================================================================================
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<Table>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
</Table>
OHIO STATE BANCSHARES
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
================================================================================
OHIO STATE BANCSHARES, INC.
111 S. Main Street
Marion, OH 43302
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
April 18, 2002
TO THE SHAREHOLDERS OF OHIO STATE BANCSHARES, INC.:
You are hereby notified that an Annual Meeting of the shareholders of Ohio
State Bancshares, Inc. (the "Company") will be held on April 18, 2002 at 5:00
p.m. (local time), at the main office of Ohio State Bancshares, Inc., 111 S.
Main Street, Marion, Ohio 43302, for the purpose of considering and acting upon
the following:
1. To elect three members of Class II (term to expire in 2005) to the Board of
Directors.
2. To transact such other business as may properly come before the meeting or
any adjournment thereof.
The Board of Directors has fixed February 21, 2002 as the record date for
the determination of shareholders entitled to notice of and to vote at the
meeting.
By order of the Board of Directors
Gary E. Pendleton, President
YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE DATE
AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF
YOUR STOCK IS HELD IN MORE THAN ONE (1) NAME, ALL PARTIES MUST SIGN THE PROXY
FORM.
MARCH 29, 2002
PROXY STATEMENT
---------------
GENERAL INFORMATION
-------------------
This Proxy Statement is furnished to the shareholders of Ohio State
Bancshares, Inc. ("Company") in connection with the solicitation of proxies to
be used in voting at the Annual Meeting of shareholders to be held on April 18,
2002, at the main office of the Company located at 111 S. Main Street, Marion,
Ohio, 43302, at 5:00 p.m. ("the Meeting"). The enclosed proxy is solicited by
the Board of Directors of the Company, at the Company's expense. This Proxy
Statement and the enclosed form of proxy are first sent or delivered to the
Company's shareholders on or about March 29, 2002.
All shareholders who execute proxies retain the right to revoke them at
any time in the manner provided below. Unless so revoked, the shares represented
by such proxies will be voted at the Meeting and all adjournments thereof.
Proxies may be revoked at any time before they are exercised at the Meeting by
filing a written notice with the Secretary of the Company or by delivering to
the Secretary of the Company subsequently dated proxies prior to the
commencement of the Meeting. A written notice of revocation of a proxy should be
sent to the Secretary of Ohio State Bancshares, Inc., 111 South Main Street,
Marion, Ohio 43302. A previously submitted proxy will also be revoked if a
shareholder attends the Meeting and votes in person. In the event a shareholder
attends the Meeting and does not wish to have his/her proxy used, he/she should
notify the Secretary of the Company prior to the start of the business meeting.
Proxies solicited by the Board of Directors of the Company will be voted in
accordance with the directions given therein. Where no instructions are
indicated, proxies will be voted for the nominees for director set forth below
and in accordance with the judgment of the Board of Directors of the Company on
any other matters which may properly come before the Meeting.
VOTING SECURITIES
Shareholders of record as of the close of business on February 21,
2002, are entitled to one vote for each share then held. As of February 21,
2002, the Company had 146,000 shares of common stock issued, outstanding and
entitled to vote. Shareholders are entitled to one vote for each share of common
stock owned as of the record date and have the right to vote cumulatively in the
election of directors, such right being subject to the requirement to provide
the Company advance notice in accordance with Section 1701.55 of the Ohio
Revised Code. Cumulative voting permits a shareholder to multiply the number of
shares held by the number of directors to be elected, and cast those votes for
one candidate or spread those votes among several candidates, as he or she deems
appropriate.
2
VOTING PROCEDURES
A quorum consists of a majority of the shares entitled to vote
represented at the annual meeting in person or by proxy. Abstentions and broker
non-votes (arising from the absence of discretionary authority on the part of a
broker-dealer to vote shares of Common Stock held in street name for customer
accounts) are counted for purposes of determining the presence or absence of a
quorum for the transaction of business.
