Document:

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                                                                    Exhibit 10.2

                               SEVERANCE AGREEMENT

     This Agreement is entered into this 28th day of November, 2001, by and
between Middlefield Banc Corp., an Ohio corporation ("Middlefield"), and Thomas
G. Caldwell, President and Chief Executive Officer of Middlefield (the
"Executive").

     Whereas, the Executive is the President and Chief Executive Officer of
Middlefield, the Executive is employed by Middlefield and its subsidiary The
Middlefield Banking Company, an Ohio-chartered, FDIC-insured nonmember bank, and
the Executive has made and is expected to continue to make major contributions
to the profitability, growth, and financial strength of Middlefield and its
subsidiaries,

     Whereas, Middlefield recognizes that, as is the case for most companies,
the possibility of a Change in Control (as defined in Section 1(c)) exists,

     Whereas, Middlefield desires to assure itself of the current and future
continuity of management and desires to establish minimum severance benefits for
certain of its officers and other key employees, including the Executive, if a
Change in Control occurs,

     Whereas, Middlefield wishes to ensure that officers and other key employees
are not practically disabled from discharging their duties if a proposed or
actual transaction involving a Change in Control arises,

     Whereas, Middlefield desires to provide additional inducement for the
Executive to continue to remain in the ongoing employ of Middlefield and
subsidiary,

     Whereas, none of the conditions or events included in the definition of the
term "golden parachute payment" that is set forth Section 18(k)(4)(A)(ii) of the
Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal
Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.1(f)(1)(ii)]
exists or, to the best knowledge of Middlefield, is contemplated insofar as
either of Middlefield or any of its subsidiaries is concerned, and

     Whereas, the Executive and Middlefield entered into a Severance Agreement
Due to Change in Control of Middlefield Banc Corp. on October 8, 1996, which the
Executive is willing to terminate in consideration of this Agreement becoming
effective,

     Now Therefore, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

1.   Change in Control Combined with Employment Termination

     (a) Termination of Executive Within Two Years After a Change in Control. If
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a Change in Control occurs during the term of this Agreement and if either of
the following occurs, the Executive shall be entitled to severance and
termination benefits specified in Section 2 of this Agreement --

     (1)  Termination by Middlefield or Subsidiary: the Executive's employment
          with Middlefield or its Subsidiary(ies) is involuntarily terminated
          within two years after a Change in Control, except for termination
          under Section 4 of this Agreement. For purposes of this Agreement,
          "Subsidiary" means an entity in which Middlefield directly or
          indirectly beneficially owns 50% or more of the outstanding voting
          securities, or

     (2)  Termination by the Executive for Good Reason: the Executive terminates
          his employment with Middlefield or Subsidiary(ies) for Good Reason (as
          defined in Section 3) within two years after a Change in Control.
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     If the Executive is removed from office or if his employment terminates
after discussions with a third party regarding a Change in Control commence, and
if those discussions ultimately conclude with a Change in Control, then for
purposes of this Agreement the removal of the Executive or termination of his
employment shall be deemed to have occurred after the Change in Control.

     (b) Termination by the Executive During a 90-day Period 12 Months after a
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Change in Control. The Executive shall also be entitled to severance and
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termination benefits under Section 2 of this Agreement if he terminates
employment with Middlefield and Subsidiary(ies) for any reason or for no reason
during the 90-day period beginning on the date that is 12 months after a Change
in Control.

     (c) Definition of Change in Control. For purposes of this Agreement,
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"Change in Control" means any of the following events occur:

     (1)  Merger: Middlefield merges into or consolidates with another
          corporation, or merges another corporation into Middlefield, and as a
          result less than a majority of the combined voting power of the
          resulting corporation immediately after the merger or consolidation is
          held by persons who were the holders of Middlefield's voting
          securities immediately before the merger or consolidation. For
          purposes of this Agreement, the term person means an individual,
          corporation, partnership, trust, association, joint venture, pool,
          syndicate, sole proprietorship, unincorporated organization or other
          entity,

     (2)  Acquisition of Significant Share Ownership: a report on Schedule 13D,
          Schedule TO, or another form or schedule (other than Schedule 13G), is
          filed or is required to be filed under Sections 13(d) or 14(d) of the
          Securities Exchange Act of 1934, if the schedule discloses that the
          filing person or persons acting in concert has or have become the
          beneficial owner of 15% or more of a class of Middlefield's voting
          securities (but this clause (2) shall not apply to beneficial
          ownership of voting shares held by a Subsidiary in a fiduciary
          capacity),

     (3)  Change in Board Composition: during any period of two consecutive
          years, individuals who constitute Middlefield's board of directors at
          the beginning of the two-year period cease for any reason to
          constitute at least a majority thereof; provided, however, that -- for
          purposes of this clause (3) -- each director who is first elected by
          the board (or first nominated by the board for election by
          stockholders) by a vote of at least two-thirds (_) of the directors
          who were directors at the beginning of the period shall be deemed to
          have been a director at the beginning of the two-year period, or

     (4)  Sale of Assets: Middlefield sells to a third party substantially all
          of Middlefield's assets. For purposes of this Agreement, sale of
          substantially all of Middlefield's assets includes sale of The
          Middlefield Banking Company.

2.   Severance and Termination Benefits

     (a) Severance and Termination Benefits. The severance and termination
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benefits to which the Executive is entitled under Section 1 are as follows --

     (1)  Lump Sum Payment: Middlefield shall make a lump sum payment to the
          Executive in an amount in cash equal to two times the Executive's
          annual compensation. For purposes of this Agreement, annual
          compensation means (a) the Executive's annual base salary on the date
          of the Change in Control or the Executive's termination of employment
          (at whichever date the Executive's current annual base salary is
          greater), plus (b) the average of the bonuses and incentive
          compensation earned for the three calendar years immediately preceding
          the year in which the Change in Control occurs, regardless of when the
          bonus or incentive compensation is

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          paid. Middlefield recognizes that the bonus and incentive compensation
          earned by the Executive for a particular year's service might be paid
          in the year after the calendar year in which the bonus or incentive
          compensation is earned. The amount payable to the Executive hereunder
          shall not be reduced to account for the time value of money or
          discounted to present value. The payment required under this Section
          2(a)(1) is payable no later than 5 business days after the date the
          Executive's employment terminates. If the Executive terminates
          employment for Good Reason, the date of termination shall be the date
          specified by the Executive in his notice of termination.

