EX-10.1






EMPLOYMENT AGREEMENT




This Agreement is made this 15th day of December, 2005, by and between Western Reserve
Bancorp., Inc., an Ohio corporation (the “Corporation”), and Edward J. McKeon (the “Employee”).



WHEREAS, the Board of Directors of the Corporation believes that the future services of the
Employee in the capacity of President and Chief Executive Officer will be of great value to the
Corporation;



WHEREAS, the Corporation and Employee have previously entered into employment agreements, the
last being an Employment Agreement dated as of December 14, 2001; and



WHEREAS, the Corporation operates a wholly owned commercial banking subsidiary known as
Western Reserve Bank, which is engaged in the general business of banking, (hereinafter the
“Bank”); and



WHEREAS, the Employee is willing to continue in the employ of the Corporation and the Bank on
a full-time basis for the term of this Agreement.



NOW, THEREFORE, in consideration of the premises and the mutual covenants herein set forth,
the parties hereto have agreed and do hereby mutually agree as follows:



1. Term — Agreement to Serve




The Corporation hereby employs for itself, the Bank and or any additional subsidiaries
(hereinafter sometimes collectively referred to as the “Corporation”), the services of
Employee commencing as of the date first written above and ending October 1, 2010, and as
may be extended as provided below (the “Employment Term”), subject to the rights of earlier
termination hereinafter set forth, to perform the duties of President and Chief Executive
Officer for the Corporation and the Bank. The Employment Term shall automatically be
extended for an additional one year period, unless either the Corporation or the Employee,
by written notice to the other, not less than six (6) months prior to the end of the
Employment Term (a “notice of nonrenewal”), elects not to renew such term. The Employee
hereby accepts such employment in consideration of the compensation and the other terms and
conditions herein provided, and agrees to serve the Corporation well and faithfully and to
devote his best efforts to such employment as long as it shall continue hereunder. During
the period of such employment, the Employee will devote all of his time and attention —
reasonable vacations, periods of illness and the like excepted — to the affairs of the
Corporation.



2. Base Salary and Supplemental Benefits




Except as otherwise provided herein, as compensation for these services hereunder, the
Corporation will pay to Employee, in installments and on dates in accordance with its normal
payroll, during the period of his employment hereunder, a base salary at the aggregate rate
of One Hundred Sixty-Two Thousand Dollars ($162,000) per year, subject to the right of the
parties, by mutual agreement, to adjust such rate in respect of any future calendar year or
years after the date hereof, (hereinafter referred to as “Base Pay”). It is the intent of
the parties that the base salary set forth herein will be reviewed for the year 2006 after
the Compensation Committee of the Corporation has conducted its annual review of Employee
for the year ended December 31, 2005.




In addition the Corporation shall provide the following benefits (“Supplemental Benefits”)
during the Employment Term and while Employee is in the active employment with the
Corporation. Termination of employment of Employee at or prior to the end of the Employment
Term as provided in paragraph 4 hereof, shall cause the immediate termination of these
Supplemental Benefits.




	 	(a)	 	Pay for and provide to the Employee for his exclusive use: (i) a full-sized
automobile, the make and model of which shall be mutually agreed to between the
Corporation and the Employee; and (ii) a cell phone and monthly cell phone service
reasonably acceptable to Employee.






	 	(b)	 	Provide $250,000 in term life insurance, payable to the beneficiary of
Employee’s choice.






	 	(c)	 	Provide five (5) weeks paid vacation annually.






	 	(d)	 	Pay for and provide to Employee reasonable and customary disability insurance
that shall provide Employee with a monthly disability insurance payment equal to not
less than 60% of his monthly Base Pay in the event of disability.






	 	(e)	 	Provide comprehensive health and medical insurance coverage at least comparable
to that provided to other employees of the Corporation.






	 	(f)	 	Reimburse fees and expenses incurred in connection with business of the
Corporation or the Bank including fees for attendance at banking related conventions
and similar items approved by the Board of Directors.






