Exhibit 10.5
July 30, 2007
Mr. Philip Kinley
2176 Heron Lane
Marion, OH 43302
Re: Confidential Separation Agreement And General Release
Dear Phil,
This letter constitutes a Confidential Separation Agreement and General Release
(“Agreement”) between you on one side and Commercial Savings Bank, its corporate
holding Company, Commercial Bancshares, Inc., and their respective affiliates,
officers, directors, and shareholders (collectively, “we”, “us”, “our” or
“ours”).
By way of background, you have resigned from your employment by us effective as
of June 30, 2007 (“Resignation Date”). You desire to secure the severance
benefits provided in this Agreement, and recognize that the severance benefits
provide value to which you would not otherwise be entitled. Finally, you and we
desire to effect a final settlement of all matters relating to your employment
by us.
Based upon the foregoing and in consideration of the mutual covenants and
promises in this Agreement and other good and valuable consideration, you and we
agree to the following:

1.   Neither this Agreement nor any action under this Agreement shall in any way
be construed as an admission by either you or us of any liability, wrongdoing or
violation of law, regulation, contract or policy.

2.   We will pay or provide you the following in final settlement of all claims
that you may have against us (collectively “severance payments”):

  (a)   We will pay to you a salary of $12,166.67 per month for a period of
twelve (12) months from the Resignation Date (“Severance Period”). You and we
agree that the payments are allocated 25% to salary continuation and 75% to your
covenant not to compete with us. Federal, state, and local taxes, and social
security contributions will be withheld from the payments allocated to salary.
Payments allocated to the covenant not to compete will be reported on IRS
Form 1099.     (b)   You may participate in the family group health, disability,
and other health and welfare insurance plans made available to our employees
until the earliest to occur of [1] the expiration of one year following the
Resignation Date or [2] the date on which you agree to new employment.

 

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Mr. Philip Kinley
July 30, 2007
Page 2

  (c)   We will continue to pay your Marion Country Club membership as a part of
CSB’s corporate membership until December 31, 2008.     (d)   You will be paid
no wages, bonuses, benefits, compensation or remuneration, other value of any
kind subsequent to the Resignation Date other than the items expressly listed in
items (a) and (b) above.

3.   You hereby resign as an employee of ours. You hereby decline reelection,
reinstatement, employment and rehire by us and waive all rights to claim such
relief. You agree never to seek or apply for the position of director or
employee of any of us. If we merge with, purchase, or enter into any other
business combination with your then-current employer, this paragraph shall not
apply.

4.   This Agreement is confidential. You shall not disclose this Agreement in
any way to any person other than your spouse, legal counsel and tax advisor. If
you disclose this Agreement to your spouse, legal counsel or tax advisor, you
shall ensure that they will be similarly bound to protect its confidentiality
and that a breach of this paragraph by your spouse, legal counsel or tax advisor
shall be considered a breach of this paragraph by you. Notwithstanding this
paragraph, you may disclose paragraph 6 of this Agreement to a potential
employer. You and we agree to direct all external communications regarding you
and your employment with us (other than the initial press release) to Stanley
Kinnett, Vice Chairman of the Board of Directors, or others for which we have
given you written notice.

5.   You represent that you have not filed any pending complaint, charge, claim
or grievance against us with any local, state or federal agency, court or
commission.

6.   (a) You acknowledge the following:

  (i)   As a result of your employment with us, you have obtained secret and
confidential information concerning our businesses (“Confidential Information”),
including, without limitation, the operations, finances, business plans, product
and process specifications, costs, price, profitability, sales information, the
identity of potential acquisitions, and the identity of customers and sources of
supply including their needs, requirements, and the nature and extent of
contracts with them;     (ii)   You acknowledge that we will suffer substantial
damage that will be difficult to compute if you enter into a Competing Business
(as defined in paragraph 6(d)(i)), or if you disclose Confidential Information;
and     (iii)   This Agreement is reasonable and necessary for the protection of
our businesses and the businesses of our subsidiaries and divisions.

 

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Mr. Philip Kinley
July 30, 2007
Page 3

  (b)   You will not use for your own benefit or disclose any Confidential
Information without our express written consent.     (c)   You warrant that you
have delivered to us all of our property, including without limitation all
memoranda, notes, files, computers, cell phones or other wireless devices,
software, discs, memory storage records, reports, manuals, drawings, blueprints,
credit cards and other documents as well as all copies thereof. You also warrant
that you have not kept, created, or downloaded any copy of our computer records.
    (d)   For a period of two years following the Resignation Date, you, without
our prior express written permission, shall not (i) enter into the employ of or
render any services, in an executive, managerial, marketing or sales capacity
for, any bank, similar financial institution or bank holding company that
maintains its principal corporate office within thirty (30) miles of our
corporate office in Upper Sandusky, Ohio or for a branch office of any bank,
similar financial institution or bank holding company, located within thirty
(30) miles of our corporate office in Upper Sandusky, Ohio; (ii) engage in any
Competing Business; (iii) solicit, induce or entice anyone, or cause any other
person or entity to solicit, recruit, induce or entice anyone, to leave our
employ; or (iv) interfere with, or endeavor to entice away from us, any of our
customers or contractors.     (e)   For breaches of paragraph 6(a) through 6(d),

  (i)   we shall have the right to have those provisions specifically enforced
by a court order and to obtain any other relief to which we may be entitled by
law or equity from any court having jurisdiction; and     (ii)   We shall have
the right to require you to pay over to us all severance payments already paid
by us and to terminate our obligation to provide any further severance payments.

