Investment Plan (2002)Full Document 

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               INVESTMENT PLAN
                           THE MERCHANTS NATIONAL BANK
                               OF HILLSBORO, OHIO
                            EXECUTIVE INVESTMENT PLAN

                         EFFECTIVE AS OF JANUARY 1, 1997




                                TABLE OF CONTENTS
ARTICLE PAGE ---------------------------------------------------------------------------------------------------------- ARTICLE I PURPOSE..................................................................................1 ARTICLE II DEFINITIONS AND CONSTRUCTION.............................................................1 ARTICLE III OPTION GRANT.............................................................................3 ARTICLE IV OPTION EXERCISE..........................................................................5 ARTICLE V AMENDMENT OR TERMINATION.................................................................7 ARTICLE VI ADMINISTRATION...........................................................................8 ARTICLE VII TRUST PROVISIONS........................................................................10 ARTICLE VIII MISCELLANEOUS PROVISIONS................................................................10
THE MERCHANTS NATIONAL BANK OF HILLSBORO, OHIO EXECUTIVE INVESTMENT PLAN ARTICLE I PURPOSE 1.1 PURPOSE. The purpose of the Plan is to provide additional compensation to certain key individuals, commensurate with their contributions to the success of the Employer, in a form that will provide incentives and rewards for superior performance, encourage the recipients to continue in the employment of the Employer, and allow the recipients to diversify their investment portfolios. 1.2 INTENT. The Plan is intended to be an unfunded plan maintained by the Employer primarily for a select group of management or highly compensated employees within the meaning of ERISA. The Plan is also intended to be a nonqualified stock option plan within the meaning of section 83 of the Code. ARTICLE II DEFINITIONS AND CONSTRUCTION 2.1 DEFINITIONS. As used herein, the following capitalized words and phrases shall have the respective meanings set forth below: "BENEFICIARY" means the person or persons designated by a Participant, pursuant to Section 3.7, to exercise an Option after the Participant's death. "BOARD OF DIRECTORS" or "BOARD" means the board of directors of the Employer. "CHANGE OF CONTROL" means any change in (a) the effective control of the Employer, or (b) the ownership of a substantial portion of the assets of the Employer, as defined under section 280G of the Code, except as otherwise provided by written agreement executed by the Employer and a Participant prior to such Change of Control. "CODE" means the Internal Revenue Code of 1986, any amendments thereto, and any regulations or rulings issued thereunder. "COMMITTEE" means the Salary & Personnel Committee appointed in accordance with Section 6.1. "EFFECTIVE DATE" means January 1, 1997. "EMPLOYEE" means any individual who is employed by the Employer. "EMPLOYER" means The Merchants National Bank of Hillsboro, Ohio, and any successor thereto. "ERISA" means the Employee Retirement Income Security Act of 1974, any amendments thereto, and any regulations or rulings issued thereunder. "EXERCISE PERIOD" means the period during which a Participant may exercise an Option, as determined under Section 4.1. "EXERCISE PRICE" means the price to be paid by a Participant to exercise an Option, as determined under Section 3.3. "FAIR MARKET VALUE" means the closing price of a share of Stock reflected in the consolidated trading tables of The Wall Street Journal (presently the NYSE-Composite Transactions), or other recognized market source, as determined by the Committee, on the applicable date of reference hereunder, or if there is no sale on such date, then the closing price on the last previous day on which a sale is reported. "GRANT DATE" means, with respect to any Option, the date on which the Option Agreement is executed by the Employer and the Participant. "OPTION" means the right of a Participant, granted by the Employer in accordance with Section 3.2, to purchase Stock from the Employer at the Exercise Price. "OPTION AGREEMENT" means an agreement setting forth the terms of an Option executed by the Employer and a Participant pursuant to Section 3.2. "PARTICIPANT" means any Employee who has been granted Options in accordance with the Plan and whose Options have not been exercised in full. "PLAN" means The Merchants National Bank of Hillsboro, Ohio Executive Investment Plan, as set forth herein and from time to time amended. "STOCK" means shares of common or preferred stock of a corporation listed on a national securities exchange or shares of a regulated investment company designated by the Committee as subject to purchase through the exercise of an Option. "TERMINATION OF EMPLOYMENT" means an Employee's separation from the service of the Employer (including all subsidiaries and affiliates of the Employer) by reason of resignation, discharge, death or other termination, or upon the Committee's determination that the Employee is unable to continue to perform his regular duties on account of disability. The Committee may, in its discretion, determine whether any leave or other absence from service constitutes a Termination of Employment for purposes of the Plan. "TRUST" means the trust that may be established pursuant to Article VII to hold the Stock that is subject to purchase through the exercise of an Option. "TRUST AGREEMENT" means an agreement setting forth the terms of the Trust established pursuant to Article VII. "TRUST FUND" means the Stock subject to an Option that is held in the Trust. "TRUSTEE" means the persons or institution acting as trustee of the Trust. 2.2 HEADINGS. The headings of Articles, Sections and Paragraphs are solely for convenience of reference. If there is any conflict between such headings and the text of this Plan, the text shall control. 2.3 GENDER. Unless the context clearly requires a different meaning, all pronouns shall refer indifferently to persons of any gender. 2.4 SINGULAR AND PLURAL. Unless the context clearly requires a different meaning, singular terms shall also include the plural and vice versa. ARTICLE III OPTION GRANT 3.1 ELIGIBILITY. Options may be granted to any Employee selected by the Committee from the executive officers and other key employees of the Employer who occupy senior managerial or professional positions and who have the capability of making a substantial contribution to the success of the Employer. In making this selection and in determining the form and amount of Options, the Committee shall consider any factors that it deems relevant, including the individual's functions, responsibilities, value of services to the Employer and past and potential contributions to the Employer's profitability and growth. 3.2 GRANT OF OPTIONS. Options may be granted by the Committee at any time on or after the Effective Date and prior to the termination of the Plan. Options shall become effective upon the execution by Employer and the Participant of an Option Agreement specifying the Stock, the number of shares subject to the Option, the Exercise Price, and such other terms and in such form as the Committee may from time to time determine in accordance with the Plan. 3.3 EXERCISE PRICE. The Exercise Price shall be initially determined by the Committee based upon the Fair Market Value of the Stock on the Grant Date. The Exercise Price shall be subsequently adjusted in the following manner, or as otherwise provided in the Option Agreement: (a) The Employer agrees that all income, including dividends and other cash distributions received, with respect to the Stock shall be reinvested in Stock of the same kind and that such additional Stock shall become subject to the same Option. On the last day of each calendar year, on the date any Option (or portion thereof) is exercised, or on any other date determined by the Committee, the Committee shall adjust the Exercise Price to maintain a 25% ratio to the Fair Market Value of the Stock. (b) In the event of a stock dividend, stock split, reverse stock split, rights offering, return of capital distribution, recapitalization or similar transaction that materially affects the Fair Market Value of the Stock, the Committee shall adjust the Exercise
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