<PAGE> 1
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the period ended June 30, 1997
or
[ ] Transition Report Pursuant to Section
13 or 15(d) of the Securities Exchange Act
of 1934 For the transition period from
to
---- ----
Commission file number 0-20255
I.R.S. Employer Identification Number 34-1692031
Mahoning National Bancorp, Inc.
(an Ohio Corporation)
23 Federal Plaza
Youngstown, Ohio 44501-0479
Telephone: (330) 742-7000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date: 6,300,000 shares of the
Company's Common Stock (No par value) were outstanding as of July 31, 1997.
<PAGE> 2
MAHONING NATIONAL BANCORP, INC.
INDEX
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements Consolidated
Balance Sheet (unaudited) June 30, 1997 and
December 31, 1996 3
Consolidated Statements of Income-
Three and Six Months Ended June 30, 1997
and 1996 (unaudited) 4
Condensed Consolidated Statement of Cash Flows -
Six Months Ended June 30, 1997 and 1996
(unaudited) 5
Notes to Consolidated Financial Statements 6
Item 2 - Management Discussion and Analysis
of Operations and Liquidity and Capital Resources 7-16
Item 3 - Summary of Average Balances and Interest Rates 17
PART II - OTHER INFORMATION 18-19
Exhibit 10 - Material Contracts 20-120
Exhibit Number 27 - Financial Data Schedule
SIGNATURES 121
</TABLE>
<PAGE> 3
PART I
FINANCIAL INFORMATION
MAHONING NATIONAL BANCORP INC.
CONSOLIDATED STATEMENTS OF CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
(Amounts in thousands)
JUNE 30, DECEMBER 31,
ASSETS 1997 1996
--------- ------------
<S> <C> <C>
Cash and due from banks $ 30,786 $ 29,257
Federal funds sold -- 19,500
Investment securities available for sale - at fair value 162,314 143,600
Investment securities held to maturity - at cost
(Market value $71,918 at June 30, 1997
and $85,646 at December 31, 1996) 72,018 85,732
Loans 490,535 477,795
Less allowance for possible loan losses 7,919 8,112
--------- ---------
Net loans 482,616 469,683
Bank premises and equipment 8,701 8,981
Other assets 15,319 12,807
--------- ---------
Total assets $ 771,754 $ 769,560
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Non-interest bearing $ 73,875 $ 70,706
Interest bearing
Savings 275,294 282,929
Time 201,903 197,363
--------- ---------
Total deposits 551,072 550,998
Federal funds purchased and securities
sold under agreement to repurchase 115,859 122,467
Short term borrowings 15,000 10,235
Long term borrowings 3,614 4,065
Other liabilities 5,078 4,700
--------- ---------
Total liabilities 690,623 692,465
--------- ---------
STOCKHOLDERS' EQUITY
Common stock (No par value, $1 stated value)
Authorized 15,000,000 shares, Issued
and Outstanding - 6,300,000 shares 6,300 6,300
Additional paid-in capital 44,100 44,100
Retained earnings 30,995 26,627
Unrealized (loss) gain on investment securities
available for sale, net of deferred taxes (264) 68
--------- ---------
Total stockholders' equity 81,131 77,095
--------- ---------
Total liabilities and
stockholders' equity $ 771,754 $ 769,560
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 4
MAHONING NATIONAL BANCORP INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE THREE FOR THE THREE FOR THE SIX FOR THE SIX
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED
(Amounts in thousands, except per share data) JUNE 30, 1997 JUNE 30, 1996 JUNE 30, 1997 JUNE 30, 1996
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $10,946 $10,501 $21,595 $20,952
Interest on investment securities
Taxable 3,215 3,153 6,333 6,191
Nontaxable 265 216 508 403
Interest on federal funds sold 128 66 306 166
------- ------- ------- -------
14,554 13,936 28,742 27,712
INTEREST EXPENSE
Interest on deposits 4,234 4,555 8,454 9,171
Interest on federal funds purchased and
securities sold under agreement to repurchase 1,570 985 3,059 1,927
Interest on short term borrowings 128 69 226 145
Interest on long term borrowings 51 62 105 104
------- ------- ------- -------
5,983 5,671 11,844 11,347
------- ------- ------- -------
Net interest income 8,571 8,265 16,898 16,365
PROVISION FOR LOAN LOSSES 725 550 1,525 1,075
------- ------- ------- -------
Net interest income after
provision for loan losses 7,846 7,715 15,373 15,290
OTHER OPERATING REVENUE
Trust department income 787 664 1,497 1,266
Service charges on deposit accounts 1,019 874 2,014 1,698
Other service charges 204 188 395 345
Other revenue 75 64 144 144
Gain on sale of investment securities
available for sale -- -- 178 --
------- ------- ------- -------
2,085 1,790 4,228 3,453
------- ------- ------- -------
OTHER OPERATING EXPENSE
Salaries and employee benefits 2,741 2,664 5,445 5,320
Expenses of premises and fixed assets 704 813 1,506 1,622
Other expense 1,666 1,647 3,185 3,285
------- ------- ------- -------
5,111 5,124 10,136 10,227
------- ------- ------- -------
Income before income taxes 4,820 4,381 9,465 8,516
INCOME TAX EXPENSE 1,568 1,423 3,080 2,766
------- ------- ------- -------
NET INCOME $ 3,252 $ 2,958 $ 6,385 $ 5,750
======= ======= ======= =======
EARNINGS PER COMMON SHARE $ 0.51 $ 0.47 $ 1.01 $ 0.91
DIVIDENDS PER SHARE $ 0.16 $ 0.135 $ 0.32 $ 0.27
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 5
MAHONING NATIONAL BANCORP INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
(Amounts in thousands) JUNE 30, 1997 JUNE 30, 1996
(UNAUDITED) (UNAUDITED)
-----------------------------
<S> <C> <C>
Cash flows from operating activities $ 6,926 $ 8,325
Cash flows from investing activities
Proceeds from maturities of investment securities available for sale 10,172 11,609
Proceeds from maturities of investment securities held to maturity 13,735 22,710
Sale of investment securities available for sale 20,075 --
Purchase of investment securities available for sale (49,286) (16,660)
Purchase of investment securities held to maturity -- (35,468)
Net increase in loans (15,095) (18,179)
Net decrease in federal funds sold 19,500 2,800
Capital expenditures (262) (306)
-------- --------
Net cash (used in) provided by investing activities (1,161) (33,494)
Cash flows from financing activities
Net increase (decrease) in deposits 74 (6,157)
Net (decrease) increase in federal funds purchased and
securities sold under agreement to repurchase (6,608) 22,542
Net increase in short term borrowings 4,765 7,622
Proceeds from long term borrowings -- 3,500
Payments on long term borrowings (451) (298)
Dividends paid (2,016) (1,701)
-------- --------
Net cash (used in) provided by financing activities (4,236) 25,508
Net increase in cash and cash equivalents 1,529 339
Cash and cash equivalents at beginning of year 29,257 30,731
-------- --------
Cash and cash equivalents at end of six months $ 30,786 $ 31,070
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the first six months for:
Interest $ 11,735 $ 11,262
======== ========
Income Taxes $ 2,874 $ 2,320
======== ========
Non-cash transactions:
Transfer from loans to other real estate owned $ 107 $ 34
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 6
MAHONING NATIONAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The financial information presented is prepared in accordance with
generally accepted accounting principles and general policies within the
financial service industry. The financial information included herein has been
prepared by management without audit by independent certified public accountants
who do not express an opinion thereon. All significant intercompany balances and
transactions have been eliminated and the information furnished includes all
adjustments consisting of normal recurring accrual adjustments which are in the
opinion of management, necessary for a fair presentation of results for the
interim period. The results of the interim financial information presented are
not necessarily indicative of the results of operations for the full calendar
year ending December 31, 1997.
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Earnings Review
Net income for the first six months of 1997 amounted to $6.385 million
or $1.01 per share. This represents an increase of 11% over net income earned
during the same period in 1996 ($5.750 million or $0.91 per share). Mahoning
National Bancorp, Inc.'s, (the Company) net income for the current quarter
increased 10% to $3.252 million or $.51 per share from $2.958 million or $0.47
per share for the same quarter in 1996.
The primary component of earnings is net interest income. Net interest income
for the first six months of 1997 was $16.898 million compared with $16.365
million or a 3% increase from the comparable period in 1996. Net interest income
for the current quarter increased 4% over the comparable period of 1996 ($8.571
million from $8.265 million).
Interest and fees on loans increased $643 thousand in the first six months of
1997 compared to the first six months of 1996. This increase was the result of a
$16.117 million increase in average loan balances for the first six months of
1997 compared to 1996; $487.698 million compared to $471.581 million. The
increase in average loan balances in the first six months of 1997 accounted for
nearly all of the additional interest and fee income on loans. Interest expense
increased $497 thousand in the first six months of 1997 compared to the same
period in 1996. This increase can be attributed to an increase in the volume of
securities sold under agreements to repurchase as 1997 average balances
increased $42.071 million over average balances in the same period of 1996. This
increase in funding offset the $14.236 million decrease in average savings
deposits in the first six months of 1997 compared to the same period in 1996.
The average balance of time deposits for the first six months of 1997 decreased
$10.766 million from the average balances for the same period of 1996. The cost
of these funds also decreased from 5.46% for the first six months of 1996 to
5.30% for the first six months of 1997, a 16 basis point decrease. While time
deposit costs for 1997 are currently lower than 1996 costs, they should increase
in the second half of the year as maturing certificates are repricing at higher
rates and the local time deposit market remains extremely competitive. It is the
Company's intent to offer competitive rates on those time deposit maturities
that the Asset Liability Committee (ALCO) determines appropriate. The ALCO will
base their decisions on the Company's balance sheet structure, interest rate
forecasts and alternative funding costs.
For a detailed analysis of the Company's net interest margin, on a tax
equivalent basis, refer to the Summary of Average Balances and Interest Rates;
Item 3 of this report on page 17.
In late March of 1997 the Federal Reserve Bank increased the discount rate and
the Company increased its prime lending rate by 25 basis points. With this
increase a significant portion of the Company's loan portfolio was repriced
upward immediately,
<PAGE> 8
while rates on interest bearing deposits and borrowings continued to increase
more deliberately, with existing certificates of deposit repricing at slightly
higher rates than previously experienced.
The impact of this pricing change had minimal impact on year to date and second
quarter earnings. The change in the mix of the loan portfolio, which had
declines in consumer loans that were off-set with increases in lower yielding
residential mortgage loans, kept the portfolio yield at 8.97% for both the first
and second quarters of 1997. Strategic funding and pricing decisions on the
Company's deposits and other borrowings have resulted in a steady 3.85% cost on
interest bearing liabilities for the first six months of 1997. The net interest
margin for the first six months of 1997 was 4.75%, a four (4) basis point
decrease from the 4.79% net interest margin for the first six months of 1996.
With the current uncertainty on which direction the Federal Reserve will move
rates over the next twelve months, the Company analyzed the effect of a presumed
100 and 200 basis point increase and decrease in interest rates through its
simulation analysis. While the results of the simulation indicated no
significant impact on net interest income over the next twelve months, they did
indicate the Company to be negatively impacted by rising interest rates and
positively impacted by falling interest rates due to the liability sensitive
nature of the balance sheet.
Other operating revenue for the first six months of 1997, exclusive of security
transactions, was $4.050 million or a 17% increase over the first six months of
1996 total of $3.453 million. Other operating revenue for the current quarter,
exclusive of security transactions, was $2.085 million compared to $1.790
million for the same quarter of 1996, a 16% increase. Other operating revenue,
exclusive of security transactions, as a percentage of average assets was 1.06%
for the first six months of 1997 compared to .94% for the same period in 1996.
The largest component of other operating revenue in the first six months of 1997
was service charges on deposit accounts which increased $316 thousand or 19%
over the first six months of 1996. Service charges on deposit accounts for the
current quarter increased by $145 thousand or 17% over the same period in 1996,
$1.019 million from $874 thousand. The Company annually reviews all of its
fee-based products and services for marketability and profitability. Adjustments
to fees for the Company's products and services and the strengthening of
controls for the collections of such fees are the reasons for the significant
increase.
Mahoning National Bank's Trust Department generated $1.497 million in other
revenue in the first six months of 1997, an increase of $231 thousand or 18%
over the $1.266 million earned in the same period of 1996. The Trust Department
generated $787 thousand of operating income in the second quarter of 1997, an
18% increase over the $664 thousand earned in the comparable quarter of 1996.
This increase can be attributed to two factors; an influx of new trust accounts
and market value based fees which increased due to the significant increase in
account market values due to rises in the stock market over the past year. At
June 30, 1997, Trust department assets totaled $433.596 million with a market
<PAGE> 9
value of $628.924 million compared to $549.959 million with a market value of
$727.144 million at June 30, 1996. This decrease was the result of a corporate
customer consolidating employee benefit and custody trust accounts with a
financial institution outside of our market area in the second quarter of 1997.
As a result of the loss of this account relationship Trust department revenue
for 1997 should approximate the $2.837 million earned in 1996.
In February of 1997 the Company realized a $178 thousand gain when $20.075
million of US Government securities were sold from the available for sale
portfolio. There were no security sales in the second quarter of 1997. There
were no security sales in the first six months of 1996.
Provision for loan losses for the first six months of 1997 amounted to $1.525
million compared to $1.075 million for the comparable period in 1996. The
provision for the current quarter was $725 thousand compared to $550 thousand
for the same quarter of 1996. This increase is discussed in more detail under
the Provision For Loan Losses heading later in this discussion.
Other operating expense for the first six months decreased $91 thousand or less
than 1% from the comparable period in 1996 to $10.136 million from $10.227
million. For the current quarter other operating expense totaled $5.111 million
compared to $5.124 million in the same quarter of 1996. As a percentage of
average assets, other operating expense was 2.65% for the first six months of
1997 compared to 2.77% in the same time period of 1996.
On September 30, 1996, the "Deposit Insurance Fund Act of 1996" was enacted.
This Act requires Federal Deposit Insurance Corporation (FDIC) insured banks to
pay a 1.29 basis point assessment ($.0129 per $100 of deposits) for Bank
Insurance Fund deposits in 1997, 1998 and 1999. As a result of this assessment,
FDIC premium expense for the first six months of 1997 totaled $36 thousand
compared to $1 thousand for the same period in 1996.
Salaries and employee benefits expense for the first six months of 1997
increased $125 thousand or 2% and $77 thousand or 3% for the most recent quarter
when compared to 1996. Salary expense alone increased $80 thousand or 2% for the
first six months of 1997 and $30 thousand for the current quarter when compared
to the same periods in 1996. This increase can be attributed to annual merit
salary adjustments which took effect January 1, 1997 and increases in various
employee incentive programs. Health care expenses for the first six months of
1997 were $387 thousand compared to $328 thousand for the same period in 1996,
an increase of $59 thousand or 18%. This increase was due in part to increased
health care claims over the past 12 months. The Company's renewal rates for the
1997 - 1998 plan year increased between 5 - 10%, which should increase health
care costs over the remainder of 1997 and into 1998. This increase should not
have a material impact on future earnings.
<PAGE> 10
Expenses of premises and fixed assets for the first six months of 1997 totaled
$1.506 million, a 7% decrease ($116 thousand) from the same period in 1996.
Current quarter expense totaled $704 thousand, a 13% decrease from the same
quarter in 1996. This decrease in mainly attributable to the termination of
various equipment leases early in the second quarter of 1997 and reduced
building maintenance costs.
Other expenses, exclusive of the FDIC insurance assessment, decreased $135
thousand in the first six months of 1997, to $3.149 million from $3.284 million
for the same period of 1996, a 4% decrease. For the second quarter of 1997 other
expense, exclusive of the FDIC insurance assessment, totaled $1.647 million, the
same as the second quarter of 1996. The decrease from 1996 was the result of
reduced state franchise taxes, insurance and bond premiums and professional
expenses. Overhead expenses for the remainder of 1997 are expected to
approximate those incurred in the first six months of the year.
Income Taxes
Income tax expense for the first six months of 1997 amounted to $3.080 million
compared to $2.766 million for the same period in 1996. Income tax expense for
1997 is being accrued at an effective rate of approximately 32.5%, which
compares to an effective tax rate of 32.3% for all of 1996.
The Statement of Condition includes approximately $2.861 million and $2.681
million of net deferred tax assets at June 30, 1997 and December 31, 1996
respectively. It is management's belief that the Company has adequate taxable
income to realize the deferred tax asset and accordingly no valuation reserve
has been established.
The following annualized ratios reflect the earnings performance for the first
six months of 1997 compared to the same time period of 1996:
<TABLE>
<CAPTION>
For the six For the six
months ended months ended
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
Return on Average Assets 1.67% 1.56%
Return on Average Equity 16.30% 16.11%
Return on Earnings Assets
- -Taxable Equivalent 8.01 8.05
Interest Cost 3.26 3.26
Net Interest Margin 4.75 4.79
</TABLE>
Statements of Condition
As of June 30, 1997, total assets of the Company amounted to $771.754 million,
an increase from December 31, 1996 total assets of $769.560 million. Average
assets for the
<PAGE> 11
first six month of 1997 amounted to $772.242 million compared to $740.262
million for the same period of 1996, a 4% increase. Through the first six months
of 1997 total loans increased $12.740 million or 3% from year end while the
investment portfolio increased $5.000 million or 2% in that same period. The
growth in loans and the investment portfolio was primarily funded through a
$19.500 million reduction in federal funds sold and earnings retention. While
short term borrowings and federal funds purchased increased $4.765 million and
$11.200 million respectively in the first six months of 1997, securities sold
under agreements to repurchase declined $17.808 million from $122.467 million on
December 31, 1996 to $104.659 million at June 30, 1997. The significant decline
in securities sold under agreements to repurchase resulted from the loss of
approximately $11.2 million in overnight repurchase agreements (corporate
"sweep" checking accounts) due to a corporate sweep customer consolidating their
funds with a financial institution outside of our market area.
Investment Portfolio
The deposits and other borrowings of the Company, in excess of required reserves
and operating funds of the Company, are invested in loans, investment securities
and federal funds sold. The objective of the investment portfolio is to combine
liquidity, earnings and safety of the investment in a prudent manner so as to
protect the depositor, fulfill responsibility to borrowers and offer a favorable
return to the stockholders.
At June 30, 1997 the investment portfolio totaled $234.332 million (net of a
$407 thousand unrealized loss on available for sale securities) which was an
increase of $5.000 million from December 31, 1996.
At June 30, 1997 the Company has classified investment securities with amortized
cost and fair market value of $162.721 and $162.314 million respectively, or 69%
of the portfolio as available for sale, with the remainder of the portfolio
classified as held to maturity. The adoption of SFAS 115 has resulted in a
decrease in the carrying amount of investment securities of $407 thousand with a
decrease in stockholders' equity of $264 thousand net of deferred income taxes.
Those securities classified as available for sale will afford the Company's
Asset/Liability Committee the necessary flexibility to manage the portfolio to
meet liquidity needs that may arise.
In the first quarter of 1997, $20.075 million of U.S. Government Securities that
were coming due in 1997 were sold from the available for sale portfolio and were
reinvested in longer term U.S. Treasury securities. There were no security sales
in the second quarter of 1997, or the first six months of 1996. No securities
were transferred between categories in the first six months of 1997.
Loans
Total loans outstanding increased by $12.740 million or 3% from $477.795 million
on December 31, 1996, to $490.535 million on June 30, 1997. This growth, coupled
with no
<PAGE> 12
change in deposits resulted in a loan to deposit ratio of 89.01% at June 30,
1997, compared to 86.71% at December 31, 1996.
The increase in the loan portfolio in the first six months of 1997 is the result
of continued loan demand and good results from business development efforts. The
areas of largest growth in the first six months of 1997 were nonresidential
mortgages, commercial loans and residential mortgages.
Nonresidential mortgages increased $9.713 million or 10% from $95.081 million to
$104.794 million and commercial loans increased $4.858 million or 6% from
$87.117 million to $91.975 million in the first six months of 1997. The momentum
established the past several years with a strong sales culture in the corporate
and branch business development areas continue to result in new relationships.
The continued strength of the local economy and good environment for
construction also contributed to the strong growth. Modest commercial loan
growth is projected for the remainder of 1997.
Residential mortgages increased $3.835 million or 2% from $156.574 million to
$160.409 million in the first six months of 1997. The demand for purchase money
mortgage loans lessened in the second quarter as did refinancings. Strong demand
for equity loan products continues to result in increased loan balances in those
products.
Consumer loans decreased $3.996 million or 3% in the first six months of 1997
after decreasing $10.496 million or 8% in 1996. Consumer loan balances are
primarily dependent on the level of indirect automobile financing purchased by
the Bank. Substantial growth of the past years was not sustained in 1996 and the
first six months of 1997 due to a slower market, greater competition among local
lenders and the Company's close monitoring of underwriting criteria due to
increased charge-offs and delinquency trends. Competition from leasing by
captive automobile finance companies (i.e. GMAC, Ford Motor Credit) will impact
future growth and necessitate a commitment to providing the dealer network with
a very high level of service. Given the rapid amortization of the automobile
loan portfolio, which has a short average maturity, and a projected slow down in
our national economy, consumer loan totals are expected to continue to decline
throughout 1997.
<PAGE> 13
As of June 30, 1997, non-performing loans, defined as those loans which are on
non-accrual or are 90 days or more past due and still accruing, totaled $3.601
million compared to $4.629 million at December 31, 1996. Listed below is a
schedule of the Company's non-performing assets:
<TABLE>
<CAPTION>
(Amounts in thousands) June 30, 1997 December 31, 1996
- ------------------------- ------------- -----------------
<S> <C> <C>
Non accrual loans $2,560 $3,698
Accruing loans 90 days
or more past due 1,041 931
------ ------
Non performing loans 3,601 4,629
Restructured loans in
compliance with modified
terms 271 411
Other real estate owned 286 269
------ ------
Total problem assets $4,158 $5,309
====== ======
Total problem assets to
total assets 0.54% 0.69%
</TABLE>
The following ratios will provide additional information on the status of the
loan portfolio:
<TABLE>
<CAPTION>
As of As of
June 30, 1997 December 31, 1996
------------- -----------------
<S> <C> <C>
Loan to deposit ratio 89.01% 86.71%
Non performing loans to
total loans .73 .97
Non performing loans to
allowance for loan losses 45.47 57.06
Allowance for loan losses
to total loans 1.61 1.70
</TABLE>
Shown below is a summary of the allowance for loan losses:
<TABLE>
<CAPTION>
For the six For the six
months ended months ended
(Amounts in thousands) June 30, 1997 June 30, 1996
- ------------------------- ------------- -------------
<S> <C> <C>
Balance at beginning of period $8,112 $7,156
Provision charged to operating
expense 1,525 1,075
Recoveries of loans charged off 295 272
Losses charged to allowance (2,013) (1,128)
------ ------
Balance at end of period $7,919 $7,375
====== ======
Net charge-offs to average
loans .35% .18%
</TABLE>
<PAGE> 14
Information required under Statement of Financial Accounting Standards No. 114
"Accounting by Creditors for Impairment of a Loan" and No. 118 "Accounting by
Creditors for Impairment of a Loan - Income Recognition and Disclosure" is as
follows for the six months ended June 30:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Principal amount of impaired loans $ 934 $ 495
Allowance allocated to impaired loans 450 125
------ ------
Portion for which no allowance is allocated $ 484 $ 370
====== ======
Average investment in impaired loans for
the six months ended June 30: $1,071 $ 538
====== ======
</TABLE>
Total cash collected on impaired loans during the first six months of 1997 and
1996 was $556 thousand and $136 thousand respectively; $547 thousand was
credited to the principal balance outstanding and $9 thousand was credited to
interest in the first six months of 1997 while the entire $136 thousand was
credited to the principal balance outstanding in the first six months of 1996.
