by a
written “Notice of Termination” to the other party hereto.  For purposes of this
Agreement, a “Notice of Termination” shall mean a dated notice which (i)
indicates the specific termination provision in this Agreement relied upon, (ii)
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so
indicated, (iii) specifies a Date of Termination, which shall be not less than
thirty (30) nor more than ninety (90) days after such Notice of Termination is
given, except in the case of the termination of the Executive’s employment for
Cause, which shall be effective immediately, and (iv) is given in the manner
specified in Section 11 hereof.

(j)           Retirement.  “Retirement” shall mean the Executive’s voluntary or
involuntary termination of employment, as applicable, upon reaching at least age
65, but shall not include an involuntary termination for Cause.

2.           Term of Employment.

(a)           The Employers hereby employ the Executive as Chairman of the
Board, President and Chief Executive Officer of each of the Bank and the
Corporation and the Executive hereby accepts said employment and agrees to
render such services to the Employers on the terms and conditions set forth in
this Agreement.  The term of employment under this Agreement shall be for three
years beginning on January 1, 2012 and, upon approval of the Board of Directors
of each of the Corporation and the Bank, shall extend for one additional year on
January 1st of each subsequent calendar year such that at any time after January
1, 2012 the remaining term of this Agreement shall be from two to three years,
absent notice of non-renewal as set forth below.  Prior to January 1, 2013 and
each January 1st thereafter, the Board of Directors of each of the Corporation
and the Bank shall consider and review (with appropriate corporate documentation
thereof, and after taking into account all relevant factors, including the
Executive’s performance hereunder) an extension of the term of this Agreement,
and the term shall continue to extend each year if the Boards of Directors
approve such extension unless the Executive gives written notice to the
Employers of the Executive’s election not to extend the term, with such written
notice to be given not less than thirty (30) days prior to any such January 1st.
If either Board of Directors elects not to extend the term, it shall give
written notice of such decision to the Executive not less than thirty (30) days
prior to any such January 1st.  If any party gives timely notice that the term
will not be extended as of January 1st of any year, then this Agreement shall

 
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terminate at the conclusion of its remaining term.  References herein to the
term of this Agreement shall refer both to the initial term and successive
terms.
 
(b)           During the term of this Agreement, the Executive shall perform
such executive services for the Corporation and the Bank as may be consistent
with his titles and from time to time assigned to him by the Corporation’s and
the Bank’s Board of Directors.

(c)           During the term of this Agreement, the Executive shall also be
nominated or re-nominated to be a member of the Board of Directors of each of
the Corporation and the Bank, as long as the Executive has not materially
violated any of the terms and provisions of this Agreement.

3.           Compensation and Benefits.

(a)           The Employers shall compensate and pay the Executive for his
services during the term of this Agreement at a minimum base salary of $250,000
per year (“Base Salary”), which may be increased from time to time in such
amounts as may be determined by the Boards of Directors of the Employers and may
not be decreased without the Executive’s express written consent.  In addition
to his Base Salary, the Executive shall be entitled to receive during the term
of this Agreement such bonus payments as may be determined by the Boards of
Directors of the Employers.

(b)           During the term of this Agreement, the Executive shall be entitled
to participate in and receive the benefits of any pension or other retirement
benefit plan, profit sharing, stock option, employee stock ownership, or other
plans, benefits and privileges given to employees and executives of the
Employers, to the extent commensurate with his then duties and responsibilities,
as fixed by the Boards of Directors of the Employers.  The Employers shall not
make any changes in such plans, benefits or privileges which would adversely
affect the Executive’s rights or benefits thereunder, unless such change occurs
pursuant to a program applicable to all executive officers of the Employers and
does not result in a proportionately greater adverse change in the rights of or
benefits to the Executive as compared with any other executive officer of the
Employers.  Nothing paid to the Executive under any plan or arrangement
presently in effect or made available in the future shall be deemed to be in
lieu of the salary payable to the Executive pursuant to Section 3(a) hereof.

