ExecutiveEmployment Contract

Exhibit 10.1

Executive Employment Contract

This Contract is made as of ____________________, 2015 (“Effective Date”), between Commercial Bancshares, Inc. (“CBS”), an Ohio corporation having an address of 118 S. Sandusky Avenue, Upper Sandusky, Ohio 43351, and Robert E. Beach (“Mr. Beach”), having an address of 15302 Lakeview Parkway, Findlay, Ohio 45840, for Mr. Beach’s employment by CBS as President and Chief Executive Officer (“CEO”) of CBS.

BACKGROUND

A.           CBS desires to continue to employ Mr. Beach under the terms and conditions set forth in this Contract.

B.           Mr. Beach desires to continue to be employed by CBS under the terms set forth in this Contract.

In consideration of the promises contained in this Contract and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1.      Employment. Upon the terms and subject to the conditions of this Contract, CBS hereby agrees to employ Mr. Beach. Upon the terms and subject to the conditions of this Contract, Mr. Beach agrees to serve as a full time employee of CBS.

2.      Services rendered.

(a)       General. Mr. Beach shall render services and perform the duties of the positions of President and Chief Executive Officer of CBS. Subject to Sections 2(b) and 2(d), Mr. Beach shall hold such other offices in CBS affiliates and perform such other duties and have such other responsibilities for CBS and its affiliates as are of the same character and nature as those typically performed by the president and chief executive officer of a bank holding company of comparable size and with a comparable market to that of CBS that may be assigned by the board of directors of CBS or any of its affiliates. Mr. Beach will be eligible to receive the same compensation and shall be eligible to participate in any and all compensation plans and arrangements that are available from time to time to directors of CBS and The Commercial Savings Bank, the wholly-owned commercial banking subsidiary of CBS (the “Bank”).

(b)       Reporting and authority. Mr. Beach shall report to and be subject to the supervision and direction of the Board of Directors of CBS (“Board”). Mr. Beach shall have the authority set by the CBS Code of Regulations, as may be amended from time to time, and the authority delegated to him by the Board.

(c)       Full-time employee. Mr. Beach shall devote his full-time employment during the term of this Contract to the faithful and diligent performance of his duties for CBS and its affiliates. Mr. Beach shall not engage in other employment or business activities, whether or not the employment or activities are pursued for gain, profit, or other pecuniary advantage, without the prior written consent of CBS. Business activities do not include passive investments.

(d)       Adherence to standards. Mr. Beach shall perform all duties in a competent and professional manner. Mr. Beach shall abide by the Articles of Incorporation and Code of Regulations of CBS and the Bank; the rules, regulations, policies, and performance objectives of CBS and the Bank as they exist from time to time; applicable ethical and business standards; and the law.

3.      Compensation. “Compensation” includes base salary, performance based compensation, if any, and employee benefits.

(a)       Base salary and initial bonus. During the initial term of this Contract, CBS shall pay Mr. Beach a base salary of $243,000 subject to all applicable withholdings, in accordance with the then current policies of CBS for executive compensation. The base salary provided by this §3(a) as adjusted under §3(e) shall be referred to herein as “base salary”.

(b)       Employee benefits. In addition to the base salary, CBS shall provide to, or for the benefit of, Mr. Beach, the following employee benefits:

The benefits provided under this §3(b) shall be referred to herein as “employee benefits”.

(c)       Performance based compensation. CBS may pay Mr. Beach additional incentive or performance based compensation consisting of cash payments, stock options or stock awards, in the sole and absolute discretion of the Board. Any such incentive or performance based compensation may be based on asset growth, return on assets, stock price, or other factors selected by the Board from time to time. Mr. Beach acknowledges that the Board may reach a decision not to award any incentive or performance based compensation. The incentive or performance based compensation provided for under this §3(c) shall be referred to herein as “performance based compensation”.

(d)       Reports of use of employee benefits. Mr. Beach shall submit regular reports of personal use of the employee benefits that the Internal Revenue Code requires to be treated as taxable income to Mr. Beach in order to allow CBS to determine the amount that must be reported to the Internal Revenue Service as compensation to Mr. Beach.

