Lease Agreement - OHIO STATE BANCSHARES INC - 3-24-1997

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Lease Agreement - OHIO STATE BANCSHARES INC - 3-24-1997 Powered By Docstoc
					Exhibit 10.1 LEASE AGREEMENT This Lease Agreement is made and entered into this 20th day of June, 1996, by and between Henney and Cooper, Inc., an Ohio corporation of Marion, Ohio, hereinafter called Lessor, and The Marion Bank, an Ohio corporation of Marion, Ohio, hereinafter called Lessee. WHEREAS, Lessor owns certain vacant land located on Richland Road in Marion, Ohio on which it is willing to cause the construction of a building to suit Lessee's needs; and WHEREAS, Lessee is engaged in general banking business in Marion, Ohio and the surrounding counties and wishes to enter into a long term lease for the land owned and the building to be built by Lessor and located on Richland Road, and WHEREAS, the parties desire to enter into a long term lease on the terms and conditions hereinafter provided, NOW THEREFORE, in consideration of the mutual covenants and agreements herein set forth, and other good and valuable consideration, Lessor does hereby demise and lease to Lessee and Lessee does hereby lease from Lessor the premises situated on Richland Road in Marion, Marion County, Ohio and more particularly described in Exhibit A attached hereto and hereinafter called the "Leased Premises." ARTICLE 1. CONSTRUCTION OF BUILDING 1.01. Lessor agrees to cause to be constructed a building on the Leased Premises substantially in accordance with a set of construction drawings prepared by the architectural firm of Jester, Jones, Schifer and Feltham dated March 15, 1996, said drawings being incorporated herein for reference for purposes of establishing the building and other improvements to be constructed on the Leased Premises (hereinafter referred to as the "Drawings".) The entire cost of land, buildings, improvements, labor, equipment and all other items shown on the Drawings shall be born by Lessor. The estimated completion date is October 31, 1996. ARTICLE 2. TERM 2.01. The term of this lease shall be twenty (20) years commencing on the date a certificate of occupancy is delivered to Lessee.

ARTICLE 3. RENT 3.01. Lessee agrees to pay to Lessor without any prior demand therefor and without any deduction or set-off whatsoever, and as a fixed minimum rent, a sum equal to all cost of construction in accordance with the Drawings amortized over twenty (20) years at the rate of eight percent (8%) payable in monthly installments ($8.36 per thousand per month). The parties agree that the cost of construction shall be the sum of Four Hundred Eight Thousand Dollars ($408,000.00). Any deletions or additions to the cost of construction shall be approved in advance and in writing by Lessee. The anticipated cost of construction as hereinabove stated shall be adjusted in accordance with approved deletions or additions with a corresponding adjustment of the rent. Except for the first month which shall be prorated, the rent shall be due and payable on the first day of each month in advance. Rent not paid by the tenth (10th) of the month shall be assessed a penalty equal to ten percent (10%) of the monthly rent due. Any installment of rent and penalty not paid within thirty (30) days of its due date shall bear interest at the rate of ten percent (10%) per annum. Rent shall commence on the date a certificate of occupancy is delivered to Lessee and shall continue for a period of twenty (20) years. At the time the payment of rent commences, the parties agree that an Addendum to this lease shall be signed by Lessor and Lessee which states the fixed minimum rent to be paid each month over the term of the Lease, calculated as heretofore stated, using the final cost of construction. 3.02. At the conclusion of the fifth (5th), tenth (10th) and fifteenth (15th) years of this lease, the rent shall be adjusted by a percentage equal to fifty percent (50%) of the cumulative total of the CPI for the previous five (5)-year period as determined by the Consumer Price Index for Urban Wage Earners and Clerical Workers-U.S. City Average published by the Bureau of Labor Statistics, United States Department of Labor, or if not then published, then by the most similar economic indicator then published, with a maximum increase of ten percent (10%) for any one five (5)-year period and a minimum of five percent (5 %) for any one five (5)-year period. ARTICLE 4. TAXES AND ASSESSMENTS PAYMENT BY LESSEE 4.01. Lessee shall, as further consideration for this lease, pay and discharge all taxes, general and special assessments and other charges of every description which during the term of this lease may be levied on or assessed against the Leased Premises and all interests therein and all improvements and other property thereon, whether belonging to Lessor or to Lessee, or to which either of them may become liable in relation thereto. HOLD HARMLESS CLAUSE 4.02. Lessee agrees to and shall protect and hold harmless Lessor and the Leased Premises from liability for any and all such taxes, assessments, and charges, together with any interest, penalties, or other sums thereby imposed. and from any sale or other proceeding to enforce payment thereof. 2

PRORATION OF FIRST AND LAST YEAR TAXES 4.03. All such taxes and assessments for the first and last years of this lease shall be prorated between Lessor and Lessee on the basis of the ratio between the time the premises are leased to lessee and the time the premises are not so leased. TIME OF PAYMENT 4.04. Lessor agrees to provide Lessee with the tax and assessment bills not less than fifteen (15) days before they are due. Lessee agrees to and shall pay all such foregoing taxes, assessments, and charges prior to the delinquency thereof and give notice of each such payment to Lessor. If Lessor fails to give Lessee the tax bills fifteen (15) days before they are due, Lessor shall be responsible for any delinquency thereon. PAYMENT BY LESSOR ON LESSEE'S DEFAULT 4.05. If Lessee fails to pay such taxes, assessments, or charges, or fails to give written notice of any payment thereof as herein provided, Lessor may, at its option, pay such taxes, assessments, or charges, together with all penalties and interest which may have been added thereto because of Lessee's delinquency or default, and may likewise redeem the Leased Premises, or any part thereof, or the buildings or improvements situated thereon, from any tax sale or sales. Any such amounts so paid by Lessor shall become immediately due and payable as rent by Lessee to Lessor, together with interest thereon at the rate of ten percent (10%) per annum from the date of payment by Lessor until paid by Lessee. Any such payment by Lessor shall not be deemed to be a waiver of any other rights which Lessor may have under the provisions of this lease or as provided by law. CONTESTING LEVY, ASSESSMENT, OR CHARGE 4.06. Lessee shall have the privilege, acting in the name of the Lessor, before delinquency occurs, of protesting, contesting, objecting to, or opposing the legality or amount of any such taxes, assessments, or public charges to be paid by Lessee hereunder. If Lessee shall, in good faith, deem the same to be illegal or excessive, and in the event of any such contest, he may to the extent provided by law defer payment of any such tax, assessment, fee, or charge so long as the legality or the amount thereof is so contested in good faith; provided, however, that if any time payment of the whole or any part thereof shall become necessary in order to prevent the termination, by sale or otherwise, of the right of redemption of any property affected thereby, or to prevent eviction of either Lessor or Lessee because of nonpayment thereof, Lessee shall pay the same in order to prevent such termination of the right of redemption or such eviction. Any such contest, whether before or after payment, may be made in the name of Lessor or Lessee, or both, as Lessee may determine, but if such contest is made by Lessee in the name of Lessor, then Lessor shall be notified thereof at least five (5) days prior to the commencement of the 3

