Document:

Amended and Restated Employment Agreement

 AMENDED AND RESTATED 
 EMPLOYMENT AGREEMENT 
 THIS EMPLOYMENT AGREEMENT, made and entered into as of the first day of
October, 2002, and hereby amended and restated as of the first day of June, 2007, by and between FIRST NATIONAL CORPORATION, a Virginia corporation, hereinafter called the “Corporation”, and J. ANDREW HERSHEY hereinafter
called “Employee”, and provides as follows: 
 RECITALS 
 WHEREAS, the Corporation is a bank holding company engaged in the operation of a bank; and 
 WHEREAS, Employee has been involved in the management of the business and affairs of the Corporation and, therefore, possesses managerial experience,
knowledge, skills and expertise in such type of business; and 
 WHEREAS, the continued employment of Employee by the Corporation is in the
best interests of the Corporation and Employee; and 
 WHEREAS, the parties have mutually agreed upon the terms and conditions of
Employee’s continued employment by the Corporation as hereinafter set forth; 
 TERMS OF AGREEMENT 
 NOW, THEREFORE, for and in consideration of the premises and of the mutual promises and undertakings of the parties as hereinafter set forth, the parties
covenant and agree as follows: 
 Section 1. Employment. (a) Employee shall be employed as the Executive Vice President
– Loan Administration of the Corporation and its wholly owned subsidiary, First Bank. He shall perform such services for the Corporation and/or one or more Affiliates as may be assigned to Employee by the Corporation from time to time upon the
terms and conditions hereinafter set forth. Employee’s services shall be rendered in a senior management or executive capacity and shall be of the type for which he is suited by background and training. 
 (b) References in this Agreement to services rendered for the Corporation and compensation and benefits payable or provided by the Corporation shall
include services rendered for and compensation and benefits payable or provided by any Affiliate. References in this Agreement to the “Corporation” also shall mean and refer to each Affiliate for which Employee performs services.
References in this Agreement to “Affiliate” shall mean any business entity that, directly or indirectly, through one or more intermediaries, is controlled by the Corporation. 
 Section 2. Term. The term of this Agreement shall at all times be two (2) years, which means that at the end of every day, the term of
this Agreement shall be extended for one day. With thirty (30) days notice, however, either party may notify the other that the term of this Agreement shall no longer be extended and that this Agreement will terminate two (2) years after
the effective date of such notice. 
 Section 3. Exclusive Service. Employee shall devote his best efforts and full time to
rendering services on behalf of the Corporation in furtherance of its best interests. Employee shall comply with all policies, standards and regulations of the Corporation now or hereafter promulgated, and shall perform his duties under this
Agreement to the best of his abilities and in accordance with standards of conduct applicable to executive officers of banks. 
 Section 4. Salary. (a) As compensation while employed hereunder, Employee, during his faithful performance of this Agreement, in whatever capacity rendered, shall receive an annual base salary of $152,500.00 payable on such
terms and in such installments as the parties may from time to time mutually agree upon. The Board of Directors, in its discretion, may increase Employee’s base salary during the term of this Agreement; provided, however, that Employee’s
salary after being increased may not be decreased. 
 (b) The Corporation shall withhold state and federal income taxes, social security
taxes and such other payroll deductions as may from time to time be required by law or agreed upon in writing by Employee and the Corporation. The Corporation shall also withhold and remit to the proper party any amounts agreed to in writing by the
Corporation and Employee for participation in any corporate sponsored benefit plans for which a contribution is required. 
  

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 (c) Except as otherwise expressly set forth hereunder, no compensation shall be paid pursuant to this
Agreement in respect of any month or portion thereof subsequent to any termination of Employee’s employment by the Corporation. 
 Section 5. Corporate Benefit Plans. Employee shall be entitled to participate in or become a participant in any employee benefit plan maintained by the Corporation for which he is or will become eligible on such terms as the
Board of Directors may, in its discretion, establish, modify or otherwise change. 
 Section 6. Bonuses. Employee shall receive
only such bonuses as the Board of Directors, in its discretion, decides to pay to Employee. 
 Section 7. Expense Account. The
Corporation shall reimburse Employee for reasonable and customary business expenses incurred in the conduct of the Corporation’s business. Such expenses will include business meals, out-of-town lodging and travel expenses. Employee agrees to
timely submit records and receipts of reimbursable items and agrees that the Corporation can adopt reasonable rules and policies regarding such reimbursement. The Corporation agrees to make prompt payment to Employee following receipt and
verification of such reports. Such payment shall be made no later than March 15 following the calendar year in which such expense was incurred. 
 Section 8. Personal and Sick Leave. Employee shall be entitled to the same personal and sick leave as the Board of Directors may from time to time designate for all full-time employees of the Corporation.