	 	(g)	 	Provide for supplemental retirement benefits pursuant to the Supplemental
Employee Retirement Plan adopted for the benefit of Employee on May 15, 2003.






	 	3.	 	Bonus, Options and Continuation of Certain Health Insurance Benefits






	 	(a)	 	Subject to the rules and regulations applicable thereto and during Employee’s
active employment with the Corporation, the Corporation will provide for Employee’s
participation in any incentive, employee benefit and health and welfare plans or
programs administered by the Corporation or the Bank or under its direction, in each
case subject to the terms and conditions of such plans.






	 	(b)	 	The Corporation and Employee hereby acknowledge that options to purchase shares
of the common stock of the Corporation (the “Options”) have been granted to Employee
under the terms of a stock option grant agreement and second addendum to employment
agreement dated as of October 22, 1998 (the “Second Addendum”) and the Employee agrees
to abide by the terms of the Second Addendum and the terms of the Amended and Restated
Western Reserve Bancorp, Inc. 1998 Stock Option Plan relative to the Options.






	 	(c)	 	Upon the termination of the employment of Employee for any reason other than
pursuant to paragraph 4(c) hereof [Cause], or paragraph 4(h) hereof [voluntarily by
Employee], the Corporation will pay the COBRA premiums for continuation of healthcare
benefits for Employee and his eligible dependents for so long as they are eligible.
Thereafter the Corporation, at its option, shall either: (i) pay for and provide for
the continuation of healthcare coverage comparable to that provided for other employees
of the Corporation for Employee and his eligible dependents until October 1, 2010, or
(ii) pay to the Employee a lump sum equal to the number of months between Employee’s
termination of employment and October 1, 2010, times the then current COBRA charge for
Employee and his eligible dependents for the prior month. In the event Employee
becomes enrolled in another health care plan with comparable coverage, the obligation
of the Corporation hereunder will cease. The obligations of the Corporation under the
provisions hereof shall survive the termination of the employment of Employee and are
enforceable by Employee and his eligible dependants against the Corporation.






	 	4.	 	Termination of Employment






The employment of the Employee under the terms of this Agreement shall cease and terminate
upon the occurrence of any of the following and Employee shall be entitled to the
compensation provided for herein.




(a) Expiration of Term




On the last day of the Employment Term. In the event of a termination pursuant to this
subparagraph, the Employee shall be entitled to receive the amount of Base Pay provided for
in paragraph 2 hereof through the last day of the Employment Term.




(b) Death




On the date of Employee’s death. In the event of the termination of employment by
reason of death, Employee shall be entitled to receive the amount of Base Pay provided for
in paragraph 2 hereof through the date of death.



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	 	(c)	 	Termination by the Corporation with Cause






For Cause at any time by the Corporation. For purposes hereof, the term “Cause” shall
mean: (i) removal by order of a regulatory agency having jurisdiction over the Corporation
or the Bank, (ii) dishonesty or material inappropriate behavior, such as drunkenness or
illegal harassment of employees; (iii) misappropriation of Corporation, Bank, or customer
property, (iv) commission of a felony or crime of moral turpitude, or (v) the Employee’s
willful and repeated failure to perform his duties under this Employment Agreement, which
failure has not been cured within thirty (30) days after the Corporation gives notice
thereof to the Employee; it being expressly understood that negligence or bad judgment shall
not constitute “Cause” so long as such negligent act or omission shall be without intent of
personal profit and is reasonably believed by the Employee to be in or not adverse to the
best interests of the Corporation. In the event of a termination for Cause pursuant to
this subparagraph the Employee shall be entitled to receive the amount of Base Pay provided
for in paragraph 2 hereof through the date of termination of Employee’s employment by the
Corporation.




