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As filed with the Securities and Exchange Commission on August 31, 2001
Registration No. 333-____
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------
PEOPLES OHIO FINANCIAL CORPORATION
------------------------------------
(Exact name of registrant as specified in its charter)
OHIO 6035 31-1795575
- ------------------------------------- ---------------------------------- --------------------
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
635 South Market Street
Troy, Ohio 45373
(937) 339-5000
-----------------------------------------------------
(Address, including ZIP Code, and telephone number,
including area code, of agent for service)
Copies to:
MR. RONALD B. SCOTT JOHN C. VORYS, ESQ.
Peoples Ohio Financial Corporation KIMBERLY J. SCHAEFER, ESQ.
635 South Market Street Vorys, Sater, Seymour and Pease LLP
Troy, Ohio 45373 221 East Fourth Street
Suite 2100, Atrium Two
Cincinnati, Ohio 45202
Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after this Registration Statement has become
effective and all other conditions to the consummation of the transactions have
been satisfied or waived.
If the securities being registered on this Form are being offered
in connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
-------------------------------
Title of each
class of securities Amount to be Proposed maximum Proposed maximum Amount of
to be registered registered offering price per unit(1) aggregate price registration fee
- ---------------------- ---------------- --------------------------- ----------------- ----------------
Common Stock, 7,439,650 shares $3.325 $24,736,836 $6,184.21
no par value of Common Stock
(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(f) on the basis of the market value of a common
share of Peoples Ohio Financial Corporation on August 28, 2001, as
determined pursuant to Rule 457(c).
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PROSPECTUS
PEOPLES OHIO FINANCIAL CORPORATION
for issuance of up to
7,439,650 Common Shares
PROXY STATEMENT
PEOPLES SAVINGS BANK OF TROY
for
Annual Meeting of Shareholders
October 31, 2001
On June 25, 2001, the Board of Directors of Peoples Savings Bank of
Troy authorized the formation of a holding company for Peoples Savings. In
accordance with such authorization, Peoples Savings entered into an Agreement of
Merger dated August 27, 2001, with Peoples Ohio Financial Corporation and
Peoples Merger Corp., a wholly owned subsidiary of Peoples Ohio. The merger
agreement provides for the reorganization of Peoples Savings into a holding
company structure through a merger of Peoples Merger Corp. with and into Peoples
Savings in a transaction in which each of the outstanding shares of Peoples
Savings will be cancelled in exchange for one share of Peoples Ohio. After the
closing of the merger transaction, Peoples Savings will be a wholly-owned
subsidiary of Peoples Ohio.
At the 2001 annual meeting of Peoples Savings shareholders, you will be
asked to approve the reorganization by adopting the merger agreement. The
adoption of the merger agreement will require the affirmative vote of the
holders of two-thirds of the outstanding Peoples Savings shares, or 4,959,767
shares. In addition, Peoples Savings shareholders will be asked to elect
Directors, fix the cash compensation of the Directors for the fiscal year ending
June 30, 2002, and approve the Peoples Savings Bank of Troy 2001 Stock Option
and Incentive Plan.
The date, time and place of the annual meeting are as follows:
OCTOBER 31, 2001
3:00 P.M., EASTERN TIME
MARKET SQUARE COMMUNITY ROOM
405 S.W. PUBLIC SQUARE
TROY, OH 45373
Peoples Ohio does not have an operating history. Currently, the common
shares of Peoples Ohio are not listed on any exchange. After the reorganization
is consummated, Peoples Ohio intends to apply for the listing of its common
shares on The Nasdaq SmallCap Market when Peoples Ohio meets all of the
requirements for such listing. However, there is no assurance that Peoples Ohio
will meet the qualifications necessary for such listing or will thereafter be
listed on Nasdaq.
This prospectus/proxy statement provides detailed information about the
reorganization. We encourage you to read this entire document carefully.
THE PROPOSED REORGANIZATION INVOLVES ELEMENTS OF RISK, WHICH ARE
DESCRIBED UNDER "RISK FACTORS" ON PAGE _____.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION, THE OFFICE OF THRIFT
SUPERVISION, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE OHIO DIVISION OF
FINANCIAL INSTITUTIONS NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THE
PEOPLES OHIO COMMON SHARES TO BE ISSUED IN THE REORGANIZATION OR HAS DETERMINED
WHETHER THIS PROSPECTUS/PROXY STATEMENT IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE PEOPLES OHIO COMMON
SHARES ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY.
This prospectus/proxy statement is dated _____________, 2001, and is
being first mailed to shareholders of Peoples Savings on or about _____________,
2001.
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REFERENCES TO ADDITIONAL INFORMATION
This document incorporates important business and financial information
about Peoples Savings from documents that it has filed with the Office of Thrift
Supervision but has not included in or delivered with this document. If you
write or call Mark A. Douglas, the Vice President and Chief Financial Officer of
Peoples Savings, he will send you these documents, excluding exhibits, without
charge. You can contact him at:
Peoples Savings Bank of Troy
635 South Market Street
Troy, Ohio 45373
(937) 339-5000
TO OBTAIN TIMELY DELIVERY, YOU MUST REQUEST DOCUMENTS BY OCTOBER 24,
2001. If you request any incorporated documents, Mark A. Douglas will mail the
documents you request by first class mail by the next business day after he
receives your request.
See "Where you can find more information" on page _____ for more
information about the documents referred to in this prospectus/proxy statement.
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TABLE OF CONTENTS
Summary...................................................................................................................1
The parties............................................................................................................1
Annual meeting of Peoples Savings shareholders.........................................................................1
The reorganization.....................................................................................................2
Background and reasons for the reorganization..........................................................................2
Risk factors...........................................................................................................2
Rights of dissenting shareholders......................................................................................2
Termination and amendment of the merger agreement......................................................................2
Federal income tax consequences........................................................................................3
Regulatory approvals...................................................................................................3
Per share market price information.....................................................................................3
Risk factors related to the adoption of the merger agreement..............................................................4
Risks related to the consummation of the reorganization................................................................4
Risks shared by Peoples Savings and Peoples Ohio.......................................................................4
Forward looking statements................................................................................................6
Selected consolidated financial data of Peoples Savings..................................................................8
Comparative per share data................................................................................................9
Purpose of this document..................................................................................................9
Regulatory approvals......................................................................................................9
The parties...............................................................................................................9
The annual meeting of Peoples Savings shareholders.......................................................................10
Time, date and place..................................................................................................10
Purpose of the meeting................................................................................................10
Shares outstanding and entitled to vote; record date..................................................................10
Votes required........................................................................................................10
Voting and solicitation and revocation of proxies.....................................................................11
Rights of dissenting shareholders........................................................................................12
Principal holders of Peoples Savings' common shares......................................................................14
Proposal I - Election of Directors.......................................................................................14
Executive Officers.......................................................................................................19
Board meetings and committees............................................................................................19
Directors' compensation..................................................................................................20
Executive compensation...................................................................................................20
Summary compensation table...............................................................................................20
Report of the Compensation Committee.....................................................................................21
Report of the Audit Committee............................................................................................24
Current accountants......................................................................................................25
Audit fees............................................................................................................25
Financial information systems design and implementation fees..........................................................25
All other fees........................................................................................................25
Change in certifying accountant.......................................................................................25
Transactions with Directors and officers.................................................................................26
Related party transactions...............................................................................................26
Section 16(a) beneficial ownership reporting compliance..................................................................27
Proposal II - Establishment of Directors' compensation...................................................................27
Proposal III - Adoption of the Peoples Savings 2001 Stock Option and Incentive Plan......................................27
Proposal IV - Adoption of the merger agreement...........................................................................31
Background and reasons for the reorganization.........................................................................31
Exchange of Peoples Savings shares....................................................................................32
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Exchange of certificates evidencing Peoples Savings common shares.....................................................32
Conditions............................................................................................................33
Effective time........................................................................................................33
Termination and amendment.............................................................................................33
Board of Directors and management of Peoples Ohio following the reorganization........................................34
Resale of Peoples Ohio common shares..................................................................................34
Federal income tax consequences.......................................................................................34
Accounting treatment..................................................................................................36
Regulation...............................................................................................................36
General...............................................................................................................36
Ohio corporation law..................................................................................................37
Ohio savings association regulation...................................................................................38
Office of Thrift Supervision..........................................................................................38
Federal Deposit Insurance Corporation.................................................................................41
Federal Reserve Board reserve requirements............................................................................41
Federal Home Loan Banks...............................................................................................42
Taxation.................................................................................................................42
Federal taxation......................................................................................................42
Ohio taxation.........................................................................................................44
Description of Peoples Ohio common shares................................................................................44
Authorized capital stock..............................................................................................44
Board of Directors....................................................................................................44
Voting rights.........................................................................................................44
Dividend and liquidation rights.......................................................................................45
Anti-takeover provisions in the Articles and Code of Regulations of Peoples Ohio......................................45
Comparison of rights of holders of Peoples Ohio common shares and holders of Peoples Savings common shares...............47
Authorized shares.....................................................................................................47
Board of Directors....................................................................................................47
Voting rights.........................................................................................................47
Anti-takeover provisions..............................................................................................48
Preemptive rights.....................................................................................................48
Dividends.............................................................................................................48
Anti-takeover statutes applicable to Peoples Ohio and Peoples Savings....................................................49
Director and officer liability and indemnification.......................................................................50
Peoples Ohio..........................................................................................................50
Peoples Savings.......................................................................................................50
Other matters............................................................................................................51
Shareholders proposals...................................................................................................51
Legal matters............................................................................................................51
Experts..................................................................................................................51
Where you can find more information......................................................................................52
Appendix A Agreement of Merger dated August 27, 2001,
by and among Peoples Ohio Financial
Corporation, Peoples Savings Bank of Troy
and Peoples Merger Corp.
Appendix B Dissenters' rights of shareholders, Ohio Revised Code Section 1701.85
Appendix C Audit Committee Charter
Appendix D Peoples Savings Bank of Troy 2001 Stock Option and Incentive Plan
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SUMMARY
This summary highlights selected information from this prospectus/proxy
statement. It does not contain all of the information that is important to you.
You should read carefully this entire document and the other documents referred
to in this document to fully understand the reorganization. For a guide to where
you can obtain more information, see "Where you can find more information" on
page ___. Page references are included in this summary to direct you to a more
complete description of topics discussed in this document.
THE PARTIES (PAGE ___)
Peoples Ohio Financial Corporation
Peoples Savings Bank of Troy
Peoples Merger Corp.
635 South Market Street
Troy, Ohio 45373
(937) 339-5000
Peoples Ohio Financial Corporation was organized as a corporation under
the laws of the State of Ohio on July 20, 2001, for the purpose of becoming the
holding company for Peoples Savings. On ___________, 2001, Peoples Ohio applied
to the Office of Thrift Supervision to register as a savings and loan holding
company. As of the date of this document, Peoples Ohio had no material assets or
liabilities.
Peoples Savings Bank of Troy is an Ohio savings and loan association.
Chartered in 1890 as an Ohio mutual savings association, Peoples Savings
completed its conversion from the mutual form of ownership to the stock form of
ownership in December 1989. With five offices located throughout Miami County
and contiguous counties, Peoples Savings currently has assets of $214,840,825.
Peoples Merger Corp. was formed as an interim savings and loan
association on July 31, 2001, solely for the purpose of facilitating the
reorganization and is a wholly-owned subsidiary of Peoples Ohio.
ANNUAL MEETING OF PEOPLES SAVINGS SHAREHOLDERS (PAGE ____)
The Peoples Savings annual meeting of shareholders will take place at
3:00 p.m. on October 31, 2001. If you owned Peoples Savings common shares on
September 14, 2001, the record date established for the annual meeting by the
Board of Directors, you are entitled to vote at the annual meeting. At the
annual meeting, you will be asked to vote upon:
- The election of three Directors for terms expiring in 2004;
- The election of one Director Emeritus for a term expiring in
2002;
- The Directors' cash compensation for the fiscal year ending
June 30, 2002;
- The adoption of the Peoples Savings Bank of Troy 2001 Stock
Option and Incentive Plan; and
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- The adoption of the merger agreement.
The nominees for election as Directors and Director Emeritus who
receive the greatest number of votes will be elected. A majority of the
outstanding shares present in person or by proxy at the annual meeting must vote
in favor of the approval of Directors' fees and the stock option plan in order
for such fees and plan to be approved. The adoption of the merger agreement will
require the affirmative vote of the holders of two-thirds of the outstanding
Peoples Savings common shares, or 4,959,767 shares. As of September 14, 2001,
the current Directors, executive officers and their affiliates owned, or had
voting power, in the aggregate, with respect to 1,857,511 Peoples Savings common
shares, or 24.97% of the outstanding shares. Therefore, an additional 3,102,256
common shares, or 41.70% of the outstanding shares, must vote in favor of the
merger agreement.
THE REORGANIZATION (PAGE ____)
Peoples Savings is proposing to reorganize into a holding company
structure. The merger agreement provides for the reorganization to be effected
through a merger of Peoples Merger Corp., a wholly-owned interim savings bank
subsidiary of Peoples Ohio, with and into Peoples Savings in a transaction in
which each outstanding share of Peoples Savings will be cancelled in exchange
for one share of Peoples Ohio. Upon the closing of the merger transaction,
Peoples Savings will become a wholly-owned subsidiary of Peoples Ohio. We have
attached the merger agreement to this document as Appendix A and incorporate it
by reference into this prospectus/proxy statement. Please read the merger
agreement. It is the legal document that governs the reorganization.
BACKGROUND AND REASONS FOR THE REORGANIZATION (PAGE ___)
The formation of a holding company for Peoples Savings will provide
various benefits to Peoples Savings and its shareholders, including greater
flexibility in structuring acquisitions and in purchasing holding company shares
without adverse tax consequences. In addition, the holding company will provide
a more effective structure for responding to the rapidly changing environment in
the financial institutions industry.
RISK FACTORS (PAGE __)
There are risks associated with this reorganization. You should
carefully consider all of these risks prior to voting your shares.
RIGHTS OF DISSENTING SHAREHOLDERS (PAGE ___)
Ohio law provides that Peoples Savings shareholders may receive the
fair cash value for their shares if, among other requirements, they do not vote
in favor of the adoption of the merger agreement and they file a written demand
for fair cash value with Peoples Savings.
TERMINATION AND AMENDMENT OF THE MERGER AGREEMENT (PAGE ____)
We may agree to terminate the merger agreement at any time before the
consummation of the reorganization. The merger agreement permits the Boards of
Directors of Peoples Ohio, Peoples Savings or Merger Corp. to terminate the
merger agreement if:
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- Peoples Savings shareholders do not adopt the merger
agreement;
- The Boards of Directors determine it is not in the best
interest of their companies; or
- The holders of more than 10% of the outstanding shares of
Peoples Savings exercise dissenters' rights.
FEDERAL INCOME TAX CONSEQUENCES (PAGE ____)
The proposed reorganization will be a tax-free reorganization under
federal tax laws. You will not recognize any gain or loss for federal income tax
purposes upon your receipt of Peoples Ohio common shares.
REGULATORY APPROVALS (PAGE ___)
In order to complete the reorganization, the Office of Thrift
Supervision and the Ohio Division of Financial Institutions must approve the
transaction. Peoples Ohio and Peoples Savings have filed the necessary
applications and are awaiting approvals.
PER SHARE MARKET PRICE INFORMATION (PAGE ____)
Currently, Peoples Savings common shares are traded in the
over-the-counter stock market under the symbol "PESV." The date of the last
known sale of Peoples Savings common shares before we printed this document
occurred on _______________, 2001, for $__________ per share. We anticipate that
immediately following the reorganization, the market value of Peoples Ohio
common shares will be approximately the same as the market value of Peoples
Savings' common shares prior to the reorganization.
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RISK FACTORS RELATED TO THE ADOPTION OF THE MERGER AGREEMENT
You should carefully consider all information in this document,
especially the risk factors below, in determining how to vote on the adoption of
the merger agreement. We have divided risk factors into two groups:
- Risks relating to the consummation of the reorganization; and
- Risks relating generally to owning common shares of Peoples
Savings or Peoples Ohio.
Generally, the risks associated with holding shares of Peoples Ohio are
the same risks that are associated with the Peoples Savings shares you own. As a
result, most of the risks discussed below will exist whether or not the
reorganization is completed.
RISKS RELATED TO THE CONSUMMATION OF THE REORGANIZATION
Peoples Savings is currently subject to extensive governmental
supervision, regulation and control. Upon consummation of the reorganization,
Peoples Ohio will be subject to the following supplemental regulation as a
result of the reorganization:
- Peoples Ohio will be subject to the provisions and
restrictions of the Home Owners' Loan Act, will be supervised
by the Office of Thrift Supervision and will only be permitted
to engage in certain banking activities and activities related
to banking. Annual reports will be filed by Peoples Ohio with
the Office of Thrift Supervision, which may also conduct
examinations of Peoples Ohio. Although these requirements may
be costly and burdensome, they are designed to protect the
safety and soundness of savings and loan subsidiaries of
holding companies.
- Peoples Ohio will be subject to the provisions of the
Securities Act of 1933 and state securities laws. Registration
statements will be filed by Peoples Ohio with the Securities
and Exchange Commission, as well as with certain state
securities commissions for the offer and sale of securities to
the public. Presently, Peoples Savings is exempt from the
registration requirements of the Securities Act because of a
specific exemption for financial institution securities.
However, Peoples Savings currently files periodic financial
reports, proxy statements and other information with the
Office of Thrift Supervision under the Securities Exchange Act
of 1934. The additional filings required by the Securities Act
after the consummation of the reorganization will increase the
expense of regulatory compliance.
RISKS SHARED BY PEOPLES SAVINGS AND PEOPLES OHIO
Similar to the risks currently associated with an investment in Peoples
Savings' shares, an investment in the common shares of Peoples Ohio resulting
from the consummation of the reorganization will involve the following risks,
any of which may affect the value of Peoples Ohio's shares:
- INTEREST RATE RISKS. Our profitability is dependent to a large
extent on our net interest income. Net interest income is the
difference between interest income on interest-earning
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assets and interest expense on interest-bearing liabilities.
Interest rate risks can result from mismatches between the
dollar amount of repricing or maturing assets and liabilities
and is measured in terms of the ratio of the interest rate
sensitivity gap to total assets. Although our management
believes it has implemented strategies to reduce the potential
effects of changes in interest rates on our results of
operations, any substantial and prolonged increase in market
interest rates could adversely affect our operating results.
- STRONG COMPETITION. We face substantial competition in all
phases of our operations from a variety of different
competitors. We compete for loans, deposits and other
financial services in our geographic market with other savings
and loan associations, commercial banks, credit unions,
finance companies, mutual funds, insurance companies,
brokerage and investment banking firms and various other
non-bank competitors. Many of our competitors offer services
that we do not and have substantially greater resources, name
recognition and market presence. Our future success is
dependent on our ability to compete effectively in the highly
competitive financial institution industry.
- ECONOMIC DOWNTURNS. The savings and loan industry is
susceptible to economic change. Conditions such as inflation,
recession, unemployment, volatile interest rates, tight money
supply, scarce natural resources, real estate values,
international conflicts and other factors beyond Peoples
Savings' control can adversely affect the profitability of
Peoples Savings. In particular, a downturn in the economic
conditions in Ohio could reduce our growth rate, impair our
ability to collect loans and generally affect our financial
condition and results of operations.
- INSUFFICIENT ALLOWANCE FOR LOAN LOSSES. Lending money is a
substantial part of our business. However, every loan carries
a certain risk of non-payment. As a result, we are required by
federal and state regulations to create an allowance for loan
losses. We cannot be certain that our allowance for loan
losses will be sufficient to absorb actual loan losses.
Although we evaluate every loan that we make against our
underwriting criteria, we may experience losses by reasons of
factors beyond our control, such as changes in market
conditions affecting the value of real estate and unexpected
problems affecting the creditworthiness of our borrowers.
- LOSS OF KEY OFFICERS AND DIRECTORS. The business success of
Peoples Savings and Peoples Ohio will depend to a great extent
upon the continuation of the services of the members of the
Board of Directors and management of Peoples Savings. The loss
of any key personnel by Peoples Savings may have a material
adverse effect upon the future prospects of Peoples Savings or
Peoples Ohio. We may be unable to retain or replace members of
the Board of Directors or senior management or to retain or
replace other skilled personnel.
- NO ACTIVE MARKET FOR SHARES. Peoples Savings' common shares
trade on a very limited basis in the local over-the-counter
market, primarily in Peoples Savings' geographic service area.
While Peoples Ohio presently intends to apply to the National
Association of Securities Dealers to have its common stock
quoted on The Nasdaq SmallCap Market, there can be no
assurance that we will initially meet the listing requirements
of Nasdaq or that we will be able to continue to meet such
requirements in the future. Even if Peoples
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Ohio's shares are listed for trading on Nasdaq, the
development of an active and liquid market for such shares is
unlikely.
FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe
harbor from civil litigation for forward-looking statements. Forward-looking
statements include the information concerning future results of operations and
those statements proceeded by, followed by or that otherwise include the terms
"should," "believe," "expect," "anticipate," "intend," "may," "will,"
"continue," "estimate" and other expressions that indicate future events and
trends. Although Peoples Ohio and Peoples Savings believe that in making such
statements, their expectations are based on reasonable assumptions, these
statements may be influenced by risks and uncertainties which could cause actual
results and trends to be substantially different from historical results or
those anticipated depending on a variety of factors. These risks and
uncertainties include, without limitation:
- Revenues following the reorganization are lower than expected
or deposit withdrawals, operating costs or customer loss and
business disruption following the reorganization are greater
than expected;
- Competition among depository and other financial services
companies increases significantly;
- General economic or business conditions are less favorable
than expected, including fluctuations in interest rates;
- Adverse changes occur in the securities market; and
- Legislation or regulatory requirements or changes adversely
affect the businesses in which Peoples Ohio is engaged.
You should understand that these factors, in addition to those
discussed elsewhere in this document and in documents that have been
incorporated by reference, could affect the future results of Peoples Ohio and
Peoples Savings, and could cause those results to be substantially different
from those expressed in any forward-looking statements. Peoples Ohio and Peoples
Savings do not undertake any obligation to update any forward-looking statement
to reflect events or circumstances arising after the date of this document.
SELECTED CONSOLIDATED FINANCIAL DATA OF PEOPLES SAVINGS
We have not included pro forma and comparative financial information
concerning Peoples Ohio, the proposed savings and loan holding company, because
immediately following the effective time of the reorganization, the consolidated
financial statements of Peoples Ohio will be substantially the same as Peoples
Savings' financial statements immediately prior to the reorganization. Before
the closing of the reorganization, Peoples Ohio will not have commenced
operations and will have no material assets or liabilities.
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This document is accompanied by a copy of the Annual Report to
Shareholders of Peoples Savings. The Annual Report contains the audited
financial statements of Peoples Savings for the year ended June 30, 2001. The
tables below contain information regarding the financial condition and earnings
of Peoples Savings for the five years ended June 30, 2001.
At June 30,
-----------------------------------------------------------------------------
STATEMENT OF FINANCIAL CONDITION DATA: 2001 2000 1999 1998 1997
---- ---- ---- ---- ----
(In thousands)
Total amount of:
Assets $214,841 $205,140 $180,056 $145,175 $126,883
Held-to-maturity securities - at cost 1,484 1,670 1,956 2,696 3,236
Loans receivable - net 197,483 189,878 167,300 131,141 111,256
Deposits 108,398 109,461 107,073 97,453 82,924
FHLB advances and other borrowings 83,522 74,726 53,918 32,098 30,200
Shareholders' equity 21,002 18,702 15,725 13,893 12,570
Year ended June 30,
-----------------------------------------------------------------------------
STATEMENT OF INCOME DATA: 2001 2000 1999 1998 1997
---- ---- ---- ---- ----
(In thousands, except per share data)
Total interest income $16,338 $14,598 $12,387 $10,667 $9,375
Total interest expense 9,392 7,931 6,231 5,243 4,367
Net interest income 6,946 6,667 6,156 5,424 5,008
Provision for loan losses - 30 50 - -
Net interest income after provision for loan
losses 6,946 6,637 6,106 5,424 5,008
Non-interest income 1,485 1,374 1,109 768 607
Non-interest expense 4,737 4,268 3,947 3,551 3,795
Income before income taxes 3,694 3,743 3,268 2,641 1,820
Federal income taxes 1,273 1,263 1,077 878 579
Net income 2,421 2,480 2,191 1,763 1,241
Earnings per share:
Basic 0.33 0.33 0.30 0.24 0.17
Diluted 0.32 0.31 0.28 0.23 0.165
Year ended June 30,
-----------------------------------------------------------------------------
OTHER DATA: 2001 2000 1999 1998 1997
---- ---- ---- ---- ----
Return on average assets 1.14% 1.28% 1.35% 1.31% 1.06%
Return on average equity 11.87 13.62 13.81 12.62 10.02
Average equity to average assets 9.64 9.37 9.74 10.24 10.54
Dividend payout ratio (1) 9.09 9.09 6.67 7.81 7.35
- --------------------------
(1) Represents dividends per share divided by basic earnings per share.
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COMPARATIVE PER SHARE DATA
Peoples Savings' common shares are traded on the over-the-counter
market under the symbol "PESV." The market for Peoples Savings shares is not
active or liquid. Although Peoples Savings does not have direct knowledge of the
actual prices paid in all transactions, the following prices represent the price
ranges recorded for the periods shown according to information furnished by
brokers who deal in Peoples Savings common shares:
Cash dividend
Quarter ended High Low declared
- ------------- ---- --- --------
June 30, 2001 $3.60 $2.94 -
March 31, 2001 3.875 3.00 $0.015
December 31, 2000 4.25 2.875 -
September 30, 2000 4.25 3.375 0.015
June 30, 2000 5.75 4.25 -
March 31, 2000 7.00 5.00 0.015
December 31, 1999 8.00 6.75 -
September 30, 1999 9.25 8.00 0.015
The closing price of Peoples Savings common shares on June 25, 2001,
the last trading day before the public announcement of the reorganization, was
$3.00. The closing price of Peoples Savings common shares on the last
practicable trading day before this document was printed, September ___, 2001,
was $_____. After the consummation of the reorganization, we anticipate that the
per share market value of Peoples Ohio's common shares will be approximately the
same as the per share market value of Peoples Savings' shares immediately prior
to the reorganization.
In order to list its shares on The Nasdaq SmallCap Market, Peoples Ohio
must meet a number of Nasdaq requirements, one of which is that the minimum bid
price of Peoples Ohio's shares must be $4.00 per share. Currently, Peoples
Savings' shares are trading at $______ per share. Accordingly, if the shares of
Peoples Ohio trade at a similar price following the consummation of the
reorganization, Peoples Ohio will not be eligible to have its shares listed on
Nasdaq. Peoples Ohio intends to apply to have its shares quoted on Nasdaq when
the bid price for its shares reaches $4.00 per share and is sustained at that
price for some period of time. There is no assurance that we will ever meet the
requirements of Nasdaq. Even if Peoples Ohio shares are listed on Nasdaq, the
development of any active or liquid market for Peoples Ohio's shares is
unlikely.