 Section 9. Vacations. Employee shall be entitled to vacations in accordance with policies the Board of Directors sets for all
full time employees of the Corporation and during which Employee’s compensation hereunder shall continue to be paid. 
 Section 10.
Termination. (a) Notwithstanding the termination of Employee’s employment pursuant to any provision of this Agreement, the parties shall be required to carry out any provisions of this Agreement which contemplate performance by them
subsequent to such termination. In addition, no termination shall affect any liability or other obligation of either party which shall have accrued prior to such termination, including, but not limited to, any liability, loss or damage on account of
breach. No termination of employment shall terminate the obligation of the Corporation to make payments of any vested benefits provided hereunder or the obligations of Employee under Sections 11, 12 and 13. 
 (b) Employee’s employment hereunder may be terminated by Employee upon thirty (30) days written notice to the Corporation or at any time by
mutual agreement in writing. 
 (c) Except as otherwise provided in this Section 10(c), this Agreement shall terminate upon death of
Employee. In such event the Corporation shall pay to the estate of Employee the compensation including salary and accrued bonus, if any, which otherwise would be payable to Employee through the end of the month in which his death occurs. In
addition, Employee’s death is not intended to, and shall not, prevent amounts to which Employee would have been entitled under Sections 10(d)(2) or 10(i) had he lived from being paid under this Agreement to Employee’s estate or
beneficiaries at the time or times such amounts would have been paid had Employee lived. 
 (d)(1) The Corporation may terminate
Employee’s employment other than for “Cause,” as defined in Section 10(e), at any time upon written notice to Employee, which termination shall be effective immediately. Employee may resign thirty (30) days after notice to
the Corporation for “Good Reason”, as hereafter defined. 
 (2) If the Corporation terminates the Employee’s employment
without Cause or the Employee resigns for Good Reason, then in either event: 
 (i)(A) The Employee shall be paid for the remainder of the
then current term of this Agreement, at such times as payment was theretofore made, the salary required under Section 4 (taking into account any salary increases) that the Employee would have been entitled to receive during the remainder of the
then current term of this Agreement had such termination not occurred. 
 (B) Notwithstanding the foregoing, if such termination or
resignation occurs within one year after a Change of Control (as defined below), the time at which the amount described in Section 10(d)(2)(i)(A) is paid shall be determined not under that Section but under Section 10(i), below.

  

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 (C) Further, payments due under Section 10(d)(2)(i)(A), Section 10(d)(2)(iii), or
Section 10(d)(3) and made to a Key Employee shall commence or be paid on the first day of the month following the six-month anniversary of the Employee’s termination or resignation. The initial payment made under the preceding sentence
shall include amounts that would have been paid under Section 10(d)(2)(i)(A), Section 10(d)(2)(iii), or Section 10(d)(3) through the date of such initial payment had the Employee not been a Key Employee. This
Section 10(d)(2)(i)(C) shall apply to amounts payable to a Key Employee under Section 10(d)(2)(i)(A) even if the timing of the payments is determined under Section 10(i); and 
 (ii) The Corporation shall maintain in full force and effect for the continued benefit of the Employee for the remainder of the then current term of this
Agreement all employee welfare benefit plans and programs or arrangements in which the Employee was entitled to participate immediately prior to such termination, provided that continued participation is possible under the general terms and
provisions of such plans and programs. In the event that Employee’s participation in any such plan or program is barred, the Corporation shall arrange to provide the Employee with benefits substantially similar to those which the Employee was
entitled to receive under such plan or program. Payments under this Section 10(d)(2)(ii) that do not constitute (i) welfare benefits exempt from Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and
Treasury Regulations thereunder (the “409A Regulations”) or (ii) reimbursed medical expenses exempt under 409A Regulations Section 1.409A-1(b)(9)(v)(B) shall be limited in the aggregate to the applicable dollar amount under Code
Section 402(g)(1)(B) for the year of the separation from service. In addition, any benefits provided to a Key Employee under this Section 10(d)(2)(ii) that are considered deferred compensation subject to Code Section 409A shall not
commence until the first day of the month following the six-month anniversary of the Employee’s termination or resignation. All determinations required under this Section 10(d)(2)(ii) shall be made by independent counsel selected by the
Corporation and reasonably acceptable to the Employee or Key Employee, in accordance with Code Section 409A, the 409A Regulations and other applicable guidance; and 
 (iii) The Employee shall receive a payment in cash on the date his employment terminates equal to the amount of any cash bonus paid to him in respect of the fiscal year of the Corporation prior to the fiscal year in
which his employment terminates, multiplied by a fraction, the numerator of which is the number of days that elapse before the date his employment terminates in the fiscal year of the Corporation in which his employment terminates and the
denominator of which is three hundred sixty-five (365). 
 (3) If, (1) pursuant to the second sentence of Section 2 of this
Agreement, the Corporation notifies Employee that this Agreement shall no longer be extended, (2) the Employee’s employment by the Corporation does not terminate during the two (2) years after the effective date of such notice and
(3) the Employee’s employment by the Corporation terminates after such two (2) year period, then, beginning on the first day of the month that follows the month in which his employment terminates and continuing for the succeeding
eleven (11) months, the Corporation shall pay to the Employee an amount equal to one-twelfth (1/12) of his then current salary. 
 Notwithstanding the foregoing, at any time after payments begin under the preceding paragraph, the Corporation may, for any reason and without liability, terminate all payments under this Section 10(d)(3); provided, however, from and
after the date that the Corporation terminates such payments pursuant to this Section 10(d)(3), the Employee shall no longer be bound by Section 12; and provided further, if the Employee breaches Section 11 or any provision of
Section 12 while receiving payments under this Section 10(d)(3) (or during any delay in the receipt of payment required by Code Section 409A) and, pursuant to Section 10(d)(4), the Corporation then terminates payments on account
of such breach, the Employee shall remain bound by Section 12. 
 (4) Notwithstanding anything in this Agreement to the contrary, if
Employee breaches Section 11 or 12, Employee will not thereafter be entitled to receive any further compensation or benefits pursuant to this Section 10(d). In addition, notwithstanding anything in this Agreement to the contrary, the
Corporation shall not be required to make any payment that is prohibited by the terms of the regulations presently found at 12 C.F.R. part 359 or to the extent that any other governmental approval of the payment required by law is not received.