     (2)  Benefit Plans: Middlefield shall cause the Executive to become fully
          vested in any qualified and non-qualified plans, programs or
          arrangements in which the Executive participated if the plan, program,
          or arrangement does not address the effect of a change in control.
          Middlefield also shall contribute or cause a Subsidiary to contribute
          to the Executive's Middlefield Banking Company 401(k) Employee Savings
          and Investment Plan account the matching and voluntary contributions,
          if any, that would have been made had the Executive's employment not
          terminated before the end of the plan year.

     (3)  Insurance Coverage: Middlefield shall cause to be continued life,
          health and disability insurance coverage substantially identical to
          the coverage maintained for the Executive before his termination. The
          insurance coverage may cease when the Executive becomes employed by
          another employer or 24 months after the Executive's termination,
          whichever occurs first. At the end of the 24-month period, the
          Executive shall have the option to continue health insurance coverage
          at his own expense for a period not less than the number of months by
          which the Consolidated Omnibus Budget Reconciliation Act (COBRA)
          continuation period exceeds 24 months.

     (b) No Mitigation Required. Middlefield hereby acknowledges that it will be
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difficult and could be impossible (1) for the Executive to find reasonably
comparable employment after his employment terminates, and (2) to measure the
amount of damages the Executive suffers as a result of termination.
Additionally, Middlefield acknowledges that its general severance pay plans do
not provide for mitigation, offset or reduction of any severance payment
received thereunder. Accordingly, Middlefield further acknowledges that the
payment of severance and termination benefits by Middlefield under this
Agreement is reasonable and will be liquidated damages, and the Executive shall
not be required to mitigate the amount of any payment provided for in this
Agreement by seeking other employment or otherwise, nor will any profits,
income, earnings or other benefits from any source whatsoever create any
mitigation, offset, reduction or any other obligation on the part of the
Executive hereunder or otherwise.

3.   Good Reason

     For purposes of this Agreement, "Good Reason" means the occurrence of any
of the events or conditions described in clauses (a) through (f) hereof without
the Executive's express written consent --

     (a) Change in Office or Position or Termination as a Director: failure to
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elect or reelect or otherwise to maintain the Executive in the office or
position, or a substantially equivalent office or position, of or with
Middlefield and Subsidiary(ies) that the Executive held immediately before the
Change in Control, or the removal or failure to nominate the Executive as a
director of Middlefield (or any successor thereto) if the Executive shall have
been a director of Middlefield immediately before the Change in Control,

     (b) Adverse Change in the Scope of His Duties or Compensation and Benefits:
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     (1)  a significant adverse change in the nature or scope of the
          authorities, powers, functions, responsibilities or duties associated
          with the Executive's position with Middlefield compared to

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          the nature or scope of the authorities, powers, functions,
          responsibilities or duties associated with the position immediately
          before the Change in Control,

     (2)  a reduction in the aggregate of the Executive's annual compensation
          received from Middlefield, or

     (3)  the termination or denial of the Executive's rights to benefits under
          Middlefield's or Subsidiary's(ies') benefit, compensation and
          incentive plans and arrangements or a reduction in the scope or value
          thereof, which situation is not remedied within 10 calendar days after
          written notice to Middlefield from the Executive,

     (c) Adverse Change in Circumstances: the Executive determines that a change
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in circumstances has occurred after a Change in Control, including without
limitation a change in the scope of the business or other activities for which
the Executive is responsible compared to his responsibilities immediately before
the Change in Control, (1) which renders the Executive substantially unable to
carry out, substantially hinders the Executive's performance of, or causes the
Executive to suffer a substantial reduction in, any of the authorities, powers,
functions, responsibilities or duties associated with the office or position
held by the Executive immediately before the Change in Control, and (2) which
situation is not remedied within 10 calendar days after written notice to
Middlefield from the Executive of such determination. Provided his determination
is made in good faith, the Executive's determination will be conclusive and
binding upon the parties hereto. The Executive's determination will be presumed
to have been made in good faith, unless Middlefield establishes by clear and
convincing evidence that it was not made in good faith,

     (d) Liquidation and Merger of Middlefield: the liquidation, dissolution,
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merger, consolidation or reorganization of Middlefield or transfer of all or
substantially all of the business or assets of either Middlefield or The
Middlefield Banking Company, unless the successor or successors (by liquidation,
merger, consolidation, reorganization, transfer or otherwise) to which all or
substantially all of the business or assets have been transferred (directly or
by operation of law) assumes all duties and obligations of Middlefield under
this Agreement,

     (e) Relocation of the Executive: Middlefield relocates its principal
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executive offices, or requires the Executive to have his principal location of
work changed, to any location that is more than 15 miles from the location
thereof immediately before the Change in Control, or requires the Executive to
travel away from his office in the course of discharging his responsibilities or
duties hereunder at least 20% more (in terms of aggregate days in any calendar
year or in any calendar quarter when annualized for purposes of comparison to
any prior year) than was required of Executive in any of the three full years
immediately before the Change in Control, or

     (f) Breach of this Agreement: without limiting the generality or effect of
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the foregoing, any material breach of this Agreement by Middlefield or any
successor thereto.

4.   Termination for Which No Severance or Termination Benefits Are Payable

     (a) No Severance for Termination for Cause. Anything in this Agreement to
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the contrary notwithstanding, under no circumstance shall the Executive be
entitled to severance or termination benefits if his employment terminates for
Cause.

     (1)  Cause Means Commission of Any of the Following Acts: For purposes of
          this Agreement, "Cause" means the Executive shall have committed any
          of the following acts --

          (a)  Fraud, Embezzlement, Theft or Other Crime: an act of fraud,
               embezzlement or theft in connection with his duties or in the
               course of his employment with Middlefield or a

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               Subsidiary, or commission of a felony or commission of a
               misdemeanor involving moral turpitude,

          (b)  Negligence, Disloyalty or Violation of Law or Policy: the
               Executive's gross negligence or gross neglect of duties,
               disloyalty, dishonesty, or willful violation of any law or
               significant policy of Middlefield committed in connection with
               the Executive's employment and resulting in an adverse effect on
               Middlefield or a Subsidiary,

          (c)  Disclosure of Trade Secrets: intentional wrongful disclosure of
               secret processes or confidential information of Middlefield or a
               Subsidiary, causing material harm to Middlefield or the
               Subsidiary,