(e)       Annual review. Mr. Beach’s base salary, employee benefits, and any performance based compensation will be reviewed annually in accordance with the normal compensation review practices of the Board. In connection with each such review, Mr. Beach’s base salary may remain the same or be increased, but not decreased, Mr. Beach may or may not be awarded any performance based compensation, and Mr. Beach’s employee benefits may be increased or decreased. Any adjustments to Mr. Beach’s base salary and employee benefits (including any decision not to adjust base salary or employee benefits) shall be made in the sole discretion of the Board or a committee of the Board.

4.      Term and termination.

(a)       Term; renewal; and non-renewal. This Contract is effective as of the Effective Date and shall remain in full force and effect for a period of three years from Effective Date (the “Original Term”), unless earlier terminated as provided herein. Thereafter, this Agreement shall be automatically extended (an “Extension Term”) from year to year for additional one-year periods ending on each anniversary of the expiration of the Original Term (the “Expiration Date), unless either the Bank or Mr. Beach notifies the other in writing, at least 60 days prior to the Expiration Date, of its or his intention not to renew the Agreement.

(b)       Termination other than expiration of term.

(1)      Termination by CBS without cause. CBS may terminate Mr. Beach’s employment without cause by giving Mr. Beach a notice of termination. The notice of termination without cause shall be effective upon the earlier of actual receipt by Mr. Beach or two days after mailing by first class mail. If CBS terminates the employment of Mr. Beach without cause, CBS shall provide Mr. Beach with “Continuing Compensation” (as defined in Section 4(b)(6) below) commencing upon termination for a period (“Termination Period”) equal to the greater of twelve (12) consecutive months or the number of months remaining, if any, on the Original Term and any Extension Term that has become effective on or before the date of termination. During the Termination Period, CBS shall pay the base salary component of the Continuing Compensation in arrears on the last day of each month commencing on the last day of the first month after the month in which termination has occurred. A termination of Mr. Beach’s employment voluntarily by Mr. Beach, a termination of Mr. Beach’s employment arising out of illness or disability, and a termination of Mr. Beach’s employment after a change in control will not be a termination without cause under this subsection. Continuing compensation shall be reduced by compensation that Mr. Beach receives from any other employment or self-employment.

(2)      Termination by Mr. Beach. Mr. Beach may terminate his employment by giving CBS sixty (60) days’ notice of his intention to resign. If Mr. Beach voluntarily terminates his employment, CBS will not be obligated to pay Continuing Compensation after the date of termination, except as required by law.

(3)      Termination by CBS for cause. CBS may terminate Mr. Beach’s employment for cause by giving Mr. Beach notice of termination for cause. The notice of termination for cause is not required to describe the cause or causes, but must state that Mr. Beach’s employment has been “terminated for cause”. The notice of termination for cause shall be effective upon the earlier of actual receipt by Mr. Beach or two business days after mailing by first class mail. If CBS terminates Mr. Beach’s employment for cause, CBS will not be obligated to pay or provide any compensation of any type after the date of termination, except as required by law. “Cause” means conduct by Mr. Beach concerning any one or more of the following: [i] failure to adhere to ethical standards or the law; [ii] moral and ethical misdeeds conducted on the job; [iii] failure to carry out duties of employment or to carry out directions of the Board or properly designated committee of CBS or any affiliate of CBS, including specifically the Bank; [iv] willful misconduct; [v] conviction of a felony; [vi] removal from any office held by Mr. Beach with CBS, the Bank or any other affiliate of CBS by order of a regulatory agency having jurisdiction over CBS or any of its affiliates or threat of such an order; or [vii] conduct that otherwise interferes with the performance of Mr. Beach’s duties or CBS’s business, including any conduct that adversely reflects upon CBS or its business and any conduct committed during or outside of the employment relationship that, reasonably considered, harms the reputation of CBS. As used in this subsection, “conduct” includes one or more acts, one or more failures to act, or any combination of an act, multiple acts, a failure to act, or multiple failures to act. In the case of any conduct described item [iii] that is not a repeat instance of such conduct, Mr. Beach shall have thirty (30) days after written notice of such conduct to cure the conduct, unless the conduct also has a material adverse impact on CBS or its reputation. If Mr. Beach requests in writing, CBS shall provide Mr. Beach a written description with the cause or causes for termination.