 (5) For purposes of this Agreement, “Good Reason” shall mean: 
 (i) The assignment of duties to the Employee by the Corporation which result in the Employee having significantly less authority or responsibility than he
has on the date hereof, without his express written consent; 
 (ii) Requiring the Employee to maintain his principal office anywhere outside
of the Virginia Counties of Frederick, Warren and Shenandoah, or cities located therein; 
  

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 (iii) The failure of the Corporation to provide the Employee with substantially the same fringe benefits
that are provided to him at the inception of this Agreement; 
 (iv) The Corporation’s failure to comply with any material term of this
Agreement; 
 (v) The failure of the Corporation to obtain the assumption of and agreement to perform this Agreement by any successor as
contemplated in Section 14 hereof; or 
 (vi) The Corporation’s elimination, on or after a Change of Control, of any benefit plan,
program or arrangement (including without limitation a tax-qualified retirement plan) or any change, made on or after a Change of Control, to such plan, program or arrangement that reduces the value of the affected benefit to the Employee.

 (6) For purposes of this Agreement, “Key Employee” shall mean any Employee who, as of December 31 of any calendar year,
satisfies the requirement of Code Section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with Treasury Regulations thereunder and disregarding Code Section 416(i)(5)). An Employee who meets the criteria set forth in the
preceding sentence will be considered a Key Employee for purposes of this Agreement for the 12-month period commencing on the next following April 1. For example, an Employee who meets the definition of Key Employee as of December 31,
2008, will be considered a Key Employee from April 1, 2009 through March 31, 2010, when applying the special rules for Key Employees found in this Agreement. 
 (e) The Corporation shall have the right to terminate Employee’s employment under this Agreement at any time for Cause, which termination shall be effective immediately. Termination for “Cause” shall
include termination for Employee’s failure, neglect or refusal to perform his duties and responsibilities without the same being corrected after ten days prior written notice or termination because of his personal dishonesty, incompetence,
willful misconduct, breach of a fiduciary duty involving personal profit, willful violation of any law, rule or regulation (other than traffic violations or similar offenses), conviction of a felony or of a misdemeanor involving moral turpitude,
misappropriation of the Corporation’s assets (determined on a reasonable basis) or those of its Affiliates, or material breach of any other provision of this Agreement. Termination for Cause also shall include termination as a result of the
Employee’s failure to correct a material deficiency in the performance of his duties within 60 days after a written notice from the Board of Directors or such other reasonable period of time specified by the Board of Directors if such
deficiency cannot be cured within 60 days. Any notice given under this subsection shall state that it is a notice pursuant to Section 10(e) of this Agreement and shall set forth the Board’s complaints in detail sufficient to allow Employee
to understand and correct them. In the event Employee’s employment under this Agreement is terminated for Cause, Employee shall thereafter have no right to receive compensation or other benefits under this Agreement. 
 (f) The Corporation may terminate Employee’s employment under this Agreement, after having established the Employee’s disability by giving to
Employee written notice of its intention to terminate his employment for disability and his employment with the Corporation shall terminate effective on the 90th day after receipt of such notice if within 90 days after such receipt Employee shall
fail to return to the full-time performance of the essential functions of his position (and if Employee’s disability has been established pursuant to the definition of “disability” set forth below). For purposes of this Agreement,
“disability” means either (i) disability which after the expiration of more than 13 consecutive weeks after its commencement is determined to be total and permanent by a physician selected and paid for by the Corporation or its
insurers, and acceptable to Employee or his legal representative, which consent shall not be unreasonably withheld or (ii) disability as defined in the policy of disability insurance maintained by the Corporation or its Affiliates for the
benefit of Employee, whichever shall be more favorable to Employee. Notwithstanding any other provision of this Agreement, the Corporation shall comply with all requirements of the Americans with Disabilities Act, 42 U.S.C. § 12101 et.
seq. 
 (g) If Employee is suspended and/or temporarily prohibited from participating in the conduct of the Corporation’s affairs
by a notice served pursuant to the Federal Deposit Insurance Act, the Corporation’s obligations under this Employment Agreement shall be suspended as of the date of service unless stayed by appropriate proceedings. If the charges in the notice
are dismissed, the Corporation may in its discretion (i) pay Employee all or part of the compensation withheld while its contract obligations were suspended, and (ii) reinstate (in whole or in part) any of its obligations which were
suspended. If any payment of withheld compensation is made under this Section 10(g) in the Corporation’s sole discretion, it shall be made by March 15 following the calendar year in which the charges in the applicable notice are
dismissed. 
 (h) If Employee is removed and/or permanently prohibited from participating in the conduct of the Corporation’s affairs by
an order issued under the Federal Deposit Insurance Act or the Code of Virginia, all obligations of the Corporation under this Employment Agreement shall terminate as of the effective date of the order, but vested rights of the parties shall not be
affected. 
  