(c)           During the term of this Agreement, the Executive shall be entitled
to paid annual vacation in accordance with the policies as established from time
to time by the Boards of Directors of the Employers, which shall in no event be
less than five weeks per annum.  The Executive shall not be entitled to receive
any additional compensation from the Employers for failure to take a vacation,
nor shall the Executive be able to accumulate unused vacation time from one year
to the next, except to the extent authorized by the Boards of Directors of the
Employers.

(d)           In the event the Executive’s employment is terminated due to
Disability or Retirement, the Employers shall provide continued life, medical
and dental coverage substantially identical to the coverage maintained by the
Employers for the Executive

 
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immediately prior to his termination.  Such coverage shall be provided for the
period otherwise remaining in the term of this Agreement but for such Disability
or Retirement and thereafter shall continue if, and to the extent, provided by
the Employers’ policies in existence at such time, provided that any insurance
premiums payable by the Employers or any successors pursuant to this Section
3(d) shall be payable at such times and in such amounts as if the Executive was
still an employee of the Employers, subject to any increases in such amounts
imposed by the insurance company or COBRA, and the amount of insurance premiums
required to be paid by the Employers in any taxable year shall not affect the
amount of insurance premiums required to be paid by the Employers in any other
taxable year.
 
(e)           In the event of the Executive’s death during the term of this
Agreement, the Employers shall provide to the Executive’s spouse for the
remaining term of this Agreement continued medical and dental coverage
substantially identical to the coverage maintained by the Employers for the
Executive immediately prior to his death, provided that any insurance premiums
payable by the Employers or any successors pursuant to this Section 3(e) shall
be payable at such times and in such amounts as if the Executive was still an
employee of the Employers, subject to any increases in such amounts imposed by
the insurance company or COBRA, and the amount of insurance premiums required to
be paid by the Employers in any taxable year shall not affect the amount of
insurance premiums required to be paid by the Employers in any other taxable
year.

4.           Expenses.  The Employers shall reimburse the Executive or otherwise
provide for or pay for all reasonable expenses incurred by the Executive in
furtherance of or in connection with the business of the Employers, including,
but not by way of limitation, traveling expenses, and all reasonable
entertainment expenses (whether incurred at the Executive’s residence, while
traveling or otherwise), subject to such reasonable documentation and other
limitations as may be established by the Boards of Directors of the
Employers.  If such expenses are paid in the first instance by the Executive,
the Employers shall reimburse the Executive therefor.  Such reimbursement shall
be paid promptly by the Employers and in any event no later than March 15 of the
year immediately following the year in which such expenses were incurred.

5.           Termination.

(a)           The Employers shall have the right, at any time upon prior Notice
of Termination, to terminate the Executive’s employment hereunder for any
reason, including, without limitation, termination for Cause, Disability or
Retirement, and the Executive shall have the right, upon prior Notice of
Termination, to terminate his employment hereunder for any reason.

(b)           In the event that (i) the Executive’s employment is terminated by
the Employers for Cause or (ii) the Executive terminates his employment
hereunder other than for Disability, Retirement, death or Good Reason, the
Executive shall have no right pursuant to this Agreement to compensation or
other benefits for any period after the applicable Date of Termination.

(c)           In the event that the Executive’s employment is terminated as a
result of Disability, Retirement or the Executive’s death during the term of
this Agreement, the Executive

 
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shall have no right pursuant to this Agreement to compensation or other benefits
for any period after the applicable Date of Termination, except as provided for
in Sections 3(d) and 3(e) hereof.
 