	 	(d)	 	Disability






Upon receipt by the Employee of written notice from the Corporation that the Employee
is unable, by reason of Disability, to continue the proper performance of his duties
hereunder. For purposes of this Agreement, the Employee’s Disability shall mean that the
Employee is, by reason of any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a continuous period of not
less than 12 months, receiving income replacement benefits under disability insurance
policies as provided under paragraph 2(d) hereof. In the event the benefits provided to
Employee under such disability insurance policies do not provide to Employee a benefit level
equal to at least sixty percent (60%) of his then current Base Pay (the “Minimum Disability
Benefit”), the Corporation shall provide a direct supplemental cash payment to Executive so
that the total of income replacement benefits under disability insurance policies together
with such supplemental cash payments, provide a monthly income benefit to Employee equal to
the Minimum Disability Benefit, though October 1, 2010. In the event of a termination of
employment pursuant to this subparagraph the Employee shall be entitled to receive the
amount of Base Pay provided for in paragraph 2 hereof through the date of termination of
Employee’s employment as determined by the Corporation.




	 	(e)	 	Termination by the Corporation without Cause






At the election of the Corporation, at any time during the term of this Agreement
without Cause. Upon such termination Employee shall not be entitled to any further
compensation under paragraph 2 hereof, from and after the date of such election by the
Corporation to terminate Employee’s employment without Cause, and in lieu thereof, Employee
shall be entitled to receive compensation, if any, determined as follows.




	 	i)	 	If at the date of such termination of employment without Cause
by the Corporation Employee has not attained the age of 65, Employee shall
receive, in a lump sum payment immediately upon termination of employment, two
times his then current Base Pay.






	 	ii)	 	If at the date of such termination of employment without Cause
by the Corporation Employee has attained the age of 65, and the Corporation did
not provide six months advance written notice of its election to terminate
Employee without Cause, Employee shall receive, in a lump sum payment
immediately upon termination of employment, one times his then current Base
Pay.






	 	iii)	 	If at the date of such termination of employment without Cause
by the Corporation Employee has attained the age of 65, and the Corporation did
provide six months advance written notice of its election to terminate Employee
without Cause, Employee shall not receive any compensation.






(f) Termination in Connection with a Change in Control




	 	i)	 	If during the term of this Agreement and after the date of a
Change in Control, Employee is discharged without Cause or Employee resigns
because he has: (1) been demoted, (2) had his compensation reduced, (3) had his
principal place of employment transferred away from Medina County, Ohio or a
county contiguous thereto, or (4) had his job title, status or responsibility
materially reduced, then the Corporation shall make the Special Severance
Payment provided for in subparagraph (iii) of this subparagraph 4(f),
immediately upon Employee’s termination of employment.






	 	ii)	 	If Employee is discharged by the Corporation other than for
Cause and there is a Change in Control within twelve (12) months following the
discharge, then the Corporation shall make a payment, equal to the Special
Severance Payment less any amount paid to Employee pursuant to subparagraph
4(e) hereof, to Employee immediately upon the occurrence of the Change in
Control.






	 	iii)	 	The “Special Severance Payment” shall mean a special severance
payment payable in a lump sum, equal to 2.99 times Employee’s then current Base
Pay, provided however, that in the event the Change in Control occurs on or
after October 1, 2010, the Special Severance Payment shall be equal to 1.0
times Employee’s then current Base Pay.






	 	iv)	 	In the event Employee dies before collecting all amounts and
benefits due under this subparagraph 4(f), any payments owing shall be paid to
the person or persons as stated in the last designation of beneficiary
concerning this Agreement signed by Employee and filed with the Corporation,
and if not, then to the personal representative of the Employee. The payments
and benefits provided for in this subparagraph 4(f) are in lieu of
compensation, benefits or amounts the Employee might otherwise be entitled to
hereunder or under the Corporation’s severance policy or otherwise payable by
the Corporation by reason of termination of employment.