          (d)  Competing with Middlefield: intentional wrongful engagement in
               any competitive activity. For purposes of this Agreement,
               competitive activity means the Executive's participation, without
               the written consent of a senior executive officer of Middlefield,
               in the management of any business enterprise if (1) the
               enterprise engages in substantial and direct competition with
               Middlefield, (2) the enterprise's revenues derived from any
               product or service competitive with any product or service of
               Middlefield or Subsidiary(ies) amounted to 10% or more of the
               enterprise's revenues for its most recently completed fiscal
               year, and (3) Middlefield's revenues from the product or service
               amounted to 10% of Middlefield's revenues for its most recently
               completed fiscal year. A competitive activity does not include
               mere ownership of securities in an enterprise and the exercise of
               rights appurtenant thereto, provided the Executive's share
               ownership does not give him practical or legal control of the
               enterprise. For this purpose, ownership of less than 5% of the
               enterprise's outstanding voting securities shall conclusively be
               presumed to be insufficient for practical or legal control, and
               ownership of more than 50% shall conclusively be presumed to
               constitute practical and legal control.

                    If the Executive is now or hereafter becomes subject to an
               agreement not to compete with Middlefield or Subsidiary(ies), a
               breach by the Executive of that other non-competition agreement
               shall be grounds for denial of severance and termination benefits
               for Cause under this clause (d) of Section 4(a)(1). But if the
               Executive engages in a competitive activity under circumstances
               justifying denial of severance or termination benefits for Cause
               under this clause (d), that shall not necessarily be grounds for
               concluding that the Executive has also breached the other
               non-competition agreement to which he is or may become subject.
               This clause (d) is not intended to and shall not be construed to
               supersede or amend any provision of an employment or
               non-competition agreement to which the Executive is or may become
               subject. This clause (d) does not grant to the Executive any
               right or privilege to engage in other activities or enterprises,
               whether in competition with Middlefield or otherwise, or

          (e)  Termination for Cause under an Employment Agreement: any actions
               that have caused the Executive to be terminated for cause under
               any employment agreement existing on the date hereof or hereafter
               entered into between the Executive and Middlefield or a
               Subsidiary.

     (2)  Definition of "Intentional": For purposes of this Agreement, no act or
          failure to act on the part of the Executive shall be deemed to have
          been intentional if it was due primarily to an error in judgment or
          negligence. An act or failure to act on the Executive's part shall be
          considered intentional if it is not in good faith and if it is without
          a reasonable belief that the action or failure to act is in the best
          interests of Middlefield.

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     (3)  Termination for Cause Can Occur Solely by Formal Board Action. The
          Executive shall not be deemed under this Agreement to have been
          terminated for Cause unless and until there shall have been delivered
          to the Executive a copy of a resolution duly adopted by the
          affirmative vote of at least three-fourths (3/4) of the directors of
          Middlefield then in office at a meeting of the board of directors
          called and held for such purpose, which resolution shall (a) contain
          findings that, in the good faith opinion of the board, the Executive
          has committed an act constituting Cause and (b) specify the
          particulars thereof in detail. Notice of that meeting and the proposed
          determination of Cause shall be given to the Executive a reasonable
          amount of time before the board's meeting. The Executive and his
          counsel (if the Executive chooses to have counsel present) shall have
          a reasonable opportunity to be heard by the board at the meeting.
          Nothing in this Agreement limits the Executive's or his beneficiaries'
          right to contest the validity or propriety of the board's
          determination of Cause, and they shall have the right to contest the
          validity or propriety of the board's determination of Cause even if
          that right does not exist under any employment agreement of the
          Executive.

     (b) No Severance under this Agreement for the Executive's Death or
         --------------------------------------------------------------
Disability. Anything in this Agreement to the contrary notwithstanding, under no
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circumstance shall the Executive be entitled to severance payments or
termination benefits under this Agreement if --

     (1)  Death: the Executive dies while actively employed by Middlefield or a
          Subsidiary, or

     (2)  Disability: the Executive becomes totally disabled while actively
          employed by Middlefield or a Subsidiary. For purposes of this
          agreement, the term "totally disabled" means that because of injury or
          sickness, the Executive is unable to perform his duties.

     The benefits, if any, payable to the Executive or his beneficiary(ies) or
estate relating to his death or disability shall be determined solely by such
benefit plans or arrangements as Middlefield or Subsidiary may have with the
Executive relating to death or disability, not by this Agreement.

5.   Term of Agreement

     The initial term of this Agreement shall be for a period of three years,
commencing November 28, 2001. On the first anniversary of the November 28, 2001
effective date of this Agreement, and on each anniversary thereafter, the
Agreement shall be extended automatically for one additional year unless
Middlefield's board of directors gives notice to the Executive in writing at
least 90 days before the anniversary that the term of this Agreement will not be
extended. If the board of directors determines not to extend the term, it shall
promptly notify the Executive. References herein to the term of this Agreement
mean the initial term and extensions of the initial term. Unless terminated
earlier, this Agreement shall terminate when the Executive reaches age 65. If
the board of directors decides not to extend the term of this Agreement, this
Agreement shall nevertheless remain in force until its term expires. The board's
decision not to extend the term of this Agreement shall not -- by itself -- give
the Executive any rights under this Agreement to claim an adverse change in his
position, compensation or circumstances or otherwise to claim entitlement to
severance or termination benefits under this Agreement.

6.   This Agreement Is Not an Employment Contract

     The parties hereto acknowledge and agree that (a) this Agreement is not a
management or employment agreement and (b) nothing in this Agreement shall give
the Executive any rights or impose any obligations to continued employment by
Middlefield or any Subsidiary or successor of Middlefield, nor shall it give
Middlefield any rights or impose any obligations for the continued performance
of duties by the Executive for Middlefield or any Subsidiary or successor of
Middlefield.