proceeding and Lessor shall cooperate, reasonably, in such contest. Any such contest shall be at the sole cost and expense of Lessee. Each refund of any tax, assessment, fee, or charge so contested shall be paid to Lessee. Lessor shall not, without the prior approval of Lessee, make or enter into or finally agree to any settlement, compromise, or any disposition of any contest, or discontinue or withdraw any contest, or accept any refund, other adjustment, or credit of or from any such tax or assessment as a result of any contest. TAXES EXCLUDED 4.07. Nothing herein contained requires, or shall be construed to require, Lessee (or any of its subtenants) to pay any personal property, gift, estate, inheritance, or other tax assessed against Lessor, his heirs or successors and assigns or any income or other tax assessment charge, or levy on the rent payable by Lessee under this lease. ARTICLE 5. INSURANCE LESSOR'S OBLIGATION 5.01. Lessor agrees to and shall secure from a good and responsible company or companies doing insurance business in the State of Ohio, and maintain during the entire term of this lease, the following coverage: (a) Fire and extended coverage insurance in an amount not less than one hundred percent (100%) of the value of the Leased Premises and other improvements on the Leased Premises, provided that insurance in that percentage can be obtained, and, if not, than to the highest percentage that can be obtained less than the said one-hundred percent (100%). (b) Lessee shall annually reimburse Lessor the actual cost of the above-described insurance. Said reimbursement shall be due within thirty (30) days of receipt of notice from Lessor of the amount due with supporting documentation. Any reimbursement not paid within thirty (30) days of the due date shall bear interest at the rate of ten percent (10%) per annum. (c) Upon sixty (60) days notice to Lessor, and consistent with the cancellation provisions of any policy then in effect, Lessee may elect to directly obtain the above described insurance in compliance with the terms hereof and to pay the premium therefor directly to the carrier. If Lessee elects to obtain fire and extended coverage directly, Lessor agrees to cooperate and execute all applications, policies or other documents that may be required to obtain such insurance. 4

LESSEE'S OBLIGATION 5.02. Lessee agrees to secure from a good and responsible company or companies doing insurance business in the State of Ohio and maintain during the term of this lease, the following insurance coverage: (a) Public liability insurance in the minimum amount of Three Million Dollars ($3,000,000.00) for loss from an accident resulting in bodily injury to or death of persons, and One Million Dollars ($1,000,000.00) for loss from an accident resulting in damage to or destruction of property. Lessee shall also insure all the contents of the building at its sole expense. ADDITIONAL INSUREDS 5.03. Lessor and Lessee agree that the other shall be named as an additional insured on the aforementioned policies of insurance. SUBROGATION WAIVER 5.04. Lessor and Lessee agree that, in the event of loss due to any of the perils for which they have agreed to provide insurance, each party shall look solely to its insurance for recovery. Lessor and Lessee hereby grant to each other, on behalf of any insurer providing insurance to either of them with respect to the demised premises, a waiver of any right of subrogation which any insurer of one party may acquire against the other by virtue of payment of any loss under such insurance. PROOF OF COVERAGE 5.05. The original policies may be retained by the insured, but the other party shall have the right to inspect any and all such policies, and the insured, on demand, agrees to furnish the other party proof of payment of the premium or premiums on any such policies. PROTECTION AGAINST CANCELLATION 5.06. Proof must also be given by each party to the other that each of the policies provided for in this article expressly provides that the policy shall not be cancelled or altered without ten (10) days' prior written notice to the other party. FAILURE TO SECURE 5.07. If either party at any time during the term hereof should fail to secure or maintain the foregoing insurance, the other party shall be permitted to obtain such insurance in the defaulting party's name or as the agent of the defaulting party and shall be compensated by the defaulting party for the cost of the insurance premiums. The defaulting party shall pay the other interest on paid 5

insurance premiums at the rate of ten percent (10%) per annum computed from the date written notice is received that the premiums have been paid. PARTIAL OR TOTAL DESTRUCTION 5.08 If the building on the leased premises should be partially or totally destroyed by fire, flood, or other casualty, Lessor shall rebuild and/or make repairs so that the building is substantially the same as before such destruction or damage. If the rebuilding or repairs cannot reasonably be completed within one hundred and ninety-five (195) working days from the date of written notification by Lessee to Lessor of the occurrence of the damage, this lease shall terminate at the option of the Lessee and rent shall be abated for the unexpired portion of this lease, effective as of the date of said written notification. ARTICLE 6. UTILITIES 6.01. Lessee shall during the term hereof pay all charges for all utilities, including but not limited to telephone, gas, electricity, sewage, and water used in or on the Leased Premises and for the removal of rubbish therefrom immediately on becoming due and shall hold Lessor harmless from any liability therefor. ARTICLE 7. WASTE AND NUISANCE 7.01. Lessee shall not commit, or suffer to be committed, any waste on the Leased Premises, nor shall maintain, commit, or permit the maintenance or commission of any nuisance on the Leased Premises or use the Leased Premises for any unlawful purpose. ARTICLE 8. REPAIRS AND MAINTENANCE LESSEE'S DUTIES TO REPAIR AND MAINTAIN 8.01. Except as otherwise provided herein, Lessee agrees to keep the Leased Premises in good order and repair, reasonable wear and tear excepted. More specifically Lessee agrees: (a) To keep the Leased Premises clean and sanitary, (b) To dispose from the Leased Premises all rubbish, garbage, and other waste, in a clean and sanitary manner, (c) To repair or replace all broken or damaged doors and windows (both interior and exterior), 6

(d) To repair and maintain the entire interior of the building, (e) To repair, maintain and replace all wash basins, sinks, toilets and all plumbing fixtures, (f) To repair and maintain all electrical lighting outlets, light fixtures, ballasts and all other electrical fixtures, (g) To repair and maintain all interior walls, floors, ceilings and carpeting. (h) To repair and maintain all signs posted on the interior or exterior of the Leased Premises, (i) To repair and maintain the heating and cooling equipment serving the Leased Premises. (j) To maintain all grass and landscaping. (k) To repair and maintain all other portions of the Leased Premises not specifically enumerated as the Lessor's responsibility under Paragraph 8.02 hereof. LESSOR'S DUTIES TO REPAIR AND MAINTAIN 8.02. Except as otherwise provided herein, Lessor agrees to repair and maintain the exterior of the Leased Premises in good order and repair, reasonable wear and tear excepted. More specifically Lessor agrees: (a) To keep the roof and exterior walls in a good state of repair. (b) To replace the heating and cooling systems, unless replacement is caused by Lessee's failure to perform routine maintenance. Provided, however, that if replacement of the heating and cooling system is required during the first fifteen (15) years of the lease, the cost of replacement shall be shared equally by Lessor and Lessee. (c) To repair and maintain the common portion of the driveway from Richland Road to a point in the driveway ending with the easterly boundary of the Leased Premises, provided, however, that Lessee shall provide snow removal for said driveway. 7