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 (i)(1) If Employee’s employment is terminated without Cause or if he resigns for Good Reason within
one year after a Change of Control shall have occurred, then on Employee’s last day of employment with the Corporation, the Corporation shall pay to Employee as compensation for services rendered to the Corporation and its Affiliates a lump sum
cash amount (subject to any applicable payroll or other taxes required to be withheld) equal to the excess, if any, of 299% of Employee’s “annualized includable compensation for the base period”, as defined in Code Section 280G,
over the total amount payable to Employee under Section 10(d). In addition, under such circumstances, if an election has been made pursuant to Section 10(i)(2), below, the amount to which Employee is entitled under Section 10(d)(2)(i)
shall not be subject to the payment schedule called for under Section 10(d)(2)(i) but instead shall be paid in accordance with such election. 
 (2) Employee may elect, prior to December 31, 2007, to have the total cash amount to which he is entitled under Sections 10(d)(2)(i) and 10(i)(1) paid in a single lump sum or in 24 or 36 equal monthly installments, with the lump sum or
first installment paid on the date of termination or resignation and the remaining installments, if any, paid on the first day of each succeeding month. Such election shall not apply to amounts otherwise payable in the year the election is made nor
cause amounts to be paid in the year the election is made that would not otherwise be payable in that year. Subsequent changes to the time or form of payment of such cash amount shall be made only in accordance with Code Section 409A, the 409A
Regulations, and other applicable guidance, including any transition rules promulgated by the Internal Revenue Service. 
 (3)
Notwithstanding the foregoing, the timing of an amount payable to a Key Employee under the first sentence of Section 10(i)(1) (whether or not subject to an installment election) above shall be determined as follows: the lump sum payment shall
be made or installments shall commence on the first day of the month following the six-month anniversary of the Key Employee’s termination or resignation date. The initial payment made under the preceding sentence shall include amounts that
would have been paid under the first sentence of Section 10(i)(1) through the date of such initial payment had the Employee not been a Key Employee. 
 (4) For purposes of this Agreement, a Change of Control occurs if, after the date of this Agreement, (i) any person, including a “group” as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, becomes the owner or beneficial owner of Corporation securities having 50% or more of the combined voting power of the then outstanding Corporation securities that may be cast for the election of the Corporation’s directors other
than a result of an issuance of securities initiated by the Corporation, or open market purchases approved by the Board of Directors, as long as the majority of the Board of Directors approving the purchases is a majority at the time the purchases
are made; or (ii) as the direct or indirect result of, or in connection with, a tender or exchange offer, a merger or other business combination, a sale of assets, a contested election of directors, or any combination of these events, the
persons who were directors of the Corporation before such events cease to constitute a majority of the Corporation’s Board, or any successor’s board, within two years of the last of such transactions. For purposes of this Agreement, a
Change of Control occurs on the date on which an event described in (i) or (ii) occurs. If a Change of Control occurs on account of a series of transactions or events, the Change of Control occurs on the date of the last of such
transactions or events. 
 (5) It is the intention of the parties that no payment be made or benefit provided to Employee pursuant to this
Agreement that would constitute an “excess parachute payment” within the meaning of Section 280G of the Code and any regulations thereunder, thereby resulting in a loss of an income tax deduction by the Corporation or the imposition
of an excise tax on Employee under Section 4999 of the Code. If the independent accountants serving as auditors for the Corporation on the date of a Change of Control (or any other accounting firm designated by the Corporation) determine that
some or all of the payments or benefits scheduled under this Agreement, as well as any other payments or benefits on a Change of Control, would be nondeductible by the Company under Section 280G of the Code, then the payments scheduled under
this Agreement will be reduced to one dollar less than the maximum amount which may be paid without causing any such payment or benefit to be nondeductible. The determination made as to the reduction of benefits or payments required hereunder by the
independent accountants shall be binding on the parties. Employee shall have the right to designate within a reasonable period, which payments or benefits will be reduced; provided, however, that if no direction is received from Employee, the
Corporation shall implement the reductions in its discretion. 
 Section 11. Confidentiality/Nondisclosure. Employee covenants
and agrees that any and all information concerning the customers, businesses and services of the Corporation of which he has knowledge or access as a result of his association with the Corporation in any capacity, shall be deemed confidential in
nature and shall not, without the proper written consent of the Corporation, be directly or indirectly used, disseminated, disclosed or published by Employee to third parties other than in connection with the usual conduct of the business of the
Corporation. Such information shall expressly include, but shall not be limited to, information concerning the Corporation’s trade secrets, business operations, business records, customer lists or other customer information. Upon termination of
employment Employee shall deliver to the Corporation all originals and copies of 