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Presented below are the book value per share and net earnings per share
of (a) Peoples Savings on a historical basis and (b) Peoples Ohio on a pro forma
basis and as adjusted to reflect the completion of the reorganization as of the
beginning of each of the periods indicated. The information in the following
table is not necessarily indicative of the results that actually would have been
obtained if we had completed the reorganization before the periods indicated.
At or for the year ended June 30,
----------------------------------------------
2001 2000 1999
---- ---- ----
PEOPLES SAVINGS HISTORICAL
Net income per share:
Basic $0.33 $0.33 $0.30
Diluted 0.32 0.31 0.28
Book value per share 2.87 2.59 2.29
Cash dividends declared per share 0.03 0.03 0.02
PEOPLES OHIO PRO FORMA
Net income per share:
Basic $0.33 $0.33 $0.30
Diluted 0.32 0.31 0.28
Book value per share 2.87 2.59 2.29
Cash dividends declared per share 0.03 0.03 0.02
PURPOSE OF THIS DOCUMENT
This prospectus/proxy statement serves as both a prospectus of Peoples
Ohio for the issuance of up to 7,439,650 common shares in connection with the
reorganization and a proxy statement of Peoples Savings for the solicitation of
proxies by the Board of Directors of Peoples Savings for the Peoples Savings
annual meeting of shareholders to be held on October 31, 2001.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR
THE INFORMATION TO WHICH WE HAVE REFERRED IN THIS DOCUMENT. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT.
REGULATORY APPROVALS
Peoples Ohio and Peoples Savings have filed applications with the
Office of Thrift Supervision and the Ohio Division of Financial Institutions for
approval of the reorganization. Peoples Ohio and Peoples Savings know of no
reason why the reorganization will not be approved by these regulators.
THE PARTIES
Peoples Ohio was organized as an Ohio corporation on July 20, 2001, for
the purpose of serving as the holding company for Peoples Savings and has
applied with the Office of Thrift Supervision to register as a savings and loan
holding company. Peoples Ohio currently has no material assets or liabilities.
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Peoples Savings was chartered in 1890 as an Ohio mutual building and
savings association and completed a successful conversion from the mutual form
to the stock form of organization in December 1989. With a main office in Troy,
Ohio, and five branch offices and two trust offices in its primary market area
of Miami County, Ohio, and contiguous counties, Peoples Savings is the only
independent financial institution headquartered in Troy, Ohio. Peoples Savings
is regulated as an Ohio savings and loan association by the Office of Thrift
Supervision and the Ohio Division of Financial Institution.
Historically, Peoples Savings' principal business has consisted of
attracting savings deposits from the general public and investing such funds in
residential real estate loans made to local borrowers. As a result, Peoples
Savings' principal sources of income are interest on mortgage loans and fees for
service charges, as well as interest and dividends on investments. Peoples
Savings principal expenses are interest paid on deposits and borrowings.
Peoples Savings has a wholly-owned service corporation, Peoples Savings
Building & Savings Service Corporation of Troy, Ohio. During fiscal 1994, the
service corporation completed the construction of a fourteen-unit condominium
project in Troy, Ohio. The service corporation also has built single-family
homes in the Shenandoah Subdivision of Troy, Ohio. During fiscal 2001, the
service corporation was not engaged in any activity.
Peoples Merger Corp. was formed as an interim savings and loan
association on July 31, 2001, solely for the purpose of facilitating the
reorganization and is a wholly-owned subsidiary of Peoples Ohio.
THE ANNUAL MEETING OF PEOPLES SAVINGS SHAREHOLDERS
TIME, DATE AND PLACE
The Peoples Savings annual meeting of shareholders will be held at 3:00
p.m., Eastern Time, on October 31, 2001, at Market Square Community Room, 405
S.W. Public Square, Troy, Ohio 45373.
PURPOSE OF THE MEETING
At the annual meeting of shareholders, you will be asked to consider
and vote upon the election of Directors, the cash compensation of the Directors,
the adoption of the Peoples Savings stock option plan and the adoption of the
merger agreement.
SHARES OUTSTANDING AND ENTITLED TO VOTE; RECORD DATE
Only shareholders of record on September 14, 2001, will be entitled to
notice of and to vote at the annual meeting of shareholders. At the close of
business on September 14, 2001, there were 7,439,650 Peoples Savings common
shares outstanding, entitled to vote and held of record by approximately [697]
shareholders. Each Peoples Savings share entitles the holder thereof to one vote
on all matters properly presented at the annual meeting of shareholders.
VOTES REQUIRED
Under the Constitution of Peoples Savings, the shareholders present in
person or by proxy constitute a quorum. A quorum is necessary to take action on
any matter other than adjournment.
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PROPOSAL I - ELECTION OF DIRECTORS. Under Ohio law, the nominees
receiving the greatest number of votes will be elected as Directors and Director
Emeritus. Shares that are held by a nominee for a beneficial owner and that are
represented in person or by proxy at the annual meeting, but for which authority
to vote is withheld, are not counted toward the election of Directors or toward
the individual nominees specified in the enclosed proxy. If you sign and date
the enclosed proxy, but no vote is specified, your shares will be voted FOR the
election of all nominees.
PROPOSAL II - ESTABLISHMENT OF DIRECTORS' CASH COMPENSATION. The
affirmative vote of the holders of at least a majority of the shares represented
in person or by proxy at the annual meeting is necessary to fix the Directors'
cash compensation for the 2001-2002 fiscal year. The effect of an abstention is
the same as a vote against the approval of the proposed compensation. If you
sign and date the proxy, but no vote is indicated, your shares will be voted FOR
the approval of the Directors' compensation.
PROPOSAL III - ADOPTION OF THE PEOPLES SAVINGS 2001 STOCK OPTION AND
INCENTIVE PLAN. The affirmative vote of the holders of at least a majority of
the Peoples Savings shares represented in person or by proxy at the annual
meeting is necessary to adopt Peoples Savings' 2001 Stock Option and Incentive
Plan. Any abstention from the vote is the same as a vote against the stock
option plan. If you sign and date the enclosed proxy, but no vote is specified,
your shares will be voted FOR the adoption of the stock option plan.
PROPOSAL IV - ADOPTION OF THE MERGER AGREEMENT. The affirmative vote of
the holders of at least two-thirds of the outstanding shares on the record date
is required to adopt the merger agreement. The effect of any abstention is the
same as a vote against the merger agreement. If you sign and date the proxy, but
no vote is indicated, your shares will be voted FOR the adoption of the merger
agreement.
VOTING AND SOLICITATION AND REVOCATION OF PROXIES
We included with each copy of this prospectus/proxy statement a form of
proxy for use at the annual meeting of shareholders. This proxy is solicited by
the Peoples Savings Board of Directors. Whether or not you attend the annual
meeting, the Peoples Savings Board of Directors urges you to cast your vote on
the enclosed proxy. If you have executed a proxy and returned it to Peoples
Savings, you may revoke the executed proxy at any time before the vote by:
- filing written notice of revocation with Peoples Savings, at
635 South Market Street, Troy, Ohio 45373;
- executing and returning a later-dated proxy; or
- attending the annual meeting and giving notice of revocation
in person.
Your attendance at the annual meeting will not, by itself, serve as a revocation
of a proxy.
We do not expect any matter other than the four proposals discussed
below to be brought before the annual meeting of shareholders. The persons named
as proxies will use their best judgment in voting with respect to any other
matters that properly come before the annual meeting.
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Peoples Savings will pay all expenses incurred in connection with
preparing and mailing this prospectus/proxy statement, the accompanying proxy
and any other related materials and all other costs incurred in connection with
the solicitation of proxies on behalf of the Peoples Savings Board of Directors.
Proxies will be solicited by mail and may be further solicited, for no
additional compensation, by officers, Directors or employees of Peoples Savings.
RIGHTS OF DISSENTING SHAREHOLDERS
Under Ohio law, you have dissenters' rights with respect to the
adoption of the merger agreement. The following is a summary of the steps that
you must take if you wish to exercise those dissenters' rights. This description
is not complete. You should read Section 1701.85 of the Ohio Revised Code for a
more complete discussion of the procedures. A copy of Section 1701.85 is
attached as Appendix B to this document. IF YOU FAIL TO TAKE ANY ONE OF THE
REQUIRED STEPS SET FORTH IN SECTION 1701.85, YOUR DISSENTERS' RIGHTS MAY BE
TERMINATED UNDER OHIO LAW. If you are considering dissenting, you should consult
your own legal advisor.
To exercise dissenters' rights, you must satisfy the following five
conditions, among others:
- You must be a shareholder of record on September 14, 2001;
- You must not vote your shares in favor of the adoption of the
merger agreement;
- You must deliver a written demand for the fair cash value of
the dissenting shares within 10 days after the Peoples Savings
annual meeting;
- If Peoples Savings requests, you must send your stock
certificates to Peoples Savings within 15 days after the
request so that a legend may be added to your certificates,
stating that a demand for fair cash value has been made; and
- If you have not reached an agreement as to the fair cash value
of your shares with Peoples Savings within three months after
the service of your demand, you must file a complaint in court
for the determination of the fair cash value.
All demands should be sent to Peoples Savings, 635 South Market Street, Troy,
Ohio 45373, Attention: Secretary.
"Fair cash value" is the amount that a willing seller, under no
compulsion to sell, would be willing to accept, and that a willing buyer, under
no compulsion to purchase, would be willing to pay. In no event will the fair
cash value be in excess of the amounts specified in the dissenting shareholder's
demand. Fair cash value is determined as of the day before the annual meeting,
excluding any appreciation or depreciation in market value of your shares
resulting from the reorganization. The fair cash value of your shares may be
higher, the same, or lower than the market value of Peoples Savings shares on
the date the reorganization is effected.
The following is a more detailed description of the conditions you must
satisfy to perfect your dissenters' rights:
- You must be the record holder of the dissenting shares as of
September 14, 2001. If you have a beneficial interest in
Peoples Savings shares that are held of record in the name of
another person, you must cause the shareholder of record to
follow the required
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procedures.
- You must not vote in favor of the adoption of the merger
agreement. This requirement is satisfied if:
- You submit a properly executed proxy with
instructions to vote "against" the adoption of the
merger agreement or to "abstain" from the vote; or
- You do not return a proxy or you revoke a proxy and
you do not cast a vote at the annual meeting in favor
of the adoption of the merger agreement.
IF YOU VOTE IN FAVOR OF THE MERGER AGREEMENT, YOU WILL LOSE
YOUR DISSENTERS' RIGHTS. IF YOU SIGN AND RETURN A PROXY BUT DO
NOT INDICATE A VOTING PREFERENCE ON THE PROXY, THE PROXY WILL
BE VOTED FOR THE ADOPTION OF THE MERGER AGREEMENT AND WILL
CONSTITUTE A WAIVER OF YOUR DISSENTERS' RIGHTS.
- You must deliver a written demand with Peoples Savings on or
before the 10th day after the annual meeting at which the
Peoples Savings shareholders adopted the merger agreement.
Peoples Savings will not inform you of the expiration of the
10-day period. The written demand must include your name and
address, the number of dissenting shares and the amount you
claim as the fair cash value of those shares. Voting against
the merger agreement does not constitute a written demand as
required under Ohio law.
- If Peoples Savings requests, you must submit your certificates
for dissenting shares to Peoples Savings within 15 days after
it sends its request that a legend be placed on the
certificates, demonstrating that demand for fair cash value
was made. The certificates will be returned to you by Peoples
Savings. Peoples Savings intends to make this request to
dissenting shareholders.
- You must file a petition with the court if you do not reach an
agreement with Peoples Savings as to the fair cash value of
your shares. You must file the petition with the Court of
Common Pleas of Miami County, Ohio, for a determination of the
fair cash value of the dissenting shares within three months
after service of your demand to Peoples Savings for fair cash
value. The court will determine the fair cash value per share.
The costs of the proceeding, including reasonable compensation
to appraisers, will be assessed as the court considers
equitable.
Your right to receive the fair cash value of your dissenting shares
will terminate if:
- The merger does not become effective;
- You fail to deliver timely a written demand on Peoples
Savings;
- You do not, upon request of Peoples Savings, surrender your
Peoples Savings certificates in a timely manner;
- You withdraw your demand, with the consent of Peoples Savings;
or
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- Peoples Savings and you have not come to an agreement as to
the fair cash value of the dissenting shares and you have not
timely filed a complaint.
PRINCIPAL HOLDERS OF PEOPLES SAVINGS' COMMON SHARES
The following table sets forth information with respect to ownership
of the common shares of Peoples Savings by any person (including any "group" as
that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934)
who is known to Peoples Savings to be the beneficial owner of more than 5% of
the outstanding common shares as of September 14, 2001:
Amount and
nature of beneficial Percentage
Name and address ownership(1) of shares outstanding
- ---------------- ------------- ---------------------
E. Joseph Lowe 698,052 9.38%
901 N. Miami Avenue
Miami, Fl. 33136
G. Joseph Reardon 437,726(2) 5.86%
10 Colony Park Drive
Troy, Ohio 45373
Ronald B. Scott 516,970(3) 6.57%
194 Littlejohn Road
Troy, Ohio 45373
- ----------
(1) Except as otherwise noted, all beneficial ownership is direct and each
beneficial owner exercised sole voting and investment power over the
shares.
(2) Includes 139,516 shares as to which Mr. Reardon shares voting and
investment power and 29,344 shares that may be acquired upon the
exercise of options.
(3) Includes 424,653 shares that may be acquired upon the exercise of
options.
PROPOSAL I - ELECTION OF DIRECTORS
Peoples Savings' Constitution provides that the Board of Directors
will be composed of between five and eleven members and will be divided into
three classes approximately equal in size. In accordance with the Constitution
of Peoples Savings, the Board of Directors has fixed the number of Directors at
nine. The members of each class are elected for a term of three years. One class
is elected annually.
Three Directors will be elected at the annual meeting to serve
three-year terms and until their successors are elected and qualified. The Board
of Directors has nominated R. Douglas Haines and Richard W. Wallace to stand for
election and current Director G. Joseph Reardon to stand for reelection to the
Board of Directors at the annual meeting. There are no arrangements known to
management between the nominees and any other person pursuant to which nominees
were selected.
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A shareholder may nominate a candidate for Director directly. Peoples
Savings' Constitution provides that candidates for Directors may be nominated by
any shareholder by filing the names of the candidates with the Secretary of
Peoples Savings at least two weeks prior to the election.
Peoples Savings' Constitution provides that the shareholders may elect
one or more Directors emeritus for a one-year term and that any Director who
retires as a Director, who is not an employee of Peoples Savings at retirement
and who has served continuously as a Director for 10 years is eligible for
election as a Director Emeritus. The title Director Emeritus is honorary only. A
Director Emeritus may attend meetings of the Board of Directors, but has no
power to vote. William E. Eickhoff currently serves Peoples Savings as Director
Emeritus, and the Board of Directors has nominated him to stand for reelection
at the annual meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE DIRECTORS AND
DIRECTOR EMERITUS UNDER PROPOSAL I.
The persons named in the enclosed proxy intend to vote for the
election of the named nominees, unless you mark the proxy to the contrary. If
any nominee is unable to serve, all valid proxies will be voted for the election
of any substitutes the Board of Directors may recommend. At this time, the Board
knows of no reason why any nominee might be unavailable to serve.
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The following table sets forth certain information about each nominee
and each current Director:
Common shares
beneficially owned (1)
----------------------
Director Term to Percentage
Name Age since expire Amount of outstanding
- ---- --- ----- ------ ------ --------------
NOMINEE DIRECTORS
R. Douglas Haines 52 - - 1,000 *
Richard W. Wallace 49 - - 18,000(2) *
G. Joseph Reardon 68 1984 2001 437,726(3) 5.86%
NOMINEE FOR DIRECTOR EMERITUS
William E. Eickhoff 84 1977 2002 8,556 *
CURRENT DIRECTORS NOT UP FOR ELECTION
Peter E. Jenkins 66 1979 2003 16,580(4) *
William L. Lukens 60 1983 2003 208,940(5) 2.80%
William J. McGraw 53 1977 2002 298,684(6) 4.00%
Thomas E. Robinson 70 1996 2003 355,568(7) 4.78%
Ronald B. Scott 54 1991 2002 516,970(8) 6.57%
James S. Wilcox 54 1996 2002 105,348(9) 1.41%
Donald Cooper 73 1989 2001(10) 257,256(11) 3.44%
Richard W. Klockner 72 1996 2001(10) 240,256(12) 3.22%
All Directors, nominees and
Officers as a group (15 persons) 2,715,068(13) 32.83%
- ----------
* Less than 1%
(Footnotes on next page)
(1) Except as otherwise noted, all beneficial ownership is direct and each
beneficial owner exercises sole voting and investment power over the
shares.
(2) Includes 3,200 shares owned by Mr. Wallace's spouse and 4,000 shares
owned by his daughters.
(3) Includes 139,516 shares as to which Mr. Reardon shares voting and
investment power and 29,344 shares that may be acquired upon the
exercise of options.
(4) Includes 16,580 shares that may be acquired upon the exercise of
options.
(5) Includes 160,000 shares as to which Mr. Lukens shares voting and
investment power, 4,500 shares owned by his spouse and 20,320 shares
that may be acquired upon the exercise of options.
(6) Includes 29,320 shares that may be acquired upon the exercise of
options.
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(7) Includes 174,784 shares owned by Mr. Robinson's spouse and 6,000 shares
that may be acquired upon the exercise of options.
(8) Includes 424,653 shares that may be acquired upon the exercise of
options.
(9) Includes 9,360 shares held in Mr. Wilcox's spouses' IRA and 30,000
shares that may be acquired upon the exercise of options.
(10) Messrs. Cooper and Klockner cannot stand for reelection to the Peoples
Savings Board of Directors because their age exceeds the maximum age
permitted under Peoples Savings' Constitution.
(11) Includes 29,320 shares that may be acquired upon the exercise of
options.
(12) Includes 750 shares as to which Mr. Klockner shares voting and
investment power, 199,506 shares held by his spouse and 30,000 shares
that may be acquired upon the exercise of options.
(13) For executive officers other than Mr. Scott, includes 700 shares as to
which executive officers share voting and investment power, 26,000
shares owned by an executive officer's spouse and 214,464 shares that
may be acquired by executive officers upon the exercise of options.
The principal occupation for the last five years of each nominee and
Director of Peoples Savings is set forth below. This year's nominees are marked
with an asterisk (*).
*R. DOUGLAS HAINES has served in an advisory capacity to Peoples Savings since
1997. Having been employed by Buckeye Mutual State Insurance Company since 1972,
Mr. Haines currently holds the position of President, CEO. Mr. Haines is
Chairman of the Ohio Insurance Institute, a Director of the American Association
of Insurance Services and serves as Vice Chairman on the Upper Valley Medical
Center Board of Directors.
*RICHARD W. WALLACE has served in an advisory capacity to Peoples since 1997.
Mr. Wallace has been employed by Hartzell Fan, Inc. in Piqua, Ohio since 1988
and currently holds the position of President.
*G. JOSEPH REARDON was elected Chairman of the Board of Peoples Savings in 1989.
Mr. Reardon is the retired President of G. Joseph Reardon & Associates, Inc.,
which acts as a manufacturer's representative. Mr. Reardon also serves as
President of the Troy Board of Park Commissioners and is a member of the Troy
Planning Commission and a past member of the Troy Foundation. He is past
Chairman of the Troy chapter of the American Heart Association - Heart Sunday
and past President of the Troy Area Chamber of Commerce.
WILLIAM E. EICKHOFF served as Chairman of the Board and was the President of
Peoples Savings at the time he retired in 1982. Mr. Eickhoff began his service
with Peoples Savings in 1958 as a teller. He is a member and past Trustee of
Tipp City Senior Citizens and was a member of the Troy Rotary Club until his
retirement.
PETER E. JENKINS has been the Mayor of the City of Troy since 1991. Prior to
1991, he worked at two welding manufacturing firms in Troy. Mr. Jenkins is a
past President of the Troy City Council, former
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Board member of the Lincoln Community Center and currently serves on the Board
of Directors of the Leadership Troy Program.
WILLIAM E. LUKENS is President of Stillwater Technologies, Inc., a contract
manufacturing firm located in Troy. Mr. Lukens is a member and past President of
the Troy Rotary Club and is past Chairman of the Board of Trustees of Upper
Valley Medical Centers. Mr. Lukens is also President of the Community
Improvement Corporation, a Board member of the Edison Foundation Board and a
committee member of Habitat for Humanity. In addition, Mr. Lukens is a past
Director of the Troy area United Fund, past Chairman of the Business Economic
Education Committee for the Troy Area Chamber of Commerce and a past Board
member of the Ohio Economic Council.
WILLIAM J. MCGRAW, III, is an attorney and president of Dungan & LeFevre Co.,
L.P.A., the Troy, Ohio law firm that represents Peoples Savings as general
counsel. Mr. McGraw is past President of the Troy Area Chamber of Commerce and
the Troy Noon Optimist Club, and founding chairman of Leadership Troy. He is a
past Chairman of the Board of Trustees of Upper Valley Medical Centers, and
currently serves as a Trustee of the Troy Development Council. Mr. McGraw also
serves as Secretary and Director of Peoples Savings' service corporation.
THOMAS E. ROBINSON is a retired executive. Mr. Robinson is active in a number of
charitable boards and foundations, including the Ruth Lyons Children's Fund, and
is a past member of the Troy Foundation.
RONALD B. SCOTT has served as President and Chief Executive Officer of Peoples
Savings since December 1990. He also serves as the President and as a Director
of Peoples Savings' service corporation. Mr. Scott has been employed with
Peoples Savings since 1987 and previously served as a Senior Vice President and
the Chief Financial Officer of Peoples Savings. Mr. Scott is a past Chairman of
the Troy Area Chamber of Commerce and currently serves as a Trustee of the Troy
Foundation and Vice President of the Paul Duke Foundation. He is a member of the
Troy Development Council and is Vice Chairman of the Tax-Incentive Review
Council of Miami County.
JAMES S. WILCOX is Vice President of Finance and Chief Financial Officer for PMI
Food Equipment Group headquartered in Troy. Mr. Wilcox is a Trustee of the Miami
County YMCA and also serves on the Board of Quadlux and Tropitone corporations.
DONALD COOPER has been the President of Captor Corporation, Tipp City, Ohio, a
manufacturer of specialized electronic components, since 1967. Mr. Cooper is
also a member of the Tipp City Rotary Club and supports Tipp City community
projects.
RICHARD W. KLOCKNER is owner and President of Klockner & Associates, a civil
engineering company located in Troy, a position he has held since 1979. Mr.
Klockner is a member of the Miami County Home Builders Association, Professional
Land Surveyors of Ohio, and the Ohio Society of Professional Engineers.
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EXECUTIVE OFFICERS
In addition to the President and Chief Executive Officer, Ronald B.
Scott, Peoples Savings has the following executive officers:
MARK A. DOUGLAS is Vice President and Chief Financial Officer of Peoples
Savings. Mr. Douglas has been with Peoples Savings since October 1992, primarily
serving as Vice President and senior lender. He was appointed by the Board of
Directors as Chief Financial Officer in October 2000.
PHILLIP M. JONES has been Vice President of the Trust Division since 1995, when
Peoples Savings began its Trust Department.
LINDA A. DANIEL became Vice President of Marketing in March 1999. Prior to
joining Peoples Savings, Ms. Daniel was employed by Upper Valley Medical Center
for 11 years and served as Vice-President of Communications from 1995 to 1999.
RICHARD K. BENDER is Vice President of Data Processing, a position he has held
since October 2000. Mr. Bender joined Peoples as a loan officer in 1993.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of Peoples Savings meets at least once a month
and may have additional special meetings. During the fiscal year ended June 30,
2001, the Board of Directors of Peoples Savings met 12 times. The Board of
Peoples Savings has an Audit and Compensation Committee, but does not have a
nominating committee.
The Audit Committee, which met three times in fiscal 2001, reviews the
annual audit by Peoples Savings' independent certified public accountants and
the internal accounting and regulatory reporting of Peoples Savings. The Audit
Committee consists of three Directors. See "Report of the Audit Committee."
The Compensation Committee, consisting of Messrs. Reardon, Cooper,
Lukens and Robinson, met twice during fiscal year 2001. The Compensation
Committee reviews compensation levels of Peoples Savings' executive officers.
See "Report of the Compensation Committee."
The Board of Directors also has several other standing committees that
meet periodically, including the Executive Committee, the Trust Committee, the
Real Estate Loan Committee, the Asset and Liability Committee, the EDP Steering
Committee, and the Policy and Procedures Committee.
During fiscal year 2001, each Director attended more than 75% of the
meetings of the Board of Directors and the meetings of all committees of the
Board of Directors on which each such Director served, except Messrs. Lukens and
Robinson.
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DIRECTORS' COMPENSATION
The Directors and the Director Emeritus receive compensation for their
service to Peoples Savings. The cash compensation paid to members of the Board
of Directors during the 2001 fiscal year was: $13,000 annually for the Chairman
of the Board, $10,000 annually for each other Director and $200 for each
Director for each meeting of the Board of Directors or committee meeting
attended. See "Proposal II-- Annual establishment of Directors' compensation."
The Director Emeritus receives compensation determined annually by the Board of
Directors.
EXECUTIVE COMPENSATION
Except for the Chief Executive Officer, no Director or executive
officer of Peoples Savings received more than $100,000 in salary and bonus
payments from Peoples Savings during the year ended June 30, 2001. The following
table sets forth information about the compensation paid to the Chief Executive
Officer:
SUMMARY COMPENSATION TABLE
- -------------------------------------------------------------------------------------------------------------------
Long Term
Compensation All Other
Annual Compensation Awards Compensation
- -------------------------------------------------------------------------------------------------------------------
Name and Principal Options/SARs
Position Year Salary($) Bonus($) (#) ($)(1)
------------------ ---- --------- -------- --- ------
Ronald B. Scott 2001 $149,872 $60,530 29,355 $3,979
President, Chief 2000 130,276 62,000 40,000 4,715
Executive Officer 1999 129,770 60,000 40,000 4,480
and Director
- -------------------------------------------------------------------------------------------------------------------
(1) Represents the value of the allocation at the allocation date to the
Employee Stock Ownership Plan account of Mr. Scott.
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STOCK OPTIONS GRANTED IN FISCAL YEAR 2001
The following table sets forth information regarding stock options
awarded during fiscal year 2001 to Mr. Scott. This grant is also reflected in
the summary compensation table. The hypothetical realizable values for the
option grants are shown based on compound annual rates of stock price
appreciation of 5% and 10% from the grant date to the expiration date. The
assumed rates of appreciation are prescribed by the proxy rules administered by
the Office of Thrift Supervision, are for illustration purposes only and they
are not intended to predict future stock prices, which will depend upon market
conditions and Peoples Savings' future performance and prospects.