(d)           In the event that (i) the Executive’s employment is terminated by
the Employers for other than Cause, Disability, Retirement or the Executive’s
death or (ii) such employment is terminated by the Executive for Good Reason,
then the Employers shall, subject to the provisions of Section 6 hereof, if
applicable,

(A)           pay to the Executive, in a lump sum as of the Date of Termination,
a cash severance amount equal to three (3) times the Executive’s Average Annual
Compensation,

(B)           maintain and provide for a period ending at the earlier of (i)
thirty-six (36) months after the Date of Termination or (ii) the date of the
Executive’s full-time employment by another employer (provided that the
Executive is entitled under the terms of such employment to benefits
substantially similar to those described in this subparagraph (B)), at no cost
to the Executive, the Executive’s continued participation in all group
insurance, life insurance, health and accident and disability insurance coverage
offered by the Employers in which the Executive was entitled to participate
immediately prior to the Date of Termination, subject to subparagraphs (i), (ii)
and (iii) below, with the Executive to pay any employee portion of the premiums
that he would have been required to pay if he was still an employee of the
Employers;

(i) in the event that the Executive's participation in any plan, program or
arrangement as provided in subparagraph (B) of this Section 5(d) is barred or
would trigger the payment of an excise tax under Section 4980D of the Code, or
during such period any such plan, program or arrangement is discontinued or the
benefits thereunder are materially reduced, then the Employers shall arrange to
provide the Executive with benefits substantially similar to those which the
Executive was entitled to receive under such plans, programs and arrangements
immediately prior to the Date of Termination, except that subparagraph (ii)
below shall be applicable if the alternative benefits would still trigger the
payment of an excise tax under Section 4980D of the Code,

(ii) in the event that the continuation of any insurance coverage pursuant to
Section 5(d)(B)(i) above would trigger the payment of an excise tax under
Section 4980D of the Code, then in lieu of providing such coverage, the
Employers shall pay to the Executive within 10 business days following the Date
of Termination (or within 10 business days following the discontinuation of the
benefits if later) a lump sum cash amount equal to the projected cost to the
Employers of providing such coverage to the Executive, with the projected cost
to be based on the costs being incurred immediately prior to the Date of
Termination (or the discontinuation of the benefits if later), as increased by
10% each year, and

(iii) any insurance premiums payable by the Employers or any successors pursuant
to Section 5(d)(B) or (B)(i) shall be payable at such times and

 
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in such amounts as if the Executive was still an employee of the Employers (with
the Employers paying any employee portion of the premiums), subject to any
increases in such amounts imposed by the insurance company or COBRA, and the
amount of insurance premiums required to be paid by the Employers in any taxable
year shall not affect the amount of insurance premiums required to be paid by
the Employers in any other taxable year.
 
(C)           pay to the Executive, in a lump sum within ten (10) business days
after the Date of Termination, a cash amount equal to the projected cost to the
Employers of providing benefits to the Executive for a period of thirty-six (36)
months pursuant to any other employee benefit plan, program or arrangement
offered by the Employers in which the Executive was entitled to participate
immediately prior to the Date of Termination (other than cash bonus plans,
retirement plans or stock compensation plans of the Employers), with the
projected cost to the Employers to be based on the costs incurred for the year
in which the Date of Termination occurs as determined on an annualized basis and
with any automobile-related costs to exclude any depreciation on bank-owned
automobiles.

6.           Limitation of Benefits under Certain Circumstances.  If the
payments and benefits pursuant to Section 5 hereof, either alone or together
with other payments and benefits which the Executive has the right to receive
from the Employers, would constitute a “parachute payment” under Section 280G of
the Code, then the payments and benefits payable by the Employers pursuant to
Section 5 hereof shall be reduced by the minimum amount necessary to result in
no portion of the payments and benefits payable by the Employers under Section 5
being non-deductible to the Employers pursuant to Section 280G of the Code and
subject to the excise tax imposed under Section 4999 of the Code.  If the
payments and benefits under Section 5 are required to be reduced, the cash
severance shall be reduced first, followed by a reduction in the fringe
benefits.  The determination of any reduction in the payments and benefits to be
made pursuant to Section 5 shall be based upon the opinion of independent tax
counsel selected by the Employers and paid for by the Employers.  Such counsel
shall promptly prepare the foregoing opinion, but in no event later than ten
(10) days from the Date of Termination, and may use such actuaries as such
counsel deems necessary or advisable for the purpose.  Nothing contained herein
shall result in a reduction of any payments or benefits to which the Executive
may be entitled upon termination of employment under any circumstances other
than as specified in this Section 6, or a reduction in the payments and benefits
specified in Section 5 below zero.