The four nominees for director who receive the largest number of votes
cast "For" will be elected as directors if a quorum is present. Shares
represented at the Meeting in person or by proxy but withheld or otherwise not
cast for the election of directors, including abstentions and broker non-votes,
will have no impact on the outcome of the election.
ELECTION OF DIRECTORS AND SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The Company's Board of Directors is presently composed of 10 members,
approximately one-third of whom stand for election each year. The nominees for
election will stand for election to a three-year term expiring at the Annual
Shareholder's meeting in 2005. It is intended that the persons named in the
proxies solicited by the Board of Directors will vote for the election of the
nominees.
As of February 21, 2002, the following persons were known to the
Company to be beneficial owners of more than five percent of the Company's
Common Stock.
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership Percent of Class
------------------------ --------- ----------------
Theodore L. Graham 10,777(1) 7.38%
c/o Ohio State Bancshares, Inc.
111 S. Main Street
Marion, Ohio 43302
Thurman R. Mathews 13,247(2) 9.07%
c/o Ohio State Bancshares, Inc.
111 S. Main Street
Marion, Ohio 43302
Peter B. Miller 8,857(3) 6.07%
c/o Ohio State Bancshares, Inc.
111 S. Main Street
Marion, Ohio 43302
(1) Includes 10,537 shares owned by partnership of which Mr. Graham is a
general partner.
(2) Includes 12,717 shares owned by spouse.
(3) Includes 8,797 shares owned jointly with spouse.
3
The following table sets forth for each of the nominees and for each
director continuing in office, name, age (as of February 21, 2002), principal
occupation(s) during the past five years, the year they first became a director,
year of expiration of the proposed or current term as a director, and the number
of shares of the Company beneficially owned by such person.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF
THE NOMINEES FOR THE POSITION OF DIRECTOR.
========================================================================================================================
Class I
Nominees (Term to Expire 2004)
------------------------------
Shares of Company
Stock Beneficially
Director Owned as of % of
Name Age Occupation Since 02-21-02 Class
---- --- ---------- ----- -------- -----
Samuel J. Birnbaum 85 Retired, Director of Real Estate 1988 600 0.41%
Lodgekeeper Group
F. Winton Lackey 69 Partner, HLS Racks Inc.* 1995 2,687(1) 1.84%
John D. Owens 71 Retired Owner, Owens Electric 1994 680(3) 0.47%
*Prior to his HLS Racks Partnership, Mr. Lackey was owner of Mid Ohio Packaging,
Inc.
========================================================================================================================
Class II
Nominees (Term to Expire 2005)
------------------------------
Shares of Company
Stock Beneficially
Director Owned as of % of
Name Age Occupation Since 02-22-01 Class
---- --- ---------- ----- -------- -----
Peter B. Miller 65 President, Pete Miller, Inc. 1997 8,857(8) 6.07%
Gary E. Pendleton 57 Banker, Ohio State Bancshares, Inc. 1990 1,359(9) 0.93%
Lloyd L. Johnston 69 President, Johnston Supply Co. 1989 6,065(2) 4.15%
(Wholesale Plumbing Supplies)
========================================================================================================================
4
========================================================================================================================
Class III
Nominees (Term to Expire 2003)
------------------------------
Shares of
Company Stock
Beneficially
Name and Mailing Director Owned as of % of
Address(10) Age Occupation Since 02-22-01 Class
----------- --- ---------- ----- -------- -----
Theodore L. Graham 56 Managing Partner, Graham 1991 10,777(4) 7.38%
Investment Co. (Warehousing and Real
Estate Development)
Lois J. Fisher 53 Commercial Real Estate Development 1994 660(5) 0.45%
Thurman R. Mathews 73 Owner, Mathews, Kennedy Ford 1994 13,247(6) 9.07%
Lincoln Mercury, Marion
Fred K. White 67 Real Estate Agent, HER Kinney 1994 362(7) 0.25%
Properties*
* Prior to joining HER Kinney Properties, Mr. White was Division Manager of
Ohio Edison (utility company).