7.   Payment of Legal Fees

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     Middlefield desires that the Executive not be required to incur legal fees
and the related costs and expenses associated with the interpretation,
enforcement or defense of Executive's rights under this Agreement by litigation
or otherwise, because the amounts thereof would substantially detract from the
benefits intended to be extended to the Executive under this Agreement.
Therefore, even if the Executive does not prevail in whole or in part in
litigation or other legal action associated with the interpretation, enforcement
or defense of Executive's rights under this Agreement, Middlefield hereby agrees
to pay and be solely financially responsible for any and all attorneys' and
related fees, costs and expenses incurred by the Executive in the litigation or
other legal action, up to a maximum of $500,000. The fees and expenses of
counsel selected by the Executive shall be paid or reimbursed to the Executive
by Middlefield on a regular, periodic basis, upon presentation by the Executive
of a statement or statements prepared by such counsel in accordance with
counsel's customary practices. Anything herein to the contrary notwithstanding,
nothing in this Agreement authorizes Middlefield to pay or the Executive to
demand payment of fees, costs and expenses if and to the extent payment of fees,
costs and expenses constitutes a "prohibited indemnification payment" within the
meaning of Federal Deposit Insurance Corporation Rule 359.1(l)(1) [12 CFR
359.1(l)(1)]. Middlefield's obligation in this Section 7 to pay the Executive's
legal fees operates separately from and in addition to any legal fee
reimbursement obligation Middlefield or a Subsidiary may have under any separate
employment or other agreement between the Executive and Middlefield.

     Middlefield irrevocably authorizes the Executive to retain from time to
time counsel of Executive's choice to advise and represent him in the
interpretation, enforcement or defense of the parties' rights and
responsibilities under this Agreement, if --

          (1)  the Executive concludes that Middlefield has failed to comply
               with any of its obligations under this Agreement, or

          (2)  if Middlefield or any other person takes or threatens to take any
               action to declare this Agreement void or unenforceable, or
               institutes any litigation or other action or proceeding designed
               to deny, or to recover from, the Executive the benefits provided
               or intended to be provided to the Executive under this Agreement,

including without limitation the initiation or defense of any litigation or
other legal action, whether by or against Middlefield or any director, officer,
stockholder or other person affiliated with Middlefield, in any jurisdiction.

8.   Withholding of Taxes

     Middlefield may withhold from any benefits payable under this Agreement all
Federal, state, local or other taxes as may be required by law, governmental
regulation or ruling.

9.   Successors and Assigns

     (a) This Agreement Is Binding on Middlefield's Successors. This Agreement
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shall be binding upon Middlefield and any successor to Middlefield, including
any persons acquiring directly or indirectly all or substantially all of the
business or assets of Middlefield by purchase, merger, consolidation,
reorganization or otherwise. Any such successor shall thereafter be deemed to be
the "Corporation" for purposes of this Agreement. But this Agreement and
Middlefield's obligations under this Agreement are not otherwise assignable,
transferable or delegable by Middlefield. By agreement in form and substance
satisfactory to the Executive, Middlefield shall require any successor to all or
substantially all of the business or assets of Middlefield expressly to assume
and agree to perform this Agreement in the same manner and to the same extent
Middlefield would be required to perform if no such succession had occurred.

     (b) This Agreement Is Enforceable by the Executive and His Heirs. This
         ------------------------------------------------------------
Agreement will inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributes and legatees.

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     (c) This Agreement Is Personal in Nature and Is Not Assignable. This
         ----------------------------------------------------------
Agreement is personal in nature. Without written consent of the other party,
neither party shall assign, transfer or delegate this Agreement or any rights or
obligations under this Agreement except as expressly provided in this Section 9.
Without limiting the generality or effect of the foregoing, the Executive's
right to receive payments hereunder is not assignable or transferable, whether
by pledge, creation of a security interest, or otherwise, except for a transfer
by Executive's will or by the laws of descent and distribution. If the Executive
attempts an assignment or transfer that is contrary to this Section 9,
Middlefield shall have no liability to pay any amount to the assignee or
transferee.

10.  Notices

     All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered by hand or
mailed, certified or registered mail, return receipt requested, with postage
prepaid to the following addresses or to such other address as either party may
designate by like notice.

     (a) If to Middlefield, to:     Middlefield Banc Corp.
                                    15985 East High Street
                                    P.O. Box 35
                                    Middlefield, Ohio 44062
                                    Attn: Corporate Secretary

     (b) If to the Executive, to:   Mr. Thomas G. Caldwell
                                    15985 East High Street
                                    Middlefield, Ohio 44062

and to such other or additional person or persons as either party shall have
designated to the other party in writing by like notice.

11.  Captions and Counterparts

     The headings and subheadings used in this Agreement are included solely for
convenience and shall not affect the interpretation of this Agreement. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original, but all of which together shall constitute one and the
same agreement.

12.  Amendments and Waivers

     No provision of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in a writing or writings
signed by the Executive and by Middlefield. No waiver by either party hereto at
any time of any breach by the other party hereto or compliance with any
condition or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or representations, oral
or otherwise, expressed or implied with respect to the subject matter hereof
have been made by either party that are not set forth expressly in this
Agreement.

13.  Severability

     The provisions of this Agreement shall be deemed severable. The invalidity
or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions of this Agreement. Any provision held to
be invalid or unenforceable shall be reformed to the extent (and only to the
extent) necessary to make it valid and enforceable.

14.  Governing Law

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     The validity, interpretation, construction and performance of this
Agreement shall be governed by and construed in accordance with the substantive
laws of the State of Ohio, without giving effect to the principles of conflict
of laws of such State.

15.  Entire Agreement

     This Agreement constitutes the entire agreement between Middlefield and the
Executive concerning the subject matter hereof. No rights are granted to the
Executive under this Agreement other than those specifically set forth herein.
This Agreement supersedes and replaces in its entirety the Severance Agreement
Due to Change in Control of Middlefield Banc Corp. entered into by the Executive
and Middlefield on October 8, 1996.

     In Witness Whereof, the parties have executed this Agreement as of the day
and year first written above.

Witnesses:                              Middlefield Banc Corp.

                                        By:
------------------------                     -----------------------------------
                                             James R. Heslop, II
------------------------                Its: Executive Vice President and Chief
                                             Operating Officer

Witnesses:                              Executive

------------------------                ----------------------------------------
                                        Thomas G. Caldwell
------------------------

County of Geauga  )
                  ) ss:
State of Ohio     )

     Before me this         day of November, 2001, personally appeared the above
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named James R. Heslop, II, and Thomas G. Caldwell, who acknowledged that they
did sign the foregoing instrument and that the same was their free act and deed.

                                        ----------------------------------------
(Notary Seal)                           Notary Public
                                        My Commission Expires:

                                       9<PAGE>

                                                                    Exhibit 10.3

                               SEVERANCE AGREEMENT

     This Agreement is entered into this 28th day of November, 2001, by and
between Middlefield Banc Corp., an Ohio corporation ("Middlefield"), and James
R. Heslop, II, Executive Vice President and Chief Operating Officer of
Middlefield (the "Executive").