	 	iv)	 	In the event the payments required under this Agreement, when
added together with any other amounts required to be included by Employee under
the provisions of the Internal Revenue Code of 1986, as amended, result in an
“Excess Parachute Payment,” as that term is defined in Section 280G of the
Code, then the amount of the payments provided for in this agreement shall be
reduced in an amount which eliminates any and all excise tax to be imposed
under Section 4999 (or any successor thereto) of the Code.






	 	vi)	 	Except as set forth in subparagraph 5(d) hereof, any subsequent
employment by Employee shall not reduce the obligation of the Corporation to
make the full payments and provide the full benefits specified herein.
Employee shall have no obligation to seek other employment or otherwise
mitigate the effect of his discharge from employment.






vii) A “Change in Control” shall have the meaning set forth on Exhibit A hereof.




(g) Additional Restriction on Distributions to Key Employees.




Notwithstanding the provisions of this Agreement providing for payment of benefits upon
termination of employment, if at the time a benefit would otherwise be payable, Employee is
a “specified employee” [as defined below], and the payment provided for would be deferred
compensation with the meaning of Code section 409A, the distribution of the Employee’s
benefit may not be made until six months after the date of the Employee’s separation from
service with the Company [as that term may be defined in Section 409A(a)(2)(A)(i) of the
Code and regulations promulgated thereunder], or, if earlier the date of death of the
Employee. This requirement shall remain in effect only for periods in which the stock of the
Company is publicly traded on an established securities market.




For purposes of this subparagraph 4(g), a “specified employee” shall mean any Employee
of the Company who is a “key employee” of the Company within the meaning of Code section
416(i). This shall include any Employee who is (i) a 5-percent owner of the Company’s common
stock, or (ii) an officer of the Company with annual compensation from the Company of
$130,000.00 or more, or (iii) a 1-percent owner of Company’s common stock with annual
compensation from the Company of $150,000.00 or more (or such higher annual limit as may be
in effect for years subsequent to 2005 pursuant to indexing section 416(i) of the
Code).




The provisions of this subparagraph 4(g) have been adopted only in order to comply
with the requirements added by Code section 409A. These provisions shall be interpreted and
administered in a manner consistent with the requirements of Code section 409A, together
with any regulations or other guidance which may be published by the Treasury Department or
Internal Revenue Service interpreting such Code section 409A.




	 	(h)	 	Voluntary termination by Employee.






Employee may voluntarily terminate his employment with the Corporation at anytime. In
the event of Employee’s voluntary termination of employment he shall be entitled to receive
the amount of Base Pay provided for in paragraph 2 hereof through the last day of such
employment.




	 	5.	 	Covenant Not to Compete






	 	(a)	 	Throughout the employment of Employee pursuant the terms of this Agreement and
for a period of two years after termination of employment for any reason, Employee
agrees that he will not, except on behalf of the Corporation or with the written
consent of the Corporation,






	 	(i)	 	engage in any business activity, directly or indirectly, on his
own behalf or as a partner, stockholder (except by ownership of less than 1% of
the outstanding stock of a publicly held corporation), director, trustee,
principal, agent, employee, consultant or otherwise of any person, firm or
corporation, which is competitive with any activity in which the Corporation or
any parent, subsidiary or affiliate of the Corporation is engaged at the time,






	 	(ii)	 	allow the use of his name by or in connection with any business
which is competitive with an activity in which the Corporation or any parent,
subsidiary or affiliate of the Corporation is engaged, or






	 	(iii)	 	offer employment to or employ, for himself or on behalf of any
competitor of the Corporation or any parent, subsidiary or affiliate thereof,
any person who at any time within the prior three years shall have been
employed by the Corporation or any parent, subsidiary or affiliate of the
Corporation.






	 	(b)	 	The parties acknowledge that this paragraph 5 is fair and reasonable under the
circumstances. It is the desire and intent of the parties that the provisions of this
paragraph 5 shall be enforced to the fullest extent permitted by law. Accordingly, if
any particular portion of this paragraph 5 shall be adjudicated to be invalid or
unenforceable, this paragraph 5 shall be deemed amended to






	 	(i)	 	reform the particular portion to provide for such maximum
restrictions as will be valid and enforceable, or if that is not possible,






	 	(ii)	 	delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such reformation or deletion to apply only with respect to the
operation of this paragraph 5 in the particular jurisdiction in which such
adjudication is made.