ARTICLE 9. ALTERATIONS, IMPROVEMENTS AND FIXTURES FIXTURES 9.01. Lessee shall have the right at any time and from time to time during the term and any extended term hereof at his sole cost and expense, to affix and install such property and equipment to, in, or on the Leased Premises as it shall in its sole discretion deem advisable. Any such fixtures, equipment, and other property installed in or affixed to or on the Leased Premises shall remain the property of Lessee, and Lessor agrees that Lessee shall have the right at any time, and from time to time, to remove any and all such fixtures, equipment, and other property provided, however, that Lessee shall repair any damages to the Leased Premises caused by such removal. Provided, further, that any such fixtures, equipment, or property not removed from the premises within thirty (30) days after expiration or sooner termination of the term or extended term hereof shall be deemed to have been abandoned by Lessee and shall thereupon become the absolute property of Lessor without compensation to Lessee. IMPROVEMENTS 9.02. Upon written consent of Lessor, which consent shall not unreasonably be withheld, Lessee shall have the right at his own cost and expense from time to time during the initial term or any extended term hereof to construct on the Leased Premises such buildings and other improvements and make such alterations, additions, and changes therein as it deems necessary or convenient for its purposes, and it shall be permitted from time to time during and within thirty (30) days after expiration or sooner termination of the term hereof to remove any such building or other improvements erected or made by it; provided, however, that it shall repair any damages to the Leased Premises caused by such removal and further provided that any such building or improvement which shall not have been removed by Lessee on or within thirty (30) days after expiration or sooner termination of the term or any extended term hereof shall be deemed abandoned by Lessee and shall thereupon become the absolute property of Lessor without compensation to Lessee, and Lessee shall not be required on such abandonment to restore the premises to their present condition. Lessee nevertheless covenants and agrees that any such improvements shall be made in a careful, workmanlike manner and in compliance with all applicable federal, state, and municipal laws and regulations. ARTICLE 10. QUIET POSSESSION COVENANT OF QUIET POSSESSION 10.01. Lessor shall, on the commencement date of the term of this lease as hereinabove set forth, place Lessee in quiet possession of the Leased Premises and shall secure him in the quiet possession thereof against all persons lawfully claiming the same during the entire lease term and each extension thereof. 8

COVENANT REGARDING ENCUMBRANCES 10.02. Lessor warrants that this Lease is superior in priority to any other encumbrances on the Leased Premises save and except any restrictions of record in existence upon the execution hereof and except for any real estate taxes not yet due and payable. 10.03. Lessor may from time to time execute a mortgage on the Leased Premises and Lessee agrees to subordinate its leasehold interest to such mortgagee provided the mortgagee executes a nondisturbance and attornment agreement in a form acceptable to Lessee. 10.04. Lessor agrees within thirty (30) days after execution hereof to provide Lessee with a certificate of title opinion showing the status of the title at the commencement of this lease. 10.05 If at any time, Lessor seeks financing the security for which shall be the Leased Premises, Lessor agrees to give the Lessee the right of first refusal to match any bona fide financing terms offered by another financial institution. Lessee shall have a period of ten (10) days after notice to exercise or waive its right of first refusal. ARTICLE 11. OPTION TO RENEW 11. 01. Lessee is hereby granted and shall, if not at the time in default under this lease, have an option to renew this lease for two successive periods of five (5) years each, but otherwise on the same terms, covenants, and conditions herein contained. HOW EXERCISED 11.02. This option shall be exercised only by Lessee's delivering to Lessor in person or by United States registered or certified mail on or before six (6) months before expiration of the initial or a renewable term written notice of its election to renew or extend the term of this lease as herein provided. RENT UPON RENEWAL 11.03. The monthly rent during any renewal period shall be negotiated during the ninety (90) days immediately prior to the expiration of the initial term, which shall be subject to arbitration if the parties do not agree. EFFECT OF HOLDING OVER 11.04. In the event Lessee does not renew this lease as herein provided, and holds over 9

beyond the expiration of the term hereof, such holding over shall be deemed a month-to-month tenancy only at the monthly rent then being paid, payable on the last day of each and every month thereafter until the tenancy is terminated in a manner provided by law. ARTICLE 12. SURRENDER OF PREMISES NOTICE 12.01. Lessee shall, at least six (6) months prior to expiration of the term or any renewal term hereof, give to Lessor a written notice of its intention to surrender the Leased Premises on that date, but nothing contained herein shall be construed as an extension of the term hereof or as a consent of Lessor to any holding over by Lessee. REMOVAL OF PROPERTY 12.02. Lessee shall, without demand therefor and at his own cost and expense within thirty (30) days after expiration or sooner termination of the term hereof or of any renewal term hereof remove all property belonging to it and all alterations, additions, or improvements, and fixtures which by the terms hereof it is permitted to remove, repair all damage to the Leased Premises caused by such removal and restore the Leased Premises to the condition they were in prior to the installation of the property so removed. Any property not so removed shall be deemed to have been abandoned by Lessee and may be retained or disposed of by Lessor. SURRENDER 12.03. Lessee agrees to and shall, on expiration or sooner termination of the term hereof or of any extended term hereof, promptly surrender and deliver the Leased Premises to Lessor without demand therefor in good condition, ordinary wear and tear and damage by the elements, fire, or act of God, or by other cause beyond the reasonable control of Lessee excepted. ARTICLE 13. CONDEMNATION ALL OF PREMISES 13.01. If during the term of this lease or any extension or renewal thereof, all of the Leased Premises should be taken for any public or quasi-public use under any law, ordinance, or regulation or by right of eminent domain, or should be sold to the condemning authority under threat of condemnation, this lease shall terminate and the rent shall be abated during the unexpired portion of this lease, effective as of the date of the taking of said premises by the condemning authority. 10

PARTIAL 13.02. If less than all of the leased premises shall be taken for any public or quasi-public use under any law, ordinance, or regulation, or by right of eminent domain, or should be sold to the condemning authority under threat of condemnation, this lease shall not terminate but Lessor shall forthwith at his sole expense, restore and reconstruct the building and other improvements, situated on the leased premises, provided such restoration and reconstruction shall make the same reasonable tenantable and suitable for the uses for which the premises are leased. The rent payable hereunder during the unexpired portion of this lease shall be adjusted equitably. ALLOCATION OF AWARDS 13.03. Lessor and Lessee shall each be entitled to receive and retain such separate awards and portions of lump sum awards as may be allocated to their respective interests in any condemnation proceedings. The termination of this lease shall not affect the rights of the respective parties to such awards. ARTICLE 14. DEFAULTS AND REMEDIES DEFAULT BY LESSEE 14.01. If Lessee shall allow the rent to be in arrears more than thirty (30) days after written notice of such delinquency, or shall remain in default under any other condition of this lease for a period of thirty (30) days after written notice from Lessor, or should any other person other than Lessee secure possession of the premises, or any part thereof, by reason of any receivership, bankruptcy, proceedings, or other operation of law in any manner whatsoever, Lessor may at its option, without notice to Lessee, terminate this lease or in the alternative, Lessor may re-enter and take possession of said premises and remove all persons and property therefrom, without being deemed guilty of any manner of trespass, and relet the premises or any part thereof, for all or any part of the remainder of said term, to a party satisfactory to Lessor, and at such monthly rental as Lessor may with reasonable diligence be able to secure. Should Lessor be unable to relet after reasonable efforts to do so, or should such monthly rental be less than the rental Lessee was obligated to pay under this lease, or any renewal thereof, plus the expense of reletting, then Lessee shall pay the amount of such deficiency to Lessor. All rights and remedies of Lessor under this lease shall be cumulative, and none shall exclude any other right or remedy at law. Such rights and remedies may be exercised and enforced concurrently and whenever and as often as occasion therefor arises. DEFAULT BY LESSOR 14.02. If Lessor defaults in the performance of any term, covenant, or condition required to be performed by him under this agreement, Lessee may elect either one of the following: 11