========================================================================================================================
Executive Officers and Directors as a Group (12 Persons) 45,815 31.38%
========================================================================================================================
(1) Includes 902 shares owned jointly with spouse.
(2) Includes 5665 shares owned by a controlled company.
(3) Includes 240 shares owned by spouse.
(4) Includes 10,537 shares owned by partnership of which Mr. Graham is a
general partner.
(5) Includes 500 shares held in a trust of which Ms. Fisher is the Trustee.
(6) Includes 12,717 shares owned by spouse.
(7) Includes 362 shares owned by Fred K. White Living Trust.
(8) Includes 8,797 shares held jointly with spouse.
(9) Includes 300 shares owned jointly with spouse.
(10) The mailing address of each Director for receipt of communications in
connection with these materials is 111 S. Main Street, Marion, Ohio 43302,
such being the address of the principal offices of the Company.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company's sole business activity is the operation of its subsidiary
banking operation, The Marion Bank, hereinafter referred sometimes individually
as "Bank" or collectively with the Company as "Company." The Boards of Directors
of the Bank and the Company are comprised of the same persons at the present
time. Disclosure of information regarding committees is therefore presented for
both the Company and the Bank.
5
The Board of Directors of the Company conducts its business through
meetings of the Board. During the fiscal year ended December 31, 2001, the Board
of Directors of the Company held a total of fourteen (14) regular and special
meetings. Each director of the Company attended at least 75 percent of the total
meetings of the Board and committees on which such Board member served during
this period, with the exception of F. Winton Lackey, who attended 39% of such
meetings and Peter B. Miller, who attended 56% of such meetings.
The following table describes the standing committees of the Board of
Directors and identifies the directors serving on each committee as of December
31, 2001. The chairman of each committee is designated by an asterisk (*).
Number of
Meetings Directors
Board Committee Function Held-2001 Serving
--------------- -------- --------- -------
Executive(1) Has all powers of full board except as delegated to 13 Mathews White
other committees. Subjects reviewed include: Johnston
compensation, corporate decisions, planning, Graham
nominating decisions, EDP review. Pendleton*
Loan Approves new commercial, consumer, and real estate 15 Birnbaum Fisher
loans up to $200,000. Lackey Miller
Pendleton* Owens
Loan Review Monitors loan portfolio quality by reviewing and 1 Birnbaum White
grading existing loans and establishing loan loss Graham
reserves. Recommends revisions to Loan Policy. Pendleton
Johnston *
Audit Superintends the yearly Directors Examination and 2 Miller Fisher
Audit of the Company and monitors follow-through on Mathews White*
any corrective measures deemed necessary. All Owens
serving must be outside directors.
Housing Recommends to the Board improvements or renovations 0 Pendleton Fisher
to the facilities. Miller White
Owens
(1) The Nominating Committee is made up of the Executive Committee
members. While the Board of Directors will consider nominees
recommended by shareholders, it has not actively solicited
recommendations from the Company's shareholders for nominees nor
established any procedures for this purpose. The Executive
Committee acting in its capacity as the Nominating Committee held
one meeting during fiscal 2001.
6
AUDIT COMMITTEE REPORT
The Audit Committee of the Company's Board of Directors is composed of
five directors, each of whom is independent as defined by the National
Association of Securities Dealers' listing standards and operates under a
written charter adopted by the Board of Directors (Appendix A). The members of
the Committee are Fred K. White, Chairman, Lois J. Fisher, Thurman R. Mathews,
Peter B. Miller and John D. Owens. The Committee recommends to the Board of
Directors the selection of the Corporation's independent accountants.
Management is responsible for the Corporation's internal controls and
the financial reporting process. The independent accountants are responsible for
performing an independent audit of the Corporation's consolidated financial
statements in accordance with generally accepted auditing standards and to issue
a report thereon. The Committee's responsibility is to monitor and oversee the
processes.