     Whereas, the Executive is an Executive Vice President and Chief Operating
Officer of Middlefield, the Executive is employed by Middlefield and its
subsidiary The Middlefield Banking Company, an Ohio-chartered, FDIC-insured
nonmember bank, and the Executive has made and is expected to continue to make
major contributions to the profitability, growth, and financial strength of
Middlefield and its subsidiaries,

     Whereas, Middlefield recognizes that, as is the case for most companies,
the possibility of a Change in Control (as defined in Section 1(c)) exists,

     Whereas, Middlefield desires to assure itself of the current and future
continuity of management and desires to establish minimum severance benefits for
certain of its officers and other key employees, including the Executive, if a
Change in Control occurs,

     Whereas, Middlefield wishes to ensure that officers and other key employees
are not practically disabled from discharging their duties if a proposed or
actual transaction involving a Change in Control arises,

     Whereas, Middlefield desires to provide additional inducement for the
Executive to continue to remain in the ongoing employ of Middlefield and
subsidiary,

     Whereas, none of the conditions or events included in the definition of the
term "golden parachute payment" that is set forth in Section 18(k)(4)(A)(ii) of
the Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal
Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.1(f)(1)(ii)]
exists or, to the best knowledge of Middlefield, is contemplated insofar as
either of Middlefield or any of its subsidiaries is concerned, and

     Whereas, the Executive and Middlefield entered into a Severance Agreement
Due to Change in Control of Middlefield Banc Corp. on October 8, 1996, which the
Executive is willing to terminate in consideration of this Agreement becoming
effective,

     Now Therefore, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

1.   Change in Control Combined with Employment Termination

     (a) Termination of Executive Within Two Years After a Change in Control. If
         -------------------------------------------------------------------
a Change in Control occurs during the term of this Agreement and if either of
the following occurs, the Executive shall be entitled to severance and
termination benefits specified in Section 2 of this Agreement --

     (1)  Termination by Middlefield or Subsidiary: the Executive's employment
          with Middlefield or its Subsidiary(ies) is involuntarily terminated
          within two years after a Change in Control, except for termination
          under Section 4 of this Agreement. For purposes of this Agreement,
          "Subsidiary" means an entity in which Middlefield directly or
          indirectly beneficially owns 50% or more of the outstanding voting
          securities, or

     (2)  Termination by the Executive for Good Reason: the Executive terminates
          his employment with Middlefield or Subsidiary(ies) for Good Reason (as
          defined in Section 3) within two years after a Change in Control.
<PAGE>

     If the Executive is removed from office or if his employment terminates
after discussions with a third party regarding a Change in Control commence, and
if those discussions ultimately conclude with a Change in Control, then for
purposes of this Agreement the removal of the Executive or termination of his
employment shall be deemed to have occurred after the Change in Control.

     (b) Termination by the Executive During a 90-day Period 12 Months after a
         ---------------------------------------------------------------------
Change in Control. The Executive shall also be entitled to severance and
-----------------
termination benefits under Section 2 of this Agreement if he terminates
employment with Middlefield and Subsidiary(ies) for any reason or for no reason
during the 90-day period beginning on the date that is 12 months after a Change
in Control.

     (c) Definition of Change in Control. For purposes of this Agreement,
         -------------------------------
"Change in Control" means any of the following events occur:

     (1)  Merger: Middlefield merges into or consolidates with another
          corporation, or merges another corporation into Middlefield, and as a
          result less than a majority of the combined voting power of the
          resulting corporation immediately after the merger or consolidation is
          held by persons who were the holders of Middlefield's voting
          securities immediately before the merger or consolidation. For
          purposes of this Agreement, the term person means an individual,
          corporation, partnership, trust, association, joint venture, pool,
          syndicate, sole proprietorship, unincorporated organization or other
          entity,

     (2)  Acquisition of Significant Share Ownership: a report on Schedule 13D,
          Schedule TO, or another form or schedule (other than Schedule 13G), is
          filed or is required to be filed under Sections 13(d) or 14(d) of the
          Securities Exchange Act of 1934, if the schedule discloses that the
          filing person or persons acting in concert has or have become the
          beneficial owner of 15% or more of a class of Middlefield's voting
          securities (but this clause (2) shall not apply to beneficial
          ownership of voting shares held by a Subsidiary in a fiduciary
          capacity),

     (3)  Change in Board Composition: during any period of two consecutive
          years, individuals who constitute Middlefield's board of directors at
          the beginning of the two-year period cease for any reason to
          constitute at least a majority thereof; provided, however, that -- for
          purposes of this clause (3) -- each director who is first elected by
          the board (or first nominated by the board for election by
          stockholders) by a vote of at least two-thirds (_) of the directors
          who were directors at the beginning of the period shall be deemed to
          have been a director at the beginning of the two-year period, or

     (4)  Sale of Assets: Middlefield sells to a third party substantially all
          of Middlefield's assets. For purposes of this Agreement, sale of
          substantially all of Middlefield's assets includes sale of The
          Middlefield Banking Company.

2.   Severance and Termination Benefits

     (a) Severance and Termination Benefits. The severance and termination
         ----------------------------------
benefits to which the Executive is entitled under Section 1 are as follows --

     (1)  Lump Sum Payment: Middlefield shall make a lump sum payment to the
          Executive in an amount in cash equal to two times the Executive's
          annual compensation. For purposes of this Agreement, annual
          compensation means (a) the Executive's annual base salary on the date
          of the Change in Control or the Executive's termination of employment
          (at whichever date the Executive's current annual base salary is
          greater), plus (b) the average of the bonuses and incentive
          compensation earned for the three calendar years immediately preceding
          the year in which the Change in Control occurs, regardless of when the
          bonus or incentive compensation is

                                        2
<PAGE>

          paid. Middlefield recognizes that the bonus and incentive compensation
          earned by the Executive for a particular year's service might be paid
          in the year after the calendar year in which the bonus or incentive
          compensation is earned. The amount payable to the Executive hereunder
          shall not be reduced to account for the time value of money or
          discounted to present value. The payment required under this Section
          2(a)(1) is payable no later than 5 business days after the date the
          Executive's employment terminates. If the Executive terminates
          employment for Good Reason, the date of termination shall be the date
          specified by the Executive in his notice of termination.