  

 41 

 
documents, forms, records or other information, in whatever form it may exist, concerning the Corporation or its business, customers, products or services.
In construing this provision it is agreed that it shall be interpreted broadly so as to provide the Corporation with the maximum protection. This Section 11 shall not be applicable to any information which, through no misconduct or negligence
of Employee, has previously been disclosed to the public by anyone other than Employee. 
 Section 12. Covenant Not to Compete.
During the term of this Agreement and throughout any further period that he is an officer or employee of the Corporation, and for a period of twelve (12) months from and after the date that Employee is (for any reason) no longer employed by the
Corporation or for a period of twelve (12) months from the date of entry by a court of competent jurisdiction of a final judgment enforcing this covenant in the event of a breach by Employee, whichever is later, Employee covenants and agrees
that he will not, directly or indirectly, either as a principal, agent, employee, employer, stockholder, co-partner or in any other individual or representative capacity whatsoever: (i) engage in a Competitive Business anywhere within a ten
(10) mile straight-line radius of any office operated by the Corporation on the date Employee’s employment terminates; or (ii) solicit, or assist any other person or business entity in soliciting, any depositors or other customers of
the Corporation to make deposits in or to become customers of any other financial institution conducting a Competitive Business; or (iii) induce any individuals to terminate their employment with the Corporation or its Affiliates. As used in
this Agreement, the term “Competitive Business” means all banking and financial products and services that are substantially similar to those offered by the Corporation on the date that Employee’s employment terminates. Except as
otherwise expressly provided in Section 10(d)(3) of this Agreement, the parties intend that the covenants and restrictions in this Section 12 be enforceable against Employee regardless of the reason that his employment by the Corporation
may terminate and that such covenants and restrictions shall be enforceable against Employee even if this Agreement expires after a notice of nonrenewal given by Employee or the Corporation under Section 2 of this Agreement. 
 Section 13. Injunctive Relief, Damages, Etc. Employee agrees that given the nature of the positions held by Employee with the Corporation,
that each and every one of the covenants and restrictions set forth in Sections 11 and 12 above are reasonable in scope, length of time and geographic area and are necessary for the protection of the significant investment of the Corporation in
developing, maintaining and expanding its business. Accordingly, the parties hereto agree that in the event of any breach by Employee of any of the provisions of Sections 11 or 12 that monetary damages alone will not adequately compensate the
Corporation for its losses and, therefore, that it may seek any and all legal or equitable relief available to it, specifically including, but not limited to, injunctive relief and Employee shall be liable for all damages, including actual and
consequential damages, costs and expenses, including legal costs and actual attorneys’ fees, incurred by the Corporation as a result of taking action to enforce, or recover for any breach of, Section 11 or Section 12. The covenants
contained in Sections 11 and 12 shall be construed and interpreted in any judicial proceeding to permit their enforcement to the maximum extent permitted by law. Should a court of competent jurisdiction determine that any provision of the covenants
and restrictions set forth in Section 12 above is unenforceable as being overbroad as to time, area or scope, the court may strike the offending provision or reform such provision to substitute such other terms as are reasonable to protect the
Corporation’s legitimate business interests. 
 Section 14. Binding Effect/Assignability. This Employment Agreement shall be
binding upon and inure to the benefit of the Corporation and Employee and their respective heirs, legal representatives, executors, administrators, successors and assigns, but neither this Agreement, nor any of the rights hereunder, shall be
assignable by Employee or any beneficiary or beneficiaries designated by Employee. The Corporation will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business,
stock or assets of the Corporation, by agreement in form and substance reasonably satisfactory to the Employee, to expressly assume and agree to perform this Agreement in its entirety. Failure of the Corporation to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Employee to the compensation described in Sections 10(d) and 10(i). As used in this Agreement, “Corporation” shall mean First National
Corporation, a Virginia corporation, and any successor to its respective business, stock or assets as aforesaid which executes and delivers the agreement provided for in this Section 14 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law. 
 Section 15. Governing Law. This Employment Agreement shall be subject to and
construed in accordance with the laws of Virginia. 
 Section 16. Invalid Provisions. The invalidity or unenforceability of any
particular provision of this Employment Agreement shall not affect the validity or enforceability of any other provisions hereof, and this Employment Agreement shall be construed in all respects as if such invalid or unenforceable provisions were
omitted. 
 Section 17. Notices. Any and all notices, designations, consents, offers, acceptance or any other communications provided
for herein shall be given in writing and shall be deemed properly delivered if delivered in person or by registered or certified mail, return receipt requested, addressed in the case of the Corporation to its registered office or in the case of
Employee to his last known address. 
  

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 Section 18. Entire Agreement.  
 (a) This Employment Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes any and all
other agreements, either oral or in writing, among the parties hereto with respect to the subject matter hereof. 
 (b) This Employment
Agreement may be executed in one or more counterparts, each of which shall be considered an original copy of this Agreement, but all of which together shall evidence only one agreement. 
 Section 19. Amendment and Waiver. This Employment Agreement may not be amended except by an instrument in writing signed by or on behalf of
each of the parties hereto. No waiver of any provision of this Employment Agreement shall be valid unless in writing and signed by the person or party to be charged. 
 Section 20. Case and Gender. Wherever required by the context of this Employment Agreement, the singular or plural case and the masculine, feminine and neuter genders shall be interchangeable. 