	 	(c)	 	During the term of Employee’s employment hereunder, the covenants contained in
this paragraph 5 shall apply without regard to geographic location. Upon the
termination of Employee’s employment, the covenants contained in this paragraph 5 shall
be limited to Medina County, Ohio and contiguous counties.






	 	(d)	 	Notwithstanding any other provision of this Agreement to the contrary, in the
event of a violation of the restrictive covenants provided for herein by Employee all
amounts otherwise owing to Employee by the Corporation shall be forfeited by Employee
and the Corporation, in addition to any other remedy, shall be under no further
obligation to Employee.






	 	6.	 	Inventions, Discoveries and Improvements






The Employee hereby agrees to assign and transfer to the Corporation, its successors and
assigns, his entire right, title and interest in and to any and all inventions, discoveries,
trade secrets and improvements thereto which he may discover or develop, either solely or
jointly with others, during his employment hereunder and for a period of one year after
termination of such employment, which would relate in any way to the business of the
Corporation or any parent, subsidiary or affiliate of the Corporation, together with all
rights to letters patent, copyrights or trademarks which may be granted with respect
thereto. Immediately upon making or developing any invention, discovery, trade secret or
improvement thereto, Employee shall notify the Corporation thereof and shall execute and
deliver to the Corporation, without further compensation, such documents as may be necessary
to assign and transfer to the Corporation his entire right, title and interest in and to
such invention, discovery, trade secret or improvement thereto, and to prepare or prosecute
applications for letters patent with respect to the same in the name of the Corporation.



7. Confidential Information




Employee shall not at any time, in any manner, while employed by the Corporation or
thereafter, either directly or indirectly, except in the course of carrying out the
Corporation’s business or as previously authorized in writing on behalf of the Corporation,
disclose or communicate to any person, firm, or corporation, any information of any kind
concerning any matters affecting or relating to the Corporation’s business or any of its
data, figures, projections, estimates, customer lists, tax records, personnel histories, and
accounting procedures of the Corporation, without regard to whether any or all of such
information would otherwise be deemed confidential or material.




	 	8	 	Non-Assignability






	 	(a)	 	Neither party to this Agreement shall have the right to assign this Agreement
or any rights or obligations hereunder provided that nothing herein shall prevent the
Employee from designating one or more members of his family or a trust or trusts for
the members of his family as a beneficiary or beneficiaries entitled to receive
payments hereunder as heretofore specified.






	 	(b)	 	Except as provided above, no title to any payments which shall become due and
payable to the Employee, his personal representative or designated beneficiary under
the provisions hereof, shall be vested in him or any of them until the actual payment
thereof is made to such person by the Corporation in accordance with the provisions of
this Agreement. Neither he nor any of them shall have the right or power to transfer,
assign, anticipate or encumber any interest in any such payment, prior to the actual
receipt thereof from the Corporation. Neither this Agreement, the Corporation nor any
person’s rights hereunder shall be liable for the debt, contract or engagement of any
of them. None of them shall be permitted to appoint any agent or attorney-in-fact and
except as provided herein, to collect or receive his share of such payments or any part
thereof unless permission to do so shall be specifically granted by the Corporation in
writing. The Corporation, in the absence of such written permission, shall not in any
manner recognize such appointment, transfer, assignment or encumbrance.