IN THIS CONTEXT, THE COMMITTEE HAS MET AND HELD DISCUSSIONS WITH
MANAGEMENT AND THE INDEPENDENT ACCOUNTANTS. MANAGEMENT REPRESENTED TO THE
COMMITTEE THAT THE CORPORATION'S CONSOLIDATED FINANCIAL STATEMENTS WERE PREPARED
IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, AND THE COMMITTEE
HAS REVIEWED AND DISCUSSED THE CONSOLIDATED FINANCIAL STATEMENTS WITH MANAGEMENT
AND THE INDEPENDENT ACCOUNTANTS. THE COMMITTEE DISCUSSED WITH THE INDEPENDENT
ACCOUNTANTS MATTERS REQUIRED TO BE DISCUSSED BY STATEMENT ON AUDITING STANDARDS
NO. 61 (COMMUNICATION WITH AUDIT COMMITTEES).
The Corporation's independent accountants also provided to the
Committee the written disclosures required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), and the
Committee discussed with the independent accountants that firm's independence.
The Committee has considered whether the provision of non-audit services by the
independent accountants to the Corporation and its subsidiaries is compatible
with maintaining the independence of the independent accountants.
Based upon the Committee's discussion with management and the
independent accountants and the Committee's review of the representation of
management and the report of the independent accountants to the Committee, the
Committee recommended that the Board of Directors include the audited
consolidated financial statements in the Corporation's Annual Report on Form
10-KSB for the year ended December 31, 2001 filed with the Securities and
Exchange Commission.
Fred K. White, Chairman
Lois J. Fisher
Thurman R. Mathews
Peter B. Miller
John D. Owens
7
Company's independent accountants billed the aggregate fees shown below
for audit, financial information systems design and implementation and other
services rendered to Company and its subsidiaries for the year 2001.
Audit Fees $39,575
Financial Information Systems Design and $ 0
Implementation Fees
All Other Fees $36,200
(Includes, among other things, preparation of federal & state tax
returns and internal audit.)
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
----------------------------------------------
The Company is required to provide certain summary information
concerning compensation paid or accrued by the Company, to or on behalf of the
Company's Chief Executive Officer and the four highest paid executive officers
whose base salary and bonus exceeded $100,000, for the fiscal years ended
December 31, 2001, 2000, and 1999. As applied to the Company, the Company's
Chief Executive Officer's compensation is required to be disclosed as follows:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
Other Annual All Other Compensation
Name and Principal Position Year Salary($) Bonus($) Compensation($)(1) ($)(2)
-------------------------------- -------- ------------ ------------- ------------------------- ------------------------
GARY E. PENDLETON, President 2001 90,000 80,000 16,973 8,275
Ohio State Bancshares, Inc. 2000 82,500 26,838 14,621 8,080
1999 82,500 37,310 13,422 8,113
(1) Includes payments for use of an automobile ($6913), memberships in various
clubs ($4900), which are used primarily for Company business, as well as
the premiums on certain specified life ($1804) and medical insurance
benefits ($3356).
(2) Includes compensation for attendance at Board meetings while serving as
Directors and the Company's 401(k) plan matching amount.
8
CHANGE OF CONTROL AGREEMENT
---------------------------
During calendar year 2000, the Company entered into a Change in Control
Agreement with Mr. Pendleton. The terms of the agreement provide that in the
event of a sale, merger or similar transaction of the Company in which the
Company is not the surviving corporation, Mr. Pendleton is entitled a severance
payment equal to three times his annual compensation, which is defined to
include his then current Salary plus his previous year's cash bonus. The
severance payment is payable in the event of his involuntary termination of
employment within two years of the Change in Control or his voluntary
termination during the period beginning three months following the Change in
Control and ending six months after the Change in Control. In addition, Mr.
Pendleton is entitled under the terms of the Agreement to receive certain
health, disability, dental life insurance and other benefits for a two-year
period following a Change in Control. The agreement provides for the
reimbursement of certain excise taxes imposed upon payments received by Mr.