Interest that would have been accrued on impaired loans in the first six months
of 1997 and 1996 was $47 thousand and $28 thousand respectively. Interest income
of $9 thousand and $0 was recognized during the first six months of 1997 and
1996, respectively.
Provision For Loan Losses:
The policies of the Company provide for loan loss reserves to adequately protect
the Company against potential unidentified and/or identified loan losses
consistent with sound and prudent banking practice.
In determining the monthly provision for loan losses and the adequacy of the
loan loss reserve, management reviews the current and forecasted economic
conditions and portfolio trends. The primary focus is placed on current problem
loans, delinquencies and anticipated charge-offs. As of June 30, 1997, all loans
classified for regulatory purposes do not represent or result from trends or
uncertainties which management reasonably expects will materially impact future
operating results, liquidity, or capital resources.
The provision for loan losses charged to expense during the first six months of
1997 was $1.525 million, an increase of $450 thousand from the 1996 first six
month provision. This increase was the result of the growth in the loan
portfolio and increases in consumer loan and commercial loan charge-offs.
Net charge-offs on consumer loans and credit card related plans totaled $915
thousand for the first six months of 1997 compared to $824 thousand for the same
period in 1996. The Company's experience in 1996 and the first six months of
1997 followed national trends of deteriorating credit quality in consumer loans
and credit card and related plans brought on
<PAGE> 15
by the high level of consumer debt and record personal bankruptcy filings. In
mid-1996 the Company implemented stricter underwriting guidelines and completed
an analysis of the collection department to strengthen collection efforts. The
result of these actions began to have a positive impact on consumer charge-offs
starting in the second quarter of 1997. Net consumer loan charge-offs in the
second quarter of 1997 totaled $309 thousand compared to $606 thousand in the
first quarter of 1997 and $441 thousand in the second quarter of 1996.
Late in the first quarter of 1997, the Company became aware of a severe
deterioration in the financials of a particular Commercial loan customer. In the
subsequent loan work-out with this company, which resulted in a secured party
sale, a portion of that loan ($750 thousand), was charged-off.
It is anticipated that some of the amounts charged-off in the first six months
will be collected in the future and will be added to the allowance for loan
losses. The timing and amounts of these collections are uncertain at this time.
The trends discussed above will continue to be monitored closely during the year
as the Company evaluates the adequacy of the allowance for loan losses. While
future provisions to the loan loss reserve are dependent upon the growth and
quality of the loan portfolio it is estimated that for the remainder of 1997,
quarterly provisions will approximate those of the first two quarters. At June
30, 1997, the allowance for loan losses totaled $7.919 million or $1.61% of
total loans, compared to $7.375 million or 1.54% at June 30, 1996.
Liquidity and Capital
It is a primary objective of Mahoning National Bancorp, Inc. to maintain a level
of liquidity deemed adequate to meet the expected and potential funding needs of
loan and deposit customers. It is the Company's policy to manage its affairs
such that liquidity needs are fully satisfied through normal bank operations.
Short-term investments (Federal funds sold) and short-term borrowings (Federal
funds purchased and repurchase agreements, U.S. Treasury demand notes and
Federal Home Loan Bank advances) are used as primary cash management and
liquidity tools. Short term Federal fund lines totaling $60 million have been
established at the Company's correspondent banks. When loan demand increases at
a faster rate than deposit growth it may be necessary to manage the available
for sale portion of the investment portfolio to meet that demand, or to sell
conforming residential mortgages on the secondary market. While no loans were
designated as available for sale at June 30, 1997 the $395 thousand of
residential mortgage loans so designated at December 31, 1996 were sold at a
small gain in the second quarter of 1997. At June 30, 1997, $162.314 million of
the investment portfolio was classified as available for sale. This
classification will afford the Company's Asset/Liability Committee the
flexibility to manage the portfolio to meet any liquidity needs that may arise.
<PAGE> 16
An additional source of liquidity is derived from the Federal Home Loan Bank of
Cincinnati (FHLB). The FHLB provides short term funding alternatives with a line
of credit of $25.0 million and funding for one-to-four family residential
mortgage loans and allows the Company to better manage its interest rate risk.
The Company had $3.614 million outstanding in FHLB borrowings at June 30, 1997
compared to $4.065 million at December 31, 1996.
Total Capital Accounts have grown $4.036 million or 5% in the first six months
of 1997. This increase reflects retained earnings less dividends paid and also
reflects a $332 thousand unrealized loss on the available for sale investment
portfolio for the first six months of 1997. Dividends paid in 1997 year to date
were $2.016 million or $.32 per share compared to $1.701 million or $.27 per
share for the same period in 1996.
Book value per share as of June 30, 1997 was $12.88 compared to $12.24 on
December 31, 1996.
Under regulations issued by federal banking agencies, banks and bank holding
companies are required to maintain certain minimum capital ratios known as the
risk-based capital ratio and the leverage ratio. At June 30, 1997, Mahoning
National Bancorp's leverage, Tier 1 and total risk-based capital ratios were
10.60%, 16.93% and 18.18%, respectively, compared to 10.27%, 16.31% and 17.57%
at December 31, 1996, respectively. The Company has exceeded all required
regulatory capital ratios for each period presented and is considered "well
capitalized" under all federal banking agency regulations. The Company's
risk-based capital ratios are well above the regulatory minimums due to the
capital strength and low risk nature of the balance sheet and off-balance sheet
commitments. The structure of the Company's balance sheet is such that nearly
all of the investment portfolio is invested in U.S. Government obligations or
other low risk categories, and over 20% of the loan portfolio is invested in
one-to-four family residential mortgage loans which have a 50% risk weight
assessment. It is the Company's intent to prudently manage the capital base in
an effort to increase return on equity performance while maintaining necessary
capital requirements to maintain the "well capitalized" classification.
<PAGE> 17
MAHONING NATIONAL BANCORP INC.
SUMMARY OF AVERAGE BALANCES AND INTEREST RATES
TAX EQUIVALENT BASIS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30, 1997
(Amounts in thousands) AVERAGE AVERAGE
BALANCE INTEREST RATE%
-----------------------------------------------------------------------
INTEREST YIELDS
<S> <C> <C> <C>
Loans $487,698 $21,695 8.97
Investment securities (1) 232,627 7,115 6.14
Other earning assets 11,276 306 5.40
-----------------------------------------------------------------------
Total return on earning assets 731,601 29,116 8.01
INTEREST COSTS
Interest bearing deposits:
Savings deposits 279,639 3,214 2.32
Time deposits 199,505 5,240 5.30
-----------------------------------------------------------------------
Total interest bearing deposits 479,144 8,454 3.56
Federal funds purchased 3,488 99 5.63
Repurchase agreements 125,810 2,960 4.75
Short term borrowings 8,718 226 5.16
Long term borrowings 3,874 105 5.44
-----------------------------------------------------------------------
Total interest bearing liabilities $621,034 $11,844 3.85
Interest spread $17,272 4.16
================================================
AS A PERCENT OF AVERAGE EARNING ASSETS
Total return on earning assets 8.01
Total interest cost 3.26
-------------------------
Net Interest Margin 4.75
=========================
FOR THE SIX MONTHS ENDED
JUNE 30, 1996
(Amounts in thousands) AVERAGE AVERAGE
BALANCE INTEREST RATE%
-----------------------------------------------------------------------
INTEREST YIELDS
<S> <C> <C> <C>
Loans $471,581 $21,096 8.97
Investment securities (1) 222,110 6,811 6.15
Other earning assets 6,288 166 5.22
-----------------------------------------------------------------------
Total return on earning assets 699,979 28,073 8.05
INTEREST COSTS
Interest bearing deposits:
Savings deposits 293,875 3,451 2.36
Time deposits 210,271 5,720 5.46
-----------------------------------------------------------------------
Total interest bearing deposits 504,146 9,171 3.65
Federal funds purchased 2,017 54 5.30
Repurchase agreements 83,739 1,873 4.48
Short term borrowings 5,921 145 4.86
Long term borrowings 3,835 104 5.44
-----------------------------------------------------------------------
Total interest bearing liabilities $599,658 $11,347 3.79
Interest spread $16,726 4.26
================================================
AS A PERCENT OF AVERAGE EARNING ASSETS
Total return on earning assets 8.05
Total interest cost 3.26
-------------------------
Net Interest Margin 4.79
=========================
</TABLE>
(1) Investment securities average balance is based on average carrying value
while the average rate is calculated using average historical cost.
<PAGE> 18
PART II
OTHER INFORMATION
Mahoning National Bancorp, Inc.
Item 1 - Legal Proceedings
None
Item 2 - Changes in the Rights of the Company's Security Holders
None
Item 3 - Default Upon Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
None
Item 5 - Other Information
None
Item 6(a) - Exhibits
(10) Material Contracts:
(10a) Change-In-Control Protective Agreement -
Norman E. Benden, Jr.
(10b) Change-In-Control Protective Agreement -
Richard E. Davies
(10c) Change-In-Control Protective Agreement -
Karen R. DeSalvo
(10d) Change-In-Control Protective Agreement -
Frank Hierro
(10e) Change-In-Control Protective Agreement -
Dexter A. Hollen
(10f) Change-In-Control Protective Agreement -
John R. Lewis
(10g) Change-In-Control Protective Agreement -
Parker T. McHenry
(10h) Change-In-Control Protective Agreement -
Gregory L. Ridler
(10i) Change-In-Control Protective Agreement -
J. David Sabine
(10j) Change-In-Control Protective Agreement -
David E. Westerburg
<PAGE> 19
(10k) 1997 Amendment to Supplemental Executive
Retirement Plan between Mahoning National
Bank and Gregory L. Ridler; dated May 14,
1997.
(10l) Supplemental Executive Retirement Plan
between Mahoning National Bank and Gregory
L. Ridler. Originally incorporated by
reference in the December 31, 1995, Form 10K
Annual Report is refiled in EDGAR format and
incorporated by reference in this Form 10Q.
(10m) Split Dollar Life Insurance plan between
Mahoning National Bank and Gregory L.
Ridler. Originally incorporated by reference
in the December 31, 1995, Form 10K Annual
Report is refiled in EDGAR format and
incorporated by reference in this Form 10Q.
(27) Financial Data Schedule
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report on Form 10-Q for the six months
ended June 30, 1997 to be signed on its behalf by the undersigned thereunto duly
authorized.
DATE: August 11, 1997 Mahoning National Bancorp, Inc.
---------------------
/s/ Gregory L. Ridler
----------------------------
Gregory L. Ridler
Chairman of the Board,
President and Chief
Executive Officer
DATE: August 11, 1997 /s/ Norman E. Benden, Jr.
--------------------- ----------------------------
Norman E. Benden, Jr.
Treasurer
<PAGE> 1
Mahoning National Bancorp, Inc.
Form 10-Q
Item 6 (a)
Exhibit 10 (a)
Change-In-Control Protective Agreement
Norman E. Benden, Jr.
<PAGE> 2
THE MAHONING NATIONAL BANK OF YOUNGSTOWN
-------------------------------
Guarantee Agreement
--------------------------------
AGREEMENT entered into this 14th day May, 1997 (the "Effective Date"),
by and between The Mahoning National Bank of Youngstown (the "Bank") and Norman
E. Benden, Jr. (the "Employee").
WHEREAS, the Employee is currently employed by the Bank in an executive
capacity, and has entered into a change-in-control protective agreement (the
"Company Agreement") with Mahoning National Bancorp, Inc. (the "Company"); and
WHEREAS, the Board of Directors of the Bank has determined that it is
in the best interest of the Bank to enter into this Agreement in order to assure
continuity of the Bank's management through encouraging the long-term retention
of the Employee; and
WHEREAS, the parties desire by this writing to set forth the Bank's
commitment to guarantee the Company's obligations under the Company Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. The Bank shall be jointly and severally liable with the Company for
its obligations under the Company Agreement.
2. This Agreement shall have a term that coincides with the term of the
Company Agreement (including any and all extensions thereunder), shall be
binding on any successors to the interest of the parties, shall be amended only
through a written instrument executed by both parties, and shall be governed by
the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first written above.
ATTEST: THE MAHONING NATIONAL BANK
OF YOUNGSTOWN
/s/ Richard E. Davies By /s/ Daniel B. Roth
- ----------------------- --------------------------------------------
Richard E. Davies Daniel B. Roth
Secretary Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ Norman E. Benden, Jr.
- ----------------------- ----------------------------------------------
Sandra L. Douglas Norman E. Benden, Jr.
Employee
<PAGE> 3
CHANGE-IN-CONTROL PROTECTIVE AGREEMENT
THIS AGREEMENT entered into this 14th day of May, 1997, (the "Effective
Date") by and between, Mahoning National Bancorp, Inc. (the "Company"), and
Norman E. Benden, Jr. (the "Employee").
WHEREAS, the Employee has heretofore been employed as an executive
officer of The Mahoning National Bank of Youngstown (the "Bank"), and thereby
has directly contributed to the financial success and operational stability of
the Company; and
WHEREAS, the Company deems it to be in the best interests of its
stockholders to enter into this Agreement as additional incentive to the
Employee to continue to serve in such capacity; and
WHEREAS, the parties desire by this writing to set forth their
understanding as to their respective rights and obligations in the event a
change of control occurs with respect to the Bank or the Company.
NOW, THEREFORE, the undersigned parties AGREE as follows:
1. DEFINED TERMS
When used anywhere in the Agreement, the following terms shall have
the meaning set forth herein.
(a) "Beneficiary" shall mean the person or persons as stated in the
last designation of beneficiary concerning this Agreement signed by the Employee
and filed with Company, and if not, then the personal representative of the
Employee.
(b) "Change in Control" shall mean any one of the following events: (i)
the acquisition of ownership, holding or power to vote more than 30% of the
Bank's or the Company's voting stock, (ii) the acquisition of the ability to
control the election of a majority of the Bank's or the Company's directors,
(iii) the acquisition of a controlling influence over the management or policies
of the Bank or the Company by any person or by persons acting as a "group"
(within the meaning of Section 13(d) of the Securities Exchange Act of 1934), or
(iv) during any period of two consecutive years, individuals (the "Continuing
Directors") who at the beginning of such period constitute the Board of
Directors of the Bank or the Company (the "Existing Board") cease for any reason
to constitute at least two-thirds thereof, provided that any individual whose
election or nomination for election as a member of the Existing Board was
approved by a vote of at least two-thirds of the Continuing Directors then in
office shall be
<PAGE> 4
considered a Continuing Director. Notwithstanding the foregoing,
in the case of (i), (ii) and (iii) hereof, ownership or control of the Bank by
the Company itself shall not constitute a Change in Control. For purposes of
this paragraph only, the term "person" refers to an individual or a corporation,
partnership, trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of entity not
specifically listed herein.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and as interpreted through applicable rulings and regulations
in effect from time to time.
(d) "Code Section 280G Maximum" shall mean the product of 2.99 and
the Employee's "base amount" as defined in Code Section 280G(b)(3).
(e) "Good Reason" shall mean any of the following events, which has
not been consented to in advance by the Employee in writing: (i) the requirement
that the Employee move his or her personal residence, or perform his or her
principal executive functions, more than thirty (30) miles from his primary
office as of the date of the Change in Control; (ii) a material reduction in the
Employee's base compensation as in effect on the date of the Change in Control
or as the same may be increased from time to time; (iii) the failure by the Bank
or the Company to continue to provide the Employee with compensation and
benefits provided for on the date of the Change in Control, as the same may be
increased from time to time, or with benefits substantially similar to those
provided under any of the employee benefit plans in which the Employee now or
hereafter becomes a participant, or the taking of any action by the Bank or the
Company which would directly or indirectly reduce any of such benefits or
deprive the Employee of any material fringe benefit enjoyed at the time of the
Change in Control; (iv) the assignment to the Employee of duties and
responsibilities materially different from those normally associated with his or
her position; (v) a failure to elect or reelect the Employee to the Board of
Directors of the Bank or the Company, if the Employee is serving on such Board
on the date of the Change in Control; (vi) a material diminution or reduction in
the Employee's responsibilities or authority (including reporting
responsibilities) in connection with employment with the Bank or the Company; or
(vii) a material reduction in the secretarial or other administrative support of
the Employee.
(f) "Just Cause" shall mean, in the good faith determination of the
Bank's Board of Directors, the Employee's personal dishonesty, 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.
The Employee shall have no right to receive compensation or other benefits for
any period after termination for Just Cause. No act, or failure to act, on the
Employee's part shall be considered "willful" unless the Employee has acted, or
failed to act, with an absence of good faith and without a reasonable belief
that such action or failure to act was in the best interest of the Bank and the
Company.
<PAGE> 5
(g) "Protected Period" shall mean the period that begins on the
date six months before a Change in Control and ends on the later of the first
annual anniversary of the Change in Control or the expiration date of this
Agreement.
(h) "Trust" shall mean a grantor trust designed in accordance with
Revenue Procedure 92-64 and having a trustee independent of the Bank and the
Company,
2. TRIGGER EVENTS
The Employee shall be entitled to receive the severance benefits set
forth in Section 3 of this Agreement in the event that (i) the Employee
voluntarily terminates employment either for any reason within 30 days of a
Change in Control, (ii) the Employee voluntarily terminates employment within 90
days of an event that both occurs during the Protected Period and constitutes
Good Reason, or (iii) the Bank, the Company, or their successor(s) in interest
terminate the Employee's employment for any reason other than Just Cause during
the Protected Period.
3. SEVERANCE BENEFITS
If the Employee becomes entitled to receive severance benefits pursuant
to Section 2 hereof, the Company shall BOTH provide the Employee with the
opportunity, until the Employee first begins to participate in Medicare, to
purchase, at the Employee's own expense which shall not exceed applicable COBRA
rates, family medical and dental insurance under any group health plans that the
Bank or the Company maintains for its employees, AND pay the Employee (or the
Employee's Beneficiary in the event of the Employee's death before all required
payments have been made under this Agreement) a severance benefit, for 24 months
after termination of employment, in an amount equal to the Employee's highest
monthly salary in effect between the date that the Protected Period begins and
the date of the Change in Control. In no event, however, will the present value
of these severance payments exceed the difference between the Code Section 280G
Maximum and the sum of any other "parachute payments" as defined under Code
Section 280G(b)(2) that the Employee receives on account of the Change in
Control. Said payments shall commence within ten days of the later of the date
of the Change in Control and the Employee's last day of employment with the
Bank or the Company.
In the event that the Employee and the Company agree that the Employee
has collected an amount exceeding the Code Section 280G Maximum, the parties may
jointly agree in writing that such excess shall be treated as a loan AB INITIO
which the Employee shall repay to the Company, on terms and conditions mutually
agreeable to the parties, together with interest at the applicable federal rate
provided for in Section 7872(f)(2)(B) of the Code.
<PAGE> 6
4. FUNDING OF GRANTOR TRUST UPON CHANGE IN CONTROL
Notwithstanding any other provision of this Agreement that may be
contrary or inconsistent herewith, not later than ten (10) business days after a
Change in Control, the Company shall (i) establish a grantor trust (the "Trust")
that is designed in accordance with Revenue Procedure 92-64 and has a trustee
(the "Trustee") independent of the Company and any successor to their interest,
(ii) deposit in the Trust an amount equal to the present value of all benefits
that may become payable under this Agreement, and (iii) provide the Trustee with
an irrevocable written direction both to hold all Trust assets and any
investment return thereon in a segregated account for the benefit of the
Employee, and to follow the procedures set forth in the next paragraph as to the
payment of amounts from the Trust.
At any time after a Change in Control, the Employee may provide the
Trustee with a written affidavit (the "Affidavit") in which the Employee attests
that he has terminated employment with the Company or any successor to its
interest, and has become entitled to commence receiving the monthly benefit
payments (required by Section 3 hereof). The Affidavit shall also specify the
amount of each such monthly payment to be made from the Trust. On the first
business day of the month following the Trustee's receipt of the Affidavit, the
Trustee shall commence paying the Employee, in immediately available funds, the
monthly benefit specified in the Affidavit, and shall send a copy of it to the
Company via overnight and registered mail (return receipt requested). Upon the
receipt of the Employee's written release of all claims under this Agreement,
the Trustee shall pay to the Company any remaining assets in the Trust. The
Company shall pay any and all expenses associated with maintaining the Trust,
and shall hold the Trustee harmless from any liability for making the payments
required hereunder.
5. TERM OF THE AGREEMENT. This Agreement shall remain in effect for the
period commencing on the Effective Date and ending on the earlier of (i) the
date 36 months after the Effective Date, and (ii) the date on which the Employee
terminates employment with the Bank; provided that the Employee's rights
hereunder shall continue following the termination of this employment with the
Bank or the Company under any of the circumstances described in Section 2
hereof. Additionally, on each annual anniversary date from the Effective Date,
the term of this Agreement shall automatically be extended for an additional
one-year period beyond the then effective expiration date unless the Board of
Directors of the Company determines to the contrary in a duly adopted resolution
AND delivers a certified copy of the resolution to the Employee BEFORE the date
on which the Agreement would otherwise renew.
6. EXPENSE REIMBURSEMENT.
In the event that any dispute arises between the Employee and the
Bank or the Company as to the terms or interpretation of this Agreement, whether
instituted by formal legal
<PAGE> 7
proceedings or otherwise, including any action that the Employee takes to
enforce the terms of this Agreement or to defend against any action taken by the
Bank or the Company, the Employee shall be reimbursed for all costs and
expenses, including reasonable attorneys' fees, arising from such dispute,
proceedings or actions, provided that the Employee shall obtain a final
judgement in favor of the Employee in a court of competent jurisdiction or in
binding arbitration under the rules of the American Arbitration Association.
Such reimbursement shall be paid within ten days of Employee's furnishing to the
Bank and the Company written evidence, which may be in the form, among other
things, of a cancelled check or receipt, of any costs or expenses incurred by
the Employee.
7. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of the Company which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank or Company.
(b) Since the Company is contracting for the unique and personal
skills of the Employee, the Employee shall be precluded from assigning or
delegating his rights or duties hereunder without first obtaining the written
consent of the Company.
8. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
9. APPLICABLE LAW. Except to the extent preempted by Federal law, the
laws of the State of Ohio shall govern this Agreement in all respects, whether
as to its validity, construction, capacity, performance or otherwise.
10. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
11. ENTIRE AGREEMENT. This Agreement, together with any understanding
or modifications thereof as agreed to in writing by the parties, shall
constitute the entire agreement between the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first hereinabove written.
<PAGE> 8
ATTEST: MAHONING NATIONAL BANCORP, INC.
/s/ Richard E. Davies By: /s/ Daniel B. Roth
- ----------------------- ---------------------------
Richard E. Davies By: Daniel B. Roth
Its Secretary Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ Norman E. Benden, Jr.
- ----------------------- -----------------------------
Sandra L. Douglas Norman E. Benden, Jr.
Employee
<PAGE> 1
Mahoning National Bancorp, Inc.
Form 10-Q
Item 6 (a)
Exhibit 10 (b)
Change-In-Control Protective Agreement
Richard E. Davies
<PAGE> 2
THE MAHONING NATIONAL BANK OF YOUNGSTOWN
-------------------------------
Guarantee Agreement
--------------------------------
AGREEMENT entered into this 14th day May, 1997 (the "Effective Date"),
by and between The Mahoning National Bank of Youngstown (the "Bank") and Richard
E. Davies (the "Employee").
WHEREAS, the Employee is currently employed by the Bank in an executive
capacity, and has entered into a change-in-control protective agreement (the
"Company Agreement") with Mahoning National Bancorp, Inc. (the "Company"); and
WHEREAS, the Board of Directors of the Bank has determined that it is
in the best interest of the Bank to enter into this Agreement in order to assure
continuity of the Bank's management through encouraging the long-term retention
of the Employee; and
WHEREAS, the parties desire by this writing to set forth the Bank's
commitment to guarantee the Company's obligations under the Company Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. The Bank shall be jointly and severally liable with the Company for
its obligations under the Company Agreement.