Potential realizable value
% of total at assumed annual rate of
options stock price appreciation
granted to Exercise for option term
Options employees in price Expiration
granted fiscal 2001 ($/Share) date 5% ($) 10% ($)
------- ----------- --------- ---------- ------- ----------
Ronald B. Scott 29,355 26.99% $3.975 8/28/2010 $73,383 $185,967
The following table sets forth certain information concerning stock
option exercises during fiscal year 2001 by Mr. Scott and information concerning
option values.
Aggregate option exercises in last fiscal year and fiscal year-end option values
--------------------------------------------------------------------------------
Number of securities Value of unexercised
underlying unexercised in-the-money options
options at 6/30/01(#) at 6/30/01($) (1)
Shares acquired Value Exercisable/ Exercisable/
Name on exercise(#) realized ($) unexercisable unexercisable
- ---- --------------- ------------ ------------- -------------
Ronald B. Scott -0- -0- 424,653/-0- $460,018/-0-
- --------------------------
(1) An option is "in-the-money" if the fair value of the underlying shares
exceed the market price of the option. The figure represents the value
of the unexercised options, determined by multiplying the number of
unexercised options by the difference between the exercise price of the
option and the $3.00 market price for the common shares on June 30,
2001.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee reviews the compensation levels of the
executive officers, including the Chief Executive Officer, each year. The
Compensation Committee utilizes independent surveys of compensation of officers
in the thrift industry, taking into account comparable asset bases and
geographic locations. Based on the foregoing factors, the Compensation Committee
establishes the compensation of the Chief Executive Officer and the overall
budget for compensation of all other executive officers.
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Compensation policies toward executive officers generally
The Compensation Committee's executive compensation policies are
designed to provide competitive levels of compensation that will attract and
retain qualified executives and will reward individual performance, initiative
and achievement, while enhancing overall corporate performance and shareholder
value. The compensation program for executive officers consists of three
elements - a base salary component, a performance cash bonus and a grant of
stock options.
The objectives of the performance bonuses are to motivate and reward
the executive officers in connection with the accomplishment of annual
objectives of Peoples Savings, to reinforce a strong performance orientation
with differentiation and variability in individual awards based on contribution
to annual and long-range business results and to provide a competitive
compensation package that will attract, reward and retain individuals of the
highest quality. Performance bonuses are granted based upon objectives set by
management.
The objectives of the stock options are to motivate and reward the
executive officers based on each individual's contribution to the total
performance of Peoples Savings and to reinforce a strong performance
orientation.
Determination of CEO's compensation
Mr. Scott's compensation was based upon the Compensation Committee's
evaluation of his performance, as well as Peoples Savings' long-term performance
measured by earnings, capital growth, return on assets, return on equity, asset
quality and total shareholder return. The Board of Directors also evaluated past
stated objectives developed by the Compensation Committee and Mr. Scott and his
success in achieving these objectives. These objectives included measuring
Peoples Savings' performance against its peer group in total shareholder return,
return on assets, return on equity, earnings and asset quality of Peoples
Savings. The Compensation Committee believes that the level of compensation paid
to Mr. Scott in 2001 was fair and reasonable when compared with compensation
levels in the thrift industry reported in various independent surveys. The
compensation earned by Mr. Scott in fiscal 2001 reflects the significant
management and leadership responsibilities required of him and the effective
manner in which those responsibilities were fulfilled.
COMPENSATION COMMITTEE
G. Joseph Reardon
Donald Cooper
William E. Lukens
Thomas E. Robinson
COMPENSATION COMMITTEE INTERLOCKS
During the last fiscal year, no member of the Compensation Committee
was a current or former executive officer or employee of Peoples Savings or had
a reportable business relationship with Peoples Savings.
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PERFORMANCE GRAPH
The following graph and table show the cumulative total return on the
Peoples Savings common shares for the last five fiscal years ended June 30,
2001, compared to the cumulative total return of (i) the SNL Securities All
Publicly Traded Thrifts Index and (ii) the Russell 2000 Index. Cumulative total
return on the shares or the indices equals the total increase in value since
June 30, 1996, assuming reinvestment of all dividends paid on the shares or the
index, respectively. The graph and table were prepared assuming that $100 was
invested at the closing price on June 30, 1996 in the Peoples Savings shares and
in each of the indices. The shareholder returns shown on the performance graph
are not necessarily indicative of the future performance of the Peoples Savings
shares or of any particular index.
STOCK PERFORMANCE
[GRAPH]
PESV SNL Russell 2000
June 30, 1996 100.0 100.0 100.0
June 30, 1997 150.7 161.3 116.1
June 30, 1998 346.4 215.3 135.3
June 30, 1999 443.2 179.7 137.1
June 30, 2000 215.0 146.6 156.2
June 30, 2001 159.2 249.1 157.1
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REPORT OF THE AUDIT COMMITTEE
The Audit Committee is comprised of three Directors, all of whom are
considered "independent" under Rule 4200(a)(14) of the National Association of
Securities Dealers' listing standards. The Audit Committee is responsible for
overseeing Peoples Savings' accounting functions and controls, as well as
recommending to the Board of Directors an accounting firm to audit Peoples
Savings' financial statements. The Audit Committee has adopted a charter to set
forth its responsibilities (the "Charter"). A copy of the Charter is attached to
this document as Appendix C.
As required by the Charter, the Audit Committee received and reviewed
the report of BKD LLP regarding the results of their audit, as well as the
written disclosures and the letter from BKD required by Independence Standards
Board Standard No. 1. The Audit Committee reviewed the audited financial
statements with the management of Peoples Savings. A representative of BKD also
discussed with the Audit Committee the independence of BKD from Peoples Savings,
as well as the matters required to be discussed by Statement of Auditing
Standards 61. Discussions between the Audit Committee and the representative of
BKD included the following:
- BKD's responsibilities in accordance with generally accepted
auditing standards;
- The initial selection of, and whether there were any changes
in, significant accounting policies or their application;
- Management's judgments and accounting estimates;
- Whether there were any significant audit adjustments;
- Whether there were any disagreements with management;
- Whether there was any consultation with other accountants;
- Whether there were any major issues discussed with management
prior to BKD's retention;
- Whether BKD encountered any difficulties in performing the
audit;
- BKD's judgments about the quality of Peoples Savings'
accounting principles; and
- BKD's responsibilities for information prepared by management
that is included in documents containing audited financial
statements.
Based on its review of the financial statements and its discussions
with management and the representative of BKD, the Audit Committee did not
become aware of any material misstatements or omissions in the financial
statements. Accordingly, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in the Annual Report
on Form 10-K for the year ended June 30, 2001, to be filed with the Office of
Thrift Supervision.
Audit Committee
Donald Cooper
James S. Wilcox
William J. McGraw
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CURRENT ACCOUNTANTS
BKD LLP conducted the independent audit of Peoples Savings for the year
ended June 30, 2001, and the Board of Directors has selected BKD as the
independent accountant of Peoples Savings for the fiscal year ending June 30,
2002. Management of Peoples Savings expects that a representative of BKD will be
present at the annual meeting and will have the opportunity to make a statement
and respond to appropriate questions.
AUDIT FEES
During the year ended June 30, 2001, BKD billed $37,365 in fees for
professional services in connection with the audit of Peoples Savings' annual
financial statements and the review of financial statements included in Peoples
Savings' quarterly reports and annual reports on Forms 10-Q and 10-K.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
During 2001, no fees were incurred by Peoples Savings from BKD for
professional accounting services to design, implement or manage, hardware or
software that collects or generates information significant to Peoples Savings'
financial statements.
ALL OTHER FEES
During 2001, BKD billed Peoples Savings $48,910 in fees for services
rendered by BKD for all accounting services other than the services discussed
under the headings AUDIT FEES and FINANCIAL INFORMATION SYSTEMS DESIGN AND
IMPLEMENTATION FEES above.
CHANGE IN CERTIFYING ACCOUNTANT
Prior to August 28, 2000, KPMG LLP served as Peoples Savings'
independent public accountant. As part of management's continuing review of
operations, Peoples Savings reviewed the selection of Peoples Savings'
independent public accountants in 2000.
After completing its review, the Board of Directors, serving in the
capacity of the Audit Committee, approved the change in accountants from KPMG to
BKD LLP, effective August 28, 2000. In connection with its audits for the two
fiscal years ended June 30, 2000, and the subsequent interim period through
August 28, 2000, KPMG did not have any disagreement with Peoples Savings on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreement, if not resolved to the
satisfaction of KPMG, would have caused them to make reference in connection
with their report on Peoples Savings' financial statements to the subject matter
of the disagreement. The decision to terminate KPMG as Peoples Savings'
independent public accountants was approved by Peoples Savings' Board of
Directors.
The report of KPMG on Peoples Savings' financial statements for the
years ended June 30, 1999 and June 30, 2000 did not contain an adverse opinion
or disclaimer of opinion, and was not qualified or modified as to uncertainty,
audit scope or accounting principles. During that period, there were no
"reportable events" within the meaning of Item 304(a)(l)(v) of Regulation S-K,
promulgated under the Securities Act of 1933.
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Peoples Savings requested that KPMG furnish a letter addressed to the
Office of Thrift Supervision stating whether KPMG agreed with the above
statements. KPMG furnished Peoples Savings with such a letter dated August 28,
2000, a copy of which was filed as Exhibit 16 to a current report on Form 8-K
with the Office of Thrift Supervision filed by Peoples Savings on August 29,
2000.
TRANSACTIONS WITH DIRECTORS AND OFFICERS
Currently, Peoples Savings makes loans to directors who are not
full-time employees of Peoples Savings in the ordinary course of business and on
the same terms and conditions, including interest rates and collateral, as those
of comparable loans to other persons. Peoples Savings also has a policy whereby
Peoples Savings will make loans to its full-time employees, including directors
and employees who are full-time employees, at an interest rate that is 1% less
than the interest rate charged for comparable loans to other persons. This 1%
reduction in interest rate is subject to the condition that the employees sign
an agreement that the interest rate will be increased by 1% should the
employee's employment with Peoples Savings terminate for any reason.
The following table sets forth certain information regarding loans made
on terms more favorable than those offered to the public to executive officers
and Directors of Peoples Savings whose indebtedness to Peoples Savings exceeded
$60,000 at any time since July 1, 2000:
Largest
Rate balance Balance at
Date of during year June 30,
Name Position Originated Loan Type Interest Ended 6/30/01 2001
- ---- -------- ---------- --------- -------- ------------- --- ----
Ronald B. Scott President, CEO 11/2/93 Mortgage (Residence) 6.000% $ 62,575 $ 56,975
4/19/97 Home Equity 7.740% 3,145 -
4/19/97 Equity Line of Credit 10.500% 42,165 -
3/29/01 Equity Line of Credit 7.000% 42,505 41,766
Mark A. Douglas Vice-President 11/20/98 Mortgage (Residence) 5.750% $109,995 $107,602
Phillip M. Jones Vice-President 7/8/98 Mortgage (Residence) 6.125% $122,179 $120,502
7/8/98 Equity Line of Credit 8.5000% 24,590 14,975
Linda A. Daniel Vice-President 3/27/98 Mortgage (Residence) 5.650% $201,252 $196,463
9/28/00 Automobile 7.500% 24,041 21,404
9/11/98 Home Equity 9.740% 19,625 -
5/30/01 Equity Line of Credit 6.000% 37,359 37,356
Richard K. Bender Vice-President 10/25/95 Mortgage (Residence) 6.000% $ 76,101 $ 71,892
3/6/97 Home Equity 7.750% 2,274 -
3/2/96 Equity Line of Credit 9.000% - -
None of the outstanding loans to Directors and executive officers
involve more than the normal risk of collectibility or present other unfavorable
features, and all are current in their payments.
RELATED PARTY TRANSACTIONS
In fiscal year 2001, Dungan & LeFevre Co., L.P.A., the law firm in
which William J. McGraw, a Director of Peoples Savings, is an attorney and
President, performed legal services for Peoples Savings
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related to loan transactions, such as title examinations and document
preparation. For these services, Dungan & LeFevre received $21,975 in legal fees
paid by borrowers of Peoples Savings. The firm also received $13,225 for other
legal services primarily relating to litigation in which Peoples Savings was
involved. In addition, the firm received an annual $18,713 retainer for
non-litigation legal services to Peoples Savings.
Title Safe Agency, Inc., is a real estate title insurance agency
wholly-owned by Dungan & LeFevre. In fiscal year 2001, Title Safe Agency
performed services for Peoples Savings related to loan transactions, such as
title insurance and commitments, title examinations and post-closing services.
Borrowers of Peoples Savings paid Title Safe Agency $158,218 for services
related to their loan transactions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Peoples
Savings' Directors and executive officers to file with the Office of Thrift
Supervision initial reports of ownership and reports of changes in ownership of
the common shares of Peoples Savings. Peoples Savings assists its Directors and
executive officers in completing and filing these reports. To Peoples Savings'
knowledge, based solely on a review of these reports, during the past fiscal
year, all Section 16(a) filing requirements applicable to Peoples Savings'
Directors and executive officers were complied with in a timely fashion.
PROPOSAL II - ESTABLISHMENT OF DIRECTORS' COMPENSATION
The Ohio Revised Code and the Constitution of Peoples Savings requires
the shareholders to fix the cash compensation of the members of the Board of
Directors of Peoples Savings. For the fiscal year ending June 30, 2002, the
Board of Directors proposes that the compensation to be paid to Directors should
be: $13,000 for the Chairman of the Board; $10,000 for each other Director; and
$200 for each Director for each meeting of the Board of Directors or committee
meeting attended.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" THE DIRECTORS'
COMPENSATION PROPOSED.
PROPOSAL III - ADOPTION OF THE PEOPLES SAVINGS 2001
STOCK OPTION AND INCENTIVE PLAN
GENERAL. The Board of Directors of Peoples Savings has adopted the
Peoples Savings 2001 Stock Option and Incentive Plan, a copy of which is
attached as Appendix D. The stock option plan must be approved by the
affirmative vote of the holders of a majority of the shares of Peoples Savings
represented in person or by proxy at the annual meeting. If the reorganization
is affected, the stock option plan will be assumed by Peoples Ohio.
The following is a summary of the terms of the stock option plan and is
qualified in its entirety by reference to the full text of the stock option
plan, a copy of which is attached as Exhibit D.
PURPOSE, ADMINISTRATION AND ELIGIBILITY. The purposes of the stock
option plan include to promote and advance the interests of Peoples Savings and
its shareholders by enabling Peoples Savings to attract, retain and reward
directors and employees of Peoples Savings and to strengthen the mutuality of
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interests between the directors and employees and Peoples Savings shareholders
by providing the directors and employees with a proprietary interest in pursuing
the long-term growth, profitability and financial success of Peoples Savings.
The stock option plan will be administered by a committee comprised of at least
three directors of Peoples Savings.
TERMS OF THE STOCK OPTION PLAN. The stock option plan provides for the
reservation of a maximum of 600,000 shares of Peoples Savings for issuance by
Peoples Savings upon the granting of options to certain Directors and employees
of Peoples Savings. Any shares issued under the stock option plan will come from
authorized but unissued shares. The stock option plan provides that, if the
reorganization is effected, the shares to be issued upon the exercise of all
outstanding stock options or future awarded stock options will be common shares
of Peoples Ohio.
As shares are issued to Directors and officers of Peoples Savings who
receive and exercise options under the stock option plan, the voting power of
the Directors and officers of Peoples Savings on any matters submitted to
Peoples Savings shareholders, including changes of control, will increase.
OPTION TERMS. Options granted to the officers and employees under the
stock option plan may be incentive stock options within the meaning of Section
422 of the Code, or may be options that do not qualify under Section 422 of the
Internal Revenue Code, non-qualified stock options. Options granted under the
stock option plan to Directors who are not employees of Peoples Savings will be
non-qualified stock options.
The exercise price of each option granted under the stock option plan
will be determined by the stock option committee at the time the option is
granted. However, the exercise price of an option may not be less than 100% of
the fair market value of the shares on the date of the grant. In addition, the
exercise price of an incentive stock option may not be less than 110% of the
fair market value of the shares on the date of the grant if the recipient owns
more than 10% of the outstanding common shares of Peoples Savings. Subject to
certain exceptions specified in the stock option plan or as otherwise specified
by the committee at the time of grant, stock options are immediately exercisable
in full. No stock option will be exercisable after the expiration of ten years
from the date of the grant. However, if a recipient of an incentive stock
options owns a number of shares representing more than 10% of Peoples Savings
shares outstanding at the time the incentive stock options is granted, the term
of the incentive stock options will not exceed five years. If the fair market
value of shares awarded pursuant to an incentive stock option that is
exercisable for the first time during any calendar year by a participant under
the stock option plan exceeds $100,000, the incentive stock option will be
considered a non-qualified stock option to the extent of such excess.
An option recipient cannot transfer or assign an option other than by
will or in accordance with the laws of descent and distribution. Termination of
an option recipient's employment for cause, as defined in the stock option plan,
will result in the annulment of any outstanding exercisable options. Any
outstanding options that have not yet been exercised will terminate upon the
resignation, removal or retirement of a Director of Peoples Savings, or upon the
termination of employment of an officer or employee of Peoples Savings, except
in the case of death or disability of the option recipient or a change in
control of Peoples Savings.
Peoples Savings will receive no monetary consideration for the granting
of options under the stock option plan. Upon the exercise of options, Peoples
Savings will receive payment of cash or, if acceptable to the committee, common
shares or outstanding awarded stock options.
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The committee may include as a term of any option granted under the
stock option plan the right, but not the obligation, of Peoples Savings to
purchase all or any amount of the common shares acquired by an optionee pursuant
to the exercise of any such options. The purchase right will provide for, among
other terms, a specified duration of the purchase right, a specified price per
common share to be paid upon the exercise of the purchase right and a
restriction on the disposition of the common shares by the optionee during the
period of the purchase right.
STOCK APPRECIATION RIGHTS. The committee may include a stock
appreciation right as a component of an option or independent of an option. The
stock appreciation right would entitle the recipient to receive a number of
Peoples Savings common shares or cash, or combination thereof, as the committee
shall determine, equal to the amount by which the fair market value of the
common shares subject to the stock appreciation right exceeds the exercise price
of the stock appreciation right.
TAX TREATMENT OF INCENTIVE STOCK OPTIONS. A participant who is granted
an incentive stock option will not recognize taxable income either on the date
of the grant or on the date of exercise, although the alternative minimum tax
may apply. Upon disposition of shares acquired from the exercise of an incentive
stock option, long-term capital gain or loss is generally recognized in an
amount equal to the difference between the amount realized on the sale or
disposition and the exercise price. If the participant disposes of the shares
within two years of the date of the grant or within one year from the date of
the transfer of the shares to the participant, a disqualifying disposition,
however, then the participant will recognize ordinary income, as opposed to
capital gain, at the time of disposition in an amount generally equal to the
lesser of (i) the amount of gain realized on the disposition, or (ii) the
difference between the fair market value of the shares received on the date of
exercise and the exercise price. Any remaining gain or loss is treated as a
short-term or long-term capital gain or loss, depending upon the period of time
the shares have been held.
Peoples Savings is not entitled to a tax deduction upon either the
exercise of an incentive stock option or the disposition of shares acquired
pursuant to such exercise, except to the extent that the participant recognizes
ordinary income in a disqualifying disposition. Ordinary income from a
disqualifying disposition will constitute compensation, but will not be subject
to tax withholding, nor will it be considered wages for payroll tax purposes.
Peoples Savings reserves the right to require tax withholding if it determines
that such withholding is necessary to comply with changes in the Internal
Revenue Code.
If the holder of an incentive stock option pays the exercise price, in
whole or in part, with previously acquired shares, the exchange should not
affect the incentive stock option tax treatment of the exercise. Upon exchange,
and except as otherwise described herein, no gain or loss is recognized by the
participant upon delivering previously acquired shares to Peoples Savings, and
shares received by the participant equal in number to previously acquired shares
exchanged will have the same basis and holding period for long-term capital gain
purposes as the previously acquired shares. (The participant, however, will not
be able to utilize the prior holding period for the purpose of satisfying the
incentive stock option statutory holding period requirements for avoidance of a
disqualifying disposition.) Shares received by the participant in excess of the
number of shares previously acquired will have a basis of zero and a holding
period that commences as of the date the shares are transferred to the
participant upon the exercise of the incentive stock option. If the exercise of
an incentive stock option is effected using shares previously acquired through
the exercise of an incentive stock option, the exchange of such previously
acquired shares will be considered a disposition of such shares for the purpose
of determining whether a disqualifying disposition has occurred.
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TAX TREATMENT OF NON-QUALIFIED OPTIONS. A participant receiving an
option that does not qualify as an incentive stock option does not recognize
taxable income on the date of the grant of the option, provided that the option
does not have a readily ascertainable fair market value at the time it is
granted. The participant must recognize ordinary income generally at the time of
exercise of a non-qualified option in the amount of the difference between the
fair market value of the shares on the date of exercise and the option price.
The ordinary income received will constitute compensation for which tax
withholding by Peoples Savings generally will be required. The amount of
ordinary income recognized by a participant will be deductible by Peoples
Savings in the year that the participant recognizes the income if Peoples
Savings complies with the applicable withholding requirement.
If, at the time of exercise, the sale of the shares could subject the
participant to short-swing profit liability under Section 16(b) of the
Securities Exchange Act of 1934, such person generally will not recognize
ordinary income until the date that the participant is no longer subject to such
Section 16(b) liability. Upon such date, the participant will recognize ordinary
income in an amount equal to the fair market value of the shares on such date
less the option exercise price. Nevertheless, the participant may elect under
Section 83(b) of the Internal Revenue Code within 30 days of the date of
exercise to recognize ordinary income as of the date of exercise, without regard
to the restriction of Section 16(b).
Shares acquired upon the exercise of a non-qualified option will have a
tax basis equal to their fair market value on the exercise date, or other
relevant date on which ordinary income is recognized, and the holding period for
the shares generally will begin on the date of exercise or such other relevant
date. Upon subsequent disposition of the shares, the participant will recognize
long-term capital gain or loss if the participant has held the shares for more
than one year prior to disposition, or short-term capital gain or loss if the
participant has held the shares for one year or less.
If a holder of a non-qualified option pays the exercise price, in whole
or in part, with previously acquired shares, the participant will recognize
ordinary income in the amount by which the fair market value of the shares
received exceeds the exercise price. The participant will not recognize gain or
loss upon delivering such previously acquired shares to Peoples Savings. Shares
received by a participant equal in number to the previously acquired shares
exchanged therefor will have the same basis and holding period as such
previously acquired shares. Shares received by a participant in excess of the
number of such previously acquired shares will have a basis equal to the fair
market value of such additional shares as of the date ordinary income is
recognized. The holding period for such additional shares will commence as of
the date of exercise or such other relevant date.
TAX TREATMENT OF STOCK APPRECIATION RIGHTS. A participant in the stock
option plan is not taxed upon the grant of stock appreciation rights. Instead,
participants will generally be taxed on the exercise date, at ordinary income
rates, on the amount of each received and the fair market value of any common
shares received. However, if the sale of common shares could subject a
participant to liability under Section 16(b) of the Exchange Act, the
participant generally will not recognize ordinary income with respect to the
common shares until the participant is no longer subject to such liability, at
which time the participant will recognize ordinary income in an amount equal to
the fair market value of common shares on such date.
The committee may grant options under the stock option plan to the
Directors, officers and employees of Peoples Savings in the future at such times
as they deem most beneficial to Peoples Savings on the basis of the individual
participant's responsibility, tenure and future potential.
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No awards will be granted under the stock option plan prior to its
approval by the shareholders of Peoples Savings. Future grants under the stock
option plan will be made in the discretion of the committee, and accordingly,
are not yet determinable.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" THE ADOPTION OF THE PEOPLES
SAVINGS 2001 STOCK OPTION AND INCENTIVE PLAN.
PROPOSAL IV - ADOPTION OF THE MERGER AGREEMENT
The following is a summary of the material provisions of the merger
agreement, a copy of which we have attached as Appendix A. We urge you to read
the merger agreement carefully for details of the reorganization and the terms
and conditions of the merger agreement.
BACKGROUND AND REASONS FOR THE REORGANIZATION
After examining the advantages of forming a holding company for Peoples
Savings, the Board of Directors approved on June 25, 2001, the incorporation of
Peoples Ohio and the other steps necessary to complete the reorganization. The
reorganization will provide a more suitable corporate structure for responding
to the rapidly changing environment in the financial institutions industry. This
holding company structure will provide greater flexibility to:
- Acquire other savings and loan associations;
- Purchase our own shares; and
- Diversify and expand services.
ACQUISITIONS. One of the advantages to forming a holding
company is the increased flexibility in structuring acquisitions. The
only manner in which Peoples Savings presently may acquire another
financial institution is by a merger of the institution with or into
Peoples Savings or by the purchase of all of the assets and the
assumption of all of the liabilities of the entity. Whether through a
merger or a purchase and assumption transaction, the legal identity of
one of the two institutions must necessarily terminate.
Like a savings association, a savings and loan holding company
may merge another financial institution with or into a subsidiary
savings association of the holding company or may acquire another
financial institution through a purchase and assumption transaction.
Yet, a savings and loan holding company also may acquire all of the
outstanding shares of another institution, as a result of which the
holding company would own the entity as a separate wholly-owned
subsidiary and would be designated a "multiple" savings and loan
holding company.
SHARE REPURCHASES. In the event the Board of Directors decides
that it would be in the best interests of Peoples Savings and its
shareholders to repurchase some of its shares, the repurchase would
result in adverse tax consequences related to the recapture of the bad
debt reserve. In contrast, Peoples Ohio will be able to repurchase
shares without these adverse tax consequences.
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FLEXIBILITY IN ACTIVITIES. Peoples Ohio is in the process of
registering as a savings and loan holding company under the Home
Owners' Loan Act of 1934. As a savings and loan holding company,
Peoples Ohio will be permitted to engage upon application and
regulatory approval in a broader array of business activities than the
activities in which Peoples Savings may currently engage. Although
neither Peoples Ohio nor Peoples Savings has any current intentions to
pursue activities not closely related to banking, the status of Peoples
Ohio as a savings and loan holding company will provide greater
flexibility in providing the type of products and services which will
help meet the challenges of the increasingly competitive financial
institutions industry.
Although the Board of Directors of Peoples Savings considered the
foregoing benefits in making its decision to pursue the reorganization, there
are no present plans to engage in activities unrelated to the savings and loan
industry, to acquire other savings and loan associations or to repurchase
shares. Any decision to engage in unrelated activities, to acquire another
association or to repurchase shares will depend upon future business
opportunities and applicable federal and state regulations.
Peoples Savings' Board of Directors recognizes that some increased
costs will be incurred in the operation of a holding company and that the
securities of Peoples Ohio, unlike those of Peoples Savings, must be registered
with the Securities and Exchange Commission. Nevertheless, the Board of
Directors believes that the holding company reorganization is in the best
interests of Peoples Savings and its shareholders.
