Employment Agreement between The Farmers & Merchants State Bank and Paul S. Siebenmorgen

Summary

This agreement outlines the terms of employment for Paul S. Siebenmorgen as Senior Executive Vice President of The Farmers & Merchants State Bank. Paul will receive a base salary of $150,000, a $20,000 bonus, and a $30,000 stock grant with resale restrictions. He is eligible for standard executive benefits, moving expense reimbursement, and a country club membership. The Board intends to consider him for President and CEO in February 2005, with a potential salary increase to $175,000, subject to mutual agreement and Board approval.

EX-10.5 6 k92434exv10w5.txt EMPLOYMENT AGREEMENT BETWEEN THE COMPANY & PAUL S. SIEBENMORGEN EXHIBIT 10.5 THE FARMERS & MERCHANTS STATE BANK 307-11 N. DEFIANCE STREET ARCHBOLD, OHIO 43502 May 7, 2004 PERSONAL AND CONFIDENTIAL Mr. Paul S. Siebenmorgen 2189 Scarlet Oak Drive Avon, IN 46123 Dear Paul: This letter will confirm the terms of your employment with The Farmers & Merchants State Bank , (the "Bank") as its Senior Executive Vice President. We understand that you will start your employment with the Bank on a date to be mutually agreed upon, pending conclusion of background checks by regulatory agencies. Your initial compensation will be comprised of an annualized base salary of $150,000 and you will be eligible for a cash bonus at the end of 2004 of $20,000. In connection with your agreement to join the Bank as its Senior Executive Vice President, the Board of Directors will grant to you, $30,000 of Farmers & Merchants Bancorp, Inc. common stock. Our attorneys will provide the appropriate documentation to convey this grant promptly after you arrive at the Bank. We have advised you that the stock grant will be subject to certain restrictions upon resale, as required by federal and state securities laws. Therefore, you will generally not be able to sell the stock granted to you for at least several years, and then only upon compliance with certain securities laws. At the present time we do not have an option plan. The Board has undertaken to study the desirability of such a plan, in the near future. If the Board does implement such a plan it would be our intent that you would participate in the plan as a senior level executive. The Board has indicated its intent to provide you with certain protection in the event of a change in control of Farmers & Merchants Bancorp, Inc. similar to that provided to its other senior officers. This will be accomplished during your initial year of employment with the Bank. The Bank will provide you with its customary benefits available to all employees, at levels commensurate with your status as a senior executive. You will have four weeks of paid vacation time annually, life insurance, health benefits and participation in the 401k plan of the Bank, subject to its terms. In addition, you will be provided a corporate membership at the Orchard Hills Country Club in order to assist you in carrying out your duties as a senior executive of the Bank. The Bank will reimburse you for your reasonable moving expenses, including costs associated with travel to locate housing for you and your family. The Board asks that you obtain two competitive estimates in connection with retaining a moving company. The Board has asked that I indicate to you its intent to name you as President and CEO and a director of Farmers & Merchants Bancorp, Inc. and the Bank in February of 2005 and to make a compensation adjustment at that time to increase your base annual salary to $175,000. Of course, this is subject to the Board's determination, at that time, to proceed with appointing you as the successor CEO, and will be based on the Board's and your mutual agreement to do so. Paul, on behalf of the entire Board of Directors and all of the employees of the Bank, I extend our welcome to you and Marilyn to our Bank family. Very truly yours, /s/ Jack C. Johnson Jack C. Johnson Chairman of the Compensation Committee I acknowledge receipt of this letter and agree to its terms. /s/ Paul S. Siebenmorgen Dated: ------------------, 2004 - ------------------------------------ Paul S. Siebenmorgen