Pendleton, which are deemed "excess parachute" payments under the provisions of
Section 280G of the Internal Revenue Code.
Change of Control of the Company" is defined in the Change of Control
Agreement to mean: (I) the acquisition by a person or persons acting in concert
with the power to vote 33 percent or more of a class of the Company's voting
securities; or (ii) during any period of two (2) consecutive years during the
term of the Change of Control Agreements individuals who, at the beginning of
such period, constituted the Board of Directors of the Company cease for any
reason to constitute at least a majority of the Board, if in the instance
mentioned in subparagraphs (I) or (ii), the employment of one of the executives
is terminated involuntarily within one year of such change of control.
SUPPLEMENTAL RETIREMENT PLAN
----------------------------
During 1996, the Corporation entered into an Executive Indexed Salary
Continuation Plan ("Supplemental Plan") with Mr. Pendleton. The purpose of the
Supplemental Plan is to supplement Mr. Pendleton's retirement income. Pursuant
to the terms of the Supplemental Plan, annually the Company will accrue a
non-qualified pension benefit for the benefit of Mr. Pendleton in an amount
equal to the excess return earned on a Company owned insurance product (the
"Policy") over the Bank's average after tax cost of funds expense as reported
for the third quarter of each year. At Mr. Pendleton's retirement he will be
entitled to receive the accrued deferred benefits in a lump sum cash payment or
on an annuity basis. It is impossible to predict the future value of such
deferred compensation due to the uncertainty of the future Policy yield. The
Policy is currently valued at $1,144,458 upon which a guaranteed rate of 4% is
called for under its terms. For 2001 the Company accrued approximately $37,000
of expense under the terms of this plan for the benefit of Mr. Pendleton. The
benefits accrued under the Supplemental Plan are subject to a vesting schedule
except in the case of death, disability or a change of control of the Company.
9
In addition, contemporaneously with the adoption of the Supplemental
Plan, the Corporation and Mr. Pendleton entered into a Split Dollar Life
Insurance Agreement which provides for the payment, to Mr. Pendleton's
beneficiaries, of 80% of the net-at-risk insurance portion of an insurance
policy purchased by the Corporation in connection with the establishment of the
Supplemental Plan. As of December 31, 2001, this Split Dollar Life Insurance
Agreement would have provided a death benefit of $975,443 to Mr. Pendleton's
beneficiaries. The Corporation purchased life insurance for the purpose of
funding its obligations under the Supplemental Plan in the event of Mr.
Pendleton's death and as an investment vehicle designed to fund the payments to
Mr. Pendleton at retirement
DIRECTORS' COMPENSATION
-----------------------
Directors are paid $300 per month and $100 per month is retained and
paid at year end provided Board attendance is not less than 75%. The Chairman of
the Board receives $350 per month and $125 per month is retained and paid at
year end provided Board attendance is not less than 75%.
CERTAIN TRANSACTIONS
--------------------
Some of the directors of the Company, as well as the companies with
which such directors are associated, are customers of, and have had transactions
with the Company (through The Marion Bank) in the ordinary course of the
Company's business in 2001. These transactions consisted of extensions of credit
in the ordinary course of business and were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with non-affiliated persons. In the opinion of
management of the company and its subsidiaries, these transactions do not
involve more than normal risk of collectible or present other unfavorable
features.
The Company, through is subsidiary, expects to have in the future,
banking transactions, in the ordinary course of its business with directors,
officers, principal shareholders, and their associates, on substantially the
same terms, including interest rates and collateral on loans, as those
prevailing at the same time for comparable transactions with others and which do
not involve more than the normal risk of collectibility or present other
unfavorable features.
SELECTION OF AUDITORS
---------------------
The Board of Directors has selected the firm of Crowe, Chizek and
Company LLP, independent public accountants, to serve as auditors for the
current fiscal year.