THE BOARD OF DIRECTORS OF PEOPLES SAVINGS UNANIMOUSLY RECOMMENDS THAT
THE PEOPLES SAVINGS SHAREHOLDERS VOTE "FOR" THE ADOPTION OF THE MERGER
AGREEMENT.
EXCHANGE OF PEOPLES SAVINGS SHARES
If the holders of at least two-thirds of the outstanding common shares
of People on the record date adopt the merger agreement and if all necessary
regulatory approvals are received, Peoples Savings will become a wholly-owned
subsidiary of Peoples Ohio. This reorganization will be accomplished through the
merger of Merger Corp., a wholly owned subsidiary of Peoples Ohio, with and into
Peoples Savings. After the closing of the merger, Peoples Savings will be the
surviving entity, continuing to exist as a savings and loan association
organized under the laws of the State of Ohio.
At the effective time of the merger, each shareholder of Peoples
Savings will become a shareholder of Peoples Ohio. As a shareholder of Peoples
Ohio, you will own the same number of common shares of Peoples Ohio that you
owned of Peoples Savings.
EXCHANGE OF CERTIFICATES EVIDENCING PEOPLES SAVINGS COMMON SHARES
After the reorganization, each outstanding share certificate of Peoples
Savings will, for all corporate purposes, represent the number of whole shares
of Peoples Ohio that the holder would be entitled to receive upon its surrender.
Peoples Savings and Peoples Ohio will require that you exchange your
present share certificates of Peoples Savings for share certificates of Peoples
Ohio. You will not receive any dividends that have been declared on your shares
until you exchange your certificates. After the reorganization is effective,
Peoples Savings and Peoples Ohio will send you instructions for surrendering
your current share certificate(s). If you have lost or misplaced your Peoples
Savings share certificate(s), you should call
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immediately Peoples Savings' transfer agent, Registrar and Transfer Company, at
(908) 497-2300. The transfer agent will mail you instructions for replacing the
lost certificate.
CONDITIONS
The reorganization will not occur unless all of the following
conditions are met:
- The holders of at least two-thirds of the outstanding shares
of Peoples Savings vote to adopt the merger agreement.
- The Ohio Division of Financial Institutions approves the
merger of Merger Corp. into Peoples Savings. Peoples Savings
filed an application with the Ohio Division on ________, 2001,
and the application is pending.
- The Office of Thrift Supervision approves Peoples Ohio's
application to register as a savings and loan holding company.
Peoples Ohio filed an application with the Office of Thrift
Supervision on ___________, 2001, and the application is
pending.
Peoples Savings has no reason to believe that the reorganization will
not be approved by the regulators. In general, the savings and loan regulators
may disapprove this transaction if the reorganization would not be consistent
with safe and sound savings and loan practices or would not be in the public
interest.
EFFECTIVE TIME
Following the adoption of the merger agreement and the receipt of all
required regulatory approvals, Peoples Savings and Merger Corp. will file a
Certificate of Merger with the Secretary of State of the State of Ohio in order
to complete the reorganization. It is anticipated that the reorganization will
be completed during the quarter ending December 31, 2001.
TERMINATION AND AMENDMENT
At any time before the effective date of the reorganization, the merger
agreement may be amended by the Boards of Directors of Peoples Ohio, Peoples
Savings and Merger Corp., except that, if the Peoples Savings shareholders have
already voted to adopt the merger agreement, the Boards of Directors may not
approve any amendment that would materially and adversely affect the rights of
Peoples Savings shareholders without their further approval. The reorganization
may be abandoned if one of the following occurs:
- Two-thirds of the outstanding common shares of Peoples Savings
do not adopt the merger agreement;
- One of the Boards of Directors of the parties to the merger
agreement determines that the reorganization is not in its
shareholders' best interests; or
- The holders of more than 10% of the outstanding common shares
of Peoples Savings exercise dissenters' rights.
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BOARD OF DIRECTORS AND MANAGEMENT OF PEOPLES OHIO FOLLOWING THE REORGANIZATION
After the reorganization, as a shareholder of Peoples Ohio, you will no
longer elect Directors of Peoples Savings, but you will elect the Directors of
Peoples Ohio. The current Directors of Peoples Ohio are:
2001 2002
Class I Class II
------- --------
Donald Cooper William J. McGraw
Richard W. Klockner Ronald B. Scott
Thomas E. Robinson James S. Wilcox
Each of these Directors is serving for a two-year term. The current
term of the Class I Directors expires in 2003. The term of the Class II
Directors expires in 2002.
The current officers of Peoples Ohio are as follows:
Ronald B. Scott President
Mark A. Douglas Treasurer
Linda Daniel Secretary
The people serving as Directors and officers of Peoples Savings
immediately prior to the consummation of the reorganization will continue to
serve in such capacities after the consummation of the reorganization.
RESALE OF PEOPLES OHIO COMMON SHARES
Peoples Ohio has registered the Peoples Ohio shares to be issued in the
reorganization with the Securities and Exchange Commission under the Securities
Act of 1933. The Peoples Ohio shares will be freely transferable, except for
Peoples Ohio shares received by persons who may be deemed to be affiliates of
Peoples Savings. The term "affiliate" is defined in Rule 145 promulgated under
the Securities Act and generally includes executive officers and Directors.
Affiliates may not sell their Peoples Ohio shares, except (a) pursuant to an
effective registration statement under the Securities Act covering their Peoples
Ohio shares or (b) in compliance with Rule 145 or another applicable exemption
from the registration requirements of the Securities Act. Directors and
executive officers are generally deemed to be affiliates.
FEDERAL INCOME TAX CONSEQUENCES
Vorys, Sater, Seymour and Pease LLP, counsel to Peoples Ohio and
Peoples Savings, issued a tax opinion dated August ___, 2001, regarding the
federal income tax consequences of the proposed reorganization, the contents of
which are summarized below. We recommend that you contact a tax advisor as to
the particular facts and circumstances that may be unique to you and affect your
tax consequences.
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The transactions contemplated by the merger agreement will have the
following federal income tax consequences:
- The reorganization will constitute a reorganization within the
meaning of Section 368(a)(1)(A) and Section 368(a)(2)(E) of
the Internal Revenue Code. Peoples Savings, Peoples Ohio and
Merger Corp. will each be a "party to the reorganization"
within the meaning of Section 368(b) of the Code;
- No gain or loss will be recognized by the shareholders of
Peoples Savings on the exchange of Peoples Savings common
shares solely for Peoples Ohio common shares;
- The basis of Peoples Ohio shares to be received by the
shareholders of Peoples Savings will be the same as the basis
of their Peoples Savings common shares;
- The holding period of Peoples Ohio shares to be received by
the shareholders of Peoples Savings will include the holding
period of the Peoples Savings shares that are surrendered in
exchange, provided that the Peoples Savings shares constituted
a capital asset in the hands of the shareholders;
- No gain or loss will be recognized by Peoples Savings as a
result of the reorganization;
- The basis of the assets of Peoples Savings immediately after
the reorganization will be the same as the basis of those
assets immediately before the transaction;
- The holding period of the assets of Peoples Savings
immediately after the reorganization will be the same as the
holding period of those assets immediately before the
reorganization;
- No gain or loss will be recognized by the deposit account
holder of Peoples Savings as a result of the reorganization;
- No gain or loss will be recognized by Peoples Ohio upon the
receipt of Peoples Savings shares in exchange for Peoples Ohio
shares;
- After the reorganization, Peoples Savings and Peoples Ohio
will be considered members of the same "affiliated group,"
within the meaning of Section 1504(a)(1) of the Code;
- Shareholders of Peoples Savings who exercise their dissenters'
rights and receive solely cash in exchange for some or all of
their Peoples Savings shares will be treated as having
received a distribution in redemption of their shares subject
to the provisions and limitations of Section 302 of the Code,
which will result in the shareholders realizing and
recognizing income for federal income tax purposes in
connection with the reorganization. The amount of income and
its tax treatment (E.G., whether it constitutes ordinary
income, short-term capital gain or long-term capital gain)
will depend upon a number of factual considerations peculiar
to the individual shareholder. Any shareholder of Peoples
Savings considering exercising dissenters' rights with respect
to any Peoples
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Savings shares should consult his or her personal tax advisor
for specific advice with respect to the federal income tax
consequences of the exercise;
- Though not free from doubt, no part of the bad debt reserves
of Peoples Savings should be required to be restored to income
under Section 593(e) of the Code as a result of Peoples
Savings' payment of cash to shareholders who exercise
dissenters' rights since the reorganization will be a
transaction to which Section 381 of the Code applies;
- Dividend distributions, if any, by Peoples Savings to Peoples
Ohio (including any distribution made to provide working
capital) that exceed the current and accumulated earnings and
profits of Peoples Savings will result in taxable income to
Peoples Savings to the extent they are deemed made out of
Peoples Savings' bad debt reserve. A distribution to Peoples
Ohio in excess of the current and accumulated earnings and
profits of Peoples Savings will be deemed made out of Peoples
Savings' bad debt reserve to the extent of the sum of: (i) the
excess of the reserve for losses on "qualifying real property
loans" over the reserve that would be permitted under the
"actual loss experience" method, and (ii) the supplemental
reserve for losses. The amount deemed paid out of the bad debt
reserve will be increased to include the tax imposed as a
result of such deemed payment out of the bad debt reserve. In
this regard, the transfer of funds by Peoples Savings to
Peoples Ohio in connection with the initial capitalization of
Peoples Ohio may be deemed to be a dividend distribution of
Peoples Ohio and thus subject to the rules previously
described.
ACCOUNTING TREATMENT
The reorganization will be accounted for in a manner similar to a
pooling of interests. Accordingly, assets and liabilities transferred will be
recorded in the accounts of Merger Corp. at the amounts recorded in the accounts
of Peoples Savings as of the date of transfer.
REGULATION
GENERAL
Peoples Ohio has applied to become a savings and loan holding company
within the meaning of the Home Owners Loan Act, as amended (the "HOLA").
Consequently, Peoples Ohio will be subject to regulation, examination and
oversight by the Office of Thrift Supervision and will need to submit periodic
reports to the Office of Thrift Supervision concerning its activities and
financial condition. In addition, as a corporation organized under Ohio law,
Peoples Ohio is subject to provisions of the Ohio Revised Code applicable to
corporations generally.
As an Ohio savings association, Peoples Savings is subject to
regulation, examination and oversight by the Ohio Division of Financial
Institutions. Because Peoples Savings' deposits are insured by the FDIC, Peoples
Savings also is subject to regulatory oversight by the FDIC. Peoples Savings
must file periodic reports with the Office of Thrift Supervision concerning its
activities and financial condition. Examinations are conducted periodically by
federal and state regulators to determine whether Peoples Savings is in
compliance with various regulatory requirements and is operating in a safe and
sound manner. Peoples Savings is a member of the FHLB and is subject to certain
regulations promulgated by the Board of Governors of the Federal Reserve System.
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On November 12, 1999, the Gramm-Leach-Bliley Act (the "GLB Act") was
enacted into law. Any thrift holding company formed after May 4, 1999, such as
Peoples Ohio, is subject to the same restrictions as multiple thrift holding
companies, which generally are limited to activities that are considered
incidental to banking.
The GLB Act also authorized a new "financial holding company," which
can own banks and thrifts and which is also permitted to engage in a variety of
financial activities, including insurance and securities underwriting and agency
activities, as long as the depository institutions it owns are well capitalized,
well managed and meet certain other tests.
OHIO CORPORATION LAW
OHIO CONTROL SHARE ACQUISITION ACT. The Ohio Control Share Acquisition
Act provides that specified notice and informational filings and special
shareholder meetings and voting procedures must occur before consummation of a
proposed "control share acquisition," which is defined as any acquisition of an
issuer's shares that would entitle the acquirer to exercise or direct the voting
power of the issuer in the election of Directors within any of the following
ranges: (a) one-fifth or more but less than one-third of the voting power; (b)
one-third or more but less than a majority of the voting power; or (c) a
majority or more of such voting power. Assuming compliance with the notice and
information filing requirements prescribed by the statute, the proposed control
share acquisition may take place only if, at a duly convened special meeting of
shareholders, the acquisition is approved by both a majority of the voting power
of the issuer represented at the meeting and a majority of the voting power
remaining after excluding the combined voting power of the intended acquirer and
the Directors and officers of the issuer. The Control Share Acquisition Act does
not apply to a corporation whose articles of incorporation or regulations so
provide. Peoples Ohio has not opted out of the application of The Control Share
Acquisition Act.
OHIO MERGER MORATORIUM STATUTE. Chapter 1704 of the Ohio Revised Code
prohibits specified business combinations and transactions between an "issuing
public corporation" and a beneficial owner of 10% or more of the shares of the
corporation, an "interested shareholder," for at least three years after the
interested shareholder attains 10% ownership (unless the Board of Directors of
the issuing public corporation approves the transaction before the interested
shareholders attains 10% ownership). An "issuing public corporation" is defined
as an Ohio corporation with 50 or more stockholders that has its principal place
of business, principal executive offices, or substantial assets within the State
of Ohio, and as to which no close corporation agreement exists. Examples of
transactions regulated by the merger moratorium provisions include the
disposition of assets, mergers, consolidations, voluntary dissolutions, and the
transfer of shares. Subsequent to the three-year period, a moratorium
transaction may take place provided that certain conditions are satisfied,
including that (a) the Board of Directors approves the transaction, (b) the
transaction is approved by the holders of shares with at least two-thirds of the
voting power of the corporation (or a different proportion set forth in the
articles of incorporation), including at least a majority of the outstanding
shares after excluding shares controlled by the interested shareholder, or (c)
the business combination results in shareholders, other than the interested
shareholder, receiving a fair price plus interest for their shares. Although the
merger moratorium provisions may apply, a corporation may elect not to be
covered by the merger moratorium provisions, or subsequently elect to be
covered, with an appropriate amendment to its articles of incorporation. The
merger moratorium provisions apply to Peoples Ohio.
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TAKEOVER BID STATUTE. Ohio law provides that an offeror may not make a
tender offer or request or invitation for tenders that would result in the
offeror beneficially owning more than ten percent of any class of the target
company's equity securities, unless such offeror files certain information with
the Ohio Division of Securities and provides such information to the target
company and the offerees within Ohio. The Securities Division may suspend the
continuation of the control bid if the Securities Division determines that the
offeror's filed information does not provide full disclosure to the offerees of
all material information concerning the control bid. The statute also provides
that an offeror may not acquire any equity security of a target company within
two years of the offeror's previous acquisition of any equity security of the
same target company pursuant to a control bid, unless the Ohio offerees may sell
such security to the offeror on substantially the same terms as provided by the
previous control bid. The statute does not apply to a transaction if either the
offeror or the target company is a savings and loan holding company and the
proposed transaction requires federal regulatory approval.
OHIO SAVINGS ASSOCIATION REGULATION
The Ohio Division of Financial Institutions is responsible for the
regulation and supervision of Ohio savings and loan associations in accordance
with the laws of the State of Ohio and imposes assessments on Ohio associations
based on their asset size to cover the costs of supervision and examination.
Ohio law prescribes the permissible investments and activities of Ohio savings
associations, including the types of lending that such associations may engage
in and the investments in real estate, subsidiaries and corporate or government
securities that such associations may make. The ability of Ohio associations to
engage in these state-authorized investments and activities is subject to
oversight and approval by the FDIC, if such investments or activities are not
permissible for a federally-chartered savings association. The Ohio Division
also has approval authority over any mergers involving, or acquisitions of
control of, Ohio savings associations. The Ohio Division may initiate certain
supervisory measures or formal enforcement actions against Ohio associations.
Ultimately, if the grounds provided by law exist, the Division may place an Ohio
association in conservatorship or receivership.
In addition to being governed by the laws of Ohio specifically
governing savings associations, Peoples Savings is also governed by Ohio
corporate law, to the extent such law does not conflict with the laws
specifically governing savings associations.
OFFICE OF THRIFT SUPERVISION
REGULATORY CAPITAL REQUIREMENTS. Peoples Savings is required by Office
of Thrift Supervision regulations to meet certain minimum capital requirements.
The tangible capital requirement requires savings associations to maintain
"tangible capital" of not less than 1.5% of their adjusted total assets.
Tangible capital is defined in Office of Thrift Supervision regulations as core
capital minus any intangible assets.
"Core capital" is comprised of common stockholders' equity (including
retained earnings), noncumulative preferred stock and related surplus, minority
interests in consolidated subsidiaries, certain nonwithdrawable accounts and
pledged deposits of mutual associations. Office of Thrift Supervision
regulations require savings associations to maintain core capital of at least 4%
of their adjusted total assets, except for associations with the highest
examination rating and acceptable levels of risk.
Office of Thrift Supervision regulations require that savings
associations maintain "risk-based capital" in an amount not less than 8% of
their risk-weighted assets. Risk-based capital is defined as core
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capital plus certain additional items of capital. The Office of Thrift
Supervision may adjust the risk-based capital requirement on an individualized
basis to take into account risks due to concentrations of credit and
non-traditional activities.
The Office of Thrift Supervision has adopted regulations governing
prompt corrective action to resolve the problems of capital deficient and
otherwise troubled savings associations. At each successively lower defined
capital category, an association is subject to more restrictive and more
numerous mandatory or discretionary regulatory actions or limits, and the Office
of Thrift Supervision has less flexibility in determining how to resolve the
problems of the institution. In addition, the Office of Thrift Supervision
generally can downgrade an association's capital category, notwithstanding its
capital level, if, after notice and opportunity for hearing, the association is
deemed to be engaging in an unsafe or unsound practice because it has not
corrected deficiencies that resulted in it receiving a less than satisfactory
examination rating on matters other than capital or it is deemed to be in an
unsafe or unsound condition.
QUALIFIED THRIFT LENDER TEST. Savings associations must meet one of two
tests in order to be a qualified thrift lender. The first test requires a
savings association to maintain a specified level of investments in assets that
are designated as qualifying thrift investments ("QTIs"). Generally, QTIs are
assets related to domestic residential real estate and manufactured housing and
include credit card, student and small business loans and stock issued by any
FHLB, the FHLMC or the FNMA. Under the QTL test, 65% of an institution's
"portfolio assets" (total assets less goodwill and other intangibles, property
used to conduct business and 20% of liquid assets) must consist of QTI on a
monthly average basis in nine out of every 12 months. The second test permits a
savings association to qualify as a QTL by meeting the definition of "domestic
building and loan association" under the Internal Revenue Code of 1986, as
amended. In order for an institution to meet the definition of a "domestic
building and loan association" under the Code, at least 60% of such
institution's assets must consist of specified types of property, including cash
loans secured by residential real estate or deposits, educational loans and
certain governmental obligations. The Office of Thrift Supervision may grant
exceptions to the QTL tests under certain circumstances. If a savings
association fails to meet one of the QTL tests, the association and its holding
company become subject to certain operating and regulatory restrictions.
LENDING LIMIT. Office of Thrift Supervision regulations generally limit
the aggregate amount that a savings association can lend to one borrower to an
amount equal to 15% of the association's lending limit capital. A savings
association may lend to one borrower an additional amount not to exceed 10% of
the association's lending limit capital, if the additional amount is fully
secured by certain forms of "readily marketable collateral." Real estate is not
considered "readily marketable collateral." Certain types of loans are not
subject to the lending limit. A general exception to the 15% limit provides that
an association may lend to one borrower up to $500,000, for any purpose. In
applying the limit on loans to one borrower, the regulations require that loans
to certain related borrowers be aggregated.
TRANSACTIONS WITH INSIDERS AND AFFILIATES. Loans to executive officers,
Directors and principal shareholders and their related interests must conform to
the lending limit on loans to one borrower, and the total of such loans to
executive officers, Directors, principal shareholders and their related
interests cannot exceed the association's lending limit capital (or 200% of
lending limit capital for qualifying institutions with less than $100 million in
deposits). Most loans to Directors, executive officers and principal
shareholders must be approved in advance by a majority of the "disinterested"
members of the Board of Directors of the association, with any "interested"
Director not participating. All loans to Directors, executive officers and
principal shareholders must be made on terms substantially the same as
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offered in comparable transactions with the general public or as offered to all
employees in a company-wide benefit program, and loans to executive officers are
subject to additional limitations.
All transactions between savings associations and their affiliates must
comply with Sections 23A and 23B of the Federal Reserve Act. An affiliate of a
savings association is any company or entity that controls, is controlled by or
is under common control with the savings association. Peoples Ohio will be an
affiliate of Peoples Savings. Generally, Sections 23A and 23B of the Federal
Reserve Act (i) limit the extent to which a savings association or its
subsidiaries may engage in "covered transactions" with any one affiliate to an
amount equal to 10% of such institution's capital stock and surplus, (ii) limit
the aggregate of all such transactions with all affiliates to an amount equal to
20% of such capital stock and surplus, and (iii) require that all such
transactions be on terms substantially the same, or at least as favorable to the
association, as those provided in transactions with a non-affiliate. The term
"covered transaction" includes the making of loans, purchasing of assets,
issuance of a guarantee and other similar types of transactions. In addition to
the limits in Sections 23A and 23B, a savings association may not make any loan
or other extension of credit to an affiliate unless the affiliate is engaged
only in activities permissible for a bank holding company and may not purchase
or invest in securities of any affiliate except shares of a subsidiary.
LIMITATIONS ON CAPITAL DISTRIBUTIONS. The Office of Thrift Supervision
imposes various restrictions or requirements on the ability of associations to
make capital distributions. Capital distributions include, without limitation,
payments of cash dividends, repurchases and certain other acquisitions by an
association of its shares and payments to stockholders of another association in
an acquisition of such other association.
An application must be submitted and approval from the Office of Thrift
Supervision must be obtained by a subsidiary of a savings and loan holding
company (i) if the proposed distribution would cause total distributions for the
calendar year to exceed net income for that year to date plus the savings
association's retained net income for that year to date plus the retained net
income for the preceding two years; (ii) if the savings association will not be
at least adequately capitalized following the capital distribution; or (iii) if
the proposed distribution would violate a prohibition contained in any
applicable statute, regulation or agreement between the savings association and
the Office of Thrift Supervision (or the FDIC), or violate a condition imposed
on the savings association in an Office of Thrift Supervision-approved
application or notice. If a savings association subsidiary of a holding company
is not required to file an application, it must file a 30-day notice of the
proposed capital distribution with the Office of Thrift Supervision.
HOLDING COMPANY REGULATION. As a savings and loan holding company
within the meaning of the HOLA, Peoples Ohio will be registered with the Office
of Thrift Supervision and will be subject to Office of Thrift Supervision
regulations, examination, supervision and reporting requirements.
The HOLA generally prohibits a savings and loan holding company from
controlling any other savings association or savings and loan holding company,
without prior approval of the Office of Thrift Supervision, or from acquiring or
retaining more than 5% of the voting shares of a savings association or holding
company thereof, which is not a subsidiary. Under certain circumstances, a
savings and loan holding company is permitted to acquire, with the approval of
the Office of Thrift Supervision, up to 15% of the previously unissued voting
shares of an undercapitalized savings association for cash without such savings
association being deemed to be controlled by Peoples Ohio. Except with the prior
approval of the Office of Thrift Supervision, no Director or officer of a
savings and loan holding company or person owning or controlling by proxy or
otherwise more than 25% of such holding company's stock may also
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acquire control of any savings institution, other than a subsidiary institution,
or any other savings and loan holding company.
FEDERAL REGULATION OF ACQUISITIONS OF CONTROL OF PEOPLES OHIO AND
PEOPLES SAVINGS. In addition to the Ohio law limitations on the merger and
acquisition of Peoples Ohio, federal limitations generally require regulatory
approval of acquisitions at specified levels. Under pertinent federal law and
regulations, no person, directly or indirectly, or acting in concert with
others, may acquire control of Peoples Savings or Peoples Ohio without 60 days'
prior notice to the Office of Thrift Supervision. "Control" is generally defined
as having more than 25% ownership or voting power; however, ownership or voting
power of more than 10% may be deemed "control" if certain factors are in place.
If the acquisition of control is by a company, the acquiror must obtain
approval, rather than give notice, of the acquisition.
FEDERAL DEPOSIT INSURANCE CORPORATION
DEPOSIT INSURANCE AND ASSESSMENTS. The FDIC is an independent federal
agency that insures the deposits, up to prescribed statutory limits, of
federally insured banks and savings and loan associations and safeguards the
safety and soundness of the banking and savings and loan industries. The FDIC
administers two separate insurance funds, the Bank Insurance Fund for commercial
banks and state savings banks and the Savings Association Insurance Fund for
savings associations. Peoples Savings is a member of the SAIF and its deposit
accounts are insured by the FDIC up to the prescribed limits. The FDIC has
examination authority over all insured depository institutions, including
Peoples Savings, and has authority to initiate enforcement actions against
federally-insured savings associations if the FDIC does not believe the Office
of Thrift Supervision has taken appropriate action to safeguard safety and
soundness and the deposit insurance fund.
The FDIC is required to maintain designated levels of reserves in the
SAIF and in the BIF. The FDIC may increase assessment rates for either fund if
necessary to restore the fund's ratio of reserves to insured deposits to its
target level within a reasonable time and may decrease such rates if such target
level has been met. The FDIC has established a risk-based assessment system for
both SAIF and BIF members. Under this system, assessments vary based on the risk
the institution poses to its deposit insurance fund. The risk level is
determined based on the institution's capital level and the FDIC's level of
supervisory concern about the institution.
STATE-CHARTERED ASSOCIATION ACTIVITIES. The ability of state-chartered
associations to engage in any state-authorized activities or make any
state-authorized investments is limited if such activity is conducted or
investment is made in a manner different than that permitted for, or subject to
different terms and conditions than those imposed on, federally chartered
savings associations. Engaging as a principal in any such activity or investment
not permissible for a federal association is subject to approval by the FDIC.
Such approval will not be granted unless certain capital requirements are met
and there is not a significant risk to the FDIC insurance fund.
FEDERAL RESERVE BOARD RESERVE REQUIREMENTS
Federal Reserve Board regulations require savings associations to
maintain reserves of 3% of net transaction accounts (primarily NOW accounts) up
to $42.8 million (subject to an exemption of up to $5.5 million), and of 10% of
net transaction accounts in excess of $42.8 million.
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FEDERAL HOME LOAN BANKS
The FHLBs provide credit to their members in the form of advances.
Peoples Savings is a member of the FHLB of Cincinnati and must maintain an
investment in the capital stock of the FHLB of Cincinnati in an amount equal to
the greater of 1.0% of the aggregate outstanding principal amount of Peoples
Savings' residential mortgage loans, home purchase contracts and similar
obligations at the beginning of each year, or 5% of its advances from the FHLB
of Cincinnati.
Upon the origination or renewal of a loan or advance, the FHLB is
required by law to obtain and maintain a security interest in collateral in one
or more specified categories.
The FHLB is required to establish standards of community investment or
service that its members must maintain for continued access to long-term
advances. The standards take into account a member's performance under the
Community Reinvestment Act and its record of lending to first-time home buyers.
All long-term advances by the FHLB must be made only to provide funds for
residential housing finance.