7.           Restrictive Covenants

(a)           Trade Secrets. The Executive acknowledges that he has had, and
will have, access to confidential information of the Employers (including, but
not limited to, current and prospective confidential know-how, customer lists,
marketing plans, business plans, financial and pricing information, and
information regarding acquisitions, mergers and/or joint ventures) concerning
the business, customers, contacts, prospects, and assets of the Employers that
is unique, valuable and not generally known outside the Employers, and that was
obtained from the Employers or which was learned as a result of the performance
of services by the Executive on behalf of the Employers (“Trade Secrets”). Trade
Secrets shall not include any information that:

 
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(i) is now, or hereafter becomes, through no act or failure to act on the part
of the Executive that constitutes a breach of this Section 7, generally known or
available to the public; (ii) is known to the Executive at the time such
information was obtained from the Employers; (iii) is hereafter furnished
without restriction on disclosure to the Executive by a third party, other than
an employee or agent of the Employers, who is not under any obligation of
confidentiality to the Employers or an Affiliate; (iv) is disclosed with the
written approval of the Employers; or (v) is required to be disclosed or
provided by law, court order, order of any regulatory agency having jurisdiction
or similar compulsion, including pursuant to or in connection with any legal
proceeding involving the parties hereto; provided however, that such disclosure
shall be limited to the extent so required or compelled; and provided further,
however, that if the Executive is required to disclose such confidential
information, he shall give the Employers notice of such disclosure and cooperate
in seeking suitable protections. Other than in the course of performing services
for the Employers, the Executive will not, at any time, directly or indirectly
use, divulge, furnish or make accessible to any person any Trade Secrets, but
instead will keep all Trade Secrets strictly and absolutely confidential. The
Executive will deliver promptly to the Employers, at the termination of his
employment or at any other time at the request of the Employers, without
retaining any copies, all documents and other materials in his possession
relating, directly or indirectly, to any Trade Secrets.
 
(b)           Non-Competition. Unless the Executive’s employment is terminated
in connection with or following a Change in Control of the Employers or unless
the Executive’s employment is terminated by the Employers for a reason other
than Cause, then for a period of eighteen (18) months after termination of
employment (the “Restricted Period”), the Executive will not, directly or
indirectly, (i) become a director, officer, employee, principal, agent,
consultant or independent contractor of any insured depository institution,
trust company or parent holding company of any such institution or company which
has an office in any county in the Commonwealth of Pennsylvania in which the
Bank also maintains an office.  Notwithstanding the foregoing, nothing in this
Agreement shall prevent the Executive from owning for passive investment
purposes not intended to circumvent this Agreement, less than five percent (5%)
of the publicly traded voting securities of any company engaged in the banking,
financial services, insurance, brokerage or other business similar to or
competitive with the Employers (so long as the Executive has no power to manage,
operate, advise, consult with or control the competing enterprise and no power,
alone or in conjunction with other affiliated parties, to select a director,
manager, general partner, or similar governing official of the competing
enterprise other than in connection with the normal and customary voting powers
afforded the Executive in connection with any permissible equity ownership).

(c)           Non-Solicitation of Employees. During the Restricted Period, the
Executive shall not, directly or indirectly, solicit, induce or hire, or attempt
to solicit, induce or hire, any current employee of the Employers, or any
individual who becomes an employee during the Restricted Period, to leave his or
her employment with the Employers or join or become affiliated with any other
business or entity, or in any way interfere with the employment relationship
between any employee and the Employers.