2. This Agreement shall have a term that coincides with the term of the
Company Agreement (including any and all extensions thereunder), shall be
binding on any successors to the interest of the parties, shall be amended only
through a written instrument executed by both parties, and shall be governed by
the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first written above.
ATTEST: THE MAHONING NATIONAL BANK
OF YOUNGSTOWN
/s/ Norman E. Benden, Jr. By /s/ Daniel B. Roth
- -------------------------- ----------------------------------
Norman E. Benden, Jr. By Daniel B. Roth
Treasurer Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ Richard E. Davies
- -------------------------- ------------------------------------
Sandra L. Douglas Richard E. Davies
Employee
<PAGE> 3
CHANGE-IN-CONTROL PROTECTIVE AGREEMENT
THIS AGREEMENT entered into this 14th day of May, 1997, (the "Effective
Date") by and between, Mahoning National Bancorp, Inc. (the "Company"), and
Richard E. Davies (the "Employee").
WHEREAS, the Employee has heretofore been employed as an executive
officer of The Mahoning National Bank of Youngstown (the "Bank"), and thereby
has directly contributed to the financial success and operational stability of
the Company; and
WHEREAS, the Company deems it to be in the best interests of its
stockholders to enter into this Agreement as additional incentive to the
Employee to continue to serve in such capacity; and
WHEREAS, the parties desire by this writing to set forth their
understanding as to their respective rights and obligations in the event a
change of control occurs with respect to the Bank or the Company.
NOW, THEREFORE, the undersigned parties AGREE as follows:
1. DEFINED TERMS
When used anywhere in the Agreement, the following terms shall have
the meaning set forth herein.
(a) "Beneficiary" shall mean the person or persons as stated in the
last designation of beneficiary concerning this Agreement signed by the Employee
and filed with Company, and if not, then the personal representative of the
Employee.
(b) "Change in Control" shall mean any one of the following events: (i)
the acquisition of ownership, holding or power to vote more than 30% of the
Bank's or the Company's voting stock, (ii) the acquisition of the ability to
control the election of a majority of the Bank's or the Company's directors,
(iii) the acquisition of a controlling influence over the management or policies
of the Bank or the Company by any person or by persons acting as a "group"
(within the meaning of Section 13(d) of the Securities Exchange Act of 1934), or
(iv) during any period of two consecutive years, individuals (the "Continuing
Directors") who at the beginning of such period constitute the Board of
Directors of the Bank or the Company (the "Existing Board") cease for any reason
to constitute at least two-thirds thereof, provided that any individual whose
election or nomination for election as a member of the Existing Board was
approved by a vote of at least two-thirds of the Continuing Directors then in
office shall be
<PAGE> 4
considered a Continuing Director. Notwithstanding the foregoing, in the case of
(i), (ii) and (iii) hereof, ownership or control of the Bank by the Company
itself shall not constitute a Change in Control. For purposes of this paragraph
only, the term "person" refers to an individual or a corporation, partnership,
trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not specifically listed
herein.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and as interpreted through applicable rulings and
regulations in effect from time to time.
(d) "Code Section 280G Maximum" shall mean the product of
2.99 and the Employee's "base amount" as defined in Code Section 280G(b)(3).
(e) "Good Reason" shall mean any of the following events,
which has not been consented to in advance by the Employee in writing: (i) the
requirement that the Employee move his or her personal residence, or perform his
or her principal executive functions, more than thirty (30) miles from his
primary office as of the date of the Change in Control; (ii) a material
reduction in the Employee's base compensation as in effect on the date of the
Change in Control or as the same may be increased from time to time; (iii) the
failure by the Bank or the Company to continue to provide the Employee with
compensation and benefits provided for on the date of the Change in Control, as
the same may be increased from time to time, or with benefits substantially
similar to those provided under any of the employee benefit plans in which the
Employee now or hereafter becomes a participant, or the taking of any action by
the Bank or the Company which would directly or indirectly reduce any of such
benefits or deprive the Employee of any material fringe benefit enjoyed at the
time of the Change in Control; (iv) the assignment to the Employee of duties and
responsibilities materially different from those normally associated with his or
her position; (v) a failure to elect or reelect the Employee to the Board of
Directors of the Bank or the Company, if the Employee is serving on such Board
on the date of the Change in Control; (vi) a material diminution or reduction in
the Employee's responsibilities or authority (including reporting
responsibilities) in connection with employment with the Bank or the Company; or
(vii) a material reduction in the secretarial or other administrative support of
the Employee.
(f) "Just Cause" shall mean, in the good faith determination
of the Bank's Board of Directors, the Employee's personal dishonesty, 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.
The Employee shall have no right to receive compensation or other benefits for
any period after termination for Just Cause. No act, or failure to act, on the
Employee's part shall be considered "willful" unless the Employee has acted, or
failed to act, with an absence of good faith and without a reasonable belief
that such action or failure to act was in the best interest of the Bank and the
Company.
<PAGE> 5
(g) "Protected Period" shall mean the period that begins on
the date six months before a Change in Control and ends on the later of the
first annual anniversary of the Change in Control or the expiration date of this
Agreement.
(h) "Trust" shall mean a grantor trust designed in
accordance with Revenue Procedure 92-64 and having a trustee independent of the
Bank and the Company,
2. TRIGGER EVENTS
The Employee shall be entitled to receive the severance benefits set
forth in Section 3 of this Agreement in the event that (i) the Employee
voluntarily terminates employment either for any reason within 30 days of a
Change in Control, (ii) the Employee voluntarily terminates employment within 90
days of an event that both occurs during the Protected Period and constitutes
Good Reason, or (iii) the Bank, the Company, or their successor(s) in interest
terminate the Employee's employment for any reason other than Just Cause during
the Protected Period.
3. SEVERANCE BENEFITS
If the Employee becomes entitled to receive severance benefits pursuant
to Section 2 hereof, the Company shall BOTH provide the Employee with the
opportunity, until the Employee first begins to participate in Medicare, to
purchase, at the Employee's own expense which shall not exceed applicable COBRA
rates, family medical and dental insurance under any group health plans that the
Bank or the Company maintains for its employees, AND pay the Employee (or the
Employee's Beneficiary in the event of the Employee's death before all required
payments have been made under this Agreement) a severance benefit, for 12 months
after termination of employment, in an amount equal to the Employee's highest
monthly salary in effect between the date that the Protected Period begins and
the date of the Change in Control. In no event, however, will the present value
of these severance payments exceed the difference between the Code Section 280G
Maximum and the sum of any other "parachute payments" as defined under Code
Section 280G(b)(2) that the Employee receives on account of the Change in
Control. Said payments shall commence within ten days of the later of the date
of the Change in Control and the Employee's last day of employment with the
Bank or the Company.
In the event that the Employee and the Company agree that the Employee
has collected an amount exceeding the Code Section 280G Maximum, the parties
may jointly agree in writing that such excess shall be treated as a loan AB
INITIO which the Employee shall repay to the Company, on terms and conditions
mutually agreeable to the parties, together with interest at the applicable
federal rate provided for in Section 7872(f)(2)(B) of the Code.
<PAGE> 6
4. FUNDING OF GRANTOR TRUST UPON CHANGE IN CONTROL
Notwithstanding any other provision of this Agreement that may be
contrary or inconsistent herewith, not later than ten (10) business days after a
Change in Control, the Company shall (i) establish a grantor trust (the "Trust")
that is designed in accordance with Revenue Procedure 92-64 and has a trustee
(the "Trustee") independent of the Company and any successor to their interest,
(ii) deposit in the Trust an amount equal to the present value of all benefits
that may become payable under this Agreement, and (iii) provide the Trustee with
an irrevocable written direction both to hold all Trust assets and any
investment return thereon in a segregated account for the benefit of the
Employee, and to follow the procedures set forth in the next paragraph as to the
payment of amounts from the Trust.
At any time after a Change in Control, the Employee may provide the
Trustee with a written affidavit (the "Affidavit") in which the Employee attests
that he has terminated employment with the Company or any successor to its
interest, and has become entitled to commence receiving the monthly benefit
payments (required by Section 3 hereof). The Affidavit shall also specify the
amount of each such monthly payment to be made from the Trust. On the first
business day of the month following the Trustee's receipt of the Affidavit, the
Trustee shall commence paying the Employee, in immediately available funds, the
monthly benefit specified in the Affidavit, and shall send a copy of it to the
Company via overnight and registered mail (return receipt requested). Upon the
receipt of the Employee's written release of all claims under this Agreement,
the Trustee shall pay to the Company any remaining assets in the Trust. The
Company shall pay any and all expenses associated with maintaining the Trust,
and shall hold the Trustee harmless from any liability for making the payments
required hereunder.
5. TERM OF THE AGREEMENT. This Agreement shall remain in effect for the
period commencing on the Effective Date and ending on the earlier of (i) the
date 36 months after the Effective Date, and (ii) the date on which the Employee
terminates employment with the Bank; provided that the Employee's rights
hereunder shall continue following the termination of this employment with the
Bank or the Company under any of the circumstances described in Section 2
hereof. Additionally, on each annual anniversary date from the Effective Date,
the term of this Agreement shall automatically be extended for an additional
one-year period beyond the then effective expiration date unless the Board of
Directors of the Company determines to the contrary in a duly adopted resolution
AND delivers a certified copy of the resolution to the Employee BEFORE the date
on which the Agreement would otherwise renew.
6. EXPENSE REIMBURSEMENT.
In the event that any dispute arises between the Employee
and the Bank or the Company as to the terms or interpretation of this Agreement,
whether instituted by formal legal
<PAGE> 7
proceedings or otherwise, including any action that the Employee takes to
enforce the terms of this Agreement or to defend against any action taken by the
Bank or the Company, the Employee shall be reimbursed for all costs and
expenses, including reasonable attorneys' fees, arising from such dispute,
proceedings or actions, provided that the Employee shall obtain a final
judgement in favor of the Employee in a court of competent jurisdiction or in
binding arbitration under the rules of the American Arbitration Association.
Such reimbursement shall be paid within ten days of Employee's furnishing to the
Bank and the Company written evidence, which may be in the form, among other
things, of a cancelled check or receipt, of any costs or expenses incurred by
the Employee.
7. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of the Company which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank or Company.
(b) Since the Company is contracting for the unique and personal
skills of the Employee, the Employee shall be precluded from assigning or
delegating his rights or duties hereunder without first obtaining the written
consent of the Company.
8. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
9. APPLICABLE LAW. Except to the extent preempted by Federal law,
the laws of the State of Ohio shall govern this Agreement in all respects,
whether as to its validity, construction, capacity, performance or otherwise.
10. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
11. ENTIRE AGREEMENT. This Agreement, together with any
understanding or modifications thereof as agreed to in writing by the parties,
shall constitute the entire agreement between the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.
<PAGE> 8
ATTEST: MAHONING NATIONAL BANCORP, INC.
/s/ Norman E. Benden, Jr. By: /s/ Daniel B. Roth
- ---------------------------- ------------------------------
Norman E. Benden, Jr. By: Daniel B. Roth
Its Treasurer Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ Richard E. Davies
- ---------------------------- ---------------------------------
Sandra L. Douglas Richard E. Davies
Employee
<PAGE> 1
Mahoning National Bancorp, Inc.
Form 10-Q
Item 6 (a)
Exhibit 10 (c)
Change-In-Control Protective Agreement
Karen R. DeSalvo
<PAGE> 2
THE MAHONING NATIONAL BANK OF YOUNGSTOWN
-------------------------------
Guarantee Agreement
--------------------------------
AGREEMENT entered into this 14th day May, 1997 (the "Effective Date"),
by and between The Mahoning National Bank of Youngstown (the "Bank") and Karen
R. DeSalvo (the "Employee").
WHEREAS, the Employee is currently employed by the Bank in an executive
capacity, and has entered into a change-in-control protective agreement (the
"Company Agreement") with Mahoning National Bancorp, Inc. (the "Company"); and
WHEREAS, the Board of Directors of the Bank has determined that it is
in the best interest of the Bank to enter into this Agreement in order to assure
continuity of the Bank's management through encouraging the long-term retention
of the Employee; and
WHEREAS, the parties desire by this writing to set forth the Bank's
commitment to guarantee the Company's obligations under the Company Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. The Bank shall be jointly and severally liable with the Company for
its obligations under the Company Agreement.
2. This Agreement shall have a term that coincides with the term of the
Company Agreement (including any and all extensions thereunder), shall be
binding on any successors to the interest of the parties, shall be amended only
through a written instrument executed by both parties, and shall be governed by
the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first written above.
ATTEST: THE MAHONING NATIONAL BANK
OF YOUNGSTOWN
/s/ Richard E. Davies By /s/ Daniel B. Roth
- -------------------------- -----------------------------------
Richard E. Davies By Daniel B. Roth
Secretary Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ Karen R. DeSalvo
- --------------------------- -------------------------------------
Sandra L. Douglas Karen R. DeSalvo
Employee
<PAGE> 3
CHANGE-IN-CONTROL PROTECTIVE AGREEMENT
THIS AGREEMENT entered into this 14th day of May, 1997, (the "Effective
Date") by and between, Mahoning National Bancorp, Inc. (the "Company"), and
Karen R. DeSalvo (the "Employee").
WHEREAS, the Employee has heretofore been employed as an executive
officer of The Mahoning National Bank of Youngstown (the "Bank"), and thereby
has directly contributed to the financial success and operational stability of
the Company; and
WHEREAS, the Company deems it to be in the best interests of its
stockholders to enter into this Agreement as additional incentive to the
Employee to continue to serve in such capacity; and
WHEREAS, the parties desire by this writing to set forth their
understanding as to their respective rights and obligations in the event a
change of control occurs with respect to the Bank or the Company.
NOW, THEREFORE, the undersigned parties AGREE as follows:
1. DEFINED TERMS
When used anywhere in the Agreement, the following terms shall have
the meaning set forth herein.
(a) "Beneficiary" shall mean the person or persons as stated in the
last designation of beneficiary concerning this Agreement signed by the Employee
and filed with Company, and if not, then the personal representative of the
Employee.
(b) "Change in Control" shall mean any one of the following events: (i)
the acquisition of ownership, holding or power to vote more than 30% of the
Bank's or the Company's voting stock, (ii) the acquisition of the ability to
control the election of a majority of the Bank's or the Company's directors,
(iii) the acquisition of a controlling influence over the management or policies
of the Bank or the Company by any person or by persons acting as a "group"
(within the meaning of Section 13(d) of the Securities Exchange Act of 1934), or
(iv) during any period of two consecutive years, individuals (the "Continuing
Directors") who at the beginning of such period constitute the Board of
Directors of the Bank or the Company (the "Existing Board") cease for any reason
to constitute at least two-thirds thereof, provided that any individual whose
election or nomination for election as a member of the Existing Board was
approved by a vote of at least two-thirds of the Continuing Directors then in
office shall be
<PAGE> 4
considered a Continuing Director. Notwithstanding the foregoing, in the case of
(i), (ii) and (iii) hereof, ownership or control of the Bank by the Company
itself shall not constitute a Change in Control. For purposes of this paragraph
only, the term "person" refers to an individual or a corporation, partnership,
trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not specifically listed
herein.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and as interpreted through applicable rulings and regulations
in effect from time to time.
(d) "Code Section 280G Maximum" shall mean the product of 2.99 and
the Employee's "base amount" as defined in Code Section 280G(b)(3).
(e) "Good Reason" shall mean any of the following events, which has
not been consented to in advance by the Employee in writing: (i) the requirement
that the Employee move his or her personal residence, or perform his or her
principal executive functions, more than thirty (30) miles from his primary
office as of the date of the Change in Control; (ii) a material reduction in the
Employee's base compensation as in effect on the date of the Change in Control
or as the same may be increased from time to time; (iii) the failure by the Bank
or the Company to continue to provide the Employee with compensation and
benefits provided for on the date of the Change in Control, as the same may be
increased from time to time, or with benefits substantially similar to those
provided under any of the employee benefit plans in which the Employee now or
hereafter becomes a participant, or the taking of any action by the Bank or the
Company which would directly or indirectly reduce any of such benefits or
deprive the Employee of any material fringe benefit enjoyed at the time of the
Change in Control; (iv) the assignment to the Employee of duties and
responsibilities materially different from those normally associated with his or
her position; (v) a failure to elect or reelect the Employee to the Board of
Directors of the Bank or the Company, if the Employee is serving on such Board
on the date of the Change in Control; (vi) a material diminution or reduction in
the Employee's responsibilities or authority (including reporting
responsibilities) in connection with employment with the Bank or the Company; or
(vii) a material reduction in the secretarial or other administrative support of
the Employee.
(f) "Just Cause" shall mean, in the good faith determination of the
Bank's Board of Directors, the Employee's personal dishonesty, 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.
The Employee shall have no right to receive compensation or other benefits for
any period after termination for Just Cause. No act, or failure to act, on the
Employee's part shall be considered "willful" unless the Employee has acted, or
failed to act, with an absence of good faith and without a reasonable belief
that such action or failure to act was in the best interest of the Bank and the
Company.
<PAGE> 5
(g) "Protected Period" shall mean the period that begins on the date
six months before a Change in Control and ends on the later of the first annual
anniversary of the Change in Control or the expiration date of this Agreement.
(h) "Trust" shall mean a grantor trust designed in accordance with
Revenue Procedure 92-64 and having a trustee independent of the Bank and the
Company,
2. TRIGGER EVENTS
The Employee shall be entitled to receive the severance benefits set
forth in Section 3 of this Agreement in the event that (i) the Employee
voluntarily terminates employment either for any reason within 30 days of a
Change in Control, (ii) the Employee voluntarily terminates employment within 90
days of an event that both occurs during the Protected Period and constitutes
Good Reason, or (iii) the Bank, the Company, or their successor(s) in interest
terminate the Employee's employment for any reason other than Just Cause during
the Protected Period.
3. SEVERANCE BENEFITS
If the Employee becomes entitled to receive severance benefits pursuant
to Section 2 hereof, the Company shall BOTH provide the Employee with the
opportunity, until the Employee first begins to participate in Medicare, to
purchase, at the Employee's own expense which shall not exceed applicable COBRA
rates, family medical and dental insurance under any group health plans that the
Bank or the Company maintains for its employees, AND pay the Employee (or the
Employee's Beneficiary in the event of the Employee's death before all required
payments have been made under this Agreement) a severance benefit, for 12 months
after termination of employment, in an amount equal to the Employee's highest
monthly salary in effect between the date that the Protected Period begins and
the date of the Change in Control. In no event, however, will the present value
of these severance payments exceed the difference between the Code Section 280G
Maximum and the sum of any other "parachute payments" as defined under Code
Section 280G(b)(2) that the Employee receives on account of the Change in
Control. Said payments shall commence within ten days of the later of the date
of the Change in Control and the Employee's last day of employment with the
Bank or the Company.
In the event that the Employee and the Company agree that the Employee
has collected an amount exceeding the Code Section 280G Maximum, the parties
may jointly agree in writing that such excess shall be treated as a loan AB
INITIO which the Employee shall repay to the Company, on terms and conditions
mutually agreeable to the parties, together with interest at the applicable
federal rate provided for in Section 7872(f)(2)(B) of the Code.
<PAGE> 6
4. FUNDING OF GRANTOR TRUST UPON CHANGE IN CONTROL
Notwithstanding any other provision of this Agreement that may be
contrary or inconsistent herewith, not later than ten (10) business days after a
Change in Control, the Company shall (i) establish a grantor trust (the "Trust")
that is designed in accordance with Revenue Procedure 92-64 and has a trustee
(the "Trustee") independent of the Company and any successor to their interest,
(ii) deposit in the Trust an amount equal to the present value of all benefits
that may become payable under this Agreement, and (iii) provide the Trustee with
an irrevocable written direction both to hold all Trust assets and any
investment return thereon in a segregated account for the benefit of the
Employee, and to follow the procedures set forth in the next paragraph as to the
payment of amounts from the Trust.
At any time after a Change in Control, the Employee may provide the
Trustee with a written affidavit (the "Affidavit") in which the Employee attests
that he has terminated employment with the Company or any successor to its
interest, and has become entitled to commence receiving the monthly benefit
payments (required by Section 3 hereof). The Affidavit shall also specify the
amount of each such monthly payment to be made from the Trust. On the first
business day of the month following the Trustee's receipt of the Affidavit, the
Trustee shall commence paying the Employee, in immediately available funds, the
monthly benefit specified in the Affidavit, and shall send a copy of it to the
Company via overnight and registered mail (return receipt requested). Upon the
receipt of the Employee's written release of all claims under this Agreement,
the Trustee shall pay to the Company any remaining assets in the Trust. The
Company shall pay any and all expenses associated with maintaining the Trust,
and shall hold the Trustee harmless from any liability for making the payments
required hereunder.
5. TERM OF THE AGREEMENT. This Agreement shall remain in effect for the
period commencing on the Effective Date and ending on the earlier of (i) the
date 36 months after the Effective Date, and (ii) the date on which the Employee
terminates employment with the Bank; provided that the Employee's rights
hereunder shall continue following the termination of this employment with the
Bank or the Company under any of the circumstances described in Section 2
hereof. Additionally, on each annual anniversary date from the Effective Date,
the term of this Agreement shall automatically be extended for an additional
one-year period beyond the then effective expiration date unless the Board of
Directors of the Company determines to the contrary in a duly adopted resolution
AND delivers a certified copy of the resolution to the Employee BEFORE the date
on which the Agreement would otherwise renew.
6. EXPENSE REIMBURSEMENT.
In the event that any dispute arises between the Employee and the
Bank or the Company as to the terms or interpretation of this Agreement, whether
instituted by formal legal
<PAGE> 7
proceedings or otherwise, including any action that the Employee takes to
enforce the terms of this Agreement or to defend against any action taken by the
Bank or the Company, the Employee shall be reimbursed for all costs and
expenses, including reasonable attorneys' fees, arising from such dispute,
proceedings or actions, provided that the Employee shall obtain a final
judgement in favor of the Employee in a court of competent jurisdiction or in
binding arbitration under the rules of the American Arbitration Association.
Such reimbursement shall be paid within ten days of Employee's furnishing to the
Bank and the Company written evidence, which may be in the form, among other
things, of a cancelled check or receipt, of any costs or expenses incurred by
the Employee.
7. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of the Company which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank or Company.
(b) Since the Company is contracting for the unique and personal
skills of the Employee, the Employee shall be precluded from assigning or
delegating his rights or duties hereunder without first obtaining the written
consent of the Company.
8. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
9. APPLICABLE LAW. Except to the extent preempted by Federal law, the
laws of the State of Ohio shall govern this Agreement in all respects, whether
as to its validity, construction, capacity, performance or otherwise.
10. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
11. ENTIRE AGREEMENT. This Agreement, together with any understanding
or modifications thereof as agreed to in writing by the parties, shall
constitute the entire agreement between the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.
<PAGE> 8
ATTEST: MAHONING NATIONAL BANCORP, INC.
/s/ Richard E. Davies By: /s/ Daniel B. Roth
- ----------------------- -----------------------------
Richard E. Davies By: Daniel B. Roth
Its Secretary Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ Karen R. DeSalvo
- ----------------------- --------------------------------
Sandra L. Douglas Karen R. DeSalvo
Employee
<PAGE> 1
Mahoning National Bancorp, Inc.