TAXATION
FEDERAL TAXATION
Peoples Ohio and Peoples Savings are each subject to the federal tax
laws and regulations which apply to corporations generally. In addition to the
regular income tax, Peoples Ohio and Peoples Savings may be subject to an
alternative minimum tax. An alternative minimum tax is imposed at a minimum tax
rate of 20% on "alternative minimum taxable income" (which is the sum of a
corporation's regular taxable income, with certain adjustments, and tax
preference items), less any available exemption. Such tax preference items
include interest on certain tax-exempt bonds issued after August 7, 1986. In
addition, 75% of the amount by which a corporation's "adjusted current earnings"
exceeds its alternative minimum taxable income computed without regard to this
preference item and prior to reduction by net operating losses, is included in
alternative minimum taxable income. Net operating losses can offset no more than
90% of alternative minimum taxable income. The alternative minimum tax is
imposed to the extent it exceeds the corporation's regular income tax. Payments
of alternative minimum tax may be used as credits against regular tax
liabilities in future years. However, the Taxpayer Relief Act of 1997 repealed
the alternative minimum tax for certain "small corporations" for tax years
beginning after December 31, 1997. A corporation initially qualifies as a small
corporation if it had average gross receipts of $5,000,000 or less for the three
tax years ending with its first tax year beginning after December 31, 1996. Once
a corporation is recognized as a small corporation, it will continue to be
exempt from the alternative minimum tax for as long as its average gross
receipts for the prior three-year period does not exceed $7,500,000. In
determining if a corporation meets this requirement, the first year that it
achieved small corporation status is not taken into consideration.
Certain thrift institutions, such as Peoples Savings, are allowed
deductions for bad debts under methods more favorable than those granted to
other taxpayers. Qualified thrift institutions may compute deductions for bad
debts using either the specific charge-off method of Section 166 of the Code or
the experience method of Section 593 of the Code. The "experience" method is
also available to small banks. Under the "experience" method, a thrift
institution is generally allowed a deduction for an addition to its bad debt
reserve equal to the greater of (i) an amount based on its actual average
experience for losses in
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the current and five preceding taxable years, or (ii) an amount necessary to
restore the reserve to its balance as of the close of the base year.
Thrift institutions that are treated as small banks are allowed to
utilize the experience method applicable to such institutions, while thrift
institutions that are treated as large banks are required to use only the
specific charge off method.
A thrift institution required to change its method of computing
reserves for bad debt will treat such change as a change in the method of
accounting, initiated by the taxpayer and having been made with the consent of
the Secretary of the Treasury. Section 481(a) of the Code requires certain
amounts to be recaptured with respect to such change. Generally, the amounts to
be recaptured will be determined solely with respect to the "applicable excess
reserves" of the taxpayer. The amount of the applicable excess reserves will be
taken into account ratably over a six-taxable year period, beginning with the
first taxable year beginning after 1995, subject to the residential loan
requirement described below. In the case of a thrift institution that is treated
as a large bank, the amount of the institution's applicable excess reserves
generally is the excess of (i) the balances of its reserve for losses on
qualifying real property loans (generally loans secured by improved real estate)
and its reserve for losses on nonqualifying loans (all other types of loans) as
of the close of its last taxable year beginning before January 1, 1996, over
(ii) the balances of such reserves as of the close of its last taxable year
beginning before January 1, 1988 (i.e., the "pre-1988 reserves"). In the case of
a thrift institution that is treated as a small bank, like Peoples Savings, the
amount of the institution's applicable excess reserves generally is the excess
of (i) the balances of its reserve for losses on qualifying real property loans
and its reserve for losses on nonqualifying loans as of the close of its last
taxable year beginning before January 1, 1996, over (ii) the greater of the
balance of (a) its pre-1988 reserves or (b) what the thrift's reserves would
have been at the close of its last year beginning before January 1, 1996, had
the thrift always used the experience method.
For taxable years that begin after December 31, 1995, and before
January 1, 1998, if a thrift meets the residential loan requirement for a tax
year, the recapture of the applicable excess reserves otherwise required to be
taken into account as a Code Section 481(a) adjustment for the year will be
suspended. A thrift meets the residential loan requirement if, for the tax year,
the principal amount of residential loans made by the thrift during the year is
not less than its base amount. The "base amount" generally is the average of the
principal amounts of the residential loans made by the thrift during the six
most recent tax years beginning before January 1, 1996. A residential loan is a
loan as described in Section 7701(a)(19)(C)(v) (generally a loan secured by
residential or church property and certain mobile homes), but only to the extent
that the loan is made to the owner of the property.
The balance of the pre-1988 reserves is subject to the provisions of
Section 593(e), as modified by the Act, which require recapture in the case of
certain excessive distributions to shareholders. The pre-1988 reserves may not
be utilized for payment of cash dividends or other distributions to a
shareholder (including distributions in dissolution or liquidation) or for any
other purpose (except to absorb bad debt losses). Distribution of a cash
dividend by a thrift institution to a shareholder is treated as made: first, out
of the institution's post-1951 accumulated earnings and profits; second, out of
the pre-1988 reserves; and third, out of such other accounts as may be proper.
To the extent a distribution by Peoples Savings to Peoples Ohio is deemed paid
out of its pre-1988 reserves under these rules, the pre-1988 reserves would be
reduced and the gross income of Peoples Savings for tax purposes would be
increased by the amount which, when reduced by the income tax, if any,
attributable to the inclusion of such amount in its gross income, equals the
amount deemed paid out of the pre-1988 reserves.
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OHIO TAXATION
Peoples Ohio is subject to the Ohio corporation franchise tax, which,
as applied to Peoples Ohio, is a tax measured by both net earnings and net
worth. The rate of tax is the greater of (i) 5.1% on the first $50,000 of
computed Ohio taxable income and 8.5% of computed Ohio taxable income in excess
of $50,000 or (ii) .400% times taxable net worth.
A special litter tax is also applicable to all corporations, including
Peoples Ohio, subject to the Ohio corporation franchise tax other than
"financial institutions." If the franchise tax is paid on the net income basis,
the litter tax is equal to .11% of the first $50,000 of computed Ohio taxable
income and .22% of computed Ohio taxable income in excess of $50,000. If the
franchise tax is paid on the net worth basis, the litter tax is equal to .014%
times taxable net worth.
Peoples Savings is a "financial institution" for State of Ohio tax
purposes. As such, it is subject to the Ohio corporate franchise tax on
"financial institutions," which is imposed annually at a rate of 1.3% of the
taxable book net worth of Peoples Savings determined in accordance with
generally accepted accounting principles. As a "financial institution," Peoples
Savings is not subject to any tax based upon net income or net profits imposed
by the State of Ohio.
DESCRIPTION OF PEOPLES OHIO COMMON SHARES
The following is a summary of the material attributes of Peoples Ohio's
common shares.
AUTHORIZED CAPITAL STOCK
On the effective date of the reorganization, the authorized capital of
Peoples Ohio will consist of 16,000,000 shares, 15,000,000 of which will be
common shares, each without par value, and 1,000,000 of which will be preferred
shares, each without par value. As of September ___, 2001, the date before the
printing of this prospectus/proxy statement, 100 common shares were outstanding,
all of which were owned by Peoples Savings. Peoples Ohio has warranted in the
merger agreement that it will repurchase these 100 outstanding shares at the
effective time of the reorganization. No preferred shares have ever been issued.
Holders of Peoples Ohio shares have no conversion rights or preemptive
or other rights to subscribe for additional shares. There are no redemption or
sinking fund provisions with respect to any outstanding Peoples Ohio shares
aside from any provision required by law.
BOARD OF DIRECTORS
The Code of Regulations of Peoples Ohio provides for a Board of
Directors consisting of six Directors, divided into two classes. Each class is
elected by a separate election and the Directors in each class are elected for
two-year terms. As a result of the classification of Peoples Ohio's Board of
Directors, a minimum of two annual meetings of shareholders will be necessary
for a majority of the members of the Board of Directors to stand for election.
VOTING RIGHTS
Peoples Ohio shareholders are entitled to one vote for each share held.
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Section 1701.55 of the Ohio Revised Code provides that shareholders of
a for profit corporation that is not a savings and loan association and that is
incorporated under Ohio law must initially be granted the right to cumulate
votes in the election of Directors. The right to cumulate votes in the election
of Directors will exist at a meeting of shareholders if notice in writing is
given by any shareholder to the president, a vice president or the secretary of
an Ohio corporation, not less than 48 hours before a meeting at which Directors
are to be elected, that the shareholder desires that the voting for the election
of Directors shall be cumulative and, if an announcement of the giving of such
notice is made upon the convening of the meeting by the chairman or secretary or
by or on behalf of the shareholder giving the notice. If cumulative voting is
invoked, each shareholder would have a number of votes equal to the number of
Directors to be elected, multiplied by the number of shares owned by him, and
would be entitled to distribute his votes among the candidates as he sees fit.
Section 1701.71 of the Ohio Revised Code provides that an Ohio
corporation may eliminate cumulative voting in the election of Directors after
the expiration of 90 days after the date of initial incorporation by filing with
the Ohio Secretary of State an amendment to the articles of incorporation
eliminating cumulative voting. The Articles of Incorporation of Peoples Ohio,
which was incorporated on July 20, 2001, presently permit cumulative voting. In
order to provide shareholders of Peoples Ohio with the same rights in relation
to cumulative voting as they had as shareholders of Peoples Savings, the Peoples
Ohio Articles of Incorporation will be amended in accordance with Ohio law to
eliminate cumulative voting before the reorganization is effected. The
elimination of cumulative voting may make it more difficult for shareholders to
elect as Directors persons whose election is not supported by the Board of
Directors.
DIVIDEND AND LIQUIDATION RIGHTS
Peoples Ohio shareholders are entitled to receive dividends when and if
declared by the Board of Directors of Peoples Ohio from funds legally available
therefor. Upon liquidation, all Peoples Ohio shares currently outstanding are
entitled to participate equally in the assets of Peoples Ohio available for
distribution to its shareholders.
ANTI-TAKEOVER PROVISIONS IN THE ARTICLES AND CODE OF REGULATIONS OF PEOPLES OHIO
The Articles of Incorporation and Code of Regulations of Peoples Ohio
contain provisions that may deter a change of control of Peoples Ohio. These
provisions are intended to encourage any potential acquirer to negotiate the
terms of an acquisition with the Board of Directors of Peoples Ohio. These
provisions reduce the vulnerability of Peoples Ohio to takeover attempts and
other transactions that have not been negotiated with and approved by the Board
of Directors.
Anti-takeover devices and provisions may, however, discourage takeover
attempts that some shareholders may feel are in their best interests or in which
shareholders may receive a substantial premium for their shares. These
provisions may also benefit management by discouraging changes of control in
which incumbent management would be removed from office. The provisions may
result in Peoples Ohio being less attractive to a potential acquirer and may
result in shareholders receiving less for their shares than otherwise might be
available in the event of a takeover attempt.
The following is a summary of the anti-takeover provisions of the
Articles of Incorporation and Code of Regulations of Peoples Ohio.
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SUPERMAJORITY PROVISION. A 75% vote by Peoples Ohio shareholders is
required to adopt any of the following transactions if the Board of Directors of
Peoples Ohio recommends against approval of any of these transactions:
- A proposed amendment to Peoples Ohio's Articles of
Incorporation;
- A proposal to adopt a new Code of Regulations or an amendment
to the Code of Regulations of Peoples Ohio;
- A proposal to change the number of Directors;
- An agreement of merger or consolidation providing for the
proposed merger or consolidation of Peoples Ohio with or into
one or more other corporations;
- A proposed combination or majority share acquisition involving
the issuance of Peoples Ohio shares and requiring shareholder
approval;
- A proposal to sell, exchange, transfer or otherwise dispose of
all, or substantially all, of the assets, with or without the
goodwill, of Peoples Ohio; or
- A proposed dissolution of Peoples Ohio.
Peoples Ohio's current Directors and executive officers own approximately 24.97%
of the outstanding shares of Peoples Savings. If these Directors and officers
continue to own a comparable percentage of the outstanding shares of Peoples
Ohio at the time of a vote on any matter to which the supermajority provision
would apply, a unanimous vote of such Directors and officers against any matter
described above, would preclude its adoption. If the Board of Directors
recommends that shareholders approve any of these transactions, a majority vote
of the shareholders is sufficient to adopt the transaction.
NOMINATION PROCEDURE. Peoples Ohio's Code of Regulations provides that
shareholder nominations for the election of Directors must be made in writing
and must be delivered or mailed to the secretary of Peoples Ohio. In the case of
a nominee proposed for election as a Director at an annual meeting of
shareholders, the written notice must be received by the Secretary of Peoples
Ohio on or before the 60th day before the first anniversary of the most recent
annual meeting of shareholders of Peoples Ohio held for the election of
Directors. If the annual meeting is not held on or before the 31st day following
the anniversary of the last meeting, the written notice must be received by the
Secretary within a reasonable time before the date of the annual meeting.
In the case of a nominee proposed for election as a Director at a
special meeting of shareholders, the written notice of a proposed nominee must
be received by the secretary of Peoples Ohio by the close of business on the
seventh day after the day on which notice of the special meeting was mailed to
shareholders.
The written notice of a proposed nominee must state:
- The name, age, and business or residence address of each
nominee;
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- The principal occupation or employment of each nominee;
- The number of Peoples Ohio common shares owned beneficially
and of record by each nominee; and
- The length of time any shares have been so owned.
COMPARISON OF RIGHTS OF HOLDERS OF PEOPLES OHIO COMMON SHARES
AND HOLDERS OF PEOPLES SAVINGS COMMON SHARES
As a result of the reorganization, all of the Peoples Savings
shareholders will become shareholders of Peoples Ohio, except for those Peoples
Savings shareholders who exercise dissenters' rights. The rights of holders of
Peoples Ohio common shares and those of holders of Peoples Savings common shares
are similar in most material respects, but there are some differences.
AUTHORIZED SHARES
On the effective date of the reorganization, the capital of Peoples
Ohio will consist of 15,000,000 common shares and 1,000,000 preferred shares.
The capital of Peoples Savings consists of 90,000,000 common shares and
10,000,000 preferred shares, both with a par value of $1.00 per share.
BOARD OF DIRECTORS
GENERAL. Peoples Ohio's Code of Regulations provide for a classified
Board of Directors consisting of six Directors, divided into two classes and
elected for two-year terms.
Peoples Savings' Constitution provides for a classified Board of
Directors consisting of nine Directors, divided into three classes and elected
for three-year terms. Every Director of Peoples Savings must also be a
shareholder or depositor.
REMOVAL. The Directors of Peoples Ohio may be removed only for cause
and only by the vote of the holders of 75% of the Peoples Ohio shares entitled
to vote at an election of Directors.
A majority of the shareholders of Peoples Savings' entitled to elect a
Director may remove that Director, with or without cause.
VACANCIES. Peoples Ohio's Code of Regulations and Peoples Savings'
Constitution provide that vacancies on the Board of Directors may be filled by
an affirmative vote of a majority of the remaining Directors. Any Director
chosen to fill a vacancy will serve until the next election of the class in
which the Director was elected.
VOTING RIGHTS
CUMULATIVE VOTING. Shareholders of Peoples Savings do not have the
right to vote cumulatively in the election of Directors. Similarly, Peoples
Ohio's Articles of Incorporation will be amended prior to the consummation of
the reorganization to eliminate cumulative voting.
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SPECIAL VOTING REQUIREMENTS. The holders of at least 75% of the voting
shares of Peoples Ohio are required to adopt any of the following matters if the
Directors of Peoples Ohio recommend against approval:
- A proposed amendment to Peoples Ohio's Articles of
Incorporation;
- A proposal to adopt an amendment to the Code of Regulations of
Peoples Ohio;
- A proposal to change the number of Directors by action of the
shareholders;
- An agreement of merger or consolidation providing for the
proposed merger or consolidation of Peoples Ohio with or into
one or more other corporations;
- A proposed combination or majority share acquisition involving
the issuance of Peoples Ohio shares and requiring shareholder
approval;
- A proposal to sell, exchange, transfer or otherwise dispose of
all, or substantially all, of the assets, with or without the
goodwill, of Peoples Ohio; or
- A proposed dissolution of Peoples Ohio.
If the Directors recommend that shareholders approve any of these matters, a
majority vote of shareholders would be sufficient, unless expressly otherwise
provided by statute.
Amendments to Peoples Savings' Constitution must be approved by the
Ohio Division of Financial Institutions and at least a three-fifths vote of the
shares represented in person or by proxy. The Articles of Peoples Savings may be
amended by the approval of two-thirds of the outstanding shares of Peoples
Savings. Other than such provisions, Peoples Savings does not have special
voting requirements.
ANTI-TAKEOVER PROVISIONS
Although the Constitution of Peoples Savings does not contain specific
anti-takeover provisions, the Ohio law for savings banks provides that no one
may acquire a controlling interest in Peoples Savings without the prior written
approval of the Ohio Division.
PREEMPTIVE RIGHTS
None of the shareholders of Peoples Ohio or Peoples Savings have
preemptive rights.
DIVIDENDS
Section 1701.33 of the Ohio Revised Code generally provides that,
subject to any restrictions in a corporation's Articles of Incorporation, a
corporation may make distributions to its shareholders, provided that the
dividend does not exceed the combination of the surplus of the corporation
(defined generally as the excess of a corporation's assets plus stated capital
over its liabilities) and the difference between the following: (i) the
reduction in surplus that results from the immediate recognition of the
transition obligation under Statement of Financial Accounting Standards No. 106
issued by the Financial Accounting Standards Board and (ii) the aggregate amount
of the transition obligation that would have
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been recognized as of the date of the declaration of a dividend or distribution
if the corporation had elected to amortize its recognition of the transition
obligation under Statement of Financial Accounting Standards No. 106; and
provided further that no dividend or distribution shall be paid to the holders
of shares of any class in violation of the rights of the holders of shares of
any other class, or when the corporation is insolvent or there is reasonable
ground to believe that by such payment the corporation would be rendered
insolvent.
The ability of Peoples Savings to pay dividends is limited by the
regulations of the Office of Thrift Supervision. An application must be
submitted and approval from the Office of Thrift Supervision must be obtained by
Peoples Savings (i) if the proposed distribution would cause total distributions
for the calendar year to exceed net income for that year to date plus Peoples
Savings' retained net income for the preceding two years; (ii) if Peoples
Savings will not be at least adequately capitalized following the capital
distribution; or (iii) if the proposed distribution would violate a prohibition
contained in any applicable statute, regulation or agreement between Peoples
Savings and the Office of Thrift Supervision (or the FDIC), or violate a
condition imposed on Peoples Savings in an Office of Thrift Supervision-approved
application or notice. If Peoples Savings is not required to file an
application, it must file a 30-day notice of the proposed capital distribution
with the Office of Thrift Supervision.
At June 30, 2001, Peoples Savings could have paid approximately
$5,578,000 in dividends.
ANTI-TAKEOVER STATUTES APPLICABLE TO PEOPLES OHIO AND PEOPLES SAVINGS
Peoples Savings and Peoples Ohio are governed by Ohio law. Peoples Ohio
is also governed by the Office of Thrift Supervision. The following are federal
statutes that apply to the parties and are intended to discourage takeovers:
FEDERAL REGULATION. Office of Thrift Supervision regulations provide
that no company, "directly or indirectly or acting in concert with one or more
persons, or through one or more subsidiaries, or through one or more
transactions," may acquire "control" of a savings association at any time
without the prior approval of the Office of Thrift Supervision. In addition,
federal regulations require that, before obtaining control of a savings
association, a person, other than a company, must give 60 days' notice to the
Office of Thrift Supervision and have received no Office of Thrift Supervision
objection to the acquisition of control. Any company that acquires control
becomes a "savings and loan holding company."
Federal law generally defines "control" as ownership, control of or
holding irrevocable proxies representing more than 25% of any class of voting
stock or control in any manner of the election of a majority of Directors. A
determination by the Office of Thrift Supervision that an acquiror has the power
to direct or exercise a controlling influence over the management or policies of
the institution also constitutes control. Acquisition of more than 10% of any
class of a savings association's voting stock, if the acquirer also qualifies
for any one of eight "control factors," constitutes a rebuttable determination
of control under the regulations. The determination of control may be rebutted
by submission to the Office of Thrift Supervision, before the acquisition of
stock or the occurrence of any other circumstances giving rise to the
determination, of a statement setting forth facts and circumstances which would
support a finding that no control relationship will exist and containing
required undertakings. The regulations provide that persons or companies which
acquire beneficial ownership exceeding 10% or more of any class of a savings
bank's stock must file with the Office of Thrift Supervision a certification
that the holder is not in control of the institution, does not have a rebuttable
determination of control and will take
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no action which would result in a determination or rebuttable determination of
control without prior notice to or approval of the Office of Thrift Supervision,
as applicable.
OHIO LAWS. The Ohio anti-takeover laws also apply to Peoples Ohio and
Peoples Savings and are intended to discourage takeovers. These laws are
described in "Regulation -- Ohio corporation law" on page __.
DIRECTOR AND OFFICER LIABILITY AND INDEMNIFICATION
PEOPLES OHIO
The Code of Regulations of Peoples Ohio provide that Peoples Ohio will
indemnify its Directors or officers against expenses (including, without
limitation, attorneys' fees, filing fees, court reporters' fees and transcript
costs), judgments, fines, and amounts paid in settlement by reason of the fact
that they are or were Directors, officers, employees, agents or volunteers of
the corporation or, at the request of Peoples Ohio, were serving another
organization in a similar capacity, if the Directors or officers did not act
with an intent to cause injury or with reckless disregard for the best interests
of the corporation. With regard to criminal matters, Directors and officers must
be indemnified by the corporation if the Directors or officers had no reasonable
cause to believe their conduct was unlawful. Directors or officers claiming
indemnification will be presumed to have acted without an intent to cause injury
and without reckless disregard for Peoples Ohio's best interests and, with
respect to any criminal matter, to have had no reasonable cause to believe their
conduct was unlawful.
Peoples Ohio may not indemnify any officer or Director of the
corporation who was a party to any completed action or suit instituted by (or in
the right of) the corporation for any matter asserted in the action as to which
the officer or Director shall have been adjudged to be liable for acting with
deliberate intent to cause injury or with reckless disregard for the best
interests of the corporation. However, should the court in which the action was
brought determine that the officer or Director is fairly and reasonably entitled
to indemnity, Peoples Ohio shall indemnify the officer or Director to the extent
permitted by the court.
Any indemnification not precluded by judgment shall be made by the
corporation only upon a determination that the Director has met the applicable
standard of conduct. This determination may be made only (a) by a majority vote
of a quorum of disinterested Directors, (b) if the quorum is not obtainable or
if a majority of a quorum of disinterested Directors so directs, in a written
opinion by independent legal counsel, (c) by the shareholders or (d) by the
court, if any, in which the action was brought. Expenses incurred in defending
any action, suit or proceeding may be paid by Peoples Ohio in advance upon
receipt of an undertaking by or on behalf of the Director or officer to repay
the amount if the Director or officer is not entitled to be indemnified by the
corporation.
PEOPLES SAVINGS
The Constitution of Peoples Savings provides that Peoples Savings will
indemnify each of its Directors and officers to the full extent permitted by law
against expenses, including attorneys' fees incurred in defending any action,
suit or proceeding by reason of the fact that he is or was a Director, officer
or employee of Peoples Savings or, at the request of Peoples Savings, was
serving another organization in a similar capacity.
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Peoples Savings currently maintains a Directors' and officers'
liability policy that provides for insurance of Directors and officers for
liability incurred in connection with the performance of their duties as
Directors and officers. This policy does not, however, provide insurance for
losses resulting from willful or criminal misconduct.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
annual meeting other than those matters described above in this document.
However, if any other matters should properly come before the annual meeting, or
any adjournment thereof, including matters relating to the conduct of the annual
meeting, it is intended that the shares represented by properly-executed proxies
will be voted in accordance with the judgment of the person or persons voting
the proxies.
SHAREHOLDERS PROPOSALS
Peoples Savings will only hold an annual meeting in 2002 if the
reorganization is not completed. If the reorganization is completed, Peoples
Ohio will hold an annual meeting in 2002. Any proposal that a shareholder wishes
to have included in Peoples Ohio's or Peoples Savings' proxy materials for
Peoples Ohio's or Peoples Savings' annual meeting of shareholders to be held in
2002 must be received at the main office of Peoples Savings at 635 South Market
Street, Troy, Ohio 45373, no later than ______, 2002. Any such proposal must be
subject to the requirements of the proxy rules adopted under the Securities
Exchange Act of 1934. In addition, if a shareholder intends to present a
proposal at next year's annual meeting without including the proposal in the
proxy materials related to that meeting, and if the proposal is not received by
__________, 2002, the proxies designated by the Board of Directors for next
year's annual meeting may vote in their discretion on the proposal any shares
for which they have been appointed proxies without mention of the matter in the
proxy statement or on the proxy card for the meeting.
LEGAL MATTERS
The validity of the issuance of Peoples Ohio common shares being
offered by this document and the federal income tax consequences of the merger
have been passed upon by Vorys, Sater, Seymour and Pease LLP, Suite 2100, Atrium
Two, 221 East Fourth Street, P.O. Box 0236, Cincinnati, Ohio 45201-0236.
EXPERTS
The consolidated financial statements of Peoples Savings at June 30,
2001, which are incorporated by reference in this prospectus/proxy statement,
have been audited by BKD LLP, independent certified public accountants, as
stated in their report appearing in Peoples Savings' 2001 Annual Report to
Shareholders. The financial statements have been included in reliance upon the
report of BKD and given upon their authority as experts in accounting and
auditing.
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WHERE YOU CAN FIND MORE INFORMATION
Peoples Ohio has filed with the Securities and Exchange Commission a
Registration Statement on Form S-4 under the Securities Act of 1933 for the
Peoples Ohio shares to be issued to Peoples Savings shareholders in the
reorganization. This document is a part of the Registration Statement on Form
S-4. The rules and regulations of the Securities and Exchange Commission permit
us to omit information, exhibits and undertakings that are contained in the
Registration Statement on Form S-4 from this document. The Registration
Statement and exhibits may be examined during normal business hours, or copies
obtained by mail at prescribed rates, at the following location:
Securities and Exchange Commission's Public Reference Room
450 Fifth Street, N.W.
Washington, D.C. 20549
Please call the Securities and Exchange Commission for more information
on the operation of the Public Reference Room at 1-800-SEC-0330. PEOPLES OHIO IS
AN ELECTRONIC FILER, AND THE SECURITIES AND EXCHANGE COMMISSION MAINTAINS A WEB
SITE THAT CONTAINS A COPY OF THE REGISTRATION STATEMENT AND OTHER INFORMATION
REGARDING REGISTRANTS THAT FILE ELECTRONICALLY WITH THE SECURITIES AND EXCHANGE
COMMISSION AT THE FOLLOWING WEB ADDRESS: http://www.sec.gov.