(d)           Non-Solicitation of Customers. During the Restricted Period, the
Executive shall not, directly or indirectly, solicit or induce, or attempt to
solicit or induce, any customer, lender,

 
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supplier, licensee, licensor or other business relation of the Employers to
terminate its relationship or contract with the Employers, to cease doing
business with the Employers, or in any way interfere with the relationship
between any such customer, lender, supplier, licensee or business relation and
the Employers (including making any negative or derogatory statements or
communications concerning the Employers or their directors, officers or
employees).
 
(e)           Irreparable Harm. The Executive acknowledges that: (i) the
Executive’s compliance with Section 7 of this Agreement is necessary to preserve
and protect the proprietary rights, Trade Secrets, and the goodwill of the
Employers as going concerns, and (ii) any failure by the Executive to comply
with the provisions of this Agreement will result in irreparable and continuing
injury for which there will be no adequate remedy at law. In the event that the
Executive fails to comply with the terms and conditions of this Agreement, the
obligations of the Employers to pay the severance benefits set forth in Sections
3 and 5 shall cease, and the Employers will be entitled, in addition to other
relief that may be proper, to all types of equitable relief (including, but not
limited to, the issuance of an injunction and/or temporary restraining order)
that may be necessary to cause the Executive to comply with this Agreement, to
restore to the Employers their property, and to make the Employers whole.

(f)           Survival. The provisions set forth in this Section 7 shall survive
termination of this Agreement.

(g)           Scope Limitations. If the scope, period of time or area of
restriction specified in this Section 7 are or would be judged to be
unreasonable in any court proceeding, then the period of time, scope or area of
restriction will be reduced or limited in the manner and to the extent necessary
to make the restriction reasonable, so that the restriction may be enforced in
those areas, during the period of time and in the scope that are or would be
judged to be reasonable.

8.           Mitigation; Exclusivity of Benefits.

(a)           The Executive shall not be required to mitigate the amount of any
benefits hereunder by seeking other employment or otherwise, nor shall the
amount of any such benefits be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination or otherwise, except as set forth in Section 5(d)(B)(ii) above.

(b)           The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employers pursuant to employee benefit plans
of the Employers or otherwise.

9.           Withholding.  All payments required to be made by the Employers
hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Employers may
reasonably determine should be withheld pursuant to any applicable law or
regulation.

10.          Assignability.  The Corporation and the Bank may assign this
Agreement and their rights and obligations hereunder in whole, but not in part,
to any corporation, bank or other

 
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entity with or into which the Corporation or the Bank may hereafter merge or
consolidate or to which the Corporation or the Bank may transfer all or
substantially all of its assets, if in any such case said corporation, bank or
other entity shall by operation of law or expressly in writing assume all
obligations of the Employers hereunder as fully as if it had been originally
made a party hereto, but may not otherwise assign this Agreement or their rights
and obligations hereunder.  The Executive may not assign or transfer this
Agreement or any rights or obligations hereunder.
 
11.          Notice.  For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:

 
To the Bank:
Secretary
The Farmers National Bank of Emlenton
612 Main Street
Emlenton, Pennsylvania 16373

 
To the Corporation:
Secretary
Emclaire Financial Corp.
612 Main Street
Emlenton, Pennsylvania 16373

 
To the Executive:
William C. Marsh
At the address last appearing on
the personnel records of the Employers

12.          Amendment; Waiver.  No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and such officer or officers as may
be specifically designated by the Boards of Directors of the Employers to sign
on their behalf.  No waiver by any party hereto at any time of any breach by any
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.  In addition, notwithstanding anything in this Agreement to the
contrary, the Employers may amend in good faith any terms of this Agreement,
including retroactively, in order to comply with Section 409A of the Code.

13.          Governing Law.  The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the Commonwealth of
Pennsylvania.

14.          Nature of Obligations.  Nothing contained herein shall create or
require the Employers to create a trust of any kind to fund any benefits which
may be payable hereunder, and to the extent that the Executive acquires a right
to receive benefits from the Employers

 
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hereunder, such right shall be no greater than the right of any unsecured
general creditor of the Employers.
 