Section 21. Captions. The captions used in this Employment Agreement are intended for descriptive and reference purposes only and are not
intended to affect the meaning of any Section hereunder. 
 Section 22. Code Section 409A. This Employment Agreement is
intended to satisfy the requirements of Code Section 409A, the 409A Regulations, and other guidance, including transition rules, issued thereunder. Each provision and term of this Employment Agreement should be interpreted accordingly, but if
any provision or term would be prohibited by or inconsistent with Code Section 409A, the 409A Regulations, or such other guidance, the parties agree that such provision or term may be amended to the extent necessary to comply with or qualify
for an exemption from Code Section 409A, the 409A Regulations, and such other guidance, in a manner determined by independent counsel selected by the Corporation and reasonably acceptable to Employee. 
 IN WITNESS WHEREOF, the Corporation has caused this amended and restated Employment Agreement to be signed by its duly authorized officer and Employee
has hereunto set his hand and seal on the      day of                     , 2007. 
  

									
	 	 	 	 	FIRST NATIONAL CORPORATION	 	 
				
		 		 	By:	 	  

		 		 	Title:	 	President
					
	ATTEST:	 		 		 		 	
					
	  
	 		 		 		 	
				
		 		 	EMPLOYEE	 	
				
		 		 	 /s/ J. Andrew Hershey
	 	(SEAL)
		 		 	J. Andrew Hershey	 	
					
	ATTEST:	 		 		 		 	
					
	  
	 		 		 		 	

  

 43Separation Agreement

 Exhibit 10.1 
 SEPARATION AGREEMENT AND GENERAL RELEASE OF CLAIMS 
 I, Gnanesh Coomaraswamy, have received, carefully read, and fully understand all of the provisions
in this Separation Agreement and General Release of Claims (this “Release”). In entering into this Release, I am relying on my own judgment and knowledge and not on representations or statements made by the Federal Home Loan Bank of
Chicago (the “Bank”), its employees, or agents. I acknowledge that the Bank advised me to consult with an attorney about the terms of this Release before signing it. 
  

	1.	Severance Payment. 

 (a) I understand that my employment with the Bank
is terminated effective August 17, 2007 (the “Termination Date”) based on a mutual agreement between the Bank and me. 
 (b) In exchange
for my agreement set forth in this document and for signing the letter dated July 24, 2007 that I received with this Release (the “Severance Letter”), I understand that I will receive certain payments from the Bank: 
  

	 	(i)	The Bank will pay me a severance payment, from which the Bank will deduct all applicable state and federal taxes and other mandatory deductions. The exact amount of this severance payment is
set forth in Paragraph 1 of the Severance Letter. This amount will be payable in installments on the Bank’s regular payroll dates beginning on the first payroll date that occurs at least five (5) business days following expiration of the
seven-day Revocation Period described below; and 

  

	 	(ii)	If I elect to continue group medical insurance coverage after the Termination Date under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Bank
will pay the employer’s portion of the premiums for such continuation coverage for the period of time set forth in Paragraph 2 of the Severance Letter, such contribution by the Bank to begin in accordance with the terms of Paragraph 2 of the
Severance Letter. 

 (c) The payments described in paragraphs (b)(i) and (b)(ii) above, are referred to herein as the “Severance
Payment”. Further details regarding the Severance Payment are set forth in Paragraphs 1 and 2 of the Severance Letter. I understand that the Severance Payment will be payable only after the expiration of the seven-day Revocation Period
described below and only if I have not revoked my acceptance of the terms of this Release. I further understand that the Severance Payment constitutes a benefit that I am otherwise not entitled to receive 
 (d) I understand and agree that I am signing this Release pursuant to the Federal Home Loan Bank of Chicago Employee Severance Plan effective May 1, 2007
(“Bank Severance Plan”). I further understand that the purpose of this Release is to assure the Bank that in return for the Severance Payment, the Bank and its directors, officers, employees, agents and representatives will not be put to
the expense and inconvenience of defending any claim, charge, or lawsuit asserted by me in connection with my employment or the termination from my position. 

	2.	Review Period. 

 (a) I understand that this Release is a legally binding
document of serious legal significance. I acknowledge that I have had a period of not less than twenty-one (21) calendar days after today’s date (the “Review Period”) to review this Release and consider acceptance of this Release
and the Severance Payment in exchange for releasing any and all claims that I may have against the Bank and for agreeing to the terms of Section 5 regarding the Restrictive Covenants (hereinafter defined). I understand that the Review Period
will begin running on the day I receive this Release. 
  

	3.	Revocation Period. 

 I have been informed of my right to revoke this Release without
penalty in the seven (7) calendar days immediately following the date on which I sign this Release. This seven-day period is called the “Revocation Period”. I understand that I may revoke this Release by delivering written notice of
revocation to Matthew R. Feldman of the Operations Department of the Bank within the Revocation Period. I further understand that this Release is not effective or enforceable until the Revocation Period has expired. I further understand that the
Severance Payment will not be paid to me until after the expiration of the Revocation Period. 
  