In addition, Peoples Savings files reports, proxy statements and other
information with the Office of Thrift Supervision under the Securities Exchange
Act of 1934. You can inspect and copy the Registration Statement and its
exhibits, as well as the reports, proxy statements and other information filed
with the Office of Thrift Supervision by Peoples Savings, at the following
location:
Office of Thrift Supervision
1700 G Street, N.W.
Washington, D.C. 20552
The Securities and Exchange Commission allows us to "incorporate by
reference" into this document, which means that we can disclose important
information to you by referring you to another document filed separately with
the Office of Thrift Supervision. The information incorporated by reference is
considered to be part of this document, except for any information superseded by
information contained in later-filed documents incorporated by reference in this
document. You should read the information relating to the companies contained in
this document and the information in the documents incorporated by reference.
This document incorporates by reference the documents listed below that
Peoples Savings and Peoples Ohio have filed with the Office of Thrift
Supervision and Securities and Exchange Commission, respectively, and all other
reports filed by Peoples Savings since June 30, 2001 with the Office of Thrift
Supervision and by Peoples Ohio since August ___, 2001 with the Securities and
Exchange Commission under Sections 13(a), 13(c), or 15(d) of the Securities
Exchange Act of 1934, as amended.
FILINGS (OFFICE OF THRIFT SUPERVISION DOCKET NO. 00993) PERIOD/DATE
Annual Report on Form 10-K Year ended June 30, 2001
Annual Report to Shareholders Year ended June 30, 2001
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We have included a copy of Peoples Savings' 2001 Annual Report to
Shareholders with this document.
YOU CAN RECEIVE THE DOCUMENTS INCORPORATED BY REFERENCE (WITHOUT
EXHIBITS, UNLESS THE EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO
THIS DOCUMENT) WITHOUT CHARGE BY CALLING OR WRITING THE FOLLOWING PERSON:
Mark A. Douglas, Vice President and Chief Financial Officer
Peoples Savings Bank of Troy
635 South Market Street
Troy, Ohio 45373
IN ORDER TO OBTAIN TIMELY DELIVERY, YOU MUST REQUEST DOCUMENTS BY
OCTOBER 24, 2001. YOU MAY ALSO OBTAIN COPIES OF THE DOCUMENTS FROM THE OFFICE OF
THRIFT SUPERVISION OR SECURITIES AND EXCHANGE COMMISSION AT THE ADDRESSES
PROVIDED ABOVE.
Following the reorganization, Peoples Ohio will continue to be
regulated by the information, reporting and proxy statement requirements of the
Securities Exchange Act of 1934, as amended.
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APPENDIX A
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AGREEMENT OF MERGER
-------------------
This Agreement of Merger, made on August 27, 2001, by and
among PEOPLES OHIO FINANCIAL CORPORATION, a corporation formed under the laws of
the State of Ohio (hereinafter referred to as "FINANCIAL"); PEOPLES SAVINGS BANK
OF TROY, a savings and loan association formed under the laws of the State of
Ohio (hereinafter referred to as "PEOPLES"); and PEOPLES MERGER CORP., an
interim savings and loan association formed under the laws of the State of Ohio
(hereinafter referred to as "MERGER CORP.");
WITNESSETH:
WHEREAS, FINANCIAL has authorized 850 common shares, without
par value, 100 of which are issued and outstanding;
WHEREAS, on the EFFECTIVE DATE (hereinafter defined),
FINANCIAL will have authorized 14,000,000 common shares, without par value, and
1,000,000 preferred shares, without par value;
WHEREAS, PEOPLES has authorized 90,000,000 common shares, par
value $1.00 per share, 7,439,650 of which are issued and outstanding and 883,186
of which are reserved for issuance upon exercise of outstanding stock options
(hereinafter referred to as the "PEOPLES OPTIONS"), and 10,000,000 preferred
shares, par value $1.00 per share, none of which is issued or outstanding;
WHEREAS, MERGER CORP. has authorized 850 common shares,
without par value, one of which is issued and outstanding;
WHEREAS, the one issued and outstanding common share of MERGER
CORP. is owned of record and beneficially by FINANCIAL;
WHEREAS, the Boards of Directors of FINANCIAL, PEOPLES and
MERGER CORP. deem it advisable and in the best interests of their respective
corporations and their shareholders that MERGER CORP. be merged with and into
PEOPLES upon the terms and subject to the conditions of this Agreement of
Merger; and
WHEREAS, the Boards of Directors of FINANCIAL, PEOPLES and
MERGER CORP. have each authorized and approved this Agreement of Merger by
resolutions duly authorized by them;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements of the parties herein contained, it is hereby
agreed by and among FINANCIAL, PEOPLES and MERGER CORP. that the terms of the
merger contemplated by this Agreement of Merger (hereinafter referred to as the
"MERGER"), and the mode of carrying them into effect, shall be as follows:
ARTICLE ONE
SECTION 1.01. At the time when the MERGER shall become
effective (herein referred to as the "EFFECTIVE DATE"), MERGER CORP. will merge
with and into PEOPLES and PEOPLES
61
will be the continuing and surviving corporation in the MERGER, will continue to
exist as a savings and loan association under the laws of the State of Ohio and
will be the only one of the CONSTITUENT CORPORATIONS (hereinafter defined) to
continue its separate corporate existence after the EFFECTIVE DATE. As used in
this Agreement of Merger, the term "CONSTITUENT CORPORATIONS" refers to PEOPLES
and MERGER CORP. before the EFFECTIVE DATE and the term "RESULTING CORPORATION"
refers to PEOPLES after the EFFECTIVE DATE.
SECTION 1.02. The name of the RESULTING CORPORATION shall be
PEOPLES SAVINGS BANK OF TROY.
SECTION 1.03. The principal office of the RESULTING
CORPORATION shall be located at 635 Market Street, Troy, Ohio 45373-0417.
SECTION 1.04. The purposes for which the RESULTING CORPORATION
is formed are to raise money to be loaned to its depositors and others and for
such other purposes as are authorized by law.
SECTION 1.05. The authorized capital of the RESULTING
CORPORATION shall consist of 90,000,000 common shares, par value of $1.00 per
share, and 10,000,000 preferred shares, par value $1.00 per share.
SECTION 1.06. The Constitution and Bylaws of PEOPLES as in
effect immediately before the EFFECTIVE DATE shall be the Constitution and
Bylaws of the RESULTING CORPORATION until amended in accordance with law.
SECTION 1.07. On and after the EFFECTIVE DATE, and until
changed in accordance with law, the number of directors of the RESULTING
CORPORATION shall be nine (9), each of whom shall serve until the annual meeting
of shareholders of the RESULTING CORPORATION in the year indicated in the table
set forth immediately below. The names and residence addresses of the persons
who shall serve as directors on and after the EFFECTIVE DATE and until changed
in accordance with law are as follows:
NAME RESIDENCE ADDRESS TERM EXPIRES
---- ----------------- ------------
Donald Cooper 45 Colony Park Drive 2001
Troy, Ohio 45373
Richard W. Klockner 53 Dronfield Road 2001
Troy, Ohio 45373
62
NAME RESIDENCE ADDRESS TERM EXPIRES
---- ----------------- ------------
G. Joseph Reardon 10 Colony Park Drive 2001
Troy, Ohio 45373
William J. McGraw, III 2390 Greenlawn Drive 2002
Troy, Ohio 45373
Ronald B. Scott 194 Littlejohn Road 2002
Troy, Ohio 45373
James S. Wilcox 11546 Fenner Road 2002
Laura, Ohio 45337
Peter E. Jenkins 1156 Westridge Drive 2003
Troy, Ohio 45373
William L. Lukens 2060 Peters Road 2003
Troy, Ohio 45373
Thomas E. Robinson 1823 Peters Road 2003
Troy, Ohio 45373
SECTION 1.08. On and after the EFFECTIVE DATE, and until
changed in accordance with law, the persons whose names and residence addresses
are set forth immediately below shall be the executive officers of the RESULTING
CORPORATION and shall hold the offices set forth beside their respective names.
NAME RESIDENCE ADDRESS OFFICE
---- ----------------- ------------
Ronald B. Scott 194 Littlejohn Road President
Troy, Ohio 45373
Linda Daniel 7687 Winding Way N Vice President
Tipp City, Ohio 45371
Mark Douglas 1051 Crestview Drive Vice President
Troy, Ohio 45373
Phillip M. Jones 2240 Seneca Drive Vice President
Troy, Ohio 45373
Richard Bender 7982 Cliffwood Drive Vice President
Tipp City, Ohio 45373
63
SECTION 1.09. Ronald B. Scott, whose address is 635 S. Market
Street, Troy, Ohio 45373-0417, a natural person resident in the State of Ohio,
is the statutory agent upon whom any process, notice or demand against MERGER
CORP. or PEOPLES may be served.
ARTICLE TWO
SECTION 2.01. The manner and basis of making distributions to
shareholders of the CONSTITUENT CORPORATIONS in extinguishment of and in
substitution for their shares of the CONSTITUENT CORPORATIONS shall be as set
forth in this Article Two.
SECTION 2.02. On the EFFECTIVE DATE and as a result of the
MERGER, automatically and without any further act of the CONSTITUENT
CORPORATIONS, FINANCIAL or the holders of PEOPLES shares, the following shall
occur:
(a) Each of the issued and outstanding shares of PEOPLES
shall be cancelled and extinguished and, in
substitution and exchange therefore, the holder
thereof shall be entitled, subject to and upon
compliance with Section 2.03(a) of this Agreement of
Merger, to receive from FINANCIAL one common share,
without par value, of FINANCIAL; and
(b) Each of the PEOPLES OPTIONS shall be cancelled and
extinguished and, in substitution and exchange
therefore, the holder thereof shall be entitled,
subject to and upon compliance with Section 2.03(b)
of this Agreement of Merger, to receive from
FINANCIAL an option to purchase a number of common
shares, without par value, of FINANCIAL equal to the
number of common shares of PEOPLES subject to the
PEOPLES OPTION of the holder immediately before the
EFFECTIVE DATE at an exercise price equal to the
exercise price of the PEOPLES OPTION of the holder.
SECTION 2.03. (a) Each holder of PEOPLES common shares who, as
a result of the MERGER, holds one or more certificates which theretofore
represented one or more common shares of PEOPLES that have been extinguished as
a result of the MERGER shall surrender each such certificate held by him to the
RESULTING CORPORATION and, within a reasonable time after such surrender, the
RESULTING CORPORATION shall deliver to each such holder in exchange therefor one
or more certificates evidencing the number of FINANCIAL shares to which each
such holder is entitled in accordance with the provisions of Section 2.02 of
this Agreement of Merger; and, until so surrendered, each such certificate
which, prior to the MERGER, represented one or more shares of PEOPLES that have
been extinguished as a result of the MERGER shall be deemed for all corporate
purposes, except as provided in Section 2.06 of this Agreement of Merger, to
evidence ownership of the number of shares of FINANCIAL which the holder of such
certificate is entitled to receive in substitution therefor in accordance with
Section 2.02 of this Agreement of Merger; provided, however, that if there be
delivered to the RESULTING CORPORATION by any person who is unable to produce
any such certificate for surrender in accordance with this Section 2.03,
64
(1) Evidence to the satisfaction of the RESULTING CORPORATION
that any such certificate or certificates has been lost,
wrongfully taken or destroyed;
(2) Such security or indemnity as may be requested by the
RESULTING CORPORATION to save it harmless; and
(3) Evidence to the satisfaction of the RESULTING CORPORATION
that such person is the owner of the shares theretofore
represented by each certificate claimed by him to be lost,
wrongfully taken or destroyed and that such person who would
be entitled to present each such certificate for exchange
pursuant to this Agreement,
then the RESULTING CORPORATION, in the absence of actual notice to it that any
shares then or theretofore evidenced by any such certificate have been acquired
by a bona fide purchaser, shall deliver to such person one or more certificates
evidencing the number of shares of FINANCIAL that such person would have been
entitled to receive upon surrender of each such lost, wrongfully taken or
destroyed certificate.
(b) Each holder of a PEOPLES OPTION who is a party to a stock
option agreement which represented before the EFFECTIVE DATE one or more PEOPLES
OPTIONS extinguished as a result of the MERGER shall surrender each such
agreement to FINANCIAL and, within a reasonable time after such surrender,
FINANCIAL shall deliver to each such holder in exchange therefor one or more
agreements in respect of the number of FINANCIAL shares in respect of which each
such holder is entitled to an option in accordance with the provisions of
Section 2.02 of this Agreement of Merger.
SECTION 2.04. If any certificate evidencing one or more shares
of FINANCIAL deliverable as provided in Section 2.03 of this Agreement of Merger
is to evidence shares held in the name of a person other than the person in
whose name such surrendered certificate was registered on the books of PEOPLES
on the EFFECTIVE DATE, it shall be a condition precedent to the delivery of each
such certificate evidencing common shares of FINANCIAL that such surrendered
certificate shall be properly endorsed and otherwise in proper form for transfer
and accompanied by such documents as may reasonably be required by the RESULTING
CORPORATION in its discretion and that the person surrendering such certificate
pay to the RESULTING CORPORATION any transfer or other taxes required by reason
of the related transfer of one or more common shares of FINANCIAL (or of PEOPLES
prior to the MERGER) to a person other than the registered holder of such
surrendered certificate, or established to the satisfaction of the RESULTING
CORPORATION that such tax has been paid or is not payable.
SECTION 2.05. No certificate evidencing one or more shares of
FINANCIAL deliverable by it as provided elsewhere in this Agreement of Merger
shall be delivered by the RESULTING CORPORATION until the holder of such shares
shall have complied with Section 2.03 and, where applicable, Section 2.04 of
this Agreement of Merger.
SECTION 2.06. No cash, share or other dividend or distribution
in respect of common shares of FINANCIAL shall be paid or distributed in respect
of such a share that, as a result of the MERGER, is evidenced by a certificate
which theretofore evidenced one or more shares of PEOPLES until the holder of
such certificate shall have complied with Section 2.03 and, where applicable,
Section 2.04 of this Agreement of Merger, but upon such compliance, the
RESULTING CORPORATION shall cause each such cash, share or other dividend or
distribution to be paid and distributed to the person entitled thereto (without
interest or other compensation for delay in such payment or distribution).
65
SECTION 2.07. The RESULTING CORPORATION may from time to time,
in the case of one or more persons, waive one or more of the rights provided to
it in Section 2.03 of this Agreement of Merger to withhold certain certificates,
payments, deliveries and distributions, and no such waiver shall constitute a
waiver of its right thereafter to withhold any such certificate, payment,
delivery or distribution in the case of any person.
SECTION 2.08. Notwithstanding anything in this AGREEMENT to
the contrary, the PEOPLES common shares which are outstanding immediately before
the EFFECTIVE DATE and which are held by shareholders who shall not have voted
such shares in favor of this AGREEMENT, who shall have delivered to FINANCIAL or
PEOPLES a written demand for appraisal of such shares in the manner provided in
Section 1701.85 of the Ohio Revised Code (hereinafter referred to as the "ORC")
and who shall have otherwise complied fully with all of the requirements of
Section 1701.85 of the ORC shall not be converted into or be exchangeable for
the right to receive the consideration provided in this AGREEMENT; provided,
however, that (a) each of such shares (herein referred to as the "DISSENTING
SHARES") shall nevertheless be cancelled and extinguished in accordance with
this AGREEMENT; (b) the holder of DISSENTING SHARES, upon full compliance with
the requirements of Section 1701.85 of the ORC, shall be entitled to payment of
the appraised value of such shares in accordance with the provisions of Section
1701.85 of the ORC; and (c) in the event (i) any holder of DISSENTING SHARES
shall subsequently withdraw such holder's demand for appraisal of such shares
within sixty days after the EFFECTIVE DATE or shall fail to establish such
holder's entitlement to appraisal rights in accordance with Section 1701.85 of
the ORC, or (ii) any holder of DISSENTING SHARES has not filed a petition
demanding a determination of the value of such shares within the period provided
in Section 1701.85 of the ORC, such holder shall forfeit the right to appraisal
of such shares and such shares shall thereupon be deemed to have been converted
into and to have become exchangeable for the right to receive the consideration
provided in this AGREEMENT.
SECTION 2.09. On and after the EFFECTIVE DATE and as a result
of the MERGER, the issued and outstanding share of MERGER CORP. shall,
automatically and without any further act of the CONSTITUENT CORPORATIONS or
FINANCIAL, be cancelled and extinguished and, in substitution and exchange for
such MERGER CORP. share so cancelled and extinguished, FINANCIAL shall receive
7,439,650 common shares of the RESULTING CORPORATION. Promptly after the
EFFECTIVE DATE, the RESULTING CORPORATION shall deliver to FINANCIAL a
certificate evidencing the 7,439,650 common shares of the RESULTING CORPORATION
issued to FINANCIAL in accordance with this Section 2.09, and until such
certificate is prepared and issued to FINANCIAL to evidence such 7,439,650
common shares of the RESULTING CORPORATION, the certificate theretofore
representing the one share of MERGER CORP. shall be deemed for all corporate
purposes to evidence ownership of an aggregate of 7,439,650 issued and
outstanding shares of the RESULTING CORPORATION.
ARTICLE THREE
SECTION 3.01. On and after the EFFECTIVE DATE and as a result
of the MERGER, the separate existence of MERGER CORP. shall cease; provided,
however, that whenever a conveyance, assignment, transfer, deed or other
instrument or act is necessary to vest property or rights in the RESULTING
CORPORATION, the officers of the respective CONSTITUENT CORPORATIONS shall
execute, acknowledge and deliver such instruments and do such acts. For purposes
of the foregoing
66
sentence only, the existence of MERGER CORP. and the authority of its officers
and directors shall be continued notwithstanding the MERGER.
SECTION 3.02. On and after the EFFECTIVE DATE, all of the
assets and property of every kind and character, real, personal and mixed,
tangible and intangible, choses in action, rights and credits, owned by the
CONSTITUENT CORPORATIONS, or which would inure to any of them, shall
immediately, by operation of law and without any conveyance or transfer and
without any further act or deed, be vested in and become the property of the
RESULTING CORPORATION, which shall have, hold and enjoy the same in its own
right as fully and to the same extent as the same were possessed, held and
enjoyed by the CONSTITUENT CORPORATIONS before the MERGER, and the RESULTING
CORPORATION shall be deemed to be and shall be a continuation of the entity and
identify of PEOPLES on and after the EFFECTIVE DATE.
SECTION 3.03. All of the rights and obligations of the
CONSTITUENT CORPORATIONS shall remain unimpaired, and the RESULTING CORPORATION
shall succeed to all of such rights and obligations and the duties and
liabilities connected therewith. Title to any real estate or any interest
therein vested in any CONSTITUENT CORPORATIONS shall not revert or in any way be
impaired by reason of the MERGER. Any claim existing, or action or proceeding
pending, by or against any CONSTITUENT CORPORATIONS, may be prosecuted to
judgment with right of appeal, as if the MERGER had not taken place or the
RESULTING CORPORATION may be substituted in its place.
SECTION 3.04. On and after the EFFECTIVE DATE, all the rights
of creditors of each CONSTITUENT CORPORATION shall be preserved unimpaired, and
all liens on the property of any CONSTITUENT CORPORATION shall be preserved
unimpaired, on only the property affected by any such lien immediately prior to
the EFFECTIVE DATE.
SECTION 3.05. By way of example of the effect of the
provisions of this Article Three and without limiting the generality of any
other provision of this Article Three, all savings deposit accounts of PEOPLES
existing at the EFFECTIVE DATE shall be unaffected by the MERGER.
ARTICLE FOUR
SECTION 4.01. The status of PEOPLES as a savings and loan
association shall be unaffected by the MERGER. PEOPLES shall continue after the
EFFECTIVE DATE subject to the statutory and administrative controls to which it
was subject before the EFFECTIVE DATE.
SECTION 4.02. FINANCIAL represents and warrants to PEOPLES
that (a) the Articles of Incorporation of FINANCIAL will be amended on or before
the EFFECTIVE DATE to authorize 14,000,000 common shares, without par value, and
1,000,000 preferred shares, without par value; (b) FINANCIAL will assume all of
the obligations of PEOPLES under each of the stock option plans in accordance
with which the PEOPLES OPTIONS were granted; and (c) the 100 issued and
outstanding shares of FINANCIAL shall be purchased by FINANCIAL on the EFFECTIVE
DATE pursuant to the terms and conditions of a Subscription Agreement dated July
23, 2001, by and between FINANCIAL and PEOPLES.
67
SECTION 4.03. MERGER CORP. represents and warrants to PEOPLES
that its activities as a corporation since the beginning of its legal existence
have been limited to accepting an initial subscription to its shares and
participating in the MERGER contemplated by this Agreement. If the foregoing
representations shall not be true, PEOPLES shall not be obligated to consummate
this MERGER.
SECTION 4.04. PEOPLES represents and warrants to FINANCIAL
that PEOPLES has authorized 90,000,000 common shares, par value $1.00 per share,
7,439,650 of which are issued and outstanding and 883,186 of which are reserved
for issuance upon exercise of the PEOPLES OPTIONS.
SECTION 4.05. This Agreement of Merger is intended to be and
the parties hereto adopt the Agreement as a Plan of Reorganization under Section
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended, to be effectuated
in the manner set forth herein.
SECTION 4.06. The MERGER shall become effective at the close
of business of PEOPLES on the date on which the certificate provided for in
Section 1701.81 of the Ohio Revised Code is filed in the office of the Secretary
of State of Ohio (herein referred to as the "EFFECTIVE DATE") by the office of
the Superintendent of the Division of Financial Institutions of the Ohio
Department of Commerce.
ARTICLE FIVE
SECTION 5.01. This Agreement of Merger and the MERGER shall
not become effective until this Agreement of Merger and/or the MERGER has been
approved by all regulatory authorities which are required to approve this
Agreement of Merger and/or the MERGER and by the requisite majority vote of the
shareholders of the CONSTITUENT CORPORATIONS and FINANCIAL as required by law.
SECTION 5.02. At any time before the EFFECTIVE DATE, this
Agreement may be amended from time to time by an Agreement of Merger in writing
executed in the same manner as this Agreement, after authorization of such
action by the Boards of Directors of PEOPLES, FINANCIAL and MERGER CORP.
SECTION 5.03. The MERGER contemplated by this Agreement may be
abandoned by FINANCIAL, PEOPLES or MERGER CORP. and this Agreement of Merger may
be terminated (a) in the event that this Agreement of Merger and the MERGER are
not duly approved by the requisite majority vote of the shareholders of PEOPLES;
(b) in the event that the Boards of Directors of PEOPLES, FINANCIAL, or MERGER
CORP. at any time prior to the filing of the Certificate of Merger with the
Secretary of State of the State of Ohio mutually determine that the MERGER is
not in the best interests of their respective corporations; or (c) in the event
that the number of DISSENTING SHARES exceeds ten percent (10%) of the issued and
outstanding shares of PEOPLES.
68
IN WITNESS WHEREOF, Peoples Ohio Financial Corporation,
Peoples Savings Bank of Troy and Peoples Merger Corp., have caused this
Agreement of Merger to be duly executed by their authorized officers as of the
day and year first above written.
ATTEST: PEOPLES OHIO FINANCIAL CORPORATION
/s/ Linda Daniel By /s/ Ronald B. Scott
- ------------------------------------ ---------------------------------
Linda Daniel, Ronald B. Scott,
its Secretary its President
ATTEST: PEOPLES SAVINGS BANK OF TROY
/s/ Linda Daniel By /s/ Ronald B. Scott
- ------------------------------------ --------------------------------
Linda Daniel, Ronald B. Scott,
its Secretary its President
ATTEST: PEOPLES MERGER CORP.
/s/ Mark A. Douglas By /s/ Ronald B. Scott
- ------------------------------------ -------------------------------
Mark Douglas, Ronald B. Scott,
its Secretary its President
STATE OF OHIO )
) SS:
COUNTY OF MIAMI )
On this 27th day of August, 2001, personally appeared before
me, a Notary Public in and for such county and state aforesaid, Ronald B. Scott
and Linda Daniel to me known and known to me to be the President and Secretary,
respectively, of each of Peoples Ohio Financial Corporation and Peoples Savings
Bank of Troy, and Ronald B. Scott and Mark Douglas to me known and known to me
to be the President and Secretary, respectively, of Peoples Merger Corp., who
severally acknowledged that they did sign the foregoing Agreement of Merger as
such President and Secretary for and on behalf of such corporations and that the
same is their free act and deed and the free and voluntary corporate act and
deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal on
the date last mentioned.
/s/Darlyn D. Stradling
-------------------------
Notary Public
69
APPENDIX B
70
Section 1701.85 DISSENTING SHAREHOLDER'S DEMAND FOR FAIR CASH VALUE OF
SHARES.
(A) (1) A shareholder of a domestic corporation is entitled to
relief as a dissenting shareholder in respect of the proposals described in
sections 1701.74, 1701.76, and 1701.84 of the Revised Code, only in compliance
with this section.
(2) If the proposal must be submitted to the shareholders of
the corporation involved, the dissenting shareholder shall be a record holder of
the shares of the corporation as to which he seeks relief as of the date fixed
for the determination of shareholders entitled to notice of a meeting of the
shareholders at which the proposal is to be submitted, and such shares shall not
have been voted in favor of the proposal. Not later than ten days after the date
on which the vote on the proposal was taken at the meeting of the shareholders,
the dissenting shareholder shall deliver to the corporation a written demand for
payment to him of the fair cash value of the shares as to which he seeks relief,
which demand shall state his address, the number and class of such shares, and
the amount claimed by him as the fair cash value of the shares.
(3) The dissenting shareholder entitled to relief under
division (C) of section 1701.84 of the Revised Code in the case of a merger
pursuant to section 1701.80 of the Revised Code and a dissenting shareholder
entitled to relief under division (E) of section 1701.84 of the Revised Code in
the case of a merger pursuant to section 1701.801 [1701.80.1] of the Revised
Code shall be a record holder of the shares of the corporation as to which he
seeks relief as of the date on which the agreement of merger was adopted by the
directors of that corporation. Within twenty days after he has been sent the
notice provided in section 1701.80 or 1701.801 [1701.80.1] of the Revised Code,
the dissenting shareholder shall deliver to the corporation a written demand for
payment with the same information as that provided for in division (A)(2) of
this section.
(4) In the case of a merger or consolidation, a demand served
on the constituent corporation involved constitutes service on the surviving or
the new entity, whether the demand is served before, on, or after the effective
date of the merger or consolidation.