(4)      Termination upon permanent disability. Mr. Beach’s employment shall terminate upon the permanent disability of Mr. Beach. “Permanent disability” means Mr. Beach’s physical or mental inability to perform the services required under this Contract caused by a physical or mental condition or impairment for a period exceeding 180 days. In the event either the Company or Mr. Beach, after receipt of notice of Mr. Beach’s permanent disability from the other, dispute that Mr. Beach’s permanent disability shall have occurred, Mr. Beach shall promptly submit to physical examinations by three physicians, one of whom shall be a physician who regularly has treated Mr. Beach, assuming that he has such a regular physician, and, unless two of such physicians shall issue their written statement to the effect that in their opinion, based on their diagnosis, Mr. Beach is capable of resuming his employment and devoting his full time and energy to discharging his duties within sixty (60) days after the date of such statement, such permanent disability shall be deemed to have occurred.

(5)      Termination after a change in control.

(i)          When a termination after a change in control occurs.

A termination after a change in control occurs [i] when, within one year after a change in control, Mr. Beach’s employment is terminated without cause; [ii] when, within one year after a change in control, Mr. Beach resigns because he has [a] been demoted, [b] had his base salary reduced, [c] had his principal place of employment transferred away from Wyandot County, Ohio or a county contiguous thereto, or [d] had his job title, status or responsibility materially reduced; or [iii] when, [a] Mr. Beach’s employment is terminated by CBS without cause, [b] there is a change in control within one (1) year following the termination, and [c] Mr. Beach’s termination of employment [1] was at the request of a third party who has taken steps reasonably calculated to effect a change in control or [2] was otherwise in anticipation of a change in control. A termination of employment [i] upon expiration of the term of this Contract, [ii] for cause, or [iii] upon the permanent disability of Mr. Beach is not a termination after a change in control.

(ii)         Compensation after termination after a change in control.

If Mr. Beach’s employment is terminated after a change in control, within 30 days of such termination of employment, CBS, or its successor, shall commence paying to Mr. Beach, a monthly payment (the “Monthly CIC Payment”)in an amount equal to the difference of [a] the product of 2.99 times the then current annual base salary less [b] the total amount of Continuing Compensation paid and payable to Mr. Beach by CBS, including Continuing Compensation paid and Continuing Compensation owed but not yet paid, with the difference between [a] and [b] divided by thirty-six (36). Such Monthly CIC Payment shall continue for thirty-five (35) additional months after the initial payment. In addition to the Monthly CIC Payment, and if Mr. Beach elects COBRA continuation coverage and pays the applicable premiums, CBS shall reimbursement Mr. Beach for the premiums paid by him for such COBRA continuation coverage for comparable medical benefits (or such other comparable medical insurance if past the 18 months for which COBRA coverage is available), for a period equal to the shorter of 24 months or the time that Mr. Beach is provided comparable coverage by a subsequent employer or through his spouse’s employer. Such COBRA payments shall begin within not more than thirty (30) days following Mr. Beach’s termination in connection with a change in control.

(iii)        No excess parachute payments.