(a) After not less than thirty (30) days' notice to Lessor, Lessee may remedy such default by any necessary action, and in connection with such remedy may pay expenses and employ counsel; all reasonable sums expended or obligations incurred by Lessee in connection therewith shall be paid by Lessor to Lessee on demand, and on failure of such reimbursement, Lessee may, in addition to any other right or remedy that Lessee may have, deduct the costs and expenses thereof from rent subsequently becoming due hereunder; or (b) Elect to terminate this agreement on giving at least thirty (30) days' notice to Lessor of such intention, thereby terminating this agreement on the date designated in such notice, unless Lessor shall have cured such default prior to expiration of the thirty (30)-day period. ARTICLE 15. INSPECTION BY LESSOR 15.01. Lessee shall permit Lessor and his agents to enter into and upon the leased premises at all reasonable times for the purpose of inspecting the same or for the purpose of maintaining or making repairs or alterations to the building. ARTICLE 16. ASSIGNMENT, SUBLEASE AND LESSOR'S COVENANT 16.01. Lessee shall have the right with the prior written consent of Lessor, which consent will not be unreasonably withheld, to assign this lease, and any interest therein, and to sublet the Leased Premises, or any part thereof, or any right or privilege pertinent thereto, provided each assignee assumes in writing all of Lessee's obligations under this lease, and Lessee shall remain liable for each and every obligation under this lease, and provided further Lessee shall not sublease to any person or entity which is in the same business as any of Lessor's other tenants on Richland Road or Mt. Vernon Avenue in Marion, Ohio. ASSIGNMENT BY LESSOR 16.02. Lessor is expressly given the right to assign any or all of its interest under the terms of this lease. 16.03. Lessor or any of its affiliates agrees that during the initial and any renewal terms hereof not to lease any real estate currently owned by it, located on Richland Road or Mt. Vernon Avenue, to any other financial institution of any kind doing business in Marion County, save and except for any tenants of Lessor already under lease at the time of execution of this lease or their successors and assigns. 16.04. For purposes of this paragraph "affiliate" shall mean Lessor or any of its shareholders, officers, directors or successors in interest thereto. 12

ARTICLE 17. RIGHT OF FIRST REFUSAL 17.01. If at any time during the initial term or any renewal term of this lease Lessor shall receive a bona fide offer to purchase the Leased Premises which Lessor desires to accept, Lessee is hereby granted a right of first refusal to purchase the Leased Premises on the same terms and conditions of the bona fide offer. Lessee shall have a period of thirty (30) days after written notice in which to exercise or waive its right of first refusal. Provided, however, the right of first refusal granted to Lessee pertains only to the Leased Premises and not to other contiguous property owned by Lessor, nor to any offer received by Lessor which includes such contiguous property in addition to the Leased Premises. 17.02. Lessor is currently the owner of contiguous property being Tract "E" and part of Tract "D" in Reidenbaugh Addition to the City of Marion, Ohio. If Lessor receives an offer for the sale of said contiguous property (whether or not including the leased premises) Lessor will obtain an affidavit from said prospective purchaser that restricts the use of said premises as a bank for a period of five years from the date of purchase, except for the current use by City Loan & Savings and The Marion Bank, their successors and assigns. If a prospective purchaser refuses to provide such affidavit, then and in that event, Lessor shall give Lessee thirty (30) days notice of such proposed sale and the terms thereof. Lessee shall have the first option to purchase said property within the thirty (30) day period at the same price and on the same terms of any such proposal. ARTICLE 18. LICENSE FOR INGRESS AND EGRESS 18.01. The parties agree that ingress and egress to the Leased Premises is through and across a driveway owned by Lessor located immediately along the northern boundary of the Leased Premises and over which Lessee is granted a license for unrestricted access to the Leased Premises. Lessor agrees to improve that portion of the driveway serving the Leased Premises to a standard consistent with commercial vehicular traffic to and from the Leased Premises. The driveway shall have curb cuts to the Leased Premises as shown in the Drawings. The driveway is more particularly described in the attached Exhibit B. 18.02. Lessor agrees to repair and maintain the driveway area serving the Leased Premises to a standard consistent with commercial vehicular traffic to and from the Leased Premises. 18.03. Lessee agrees to provide snow removal for the driveway from Richland Road to a point in the driveway ending with the easterly boundary of the Leased Premises. 18.04. If Lessee's right to use the driveway is terminated for any reason, Lessee shall have the option to immediately terminate this lease. 13

18.05. Although Lessee's right to use the driveway shall be nonexclusive, Lessor agrees not to grant any right to any third party which unreasonably interferes with Lessee's use of the driveway. ARTICLE 19. SIGNS 19.01. Lessee shall have the right to erect signs on any portion of the Leased Premises including, but not limited to, the exterior walls of the building, windows, doors and grounds, subject to applicable laws and deed restrictions. Lessee shall remove all signs at the termination of this lease and shall repair any damage and close any holes caused by such removal. 19.02. Lessor agrees as part of the initial construction cost to erect one (1) sign as shown in the Drawings. Thereafter the lettering shall be deemed the property of Lessee but the sign structure shall remain the property of Lessor. 19.03. Lessee shall be responsible for the repair and maintenance of all signage. ARTICLE 20. ARBITRATION 20.01. Lessor and Lessee agree to submit to arbitration any dispute that may arise out of the construction or implementation of the terms of this lease. In the event arbitration is requested by either party, each party shall select one arbitrator and the two arbitrators shall select a third. The arbitrators shall then meet and hear the arguments of the parties and decide the matter by majority vote. The decision of the arbitrators shall be final and binding. Each party shall pay the cost of the arbitrator selected by it and the cost of the third arbitrator shall be paid by the party most adversely affected by the award. ARTICLE 21. MISCELLANEOUS NOTICES AND ADDRESSES 21.01. All notices provided to be given under this agreement shall be given by certified mail or registered mail, addressed to the property party, at the following address:
Lessor: Stephen L. Jenkins P.O. Box 513 Marion, Ohio 43301-0513 Lessee: Gary E. Pendleton, President 111 South Main Street P.O. Box 1818 Marion, Ohio 43301-1818