(5) If the corporation sends to the dissenting shareholder, at
the address specified in his demand, a request for the certificates representing
the shares as to which he seeks relief, the dissenting shareholder, within
fifteen days from the date of the sending of such request, shall deliver to the
corporation the certificates requested so that the corporation may forthwith
endorse on them a legend to the effect that demand for the fair cash value of
such shares has been made. The corporation promptly shall return such endorsed
certificates to the dissenting shareholder. A dissenting shareholder's failure
to deliver such certificates terminates his rights as a dissenting shareholder,
at the option of the corporation, exercised by written notice sent to the
dissenting shareholder within twenty days after the lapse of the fifteen-day
period, unless a court for good cause shown otherwise directs. If shares
represented by a certificate on which such a legend has been endorsed are
transferred, each new certificate issued for them shall bear a similar legend,
together with the name of the original dissenting holder of such shares. Upon
receiving a demand for payment from a dissenting shareholder who is the record
holder of uncertificated securities, the corporation shall make an appropriate
notation of the demand for payment in its shareholder records. If uncertificated
shares for which payment has been demanded are to be transferred, any new
certificate issued for the shares shall bear the legend required for
certificated securities as provided in this paragraph. A transferee of the
shares so endorsed, or of uncertificated securities where such notation has been
made, acquires only such rights in the corporation as the original dissenting
holder of such shares had immediately after the service of a demand for payment
of the fair cash value of the
71
shares. A request under this paragraph by the corporation is not an admission by
the corporation that the shareholder is entitled to relief under this section.
(B) Unless the corporation and the dissenting shareholder have come to
an agreement on the fair cash value per share of the shares as to which the
dissenting shareholder seeks relief, the dissenting shareholder or the
corporation, which in case of a merger or consolidation may be the surviving or
new entity, within three months after the service of the demand by the
dissenting shareholder, may file a complaint in the court of common pleas of the
county in which the principal office of the corporation that issued the shares
is located or was located when the proposal was adopted by the shareholders of
the corporation, or, if the proposal was not required to be submitted to the
shareholders, was approved by the directors. Other dissenting shareholders,
within that three-month period, may join as plaintiffs or may be joined as
defendants in any such proceeding, and any two or more such proceedings may be
consolidated. The complaint shall contain a brief statement of the facts,
including the vote and the facts entitling the dissenting shareholder to the
relief demanded. No answer to such a complaint is required. Upon the filing of
such a complaint, the court, on motion of the petitioner, shall enter an order
fixing a date for a hearing on the complaint and requiring that a copy of the
complaint and a notice of the filing and of the date for hearing be given to the
respondent or defendant in the manner in which summons is required to be served
or substituted service is required to be made in other cases. On the day fixed
for the hearing on the complaint or any adjournment of it, the court shall
determine from the complaint and from such evidence as is submitted by either
party whether the dissenting shareholder is entitled to be paid the fair cash
value of any shares and, if so, the number and class of such shares. If the
court finds that the dissenting shareholder is so entitled, the court may
appoint one or more persons as appraisers to receive evidence and to recommend a
decision on the amount of the fair cash value. The appraisers have such power
and authority as is specified in the order of their appointment. The court
thereupon shall make a finding as to the fair cash value of a share and shall
render judgment against the corporation for the payment of it, with interest at
such rate and from such date as the court considers equitable. The costs of the
proceeding, including reasonable compensation to the appraisers to be fixed by
the court, shall be assessed or apportioned as the court considers equitable.
The proceeding is a special proceeding and final orders in it may be vacated,
modified, or reversed on appeal pursuant to the Rules of Appellate Procedure
and, to the extent not in conflict with those rules, Chapter 2505. of the
Revised Code. If, during the pendency of any proceeding instituted under this
section, a suit or proceeding is or has been instituted to enjoin or otherwise
to prevent the carrying out of the action as to which the shareholder has
dissented, the proceeding instituted under this section shall be stayed until
the final determination of the other suit or proceeding. Unless any provision in
division (D) of this section is applicable, the fair cash value of the shares
that is agreed upon by the parties or fixed under this section shall be paid
within thirty days after the date of final determination of such value under
this division, the effective date of the amendment to the articles, or the
consummation of the other action involved, whichever occurs last. Upon the
occurrence of the last such event, payment shall be made immediately to a holder
of uncertificated securities entitled to such payment. In the case of holders of
shares represented by certificates, payment shall be made only upon and
simultaneously with the surrender to the corporation of the certificates
representing the shares for which the payment is made.
(C) If the proposal was required to be submitted to the shareholders of
the corporation, fair cash value as to those shareholders shall be determined as
of the day prior to the day on which the vote by the shareholders was taken and,
in the case of a merger pursuant to section 1701.80 or 1701.801 [1701.80.1] of
the Revised Code, fair cash value as to shareholders of a constituent subsidiary
corporation shall be determined as of the day before the adoption of the
agreement of merger by the directors of the particular subsidiary corporation.
The fair cash value of a share for the purposes of this section is the amount
that a willing seller who is under no compulsion to sell would be willing to
accept
72
and that a willing buyer who is under no compulsion to purchase would be
willing to pay, but in no event shall the fair cash value of a share exceed the
amount specified in the demand of the particular shareholder. In computing such
fair cash value, any appreciation or depreciation in market value resulting from
the proposal submitted to the directors or to the shareholders shall be
excluded.
(D) (1) The right and obligation of a dissenting shareholder to receive
such fair cash value and to sell such shares as to which he seeks relief, and
the right and obligation of the corporation to purchase such shares and to pay
the fair cash value of them terminates if any of the following applies:
(a) The dissenting shareholder has not complied
with this section, unless the corporation by its directors waives such failure;
(b) The corporation abandons the action involved
or is finally enjoined or prevented from carrying it out, or the shareholders
rescind their adoption of the action involved;
(c) The dissenting shareholder withdraws his
demand, with the consent of the corporation by its directors;
(d) The corporation and the dissenting
shareholder have not come to an agreement as to the fair cash value per share,
and neither the shareholder nor the corporation has filed or joined in a
complaint under division (B) of this section within the period provided in that
division.
(2) For purposes of division (D)(1) of this section, if the
merger or consolidation has become effective and the surviving or new entity is
not a corporation, action required to be taken by the directors of the
corporation shall be taken by the general partners of a surviving or new
partnership or the comparable representatives of any other surviving or new
entity.
(E) From the time of the dissenting shareholder's giving of the demand
until either the termination of the rights and obligations arising from it or
the purchase of the shares by the corporation, all other rights accruing from
such shares, including voting and dividend or distribution rights, are
suspended. If during the suspension, any dividend or distribution is paid in
money upon shares of such class or any dividend, distribution, or interest is
paid in money upon any securities issued in extinguishment of or in substitution
for such shares, an amount equal to the dividend, distribution, or interest
which, except for the suspension, would have been payable upon such shares or
securities, shall be paid to the holder of record as a credit upon the fair cash
value of the shares. If the right to receive fair cash value is terminated other
than by the purchase of the shares by the corporation, all rights of the holder
shall be restored and all distributions which, except for the suspension, would
have been made shall be made to the holder of record of the shares at the time
of termination.
73
APPENDIX C
74
PEOPLES SAVINGS BANK OF TROY
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The Audit Committee is a committee of the Board of Directors. The
primary function of the Audit Committee is to assist the Board of Directors in
fulfilling its oversight responsibilities by monitoring the following processes:
1. the financial information which will be provided to shareholders,
governmental or regulatory bodies, the public, and others;
2. the Bank's auditing, accounting, and financial reporting process;
3. the systems of internal controls related to finance, accounting,
legal compliance, regulatory compliance and ethics that management and the Board
of Directors have established; and
4. the audit process.
The Audit Committee's primary duties and responsibilities are to:
1. serve as an independent and objective party to monitor the Bank's
financial reporting process and internal control system;
2. review and appraise the audit efforts of the Bank's independent
accountants and the internal auditors; and
3. provide an open avenue of communication among the independent
accountants, financial and senior management, internal auditors, and the Board
of Directors.
The Audit Committee will primarily fulfill these responsibilities by carrying
out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee should be comprised of three or more directors as
determined by the Board. Each member will be independent of the management of
the Bank and free of any relationship that, in the opinion of the Board of
Directors, would interfere with their exercise of independent judgement as a
Committee member.
The members of the Committee shall be elected by the Board at the
annual organizational meeting of the Board or until their successors shall be
duly elected and qualified. Unless a Chair is elected by the full Board, the
members of the Committee may designate a Chair by majority vote of the full
Committee membership.
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The duties and responsibilities of a member of the Audit Committee are
in addition to those duties set out for a member of the Board of Directors.
III. MEETINGS
The Committee shall meet at least three times annually, or more
frequently as circumstances dictate. As part of its job to foster open
communication, the Committee may include, as a part of each meeting agenda, an
executive session. This session may be used, as necessary, by management, the
internal auditors, and the independent accountants to discuss any matters that
the Committee or each of these groups believe should be discussed separately.
The Committee may ask members of management or others to attend meetings and
provide pertinent information as necessary.
IV. RESPONSIBILITIES AND DUTIES
In meeting its responsibilities, the Audit Committee is expected to:
1. Provide an open avenue of communication between the internal
auditors, the independent accountant, and the Board of Directors;
2. Attempt to confirm and assure the objectivity of the internal
auditor;
3. Attempt to confirm and assure the independence of the independent
accountant, including a review of management consulting services provided by the
independent accountant and related fees;
4. Review and update the Committee's charter periodically;
5. Recommend to the Board of Directors the independent accountants to
be nominated, approve the compensation of the independent accountant, and review
and approve, if applicable, the discharge of the independent accountants;
6. Review and concur in the appointment, replacement, reassignment, or
dismissal of the internal auditor;
7. Review the qualifications of the internal auditor to specific areas
within the audit plan;
8. Review with the independent auditor and internal auditor the
coordination of audit efforts to assure completeness of coverage, reduction of
redundant efforts, and the effective use of audit resources;
9. Consider, in consultation with the independent accountant and the
internal auditor, the audit scope and plan of the internal auditors and the
independent accountant. Determine if the internal auditor and independent
accountants are utilizing a risk-based approach;
10. Consider and review with the independent accountant and internal
auditor:
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a. the adequacy of the Bank's internal controls including
computerized information system controls and security;
b. any related significant findings and recommendations of the
independent accountant and internal auditing together with management responses
thereto; and
c. the status of previous audit recommendations and management's
follow up on those recommendations.
11. Review with management and the independent accountant at the
completion of the annual audit:
a. the Bank's annual financial statements and related footnotes;
b. the independent accountant's audit of the financial statements
and his or her report thereon;
c. any significant changes required in the independent accountant's
audit plan;
d. any serious difficulties or disputes with management encountered
during the course of the audit;
e. other matters related to the conduct of the audit which are to
be communicated to the committee under generally accepted auditing standards;
f. advise financial management and the independent auditor that
they are expected to provide a timely analysis of significant current financial
reporting issues and practices; and
g. provide that financial management and the independent auditor
discuss with the audit committee their qualitative judgements about the
appropriateness, not just the acceptability, of accounting principles and
financial disclosure practices used or proposed to be adopted by the Corporation
and, particularly, about the degree of aggressiveness or conservatism of its
accounting principles and underlying estimates.
12. Review with management and the internal auditor:
a. regular internal audit reports to management prepared by the
internal auditor, including significant findings and management's responses to
those findings;
b. any difficulties encountered in the course of their audits,
including any restrictions on the scope of their work or access to required
information; and
c. the annual internal audit plan and any changes required in the
scope of that plan.
13. Unless otherwise directed by the Board of Directors the Committee
may:
a. review with management, and if necessary, with the Bank's
counsel, any legal matter that could have a significant impact on the Bank's
financial statements;
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b. review legal and regulatory matters that may have a material
impact on the financial statements, related Bank compliance policies, and
programs and reports received from regulators;
c. meet with the Bank's regulatory bodies to discuss the results of
their examinations; and
d. conduct or authorize, if necessary, investigations into any
matters within the Committee's scope of responsibilities. The Committee shall be
empowered to retain independent counsel, accountants, or others to assist in the
conduct of any investigation.
14. Determine as regards to new transactions or events, the auditor's
reasoning for the appropriateness of the accounting principles and disclosure
practices adopted by the Bank.
15. Meet with the internal auditor, the independent accountant, and
management in separate executive sessions to discuss any matters that the
committee or these groups believe should be discussed privately with the Audit
Committee.
16. Report Committee actions to the Board of Directors with such
recommendations as the Committee may deem appropriate.
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APPENDIX D
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PEOPLES SAVINGS BANK OF TROY
2001 STOCK OPTION AND INCENTIVE PLAN
1. PURPOSE. The purpose of the Peoples Savings Bank of Troy 2001 Stock
Option and Incentive Plan (this "Plan") is to promote and advance the interests
of Peoples Savings Bank of Troy and its shareholders by enabling the Company
(hereinafter defined) to attract, retain and reward directors, managerial and
other employees of the Company and any Subsidiary (hereinafter defined) and to
strengthen the mutuality of interests between such directors and employees and
the Company's shareholders by providing such persons with a proprietary interest
in pursuing the long-term growth, profitability and financial success of the
Company.
2. DEFINITIONS. For purposes of this Plan, the following terms shall
have the meanings set forth below:
(a) "Award" means the grant by the Committee of an Incentive
Stock Option, a Non-Qualified Stock Option or a Stock Appreciation
Right, or any combination thereof, as provided in the Plan.
(b) "Board" means the Board of Directors of the Company;
provided, however, that in the event of the consummation of the Merger, "Board"
shall mean the Board of Directors of POFC.
(c) "Code" means the Internal Revenue Code of 1986, as
amended, or any successor thereto, together with rules, regulations and
interpretations promulgated thereunder.
(d) "Committee" means the Committee of the Board constituted
as provided in Section 3 of this Plan.
(e) "Common Shares" means the common shares, $1 par value per
share, of the Company or any security of the Company issued in
substitution, in exchange or in lieu thereof; provided, however, that
in the event of the consummation of the Merger, "Common Shares" shall
mean the common shares, without par value, of POFC.
(f) "Company" means Peoples Savings Bank of Troy, an Ohio
savings and loan association, or any successor corporation; provided,
however, that in the event of the consummation of the Merger, "Company"
shall mean POFC.
(g) "Employment" means regular employment with the Company or
a Subsidiary and does not include service as a director only.
(h) "ERISA" means the Employment Retirement Income Security
Act, as amended, or any successor thereto, together with rules,
regulations and interpretations promulgated thereunder.
(i) "Exchange Act" means the Securities Exchange Act of 1934,
as amended, or any successor statute.
(j) "Fair Market Value" means as follows:
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(i) If the Common Shares are traded on a national
securities exchange at the time of grant of the Stock Option,
then the Fair Market Value shall be the average of the highest
and the lowest selling price on such exchange on the date of
such Stock Option is granted or, if there were no sales on
such date, then on the next prior business day on which there
was a sale.
(ii) If the Common Shares are quoted on The Nasdaq
Stock Market at the time of the grant of the Stock Option,
then the Fair Market Value shall mean between the closing bid
and closing asked quotation with respect to a Common Share on
such date on The Nasdaq Stock Market.
(iii) If the Common Shares are not traded on a
national securities exchange or quoted on The Nasdaq Stock
Market, then the Fair Market Value shall be as determined by
the Committee.
(k) "Incentive Stock Option" means any Stock Option granted
pursuant to the provisions of Section 6 of this Plan which is intended
to be and is specifically designated as an "incentive stock option"
within the meaning of Section 422 of the Code.
(l) "Merger" means the merger of Peoples Merger Corp. with and
into Peoples Savings Bank of Troy in accordance with the terms of the
Agreement of Merger dated August 27, 2001, by and among Peoples Merger
Corp., Peoples Savings Bank of Troy and POFC, on the effective date of
which Peoples Savings Bank of Troy will become a wholly-owned
subsidiary of POFC.
(m) "Non-Qualified Stock Option" means any Stock Option
granted pursuant to the provisions of Section 6 of this Plan which is
not an Incentive Stock Option.
(n) "OTS" means the Office of Thrift Supervision, Department
of the Treasury.
(o) "POFC" means Peoples Ohio Financial Corporation, an Ohio
corporation.
(p) "Participant" means an employee or director of the Company
or a Subsidiary who is granted a Stock Option under this Plan.
Notwithstanding the foregoing, for the purposes of the granting of any
Incentive Stock Option under this Plan, the term "Participant" shall
include only employees of the Company or a Subsidiary.
(q) "Plan" means the Peoples Savings Bank of Troy 2001 Stock
Option and Incentive Plan, as set forth herein and as hereinafter
amended from time to time.
(r) "Related" means (i) in the case of a Stock Appreciation
Right, a Stock Appreciation Right which is granted in connection with,
and to the extent exercisable, in whole or in part, in lieu of, an
Option and (ii) in the case of an Option, an Option with respect to
which and to the extent to which a Stock Appreciation Right is
exercisable, in whole or in part, in lieu thereof has been granted.
(s) "Repurchase Right" means the right defined in Section 10
of this Plan.
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(t) "Stock Appreciation Right" means a Stock Appreciation
Right with respect to shares granted by the Committee pursuant to
Section 11 hereof.
(u) "Stock Option" means an award to purchase Common Shares
granted pursuant to the provisions of Section 6 of this Plan.
(v) "Subsidiary" means any corporation or entity in which the
Company directly or indirectly controls 50% or more of the total voting
power of all classes of its stock having voting power. In the event of
the consummation of the Merger, "Subsidiary" shall include Peoples
Savings Bank of Troy.
(w) "Terminated for Cause" means any removal of a director or
discharge of an employee for personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of a
material provision of any law, rule or regulation (other than traffic
violations or similar offenses), a material violation of a final
cease-and-desist order or any other action of a director or employee
which results in a substantial financial loss to the Company or a
Subsidiary.
3. ADMINISTRATION.
(a) This Plan shall be administered by the Committee, which
shall be comprised of not fewer than three of the members of the Board.
The members of the Committee shall be appointed from time to time by
the Board. Members of the Committee shall serve at the pleasure of the
Board, and the Board may from time to time remove members from, or add
members to, the Committee. A majority of the members of the Committee
shall constitute a quorum for the transaction of business. An action
approved in writing by a majority of the members of the Committee then
serving shall be fully as effective as if the action had been taken by
unanimous vote at a meeting duly called and held.
(b) The Committee is authorized to construe and interpret this
Plan and to make all other determinations necessary or advisable for
the administration of this Plan. The Committee may designate persons
other than members of the Committee to carry out its responsibilities
under such conditions and limitations as it may prescribe. Any
determination, decision or action of the Committee in connection with
the construction, interpretation, administration, or application of
this Plan shall be final, conclusive and binding upon all persons
participating in this Plan and any person validly claiming under or
through persons participating in this Plan. The Company shall effect
the granting of Stock Options under this Plan in accordance with the
determinations made by the Committee, by execution of instruments in
writing in such form as approved by the Committee.
4. DURATION OF, AND COMMON SHARES SUBJECT TO, THIS PLAN.
(a) Term. This Plan shall terminate on the date which is ten
(10) years from the date on which this Plan is adopted by the Board,
except with respect to Stock Options then outstanding. Notwithstanding
the foregoing, no Incentive Stock Option may be granted under this Plan
after the date which is ten (10) years from the date on which this Plan
is adopted by the Board or the date on which this Plan is approved by
the shareholders of the Company, whichever is earlier.
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(b) Common Shares Subject to Plan. The maximum number of
Common Shares in respect of which Awards may be granted under this
Plan, subject to adjustment as provided in Section 9 of this Plan,
shall be 600,000 Common Shares. For the purpose of computing the total
number of Common Shares available for Awards under this Plan, there
shall be counted against the foregoing limitations the number of Common
Shares subject to issuance upon exercise or settlement of Stock Options
as of the dates on which such Stock Options are granted. If any Stock
Options or Stock Appreciation Rights are forfeited, terminated or
exchanged for other Stock Appreciation Rights or Stock Options, or
expire unexercised, the Common Shares which were theretofore subject to
such Awards shall again be available for Awards under this Plan to the
extent of such forfeiture, termination or expiration of such Awards.
Common Shares which may be issued under this Plan may be either
authorized and unissued shares or issued shares which have been reacquired by
the Company. No fractional shares shall be issued under this Plan.
5. ELIGIBILITY AND GRANTS. Persons eligible for Awards under this Plan
shall consist of directors and managerial and other key employees of the Company
or a Subsidiary who hold positions with significant responsibilities or whose
performance or potential contribution, in the judgment of the Committee, will
benefit the future success of the Company or a Subsidiary. In selecting the
directors and employees to whom Awards will be made and the number of shares
subject to such Awards, the Committee shall consider the position, duties and
responsibilities of the eligible directors and employees, the value of their
services to the Company and the Subsidiaries and any other factors the Committee
may deem relevant.
6. STOCK OPTIONS. Stock Options granted under this Plan may be in the
form of Incentive Stock Options or Non-Qualified Stock Options. Such Stock
Options shall be subject to the following terms and conditions and in such form
as the Committee may from time to time approve and shall contain such additional
terms and conditions as the Committee shall deem desirable, not inconsistent
with the express provisions of the Plan:
(a) Grant. Stock Options may be granted under this Plan on
terms and conditions not inconsistent with the provisions of this Plan.
(b) Stock Option Price. The option exercise price per Common
Share purchasable under a Stock Option shall be determined by the
Committee at the time of grant; provided, however, that in no event
shall the exercise price of an Incentive Stock Option be less than 100%
of the Fair Market Value of the Common Shares on the date of the grant
of such Incentive Stock Option, and in the case of a Participant who
owns Common Shares representing more than 10% of the outstanding Common
Shares at the time an Incentive Stock Option is granted, the option
exercise price shall in no event be less than 110% of the Fair Market
Value of the Common Shares at the time the Incentive Stock Option is
granted to such Participant.
(c) Stock Option Terms. Subject to the right of the Company to
provide for earlier termination in the event of any merger, acquisition
or consolidation involving the Company, the term of each Stock Option
shall be fixed by the Committee; provided, however, that the term of an
Incentive Stock Option will not exceed ten years after the date the
Incentive Stock Option is granted; provided further, however, that in
the case of a Participant who owns a number of Common Shares
representing more than 10% of the Common Shares outstanding at the
time the
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Incentive Stock Option is granted, the term of the Incentive
Stock Option shall not exceed five years.
(d) Exercisability. Except as set forth in this Plan or as
designated by the Committee at the time of grant, Stock Options awarded
under this Plan shall be immediately exercisable in full.
(e) Method of Exercise. A Stock Option may be exercised, in
whole or in part, by giving written notice of exercise to the Company
specifying the number of Common Shares to be purchased. Such notice
shall be accompanied by payment in full of the purchase price in cash
or, if acceptable to the Committee in its sole discretion, in Common
Shares already owned by the Participant, or by surrendering outstanding
Stock Options. The Committee may also permit Participants, either on a
selective or aggregate basis, to simultaneously exercise Stock Options
and sell Common Shares thereby acquired, pursuant to a brokerage or
similar arrangement, approved in advance by the Committee, and use the
proceeds from such sale as payment of the purchase price of such
shares.
(f) Special Rule for Incentive Stock Options. With respect to
Incentive Stock Options granted under this Plan, to the extent the
aggregate Fair Market Value (determined as of the date the Incentive
Stock Option is granted) of the number of shares with respect to which
Incentive Stock Options are exercisable under all plans of the Company
or a Subsidiary for the first time by a Participant during any calendar
year exceeds $100,000, or such other limit as may be required by the
Code, such Stock Options shall be Non-Qualified Stock Options to the
extent of such excess.
7. EFFECT OF TERMINATION OF EMPLOYMENT, DISABILITY, DEATH OR CHANGE IN
CONTROL.
(a) Except in the event of the death or disability of a
Participant or in the event a Participant is Terminated for Cause, upon
the resignation, removal or retirement from the Board of any
Participant who is a director of the Company or a Subsidiary or upon
the termination of Employment of a Participant who is not a director of
the Company or a Subsidiary, all Stock Options which have not yet
become exercisable shall thereupon terminate and be of no further force
or effect, and, unless the Committee shall specifically state otherwise
at the time a Stock Option is granted, all Stock Options which have
become exercisable shall terminate if they are not exercised by the
earlier of (i) the respective dates of such Stock Options or (ii) the
date which is three (3) months after such resignation, removal,
retirement or termination of Employment.
(b) Unless the Committee shall specifically state otherwise at
the time a Stock Option is granted, all Stock Options granted under
this Plan shall become exercisable in full on the date of termination
of a Participant's employment or directorship with the Company or a
Subsidiary because of his death or disability, and, subject to
extension by the Committee, all Stock Options shall terminate if not
exercised by the earlier of (i) the respective expiration dates of any
such Stock Options or (ii) the date which is twelve (12) months after
the Participant's death or disability.
(c) Unless the Committee shall specifically state otherwise at
the time a Stock Option is granted, in the event the Employment or the
directorship of a Participant is Terminated for Cause, any Stock Option
which has not been exercised shall terminate and be of no further force
or effect as of the date the Participant is Terminated for Cause.
84
(d) All outstanding Stock Options shall become immediately
exercisable in the event of a change in control or imminent change in
control of the Company or any Subsidiary, as determined by the
Committee. For purposes of this Section 7, "change in control" shall
mean: (i) the execution of an agreement for the sale of all, or a
material portion of, the assets of the Company or any Subsidiary; (ii)
the execution of an agreement for a merger or recapitalization of the
Company or any Subsidiary or any merger or recapitalization whereby the
Company or any Subsidiary is not the surviving entity; (iii) a change
of control of the Company or any Subsidiary, as defined or determined
by the OTS; or (iv) the acquisition, directly or indirectly, of the
beneficial ownership (within the meaning of the term "beneficial
ownership" as defined under Section 13(d) of the Exchange Act and the
rules promulgated thereunder) of twenty-five percent (25%) or more of
the outstanding voting securities of the Company or any Subsidiary by
any person, trust, entity or group. For purposes of this Section 7,
"imminent change in control" shall refer to any offer or announcement,
oral or written, by any person or any persons acting as a group, to
acquire control of the Company or any Subsidiary as to which an
application or notice has been filed with the OTS and such application
has been approved or such notice has not been disapproved.
8. NON-TRANSFERABILITY OF STOCK OPTIONS. No Stock Option under this
Plan, and no rights or interests therein, shall be assignable or transferable by
a Participant except by will or the laws of descent and distribution. During the
lifetime of a Participant, Stock Options are exercisable only by, and payments
in settlement of Stock Options will be payable only to, the Participant or his
or her legal representative.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
(a) Notwithstanding the existence of this Plan and any Awards
granted hereunder, the Board and/or the shareholders of the Company
shall at any time have the right, the power and the authority to make
or authorize any of the following: any adjustment, recapitalization,
reorganization or other change in the Company's capital structure or
its business; any merger, acquisition or consolidation of the Company;
any issuance of bonds, debentures, preferred or prior preference stocks
ahead of or affecting the Company's capital stock or the rights
thereof; the dissolution or liquidation of the Company or any sale or
transfer of all or any part of its assets or business; or any other
corporate act or proceeding, including any merger or acquisition which
would result in the exchange of cash, stock of another company or
options to purchase the stock of another company for any Awards
outstanding at the time of such corporate transaction or which would
involve the termination of all Awards outstanding at the time of such
corporate transaction.