Form 10-Q
Item 6 (a)
Exhibit 10 (d)
Change-In-Control Protective Agreement
Frank Hierro
<PAGE> 2
THE MAHONING NATIONAL BANK OF YOUNGSTOWN
-------------------------------
Guarantee Agreement
--------------------------------
AGREEMENT entered into this 14th day May, 1997 (the "Effective Date"),
by and between The Mahoning National Bank of Youngstown (the "Bank") and Frank
Hierro (the "Employee").
WHEREAS, the Employee is currently employed by the Bank in an executive
capacity, and has entered into a change-in-control protective agreement (the
"Company Agreement") with Mahoning National Bancorp, Inc. (the "Company"); and
WHEREAS, the Board of Directors of the Bank has determined that it is
in the best interest of the Bank to enter into this Agreement in order to assure
continuity of the Bank's management through encouraging the long-term retention
of the Employee; and
WHEREAS, the parties desire by this writing to set forth the Bank's
commitment to guarantee the Company's obligations under the Company Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. The Bank shall be jointly and severally liable with the Company for
its obligations under the Company Agreement.
2. This Agreement shall have a term that coincides with the term of the
Company Agreement (including any and all extensions thereunder), shall be
binding on any successors to the interest of the parties, shall be amended only
through a written instrument executed by both parties, and shall be governed by
the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first written above.
ATTEST: THE MAHONING NATIONAL BANK
OF YOUNGSTOWN
/s/ Richard E. Davies By /s/ Daniel B. Roth
- ------------------------- ----------------------------------
Richard E. Davies By Daniel B. Roth
Secretary Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ Frank Hierro
- ------------------------- ------------------------------------
Sandra L. Douglas Frank Hierro
Employee
<PAGE> 3
CHANGE-IN-CONTROL PROTECTIVE AGREEMENT
THIS AGREEMENT entered into this 14th day of May, 1997, (the "Effective
Date") by and between, Mahoning National Bancorp, Inc. (the "Company"), and
Frank Hierro (the "Employee").
WHEREAS, the Employee has heretofore been employed as an executive
officer of The Mahoning National Bank of Youngstown (the "Bank"), and thereby
has directly contributed to the financial success and operational stability of
the Company; and
WHEREAS, the Company deems it to be in the best interests of its
stockholders to enter into this Agreement as additional incentive to the
Employee to continue to serve in such capacity; and
WHEREAS, the parties desire by this writing to set forth their
understanding as to their respective rights and obligations in the event a
change of control occurs with respect to the Bank or the Company.
NOW, THEREFORE, the undersigned parties AGREE as follows:
1. DEFINED TERMS
When used anywhere in the Agreement, the following terms shall have the
meaning set forth herein.
(a) "Beneficiary" shall mean the person or persons as stated in the
last designation of beneficiary concerning this Agreement signed by the Employee
and filed with Company, and if not, then the personal representative of the
Employee.
(b) "Change in Control" shall mean any one of the following events: (i)
the acquisition of ownership, holding or power to vote more than 30% of the
Bank's or the Company's voting stock, (ii) the acquisition of the ability to
control the election of a majority of the Bank's or the Company's directors,
(iii) the acquisition of a controlling influence over the management or policies
of the Bank or the Company by any person or by persons acting as a "group"
(within the meaning of Section 13(d) of the Securities Exchange Act of 1934), or
(iv) during any period of two consecutive years, individuals (the "Continuing
Directors") who at the beginning of such period constitute the Board of
Directors of the Bank or the Company (the "Existing Board") cease for any reason
to constitute at least two-thirds thereof, provided that any individual whose
election or nomination for election as a member of the Existing Board was
approved by a vote of at least two-thirds of the Continuing Directors then in
office shall be
<PAGE> 4
considered a Continuing Director. Notwithstanding the foregoing, in the case of
(i), (ii) and (iii) hereof, ownership or control of the Bank by the Company
itself shall not constitute a Change in Control. For purposes of this paragraph
only, the term "person" refers to an individual or a corporation, partnership,
trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not specifically listed
herein.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and as interpreted through applicable rulings and regulations
in effect from time to time.
(d) "Code Section 280G Maximum" shall mean the product of 2.99 and the
Employee's "base amount" as defined in Code Section 280G(b)(3).
(e) "Good Reason" shall mean any of the following events, which has not
been consented to in advance by the Employee in writing: (i) the requirement
that the Employee move his or her personal residence, or perform his or her
principal executive functions, more than thirty (30) miles from his primary
office as of the date of the Change in Control; (ii) a material reduction in the
Employee's base compensation as in effect on the date of the Change in Control
or as the same may be increased from time to time; (iii) the failure by the Bank
or the Company to continue to provide the Employee with compensation and
benefits provided for on the date of the Change in Control, as the same may be
increased from time to time, or with benefits substantially similar to those
provided under any of the employee benefit plans in which the Employee now or
hereafter becomes a participant, or the taking of any action by the Bank or the
Company which would directly or indirectly reduce any of such benefits or
deprive the Employee of any material fringe benefit enjoyed at the time of the
Change in Control; (iv) the assignment to the Employee of duties and
responsibilities materially different from those normally associated with his or
her position; (v) a failure to elect or reelect the Employee to the Board of
Directors of the Bank or the Company, if the Employee is serving on such Board
on the date of the Change in Control; (vi) a material diminution or reduction in
the Employee's responsibilities or authority (including reporting
responsibilities) in connection with employment with the Bank or the Company; or
(vii) a material reduction in the secretarial or other administrative support of
the Employee.
(f) "Just Cause" shall mean, in the good faith determination of the
Bank's Board of Directors, the Employee's personal dishonesty, 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.
The Employee shall have no right to receive compensation or other benefits for
any period after termination for Just Cause. No act, or failure to act, on the
Employee's part shall be considered "willful" unless the Employee has acted, or
failed to act, with an absence of good faith and without a reasonable belief
that such action or failure to act was in the best interest of the Bank and the
Company.
<PAGE> 5
(g) "Protected Period" shall mean the period that begins on the
date six months before a Change in Control and ends on the later of the first
annual anniversary of the Change in Control or the expiration date of this
Agreement.
(h) "Trust" shall mean a grantor trust designed in accordance with
Revenue Procedure 92-64 and having a trustee independent of the Bank and the
Company,
2. TRIGGER EVENTS
The Employee shall be entitled to receive the severance benefits set
forth in Section 3 of this Agreement in the event that (i) the Employee
voluntarily terminates employment either for any reason within 30 days of a
Change in Control, (ii) the Employee voluntarily terminates employment within 90
days of an event that both occurs during the Protected Period and constitutes
Good Reason, or (iii) the Bank, the Company, or their successor(s) in interest
terminate the Employee's employment for any reason other than Just Cause during
the Protected Period.
3. SEVERANCE BENEFITS
If the Employee becomes entitled to receive severance benefits pursuant
to Section 2 hereof, the Company shall BOTH provide the Employee with the
opportunity, until the Employee first begins to participate in Medicare, to
purchase, at the Employee's own expense which shall not exceed applicable COBRA
rates, family medical and dental insurance under any group health plans that the
Bank or the Company maintains for its employees, AND pay the Employee (or the
Employee's Beneficiary in the event of the Employee's death before all required
payments have been made under this Agreement) a severance benefit, for 24 months
after termination of employment, in an amount equal to the Employee's highest
monthly salary in effect between the date that the Protected Period begins and
the date of the Change in Control. In no event, however, will the present value
of these severance payments exceed the difference between the Code Section 280G
Maximum and the sum of any other "parachute payments" as defined under Code
Section 280G(b)(2) that the Employee receives on account of the Change in
Control. Said payments shall commence within ten days of the later of the date
of the Change in Control and the Employee's last day of employment with the
Bank or the Company.
In the event that the Employee and the Company agree that the Employee
has collected an amount exceeding the Code Section 280G Maximum, the parties may
jointly agree in writing that such excess shall be treated as a loan AB INITIO
which the Employee shall repay to the Company, on terms and conditions mutually
agreeable to the parties, together with interest at the applicable federal rate
provided for in Section 7872(f)(2)(B) of the Code.
<PAGE> 6
4. FUNDING OF GRANTOR TRUST UPON CHANGE IN CONTROL
Notwithstanding any other provision of this Agreement that may be
contrary or inconsistent herewith, not later than ten (10) business days after a
Change in Control, the Company shall (i) establish a grantor trust (the "Trust")
that is designed in accordance with Revenue Procedure 92-64 and has a trustee
(the "Trustee") independent of the Company and any successor to their interest,
(ii) deposit in the Trust an amount equal to the present value of all benefits
that may become payable under this Agreement, and (iii) provide the Trustee with
an irrevocable written direction both to hold all Trust assets and any
investment return thereon in a segregated account for the benefit of the
Employee, and to follow the procedures set forth in the next paragraph as to the
payment of amounts from the Trust.
At any time after a Change in Control, the Employee may provide the
Trustee with a written affidavit (the "Affidavit") in which the Employee attests
that he has terminated employment with the Company or any successor to its
interest, and has become entitled to commence receiving the monthly benefit
payments (required by Section 3 hereof). The Affidavit shall also specify the
amount of each such monthly payment to be made from the Trust. On the first
business day of the month following the Trustee's receipt of the Affidavit, the
Trustee shall commence paying the Employee, in immediately available funds, the
monthly benefit specified in the Affidavit, and shall send a copy of it to the
Company via overnight and registered mail (return receipt requested). Upon the
receipt of the Employee's written release of all claims under this Agreement,
the Trustee shall pay to the Company any remaining assets in the Trust. The
Company shall pay any and all expenses associated with maintaining the Trust,
and shall hold the Trustee harmless from any liability for making the payments
required hereunder.
5. TERM OF THE AGREEMENT. This Agreement shall remain in effect for the
period commencing on the Effective Date and ending on the earlier of (i) the
date 36 months after the Effective Date, and (ii) the date on which the Employee
terminates employment with the Bank; provided that the Employee's rights
hereunder shall continue following the termination of this employment with the
Bank or the Company under any of the circumstances described in Section 2
hereof. Additionally, on each annual anniversary date from the Effective Date,
the term of this Agreement shall automatically be extended for an additional
one-year period beyond the then effective expiration date unless the Board of
Directors of the Company determines to the contrary in a duly adopted resolution
AND delivers a certified copy of the resolution to the Employee BEFORE the date
on which the Agreement would otherwise renew.
6. EXPENSE REIMBURSEMENT.
In the event that any dispute arises between the Employee and the
Bank or the Company as to the terms or interpretation of this Agreement, whether
instituted by formal legal
<PAGE> 7
proceedings or otherwise, including any action that the Employee takes to
enforce the terms of this Agreement or to defend against any action taken by the
Bank or the Company, the Employee shall be reimbursed for all costs and
expenses, including reasonable attorneys' fees, arising from such dispute,
proceedings or actions, provided that the Employee shall obtain a final
judgement in favor of the Employee in a court of competent jurisdiction or in
binding arbitration under the rules of the American Arbitration Association.
Such reimbursement shall be paid within ten days of Employee's furnishing to the
Bank and the Company written evidence, which may be in the form, among other
things, of a cancelled check or receipt, of any costs or expenses incurred by
the Employee.
7. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of the Company which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank or Company.
(b) Since the Company is contracting for the unique and personal
skills of the Employee, the Employee shall be precluded from assigning or
delegating his rights or duties hereunder without first obtaining the written
consent of the Company.
8. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
9. APPLICABLE LAW. Except to the extent preempted by Federal law, the
laws of the State of Ohio shall govern this Agreement in all respects, whether
as to its validity, construction, capacity, performance or otherwise.
10. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
11. ENTIRE AGREEMENT. This Agreement, together with any understanding
or modifications thereof as agreed to in writing by the parties, shall
constitute the entire agreement between the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.
<PAGE> 8
ATTEST: MAHONING NATIONAL BANCORP, INC.
/s/ Richard E. Davies By: /s/ Daniel B. Roth
- ----------------------------- ---------------------------
Richard E. Davies By: Daniel B. Roth
Its Secretary Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ Frank Hierro
- ----------------------------- ------------------------------
Sandra L. Douglas Frank Hierro
Employee
<PAGE> 1
Mahoning National Bancorp, Inc.
Form 10-Q
Item 6 (a)
Exhibit 10 (e)
Change-In-Control Protective Agreement
Dexter A. Hollen
<PAGE> 2
THE MAHONING NATIONAL BANK OF YOUNGSTOWN
-------------------------------
Guarantee Agreement
--------------------------------
AGREEMENT entered into this 14th day May, 1997 (the "Effective Date"),
by and between The Mahoning National Bank of Youngstown (the "Bank") and Dexter
A. Hollen (the "Employee").
WHEREAS, the Employee is currently employed by the Bank in an executive
capacity, and has entered into a change-in-control protective agreement (the
"Company Agreement") with Mahoning National Bancorp, Inc. (the "Company"); and
WHEREAS, the Board of Directors of the Bank has determined that it is
in the best interest of the Bank to enter into this Agreement in order to assure
continuity of the Bank's management through encouraging the long-term retention
of the Employee; and
WHEREAS, the parties desire by this writing to set forth the Bank's
commitment to guarantee the Company's obligations under the Company Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. The Bank shall be jointly and severally liable with the Company for
its obligations under the Company Agreement.
2. This Agreement shall have a term that coincides with the term of the
Company Agreement (including any and all extensions thereunder), shall be
binding on any successors to the interest of the parties, shall be amended only
through a written instrument executed by both parties, and shall be governed by
the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first written above.
ATTEST: THE MAHONING NATIONAL BANK
OF YOUNGSTOWN
/s/ Richard E. Davies By /s/ Daniel B. Roth
- -------------------------- -----------------------------------
Richard E. Davies By Daniel B. Roth
Secretary Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ Dexter A. Hollen
- -------------------------- -------------------------------------
Sandra L. Douglas Dexter A. Hollen
Employee
<PAGE> 3
CHANGE-IN-CONTROL PROTECTIVE AGREEMENT
THIS AGREEMENT entered into this 14th day of May, 1997, (the "Effective
Date") by and between, Mahoning National Bancorp, Inc. (the "Company"), and
Dexter A. Hollen (the "Employee").
WHEREAS, the Employee has heretofore been employed as an executive
officer of The Mahoning National Bank of Youngstown (the "Bank"), and thereby
has directly contributed to the financial success and operational stability of
the Company; and
WHEREAS, the Company deems it to be in the best interests of its
stockholders to enter into this Agreement as additional incentive to the
Employee to continue to serve in such capacity; and
WHEREAS, the parties desire by this writing to set forth their
understanding as to their respective rights and obligations in the event a
change of control occurs with respect to the Bank or the Company.
NOW, THEREFORE, the undersigned parties AGREE as follows:
1. DEFINED TERMS
When used anywhere in the Agreement, the following terms shall have
the meaning set forth herein.
(a) "Beneficiary" shall mean the person or persons as stated in the
last designation of beneficiary concerning this Agreement signed by the Employee
and filed with Company, and if not, then the personal representative of the
Employee.
(b) "Change in Control" shall mean any one of the following events: (i)
the acquisition of ownership, holding or power to vote more than 30% of the
Bank's or the Company's voting stock, (ii) the acquisition of the ability to
control the election of a majority of the Bank's or the Company's directors,
(iii) the acquisition of a controlling influence over the management or policies
of the Bank or the Company by any person or by persons acting as a "group"
(within the meaning of Section 13(d) of the Securities Exchange Act of 1934), or
(iv) during any period of two consecutive years, individuals (the "Continuing
Directors") who at the beginning of such period constitute the Board of
Directors of the Bank or the Company (the "Existing Board") cease for any reason
to constitute at least two-thirds thereof, provided that any individual whose
election or nomination for election as a member of the Existing Board was
approved by a vote of at least two-thirds of the Continuing Directors then in
office shall be
<PAGE> 4
considered a Continuing Director. Notwithstanding the foregoing, in the case of
(i), (ii) and (iii) hereof, ownership or control of the Bank by the Company
itself shall not constitute a Change in Control. For purposes of this paragraph
only, the term "person" refers to an individual or a corporation, partnership,
trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not specifically listed
herein.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and as interpreted through applicable rulings and regulations
in effect from time to time.
(d) "Code Section 280G Maximum" shall mean the product of 2.99 and the
Employee's "base amount" as defined in Code Section 280G(b)(3).
(e) "Good Reason" shall mean any of the following events, which has not
been consented to in advance by the Employee in writing: (i) the requirement
that the Employee move his or her personal residence, or perform his or her
principal executive functions, more than thirty (30) miles from his primary
office as of the date of the Change in Control; (ii) a material reduction in the
Employee's base compensation as in effect on the date of the Change in Control
or as the same may be increased from time to time; (iii) the failure by the Bank
or the Company to continue to provide the Employee with compensation and
benefits provided for on the date of the Change in Control, as the same may be
increased from time to time, or with benefits substantially similar to those
provided under any of the employee benefit plans in which the Employee now or
hereafter becomes a participant, or the taking of any action by the Bank or the
Company which would directly or indirectly reduce any of such benefits or
deprive the Employee of any material fringe benefit enjoyed at the time of the
Change in Control; (iv) the assignment to the Employee of duties and
responsibilities materially different from those normally associated with his or
her position; (v) a failure to elect or reelect the Employee to the Board of
Directors of the Bank or the Company, if the Employee is serving on such Board
on the date of the Change in Control; (vi) a material diminution or reduction in
the Employee's responsibilities or authority (including reporting
responsibilities) in connection with employment with the Bank or the Company; or
(vii) a material reduction in the secretarial or other administrative support of
the Employee.
(f) "Just Cause" shall mean, in the good faith determination of the
Bank's Board of Directors, the Employee's personal dishonesty, 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.
The Employee shall have no right to receive compensation or other benefits for
any period after termination for Just Cause. No act, or failure to act, on the
Employee's part shall be considered "willful" unless the Employee has acted, or
failed to act, with an absence of good faith and without a reasonable belief
that such action or failure to act was in the best interest of the Bank and the
Company.
<PAGE> 5
(g) "Protected Period" shall mean the period that begins on the date
six months before a Change in Control and ends on the later of the first annual
anniversary of the Change in Control or the expiration date of this Agreement.
(h) "Trust" shall mean a grantor trust designed in accordance with
Revenue Procedure 92-64 and having a trustee independent of the Bank and the
Company,
2. TRIGGER EVENTS
The Employee shall be entitled to receive the severance benefits set
forth in Section 3 of this Agreement in the event that (i) the Employee
voluntarily terminates employment either for any reason within 30 days of a
Change in Control, (ii) the Employee voluntarily terminates employment within 90
days of an event that both occurs during the Protected Period and constitutes
Good Reason, or (iii) the Bank, the Company, or their successor(s) in interest
terminate the Employee's employment for any reason other than Just Cause during
the Protected Period.
3. SEVERANCE BENEFITS
If the Employee becomes entitled to receive severance benefits pursuant
to Section 2 hereof, the Company shall BOTH provide the Employee with the
opportunity, until the Employee first begins to participate in Medicare, to
purchase, at the Employee's own expense which shall not exceed applicable COBRA
rates, family medical and dental insurance under any group health plans that the
Bank or the Company maintains for its employees, AND pay the Employee (or the
Employee's Beneficiary in the event of the Employee's death before all required
payments have been made under this Agreement) a severance benefit, for 12 months
after termination of employment, in an amount equal to the Employee's highest
monthly salary in effect between the date that the Protected Period begins and
the date of the Change in Control. In no event, however, will the present value
of these severance payments exceed the difference between the Code Section 280G
Maximum and the sum of any other "parachute payments" as defined under Code
Section 280G(b)(2) that the Employee receives on account of the Change in
Control. Said payments shall commence within ten days of the later of the date
of the Change in Control and the Employee's last day of employment with the Bank
or the Company.
In the event that the Employee and the Company agree that the Employee
has collected an amount exceeding the Code Section 280G Maximum, the parties may
jointly agree in writing that such excess shall be treated as a loan AB INITIO
which the Employee shall repay to the Company, on terms and conditions mutually
agreeable to the parties, together with interest at the applicable federal rate
provided for in Section 7872(f)(2)(B) of the Code.
<PAGE> 6
4. FUNDING OF GRANTOR TRUST UPON CHANGE IN CONTROL
Notwithstanding any other provision of this Agreement that may be
contrary or inconsistent herewith, not later than ten (10) business days after a
Change in Control, the Company shall (i) establish a grantor trust (the "Trust")
that is designed in accordance with Revenue Procedure 92-64 and has a trustee
(the "Trustee") independent of the Company and any successor to their interest,
(ii) deposit in the Trust an amount equal to the present value of all benefits
that may become payable under this Agreement, and (iii) provide the Trustee with
an irrevocable written direction both to hold all Trust assets and any
investment return thereon in a segregated account for the benefit of the
Employee, and to follow the procedures set forth in the next paragraph as to the
payment of amounts from the Trust.
At any time after a Change in Control, the Employee may provide the
Trustee with a written affidavit (the "Affidavit") in which the Employee attests
that he has terminated employment with the Company or any successor to its
interest, and has become entitled to commence receiving the monthly benefit
payments (required by Section 3 hereof). The Affidavit shall also specify the
amount of each such monthly payment to be made from the Trust. On the first
business day of the month following the Trustee's receipt of the Affidavit, the
Trustee shall commence paying the Employee, in immediately available funds, the
monthly benefit specified in the Affidavit, and shall send a copy of it to the
Company via overnight and registered mail (return receipt requested). Upon the
receipt of the Employee's written release of all claims under this Agreement,
the Trustee shall pay to the Company any remaining assets in the Trust. The
Company shall pay any and all expenses associated with maintaining the Trust,
and shall hold the Trustee harmless from any liability for making the payments
required hereunder.
5. TERM OF THE AGREEMENT. This Agreement shall remain in effect for the
period commencing on the Effective Date and ending on the earlier of (i) the
date 36 months after the Effective Date, and (ii) the date on which the Employee
terminates employment with the Bank; provided that the Employee's rights
hereunder shall continue following the termination of this employment with the
Bank or the Company under any of the circumstances described in Section 2
hereof. Additionally, on each annual anniversary date from the Effective Date,
the term of this Agreement shall automatically be extended for an additional
one-year period beyond the then effective expiration date unless the Board of
Directors of the Company determines to the contrary in a duly adopted resolution
AND delivers a certified copy of the resolution to the Employee BEFORE the date
on which the Agreement would otherwise renew.
6. EXPENSE REIMBURSEMENT.
In the event that any dispute arises between the Employee and the
Bank or the Company as to the terms or interpretation of this Agreement, whether
instituted by formal legal
<PAGE> 7
proceedings or otherwise, including any action that the Employee takes to
enforce the terms of this Agreement or to defend against any action taken by the
Bank or the Company, the Employee shall be reimbursed for all costs and
expenses, including reasonable attorneys' fees, arising from such dispute,
proceedings or actions, provided that the Employee shall obtain a final
judgement in favor of the Employee in a court of competent jurisdiction or in
binding arbitration under the rules of the American Arbitration Association.
Such reimbursement shall be paid within ten days of Employee's furnishing to the
Bank and the Company written evidence, which may be in the form, among other
things, of a cancelled check or receipt, of any costs or expenses incurred by
the Employee.
7. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of the Company which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank or Company.
(b) Since the Company is contracting for the unique and personal
skills of the Employee, the Employee shall be precluded from assigning or
delegating his rights or duties hereunder without first obtaining the written
consent of the Company.
8. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
9. APPLICABLE LAW. Except to the extent preempted by Federal law, the
laws of the State of Ohio shall govern this Agreement in all respects, whether
as to its validity, construction, capacity, performance or otherwise.
10. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
11. ENTIRE AGREEMENT. This Agreement, together with any understanding
or modifications thereof as agreed to in writing by the parties, shall
constitute the entire agreement between the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.
<PAGE> 8
ATTEST: MAHONING NATIONAL BANCORP, INC.