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PARTIES BOUND 21.02. This agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors, and assigns when permitted by this agreement. OHIO LAW TO APPLY 21.03. This agreement shall be construed under and in accordance with the laws of the State of Ohio, and all obligations of the parties created hereunder are performable in Marion County, Ohio. LEGAL CONSTRUCTION 21.04. In case any one or more of the provisions contained in this lease shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision thereof and this lease shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein. SOLE AGREEMENT OF THE PARTIES 21.05. This lease constitutes the sole and only agreement of the parties hereto and supersedes any prior understandings or written or oral agreements between the parties respecting the within subject matter. AMENDMENT 21.06. No amendment, modification, or alteration of the terms hereof shall be binding unless the same be in writing, dated subsequent to the date hereof, and duly executed by the parties hereto. 15

RIGHTS AND REMEDIES CUMULATIVE 21.07. The rights and remedies provided by this lease are cumulative and the use of any one right or remedy by either party shall not preclude or waive its right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance, or otherwise. WAIVER OF DEFAULT 21.08. No waiver by the parties hereto of any default or breach of any term, condition, or covenant of this lease shall be deemed to be a waiver of any other breach of the same or any other term, condition, or covenant contained herein. ATTORNEYS' FEES 21.09. In the event Lessor or Lessee breaches any of the terms of this agreement whereby the party not in default employs attorneys to protect or enforce its rights hereunder and prevails, then the defaulting party agrees to pay the other party reasonable attorneys' fees so incurred by such other party. EXCUSE 21.10. Neither Lessor nor Lessee shall be required to perform any term, condition, or covenant in this lease so long as such performance is delayed or prevented by any acts of God, strikes, lockouts, material or labor restrictions by any governmental authority, civil riot, floods, and any other cause not reasonably within the control of the Lessor or Lessee and which by the exercise of due diligence Lessor or Lessee in unable, wholly or in part, to prevent or overcome. TIME OF THE ESSENCE 21. 11. Time is of the essence of this agreement. 16

MEMORANDUM OF LEASE 21.12. A short form of this Lease, as furnished by LESSOR, shall be executed for recording at the same time this Lease is executed, and shall be the only instrument pertaining to this Lease that shall be publicly recorded. IN WITNESS WHEREOF. the undersigned Lessor and Lessee hereto execute this agreement as of the day and year first above written.
Signed and acknowledged in presence of: - ----------------------------By ---------------------------Stephen L. Jenkins, President - ----------------------------LESSEE THE MARION BANK - ----------------------------By ----------------------------Gary E. Pendleton, President - ----------------------------LESSOR HENNEY AND COOPER, INC.

STATE OF OHIO ) ) COUNTY OF MARION) SS: Before me, a Notary Public in and for said county, personally appeared the above-named Stephen L. Jenkins, President of HENNEY AND COOPER, INC., who acknowledged the signing thereof to be his voluntary act and deed. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this 20th day of June, 1996. Notary Public 17

STATE OF OHIO ) ) COUNTY OF MARION) SS: Before me, a Notary Public in and for said county, personally appeared the above-named Gary E. Pendleton, President of THE MARION BANK, who acknowledged the signing thereof to be his voluntary act and deed. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this 20th day of June, 1996. Notary Public This instrument was prepared by: Ted M. McKinniss, Esq. EMENS, KEGLER, BROWN, HILL & RITTER 250 Executive Drive, Suite B Marion, Ohio 43302 18

ADDENDUM This Addendum to Lease Agreement dated June 20, 1996 between Henney & Cooper, Inc. ("Lessor"), and The Marion Bank ("Lessee") is made and entered into as of December 5, 1996: WITNESSETH: WHEREAS, Lessor and Lessee entered into a Lease Agreement dated June 20, 1996 whereby Lessor agreed to cause to be constructed on the leased premises a building for use by Lessee as a branch bank; and WHEREAS, Section 3.01 of said Lease Agreement sets forth a formula for determination of the lease payments based upon the cost of construction of said building; and WHEREAS, Section 3.01 further provides that an Addendum shall be signed by Lessor and Lessee which states the fixed minimum rent to be paid using the final cost of construction. ------NOW, THEREFORE, In consideration of the Lease Agreement and the mutual promises of the parties, the parties agree as follows: 1. The final cost of construction of the building constructed on the leased premises was $386,236.00. 2. The date of the commencement of said lease shall be December 5, 1996. 3. The amount of the fixed minimum rent calculated at the rate of $8.36 per thousand per month shall be $3,229.00 per month. 4. The amount of rent for the month of December 1996 shall be prorated and it is agreed that the rent for the period from December 5,1996 through December 31, 1996 shall be $2,708.00. 5. Commencing January 1, 1997 through November 30, 2001 the fixed minimum rent shall be $3,229.00 per month. 6. On December 1, 2001 the fixed minimum rent shall be adjusted in accordance with the provisions of Section 3.02 of the Lease Agreement. 7. Except as specifically amended hereby, the Lease Agreement dated June 20, 1996 shall remain in full force and effect.

IN WITNESS WHEREOF, the parties have hereunto subscribed their names in duplicate on the day and year first above written.
Signed in the presence of: HENNEY & COOPER, INC. BY - --------------------------------- --------------------------------------------------------------Stephen L. Jenkins, President

THE MARION BANK - -------------------------------BY - ----------------------------------------------------------------Gary E. Pendleton, President

STATE OF OHIO

MARION COUNTY ss: Before me, a Notary Public in and for said County and State, personally appeared the above-named Stephen L. Jenkins, President of Henney and Cooper, Inc., who acknowledged that he did sign the foregoing instrument and that the same is his free act and deed for the uses and purposes therein set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at Marion, Ohio this 7th day of February, 1997. Notary Public STATE OF OHIO MARION COUNTY ss: Before me, a Notary Public in and for said County and State, personally appeared the above-named Gary Pendleton, President of The Marion Bank Lessee, who acknowledged that he did sign the foregoing instrument and that the same is his free act and deed for the uses and purposes therein set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at Marion, Ohio this ______ day of February, 1997. Notary Public This instrument prepared by BARTRAM BARTRAM, Attorneys at Law 146 E. Center Street, P.O. Box 3 Marion, Ohio 43301-0003

EXHIBIT 10.2 EXECUTIVE INDEXED SALARY CONTINUATION PLAN AGREEMENT This Agreement, made and entered into this 30th day of December, 1996, by and between The Marion Bank, a Bank organized and existing under the laws of the State of Ohio, hereinafter referred to as "the Bank", and Gary E. Pendleton, a Key Employee and the Executive of the Bank, hereinafter referred to as "the Executive". The Executive has been in the employ of the Bank for several years and has now and for years past faithfully served the Bank. It is the consensus of the Board of Directors of the Bank (The Board) that the Executive's services have been of exceptional merit, in excess of the compensation paid and an invaluable contribution to the profits and position of the Bank in its field of activity. The Board further believes that the Executive's experience, knowledge of corporate affairs, reputation and industry contacts are of such value and his continued services are so essential to the Bank's future growth and profits that it would suffer severe financial loss should the Executive terminate his services. 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 upon his retirement and, alternatively, to his beneficiary(ies) in the event of his premature death while employed by the Bank. It is the intent of the parties hereto that this Agreement be considered an arrangement maintained primarily to provide supplemental retirement benefits for the Executive, as a member of a select group of management or highly-compensated employees of the Bank for purposes of the Employee Retirement Security Act of 1974 (ERISA). The Executive is fully advised of the Bank's financial status and has had substantial input in the design and operation of this benefit plan. Therefore, in consideration of the Executive's services performed in the past and those to be performed in the future and based upon the mutual promises and covenants herein contained, the Bank and the Executive, agree as follows:

I. DEFINITIONS A. Effective Date: The Effective Date of this Agreement shall be December 30, 1996. B. Plan Year: Any reference to "Plan Year" shall mean a calendar year from January 1 to December 31. In the year of implementation, the term "Plan Year" shall mean the period from the effective date to December 31 of the year of the effective date. C. Retirement Date: Retirement Date shall mean retirement from service with the Bank which becomes effective on the first day of the calendar month following the month in which the Executive reaches his sixtieth (60th) birthday or such later date as the Executive may actually retire. D. Termination of Service: Termination of Service shall mean voluntary resignation of service by the Executive or the Bank's discharge of the Executive without cause ["cause" defined in subparagraph III (D) hereinafter], prior to the Normal Retirement Age [described in subparagraph I (J) hereinafter]. E. Pre-Retirement Account: A Pre-Retirement Account shall be established as a liability reserve account on the books of the Bank for the benefit of the Executive. Prior to termination of service or Retirement Date or the Executive's actual retirement from service with the Bank, such liability reserve account shall be increased or decreased each Plan Year (including the Plan Year in which the Executive ceases to be employed by the Bank) by an amount equal to the annual earnings or loss for that Plan Year determined by the Index [described in subparagraph I (G) hereinafter], less the Cost of Funds Expense for that Plan Year [described in subparagraph I (H) hereinafter]. F. Index Retirement Benefit: The Index Retirement Benefit for the Executive for any year shall be equal to the excess of the annual earnings (if any) determined by the Index [subparagraph I (G)] for that Plan Year over the Cost of Funds Expense [subparagraph I (H)] for that Plan Year. 2

G. Index: The Index for any Plan Year shall be the aggregate annual after-tax income from the life insurance contracts described hereinafter as defined by FASB Technical Bulletin 85-4. This Index shall be applied as if such insurance contracts were purchased on the effective date hereof.
Insurance Company: Policy Form: Policy Name: Insured's Age and Sex: Riders: Ratings: Option: Face Amount: Premiums Paid: Number of Premium Payments: Assumed Purchase Date: Alexander Hamilton Life Insurance Co. Flexible Premium Adjustable Life Executive Security Plan 52, Male None None A $1,239,860 $88,000 Thirteen December 31, 1996

If such contracts of life insurance are actually purchased by the Bank then the actual policies as of the dates they were purchased shall be used in calculations under this Agreement. If such contracts of life insurance are not purchased or are subsequently surrendered or lapsed, then the Bank shall receive annual policy illustrations that assume the above described policies were purchased from the above named insurance company(ies) on the Effective Date from which the increase in policy value will be used to calculate the amount of the Index. In either case, references to the life insurance contract are merely for purposes of calculating a benefit. The Bank has no obligation to purchase such life insurance and, if purchased, the Executive and his beneficiary(ies) shall have no ownership interest in such policy and shall always have no greater interest in the benefits under this Agreement than that of an unsecured general creditor of the Bank. H. Cost of Funds Expense: The Cost of Funds Expense for any Plan Year shall be calculated by taking the sum of the amount of premiums set forth in the Indexed policies described above plus the amount of any after-tax benefits paid to the Executive pursuant to this Agreement (Paragraph III hereinafter) plus the amount of all previous years after-tax Costs of Funds Expense, and multiplying that sum by the average after-tax cost of funds of the Bank's third quarter Call Report for the Plan Year as filed with the Federal Reserve. 3

I. Change of Control: Change of control shall be deemed to be the cumulative transfer of more than fifty percent (50%) of the voting stock of the Bank Holding Company from the Effective Date of this Agreement. For the purposes of this Agreement, transfers on account of deaths or gifts, transfers between family members or transfers to a qualified retirement plan maintained by the Bank shall not be considered in determining whether there has been a change in control. J. Normal Retirement Age: Normal Retirement Age shall mean the date on which the Executive attains age sixty-five (65). II. EMPLOYMENT No provision of this Agreement shall be deemed to restrict or limit any existing employment agreement by and between the Bank and the Executive, nor shall any conditions herein create specific employment rights to the Executive nor limit the right of the Employer to discharge the Executive with or without cause. In a similar fashion, no provision shall limit the Executive's rights to voluntarily sever his employment at any time. III. INDEX BENEFITS The following benefits provided by the Bank to the Executive are in the nature of a fringe benefit and shall in no event be construed to effect nor limit the Executive's current or prospective salary increases, cash bonuses or profit-sharing distributions or credits. A. Retirement Benefits: Should the Executive continue to be employed by the Bank until his Retirement Date, defined in subparagraph I (C), he shall be entitled to receive the balance in his Pre-Retirement Account [as defined in subparagraph I (E)] in fifteen (15) equal annual installments commencing thirty (30) days following the Executive's Retirement. In addition to these payments, commencing with the Plan Year in which the Executive attains his Normal Retirement Age, defined in subparagraph I (J), the Index Retirement Benefit [as defined in subparagraph I (F) above] for each year shall be paid to the Executive until his death. 4

B. Termination of Service: Subject to subparagraph III (D) hereinafter, should the Executive suffer a termination of service [defined in subparagraph I (D)], he shall be entitled to receive ten percent (10%), times the number of full years (to a maximum of 100%) the Executive has served from the date of first employment prior to attaining Normal Retirement Age with the Bank, times the balance in the Pre-Retirement Account paid over fifteen (15) years in equal installments commencing at the Retirement Date [subparagraph I (C)]. In addition to these payments, commencing upon the Executive's Normal Retirement Age, ten percent (10%) times full years of service with the Bank, times the Index Retirement Benefit for each year shall be paid to the Executive until his death. C. Death: Should the Executive die prior to having received the full balance of the Pre-Retirement Account, the unpaid balance of the Pre-Retirement Account shall be paid in a lump sum to the beneficiary selected by the Executive and filed with the Bank. In the absence of or a failure to designate a beneficiary, the unpaid balance shall be paid in a lump sum to the personal representative of the Executive's estate. D. Discharge for Cause: Should the Executive be discharged for cause at any time prior to his Retirement Date, all Index Benefits under this Agreement [subparagraphs III (A), (B) or (C)] shall be forfeited. The term "for cause" shall mean gross negligence or gross neglect or the conviction 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. If a dispute arises as to discharge "for cause", such dispute shall be resolved by arbitration as set forth in this Agreement. E. Disability: In the event the Executive shall become disabled, he shall be considered to have reached his retirement date as of the date of his disability for the purposes of receiving benefit payments under this Agreement. The fact of disability shall be in the sole discretion of the Board of Directors of the Bank upon the application of the Executive. 5