15.          Headings.  The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

16.          Validity.  The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.

17.          Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

18.          Regulatory Actions.  The following provisions shall be applicable
to the parties or any successor thereto, and shall be controlling in the event
of a conflict with any other provision of this Agreement, including without
limitation Section 5 hereof.

(a)           If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Bank’s affairs pursuant to
notice served under Section 8(e)(3) or Section 8(g)(1) of the Federal Deposit
Insurance Act (“FDIA”)(12 U.S.C. §§1818(e)(3) and 1818(g)(1)), the Bank’s
obligations under this Agreement shall be suspended as of the date of service,
unless stayed by appropriate proceedings.  If the charges in the notice are
dismissed, the Bank may, in its discretion:  (i) pay the Executive all or part
of the compensation withheld while its obligations under this Agreement were
suspended, and (ii) reinstate (in whole or in part) any of its obligations which
were suspended.

(b)           If the Executive is removed from office and/or permanently
prohibited from participating in the conduct of the Bank’s affairs by an order
issued under Section 8(e)(4) or Section 8(g)(1) of the FDIA (12 U.S.C.
§§1818(e)(4) and (g)(1)), all obligations of the Bank under this Agreement shall
terminate as of the effective date of the order, but vested rights of the
Executive and the Bank as of the date of termination shall not be affected.

(c)           If the Bank is in default, as defined in Section 3(x)(1) of the
FDIA (12 U.S.C. §1813(x)(1)), all obligations under this Agreement shall
terminate as of the date of default, but vested rights of the Executive and the
Bank as of the date of termination shall not be affected.

19.          Regulatory Prohibition.  Notwithstanding any other provision of
this Agreement to the contrary, any payments made to the Executive pursuant to
this Agreement, or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the FDIA (12 U.S.C. §1828(k)) and 12 C.F.R.
Part 359.

20.          Payment of Costs and Legal Fees and Reinstatement of Benefits.  In
the event any dispute or controversy arising under or in connection with the
Executive’s termination is resolved in favor of the Executive, whether by
judgment, arbitration or settlement, the Executive shall be entitled to the
payment of (a) all legal fees incurred by the Executive in resolving such

 
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dispute or controversy, and (b) any back-pay, including Base Salary, bonuses and
any other cash compensation, fringe benefits and any compensation and benefits
due to the Executive under this Agreement.
 
21.          Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the rules then in effect of the district office of the American
Arbitration Association (“AAA”) nearest to the home office of the Bank, and
judgment upon the award rendered may be entered in any court having jurisdiction
thereof, except to the extent that the parties may otherwise reach a mutual
settlement of such issue.  The Employers shall incur the cost of all fees and
expenses associated with filing a request for arbitration with the AAA, whether
such filing is made on behalf of the Employers or the Executive, and the costs
and administrative fees associated with employing the arbitrator and related
administrative expenses assessed by the AAA.

22.          Entire Agreement.  This Agreement embodies the entire agreement
between the Employers and the Executive with respect to the matters agreed to
herein. All prior agreements between the Employers and the Executive, including
without limitation the Prior Agreement, with respect to the matters agreed to
herein are hereby superseded and shall have no force or effect.
 
 
 
 

 
 
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IN WITNESS WHEREOF, this Agreement has been executed as of the date first
written above.
 

 
EMCLAIRE FINANCIAL CORP.
        By:
/s/ Robert L. Hunter
   
Robert L. Hunter
Chairman, Human Resources Committee
             
THE FARMERS NATIONAL BANK
  OF EMLENTON
        By:
/s/ Robert L. Hunter
   
Robert L. Hunter
Chairman, Human Resources Committee
              EXECUTIVE     By:
/s/ William C. Marsh
   
William C. Marsh

 
 
 
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