  (f)   Each of the rights and remedies enumerated in this paragraph 6 shall be
independent of the other, shall be severally enforceable, and shall be in
addition to, and not in lieu of, any other rights and remedies available to us
in law or equity.

7.   You shall not make any disparaging or negative statements regarding us or
our officers, directors or employees. We, in turn, shall not to make any
disparaging or negative statements regarding you.

 

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Mr. Philip Kinley
July 30, 2007
Page 4

8.   Throughout the Severance Period, you shall, upon reasonable notice, advise
and assist us in preparing such operational, financial or other reports or other
filings as we may reasonably request, and to respond to inquiries concerning our
operations, finances and business and otherwise cooperate with us as we shall
reasonably request. You shall assist and cooperate with us at our request in
prosecuting or defending against any litigation, complaints or claims against or
involving us. We shall pay your necessary travel costs and expenses if you
assist us under this paragraph.

9.   As a material inducement to us to enter this Agreement, you hereby
irrevocably and unconditionally release, acquit and forever discharge each of
us, and our respective successors, assigns, agents, directors, officers,
employees, representatives, subsidiaries, divisions, parent corporations and
affiliates, and all other persons acting by, through or in concert with any of
us or any of the foregoing (collectively “Releasees”) from any and all charges,
complaints, claims, liabilities, obligations, promises, agreements, actions,
damages, expenses (including attorneys’ fees and costs actually incurred), or
any rights of any and every kind or nature, accrued or unaccrued, which you have
or claim to have against each or any of the Releasees, whether known to you or
not.       This release includes, but is in no way limited to, all matters
relating to or arising out of your employment and termination of employment by
us and all claims for severance benefits. The release includes, but is in no way
limited to, rights and claims under the Age Discrimination in Employment Act of
1967, Title VII of the Civil Rights Act, as amended, the Americans With
Disabilities Act, the Family Medical Leave Act, and all other state, local or
municipal fair employment and discrimination laws.       Notwithstanding the
foregoing, this release and waiver is not intended to affect, nor shall it be
construed to affect, your vested or accrued rights and benefits in the following
plans:

  a)   Commercial Savings Bank 401 (k) Retirement Plan;     b)   1997 Commercial
Bancshares, Inc. Stock Option Plan;     c)   Commercial Savings Bank Director’s
Deferred Compensation Program;     d)   Executive Supplemental Retirement Plan
as administered by Benmark.

    Notwithstanding the foregoing release and waiver of rights and claims, we
shall continue to indemnify you for all your acts and omissions during the
course of, and within the scope of your active employment with us, pursuant to
our policies, by-laws, and contracts of insurance, as long as your acts and
omissions were in good faith.   10.   This Agreement shall be binding upon, and
inure to the benefit of, your and our respective heirs, executors,
administrators, representatives, successors and assigns and

 

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Mr. Philip Kinley
July 30, 2007
Page 5
shall inure to the benefit of the Releasees and to their respective heirs,
administrators, representatives, executors, successors, and assigns.

11.   You shall indemnify and hold each and all of the Releasees harmless from
and against any and all loss, cost, damage or expense, including, without
limitation, attorneys’ fees incurred by the Releasees, arising out of the breach
of the Agreement by you.

12.   This Agreement is final and binding and constitutes the complete and
exclusive statement of the terms and conditions of settlement, and no
representations or commitments were made by the parties to induce the Agreement
other than as expressly set forth in this Agreement.

13.   You have a right to consult an attorney before signing this Agreement. You
have 21 days from the receipt of this letter to consider this Agreement, and you
may revoke this Agreement within seven (7) days of signing it.       You may
waive any portion of the 21-day period to consider this Agreement by voluntarily
signing and delivering this Agreement before the expiration of 21 days.       To
revoke this Agreement, you must deliver a written notice of revocation addressed
to the Vice Chairman of the Board and Chairman of the Compensation Committee of
the Board of Directors of Commercial Bancshares, Inc., Mr. Stanley Kinnett, at
our corporate headquarters, 118 South Sandusky Avenue, Upper Sandusky, Ohio
43351 no later than the seventh (7th) day after you sign this Agreement.

14.   This Agreement may not be modified or supplemented except by a subsequent
written Agreement signed by the party against whom enforcement of the
modification is sought.

15.   The validity, construction and enforceability of this Agreement shall be
governed in all respects by the laws of the State of Ohio with venue being in
Wyandot County, without regard to its conflicts of laws rules.

16.   You warrant to us that you have carefully read the entire document, that a
copy of the document was available to you prior to execution, that you know and
understand the provisions of this document, and that you have signed the
document as your own free act and deed.

17.   If it is subsequently determined by the Internal Revenue Service, or by a
state or local taxing authority, that any portion of the payment to you for your
covenant not to compete constitutes taxable wage income to you, you shall
indemnify us from any and all assessments, fines or penalties that may be issued
against any of us or any of our employees, officers, directors or agents as a
result of any failure to make any withholdings from the payment.

 

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Mr. Philip Kinley
Jyly 30, 2007
Page 6
By signing the Acceptance below my signature, you become bound by this
Agreement.

            Sincerely yours,

Commercial Savings Bank and Commercial Bancshares, Inc.
    Date: 8-13-07  By:   /s/ Michael Shope         Michael Shope, Chairman     
       

Acceptance
     I hereby accept the foregoing Agreement.

                Date: 7-30-07  /s/ Philip Kinley       Philip Kinley