     (2)  Benefit Plans: Middlefield shall cause the Executive to become fully
          vested in any qualified and non-qualified plans, programs or
          arrangements in which the Executive participated if the plan, program,
          or arrangement does not address the effect of a change in control.
          Middlefield also shall contribute or cause a Subsidiary to contribute
          to the Executive's Middlefield Banking Company 401(k) Employee Savings
          and Investment Plan account the matching and voluntary contributions,
          if any, that would have been made had the Executive's employment not
          terminated before the end of the plan year.

     (3)  Insurance Coverage: Middlefield shall cause to be continued life,
          health and disability insurance coverage substantially identical to
          the coverage maintained for the Executive before his termination. The
          insurance coverage may cease when the Executive becomes employed by
          another employer or 24 months after the Executive's termination,
          whichever occurs first. At the end of the 24-month period, the
          Executive shall have the option to continue health insurance coverage
          at his own expense for a period not less than the number of months by
          which the Consolidated Omnibus Budget Reconciliation Act (COBRA)
          continuation period exceeds 24 months.

     (b) No Mitigation Required. Middlefield hereby acknowledges that it will be
         ----------------------
difficult and could be impossible (1) for the Executive to find reasonably
comparable employment after his employment terminates, and (2) to measure the
amount of damages the Executive suffers as a result of termination.
Additionally, Middlefield acknowledges that its general severance pay plans do
not provide for mitigation, offset or reduction of any severance payment
received thereunder. Accordingly, Middlefield further acknowledges that the
payment of severance and termination benefits by Middlefield under this
Agreement is reasonable and will be liquidated damages, and the Executive shall
not be required to mitigate the amount of any payment provided for in this
Agreement by seeking other employment or otherwise, nor will any profits,
income, earnings or other benefits from any source whatsoever create any
mitigation, offset, reduction or any other obligation on the part of the
Executive hereunder or otherwise.

3.   Good Reason

     For purposes of this Agreement, "Good Reason" means the occurrence of any
of the events or conditions described in clauses (a) through (f) hereof without
the Executive's express written consent --

     (a) Change in Office or Position or Termination as a Director: failure to
         ---------------------------------------------------------
elect or reelect or otherwise to maintain the Executive in the office or
position, or a substantially equivalent office or position, of or with
Middlefield and Subsidiary(ies) that the Executive held immediately before the
Change in Control, or the removal or failure to nominate the Executive as a
director of Middlefield (or any successor thereto) if the Executive shall have
been a director of Middlefield immediately before the Change in Control,

     (b) Adverse Change in the Scope of His Duties or Compensation and Benefits:
         ----------------------------------------------------------------------

     (1)  a significant adverse change in the nature or scope of the
          authorities, powers, functions, responsibilities or duties associated
          with the Executive's position with Middlefield compared to

                                        3
<PAGE>

          the nature or scope of the authorities, powers, functions,
          responsibilities or duties associated with the position immediately
          before the Change in Control,

     (2)  a reduction in the aggregate of the Executive's annual compensation
          received from Middlefield, or

     (3)  the termination or denial of the Executive's rights to benefits under
          Middlefield's or Subsidiary's(ies') benefit, compensation and
          incentive plans and arrangements or a reduction in the scope or value
          thereof, which situation is not remedied within 10 calendar days after
          written notice to Middlefield from the Executive,

     (c) Adverse Change in Circumstances: the Executive determines that a change
         -------------------------------
in circumstances has occurred after a Change in Control, including without
limitation a change in the scope of the business or other activities for which
the Executive is responsible compared to his responsibilities immediately before
the Change in Control, (1) which renders the Executive substantially unable to
carry out, substantially hinders the Executive's performance of, or causes the
Executive to suffer a substantial reduction in, any of the authorities, powers,
functions, responsibilities or duties associated with the office or position
held by the Executive immediately before the Change in Control, and (2) which
situation is not remedied within 10 calendar days after written notice to
Middlefield from the Executive of such determination. Provided his determination
is made in good faith, the Executive's determination will be conclusive and
binding upon the parties hereto. The Executive's determination will be presumed
to have been made in good faith, unless Middlefield establishes by clear and
convincing evidence that it was not made in good faith,

     (d) Liquidation and Merger of Middlefield: the liquidation, dissolution,
         -------------------------------------
merger, consolidation or reorganization of Middlefield or transfer of all or
substantially all of the business or assets of either Middlefield or The
Middlefield Banking Company, unless the successor or successors (by liquidation,
merger, consolidation, reorganization, transfer or otherwise) to which all or
substantially all of the business or assets have been transferred (directly or
by operation of law) assumes all duties and obligations of Middlefield under
this Agreement,

     (e) Relocation of the Executive: Middlefield relocates its principal
         ---------------------------
executive offices, or requires the Executive to have his principal location of
work changed, to any location that is more than 15 miles from the location
thereof immediately before the Change in Control, or requires the Executive to
travel away from his office in the course of discharging his responsibilities or
duties hereunder at least 20% more (in terms of aggregate days in any calendar
year or in any calendar quarter when annualized for purposes of comparison to
any prior year) than was required of Executive in any of the three full years
immediately before the Change in Control, or

     (f) Breach of this Agreement: without limiting the generality or effect of
         ------------------------
the foregoing, any material breach of this Agreement by Middlefield or any
successor thereto.

4.   Termination for Which No Severance or Termination Benefits Are Payable

     (a) No Severance for Termination for Cause. Anything in this Agreement to
         --------------------------------------
the contrary notwithstanding, under no circumstance shall the Executive be
entitled to severance or termination benefits if his employment terminates for
Cause.