Representatives of Crowe, Chizek and Company LLP will be present at the
Meeting with the opportunity to make a statement if they desire to do so and
will be available to respond to appropriate questions.
10
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE
ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and Directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, Directors and greater than ten percent shareholders are required by
regulation of the SEC to furnish the Company with copies of all Section 16(a)
forms they file.
Based solely on review of the copies of such forms furnished to the
Company or written representations that no Form 5s, (Annual Statement of
Beneficial Ownership of Securities) were required, the Company believes that
during 2001 all Section 16(a) filing requirements applicable to its officers and
Directors were satisfied. The Company has no shareholders who are ten percent
beneficial owners.
SHAREHOLDER PROPOSALS
If any shareholder of the Company wishes to submit a proposal to be
included in next year's Proxy Statement and acted upon at the annual meeting to
be held in 2003, the proposal must be received by the Secretary at the principal
executive offices of Ohio State Bancshares, Inc., 111 South Main Street, Marion,
Ohio 43302, prior to the close of business on November 15, 2002. On any other
proposal raised by a shareholder for the next year's annual meeting, the Company
intends that proxies received by it will be voted in the interest of the Company
in accordance with the judgment of the Board of Directors of the Company and the
proposal will be considered untimely, unless notice of the proposal is received
by the Company not later than January 29, 2002.
The Company's Code of Regulations establishes advance notice procedures
as to the nomination, other than by or at the direction of the Board of
Directors, of candidates for election as directors. In order to make a director
nomination at a shareholder meeting it is necessary that you notify the Company
not fewer than 14 days in advance of the meeting unless the Company provides
shareholders less than 21 days notice of the meeting and then notice of the
nominations must be given not later than the seventh day after the notice of the
meeting was mailed. In addition, the notice must meet all other requirements
contained in our Code of Regulations . Any shareholder who wishes to take such
action should obtain a copy of the Code of Regulations and may do so by written
request addressed to the Secretary of the Company at the principal executive
offices of the Company.
11
OTHER MATTERS
The Board of Directors of the Corporation is not aware of any other
matters that may come before the meeting. However, the enclosed Proxy will
confer discretionary authority with respect to matters which are not known to
the Board of Directors at the time of printing hereof and which may properly
come before the meeting. A copy of the Corporation's 2001 report filed with the
Securities and Exchange Commission, on Form 10-KSB, is available without charge
to shareholders. Address all requests, in writing, for this document to Mr. Gary
Pendleton, President, Ohio State Bancshares, Inc., 111 S. Main Street, Marion,
Ohio 43302.
By Order of the Board of Directors of
Ohio State Bancshares, Inc.
Gary Pendleton, President
12
APPENDIX A
OHIO STATE BANCSHARES, INC.
AUDIT COMMITTEE CHARTER
COMPOSITION
There shall be a committee of the board of directors (the "Board") to be known
as the audit committee which shall have at least three (3) members, comprised
solely of independent directors, as such term is defined in Rule 4200(a)(15) of
the National Association of Securities Dealers' ("NASD") listing standards.
Each member of the audit committee shall be able to read and understand
fundamental financial statements, including the company's balance sheet, income
statement and cash flow statement or will become able to do so within a
reasonable period of time after his or her appointment to the audit committee.
In addition, at least one member of the audit committee shall have past
employment experience in finance or accounting, requisite professional
certification in accounting or any other comparable experience or background
which results in the individual's financial sophistication, including being or
having been a chief executive officer, chief financial officer or other senior
officer with financial oversight responsibilities.
The Board shall elect or appoint a chair of the audit committee who
will have authority to act on behalf of the audit committee between meetings.
RESPONSIBILITIES
The responsibilities of the audit committee are as follows:
[X] Ensure its receipt from the outside auditor of a formal written
statement, delineating all relationships between the outside
auditor and the company consistent with the Independence Standards
Board Standard No. 1.