	 	(c)	 	If the Employee or any personal representative or any designated beneficiary
attempts to transfer, assign or encumber his interest in such payments, or any part
thereof, prior to the payment or distribution thereof to him or her; or, if any
transfer or seizure thereof is attempted to be made or brought through the operation of
any bankruptcy or insolvency law, the right of the person taking such action or
concerned therein or affected thereby, and who would, but for this provision, be
entitled to receive such payments, or any part thereof, shall forthwith and ipso facto
terminate, all rights bestowed on any such person being hereby, on the happening of any
such event, expressly revoked; and the Corporation shall thereafter, in its absolute
discretion, at such time or times as it deems proper, cause such part of such person’s
theretofore existing share of such payments to be paid to such person or persons,
including the Employee, or any parent, spouse or child of said person, as the
Corporation, in its uncontrolled discretion, shall deem advisable; and the remainder of
such payments, if any, may be distributed by the Corporation to the person or person
who would have been entitled to receive the same if such person had died immediately
prior to said attempted transfer, assignment or encumbrance, or attempted transfer or
seizure by operation of law.






	 	9.	 	Binding Effect






This Agreement shall be binding upon and inure to the benefit of any successor of the
Corporation, and any such successor shall be deemed substituted for the Corporation under
the terms of this Agreement. As used in this Agreement, the term “successor” shall include
any person, firm, corporation, or other business entity which, at any time, whether by
merger, purchase, or otherwise, acquires all or substantially all of the assets or business
of the Corporation.



10. Entire Agreement




This Agreement contains the entire agreement of the parties hereto concerning the subject
matter hereof, and cancels any and all other oral or written agreements or understandings
between the parties with respect to the subject matter hereof, provided, however, that the
provisions of the Second Addendum, other than paragraph 4 thereof, shall remain in full
force and effect. The Agreement may not be changed orally, but only by agreement in writing
signed by both parties.




	 	11.	 	Authorization for Acts of Corporation






Any act, request, approval, consent or opinion of the Corporation hereunder shall be
authorized, given or expressed by resolution of its Board of Directors.



12. Arbitration




Subject to the Corporation’s right to seek injunctive relief under paragraph 5 of this
Agreement, in the event the parties are unable to resolve any issue, misunderstanding,
disagreement or dispute after making a good faith effort to do so, the parties hereto agree
to arbitrate any such 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 eight weeks they have been unable to agree upon one arbitrator, then either party may
appoint one arbitrator and require the other party to appoint a second arbitrator.
Whereupon, the two appointed arbitrators shall appoint a third arbitrator mutually agreeable
to the two arbitrators. The arbitration shall occur in Medina, Ohio, or such other place as
mutually agreed upon. Each party shall bear their own expenses in connection with such
arbitration. Judgement on the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof.




	 	13.	 	Governing Law






This Agreement is executed and delivered in the State of Ohio and is intended to be
interpreted, construed and enforced in accordance with the laws of such State.



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IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed on its behalf by
the Chairman of its Board of Directors, and the Employee has signed this Agreement, all as of the
date and year first above written.




Western Reserve Bancorp, Inc.




By: /s/ P.M. Jones

P.M. Jones, Chairman, Board of Directors





/s/ Edward J. McKeon




	 	 	 	Edward J. McKeon




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Exhibit A



Change in Control Definition




A “Change in Control” shall mean a “Change in Ownership” as defined in (a) hereof; a “Change
in Effective Control” as defined in (b), hereof; or a “Change in Ownership of a Substantial
Portion of Assets” as defined in (c) hereof.




	 	(a)	 	Change in Ownership. For purposes of this Agreement, a “change in the
ownership” of the Corporation occurs on the date that any one person, or more than one
	 
	 	 	 	person acting as a group (as defined in subparagraph (d) hereof, acquires ownership of
stock of the Corporation that, together with stock held by such person or group,
constitutes more than 50 percent of the total fair market value or total voting power
of the stock of the Corporation. However, if any one person, or more than one person
acting as a group, is considered to own more than 50 percent of the total fair market
value or total voting power of the stock of the Corporation, the acquisition of
additional stock by the same person or persons is not considered to cause a change in
the ownership of the Corporation (or to cause a change in the effective control of the
Corporation (within the meaning of subparagraph (b) hereof. An increase in the
percentage of stock owned by any one person, or persons acting as a group, as a result
of a transaction in which the Corporation acquires its stock in exchange for property
will be treated as an acquisition of stock for purposes of this paragraph.