/s/ Richard E. Davies By: /s/ Daniel B. Roth
- ----------------------------- ------------------------------
Richard E. Davies By: Daniel B. Roth
Its Secretary Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ Dexter A. Hollen
- ----------------------------- ---------------------------------
Sandra L. Douglas Dexter A. Hollen
Employee
<PAGE> 1
Mahoning National Bancorp, Inc.
Form 10-Q
Item 6 (a)
Exhibit 10 (f)
Change-In-Control Protective Agreement
John R. Lewis
<PAGE> 2
THE MAHONING NATIONAL BANK OF YOUNGSTOWN
-------------------------------
Guarantee Agreement
--------------------------------
AGREEMENT entered into this 14th day May, 1997 (the "Effective Date"),
by and between The Mahoning National Bank of Youngstown (the "Bank") and John R.
Lewis (the "Employee").
WHEREAS, the Employee is currently employed by the Bank in an executive
capacity, and has entered into a change-in-control protective agreement (the
"Company Agreement") with Mahoning National Bancorp, Inc. (the "Company"); and
WHEREAS, the Board of Directors of the Bank has determined that it is
in the best interest of the Bank to enter into this Agreement in order to assure
continuity of the Bank's management through encouraging the long-term retention
of the Employee; and
WHEREAS, the parties desire by this writing to set forth the Bank's
commitment to guarantee the Company's obligations under the Company Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. The Bank shall be jointly and severally liable with the Company for
its obligations under the Company Agreement.
2. This Agreement shall have a term that coincides with the term of the
Company Agreement (including any and all extensions thereunder), shall be
binding on any successors to the interest of the parties, shall be amended only
through a written instrument executed by both parties, and shall be governed by
the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first written above.
ATTEST: THE MAHONING NATIONAL BANK
OF YOUNGSTOWN
/s/ Richard E. Davies By /s/ Daniel B. Roth
- --------------------- --------------------------------------
Richard E. Davies By Daniel B. Roth
Secretary Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ John R. Lewis
- --------------------- ----------------------------------------
Sandra L. Douglas John R. Lewis
Employee
<PAGE> 3
CHANGE-IN-CONTROL PROTECTIVE AGREEMENT
THIS AGREEMENT entered into this 14th day of May, 1997, (the "Effective
Date") by and between, Mahoning National Bancorp, Inc. (the "Company"), and John
R. Lewis (the "Employee").
WHEREAS, the Employee has heretofore been employed as an executive
officer of The Mahoning National Bank of Youngstown (the "Bank"), and thereby
has directly contributed to the financial success and operational stability of
the Company; and
WHEREAS, the Company deems it to be in the best interests of its
stockholders to enter into this Agreement as additional incentive to the
Employee to continue to serve in such capacity; and
WHEREAS, the parties desire by this writing to set forth their
understanding as to their respective rights and obligations in the event a
change of control occurs with respect to the Bank or the Company.
NOW, THEREFORE, the undersigned parties AGREE as follows:
1. DEFINED TERMS
When used anywhere in the Agreement, the following terms shall have
the meaning set forth herein.
(a) "Beneficiary" shall mean the person or persons as stated in the
last designation of beneficiary concerning this Agreement signed by the Employee
and filed with Company, and if not, then the personal representative of the
Employee.
(b) "Change in Control" shall mean any one of the following events: (i)
the acquisition of ownership, holding or power to vote more than 30% of the
Bank's or the Company's voting stock, (ii) the acquisition of the ability to
control the election of a majority of the Bank's or the Company's directors,
(iii) the acquisition of a controlling influence over the management or policies
of the Bank or the Company by any person or by persons acting as a "group"
(within the meaning of Section 13(d) of the Securities Exchange Act of 1934), or
(iv) during any period of two consecutive years, individuals (the "Continuing
Directors") who at the beginning of such period constitute the Board of
Directors of the Bank or the Company (the "Existing Board") cease for any reason
to constitute at least two-thirds thereof, provided that any individual whose
election or nomination for election as a member of the Existing Board was
approved by a vote of at least two-thirds of the Continuing Directors then in
office shall be
<PAGE> 4
considered a Continuing Director. Notwithstanding the foregoing, in the case of
(i), (ii) and (iii) hereof, ownership or control of the Bank by the Company
itself shall not constitute a Change in Control. For purposes of this paragraph
only, the term "person" refers to an individual or a corporation, partnership,
trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not specifically listed
herein.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and as interpreted through applicable rulings and regulations
in effect from time to time.
(d) "Code Section 280G Maximum" shall mean the product of 2.99 and the
Employee's "base amount" as defined in Code Section 280G(b)(3).
(e) "Good Reason" shall mean any of the following events, which has not
been consented to in advance by the Employee in writing: (i) the requirement
that the Employee move his or her personal residence, or perform his or her
principal executive functions, more than thirty (30) miles from his primary
office as of the date of the Change in Control; (ii) a material reduction in the
Employee's base compensation as in effect on the date of the Change in Control
or as the same may be increased from time to time; (iii) the failure by the Bank
or the Company to continue to provide the Employee with compensation and
benefits provided for on the date of the Change in Control, as the same may be
increased from time to time, or with benefits substantially similar to those
provided under any of the employee benefit plans in which the Employee now or
hereafter becomes a participant, or the taking of any action by the Bank or the
Company which would directly or indirectly reduce any of such benefits or
deprive the Employee of any material fringe benefit enjoyed at the time of the
Change in Control; (iv) the assignment to the Employee of duties and
responsibilities materially different from those normally associated with his or
her position; (v) a failure to elect or reelect the Employee to the Board of
Directors of the Bank or the Company, if the Employee is serving on such Board
on the date of the Change in Control; (vi) a material diminution or reduction in
the Employee's responsibilities or authority (including reporting
responsibilities) in connection with employment with the Bank or the Company; or
(vii) a material reduction in the secretarial or other administrative support of
the Employee.
(f) "Just Cause" shall mean, in the good faith determination of the
Bank's Board of Directors, the Employee's personal dishonesty, 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.
The Employee shall have no right to receive compensation or other benefits for
any period after termination for Just Cause. No act, or failure to act, on the
Employee's part shall be considered "willful" unless the Employee has acted, or
failed to act, with an absence of good faith and without a reasonable belief
that such action or failure to act was in the best interest of the Bank and the
Company.
<PAGE> 5
(g) "Protected Period" shall mean the period that begins on the
date six months before a Change in Control and ends on the later of the first
annual anniversary of the Change in Control or the expiration date of this
Agreement.
(h) "Trust" shall mean a grantor trust designed in accordance with
Revenue Procedure 92-64 and having a trustee independent of the Bank and the
Company,
2. TRIGGER EVENTS
The Employee shall be entitled to receive the severance benefits set
forth in Section 3 of this Agreement in the event that (i) the Employee
voluntarily terminates employment either for any reason within 30 days of a
Change in Control, (ii) the Employee voluntarily terminates employment within 90
days of an event that both occurs during the Protected Period and constitutes
Good Reason, or (iii) the Bank, the Company, or their successor(s) in interest
terminate the Employee's employment for any reason other than Just Cause during
the Protected Period.
3. SEVERANCE BENEFITS
If the Employee becomes entitled to receive severance benefits pursuant
to Section 2 hereof, the Company shall BOTH provide the Employee with the
opportunity, until the Employee first begins to participate in Medicare, to
purchase, at the Employee's own expense which shall not exceed applicable COBRA
rates, family medical and dental insurance under any group health plans that the
Bank or the Company maintains for its employees, AND pay the Employee (or the
Employee's Beneficiary in the event of the Employee's death before all required
payments have been made under this Agreement) a severance benefit, for 12 months
after termination of employment, in an amount equal to the Employee's highest
monthly salary in effect between the date that the Protected Period begins and
the date of the Change in Control. In no event, however, will the present value
of these severance payments exceed the difference between the Code Section 280G
Maximum and the sum of any other "parachute payments" as defined under Code
Section 280G(b)(2) that the Employee receives on account of the Change in
Control. Said payments shall commence within ten days of the later of the date
of the Change in Control and the Employee's last day of employment with the
Bank or the Company.
In the event that the Employee and the Company agree that the Employee
has collected an amount exceeding the Code Section 280G Maximum, the parties
may jointly agree in writing that such excess shall be treated as a loan AB
INITIO which the Employee shall repay to the Company, on terms and conditions
mutually agreeable to the parties, together with interest at the applicable
federal rate provided for in Section 7872(f)(2)(B) of the Code.
<PAGE> 6
4. FUNDING OF GRANTOR TRUST UPON CHANGE IN CONTROL
Notwithstanding any other provision of this Agreement that may be
contrary or inconsistent herewith, not later than ten (10) business days after a
Change in Control, the Company shall (i) establish a grantor trust (the "Trust")
that is designed in accordance with Revenue Procedure 92-64 and has a trustee
(the "Trustee") independent of the Company and any successor to their interest,
(ii) deposit in the Trust an amount equal to the present value of all benefits
that may become payable under this Agreement, and (iii) provide the Trustee with
an irrevocable written direction both to hold all Trust assets and any
investment return thereon in a segregated account for the benefit of the
Employee, and to follow the procedures set forth in the next paragraph as to the
payment of amounts from the Trust.
At any time after a Change in Control, the Employee may provide the
Trustee with a written affidavit (the "Affidavit") in which the Employee attests
that he has terminated employment with the Company or any successor to its
interest, and has become entitled to commence receiving the monthly benefit
payments (required by Section 3 hereof). The Affidavit shall also specify the
amount of each such monthly payment to be made from the Trust. On the first
business day of the month following the Trustee's receipt of the Affidavit, the
Trustee shall commence paying the Employee, in immediately available funds, the
monthly benefit specified in the Affidavit, and shall send a copy of it to the
Company via overnight and registered mail (return receipt requested). Upon the
receipt of the Employee's written release of all claims under this Agreement,
the Trustee shall pay to the Company any remaining assets in the Trust. The
Company shall pay any and all expenses associated with maintaining the Trust,
and shall hold the Trustee harmless from any liability for making the payments
required hereunder.
5. TERM OF THE AGREEMENT. This Agreement shall remain in effect for the
period commencing on the Effective Date and ending on the earlier of (i) the
date 36 months after the Effective Date, and (ii) the date on which the Employee
terminates employment with the Bank; provided that the Employee's rights
hereunder shall continue following the termination of this employment with the
Bank or the Company under any of the circumstances described in Section 2
hereof. Additionally, on each annual anniversary date from the Effective Date,
the term of this Agreement shall automatically be extended for an additional
one-year period beyond the then effective expiration date unless the Board of
Directors of the Company determines to the contrary in a duly adopted resolution
AND delivers a certified copy of the resolution to the Employee BEFORE the date
on which the Agreement would otherwise renew.
6. EXPENSE REIMBURSEMENT.
In the event that any dispute arises between the Employee and the
Bank or the Company as to the terms or interpretation of this Agreement, whether
instituted by formal legal
<PAGE> 7
proceedings or otherwise, including any action that the Employee takes to
enforce the terms of this Agreement or to defend against any action taken by the
Bank or the Company, the Employee shall be reimbursed for all costs and
expenses, including reasonable attorneys' fees, arising from such dispute,
proceedings or actions, provided that the Employee shall obtain a final
judgement in favor of the Employee in a court of competent jurisdiction or in
binding arbitration under the rules of the American Arbitration Association.
Such reimbursement shall be paid within ten days of Employee's furnishing to the
Bank and the Company written evidence, which may be in the form, among other
things, of a cancelled check or receipt, of any costs or expenses incurred by
the Employee.
7. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of the Company which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank or Company.
(b) Since the Company is contracting for the unique and personal
skills of the Employee, the Employee shall be precluded from assigning or
delegating his rights or duties hereunder without first obtaining the written
consent of the Company.
8. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
9. APPLICABLE LAW. Except to the extent preempted by Federal law, the
laws of the State of Ohio shall govern this Agreement in all respects, whether
as to its validity, construction, capacity, performance or otherwise.
10. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
11. ENTIRE AGREEMENT. This Agreement, together with any understanding
or modifications thereof as agreed to in writing by the parties, shall
constitute the entire agreement between the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.
<PAGE> 8
ATTEST: MAHONING NATIONAL BANCORP, INC.
/s/ Richard E. Davies By: /s/ Daniel B. Roth
- --------------------------- ------------------------------
Richard E. Davies By: Daniel B. Roth
Its Secretary Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ John R. Lewis
- --------------------------- ---------------------------------
Sandra L. Douglas John R. Lewis
Employee
<PAGE> 1
Mahoning National Bancorp, Inc.
Form 10-Q
Item 6 (a)
Exhibit 10 (g)
Change-In-Control Protective Agreement
Parker T. McHenry
<PAGE> 2
THE MAHONING NATIONAL BANK OF YOUNGSTOWN
-------------------------------
Guarantee Agreement
--------------------------------
AGREEMENT entered into this 14th day May, 1997 (the "Effective Date"),
by and between The Mahoning National Bank of Youngstown (the "Bank") and Parker
T. McHenry (the "Employee").
WHEREAS, the Employee is currently employed by the Bank in an executive
capacity, and has entered into a change-in-control protective agreement (the
"Company Agreement") with Mahoning National Bancorp, Inc. (the "Company"); and
WHEREAS, the Board of Directors of the Bank has determined that it is
in the best interest of the Bank to enter into this Agreement in order to assure
continuity of the Bank's management through encouraging the long-term retention
of the Employee; and
WHEREAS, the parties desire by this writing to set forth the Bank's
commitment to guarantee the Company's obligations under the Company Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. The Bank shall be jointly and severally liable with the Company for
its obligations under the Company Agreement.
2. This Agreement shall have a term that coincides with the term of the
Company Agreement (including any and all extensions thereunder), shall be
binding on any successors to the interest of the parties, shall be amended only
through a written instrument executed by both parties, and shall be governed by
the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first written above.
ATTEST: THE MAHONING NATIONAL BANK
OF YOUNGSTOWN
/s/ Richard E. Davies By /s/ Daniel B. Roth
- ----------------------------- ---------------------------------
Richard E. Davies By Daniel B. Roth
Secretary Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ Parker T. McHenry
- ----------------------------- -----------------------------------
Sandra L. Douglas Parker T. McHenry
Employee
<PAGE> 3
CHANGE-IN-CONTROL PROTECTIVE AGREEMENT
THIS AGREEMENT entered into this 14th day of May, 1997, (the "Effective
Date") by and between, Mahoning National Bancorp, Inc. (the "Company"), and
Parker T. McHenry (the "Employee").
WHEREAS, the Employee has heretofore been employed as an executive
officer of The Mahoning National Bank of Youngstown (the "Bank"), and thereby
has directly contributed to the financial success and operational stability of
the Company; and
WHEREAS, the Company deems it to be in the best interests of its
stockholders to enter into this Agreement as additional incentive to the
Employee to continue to serve in such capacity; and
WHEREAS, the parties desire by this writing to set forth their
understanding as to their respective rights and obligations in the event a
change of control occurs with respect to the Bank or the Company.
NOW, THEREFORE, the undersigned parties AGREE as follows:
1. DEFINED TERMS
When used anywhere in the Agreement, the following terms shall have
the meaning set forth herein.
(a) "Beneficiary" shall mean the person or persons as stated in the
last designation of beneficiary concerning this Agreement signed by the Employee
and filed with Company, and if not, then the personal representative of the
Employee.
(b) "Change in Control" shall mean any one of the following events: (i)
the acquisition of ownership, holding or power to vote more than 30% of the
Bank's or the Company's voting stock, (ii) the acquisition of the ability to
control the election of a majority of the Bank's or the Company's directors,
(iii) the acquisition of a controlling influence over the management or policies
of the Bank or the Company by any person or by persons acting as a "group"
(within the meaning of Section 13(d) of the Securities Exchange Act of 1934), or
(iv) during any period of two consecutive years, individuals (the "Continuing
Directors") who at the beginning of such period constitute the Board of
Directors of the Bank or the Company (the "Existing Board") cease for any reason
to constitute at least two-thirds thereof, provided that any individual whose
election or nomination for election as a member of the Existing Board was
approved by a vote of at least two-thirds of the Continuing Directors then in
office shall be
<PAGE> 4
considered a Continuing Director. Notwithstanding the foregoing, in the case of
(i), (ii) and (iii) hereof, ownership or control of the Bank by the Company
itself shall not constitute a Change in Control. For purposes of this paragraph
only, the term "person" refers to an individual or a corporation, partnership,
trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not specifically listed
herein.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and as interpreted through applicable rulings and regulations
in effect from time to time.
(d) "Code Section 280G Maximum" shall mean the product of 2.99 and
the Employee's "base amount" as defined in Code Section 280G(b)(3).
(e) "Good Reason" shall mean any of the following events, which has
not been consented to in advance by the Employee in writing: (i) the requirement
that the Employee move his or her personal residence, or perform his or her
principal executive functions, more than thirty (30) miles from his primary
office as of the date of the Change in Control; (ii) a material reduction in the
Employee's base compensation as in effect on the date of the Change in Control
or as the same may be increased from time to time; (iii) the failure by the Bank
or the Company to continue to provide the Employee with compensation and
benefits provided for on the date of the Change in Control, as the same may be
increased from time to time, or with benefits substantially similar to those
provided under any of the employee benefit plans in which the Employee now or
hereafter becomes a participant, or the taking of any action by the Bank or the
Company which would directly or indirectly reduce any of such benefits or
deprive the Employee of any material fringe benefit enjoyed at the time of the
Change in Control; (iv) the assignment to the Employee of duties and
responsibilities materially different from those normally associated with his or
her position; (v) a failure to elect or reelect the Employee to the Board of
Directors of the Bank or the Company, if the Employee is serving on such Board
on the date of the Change in Control; (vi) a material diminution or reduction in
the Employee's responsibilities or authority (including reporting
responsibilities) in connection with employment with the Bank or the Company; or
(vii) a material reduction in the secretarial or other administrative support of
the Employee.
(f) "Just Cause" shall mean, in the good faith determination of the
Bank's Board of Directors, the Employee's personal dishonesty, 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.
The Employee shall have no right to receive compensation or other benefits for
any period after termination for Just Cause. No act, or failure to act, on the
Employee's part shall be considered "willful" unless the Employee has acted, or
failed to act, with an absence of good faith and without a reasonable belief
that such action or failure to act was in the best interest of the Bank and the
Company.
<PAGE> 5
(g) "Protected Period" shall mean the period that begins on the
date six months before a Change in Control and ends on the later of the first
annual anniversary of the Change in Control or the expiration date of this
Agreement.
(h) "Trust" shall mean a grantor trust designed in accordance with
Revenue Procedure 92-64 and having a trustee independent of the Bank and the
Company,
2. TRIGGER EVENTS
The Employee shall be entitled to receive the severance benefits set
forth in Section 3 of this Agreement in the event that (i) the Employee
voluntarily terminates employment either for any reason within 30 days of a
Change in Control, (ii) the Employee voluntarily terminates employment within 90
days of an event that both occurs during the Protected Period and constitutes
Good Reason, or (iii) the Bank, the Company, or their successor(s) in interest
terminate the Employee's employment for any reason other than Just Cause during
the Protected Period.
3. SEVERANCE BENEFITS
If the Employee becomes entitled to receive severance benefits pursuant
to Section 2 hereof, the Company shall BOTH provide the Employee with the
opportunity, until the Employee first begins to participate in Medicare, to
purchase, at the Employee's own expense which shall not exceed applicable COBRA
rates, family medical and dental insurance under any group health plans that the
Bank or the Company maintains for its employees, AND pay the Employee (or the
Employee's Beneficiary in the event of the Employee's death before all required
payments have been made under this Agreement) a severance benefit, for 24 months
after termination of employment, in an amount equal to the Employee's highest
monthly salary in effect between the date that the Protected Period begins and
the date of the Change in Control. In no event, however, will the present value
of these severance payments exceed the difference between the Code Section 280G
Maximum and the sum of any other "parachute payments" as defined under Code
Section 280G(b)(2) that the Employee receives on account of the Change in
Control. Said payments shall commence within ten days of the later of the date
of the Change in Control and the Employee's last day of employment with the
Bank or the Company.
In the event that the Employee and the Company agree that the Employee
has collected an amount exceeding the Code Section 280G Maximum, the parties
may jointly agree in writing that such excess shall be treated as a loan AB
INITIO which the Employee shall repay to the Company, on terms and conditions
mutually agreeable to the parties, together with interest at the applicable
federal rate provided for in Section 7872(f)(2)(B) of the Code.
<PAGE> 6
4. FUNDING OF GRANTOR TRUST UPON CHANGE IN CONTROL
Notwithstanding any other provision of this Agreement that may be
contrary or inconsistent herewith, not later than ten (10) business days after a
Change in Control, the Company shall (i) establish a grantor trust (the "Trust")
that is designed in accordance with Revenue Procedure 92-64 and has a trustee
(the "Trustee") independent of the Company and any successor to their interest,
(ii) deposit in the Trust an amount equal to the present value of all benefits
that may become payable under this Agreement, and (iii) provide the Trustee with
an irrevocable written direction both to hold all Trust assets and any
investment return thereon in a segregated account for the benefit of the
Employee, and to follow the procedures set forth in the next paragraph as to the
payment of amounts from the Trust.
At any time after a Change in Control, the Employee may provide the
Trustee with a written affidavit (the "Affidavit") in which the Employee attests
that he has terminated employment with the Company or any successor to its
interest, and has become entitled to commence receiving the monthly benefit
payments (required by Section 3 hereof). The Affidavit shall also specify the
amount of each such monthly payment to be made from the Trust. On the first
business day of the month following the Trustee's receipt of the Affidavit, the
Trustee shall commence paying the Employee, in immediately available funds, the
monthly benefit specified in the Affidavit, and shall send a copy of it to the
Company via overnight and registered mail (return receipt requested). Upon the
receipt of the Employee's written release of all claims under this Agreement,
the Trustee shall pay to the Company any remaining assets in the Trust. The
Company shall pay any and all expenses associated with maintaining the Trust,
and shall hold the Trustee harmless from any liability for making the payments
required hereunder.
5. TERM OF THE AGREEMENT. This Agreement shall remain in effect for the
period commencing on the Effective Date and ending on the earlier of (i) the
date 36 months after the Effective Date, and (ii) the date on which the Employee
terminates employment with the Bank; provided that the Employee's rights
hereunder shall continue following the termination of this employment with the
Bank or the Company under any of the circumstances described in Section 2
hereof. Additionally, on each annual anniversary date from the Effective Date,
the term of this Agreement shall automatically be extended for an additional
one-year period beyond the then effective expiration date unless the Board of
Directors of the Company determines to the contrary in a duly adopted resolution
AND delivers a certified copy of the resolution to the Employee BEFORE the date
on which the Agreement would otherwise renew.
6. EXPENSE REIMBURSEMENT.
In the event that any dispute arises between the Employee and the
Bank or the Company as to the terms or interpretation of this Agreement, whether
instituted by formal legal
<PAGE> 7
proceedings or otherwise, including any action that the Employee takes to
enforce the terms of this Agreement or to defend against any action taken by the
Bank or the Company, the Employee shall be reimbursed for all costs and
expenses, including reasonable attorneys' fees, arising from such dispute,
proceedings or actions, provided that the Employee shall obtain a final
judgement in favor of the Employee in a court of competent jurisdiction or in
binding arbitration under the rules of the American Arbitration Association.
Such reimbursement shall be paid within ten days of Employee's furnishing to the
Bank and the Company written evidence, which may be in the form, among other
things, of a cancelled check or receipt, of any costs or expenses incurred by
the Employee.
7. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of the Company which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank or Company.
(b) Since the Company is contracting for the unique and personal
skills of the Employee, the Employee shall be precluded from assigning or
delegating his rights or duties hereunder without first obtaining the written
consent of the Company.
8. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
9. APPLICABLE LAW. Except to the extent preempted by Federal law, the
laws of the State of Ohio shall govern this Agreement in all respects, whether
as to its validity, construction, capacity, performance or otherwise.
10. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
11. ENTIRE AGREEMENT. This Agreement, together with any understanding
or modifications thereof as agreed to in writing by the parties, shall
constitute the entire agreement between the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.
<PAGE> 8
ATTEST: MAHONING NATIONAL BANCORP, INC.
/s/ Richard E. Davies By: /s/ Daniel B. Roth
- -------------------------- ------------------------------
Richard E. Davies By: Daniel B. Roth
Its Secretary Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ Parker T. McHenry
- -------------------------- ------------------------------
Sandra L. Douglas Parker T. McHenry
Employee
<PAGE> 1
Mahoning National Bancorp, Inc.
Form 10-Q
Item 6 (a)
Exhibit 10 (h)
Change-In-Control Protective Agreement
Gregory L. Ridler
By Board action on May 12, 1997, this agreement
replaces The Change of Control Agreement between
Gregory L. Ridler - Chairman of the Board,
President and Chief Executive Officer dated
August 3, 1992, filed with the registrant's Form
10-K dated December 31, 1992.
<PAGE> 2
THE MAHONING NATIONAL BANK OF YOUNGSTOWN
-------------------------------
Guarantee Agreement
--------------------------------
AGREEMENT entered into this 14th day May, 1997 (the "Effective Date"),
by and between The Mahoning National Bank of Youngstown (the "Bank") and Gregory
L. Ridler (the "Employee").
WHEREAS, the Employee is currently employed by the Bank in an executive
capacity, and has entered into a change-in-control protective agreement (the
"Company Agreement") with Mahoning National Bancorp, Inc. (the "Company"); and
WHEREAS, the Board of Directors of the Bank has determined that it is
in the best interest of the Bank to enter into this Agreement in order to assure
continuity of the Bank's management through encouraging the long-term retention
of the Employee; and
WHEREAS, the parties desire by this writing to set forth the Bank's
commitment to guarantee the Company's obligations under the Company Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. The Bank shall be jointly and severally liable with the Company for
its obligations under the Company Agreement.
2. This Agreement shall have a term that coincides with the term of the
Company Agreement (including any and all extensions thereunder), shall be
binding on any successors to the interest of the parties, shall be amended only
through a written instrument executed by both parties, and shall be governed by
the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first written above.
ATTEST: THE MAHONING NATIONAL BANK
OF YOUNGSTOWN
/s/ Richard E. Davies By /s/ Daniel B. Roth
- ---------------------- -----------------------------------
Richard E. Davies By Daniel B. Roth
Secretary Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ Gregory L. Ridler
- ---------------------- -----------------------------------
Sandra L. Douglas Gregory L. Ridler
Employee
<PAGE> 3
CHANGE-IN-CONTROL PROTECTIVE AGREEMENT
THIS AGREEMENT entered into this 14th day of May, 1997, (the "Effective
Date") by and between, Mahoning National Bancorp, Inc. (the "Company"), and
Gregory L. Ridler (the "Employee").
WHEREAS, the Employee has heretofore been employed as an executive
officer of The Mahoning National Bank of Youngstown (the "Bank"), and thereby
has directly contributed to the financial success and operational stability of
the Company; and
WHEREAS, the Company deems it to be in the best interests of its
stockholders to enter into this Agreement as additional incentive to the
Employee to continue to serve in such capacity; and
WHEREAS, the parties desire by this writing to set forth their
understanding as to their respective rights and obligations in the event a
change of control occurs with respect to the Bank or the Company.
NOW, THEREFORE, the undersigned parties AGREE as follows:
1. DEFINED TERMS
When used anywhere in the Agreement, the following terms shall have
the meaning set forth herein.
(a) "Beneficiary" shall mean the person or persons as stated in the
last designation of beneficiary concerning this Agreement signed by the Employee
and filed with Company, and if not, then the personal representative of the
Employee.
(b) "Change in Control" shall mean any one of the following events: (i)
the acquisition of ownership, holding or power to vote more than 30% of the
Bank's or the Company's voting stock, (ii) the acquisition of the ability to
control the election of a majority of the Bank's or the Company's directors,
(iii) the acquisition of a controlling influence over the management or policies
of the Bank or the Company by any person or by persons acting as a "group"
(within the meaning of Section 13(d) of the Securities Exchange Act of 1934), or
(iv) during any period of two consecutive years, individuals (the "Continuing
Directors") who at the beginning of such period constitute the Board of
Directors of the Bank or the Company (the "Existing Board") cease for any reason
to constitute at least two-thirds thereof, provided that any individual whose
election or nomination for election as a member of the Existing Board was
approved by a vote of at least two-thirds of the Continuing Directors then in
office shall be
<PAGE> 4
considered a Continuing Director. Notwithstanding the foregoing, in the case of
(i), (ii) and (iii) hereof, ownership or control of the Bank by the Company
itself shall not constitute a Change in Control. For purposes of this paragraph
only, the term "person" refers to an individual or a corporation, partnership,
trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not specifically listed
herein.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and as interpreted through applicable rulings and regulations
in effect from time to time.
(d) "Code Section 280G Maximum" shall mean the product of 2.99 and
the Employee's "base amount" as defined in Code Section 280G(b)(3).
(e) "Good Reason" shall mean any of the following events, which has
not been consented to in advance by the Employee in writing: (i) the requirement
that the Employee move his or her personal residence, or perform his or her
principal executive functions, more than thirty (30) miles from his primary
office as of the date of the Change in Control; (ii) a material reduction in the
Employee's base compensation as in effect on the date of the Change in Control
or as the same may be increased from time to time; (iii) the failure by the Bank
or the Company to continue to provide the Employee with compensation and
benefits provided for on the date of the Change in Control, as the same may be
increased from time to time, or with benefits substantially similar to those
provided under any of the employee benefit plans in which the Employee now or
hereafter becomes a participant, or the taking of any action by the Bank or the
Company which would directly or indirectly reduce any of such benefits or
deprive the Employee of any material fringe benefit enjoyed at the time of the
Change in Control; (iv) the assignment to the Employee of duties and
responsibilities materially different from those normally associated with his or
her position; (v) a failure to elect or reelect the Employee to the Board of
Directors of the Bank or the Company, if the Employee is serving on such Board
on the date of the Change in Control; (vi) a material diminution or reduction in
the Employee's responsibilities or authority (including reporting
responsibilities) in connection with employment with the Bank or the Company; or
(vii) a material reduction in the secretarial or other administrative support of
the Employee.
(f) "Just Cause" shall mean, in the good faith determination of the
Bank's Board of Directors, the Employee's personal dishonesty, 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.
The Employee shall have no right to receive compensation or other benefits for
any period after termination for Just Cause. No act, or failure to act, on the
Employee's part shall be considered "willful" unless the Employee has acted, or
failed to act, with an absence of good faith and without a reasonable belief
that such action or failure to act was in the best interest of the Bank and the
Company.
<PAGE> 5
(g) "Protected Period" shall mean the period that begins on the
date six months before a Change in Control and ends on the later of the first
annual anniversary of the Change in Control or the expiration date of this
Agreement.
(h) "Trust" shall mean a grantor trust designed in accordance with
Revenue Procedure 92-64 and having a trustee independent of the Bank and the
Company,
2. TRIGGER EVENTS
The Employee shall be entitled to receive the severance benefits set
forth in Section 3 of this Agreement in the event that (i) the Employee
voluntarily terminates employment either for any reason within 30 days of a
Change in Control, (ii) the Employee voluntarily terminates employment within 90
days of an event that both occurs during the Protected Period and constitutes
Good Reason, or (iii) the Bank, the Company, or their successor(s) in interest
terminate the Employee's employment for any reason other than Just Cause during
the Protected Period.
3. SEVERANCE BENEFITS
If the Employee becomes entitled to receive severance benefits pursuant
to Section 2 hereof, the Company shall BOTH provide the Employee with the
opportunity, until the Employee first begins to participate in Medicare, to
purchase, at the Employee's own expense which shall not exceed applicable COBRA
rates, family medical and dental insurance under any group health plans that the
Bank or the Company maintains for its employees, AND pay the Employee (or the
Employee's Beneficiary in the event of the Employee's death before all required
payments have been made under this Agreement) a severance benefit, for 36 months
after termination of employment, in an amount equal to the Employee's highest
monthly salary in effect between the date that the Protected Period begins and
the date of the Change in Control. In no event, however, will the present value
of these severance payments exceed the difference between the Code Section 280G
Maximum and the sum of any other "parachute payments" as defined under Code
Section 280G(b)(2) that the Employee receives on account of the Change in
Control. Said payments shall commence within ten days of the later of the date
of the Change in Control and the Employee's last day of employment with the
Bank or the Company.
In the event that the Employee and the Company agree that the Employee
has collected an amount exceeding the Code Section 280G Maximum, the parties
may jointly agree in writing that such excess shall be treated as a loan AB
INITIO which the Employee shall repay to the Company, on terms and conditions
mutually agreeable to the parties, together with interest at the applicable
federal rate provided for in Section 7872(f)(2)(B) of the Code.
<PAGE> 6
4. FUNDING OF GRANTOR TRUST UPON CHANGE IN CONTROL
Notwithstanding any other provision of this Agreement that may be
contrary or inconsistent herewith, not later than ten (10) business days after a
Change in Control, the Company shall (i) establish a grantor trust (the "Trust")
that is designed in accordance with Revenue Procedure 92-64 and has a trustee
(the "Trustee") independent of the Company and any successor to their interest,
(ii) deposit in the Trust an amount equal to the present value of all benefits
that may become payable under this Agreement, and (iii) provide the Trustee with
an irrevocable written direction both to hold all Trust assets and any
investment return thereon in a segregated account for the benefit of the
Employee, and to follow the procedures set forth in the next paragraph as to the
payment of amounts from the Trust.
At any time after a Change in Control, the Employee may provide the
Trustee with a written affidavit (the "Affidavit") in which the Employee attests
that he has terminated employment with the Company or any successor to its
interest, and has become entitled to commence receiving the monthly benefit
payments (required by Section 3 hereof). The Affidavit shall also specify the
amount of each such monthly payment to be made from the Trust. On the first
business day of the month following the Trustee's receipt of the Affidavit, the
Trustee shall commence paying the Employee, in immediately available funds, the
monthly benefit specified in the Affidavit, and shall send a copy of it to the
Company via overnight and registered mail (return receipt requested). Upon the
receipt of the Employee's written release of all claims under this Agreement,
the Trustee shall pay to the Company any remaining assets in the Trust. The
Company shall pay any and all expenses associated with maintaining the Trust,
and shall hold the Trustee harmless from any liability for making the payments
required hereunder.
5. TERM OF THE AGREEMENT. This Agreement shall remain in effect for the
period commencing on the Effective Date and ending on the earlier of (i) the
date 36 months after the Effective Date, and (ii) the date on which the Employee
terminates employment with the Bank; provided that the Employee's rights
hereunder shall continue following the termination of this employment with the
Bank or the Company under any of the circumstances described in Section 2
hereof. Additionally, on each annual anniversary date from the Effective Date,
the term of this Agreement shall automatically be extended for an additional
one-year period beyond the then effective expiration date unless the Board of
Directors of the Company determines to the contrary in a duly adopted resolution
AND delivers a certified copy of the resolution to the Employee BEFORE the date
on which the Agreement would otherwise renew.
6. EXPENSE REIMBURSEMENT.
In the event that any dispute arises between the Employee and the
Bank or the Company as to the terms or interpretation of this Agreement, whether
instituted by formal legal
<PAGE> 7
proceedings or otherwise, including any action that the Employee takes to
enforce the terms of this Agreement or to defend against any action taken by the
Bank or the Company, the Employee shall be reimbursed for all costs and
expenses, including reasonable attorneys' fees, arising from such dispute,
proceedings or actions, provided that the Employee shall obtain a final
judgement in favor of the Employee in a court of competent jurisdiction or in
binding arbitration under the rules of the American Arbitration Association.
Such reimbursement shall be paid within ten days of Employee's furnishing to the
Bank and the Company written evidence, which may be in the form, among other
things, of a cancelled check or receipt, of any costs or expenses incurred by
the Employee.
7. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of the Company which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank or Company.
(b) Since the Company is contracting for the unique and personal
skills of the Employee, the Employee shall be precluded from assigning or
delegating his rights or duties hereunder without first obtaining the written
consent of the Company.
8. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
9. APPLICABLE LAW. Except to the extent preempted by Federal law, the
laws of the State of Ohio shall govern this Agreement in all respects, whether
as to its validity, construction, capacity, performance or otherwise.
10. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
11. ENTIRE AGREEMENT. This Agreement, together with any understanding
or modifications thereof as agreed to in writing by the parties, shall
constitute the entire agreement between the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.
<PAGE> 8
ATTEST: MAHONING NATIONAL BANCORP, INC.
/s/ Richard E. Davies By: /s/ Daniel B. Roth
- -------------------------- -----------------------------
Richard E. Davies By: Daniel B. Roth
Its Secretary Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ Gregory L. Ridler
- -------------------------- ----------------------------
Sandra L. Douglas Gregory L. Ridler
Employee
<PAGE> 1
Mahoning National Bancorp, Inc.
Form 10-Q
Item 6 (a)
Exhibit 10 (i)
Change-In-Control Protective Agreement
J. David Sabine
<PAGE> 2
THE MAHONING NATIONAL BANK OF YOUNGSTOWN
-------------------------------
Guarantee Agreement
--------------------------------
AGREEMENT entered into this 14th day May, 1997 (the "Effective Date"),
by and between The Mahoning National Bank of Youngstown (the "Bank") and J.
David Sabine (the "Employee").
WHEREAS, the Employee is currently employed by the Bank in an executive
capacity, and has entered into a change-in-control protective agreement (the
"Company Agreement") with Mahoning National Bancorp, Inc. (the "Company"); and
WHEREAS, the Board of Directors of the Bank has determined that it is
in the best interest of the Bank to enter into this Agreement in order to assure
continuity of the Bank's management through encouraging the long-term retention
of the Employee; and
WHEREAS, the parties desire by this writing to set forth the Bank's
commitment to guarantee the Company's obligations under the Company Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. The Bank shall be jointly and severally liable with the Company for
its obligations under the Company Agreement.
2. This Agreement shall have a term that coincides with the term of the
Company Agreement (including any and all extensions thereunder), shall be
binding on any successors to the interest of the parties, shall be amended only
through a written instrument executed by both parties, and shall be governed by
the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first written above.
ATTEST: THE MAHONING NATIONAL BANK
OF YOUNGSTOWN
/s/ Richard E. Davies By /s/ Daniel B. Roth
- ----------------------- -----------------------------------
Richard E. Davies By Daniel B. Roth
Secretary Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ J. David Sabine
- ----------------------- -----------------------------------
Sandra L. Douglas J. David Sabine
Employee
<PAGE> 3
CHANGE-IN-CONTROL PROTECTIVE AGREEMENT
THIS AGREEMENT entered into this 14th day of May, 1997, (the "Effective
Date") by and between, Mahoning National Bancorp, Inc. (the "Company"), and J.
David Sabine (the "Employee").
WHEREAS, the Employee has heretofore been employed as an executive
officer of The Mahoning National Bank of Youngstown (the "Bank"), and thereby
has directly contributed to the financial success and operational stability of
the Company; and
WHEREAS, the Company deems it to be in the best interests of its
stockholders to enter into this Agreement as additional incentive to the
Employee to continue to serve in such capacity; and
WHEREAS, the parties desire by this writing to set forth their
understanding as to their respective rights and obligations in the event a
change of control occurs with respect to the Bank or the Company.
NOW, THEREFORE, the undersigned parties AGREE as follows:
1. DEFINED TERMS
When used anywhere in the Agreement, the following terms shall have
the meaning set forth herein.
(a) "Beneficiary" shall mean the person or persons as stated in the
last designation of beneficiary concerning this Agreement signed by the Employee
and filed with Company, and if not, then the personal representative of the
Employee.
(b) "Change in Control" shall mean any one of the following events: (i)
the acquisition of ownership, holding or power to vote more than 30% of the
Bank's or the Company's voting stock, (ii) the acquisition of the ability to
control the election of a majority of the Bank's or the Company's directors,
(iii) the acquisition of a controlling influence over the management or policies
of the Bank or the Company by any person or by persons acting as a "group"
(within the meaning of Section 13(d) of the Securities Exchange Act of 1934), or
(iv) during any period of two consecutive years, individuals (the "Continuing
Directors") who at the beginning of such period constitute the Board of
Directors of the Bank or the Company (the "Existing Board") cease for any reason
to constitute at least two-thirds thereof, provided that any individual whose
election or nomination for election as a member of the Existing Board was
approved by a vote of at least two-thirds of the Continuing Directors then in
office shall be
<PAGE> 4
considered a Continuing Director. Notwithstanding the foregoing, in the case of
(i), (ii) and (iii) hereof, ownership or control of the Bank by the Company
itself shall not constitute a Change in Control. For purposes of this paragraph
only, the term "person" refers to an individual or a corporation, partnership,
trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not specifically listed
herein.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and as interpreted through applicable rulings and regulations
in effect from time to time.
(d) "Code Section 280G Maximum" shall mean the product of 2.99 and
the Employee's "base amount" as defined in Code Section 280G(b)(3).
(e) "Good Reason" shall mean any of the following events, which has
not been consented to in advance by the Employee in writing: (i) the requirement
that the Employee move his or her personal residence, or perform his or her
principal executive functions, more than thirty (30) miles from his primary
office as of the date of the Change in Control; (ii) a material reduction in the
Employee's base compensation as in effect on the date of the Change in Control
or as the same may be increased from time to time; (iii) the failure by the Bank
or the Company to continue to provide the Employee with compensation and
benefits provided for on the date of the Change in Control, as the same may be
increased from time to time, or with benefits substantially similar to those
provided under any of the employee benefit plans in which the Employee now or
hereafter becomes a participant, or the taking of any action by the Bank or the
Company which would directly or indirectly reduce any of such benefits or
deprive the Employee of any material fringe benefit enjoyed at the time of the
Change in Control; (iv) the assignment to the Employee of duties and
responsibilities materially different from those normally associated with his or
her position; (v) a failure to elect or reelect the Employee to the Board of
Directors of the Bank or the Company, if the Employee is serving on such Board
on the date of the Change in Control; (vi) a material diminution or reduction in
the Employee's responsibilities or authority (including reporting
responsibilities) in connection with employment with the Bank or the Company; or
(vii) a material reduction in the secretarial or other administrative support of
the Employee.
(f) "Just Cause" shall mean, in the good faith determination of the
Bank's Board of Directors, the Employee's personal dishonesty, 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.
The Employee shall have no right to receive compensation or other benefits for
any period after termination for Just Cause. No act, or failure to act, on the
Employee's part shall be considered "willful" unless the Employee has acted, or
failed to act, with an absence of good faith and without a reasonable belief
that such action or failure to act was in the best interest of the Bank and the
Company.
<PAGE> 5
(g) "Protected Period" shall mean the period that begins on the
date six months before a Change in Control and ends on the later of the first
annual anniversary of the Change in Control or the expiration date of this
Agreement.
(h) "Trust" shall mean a grantor trust designed in accordance with
Revenue Procedure 92-64 and having a trustee independent of the Bank and the
Company,
2. TRIGGER EVENTS
The Employee shall be entitled to receive the severance benefits set
forth in Section 3 of this Agreement in the event that (i) the Employee
voluntarily terminates employment either for any reason within 30 days of a
Change in Control, (ii) the Employee voluntarily terminates employment within 90
days of an event that both occurs during the Protected Period and constitutes
Good Reason, or (iii) the Bank, the Company, or their successor(s) in interest
terminate the Employee's employment for any reason other than Just Cause during
the Protected Period.
3. SEVERANCE BENEFITS
If the Employee becomes entitled to receive severance benefits pursuant
to Section 2 hereof, the Company shall BOTH provide the Employee with the
opportunity, until the Employee first begins to participate in Medicare, to
purchase, at the Employee's own expense which shall not exceed applicable COBRA
rates, family medical and dental insurance under any group health plans that the
Bank or the Company maintains for its employees, AND pay the Employee (or the
Employee's Beneficiary in the event of the Employee's death before all required
payments have been made under this Agreement) a severance benefit, for 24 months
after termination of employment, in an amount equal to the Employee's highest
monthly salary in effect between the date that the Protected Period begins and
the date of the Change in Control. In no event, however, will the present value
of these severance payments exceed the difference between the Code Section 280G
Maximum and the sum of any other "parachute payments" as defined under Code
Section 280G(b)(2) that the Employee receives on account of the Change in
Control. Said payments shall commence within ten days of the later of the date
of the Change in Control and the Employee's last day of employment with the Bank
or the Company.
In the event that the Employee and the Company agree that the Employee
has collected an amount exceeding the Code Section 280G Maximum, the parties may
jointly agree in writing that such excess shall be treated as a loan AB INITIO
which the Employee shall repay to the Company, on terms and conditions mutually
agreeable to the parties, together with interest at the applicable federal rate
provided for in Section 7872(f)(2)(B) of the Code.
<PAGE> 6
4. FUNDING OF GRANTOR TRUST UPON CHANGE IN CONTROL
Notwithstanding any other provision of this Agreement that may be
contrary or inconsistent herewith, not later than ten (10) business days after a
Change in Control, the Company shall (i) establish a grantor trust (the "Trust")
that is designed in accordance with Revenue Procedure 92-64 and has a trustee
(the "Trustee") independent of the Company and any successor to their interest,
(ii) deposit in the Trust an amount equal to the present value of all benefits
that may become payable under this Agreement, and (iii) provide the Trustee with
an irrevocable written direction both to hold all Trust assets and any
investment return thereon in a segregated account for the benefit of the
Employee, and to follow the procedures set forth in the next paragraph as to the
payment of amounts from the Trust.
At any time after a Change in Control, the Employee may provide the
Trustee with a written affidavit (the "Affidavit") in which the Employee attests
that he has terminated employment with the Company or any successor to its
interest, and has become entitled to commence receiving the monthly benefit
payments (required by Section 3 hereof). The Affidavit shall also specify the
amount of each such monthly payment to be made from the Trust. On the first
business day of the month following the Trustee's receipt of the Affidavit, the
Trustee shall commence paying the Employee, in immediately available funds, the
monthly benefit specified in the Affidavit, and shall send a copy of it to the
Company via overnight and registered mail (return receipt requested). Upon the
receipt of the Employee's written release of all claims under this Agreement,
the Trustee shall pay to the Company any remaining assets in the Trust. The
Company shall pay any and all expenses associated with maintaining the Trust,
and shall hold the Trustee harmless from any liability for making the payments
required hereunder.
5. TERM OF THE AGREEMENT. This Agreement shall remain in effect for the
period commencing on the Effective Date and ending on the earlier of (i) the
date 36 months after the Effective Date, and (ii) the date on which the Employee
terminates employment with the Bank; provided that the Employee's rights
hereunder shall continue following the termination of this employment with the
Bank or the Company under any of the circumstances described in Section 2
hereof. Additionally, on each annual anniversary date from the Effective Date,
the term of this Agreement shall automatically be extended for an additional
one-year period beyond the then effective expiration date unless the Board of
Directors of the Company determines to the contrary in a duly adopted resolution
AND delivers a certified copy of the resolution to the Employee BEFORE the date
on which the Agreement would otherwise renew.
6. EXPENSE REIMBURSEMENT.
In the event that any dispute arises between the Employee and the
Bank or the Company as to the terms or interpretation of this Agreement, whether
instituted by formal legal
<PAGE> 7
proceedings or otherwise, including any action that the Employee takes to
enforce the terms of this Agreement or to defend against any action taken by the
Bank or the Company, the Employee shall be reimbursed for all costs and
expenses, including reasonable attorneys' fees, arising from such dispute,
proceedings or actions, provided that the Employee shall obtain a final
judgement in favor of the Employee in a court of competent jurisdiction or in
binding arbitration under the rules of the American Arbitration Association.