     (1)  Cause Means Commission of Any of the Following Acts: For purposes of
          this Agreement, "Cause" means the Executive shall have committed any
          of the following acts --

          (a)  Fraud, Embezzlement, Theft or Other Crime: an act of fraud,
               embezzlement or theft in connection with his duties or in the
               course of his employment with Middlefield or a

                                        4
<PAGE>

               Subsidiary, or commission of a felony or commission of a
               misdemeanor involving moral turpitude,

          (b)  Negligence, Disloyalty or Violation of Law or Policy: the
               Executive's gross negligence or gross neglect of duties,
               disloyalty, dishonesty, or willful violation of any law or
               significant policy of Middlefield committed in connection with
               the Executive's employment and resulting in an adverse effect on
               Middlefield or a Subsidiary,

          (c)  Disclosure of Trade Secrets: intentional wrongful disclosure of
               secret processes or confidential information of Middlefield or a
               Subsidiary, causing material harm to Middlefield or the
               Subsidiary,

          (d)  Competing with Middlefield: intentional wrongful engagement in
               any competitive activity. For purposes of this Agreement,
               competitive activity means the Executive's participation, without
               the written consent of a senior executive officer of Middlefield,
               in the management of any business enterprise if (1) the
               enterprise engages in substantial and direct competition with
               Middlefield, (2) the enterprise's revenues derived from any
               product or service competitive with any product or service of
               Middlefield or Subsidiary(ies) amounted to 10% or more of the
               enterprise's revenues for its most recently completed fiscal
               year, and (3) Middlefield's revenues from the product or service
               amounted to 10% of Middlefield's revenues for its most recently
               completed fiscal year. A competitive activity does not include
               mere ownership of securities in an enterprise and the exercise of
               rights appurtenant thereto, provided the Executive's share
               ownership does not give him practical or legal control of the
               enterprise. For this purpose, ownership of less than 5% of the
               enterprise's outstanding voting securities shall conclusively be
               presumed to be insufficient for practical or legal control, and
               ownership of more than 50% shall conclusively be presumed to
               constitute practical and legal control.

                    If the Executive is now or hereafter becomes subject to an
               agreement not to compete with Middlefield or Subsidiary(ies), a
               breach by the Executive of that other non-competition agreement
               shall be grounds for denial of severance and termination benefits
               for Cause under this clause (d) of Section 4(a)(1). But if the
               Executive engages in a competitive activity under circumstances
               justifying denial of severance or termination benefits for Cause
               under this clause (d), that shall not necessarily be grounds for
               concluding that the Executive has also breached the other
               non-competition agreement to which he is or may become subject.
               This clause (d) is not intended to and shall not be construed to
               supersede or amend any provision of an employment or
               non-competition agreement to which the Executive is or may become
               subject. This clause (d) does not grant to the Executive any
               right or privilege to engage in other activities or enterprises,
               whether in competition with Middlefield or otherwise, or

          (e)  Termination for Cause under an Employment Agreement: any actions
               that have caused the Executive to be terminated for cause under
               any employment agreement existing on the date hereof or hereafter
               entered into between the Executive and Middlefield or a
               Subsidiary.

     (2)  Definition of "Intentional": For purposes of this Agreement, no act or
          failure to act on the part of the Executive shall be deemed to have
          been intentional if it was due primarily to an error in judgment or
          negligence. An act or failure to act on the Executive's part shall be
          considered intentional if it is not in good faith and if it is without
          a reasonable belief that the action or failure to act is in the best
          interests of Middlefield.

                                        5
<PAGE>

     (3)  Termination for Cause Can Occur Solely by Formal Board Action. The
          Executive shall not be deemed under this Agreement to have been
          terminated for Cause unless and until there shall have been delivered
          to the Executive a copy of a resolution duly adopted by the
          affirmative vote of at least three-fourths (3/4) of the directors of
          Middlefield then in office at a meeting of the board of directors
          called and held for such purpose, which resolution shall (a) contain
          findings that, in the good faith opinion of the board, the Executive
          has committed an act constituting Cause and (b) specify the
          particulars thereof in detail. Notice of that meeting and the proposed
          determination of Cause shall be given to the Executive a reasonable
          amount of time before the board's meeting. The Executive and his
          counsel (if the Executive chooses to have counsel present) shall have
          a reasonable opportunity to be heard by the board at the meeting.
          Nothing in this Agreement limits the Executive's or his beneficiaries'
          right to contest the validity or propriety of the board's
          determination of Cause, and they shall have the right to contest the
          validity or propriety of the board's determination of Cause even if
          that right does not exist under any employment agreement of the
          Executive.

     (b) No Severance under this Agreement for the Executive's Death or
         --------------------------------------------------------------
Disability. Anything in this Agreement to the contrary notwithstanding, under no
----------
circumstance shall the Executive be entitled to severance payments or
termination benefits under this Agreement if --

     (1)  Death: the Executive dies while actively employed by Middlefield or a
          Subsidiary, or

     (2)  Disability: the Executive becomes totally disabled while actively
          employed by Middlefield or a Subsidiary. For purposes of this
          agreement, the term "totally disabled" means that because of injury or
          sickness, the Executive is unable to perform his duties.

     The benefits, if any, payable to the Executive or his beneficiary(ies) or
estate relating to his death or disability shall be determined solely by such
benefit plans or arrangements as Middlefield or Subsidiary may have with the
Executive relating to death or disability, not by this Agreement.

5.   Term of Agreement

     The initial term of this Agreement shall be for a period of three years,
commencing November 28, 2001. On the first anniversary of the November 28, 2001
effective date of this Agreement, and on each anniversary thereafter, the
Agreement shall be extended automatically for one additional year unless
Middlefield's board of directors gives notice to the Executive in writing at
least 90 days before the anniversary that the term of this Agreement will not be
extended. If the board of directors determines not to extend the term, it shall
promptly notify the Executive. References herein to the term of this Agreement
mean the initial term and extensions of the initial term. Unless terminated
earlier, this Agreement shall terminate when the Executive reaches age 65. If
the board of directors decides not to extend the term of this Agreement, this
Agreement shall nevertheless remain in force until its term expires. The board's
decision not to extend the term of this Agreement shall not -- by itself -- give
the Executive any rights under this Agreement to claim an adverse change in his
position, compensation or circumstances or otherwise to claim entitlement to
severance or termination benefits under this Agreement.

6.   This Agreement Is Not an Employment Contract

     The parties hereto acknowledge and agree that (a) this Agreement is not a
management or employment agreement and (b) nothing in this Agreement shall give
the Executive any rights or impose any obligations to continued employment by
Middlefield or any Subsidiary or successor of Middlefield, nor shall it give
Middlefield any rights or impose any obligations for the continued performance
of duties by the Executive for Middlefield or any Subsidiary or successor of
Middlefield.