	 	(b)	 	Change in the Effective Control. For purposes of this Agreement, a
change in the effective control of the Corporation occurs on the date that either –






	 	(i)	 	Any one person, or more than one person acting as a
group (as determined under subparagraph (d) hereof, acquires (or has
acquired during the 12-month period ending on the date of the most
recent acquisition by such person or persons) ownership of stock of the
Corporation possessing 35 percent or more of the total voting power of
the stock of the Corporation; or	 






	 	(ii)	 	a majority of members of the Corporation’s board of
directors is replaced during any 12-month period by directors whose
appointment or election is not endorsed by a majority of the members of
the Corporation’s board of directors prior to the date of the
appointment or election.	 






In the absence of an event described in subparagraph (b)(i) or (ii) above, a change
in the effective control of a Corporation will not have occurred.




	 	(c)	 	Change in the Ownership of a Substantial Portion of the Corporation’s
Assets. For purposes of this Agreement, a change in the ownership of a substantial
portion of the Corporation’s assets occurs on the date that any one person, or more
than one person acting as a group (as determined in subparagraph(d) hereof, acquires
(or has acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) assets from the Corporation that have a total
gross fair market value equal to or more than 40 percent of the total gross fair market
value of all of the assets of the Corporation immediately prior to such acquisition or
acquisitions. For this purpose, gross fair market value means the value of the assets
of the Corporation, or the value of the assets being disposed of, determined without
regard to any liabilities associated with such assets.






There is no Change in Control Event under this subparagraph (c) when there is a
transfer to an entity that is controlled by the shareholders of the Corporation
immediately after the transfer, as provided in this paragraph. A transfer of assets
by the Corporation is not treated as a change in the ownership of such assets if the
assets are transferred to —




	 	(i)	 	A shareholder of the Corporation (immediately before
the asset transfer) in exchange for or with respect to its stock;	 






	 	(ii)	 	An entity, 50 percent or more of the total value or
voting power of which is owned, directly or indirectly, by the
Corporation;	 






	 	(iii)	 	A person, or more than one person acting as a group,
that owns, directly or indirectly, 50 percent or more of the total
value or voting power of all the outstanding stock of the Corporation;
or	 






	 	(iv)	 	An entity, at least 50 percent of the total value or
voting power of which is owned, directly or indirectly, by a person
described in subparagraph (c)(iii).	 






For purposes of this subparagraph(c) and except as otherwise provided, a person’s
status is determined immediately after the transfer of the assets. For example, a
transfer to a corporation in which the transferor corporation has no ownership
interest before the transaction, but which is a majority-owned subsidiary of the
transferor corporation after the transaction is not treated as a change in the
ownership of the assets of the transferor corporation.




	 	(d)	 	Persons Acting as a Group. Persons will not be considered to be acting
as a group solely because they purchase assets or purchase or own stock of the same
corporation at the same time, or as a result of the same public offering. However,
persons will be considered to be acting as a group if they are owners of a corporation
that enters into a merger, consolidation, purchase or acquisition of stock, purchase or
acquisition of assets, or similar business transaction with the Corporation. If a
person, including an entity shareholder, owns stock in both corporations that enter
into a merger, consolidation, purchase or acquisition of stock, or similar transaction,
such shareholder is considered to be acting as a group with other shareholders in a
corporation only to the extent of the ownership in that corporation prior to the
transaction giving rise to the change and not with the ownership interest in the other
corporation.





Notwithstanding the foregoing, no trust department or designated fiduciary or other trustee of such
trust department of the Corporation or a subsidiary of the Corporation, or other similar fiduciary
capacity of the Corporation with direct voting control of the stock shall be treated as a person or
group within the meaning hereof. 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
treated as a person or group within the meaning hereof.



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