Notwithstanding any other provision of this Contract or of any other agreement, contract or understanding between Mr. Beach and CBS or any affiliate of CBS now existing or later arising, Mr. Beach shall not have any right to receive any compensation or benefit to the extent that the sum of all payments to or benefits received by or on behalf of Mr. Beach from CBS or any of its affiliates would cause any payment or benefit to be considered an “excess parachute payment” under 26 U.S.C. §280G(b)(1), as amended, result in the imposition of excise tax under 26 U.S.C. § 4999, as amended, or cause any loss of any deduction to CBS under 26 U.S.C. §§162(m) or 280G(a), as amended (“Excess Parachute Payment”). If the receipt by or on behalf of Mr. Beach of any payment or benefit from CBS or an affiliate would cause Mr. Beach to be considered to have received an Excess Parachute Payment, then each of the Monthly CIC Payments shall be automatically reduced by the minimum amount necessary to cause the total amount of such payments that would otherwise be considered “parachute payments” as defined in 26 U.S.C. §280G(b)(2), to equal 2.99 times Mr. Beach’s base amount, as defined in 26 U.S.C. §280G(b)(3), so that an Excess Parachute Payment shall not result. If the Monthly CIC Payments are reduced to zero, and the payments and benefits due to Mr. Beach from CBS still would cause Mr. Beach to be considered to have received an Excess Parachute Payment, then CBS, in its sole discretion, may reduce other payments and benefits so that an Excess Parachute Payment does not result. Any determination in writing by CBS’s independent public accountants (“Accountants”) of the value of payments and benefits includable in the calculation of an Excess Parachute Payment shall be conclusive and binding upon Mr. Beach and CBS for all purposes. For purposes of making the calculations required by this subsection, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of 28 U.S.C. §§280G and 4999, as amended. CBS and Mr. Beach shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this subsection. CBS shall pay the costs for a determination by the Accountants under this subsection.

(iv)        Change in control.

A “change in control” occurs on the date of a transaction pursuant to which:

No Change in Control will be considered to have occurred when there is a transfer of assets to an entity that, immediately after the transfer, is controlled by the shareholders of CBS immediately before the transfer where the transfer is to:

(v)         Golden Parachute Provision. All payments to Mr. Beach under this Contract are subject to and conditioned upon compliance with 12 U.S.C. §1828(k) and Federal Deposit Insurance Corporation (“FDIC”) regulation 12 C.F.R. Part 359, Golden Parachute and Indemnification Payments.

(vi)        Mandatory Delay of Payments to Specified Employee. If Mr. Beach is a “Specified Employee,” as defined for purposes of 26 U.S.C. §409A (see §416(i) (without regard to paragraph (5) thereof)) at any time during the 12 months preceding December 31^st of the prior calendar year, no payment following the date of Mr. Beach’s separation of service required by this Contract shall be made earlier than six (6) months after the date of Mr. Beach’s separation from service with CBS, and shall instead be paid as promptly after the six-month period has expired as may be practical.

If Mr. Beach is a Specified Employee, he shall be treated as a “Specified Employee” for the entire 12-month period beginning on the April 1 following such identification date, except during any period in which the stock of CBS is not publicly traded on an established securities market.

(6)         Continuing compensation calculations. “Continuing Compensation” means [i] an amount equal to 1/12 of Mr. Beach’s annual base salary in effect on the effective date of the notice of termination determined under the then current policies of CBS for executive compensation, plus [ii] one month of Mr. Beach’s annual employee benefits under §3(b) of this Contract, except for reimbursement of [a] business expenses incurred after termination, [b] continuing education and seminar programs occurring after termination, [c] membership expenses in clubs and organizations (except for minimum costs necessary to maintain membership for six months after termination), and [d] mileage relating to use of the automobile after termination. Employee benefits shall be reduced by any similar benefits received by or accruing to Mr. Beach from third parties during the period during which Mr. Beach receives Continuing Compensation. Federal, state, and local taxes, social security contributions, and other normal deductions will be withheld from continuation compensation. Payment of Continuing Compensation, including the timing and amount of each payment, shall be subject to the Treasury Regulations concerning severance pay issued under 28 U.S.C. §409A. If Mr. Beach dies before receiving all Continuing Compensation due, the balance of all Continuing Compensation then due shall be provided to the personal representative or other designee of Mr. Beach, except for payments for life insurance premiums and retirement plan contributions.