F. Death Benefit: Except as set forth above, there is no death benefit provided under this Agreement. IV. RESTRICTIONS UPON 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 Executive, his beneficiary(ies) or any successor in interest to him shall be and remain simply a general creditor of the Bank in the same manner as any other creditor having a general claim for matured and unpaid compensation. 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 to determine the exact nature and method of such funding. Should the Bank elect to fund this Agreement, in whole or in part, through the purchase of life insurance, mutual funds, disability policies or annuities, the Bank reserves the absolute right, in its sole discretion, to terminate such funding at any time, in whole or in part. At no time shall the Executive be deemed to have any lien or right, title or interest in or to any specific funding investment or to any assets of the Bank. If the Bank elects to invest in a life insurance, disability or annuity policy upon the life of the Executive, then the Executive shall assist the Bank by freely submitting to a physical exam and supplying such additional information necessary to obtain such insurance or annuities. V. CHANGE OF CONTROL Upon a Change of Control [as defined in subparagraph I (I) herein], if the Executive's employment is subsequently terminated then he shall receive the benefits promised in this Agreement upon attaining Normal Retirement Age, as if he had been continuously employed by the Bank until his Normal Retirement Age. The Executive will also remain eligible for all promised death benefits in this Agreement. In addition, no sale, merger or consolidation of the Bank shall take place unless the new or surviving entity expressly acknowledges the obligations under this Agreement and agrees to abide by its terms. 6

VI. MISCELLANEOUS A. Alienability and Assignment Prohibition: Neither the Executive, his/her surviving spouse nor any other beneficiary under this Agreement shall have any power or right to transfer, assign, anticipate, hypothecate, mortgage, commute, modify or otherwise encumber in advance any of the benefits payable hereunder nor shall any of said benefits be subject to seizure for the payment of any debts, judgments, alimony or separate maintenance owed by the Executive or his beneficiary, nor be transferable by operation of law in the event of bankruptcy, insolvency or otherwise. In the event the Executive or any beneficiary attempts assignment, commutation, hypothecation, transfer or disposal of the benefits hereunder, the Bank's liabilities shall forthwith cease and terminate. B. Binding Obligation of Bank and any Successor in Interest: The Bank expressly agrees that it shall not merge or consolidate into or with another bank or sell substantially all of its assets to another bank, firm or person until such bank, firm or person expressly agrees, in writing, to assume and discharge the duties and obligations of the Bank under this Agreement. This Agreement shall be binding upon the parties hereto, their successors, beneficiary(ies), heirs and personal representatives. C. Revocation: It is agreed by and between the parties hereto that, during the lifetime of the Executive, this Agreement may be amended or revoked at any time or times, in whole or in part, by the mutual written assent of the Executive and the Bank. D. 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. E. Effect on Other Bank Benefit Plans: Nothing contained in this Agreement shall affect the right of the Executive to participate in or be covered by any qualified or non-qualified pension, profit-sharing, group, bonus or other supplemental compensation or fringe benefit plan constituting a part of the Bank's existing or future compensation structure. 7

F. Headings: Headings and subheadings in this Agreement are inserted for reference and convenience only and shall not be deemed a part of this Agreement. G. Applicable Law: The validity and interpretation of this Agreement shall be governed by the laws of the State of Ohio. VII. ERISA PROVISION A. Named Fiduciary and Plan Administrator: The "Named Fiduciary and Plan Administrator" of this plan shall be The Marion Bank until its removal by the Board. As Named Fiduciary and Administrator, the Bank shall be responsible for the management, control and administration of the Salary Continuation Agreement as established herein. The Named Fiduciary may delegate to others certain aspects of the management and operation responsibilities of the plan including the employment of advisors and the delegation of ministerial duties to qualified individuals. B. Claims Procedure and Arbitration: In the event a dispute arises over benefits under this Agreement and benefits are not paid to the Executive (or to his beneficiary in the case of the Executive's death) and such claimants feel they are entitled to receive such benefits, then a written claim must be made to the Plan Administrator named above within ninety (90) days from the date payments are refused. The Plan Administrator shall review the written claim and if the claim is denied, in whole or in part, they shall provide in writing within ninety (90) days of receipt of such claim their specific reasons for such denial, reference to the provisions of this Agreement upon which the denial is based and any additional material or information necessary to perfect the claim. Such written notice shall further indicate the additional steps to be taken by claimants if a further review of the claim denial is desired. A claim shall be deemed denied if the Plan Administrator fails to take any action within the aforesaid ninety-day period. If claimants desire a second review they shall notify the Plan Administrator in writing within ninety (90) days of the first claim denial. Claimants may review this Agreement or any documents relating thereto and submit any written issues and 8

comments they may feel appropriate. In its sole discretion, the Plan Administrator shall then review the second claim and provide a written decision within ninety (90) days of receipt of such claim. This decision shall likewise state the specific reasons for the decision and shall include reference to specific provisions of this Agreement upon which the decision is based. If claimants continue to dispute the benefit denial based upon completed performance of this Agreement or the meaning and effect of the terms and conditions thereof, then claimants may submit the dispute to a Board of Arbitration for final arbitration. Said Board shall consist of one member selected by the claimant, one member selected by the Bank, and the third member selected by the first two members. The Board shall operate under any generally recognized set of arbitration rules. The parties hereto agree that they and their heirs, personal representatives, successors and assigns shall be bound by the decision of such Board with respect to any controversy properly submitted to it for determination. Where a dispute arises as to the Bank's discharge of the Executive "for cause", such dispute shall likewise be submitted to arbitration as above described and the parties hereto agree to be bound by the decision thereunder. IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully read this Agreement and executed the original thereof on the 30th day of December, 1996 and that, upon execution, each has received a conforming copy. THE MARION BANK
By: - --------------------------Witness By: - --------------------------Witness -------------------------------------Gary E. Pendleton -------------------------------------Title

9

EXHIBIT 21 OHIO STATE BANCSHARES, INC.
State of Incorporation ------------Ohio Percentage of securities owned ---------------100%

Subsidiary - ---------The Marion Bank (1)

(1) The subsidiary's principal office is located in Marion, Ohio. 49

ARTICLE 9 MULTIPLIER: 1

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH INT BEARING DEPOSITS FED FUNDS SOLD TRADING ASSETS INVESTMENTS HELD FOR SALE INVESTMENTS CARRYING INVESTMENTS MARKET LOANS ALLOWANCE TOTAL ASSETS DEPOSITS SHORT TERM LIABILITIES OTHER LONG TERM PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITIES AND EQUITY INTEREST LOAN INTEREST INVEST INTEREST OTHER INTEREST TOTAL INTEREST DEPOSIT INTEREST EXPENSE INTEREST INCOME NET LOAN LOSSES SECURITIES GAINS EXPENSE OTHER INCOME PRETAX INCOME PRE EXTRAORDINARY EXTRAORDINARY CHANGES NET INCOME EPS PRIMARY EPS DILUTED YIELD ACTUAL LOANS NON LOANS PAST LOANS TROUBLED LOANS PROBLEM ALLOWANCE OPEN CHARGE OFFS RECOVERIES ALLOWANCE CLOSE ALLOWANCE DOMESTIC ALLOWANCE FOREIGN ALLOWANCE UNALLOCATED