Such reimbursement shall be paid within ten days of Employee's furnishing to the
Bank and the Company written evidence, which may be in the form, among other
things, of a cancelled check or receipt, of any costs or expenses incurred by
the Employee.
7. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of the Company which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank or Company.
(b) Since the Company is contracting for the unique and personal
skills of the Employee, the Employee shall be precluded from assigning or
delegating his rights or duties hereunder without first obtaining the written
consent of the Company.
8. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
9. APPLICABLE LAW. Except to the extent preempted by Federal law, the
laws of the State of Ohio shall govern this Agreement in all respects, whether
as to its validity, construction, capacity, performance or otherwise.
10. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
11. ENTIRE AGREEMENT. This Agreement, together with any understanding
or modifications thereof as agreed to in writing by the parties, shall
constitute the entire agreement between the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.
<PAGE> 8
ATTEST: MAHONING NATIONAL BANCORP, INC.
/s/ Richard E. Davies By: /s/ Daniel B. Roth
- ---------------------- -----------------------------
Richard E. Davies By: Daniel B. Roth
Its Secretary Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ J. David Sabine
- ---------------------- --------------------------------
Sandra L. Douglas J. David Sabine
Employee
<PAGE> 1
Mahoning National Bancorp, Inc.
Form 10-Q
Item 6 (a)
Exhibit 10 (j)
Change-In-Control Protective Agreement
David E. Westerburg
<PAGE> 2
THE MAHONING NATIONAL BANK OF YOUNGSTOWN
-------------------------------
Guarantee Agreement
--------------------------------
AGREEMENT entered into this 14th day May, 1997 (the "Effective Date"),
by and between The Mahoning National Bank of Youngstown (the "Bank") and David
E. Westerburg (the "Employee").
WHEREAS, the Employee is currently employed by the Bank in an executive
capacity, and has entered into a change-in-control protective agreement (the
"Company Agreement") with Mahoning National Bancorp, Inc. (the "Company"); and
WHEREAS, the Board of Directors of the Bank has determined that it is
in the best interest of the Bank to enter into this Agreement in order to assure
continuity of the Bank's management through encouraging the long-term retention
of the Employee; and
WHEREAS, the parties desire by this writing to set forth the Bank's
commitment to guarantee the Company's obligations under the Company Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. The Bank shall be jointly and severally liable with the Company for
its obligations under the Company Agreement.
2. This Agreement shall have a term that coincides with the term of the
Company Agreement (including any and all extensions thereunder), shall be
binding on any successors to the interest of the parties, shall be amended only
through a written instrument executed by both parties, and shall be governed by
the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first written above.
ATTEST: THE MAHONING NATIONAL BANK
OF YOUNGSTOWN
/s/ Richard E. Davies By /s/ Daniel B. Roth
- --------------------------- -------------------------------------
Richard E. Davies By Daniel B. Roth
Secretary Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ David E. Westerburg
- --------------------------- -------------------------------------
Sandra L. Douglas David E. Westerburg
Employee
<PAGE> 3
CHANGE-IN-CONTROL PROTECTIVE AGREEMENT
THIS AGREEMENT entered into this 14th day of May, 1997, (the "Effective
Date") by and between, Mahoning National Bancorp, Inc. (the "Company"), and
David E. Westerburg (the "Employee").
WHEREAS, the Employee has heretofore been employed as an executive
officer of The Mahoning National Bank of Youngstown (the "Bank"), and thereby
has directly contributed to the financial success and operational stability of
the Company; and
WHEREAS, the Company deems it to be in the best interests of its
stockholders to enter into this Agreement as additional incentive to the
Employee to continue to serve in such capacity; and
WHEREAS, the parties desire by this writing to set forth their
understanding as to their respective rights and obligations in the event a
change of control occurs with respect to the Bank or the Company.
NOW, THEREFORE, the undersigned parties AGREE as follows:
1. DEFINED TERMS
When used anywhere in the Agreement, the following terms shall have
the meaning set forth herein.
(a) "Beneficiary" shall mean the person or persons as stated in the
last designation of beneficiary concerning this Agreement signed by the Employee
and filed with Company, and if not, then the personal representative of the
Employee.
(b) "Change in Control" shall mean any one of the following events: (i)
the acquisition of ownership, holding or power to vote more than 30% of the
Bank's or the Company's voting stock, (ii) the acquisition of the ability to
control the election of a majority of the Bank's or the Company's directors,
(iii) the acquisition of a controlling influence over the management or policies
of the Bank or the Company by any person or by persons acting as a "group"
(within the meaning of Section 13(d) of the Securities Exchange Act of 1934), or
(iv) during any period of two consecutive years, individuals (the "Continuing
Directors") who at the beginning of such period constitute the Board of
Directors of the Bank or the Company (the "Existing Board") cease for any reason
to constitute at least two-thirds thereof, provided that any individual whose
election or nomination for election as a member of the Existing Board was
approved by a vote of at least two-thirds of the Continuing Directors then in
office shall be
<PAGE> 4
considered a Continuing Director. Notwithstanding the foregoing, in the case of
(i), (ii) and (iii) hereof, ownership or control of the Bank by the Company
itself shall not constitute a Change in Control. For purposes of this paragraph
only, the term "person" refers to an individual or a corporation, partnership,
trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not specifically listed
herein.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and as interpreted through applicable rulings and regulations
in effect from time to time.
(d) "Code Section 280G Maximum" shall mean the product of 2.99 and
the Employee's "base amount" as defined in Code Section 280G(b)(3).
(e) "Good Reason" shall mean any of the following events, which has
not been consented to in advance by the Employee in writing: (i) the requirement
that the Employee move his or her personal residence, or perform his or her
principal executive functions, more than thirty (30) miles from his primary
office as of the date of the Change in Control; (ii) a material reduction in the
Employee's base compensation as in effect on the date of the Change in Control
or as the same may be increased from time to time; (iii) the failure by the Bank
or the Company to continue to provide the Employee with compensation and
benefits provided for on the date of the Change in Control, as the same may be
increased from time to time, or with benefits substantially similar to those
provided under any of the employee benefit plans in which the Employee now or
hereafter becomes a participant, or the taking of any action by the Bank or the
Company which would directly or indirectly reduce any of such benefits or
deprive the Employee of any material fringe benefit enjoyed at the time of the
Change in Control; (iv) the assignment to the Employee of duties and
responsibilities materially different from those normally associated with his or
her position; (v) a failure to elect or reelect the Employee to the Board of
Directors of the Bank or the Company, if the Employee is serving on such Board
on the date of the Change in Control; (vi) a material diminution or reduction in
the Employee's responsibilities or authority (including reporting
responsibilities) in connection with employment with the Bank or the Company; or
(vii) a material reduction in the secretarial or other administrative support of
the Employee.
(f) "Just Cause" shall mean, in the good faith determination of the
Bank's Board of Directors, the Employee's personal dishonesty, 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.
The Employee shall have no right to receive compensation or other benefits for
any period after termination for Just Cause. No act, or failure to act, on the
Employee's part shall be considered "willful" unless the Employee has acted, or
failed to act, with an absence of good faith and without a reasonable belief
that such action or failure to act was in the best interest of the Bank and the
Company.
<PAGE> 5
(g) "Protected Period" shall mean the period that begins on the date
six months before a Change in Control and ends on the later of the first annual
anniversary of the Change in Control or the expiration date of this Agreement.
(h) "Trust" shall mean a grantor trust designed in accordance with
Revenue Procedure 92-64 and having a trustee independent of the Bank and the
Company,
2. TRIGGER EVENTS
The Employee shall be entitled to receive the severance benefits set
forth in Section 3 of this Agreement in the event that (i) the Employee
voluntarily terminates employment either for any reason within 30 days of a
Change in Control, (ii) the Employee voluntarily terminates employment within 90
days of an event that both occurs during the Protected Period and constitutes
Good Reason, or (iii) the Bank, the Company, or their successor(s) in interest
terminate the Employee's employment for any reason other than Just Cause during
the Protected Period.
3. SEVERANCE BENEFITS
If the Employee becomes entitled to receive severance benefits pursuant
to Section 2 hereof, the Company shall BOTH provide the Employee with the
opportunity, until the Employee first begins to participate in Medicare, to
purchase, at the Employee's own expense which shall not exceed applicable COBRA
rates, family medical and dental insurance under any group health plans that the
Bank or the Company maintains for its employees, AND pay the Employee (or the
Employee's Beneficiary in the event of the Employee's death before all required
payments have been made under this Agreement) a severance benefit, for 24 months
after termination of employment, in an amount equal to the Employee's highest
monthly salary in effect between the date that the Protected Period begins and
the date of the Change in Control. In no event, however, will the present value
of these severance payments exceed the difference between the Code Section 280G
Maximum and the sum of any other "parachute payments" as defined under Code
Section 280G(b)(2) that the Employee receives on account of the Change in
Control. Said payments shall commence within ten days of the later of the date
of the Change in Control and the Employee's last day of employment with the Bank
or the Company.
In the event that the Employee and the Company agree that the Employee
has collected an amount exceeding the Code Section 280G Maximum, the parties may
jointly agree in writing that such excess shall be treated as a loan AB INITIO
which the Employee shall repay to the Company, on terms and conditions mutually
agreeable to the parties, together with interest at the applicable federal rate
provided for in Section 7872(f)(2)(B) of the Code.
<PAGE> 6
4. FUNDING OF GRANTOR TRUST UPON CHANGE IN CONTROL
Notwithstanding any other provision of this Agreement that may be
contrary or inconsistent herewith, not later than ten (10) business days after a
Change in Control, the Company shall (i) establish a grantor trust (the "Trust")
that is designed in accordance with Revenue Procedure 92-64 and has a trustee
(the "Trustee") independent of the Company and any successor to their interest,
(ii) deposit in the Trust an amount equal to the present value of all benefits
that may become payable under this Agreement, and (iii) provide the Trustee with
an irrevocable written direction both to hold all Trust assets and any
investment return thereon in a segregated account for the benefit of the
Employee, and to follow the procedures set forth in the next paragraph as to the
payment of amounts from the Trust.
At any time after a Change in Control, the Employee may provide the
Trustee with a written affidavit (the "Affidavit") in which the Employee attests
that he has terminated employment with the Company or any successor to its
interest, and has become entitled to commence receiving the monthly benefit
payments (required by Section 3 hereof). The Affidavit shall also specify the
amount of each such monthly payment to be made from the Trust. On the first
business day of the month following the Trustee's receipt of the Affidavit, the
Trustee shall commence paying the Employee, in immediately available funds, the
monthly benefit specified in the Affidavit, and shall send a copy of it to the
Company via overnight and registered mail (return receipt requested). Upon the
receipt of the Employee's written release of all claims under this Agreement,
the Trustee shall pay to the Company any remaining assets in the Trust. The
Company shall pay any and all expenses associated with maintaining the Trust,
and shall hold the Trustee harmless from any liability for making the payments
required hereunder.
5. TERM OF THE AGREEMENT. This Agreement shall remain in effect for the
period commencing on the Effective Date and ending on the earlier of (i) the
date 36 months after the Effective Date, and (ii) the date on which the Employee
terminates employment with the Bank; provided that the Employee's rights
hereunder shall continue following the termination of this employment with the
Bank or the Company under any of the circumstances described in Section 2
hereof. Additionally, on each annual anniversary date from the Effective Date,
the term of this Agreement shall automatically be extended for an additional
one-year period beyond the then effective expiration date unless the Board of
Directors of the Company determines to the contrary in a duly adopted resolution
AND delivers a certified copy of the resolution to the Employee BEFORE the date
on which the Agreement would otherwise renew.
6. EXPENSE REIMBURSEMENT.
In the event that any dispute arises between the Employee and the
Bank or the Company as to the terms or interpretation of this Agreement, whether
instituted by formal legal
<PAGE> 7
proceedings or otherwise, including any action that the Employee takes to
enforce the terms of this Agreement or to defend against any action taken by the
Bank or the Company, the Employee shall be reimbursed for all costs and
expenses, including reasonable attorneys' fees, arising from such dispute,
proceedings or actions, provided that the Employee shall obtain a final
judgement in favor of the Employee in a court of competent jurisdiction or in
binding arbitration under the rules of the American Arbitration Association.
Such reimbursement shall be paid within ten days of Employee's furnishing to the
Bank and the Company written evidence, which may be in the form, among other
things, of a cancelled check or receipt, of any costs or expenses incurred by
the Employee.
7. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of the Company which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank or Company.
(b) Since the Company is contracting for the unique and personal
skills of the Employee, the Employee shall be precluded from assigning or
delegating his rights or duties hereunder without first obtaining the written
consent of the Company.
8. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
9. APPLICABLE LAW. Except to the extent preempted by Federal law, the
laws of the State of Ohio shall govern this Agreement in all respects, whether
as to its validity, construction, capacity, performance or otherwise.
10. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
11. ENTIRE AGREEMENT. This Agreement, together with any understanding
or modifications thereof as agreed to in writing by the parties, shall
constitute the entire agreement between the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.
<PAGE> 8
ATTEST: MAHONING NATIONAL BANCORP, INC.
/s/ Richard E. Davies By: /s/ Daniel B. Roth
- ---------------------------- ------------------------------------
Richard E. Davies By: Daniel B. Roth
Its Secretary Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ David E. Westerburg
- ---------------------------- --------------------------------------
Sandra L. Douglas David E. Westerburg
Employee
<PAGE> 1
Mahoning National Bancorp, Inc.
Form 10-Q
Item 6 (a)
Exhibit 10 (k)
1997 Amendment to Supplemental Executive
Retirement Plan between Mahoning National Bank
and Gregory L. Ridler
<PAGE> 2
1997 Amendment
Supplemental Executive Retirement Plan
Page 1
THE MAHONING NATIONAL BANK OF YOUNGSTOWN
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
1997 Amendment
WHEREAS, The Mahoning National Bank of Youngstown (the "Bank") has
entered into an agreement (the "SERP Agreement") dated December 11, 1995 with
Gregory L. Ridler (the "Executive"), and Article XV of the SERP Agreement
permits amendments to the SERP Agreement only "with the mutual consent of the
Executive and the Bank"; and
WHEREAS, the Executive and the Bank desire to amend the SERP Agreement
in the manner set forth below, and each acknowledges due and adequate
consideration for the changes being approved.
NOW, THEREFORE, the undersigned agree to amend the SERP Agreement as
follows, effective immediately on execution hereof:
1. Article VIII of the SERP Agreement shall be amended by adding the
following sentence immediately at the end thereof:
Any payments required pursuant to this Article shall commence
with the first day of the month following the date of the Executive's
termination of employment, and shall in no event be less than a monthly
benefit of Three Thousand Nine Hundred Forty Dollars ($3,940) for two
hundred forty (240) months.
2. Article XIV of the SERP Agreement shall be amended by adding the
following paragraph immediately before its second paragraph (which begins with
the words "Notwithstanding the foregoing, no Trust ..."):
In addition, a Change in Control shall result if any of the
events described in subparagraphs 1, 2, and 3 hereof occurs with
respect to the Bank, provided that the Company's ownership of the Bank
shall not result in a Change in Control.
3. Article XIV of the SERP Agreement shall be further amended through
addition of the following sentence at the end of its last paragraph:
Any payments required pursuant to this Article shall commence
with the first day of the month following the date of the Executive's
termination of employment.
<PAGE> 3
1997 Amendment
Supplemental Executive Retirement Plan
Page 2
4. Article XIV of the SERP Agreement shall be further amended by adding
the following paragraphs immediately after its last paragraph:
Notwithstanding any other provision of this Agreement that may
be contrary or inconsistent herewith, not later than ten (10) business
days after a Change in Control, the Bank shall (i) establish a grantor
trust (the "Trust") that is designed in accordance with Revenue
Procedure 92-64 and has a trustee (the "Trustee") independent of the
Bank, the Company and any successor to their interest, (ii) deposit in
the Trust an amount equal to the present value of all benefits that may
become payable under this Agreement, and (iii) provide the Trustee with
an irrevocable written direction both to hold all Trust assets and any
investment return thereon in a segregated account for the benefit of
the Executive, and to follow the procedures set forth in the next
paragraph as to the payment of amounts from the Trust.
At any time after a Change in Control, the Executive may
provide the Trustee with a written affidavit (the "Affidavit") in which
the Executive attests that he has terminated employment with the Bank
or any successor to its interest, and has become entitled to commence
receiving monthly benefit payments (as provided by Paragraph VIII
hereof). The Affidavit shall also specify the amount of each such
monthly payment to be made from the Trust. On the first business day of
the month following the Trustee's receipt of the Affidavit, the Trustee
shall commence paying the Executive, in immediately available funds,
the monthly benefit specified in the Affidavit, and shall send a copy
of it to the bank via overnight and registered mail (return receipt
requested). Upon the receipt of the Executive's written release of all
claims under this Agreement, the Trustee shall pay to the bank any
remaining assets in the Trust. The Bank shall pay any and all expenses
associated with maintaining the Trust, and shall hold the Trustee
harmless from any liability for making the payments required hereunder.
5. Article XX of the SERP Agreement shall be amended by deleting the
last sentence of its last paragraph, and replacing that sentence with the
following:
In the event of any claim hereunder or any dispute between the
Executive and the Bank as to the terms or interpretation of this
Agreement, whether instituted by formal legal proceedings or otherwise,
including any action that the Executive takes to enforce the terms of
this Agreement or to defend against any action taken by the Bank, the
Executive shall be reimbursed for all costs and expenses, including
reasonable attorneys' fees, arising from such dispute, proceedings or
actions, provided that the Executive shall obtain a final judgement in
favor of the Executive in a court of competent jurisdiction or in
binding arbitration under the rules of the American Arbitration
Association. Such reimbursement shall be paid within ten days of
Executive's furnishing to the Bank written evidence, which may be in
the form, among other things, of a canceled check or receipt, of any
costs or expenses incurred by the Executive.
<PAGE> 4
1997 Amendment
Supplemental Executive Retirement Plan
Page 3
6. Nothing contained herein shall be held to alter, vary or affect any
of the terms, provisions, or conditions of the SERP Agreement, other than as
stated above.
WHEREFORE, on this 14th day of May, 1997, the undersigned hereby
execute this 1997 Amendment to the SERP Agreement.
MAHONING NATIONAL BANK
OF YOUNGSTOWN
Attest:
/s/ Richard E. Davies By /s/ Daniel B. Roth
- ----------------------------- ------------------------------
Richard E. Davies Daniel B. Roth
Its Secretary Its duly authorized Director
Witness:
/s/ Sandra L. Douglas /s/ Gregory L. Ridler
- ----------------------------- --------------------------------
Sandra L. Douglas Gregory L. Ridler
AGREED to, by the undersigned, this 14th day of May, 1997.
MAHONING NATIONAL BANCORP, INC.
By /s/ Daniel B. Roth
-----------------------------------
Daniel B. Roth
Its duly authorized Director
May 14, 1997
- ------------
Date Attest: /s/ Richard E. Davies
------------------------------
Richard E. Davies
Its Secretary
<PAGE> 1
Mahoning National Bancorp, Inc.
Form 10-Q
Item 6 (a)
Exhibit 10 (l)
Supplemental Executive Retirement
Plan Between Mahoning National
Bank and Gregory L. Ridler; dated
December 11, 1995. Originally
incorporated by reference in the
December 31, 1995, Form 10K Annual
Report is refiled in EDGAR format
and incorporated by reference in
this Form 10-Q
<PAGE> 2
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
--------------------------------------
THE AGREEMENT, made and entered into this 11th day of December, 1995 by
and between The Mahoning National Bank of Youngstown, an association organized
under the laws of the United States of America (hereinafter called "Bank"), and
Gregory L. Ridler (hereinafter called the "Executive").
WITNESSETH:
-----------
WHEREAS, the Executive has been and continues to be a valued Executive
of the Bank, and is now serving the Bank as its President and Chief Executive
Officer; and,
WHEREAS, it is the consensus of the Board of Directors that the
Executive's services to the Bank in the past have been of exceptional merit and
have constituted an invaluable contribution to the general welfare of the Bank
and in bringing it to its present status of operating efficiency, and its
present position in its field of activity; and,
WHEREAS, the experience of the Executive, his knowledge of the affairs
of the Bank, his reputation and contacts in the industry are so valuable that
assurance of his continued services is essential for the future growth and
profits of the Bank and it is in the best interests of the Bank to arrange terms
of continued employment for the Executive so as to reasonably assure his
remaining in the Bank's employment during his lifetime or until the age of
retirement; and,
WHEREAS, it is the desire of the Bank that his services be retained as
herein provided; and,
WHEREAS, the Bank maintains a qualified retirement plan known as The
Employees' Retirement Plan of the Mahoning National Bank of Youngstown (the
"Qualified Plan") which includes nondiscrimination limitations as imposed under
Section 401(k) and Section 401(m) of the Internal Revenue Code as well as a
maximum benefit limitation imposed by Section 402(g), Section 415, and Section
401(a)(17) of the Internal Revenue Code; and
WHEREAS, the Company adopts this Supplemental Executive Retirement
Plan, in part for the purpose of providing additional retirement benefits to
Executive in order to compensate Executive for the loss of retirement benefits
from the Qualified Plan due to the statutory limitations herein noted; and
WHEREAS, the Executive is willing to continue in the employ of the Bank
provided the Bank agrees to pay to him or his beneficiaries certain benefits in
accordance with the terms and conditions hereinafter set forth:
ACCORDINGLY, it is the desire of the Bank and the Executive to enter
into this agreement under which the Bank will agree to make certain payments to
the Executive at retirement or his beneficiary in the event of his premature
death while employed by the Bank; and,
<PAGE> 3
FURTHERMORE, it is the intent of the parties hereto that this agreement
be considered an unfunded arrangement maintained primarily to provide
supplemental benefits for the Executive, as a member of a select group of
management or highly compensated employees of the Bank for the purposes of the
Employee Retirement Income Security Act of 1974, (E.R.I.S.A.):
NOW, THEREFORE, in consideration of services performed in the past and
to be performed in the future as well as of the mutual promises and covenants
herein contained, it is agreed as follows:
I. EMPLOYMENT
The Bank agrees to employ the Executive in such capacity as the Bank
may from time to time determine. The Executive will continue in the
employ of the Bank in such capacity and with such duties and
responsibilities as may be assigned to him, and with such compensation
as may be determined from time to time by the Board of Directors of the
Bank. Active employment shall include temporary disability not to
exceed six months and other "leave of absences" specifically granted by
the Board of Directors.
II. FRINGE BENEFITS
The salary continuation benefits provided by this agreement are granted
by the Bank as a fringe benefit to the Executive and are not part of
any salary reduction plan or an arrangement deferring a bonus or a
salary increase. The Executive has no option to take any current
payment or bonus in lieu of these salary continuation benefits except
as set forth hereinafter.
III. RETIREMENT DATE
If Executive remains in the continuous employ of the Bank, he shall
retire from active employment with the Bank on his sixty-fifth (65th)
birthday, (hereinafter "Normal Retirement Date") unless by action of
the Board of Directors his period of active employment shall be
shortened or extended.