	4.	General Release. 

 (a) I hereby inform the Bank that, in exchange for
the Severance Payment, I have decided to release and discharge, knowingly and voluntarily, any and all claims, demands or actions, known and unknown, that I may have against the Bank. 
 (b) Further, I understand the conditions of my release from the Bank, and I agree: 
  

	 	(i)	The provisions of this Release, including the Severance Payment, are in full satisfaction of any claims, liabilities, demands, or causes of action, known or unknown, fixed or contingent, that
I may have or claim to have, against the Bank and its directors, officers, employees, agents and representatives at present or in the future. Claims of discrimination, any claims under the Bank Severance Plan and any other claims, other than for
vested benefits, are hereby released and discharged. 

  

	 	(ii)	This release includes, but is not limited to, claims allegedly arising under the Bank Severance Plan, the Age Discrimination in Employment Act, as amended, 29 U.S.C. § 621, et
seq.; Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e, et seq.; the Rehabilitation Act of 1973, as amended, 29 U.S.C. §§ 791, 793 and 794; the Civil Rights Enforcement Statutes, 42 U.S.C.
§§ 1981 through 1988; Sarbanes-Oxley Act of 2002, 18 U.S.C. §1514A, et seq.; the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq.; the National Labor Relations Act, 29 U.S.C. 151 et
seq.; and any other federal, state or local statute, ordinance or regulation dealing in any respect with discrimination 

  

 2 

	 	 
in employment, breach of contract or wrongful discharge, including those rights and claims arising under any alleged legal restrictions on the Bank’s rights to
terminate the employment of its employees. I understand and agree that this release and waiver applies to any and all forms of monetary or other relief that I might seek in connection with my employment or the circumstances of the termination from
my position except for receipt of unemployment compensation benefits. 

  

	 	(iii)	I acknowledge that, as of the date of this Release, I have not suffered any on the job injuries, occupational diseases or wage or overtime claims relating to my employment at the Bank or any
other claims pursuant to the Fair Labor Standards Act or the Family and Medical Leave Act. 

  

	 	(iv)	Further, I acknowledge that this Release does not prohibit me from filing a charge or complaint with the Equal Employment Opportunity Commission or participating in any investigation or
proceeding with the Equal Employment Opportunity Commission in good faith. However, pursuant to this Release, I do waive the right to recover any money damages in connection with such a charge, complaint, investigation or proceeding. 

  

	5.	Executive Covenants 

 (a) General. I and the Bank understand and
agree that the purpose of the provisions of this Section 5 is to protect legitimate business interests of the Bank, as more fully described below, and is not intended to impair or infringe upon my right to work, earn a living, or acquire and
possess property from the fruits of his labor. I hereby acknowledge that the post-employment restrictions set forth in this Section 5 are reasonable and that they do not, and will not, unduly impair his ability to earn a living after
termination of his employment with the Bank. Therefore, subject to the limitations of reasonableness imposed by law upon restrictions set forth herein, I shall be subject to the restrictions set forth in this Section 5. 
 (b) Definitions. The following capitalized terms used in this Section 5 shall have the meanings assigned to them below, which definitions shall apply to
both the singular and the plural forms of such terms: 
 “Confidential Information” means any confidential or proprietary information
possessed by the Bank without limitation, any confidential “know-how”, customer lists, details of client or consultant contracts, current and anticipated customer requirements, pricing policies, price lists, market studies, business plans,
operational methods, marketing plans or strategies, product development techniques or plans, computer software programs (including object code and source code), data and documentation, database technologies, systems, structures and architectures,
inventions and ideas, past, current and planned research and development, compilations, devised, methods, techniques, processes, financial information and data, business acquisition plans, new personnel acquisition plans and any other information
that would constitute a trade secret under the common law or statutory law of the State of Illinois. 
  

 3 

 “Determination Date” means the date of termination of my employment with the Bank for any reason
whatsoever or any earlier date (during the Restricted Period) of an alleged breach of the Restrictive Covenants by me. 
 “Person”
means any individual or any corporation, partnership, joint venture, association, or other entity or enterprise. 
 “Principal or
Representative” means a principal, owner, partner, shareholder, joint venturer, member, trustee, director, officer, manager, employee, agent, representative, or consultant. 
 “Protected Employees” means employees of the Bank or its affiliated companies who were employed by the Bank or its affiliated companies at any time
within six (6) months prior to August 17, 2007. 
 “Restricted Period” means the period of time beginning on the date of this
Release and ending on July 31, 2009. 
 “Restricted Covenants” means the restrictive covenants contained in Section 5_(c) and
(d) hereof. 
 (c) Restriction on Disclosure and Use of Confidential Information. I understand and agree that the Confidential Information
constitutes a valuable asset of the Bank and its affiliated entities, and may not be converted to my own use. Accordingly, I hereby agree that I shall not, directly or indirectly, at any time during the Restricted Period reveal, divulge, or disclose
to any Person not expressly authorized by the Bank any Confidential Information, and I shall not, directly or indirectly, at any time during the Restricted Period use or make use of any Confidential Information in connection with any business
activity other than that of the Bank. The parties acknowledge and agree that this Release is not intended to, and does not, alter either the Bank’s rights or my obligations under any state or federal statutory or common law regarding trade
secrets and unfair trade practices. 
 (d) Nonsolicitation of Protected Employees. I understand and agree that the relationship between the Bank
and each of its Protected Employees constitutes a valuable asset of the Bank and may not be converted to my own use. Accordingly, I hereby agree that during the Restricted Period I shall not directly or indirectly on my own behalf or as a Principal
or Representative of any Person solicit any Protected Employee to terminate his or her employment with the Bank with obtaining prior written consent from the Bank. 
 (e) Exceptions from Disclosure Restrictions. Anything herein to the contrary notwithstanding, I shall not be restricted from disclosing or using Confidential Information that: (i) is or becomes generally available
to the public other than as a result of an unauthorized disclosure by me or my agent; (ii) becomes available to me in a manner that is not in contravention of applicable law from a source (other than the Bank or its affiliated entities or one
of its or their officers, employees, agents, or representatives) that is not known by me to be bound by a confidential relationship with the Bank or its affiliated entities or by a confidentiality 