YEAR DEC 31 1996 JAN 01 1996 DEC 31 1996 1,972,038 499,000 716,000 0 8,089,532 2,629,280 2,609,268 27,572,913 281,142 43,055,886 39,468,970 0 360,936 0 0 0 1,212,000 2,013,980 43,055,886 2,486,077 741,802 57,620 3,285,499 1,509,093 1,539,520 1,745,979 163,000 7,314 1,465,123 358,791 259,406 0 0 259,406 2.14 2.14 4.52 29,147 40,222 0 20,625 252,174 165,534 31,502 281,142 281,142 0 146,208

OHIO STATE BANCSHARES, INC. EXHIBIT NO. 99 SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 The Private Securities Litigation Reform Act of 1995 (the "Act") provides a "safe harbor" for forward-looking statements to encourage companies to provide prospective information about their companies, so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those discussed in the statement. Ohio State Bancshares, Inc. ("Corporation") desires to take advantage of the "safe harbor" provisions of the Act. Certain information, particularly information regarding future economic performance and finances and plans and objectives of management, contained or incorporated by reference in the Corporation's Annual Report on Form 10-KSB for the year ended December 31, 1996 is forward-looking. In some cases, information regarding certain important factors that could cause actual results of operations or outcomes of other events to differ materially from any such forward-looking statement appear together with such statement. In addition, forwardlooking statements are subject to other risks and uncertainties affecting the financial institutions industry, including, but not limited to, the following: Interest Rate Risk The Corporation's operating results are dependent to a significant degree on its net interest income, which is the difference between interest income from loans, securities and other interest-earning assets and interest expense on deposits, borrowings and other interest-bearing liabilities. The interest income and interest expense of the Corporation change as the interest rates on interest-earning assets and interest-bearing liabilities change. Interest rates may change because of general economic conditions, the policies of various regulatory authorities and other factors beyond the Corporation's control. In a rising interest rate environment, loans tend to prepay slowly and new loans at higher rates increase slowly, while interest paid on deposits increases rapidly because the terms to maturity of deposits tend to be shorter than the terms to maturity or prepayment of loans. Such differences in the adjustment of interest rates on assets and liabilities may negatively affect the Corporation's income. Adequacy of the Allowance for Loan Losses The Corporation maintains an allowance for loan losses based upon a number of relevant factors, including, but not limited to, trends in the level of nonperforming assets and classified loans, current and anticipated economic conditions in the primary lending area, past loss experience, possible losses arising from specific problem loans and changes in the composition of the loan portfolio. While the Board of Directors of the Corporation believes that it uses the best information available to determine the allowance for loan losses, unforeseen market conditions could result in material adjustments, and net earnings could be significantly adversely affected if circumstances differ substantially from the assumptions used in making the final determination.

Loans secured by one- to four-family residential real estate are generally considered to involve less risk of loss than other loans in the portfolio due, in part, to the effects of general economic conditions. The repayment of commercial loans generally depends upon the cash flow from the operation of the business or property, which may be negatively affected by national and local economic conditions. The risk of default on installment and credit card loans increases during periods of recession, high unemployment and other adverse economic conditions. When consumers have trouble paying their bills, they are more likely to pay mortgage loans than consumer loans. In addition, the collateral securing such loans, if any, may decrease in value more rapidly than the outstanding balance of the loan. Competition The Marion Bank ("Bank") competes for deposits with other commercial banks, savings associations and credit unions and issuers of commercial paper and other securities, such as shares in money market mutual funds. The primary factors in competing for deposits are interest rates and convenience of office location. In making loans, The Bank competes with other, commercial banks, savings associations, consumer finance companies, credit unions, leasing companies, mortgage companies and other lenders. Competition is affected by, among other things, the general availability of lendable funds, general and local economic conditions, current interest rate levels and other factors which are not readily predictable. The size of financial institutions competing with the Bank is likely to increase as a result of changes in statutes and regulations eliminating various restrictions on interstate and inter-industry branching and acquisitions. Such increased competition may have an adverse effect upon the Corporation. Legislation and Regulation that may Adversely Affect the Corporation Earnings As a state-chartered financial institution, the Bank is subject to extensive regulation by the Ohio Division of Financial Institutions and the Federal Deposit Insurance Corporation (the "FDIC") and is periodically examined by such regulatory agencies to test compliance with various regulatory requirements. As a bank holding company, the Corporation is also subject to regulation and examination by the Board of Governors of the Federal Reserve System. Such supervision and regulation of the Bank and the Corporation are intended primarily for the protection of depositors and not for the maximization of shareholder value and may affect the ability of the Corporation to engage in various business activities. The assessments, filing fees and other costs associated with reports, examinations and other regulatory matters are significant and may have an adverse effect on the Corporation's net earnings. The FDIC is authorized to establish separate annual assessment rates for deposit insurance of members of the Bank Insurance fund (the "BIF") and the Savings Association Insurance Fund (the "SAIF"). The FDIC has established a risk-based assessment system for both SAIF and BIF members. Under such system, assessments may vary depending on the risk the institution poses to its deposit insurance fund. Such risk level is determined by reference to the institution's capital level and the FDIC's level of supervisory concern about the institution. Because the reserves of the BIF exceeded the statutorily set minimum, assessments for healthy BIF institutions were significantly decreased in the last half of 1995 and were reduced to $ 2,000 per year for well-capitalized, well-managed banks, like the Bank, in 1996. Assessments paid by healthy institutions on deposits in the SAIF exceed that paid by healthy banks by approximately $ .23 per $ 100 in deposits in 1996.

Federal legislation that was effective September 30, 1996, provided for the recapitalization of the SAIF by means of a special assessment of $ .657 per $ 100 in deposits held at March 31, 1995, in order to increase SAIF reserves to the level required by law. That legislation also required that BIF members begin to share the cost of prior thrift failures. As a result of the recapitalization of the SAIF and this cost sharing between BIF and SAIF members, FDIC assessments for well-capitalized, well-managed institutions during 1997 have been set at $ .013 per $ 100 in BIF deposits and $ .064 per $ 100 in SAIF deposits. The recapitalization plan also provides for the merger of the SAIF and BIF effective January 1, 1999, assuming there are no savings associations under federal law. Under separate proposed legislation, Congress is considering the elimination of the federal thrift charter. The Corporation cannot predict the impact of the such legislation and the merger of the BIF and SAIF on the Corporation or the Bank until the legislation is enacted and the funds are merged.