(b) In the event of any change in capitalization affecting the
Common Shares of the Company, such as a stock dividend, stock split,
recapitalization, merger, consolidation, spin-off, split-up,
combination or exchange of shares or other form of reorganization, or
any other change affecting the Common Shares, such proportionate
adjustments, if any, as the Board in its discretion may deem
appropriate to reflect such change shall be made with respect to the
aggregate number of Common Shares for which Awards in respect thereof
may be granted under this Plan, the maximum number of Common Shares
which may be sold or awarded to any Participant, the number of Common
Shares covered by each outstanding Award, and the exercise price per
share in respect of outstanding Awards.
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10. RIGHT OF REPURCHASE AND RESTRICTIONS ON DISPOSITION. The Committee,
in its sole discretion, may include, as a term of any Incentive Stock Option or
Non-Qualified Stock Option, the right (hereinafter the "Repurchase Right"), but
not the obligation, to repurchase all or any amount of the Common Shares
acquired by a Participant pursuant to the exercise of any such options. The
Repurchase Right shall provide for, among other terms, a specified duration of
the Repurchase Right, a specified price per Common Share to be paid upon the
exercise of the Repurchase Right and a restriction on the disposition of the
Common Shares by the Participant during the period of the Repurchase Right. The
Repurchase Right may permit the Company to transfer or assign such right to
another party. The Company may exercise the Repurchase Right only to the extent
permitted by applicable law.
11. STOCK APPRECIATION RIGHTS. A Stock Appreciation Right shall, upon
its exercise, entitle the Participant to whom such Stock Appreciation Right is
granted to receive a number of Common Shares or an amount of cash or combination
thereof, as the Committee in its discretion shall determine, the aggregate value
of which (i.e., the sum of the amount of cash and/or the fair market value of
such Common Shares on the date of exercise) shall equal (as nearly as possible)
the amount by which the Fair Market Value per Common Share on the date of such
exercise shall exceed the exercise price of such Stock Appreciation Right,
multiplied by the number of Common Shares with respect to which such Stock
Appreciation Right shall have been exercised. A Stock Appreciation Right may be
Related to an option or may be granted independently of any option and the
Committee shall determine whether and to what extent a Related Stock
Appreciation Right shall be granted with respect therein; provided, however,
that notwithstanding any other provision of this Plan, in the event that the
Related Option is an Incentive Stock Option, the Related Stock Appreciation
Right shall satisfy all the applicable restrictions and limitations of Section 6
hereof as if such Related Stock Appreciation Right were an Incentive Stock
Option. In the case of a Related Stock Option, such Related Stock Option shall
cease to be exercisable to the extent of the Common Shares to which the Related
Stock Appreciation Right was exercised. Upon the exercise or termination of a
Related Stock Option, any Related Stock Appreciation Right shall terminate to
the extent of the Common Shares with respect to which the Related Stock Option
was exercised or terminated.
12. AMENDMENT AND TERMINATION OF THIS PLAN. Without further approval of
the shareholders, the Board may at any time terminate this Plan, or may amend it
from time to time in such respects as the Board may deem advisable, except that
the Board may not, without approval of the shareholders, make any amendment
which would (a) increase the aggregate number of Common Shares which may be
issued under this Plan (except for adjustments pursuant to Section 9 of this
Plan), (b) materially modify the requirements as to eligibility for
participation in this Plan, or (c) materially increase the benefits accruing to
Participants under this Plan. The above notwithstanding, the Board may amend
this Plan to take into account changes in applicable securities, federal income
tax and other applicable laws.
13. MODIFICATION OF OPTIONS. The Board may authorize the Committee to
direct the execution of an instrument providing for the modification of any
outstanding Stock Option which the Board believes to be in the best interests of
the Company; provided, however, that no such modification, extension or renewal
shall confer on the holder of such Stock Option any right or benefit which could
not be conferred on him by the grant of a new Stock Option at such time and
shall not materially decrease the Participant's benefits under the Stock Option
without the consent of the holder of the Stock Option, except as otherwise
permitted under this Plan.
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14. MISCELLANEOUS.
(a) Tax Withholding. The Company shall have the right to
deduct from any settlement made under this Plan, including the delivery
or vesting of Common Shares, any federal, state or local taxes of any
kind required by law to be withheld with respect to such payments or to
take such other action as may be necessary in the opinion of the
Company to satisfy all obligation for the payment of such taxes. If
Common Shares are used to satisfy tax withholding, such shares shall be
valued based on the Fair Market Value when the tax withholding is
required to be made.
(b) No Right to Employment. Neither the adoption of this Plan
nor the granting of any Award shall confer upon any employee of the
Company or a Subsidiary any right to continued Employment with the
Company or a Subsidiary, as the case may be, nor shall it interfere in
any way with the right of the Company or a Subsidiary to terminate the
Employment of any of its employees at any time, with or without cause.
(c) Annulment of Stock Options. The grant of any Stock Option
under this Plan payable in cash is provisional until cash is paid in
settlement thereof. The grant of any Stock Option under this Plan
payable in Common Shares is provisional until the Participant becomes
entitled to the certificate in settlement thereof. In the event the
Employment or the directorship of a Participant is Terminated for
Cause, any Stock Option which is provisional shall be annulled as of
the date of such termination.
(d) Other Company Benefit and Compensation Programs. Payments
and other benefits received by a Participant under an Award made
pursuant to this Plan shall not be deemed a part of a Participant's
regular, recurring compensation for purposes of the termination
indemnity or severance pay law of any country and shall not be included
in, nor have any effect on, the determination of benefits under any
other employee benefit plan or similar arrangement provided by the
Company or a Subsidiary unless expressly so provided by such other plan
or arrangement, or except where the Committee expressly determines that
an Award or portion of an Award should be included to accurately
reflect competitive compensation practices or to recognize that an
Award has been made in lieu of a portion of competitive annual cash
compensation. An Award under this Plan may be made in combination with
or in tandem with, or as an alternative to, grants, stock options or
payments under any other plans of the Company or a Subsidiary. This
Plan notwithstanding, the Company or any Subsidiary may adopt such
other compensation programs and additional compensation arrangements as
it deems necessary to attract, retain and reward directors and
employees for their service with the Company and its Subsidiaries.
(e) Securities Law Restrictions. No Common Shares shall be
issued under this Plan unless counsel for the Company shall be
satisfied that such issuance will be in compliance with applicable
federal and state securities laws. Certificates for Common Shares
delivered under this Plan may be subject to such stop-transfer orders
and other restrictions as the Committee may deem advisable under the
rules, regulations and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Common Shares
are then listed, and any applicable federal or state securities law.
The Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
87
(f) Award Agreement. Each Participant receiving an Award under
this Plan shall enter into an agreement with the Company in a form
specified by the Committee agreeing to the terms and conditions of the
Award and such related matters as the Committee shall, in its sole
discretion, determine.
(g) Cost of Plan. The costs and expenses of administering this
Plan shall be borne by the Company.
(h) Governing Law. This Plan and all actions taken hereunder
shall be governed by and construed in accordance with the laws of the
State of Ohio, except to the extent that federal law shall be deemed
applicable.
(i) Effective Date. This Plan shall be effective upon the
later of adoption by the Board and approval by the Company's
shareholders. This Plan shall be submitted to the shareholders of the
Company for approval at an annual or special meeting of shareholders
held within twelve (12) months of the adoption of the Plan by the
Board.
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PART II
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
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(a) OHIO REVISED CODE
Division (E) of Section 1701.13 of the Ohio Revised
Code governs indemnification by a corporation and provides as follows:
(E)(1) A corporation may indemnify or agree to
indemnify any person who was or is a party or is threatened to be made a party,
to any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, other than an action by or in
the right of the corporation, by reason of the fact that he is or was a
director, officer, employee, or agent of the corporation, or is or was serving
at the request of the corporation as a director, trustee, officer, employee, or
agent of another corporation, domestic or foreign, nonprofit or for profit,
partnership, joint venture, trust, or other enterprise, against expenses,
including attorney's fees, judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit, or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit, or proceeding by
judgment, order, settlement, or conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, he had reasonable cause to believe that his
conduct was unlawful.
(2) A corporation may indemnify or agree to
indemnify any person who was or is a party or is threatened to be made a party,
to any threatened, pending, or completed action or suit by or in the right of
the corporation to procure a judgment in its favor by reason of the fact that he
is or was a director, officer, employee, or agent of the corporation, or is or
was serving at the request of the corporation as a director, trustee, officer,
employee or agent of another corporation, domestic or foreign, nonprofit or for
profit, partnership, joint venture, trust, or other enterprise, against
expenses, including attorney's fees, actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification shall be made
in respect of any of the following:
(a) Any claim, issue, or matter as to which
such person is adjudged to be liable for negligence
or misconduct in the performance of his duty to the
corporation unless, and only to the extent that the
court of common pleas or the court in which such
action or suit was brought determines upon
application that, despite the adjudication of
liability, but in view of all the circumstances of
the case, such person is fairly and reasonably
entitled to indemnity for such expenses as the court
of common pleas or such other court shall deem
proper;
(b) Any action or suit in which the only
liability asserted against a director is pursuant to
section 1701.95 of the Revised Code.
(3) To the extent that a director, trustee, officer,
employee, or agent has been successful on the merits or otherwise in defense of
any action, suit, or proceeding referred to in divisions (E)(1) and (2) of this
section, or in defense of any claim, issue, or matter therein, he shall be
indemnified against expenses, including attorney's fees, actually and reasonably
incurred by him in connection with the action, suit, or proceeding.
(4) Any indemnification under divisions (E)(1) and
(2) of this section, unless ordered by a court, shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, trustee, officer, employee, or agent is proper
in the circumstances because he has met the applicable standard of conduct set
forth in divisions (E)(1) and (2) of this section. Such determination shall be
made as follows:
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(a) By a majority vote of a quorum
consisting of directors of the indemnifying
corporation who were not and are not parties to or
threatened with any such action, suit, or proceeding;
(b) If the quorum described in division
(E)(4)(a) of this section is not obtainable or if a
majority vote of a quorum of disinterested directors
so directs, in a written opinion by independent legal
counsel other than an attorney, or a firm having
associated with it an attorney, who has been retained
by or who has performed services for the corporation
or any person to be indemnified within the past five
years;
(c) By the shareholders; or
(d) By the court of common pleas or the
court in which such action, suit, or proceeding was
brought.
Any determination made by the disinterested directors
under division (E)(4)(a) or by independent legal counsel under division
(E)(4)(b) of this section shall be promptly communicated to the person who
threatened or brought the action or suit by or in the right of the corporation
under division (E)(2) of this section, and within ten days after receipt of such
notification, such person shall have the right to petition the court of common
pleas or the court in which action or suit was brought to review the
reasonableness of such determination.
(5)(a) Unless at the time of a director's act or
omission that is the subject of an action, suit, or proceeding referred to in
divisions (E)(1) and (2) of this section, the articles or the regulations of a
corporation state by specific reference to this division that the provisions of
this division do not apply to the corporation and unless the only liability
asserted against a director in an action, suit, or proceeding referred to in
divisions (E)(1) and (2) of this section is pursuant to section 1701.95 of the
Revised Code, expenses, including attorney's fees, incurred by a director in
defending the action, suit, or proceeding shall be paid by the corporation as
they are incurred, in advance of the final disposition of the action, suit, or
proceeding upon receipt of an undertaking by or on behalf of the director in
which he agrees to do both of the following:
(i) Repay such amount if it is
proved by clear and convincing evidence in a
court of competent jurisdiction that his
action or failure to act involved an act or
omission undertaken with deliberate intent
to cause injury to the corporation or
undertaken with reckless disregard for the
best interests of the corporation;
(ii) Reasonably cooperate with the
corporation concerning the action, suit, or
proceeding.
(b) Expenses, including attorney's fees, incurred
by a director, trustee, officer, employee, or agent in defending any action,
suit, or proceeding referred to in divisions (E)(1) and (2) of this section, may
be paid by the corporation as they are incurred, in advance of the final
disposition of the action, suit, or proceeding as authorized by the directors in
the specific case upon receipt of an undertaking by or on behalf of the
director, trustee, officer, employee, or agent to repay such amount, if it
ultimately is determined that he is not entitled to be indemnified by the
corporation.
(6) The indemnification authorized by this section
shall not be exclusive of, and shall be in addition to, any other rights granted
to those seeking indemnification under the articles, the regulations or any
agreement, vote of shareholders or disinterested directors, or otherwise, both
as to action in their official capacities and as to action in another capacity
while holding their offices and positions, and shall continue as to a person who
has ceased to be a director, trustee, officer, employee, or agent and shall
inure to the benefit of the heirs, executors, and administrators of such a
person.
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(7) A corporation may purchase and maintain
insurance or furnish similar protection, including but not limited to trust
funds, letters of credit, or self-insurance, on behalf of or for any person who
is or was a director, officer, employee, or agent of the corporation, or is or
was serving at the request of the corporation as a director, trustee, officer,
employee, or agent of another corporation, domestic or foreign, nonprofit or
profit, partnership, joint venture, trust, or other enterprise, against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would have the
power to indemnify him against such liability under this section. Insurance may
be purchased from or maintained with a person in which the corporation has a
financial interest.
(8) The authority of a corporation to indemnify
persons pursuant to divisions (E)(1) and (2) of this section does not limit the
payment of expenses as they are incurred, indemnification, insurance, or other
protection that may be provided pursuant to divisions (E)(5), (6), and (7) of
this section. Divisions (E)(1) and (2) of this section do not create any
obligation to repay or return payments made by the corporation pursuant to
division (E)(5), (6), or (7).
(9) As used in this division, references to
"corporation" include all constituent corporations in a consolidation or merger
and the new or surviving corporation, so that any person who is or was a
director, officer, employee, or agent of such a constituent corporation, or is
or was serving at the request of such constituent corporation as a director,
trustee, officer, employee, or agent of another corporation, domestic or
foreign, nonprofit or for profit, partnership, joint venture, trust, or other
enterprise, shall stand in the same position under this section with respect to
the new or surviving corporation as he would if he had served the new or
surviving corporation in the same capacity.
(b) PEOPLES OHIO'S CODE OF REGULATIONS
The Code of Regulations of Peoples Ohio provide the
following with respect to indemnification of its directors and officers:
ARTICLE FIVE
INDEMNIFICATION AND INSURANCE
SECTION 5.01. INDEMNIFICATION. The corporation shall indemnify any
officer or director of the corporation who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (including,
without limitation, any action threatened or instituted by or in the right of
the corporation), by reason of the fact that he is or was a director, officer,
employee, agent or volunteer of the corporation, or is or was serving at the
request of the corporation as a director, trustee, officer, employee, member,
manager, agent or volunteer of another corporation (domestic or foreign,
nonprofit or for profit), limited liability company, partnership, joint venture,
trust or other enterprise, against expenses (including, without limitation,
attorneys' fees, filing fees, court reporters' fees and transcript costs),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if his act or omission
giving rise to any claim for indemnification under this Section 5.01 was not
occasioned by his intent to cause injury to the corporation or by his reckless
disregard for the best interests of the corporation, and in respect of any
criminal action or proceeding, he had no reasonable cause to believe his conduct
was unlawful. It shall be presumed that no act or omission of a person claiming
indemnification under this Section 5.01 that gives rise to such claim was
occasioned by an intent to cause injury to the corporation or by a reckless
disregard for the best interests of the corporation and, in respect of any
criminal matter, that such person had no reasonable cause to believe his conduct
was unlawful; the presumption recited in this Section 5.01 can be rebutted only
by clear and convincing evidence, and the termination of any action, suit or
proceeding by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, rebut such presumption.
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SECTION 5.02. COURT-APPROVED INDEMNIFICATION. Anything contained in
the Regulations or elsewhere to the contrary notwithstanding:
(A) the corporation shall not indemnify any officer or
director of the corporation who was a party to any completed action or suit
instituted by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee,
agent or volunteer of the corporation, or is or was serving at the request of
the corporation as a director, trustee, officer, employee, member, manager,
agent or volunteer of another corporation (domestic or foreign, nonprofit or for
profit), limited liability company, partnership, joint venture, trust or other
enterprise, in respect of any claim, issue or matter asserted in such action or
suit as to which he shall have been adjudged to be liable for an act or omission
occasioned by his deliberate intent to cause injury to the corporation or by his
reckless disregard for the best interests of the corporation, unless and only to
the extent that the Court of Common Pleas of Miami County, Ohio or the court in
which such action or suit was brought shall determine upon application that,
despite such adjudication of liability, and in view of all the circumstances of
the case, he is fairly and reasonably entitled to such indemnity as such Court
of Common Pleas or such other court shall deem proper; and
(B) the corporation shall promptly make any such unpaid
indemnification as is determined by a court to be proper as contemplated by this
Section 5.02.
SECTION 5.03. INDEMNIFICATION FOR EXPENSES. Anything contained in the
Regulations or elsewhere to the contrary notwithstanding, to the extent that an
officer or director of the corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Section
5.01, or in defense of any claim, issue or matter therein, he shall be promptly
indemnified by the corporation against expenses (including, without limitation,
attorneys' fees, filing fees, court reporters' fees and transcript costs)
actually and reasonably incurred by him in connection therewith.
SECTION 5.04. DETERMINATION REQUIRED. Any indemnification required
under Section 5.01 and not precluded under Section 5.02 shall be made by the
corporation only upon a determination that such indemnification is proper in the
circumstances because the officer or director has met the applicable standard of
conduct set forth in Section 5.01. Such determination may be made only (A) by a
majority vote of a quorum consisting of directors of the corporation who were
not and are not parties to, or threatened with, any such action, suit or
proceeding, or (B) if such a quorum is not obtainable or if a majority of a
quorum of disinterested directors so directs, in a written opinion by
independent legal counsel other than an attorney, or a firm having associated
with it an attorney, who has been retained by or who has performed services for
the corporation, or any person to be indemnified, within the past five years, or
(C) by the shareholders, or (D) by the Court of Common Pleas of Miami County,
Ohio or (if the corporation is a party thereto) the court in which such action,
suit or proceeding was brought, if any; any such determination may be made by a
court under division (D) of this Section 5.04 at any time including, without
limitation, any time before, during or after the time when any such
determination may be requested of, be under consideration by or have been denied
or disregarded by the disinterested directors under division (A) or by
independent legal counsel under division (B) or by the shareholders under
division (C) of this Section 5.04; and no failure for any reason to make any
such determination, and no decision for any reason to deny any such
determination, by the disinterested directors under division (A) or by
independent legal counsel under division (B) or by the shareholders under
division (C) of this Section 5.04 shall be evidence in rebuttal of the
presumption recited in Section 5.01. Any determination made by the disinterested
directors under division (A) or by independent legal counsel under division (B)
of this Section 5.04 to make indemnification in respect of any claim, issue or
matter asserted in an action or suit threatened or brought by or in the right of
the corporation shall be promptly communicated to the person who threatened or
brought such action or suit, and within ten (10) days after receipt of such
notification such person shall have the right to petition the Court of Common
Pleas of Miami County, Ohio or the court in which such action or suit was
brought, if any, to review the reasonableness of such determination.
SECTION 5.05. ADVANCES FOR EXPENSES. The provisions of Section
1701.13(E)(5)(a) of the Ohio Revised Code do not apply to the corporation.
Expenses (including, without limitation, attorneys' fees, filing fees, court
reporters' fees and transcript costs) incurred in defending any action, suit or
proceeding referred to in Section 5.01 shall be paid by the corporation in
advance of the final disposition of such action, suit or proceeding to or on
behalf
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of the officer or director promptly as such expenses are incurred by him,
but only if such officer or director shall first agree, in writing, to repay all
amounts so paid in respect of any claim, issue or other matter asserted in such
action, suit or proceeding in defense of which he shall not have been successful
on the merits or otherwise if it is proved by clear and convincing evidence in a
court of competent jurisdiction that, in respect of any such claim, issue or
other matter, his relevant action or failure to act was occasioned by his
deliberate intent to cause injury to the corporation or his reckless disregard
for the best interests of the corporation, unless, and only to the extent that,
the Court of Common Pleas of Miami County, Ohio or the court in which such
action or suit was brought shall determine upon application that, despite such
determination, and in view of all of the circumstances, he is fairly and
reasonably entitled to all or part of such indemnification.
SECTION 5.06. ARTICLE FIVE NOT EXCLUSIVE. The indemnification provided
by this Article Five shall not be exclusive of, and shall be in addition to, any
other rights to which any person seeking indemnification may be entitled under
the Articles, the Regulations, any agreement, a vote of disinterested directors,
or otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be an officer or director of the corporation and shall inure
to the benefit of the heirs, executors, and administrators of such a person.
SECTION 5.07. INSURANCE. The corporation may purchase and maintain
insurance, or furnish similar protection, including but not limited to trust
funds, letters of credit, or self-insurance, for or on behalf of any person who
is or was a director, officer, employee, agent or volunteer of the corporation,
or is or was serving at the request of the corporation as a director, trustee,
officer, employee, member, manager, agent or volunteer of another corporation
(domestic or foreign, nonprofit or for profit), limited liability company,
partnership, joint venture, trust or other enterprise, against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the corporation would have the obligation or
the power to indemnify him against such liability under the provisions of this
Article Five. Insurance may be purchased from or maintained with a person in
which the corporation has a financial interest.
SECTION 5.08. CERTAIN DEFINITIONS. For purposes of this Article
Five, and as an example and not by way of limitation:
(A) A person claiming indemnification under this Article Five
shall be deemed to have been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Section 5.01, or in defense of any
claim, issue or other matter therein, if such action, suit or proceeding shall
be terminated as to such person, with or without prejudice, without the entry of
a judgment or order against him, without a conviction of him, without the
imposition of a fine upon him and without his payment or agreement to pay any
amount in settlement thereof (whether or not any such termination is based upon
a judicial or other determination of the lack of merit of the claims made
against him or otherwise results in a vindication of him).
(B) References to an "other enterprise" shall include employee
tax benefit plans; references to a "fine" shall include any excise taxes
assessed on a person with respect to an employee benefit plan; and references to
"serving at the request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee or agent with respect
to an employee benefit plan, its participants or beneficiaries.
SECTION 5.09. VENUE. Any action, suit or proceeding to determine a
claim for, or for repayment to the corporation of, indemnification under this
Article Five may be maintained by the person claiming such indemnification, or
by the corporation, in the Court of Common Pleas of Miami County, Ohio. The
corporation and (by claiming or accepting such indemnification) each such person
consent to the exercise of jurisdiction over its or his person by the Court of
Common Pleas of Miami County, Ohio in any such action, suit or proceeding.
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ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT NO. DESCRIPTION
----------- -----------
2 Agreement of Merger dated August 27, 2001, by and among
Peoples Ohio Financial Corporation, Peoples Savings Bank of
Troy and Peoples Merger Corp.
3.1 Articles of Incorporation of Peoples Ohio Financial
Corporation
3.2 Code of Regulations of Peoples Ohio Financial Corporation
4 Articles Fourth and Sixth of the Articles of Incorporation of
Peoples Ohio Financial Corporation and Articles One, Two and
Four of the Code Regulations of Peoples Ohio Financial
Corporation, defining the rights of Peoples Ohio Financial
Corporation shareholders
5 Opinion of Vorys, Sater, Seymour and Pease regarding the
legality of the shares of Peoples Ohio Financial Corporation
being registered
8 Opinion of Vorys, Sater, Seymour and Pease regarding the tax
consequences of the merger
13 Annual Report to Shareholders for the year ended June 30, 2001
21 Subsidiaries of the Registrant
22 Notice of Annual Meeting of Shareholders of Peoples Savings
Bank of Troy
23.1 Consent of BKD LLP
23.2 Consent of KPMG LLP
23.3 Consent of Vorys, Sater, Seymour and Pease LLP
99.1 Form of Proxy for Peoples Savings Bank of Troy
99.2 Peoples Savings Bank of Troy 2001 Stock Option and Incentive
Plan
ITEM 22. UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers
or sales are being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by
section 10(a)(3) of the Securities Act of 1933, as amended (the "Act");
(ii) To reflect in the prospectus any
facts or events arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered
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would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.
(b) That, for the purpose of determining any
liability under the Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
2. The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
3. The undersigned registrant hereby undertakes to deliver or
cause to be delivered with the prospectus, to each person to whom the prospectus
is sent or given, the latest annual report to security holders that is
incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information required to be
presented by Article 3 of Regulation S-X are not set forth in the prospectus, to
deliver, or cause to be delivered to each person to whom the prospectus is sent
or given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial information.
4. The undersigned registrant hereby undertakes as follows:
that prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.
5. The registrant undertakes that every prospectus (i) that is
filed pursuant to paragraph 4 immediately preceding, or (ii) that purports to
meet the requirements of section 10(a)(3) of the Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Troy, State of Ohio on
August 20, 2001.
Peoples Ohio Financial Corporation
By: /s/ Ronald B. Scott
-------------------------------
Ronald B. Scott,
President and a Director
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been duly signed below by the following persons in
the capacities and on the dates indicated.
By: /s/ Ronald B. Scott By: /s/ Mark A. Douglas
-------------------------------- --------------------------------
Ronald B. Scott, Mark A. Douglas, Treasurer
President and a Director
Date: August 20, 2001 Date: August 20, 2001
By: /s/ Donald Cooper By: /s/ Richard W. Klockner
-------------------------------- --------------------------------
Donald Cooper, Director Richard W. Klockner, Director
Date: August 20, 2001 Date: August 20, 2001
By: /s/ Thomas E. Robinson By: /s/ William J. Mcgraw
-------------------------------- -------------------------------
Thomas E. Robinson, Director William J. McGraw, III, Director
Date: August 20, 2001 Date: August 20, 2001
By: /s/ James S. Wilcox
--------------------------------
James S. Wilcox, Director
Date: August 20, 2001
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
2 Agreement of Merger dated August 27, 2001, by and among Included as Appendix A to the
Peoples Ohio Financial Corporation, Peoples Savings Bank Prospectus/Proxy Statement
of Troy and Peoples Merger Corp.
3.1 Articles of Incorporation of Peoples Ohio Financial
Corporation
3.2 Code Regulations of Peoples Ohio Financial Corporation
4 Articles Fourth and Sixth of the Articles of Incorporation Included in Exhibits 3.1 and 3.2
of Peoples Ohio Financial Corporation and Articles One,
Two and Four of the Code of Regulations of Peoples Ohio
Financial Corporation, defining the rights of Peoples Ohio
Financial Corporation shareholders
5 Opinion of Vorys, Sater, Seymour and Pease LLP regarding To be filed by amendment
the legality of the shares of Peoples Ohio Financial
Corporation being registered
8 Opinion of Vorys, Sater, Seymour and Pease LLP regarding the
tax consequences of the merger
13 Annual Report to Shareholders for the year ended June 30,
2001
21 Subsidiaries of the Registrant
22 Notice of Annual Meeting of Shareholders of Peoples
Savings Bank of Troy
23.1 Consent of BKD LLP
23.2 Consent of KPMG LLP
23.3 Consent of Vorys, Sater, Seymour and Pease LLP Included in Exhibit 5
99.1 Form of Proxy for Peoples Savings Bank of Troy
99.2 Peoples Savings Bank of Troy 2001 Stock Option and Included as Appendix D to the
Incentive Plan Prospectus/Proxy Statement
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