7.   Payment of Legal Fees

                                        6
<PAGE>

     Middlefield desires that the Executive not be required to incur legal fees
and the related costs and expenses associated with the interpretation,
enforcement or defense of Executive's rights under this Agreement by litigation
or otherwise, because the amounts thereof would substantially detract from the
benefits intended to be extended to the Executive under this Agreement.
Therefore, even if the Executive does not prevail in whole or in part in
litigation or other legal action associated with the interpretation, enforcement
or defense of Executive's rights under this Agreement, Middlefield hereby agrees
to pay and be solely financially responsible for any and all attorneys' and
related fees, costs and expenses incurred by the Executive in the litigation or
other legal action, up to a maximum of $500,000. The fees and expenses of
counsel selected by the Executive shall be paid or reimbursed to the Executive
by Middlefield on a regular, periodic basis, upon presentation by the Executive
of a statement or statements prepared by such counsel in accordance with
counsel's customary practices. Anything herein to the contrary notwithstanding,
nothing in this Agreement authorizes Middlefield to pay or the Executive to
demand payment of fees, costs and expenses if and to the extent payment of fees,
costs and expenses constitutes a "prohibited indemnification payment" within the
meaning of Federal Deposit Insurance Corporation Rule 359.1(l)(1) [12 CFR
359.1(l)(1)]. Middlefield's obligation in this Section 7 to pay the Executive's
legal fees operates separately from and in addition to any legal fee
reimbursement obligation Middlefield or a Subsidiary may have under any separate
employment or other agreement between the Executive and Middlefield.

     Middlefield irrevocably authorizes the Executive to retain from time to
time counsel of Executive's choice to advise and represent him in the
interpretation, enforcement or defense of the parties' rights and
responsibilities under this Agreement, if --

          (1)  the Executive concludes that Middlefield has failed to comply
               with any of its obligations under this Agreement, or

          (2)  if Middlefield or any other person takes or threatens to take any
               action to declare this Agreement void or unenforceable, or
               institutes any litigation or other action or proceeding designed
               to deny, or to recover from, the Executive the benefits provided
               or intended to be provided to the Executive under this Agreement,

including without limitation the initiation or defense of any litigation or
other legal action, whether by or against Middlefield or any director, officer,
stockholder or other person affiliated with Middlefield, in any jurisdiction.

8.   Withholding of Taxes

     Middlefield may withhold from any benefits payable under this Agreement all
Federal, state, local or other taxes as may be required by law, governmental
regulation or ruling.

9.   Successors and Assigns

     (a) This Agreement Is Binding on Middlefield's Successors. This Agreement
         -----------------------------------------------------
shall be binding upon Middlefield and any successor to Middlefield, including
any persons acquiring directly or indirectly all or substantially all of the
business or assets of Middlefield by purchase, merger, consolidation,
reorganization or otherwise. Any such successor shall thereafter be deemed to be
the "Corporation" for purposes of this Agreement. But this Agreement and
Middlefield's obligations under this Agreement are not otherwise assignable,
transferable or delegable by Middlefield. By agreement in form and substance
satisfactory to the Executive, Middlefield shall require any successor to all or
substantially all of the business or assets of Middlefield expressly to assume
and agree to perform this Agreement in the same manner and to the same extent
Middlefield would be required to perform if no such succession had occurred.

     (b) This Agreement Is Enforceable by the Executive and His Heirs. This
         ------------------------------------------------------------
Agreement will inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributes and legatees.

                                        7
<PAGE>

     (c) This Agreement Is Personal in Nature and Is Not Assignable. This
         ----------------------------------------------------------
Agreement is personal in nature. Without written consent of the other party,
neither party shall assign, transfer or delegate this Agreement or any rights or
obligations under this Agreement except as expressly provided in this Section 9.
Without limiting the generality or effect of the foregoing, the Executive's
right to receive payments hereunder is not assignable or transferable, whether
by pledge, creation of a security interest, or otherwise, except for a transfer
by Executive's will or by the laws of descent and distribution. If the Executive
attempts an assignment or transfer that is contrary to this Section 9,
Middlefield shall have no liability to pay any amount to the assignee or
transferee.

10.  Notices

     All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered by hand or
mailed, certified or registered mail, return receipt requested, with postage
prepaid to the following addresses or to such other address as either party may
designate by like notice.

     (a) If to Middlefield, to:   Middlefield Banc Corp.
                                  15985 East High Street
                                  P.O. Box 35
                                  Middlefield, Ohio 44062
                                       Attn: Corporate Secretary

     (b) If to the Executive, to: Mr. James R. Heslop, II
                                  15985 East High Street
                                  Middlefield, Ohio 44062

and to such other or additional person or persons as either party shall have
designated to the other party in writing by like notice.

11.  Captions and Counterparts

     The headings and subheadings used in this Agreement are included solely for
convenience and shall not affect the interpretation of this Agreement. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original, but all of which together shall constitute one and the
same agreement.

12.  Amendments and Waivers

     No provision of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in a writing or writings
signed by the Executive and by Middlefield. No waiver by either party hereto at
any time of any breach by the other party hereto or compliance with any
condition or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or representations, oral
or otherwise, expressed or implied with respect to the subject matter hereof
have been made by either party that are not set forth expressly in this
Agreement.

13.  Severability

     The provisions of this Agreement shall be deemed severable. The invalidity
or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions of this Agreement. Any provision held to
be invalid or unenforceable shall be reformed to the extent (and only to the
extent) necessary to make it valid and enforceable.

14.  Governing Law

                                        8
<PAGE>

     The validity, interpretation, construction and performance of this
Agreement shall be governed by and construed in accordance with the substantive
laws of the State of Ohio, without giving effect to the principles of conflict
of laws of such State.

15.  Entire Agreement

     This Agreement constitutes the entire agreement between Middlefield and the
Executive concerning the subject matter hereof. No rights are granted to the
Executive under this Agreement other than those specifically set forth herein.
This Agreement supersedes and replaces in its entirety the Severance Agreement
Due to Change in Control of Middlefield Banc Corp. entered into by the Executive
and Middlefield on October 8, 1996.

     In Witness Whereof, the parties have executed this Agreement as of the day
and year first written above.

Witnesses:                       Middlefield Banc Corp.

                                 By:
----------------------------          ------------------------------------------
                                      Thomas G. Caldwell
                                 Its: President and Chief Executive Officer
----------------------------

Witnesses:                       Executive

----------------------------     -----------------------------------------------
                                 James R. Heslop, II
----------------------------

County of Geauga  )
                  ) ss:
State of Ohio     )

     Before me this      day of November, 2001, personally appeared the above
                    ----
named Thomas G. Caldwell and James R. Heslop, II, who acknowledged that they did
sign the foregoing instrument and that the same was their free act and deed.

                                 -----------------------------------------------
(Notary Seal)                    Notary Public
                                 My Commission Expires:

                                       9

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