(7)         Termination for special regulatory events. Notwithstanding any other provision of this Contract, the obligations of the parties will be as follows in the event of any of the following circumstances:

(c)          Consequences of termination of employment. Except for post-employment obligations under this subsection and post-employment obligations concerning Continuing Compensation, non-competition, and confidentiality, upon termination of Mr. Beach’s employment for any reason, [i] this Contract shall terminate; [ii] Mr. Beach’s employment shall terminate for all affiliates of CBS; [iii] Mr. Beach shall cease all activity on behalf of CBS and its affiliates; [iv] Mr. Beach shall automatically, without further action by either party, be discharged or shall resign from all directorships and offices of CBS and the Bank and all directorships and offices of affiliates of CBS held by Mr. Beach; and [v] Mr. Beach shall promptly deliver to CBS all property and all copies of property (regardless of form, and including (but not limited to) all documents, memoranda, records, specifications, electronic and digital media and other writings and materials) of CBS and all affiliates of CBS under his possession, custody or control, including (but not limited to) keys, plans, designs, computer programs, computer lists, prospect lists, records, letters, notes, reports, financial information, and all other materials relating to CBS, its subsidiaries and its affiliates, their businesses, or their clients and customers. Mr. Beach agrees that provisions of this subsection related to resignation are reasonable and that remedies at law would be inadequate for a breach of the provisions of this subsection. For these reasons, CBS may enforce the obligations of Mr. Beach under this subsection by injunctive relief, including a temporary restraining order, a preliminary injunction, and a permanent injunction and by an award for fees, costs, and expenses incurred by CBS to enforce this subsection, including (but not limited to) attorneys’ fees, costs and expenses, and other expenses incurred to enforce this subsection.

(d)          Employment after termination. So long as the non-competition restrictions of Section 5 are in effect, Mr. Beach shall notify CBS in writing within five (5) business days after accepting full or part-time employment with a third party.

(e)          Suspension and removal. If Mr. Beach is suspended or temporarily prohibited from performing his duties for CBS or its affiliates as a result of any regulatory action, CBS’s obligations under this Contract shall be suspended as of the date of service of notice of the regulatory action (unless the suspension or prohibition is stayed by appropriate proceedings). If the charges in the notice are dismissed, CBS or any of its affiliates shall [i] pay Mr. Beach all of the compensation withheld while its obligations under this Contract were suspended, and [ii] reinstate all of its other obligations under this Contract that were suspended. If Mr. Beach is removed or permanently suspended from performing his duties for CBS or its affiliates as a result of any regulatory action, all obligations of CBS under this Contract will terminate as of the effective date of the action, and CBS will not be obligated to pay or provide any compensation of any type to Mr. Beach, except as required by law.

5.       Non-competition. During the Original Term of this Contract and any Extension Term, and for a period of one year following termination of this Contract for any reason, Mr. Beach shall not be employed by or otherwise provide services, in any capacity, within a fifty (50) mile radius of Upper Sandusky, Ohio, to any bank, financial institution or bank holding company, or any affiliate of a bank, financial institution or bank holding company, unless such employment or providing of services is preapproved in writing by CSB.

During the term of this Contract (Original Term and any Extension Term) and for a period of one year thereafter, Mr. Beach (for himself or on behalf of a third party) shall not solicit any banking business from any then current customers of CBS or the Bank, and shall not employ, offer to employ, or solicit employment of any employee of CBS or any of its affiliates, subsidiaries or any professional under contract with CBS or any of its subsidiaries.

Mr. Beach agrees that he has received consideration to which he was not otherwise entitled in return for his obligations under this §5, and that the provisions of this §5 are reasonable and necessary to protect the legitimate business interests of CBS, and are reasonable with respect to time, territory, and business. Mr. Beach shall pay any and all legal fees, costs, and other expenses incurred by CBS in the course of legal action to enforce the provisions of this §5. Mr. Beach agrees that the remedies at law for a breach of this §5 would be inadequate to protect CBS because money damages would be difficult, if not impossible, to ascertain and would be estimable only by conjecture, and therefore, Mr. Beach agrees that CBS will be entitled to injunctive relief, including a temporary restraining order, a preliminary injunction and a permanent injunction for any such breach as well as all reasonable attorneys’ fees, costs and other expenses incurred to enforce this §5. The duty to arbitrate disputes under this Contract shall not apply to any claim for violation of this §5.

The obligations of Mr. Beach under this § 5 shall survive the termination of the Contract for any reason.