  

 4 

 
or other similar agreement; (iii) was known to me on a non-confidential basis and not in contravention of applicable law or a confidentiality or other similar
agreement before its disclosure to me by the Bank or its affiliated entities or one of its or their officers, employees, agents, or representatives; or (iv) is required to be disclosed by law, court order, or other legal process; provided,
however, that in the event disclosure is required by law, court order, or legal process, I shall provide the Bank with prompt notice of such requirement so that the Bank may seek an appropriate protective order prior to any such required disclosure
by me. 
  

	6.	Enforcement of the Restrictive Covenants. 

 (a) Rights and Remedies
upon Breach. In the event I breach, or threaten to commit a breach of, any of the provisions of the Restrictive Covenants, the Bank shall have the right and remedy to enjoin, preliminarily and permanently, me from violating or threatening to
violate the Restrictive Covenants and to have the Restrictive Covenants specifically enforced by any court of competent jurisdiction, it being agreed that any breach or threatened breach of the Restrictive Covenants would cause irreparable injury to
the Bank and that money damages would not provide an adequate remedy to the Bank. The rights referred to in the preceding sentence shall be independent of any others and severally enforceable, and shall be in addition to, and not in lieu of, any
other rights and remedies available to the Bank at law or in equity. 
 (b) Severability of Covenants. I acknowledge and agree that the
Restrictive Covenants are reasonable and valid in time and space and in all other respects. If any court determines that any Restrictive Covenant, or any part thereof, is invalid or unenforceable, the remainder of the Restrictive Covenants shall not
thereby be affected and shall be given full force and effect, without regard to the invalid portions. 
 7. Confidentiality. I agree not to disclose the terms of
this Release to any third party apart from my attorney or members of my immediate family. I understand and agree that the breach of this confidentiality provision constitutes a breach of this entire Release for which the Bank may seek appropriate
legal action. 
 8. No Admission. I further understand that the parties’ participation in this Release is not to be construed as an admission of any
wrongdoing or liability whatsoever by or on behalf of the Bank, or any of its directors, officers, employees, agents or representatives. Neither this Release nor any of its terms shall be used as an admission or introduced as evidence as to any
issue of law or fact in any proceeding, suit, or action, other than an action to enforce this Release. 
 9. Governing Law; Entire Agreement. This Release shall
be construed and enforced in accordance with the laws of the State of Illinois without regard to its conflicts of laws rules. It constitutes the entire agreement between the parties. 
 10. Return of Bank Property. I agree to return on or before August 21, 2007 to the Bank all of the Bank’s property in my possession. This property includes, but is not limited to, the Bank’s equipment,
financial records, company credit cards, tapes, records, manuals, employee lists, customer lists, brochures, files, cost information, keys, identification badges, equipment, and all copies thereof. 
  

 5 

 BY SIGNING BELOW, I ACKNOWLEDGE THAT I HAVE READ, FULLY UNDERSTAND AND VOLUNTARILY AGREE TO ALL OF THE PROVISIONS CONTAINED IN
THIS RELEASE. I UNDERSTAND THAT BY WAIVING THE ABOVE, I INTEND AND DO SO RELEASE AND DISCHARGE KNOWN AND UNKNOWN CLAIMS IN EXCHANGE FOR THE SEVERANCE PAYMENT. 
  

	/s/  Gnanesh  Coomaraswamy	8/20/07 

	Signature	Date 

 Acknowledged and agreed to as of 
     August 17, 2007. 
 FEDERAL HOME LOAN BANK OF CHICAGO 
 By: /s/ Matthew R. Feldman 
 Name: Matthew R. Feldman 
 Title: Executive Vice President – Head of Operations 
  
  
 Please return this completed Release to the Human Resources Department of the Bank no earlier
than the close of business on July 31, 2007 and no later than the close of business on August 20, 2007. The Severance Payment will not be paid until this Release is signed and returned to the Human Resources
Department of the Bank and until after the expiration of the seven-day Revocation Period. 
  

 6

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