IV. RETIREMENT BENEFIT AND POSTRETIREMENT DEATH BENEFIT
Upon Executive's retirement at his Normal Retirement Date, the Bank,
commencing with the first day of the month following the date of such
retirement, shall pay Executive an annual benefit equal to Ninety-Three
Thousand Dollars ($93,000) in equal monthly installments (of l/12 of
the annual benefit) for a period of two hundred forty (240) months,
provided that if less than two hundred forty (240) such monthly
payments have been made prior to the death of the Executive, the Bank
shall continue such monthly payments to whomever the Executive shall
have designated in a written instrument which is on file with the Bank.
until the full number of two hundred forty (240) monthly payments have
been made. In the absence of any effective designation of beneficiary,
any such amounts
<PAGE> 4
becoming due and payable upon the death of the Executive shall be
payable to the duly qualified executor or administrator of his estate.
V. DEATH BENEFIT PRIOR TO RETIREMENT
In the event the Executive should die while actively employed by the
Bank at any time after the date of this Agreement but prior to his
attaining the age of sixty-five (65) years (or such later date as may
be agreed upon), the Bank will pay an annual benefit equal to
Ninety-Three Thousand Dollars ($93,000) in equal monthly installments
(each equal to 1/12 of the annual benefit) for a period of two hundred
forty (240) months to such individual or individuals as the Executive
may have designated in writing and filed with the Bank. The said
monthly payments shall begin the first day of the third month following
the month of the death of the Executive. In the absence of any
effective designation of beneficiary, any such amounts becoming due and
payable upon the death of the Executive shall be payable to the duly
qualified executor or administrator of his estate. Provided, however,
that anything hereinabove to the contrary notwithstanding, no death
benefit shall be payable hereunder if it is determined that the
Executive's death was caused by suicide on or before December 6, 1997.
VI. BENEFIT ACCOUNTING
The Bank shall account for this benefit using the regulatory accounting
principles of the Bank's primary federal regulator. The Bank shall
establish an accrued liability retirement account for the Executive
into which appropriate reserves shall be accrued.
VII. VESTING
Executive's interest in the benefits that are the subject of this
Agreement shall be fully vested at all times following the date of this
Agreement.
VIII. EARLY TERMINATION OF EMPLOYMENT
Except as otherwise provided for in Paragraphs V and XIV hereof, in the
event that the employment of the Executive shall terminate, whether
voluntary or involuntary, prior to his Normal Retirement Date, then
Executive shall be entitled to receive monthly benefit payments, as
provided by Paragraph IV of this Agreement, equal to the present value
of the benefit in Paragraph IV, calculated using a discount rate of
seven percent (7%) per annum.
IX. PARTICIPATION IN OTHER PLANS
The benefits provided hereunder shall be in addition to Executive's
annual salary as determined by the Board of Directors, and shall not
affect the right of Executive to participate in any current or future
retirement plan, group insurance, bonuses, or in any
<PAGE> 5
supplemental compensation arrangement which constitutes a part of the
Bank's regular compensation structure.
X. LUMP SUM OPTION
If after the retirement of Executive, the capital of the Bank should
fall below the minimum required by the Bank's regulatory authority
and/or the Bank fails to make a profit in any two (2) successive years,
Executive may, at his option, demand that the Bank pay him the balance
of the benefits due him in a lump sum. The balance due Executive shall
be an amount of money equal to his accrued liability benefit account
balance and shall be paid to him by the Bank within thirty (30) days of
his demand.
XI. ALIENABILITY
It is agreed that neither Executive, nor his spouse, nor any other
designee, shall have any right to commute, sell, assign, transfer or
otherwise convey the right to receive any payments hereunder, which
payments and the right thereto are expressly declared to be
nonassignable and nontransferable; and, in the event of any attempted
assignment or transfer, the Bank shall have no further liability
hereunder.
XII. RESTRICTIONS ON FUNDING
The Bank shall have no obligation to set aside, earmark, or entrust any
fund or money with which to pay its obligations under this Agreement.
The Bank reserves the absolute right at its sole discretion to either
fund the obligations undertaken by this Agreement or to refrain from
funding the same and determine the extent, nature, and method of such
funding.
XIII. GENERAL ASSETS OF THE BANK
The rights of the Executive under this Agreement and of any beneficiary
of the Executive shall be solely those of an unsecured creditor of the
Bank. If the Bank shall acquire an insurance policy or any other asset
in connection with the liabilities assumed by it hereunder, it is
expressly understood and agreed that neither Executive nor any
beneficiary of Executive shall have any right with respect to, or claim
against, such policy or other asset. Such policy or asset shall not be
deemed to be held under any trust for the benefit of Executive or his
beneficiaries or to be held in any way as collateral security for the
fulfilling of the obligations of the Bank under this Agreement. It shall
be, and remain, a general, unpledged, unrestricted asset of the Bank and
Executive or any of his beneficiaries shall not have a greater claim to
the insurance policy or other assets, or any interest in either of them,
than any other general creditor of the Bank.
<PAGE> 6
XIV. CHANGE IN CONTROL
CHANGE IN CONTROL - "Change in Control" shall result if:
1. Any person or group (as such terms are used in connection with
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13(d)(3) and 13(d)(5) under
the Exchange Act), directly or indirectly, of securities of Mahoning
National Bancorp, Inc., (hereinafter the "Company") the corporation
which owns 100% of the voting stock of the Bank, representing 30% or
more of the combined voting power of the Company's then outstanding
securities; or
2. The Company is a party to a merger, consolidation, sale of assets or
other reorganization, or a proxy contest, as a consequence of which
members of the Board of Directors in office immediately prior to such
transaction or event constitute less than a majority of the Board of
Directors thereafter; or
3. During any period of 24 consecutive months, individuals who at the
beginning of such period constitute the Board of Directors of the
Company (including for this purpose any new director whose election,
nomination for election, or appointment was approved by a vote of at
least one-half of the directors then still in office who were
directors at the beginning of such period) cease for any reason to
constitute at least a majority of the Board of Directors of the
Company.
Notwithstanding the foregoing, no Trust Department or designated
fiduciary or other trustee of such Trust Department of the Company or a
subsidiary of the Company, or other similar fiduciary capacity of the
Company with direct voting control of the stock shall be included or
considered. Further, no profit-sharing, employee stock ownership,
employee stock purchase and savings, employee pension, or other
employee benefit plan of the Corporation or any of its subsidiaries,
and no Trustee of any such plan in its capacity as such Trustee, shall
be included or considered.
The Bank agrees that if there is a Change in Control of the Company and
Executive's employment is terminated (whether voluntary or involuntary)
at anytime thereafter and prior to his Normal Retirement Date,
Executive shall be entitled to such monthly benefit payments as are
provided by Paragraph VIII hereof, provided however that in the event
such termination of employment of Executive occurs after a Change of
Control of the Company, the benefits provided to Executive shall be no
less than a monthly benefit of Three Thousand Nine Hundred Forty
Dollars ($3,940) for two hundred forty (240) months.
XV. AMENDMENT
This Agreement may only be amended in whole or in part with the mutual
consent of the Executive and the Bank.
<PAGE> 7
XVI. NOT A CONTRACT OF EMPLOYMENT
This Agreement shall not be deemed to constitute a contract of
employment between the parties hereto, nor shall any provision hereof
restrict the right of the Bank to discharge the Executive, or restrict
the right of the Executive to terminate his employment.
XVII. HEADINGS
Headings and subheadings of this Agreement are inserted for reference
and convenience only and shall not be deemed a part of this agreement.
XIII. APPLICABLE LAW
The validity and interpretation of this Agreement shall be governed by
the laws of the State of Ohio.
XIX. EFFECTIVE DATE
The effective date of this agreement shall be December 6, 1995.
XX. CLAIMS PROCEDURE AND ARBITRATION
In the event that benefits under this Agreement are not paid to the
Executive (or his beneficiary in the case of the Executive's death),
and such person feels entitled to receive them, a claim shall be made
in writing to the Plan Administrator within one hundred eighty (180)
days from the date payments are not made. Such claim shall be reviewed
by the Plan Administrator and the Bank. If the claim is denied, in full
or in part, the Plan Administrator shall provide a written notice
within thirty (30) days setting forth the specific reasons for denial,
specific reference to the provisions of this Agreement upon which the
denial is based, and any additional material or information necessary
to perfect the claim, if any. Also, such written notice shall indicate
the steps to be taken if a review of the denial is desired.
If a claim is denied and a review is desired, the Executive (or his
beneficiary in the case of the Executive's death), shall notify the
Plan Administrator in writing within sixty (60) days [and a claim shall
be deemed denied if the Plan Administrator does not take any action
within the aforesaid thirty (30) day period]. In requesting a review,
the Executive or his beneficiary may review this Agreement or any
documents relating to it and submit any written issues and comments he
or she may feel appropriate. In its sole discretion the Plan
Administrator shall then review the claim and provide a written
decision within thirty (30) days. This decision likewise shall state
the specific provisions of the Agreement on which the decision is
based.
<PAGE> 8
If after following the claims procedure set forth above, the parties
are unable to agree as to whether payments are owing under the terms of
this agreement, the parties agree to arbitrate any issue,
misunderstanding, disagreement or dispute in connection with the terms
in effect in this Agreement in accordance with the Rules of the
American Arbitration Association, before one arbitrator mutually
agreeable to the parties hereto. If after two weeks Executive (or his
beneficiary or personal representative in the case of the death of
Executive) determines that Company and Executive have been unable to
agree upon one arbitrator, then Executive may appoint one arbitrator
and require Company to appoint a second arbitrator. Whereupon, the two
appointed arbitrators shall appoint a third arbitrator mutually
agreeable to them. The arbitration shall occur in Youngstown, Ohio, or
such other place as mutually agreed upon. Company and Executive shall
be mutually and equally responsible for the costs and expenses
associated with arbitration.
XXI. NAMED FIDUCIARY AND PLAN ADMINISTRATOR
For purposes of implementing this claims procedure (but not for any
other purpose), The Mahoning National Bank of Youngstown, is hereby
designated as the Named Fiduciary and Plan Administrator of Plan
Agreement. As Named Fiduciary and Plan Administrator, The Mahoning
National Bank of Youngstown shall be responsible for the management,
control, and administration of the agreement as established herein. The
Bank may delegate to others certain aspects of the management and
operation responsibilities of the Plan including the employment of
advisors and the delegation of any ministerial duties to qualified
individuals.
IN WITNESS WHEREOF, the Bank has caused this Agreement to be signed in
its corporate name by its duly authorized officers and Executive hereunto sets
his hand, all on the day and year first above written.
THE MAHONING NATIONAL BANK OF
YOUNGSTOWN
/s/ Sandra L. Douglas By: /s/ Parker T. McHenry
- ----------------------------- -----------------------------------
Sandra L. Douglas Parker T. McHenry
Witness Its: Executive Vice President
/s/ Charles J. McCrudden, Jr. By: /s/ Norman E. Benden, Jr.
- ----------------------------- -----------------------------------
Charles J. McCrudden, Jr. Norman E. Benden, Jr.
Witness Its: Senior Vice President and Comptroller
EXECUTIVE
/s/ Stanley C. Simons /s/ Gregory L. Ridler
- ----------------------------- -----------------------------------
Stanley C. Simons Gregory L. Ridler
Witness
<PAGE> 9
Acknowledgment and Guaranty
The undersigned duly authorized officers of Mahoning National Bancorp, Inc., the
sole stockholder of The Mahoning National Bank of Youngstown, hereby execute
this acknowledgment and Guaranty with the intent to obligate the Company to make
the payments provided for in this Agreement if, for any reason, the Bank is
unwilling, unable or prohibited by regulation or regulatory action from making
such payments.
MAHONING NATIONAL BANCORP, INC
/s/ Sandra L. Douglas By: /s/ Parker T. McHenry
- ------------------------------ --------------------------------
Sandra L. Douglas Parker T. McHenry
Witness Its: Vice President
/s/ Charles J. McCrudden, Jr. By: /s/ Norman E. Benden, Jr.
- ------------------------------ --------------------------------
Charles J. McCrudden, Jr. Norman E. Benden, Jr.
Witness Its: Treasurer
---------------------------
<PAGE> 10
DESIGNATION OF BENEFICIARY
Pursuant to the terms of a Supplemental Executive Retirement Plan,
dated December 11, 1995, between myself and The Mahoning National Bank of
Youngstown, I hereby designate the following beneficiary(ies) to receive
payments which may be due under such Agreement after my death:
Primary Beneficiary: Mahoning National Bank, Trustee under agreement with
Gregory L. Ridler dated January 22, 1985
23 Federal Plaza
Youngstown, Ohio 44501-0479
- ---------------------- ------------------------------ ----------------
Name Address Relationship
SECONDARY BENEFICIARY(IES):
- ---------------------- ------------------------------ ----------------
Name Address Relationship
- ---------------------- ------------------------------ ----------------
Name Address Relationship
The Primary Beneficiary named above shall be the designated beneficiary
referred to in Paragraphs IV and V of said Agreement if he or she is living at
the time a death benefit payment thereunder becomes due and payable, and the
Secondary Beneficiary named above shall be the designated beneficiary referred
to in Paragraphs IV and V of said Agreement only if he or she is living at the
time a death benefit payment becomes payable and the Primary Beneficiary is not
then living.
ATTEST: Dated: December 11, 1995
----------------------------------
/s/ Sandra L. Douglas /s/ Gregory L. Ridler
- ---------------------------- ----------------------------------------
Sandra L. Douglas Gregory L. Ridler
Witness Executive
Acknowledged by:
/s/ Charles J. McCrudden, Jr. /s/ Stanley C. Simons
- ---------------------------- ----------------------------------------
Charles J. McCrudden, Jr. Stanley C. Simons
Witness Bank Officer (Employee Benefits Officer)
<PAGE> 1
Mahoning National Bancorp, Inc.
Form 10-Q
Item 6 (a)
Exhibit 10 (m)
Split Dollar Life Insurance Plan
between Mahoning National Bank
and Gregory L. Ridler; dated
December 11, 1995. Originally
incorporated by reference in the
December 31, 1995, Form 10K
Annual Report, is refiled in
EDGAR format and incorporated
by reference in this Form 10-Q.
<PAGE> 2
SPLIT DOLLAR LIFE INSURANCE PLAN
--------------------------------
Insurer: Alexander Hamilton Life Insurance Company
-----------------------------------------
Policy Number: 0010111785
----------
Bank: The Mahoning National Bank of Youngstown
----------------------------------------
Insured: Gregory L. Ridler
-----------------
Relationship of Bank to Insured: Employer
--------
The respective rights and duties of the Bank and the Insured in the subject
policy shall be as defined in the following:
I. DEFINITIONS
Refer to the policy contract for the definition of all terms in this
Agreement.
II. POLICY TITLE AND OWNERSHIP
Title and ownership shall reside in the Bank for its use and for the
use of the Insured all in accordance with this Agreement. The Bank
alone may, to the extent of its interest, exercise the right to borrow
or withdraw on the policy cash values. Where the Bank and the Insured
(or assignee, with the consent of the Insured) mutually agree to
exercise the right to increase the coverage under the subject split
dollar policy; then, in such event, the rights, duties and benefits of
the parties to such increased coverage shall continue to be subject to
the terms of this Agreement.
III. BENEFICIARY DESIGNATION RIGHTS
The Insured (or assignee) shall have the right and power to designate a
beneficiary or beneficiaries to receive his share of the proceeds
payable upon the death of the Insured and to elect and change a payment
option for such beneficiary, subject to any right or interest the Bank
may have in such proceeds, as provided in this Agreement.
IV. PREMIUM PAYMENT METHOD
Subject to the Bank's absolute right, in its sole discretion, to
terminate the policy at anytime and for any reason, the Bank shall pay
an amount equal to the planned premiums and any other premium payments
that might become necessary to keep the policy in force.
<PAGE> 3
V. TAXABLE BENEFIT
Annually the Insured will receive a taxable benefit equal to the
assumed cost of insurance as required by the Internal Revenue Service.
The Bank (or its administrator) will report to the Employee the amount
of imputed income received each year on Form W-2 or its equivalent.
VI. DIVISION OF DEATH PROCEEDS
Subject to Paragraph VII herein, the division of the death proceeds of
the policy is as follows:
A. The Insured's beneficiary(ies), designated in accordance with
Paragraph III, shall be entitled to an amount equal to one
third (1/3) of the net-at-risk insurance portion of the
proceeds The net-at-risk insurance portion is the total
proceeds less the cash value of the policy.
B. The Bank shall be entitled to the remainder of such proceeds.
C. The Bank and the Insured (or assignees) shall share in any
interest due on the death proceeds on a pro rata basis as the
proceeds due each respectively bears to the total proceeds,
excluding any such interest.
VII. DIVISION OF THE CASH SURRENDER VALUE OF THE POLICY
The Bank shall at all times be entitled to an amount equal to the
policy's cash value, as that term is defined in the policy contract,
less any policy loans and unpaid interest or cash withdrawals
previously incurred by the Bank and any applicable surrender charges.
Such cash value shall be determined as of the date of surrender or
death as the case may be.
VIII. PREMIUM WAIVER
If the policy contains a premium waiver provision, such waived amounts
shall be considered for all purposes of this Agreement as having been
paid by the Bank.
IX. RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY ELECTION EXISTS
In the event the policy involves an endowment or annuity element, the
Bank's right and interest in any endowment proceeds or annuity
benefits, on expiration of the deferment period, shall be determined
under the provisions of this Agreement by regarding such endowment
proceeds or the commuted value of such annuity benefits as the policy's
cash value. Such endowment proceeds or annuity benefits shall be
considered to be like death proceeds for the purposes of division under
this Agreement.
<PAGE> 4
X. TERMINATION OF AGREEMENT
This Agreement shall automatically terminate upon the occurrence of any
of the following:
1. The Insured shall voluntarily leave the employ of the Bank
prior to attaining age 55, or
2. The Insured shall be discharged from employment with the Bank
for cause. The term "for cause" shall mean gross negligence or
gross neglect or the commission of a felony or gross
misdemeanor involving moral turpitude, fraud, dishonesty or
willful violation of any law that results in any adverse
effect on the Bank.
3. The insurance policy set forth above shall no longer be in
force for any reason, including but not limited to
cancellation of such policy, in the sole and absolute
discretion of the Bank.
Upon such termination, the Insured (or assignee) shall have a ninety
(90) day option to receive from the Bank an absolute assignment of the
policy (subject to the permissibility and availability of such
assignment pursuant to the terms of the policy) in consideration of a
cash payment to the Bank, whereupon this Agreement shall terminate.
Such cash payment shall be the greater of:
1. The Bank's share of the cash value of the policy on the date
of such assignment, as defined in this Agreement.
2. The amount of the premiums which have been paid by the Bank
prior to the date of such assignment.
Should the Insured (or assignee) fail to exercise this option within
the prescribed ninety (90) day period, the Insured (or assignee) agrees
that all of his rights, interest and claims in the policy shall
terminate as of the date of the termination of this Agreement.
Except as provided above, this Agreement shall terminate upon
distribution of the death benefit proceeds in accordance with Paragraph
VI above.
XI. INSURED'S OR ASSIGNEE'S ASSIGNMENT RIGHTS
The Insured may not, without the written consent of the Bank, assign to
any individual, trust or other organization, any right, title or
interest in the subject policy nor any rights, options, privileges or
duties created under this Agreement.
<PAGE> 5
XII. AGREEMENT BINDING UPON THE PARTIES
This Agreement shall bind the Insured and the Bank, their heirs,
successors, personal representatives and assigns.
XIII. NAMED FIDUCIARY AND PLAN ADMINISTRATOR
The Mahoning National Bank of Youngstown is hereby designated the
"Named Fiduciary" until resignation.. As Named Fiduciary, The Mahoning
National Bank of Youngstown shall be responsible for the management,
control, and administration of this Split Dollar Plan as established
herein. The Named Fiduciary may allocate to others certain aspects of
the management and operation responsibilities of the plan, including
the employment of advisors and the delegation of any ministerial duties
to qualified individuals.
XIV. FUNDING POLICY
Subject to termination as set forth in this Agreement, the funding
policy for this Split Dollar Plan shall be for the Bank to maintain the
subject policy in force by paying, when due, all premiums required.
XV. CLAIMS PROCEDURE FOR LIFE INSURANCE POLICY AND SPLIT DOLLAR PLAN
Claim forms or claim information as to the subject policy can be
obtained by contacting The Benefit Marketing Group, Inc.
(770-952-1529). When the Named Fiduciary has a claim which may be
covered under the provisions described in the insurance policy, he
should contact the office named above and they will either complete a
claim form and forward it to an authorized representative of the
Insurer or advise the Named Fiduciary what further requirements are
necessary. The Insurer will evaluate and make a decision as to payment.
If the claim is payable, a benefit check will be issued to the Named
Fiduciary.
In the event that a claim is not eligible under the policy, the Insurer
will notify the Named Fiduciary of the denial pursuant to the
requirements under the terms of the policy. If the Named Fiduciary is
dissatisfied with the denial of the claim and wishes to contest such
claim denial, he should contact the office named above and they will
assist in making inquiry to the Insurer. All objections to the
Insurer's actions should be in writing and submitted to the office
named above for transmittal to the Insurer.
<PAGE> 6
XVI. GENDER
Whenever in this Agreement words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine, feminine
or neuter gender, whenever they should so apply.
XVII. INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT
The Insurer shall not be deemed a party to this Agreement, but will
respect the rights of the parties as herein developed upon receiving an
executed copy of this Agreement. Payment or other performance in
accordance with the policy provisions shall fully discharge the Insurer
for any and all liability.
Executed at Youngstown, Ohio, this 11th day of December, 1995
THE MAHONING NATIONAL BANK
OF YOUNGSTOWN
/s/ Sandra L. Douglas By: /s/ Parker T. McHenry
- ------------------------------ ----------------------------------------
Sandra L. Douglas By: Parker T. McHenry
Witness Executive Vice President Title
/s/ Charles J. McCrudden, Jr. By: /s/ Norman E. Benden, Jr.
- ------------------------------ ----------------------------------------
Charles J. McCrudden, Jr. By: Norman E. Benden, Jr.
Witness Senior Vice President Title
and Comptroller
/s/ Stanley C. Simons By: /s/ Gregory L. Ridler
- ------------------------------ ----------------------------------------
Stanley C. Simons By: Gregory L. Ridler
Witness Insured
<PAGE> 7
BENEFICIARY DESIGNATION FORM
PRIMARY DESIGNATION:
Name Relationship
---- ------------
Mahoning National Bank, Trustee under agreement with Gregory L. Ridler dated
- ----------------------------------------------------------------------------
January 22, 1985
- -------------------------------- ----------------------------------
- -------------------------------- ----------------------------------
CONTINGENT DESIGNATION:
- -------------------------------- ----------------------------------
- -------------------------------- ----------------------------------
- -------------------------------- ----------------------------------
/s/ Stanley C. Simons 12/11/95 /s/ Gregory L. Ridler 12/11/95
- -------------------------------- ----------------------------------
Stanley C. Simons Date Gregory L. Ridler Date
Witness Signature of Insured
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MAHONING
NATIONAL BANCORP, INC., CONSOLIDATED STATEMENT OF CONDITION AT JUNE 30, 1997 AND
THE CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 30,786
<INT-BEARING-DEPOSITS> 2
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 162,314
<INVESTMENTS-CARRYING> 72,018
<INVESTMENTS-MARKET> 71,918
<LOANS> 490,535
<ALLOWANCE> 7,919
<TOTAL-ASSETS> 771,754
<DEPOSITS> 551,072
<SHORT-TERM> 130,859
<LIABILITIES-OTHER> 5,078
<LONG-TERM> 3,614
<COMMON> 6,300
0
0
<OTHER-SE> 74,831
<TOTAL-LIABILITIES-AND-EQUITY> 771,754
<INTEREST-LOAN> 21,595
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<EXPENSE-OTHER> 10,136
<INCOME-PRETAX> 9,465
<INCOME-PRE-EXTRAORDINARY> 6,385
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,385
<EPS-PRIMARY> 1.01
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<LOANS-NON> 2,560
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</TABLE>