6.       Confidentiality. Mr. Beach hereby acknowledges that he may be required to handle Confidential Business Information (as defined below) in the performance of his responsibilities. Mr. Beach is aware that Confidential Business Information is proprietary information to CBS or the party supplying it and the exclusive property of CBS or its clients and customers, and Mr. Beach shall not disclose Confidential Business Information in any manner at any time, to others inside or outside CBS or to unauthorized employees and officers of CBS. Unauthorized disclosure or other mishandling of Confidential Business Information may result in termination of Mr. Beach’s employment for cause and in other appropriate actions. Mr. Beach agrees that his obligation not to reveal Confidential Business Information will remain in force permanently, including in the event that [i] Mr. Beach’s authorization to handle Confidential Business Information is revoked while still under contract with CBS, and [ii] this Contract or Mr. Beach’s employment with CBS is terminated.

Except as CBS may require or otherwise consent to in writing, Mr. Beach shall not, at any time during or subsequent to the termination of this Contract disclose or use in any way any information or knowledge or data received or developed while providing services to CBS, including but not limited to, plans, designs, formulas, business processes, methods, test data, inventions, discoveries, computer programs, customer/client lists, prospect lists, financial information, and trade secrets of CBS or its customers (collectively, “Confidential Business Information”).

In addition to any other remedies CBS may have at law or in equity, Mr. Beach agrees that CBS will be entitled to a restraining order, injunction, or similar remedy to enforce the terms of this section, as well as all reasonable attorneys’ fees, costs, and other expenses incurred to enforce this section. The duty to arbitrate disputes under this Contract shall not apply to any claim for a violation of this section or Mr. Beach’s obligation to return property of CBS upon termination of employment. The obligations of Mr. Beach under this section shall survive the termination of this Contract for any reason.

7.       Indemnification. Subject to any other applicable statutory or regulatory standard or restriction, CBS shall indemnify Mr. Beach for any and all acts or omissions of Mr. Beach related in any way to his employment with CBS, provided Mr. Beach acted in good faith, in a manner reasonably believed to be in, or not opposed to, the best interests of CBS, and with the care that an ordinary prudent person in a like position would use under similar circumstances. Notwithstanding the preceding sentence, CBS shall not be obligated to indemnify Mr. Beach when such indemnification would be contrary to law or public policy or appropriate ethical standards.

8.       Validity. The invalidity or unenforceability of any particular provision of this Contract shall not affect the validity or enforceability of any other provision contained in the Contract.

9.       Choice of Law. This Contract and the interpretation of each of its provisions shall be governed by the laws of the State of Ohio and the venue of any dispute or litigation shall be Wyandot County, Ohio. The rights of the parties under this Contract will likewise be governed by the laws of the State of Ohio.

10.     Entire Contract. This Contract contains the complete agreement between the parties concerning the subjects covered by this Contract. This Contract supersedes any and all prior contracts and understandings between CBS and Mr. Beach. The provisions of this Contract are solely for the benefit of the parties to this Contract and not for the benefit of any other persons or legal entities.

11.     Assignment. This Contract is binding on and inures to the benefit of successors and assigns of CBS. Neither this Contract nor any rights hereunder shall be assignable or otherwise subject to hypothecation by Mr. Beach.

12.     Amendments. No change, waiver, or amendment to this Contract, in any form, shall be binding on the parties unless signed in writing by an authorized officer of CBS and Mr. Beach. No representations have been made by CBS or Mr. Beach concerning the terms, conditions, and agreements of the contractual relationship covered by this Contract other than those representations contained in this Contract and no representations made during the course of performance of services under this Contract can alter any of the provisions of this Contract (unless such representation is in a signed writing as provided in the preceding sentence).

13.     Arbitration. CBS and Mr. Beach agree to work together in good faith to resolve any disputes arising under this Contract. Except as otherwise provided in this Contract, any controversy or claim arising out of or relating to the interpretation or application of this Contract, or any breach hereof, shall be settled by arbitration in Wyandot County in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association then in effect, and judgment upon the award rendered by the arbitrator(s) shall be final and binding on the parties hereto and may be entered in any court having jurisdiction thereof.

In Witness Whereof, the parties hereto have executed this Contract effective as of the day and year first above written.