[X] Actively engage in a dialogue with the outside auditor with
respect to any disclosed relationships or services that may impact
the objectivity and independence of the outside auditor and be
responsible for taking, or recommending that the board of
directors take, appropriate action to oversee the independence of
the outside auditor.
[X] In view of the outside auditor's ultimate accountability to the
Board and the audit committee, as representatives of the
shareholders, the audit committee, acting together with the Board,
has the ultimate authority and responsibility to select, evaluate,
and, where appropriate, replace the outside auditor (or nominate
an outside auditor for shareholder approval in any proxy
statement).
13
[X] Review with the outside auditor, the company's internal auditor
(if any), and financial and accounting personnel, the adequacy and
effectiveness of the accounting and financial controls of the
company, and elicit any recommendations for the improvement of
such internal control procedures or particular areas where new or
more detailed controls or procedures are desirable.
[X] Consider, in consultation with the outside auditor and management
of the company, the audit scope and procedures.
[X] Review the financial statements contained in the annual report to
shareholders with management and the outside auditor to determine
that the outside auditor is satisfied with the disclosure and
content of the financial statements to be presented to the
shareholders.
[X] Meet with the internal auditor, outside auditor or management
privately to discuss any matters that the audit committee, the
internal auditor, the outside auditor or management believe should
be discussed privately with the audit committee.
[X] Review and reassess the adequacy of the committee's charter
annually.
[X] Make such other recommendations to the Board on such matters,
within the scope of its functions, as may come to its attention
and which in its discretion warrant consideration by the Board.
LIMITATIONS
The audit committee is responsible for the duties set forth in this
charter but is not responsible for either the preparation of the financial
statements or the auditing of the financial statements. Management has the
responsibility for preparing the financial statements and implementing internal
controls and the independent accountants have the responsibility for auditing
the financial statements and monitoring the effectiveness of the internal
controls. The review of the financial statements by the audit committee is not
of the same quality as the audit performed by the independent accountants. In
carrying out its responsibilities, the audit committee believes its policies and
procedures should remain flexible in order to best react to a changing
environment.
14
PROXY FOR ANNUAL MEETING OF
Ohio State Bancshares, Inc.
Marion, Ohio
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned shareholder of
Ohio State Bancshares, Inc., Marion, Ohio do hereby nominate, constitute, and
appoint Lois J. Fisher, Fred K. White, Thurman R. Mathews and Theodore L. Graham
or any one of them (with full power of substitution for me and in my name, place
and stead) to vote, including the right to vote cumulatively, all the common
stock of said Company, standing in my name on its books on February 21, 2002, at
the Annual Meeting of its shareholders to be held at the main office of Ohio
State Bancshares, Inc., 111 S. Main Street, Marion, Ohio 43302, on April 18,
2002 at 5:00 p.m. (local time), or any adjournments thereof with all the powers
the undersigned would possess if personally present as follows:
1. To elect three (3) members of Class II (term to expire 2005) to the
Board of Directors.
Gary E. Pendleton
Peter B. Miller
Lloyd L. Johnston
For All Nominees Withhold Authority To Vote For All Nominees (INSTRUCTIONS: To withhold authority to
(Except as marked to the contrary) vote for any individual director(s),
strike a line through the nominee's name.
[ ] [ ]
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
THIS PROXY CONFERS AUTHORITY TO VOTE "FOR" THE ABOVE NOMINEES UNLESS OTHERWISE
MARKED. IF ANY OTHER BUSINESS IS PRESENTED AT SAID MEETING, THIS PROXY SHALL BE
VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF MANAGEMENT. ALL SHARES
REPRESENTED BY PROPERLY EXECUTED PROXIES WILL BE VOTED AS DIRECTED.
The Board of Directors recommends a vote "FOR" the directors nominated by the
Board of Directors. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
and may be revoked prior to its exercise by either written notice or personally
at the meeting or by a subsequently dated proxy.
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(Stockholder Signature) (Date)
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(Stockholder Signature) (Date)
Please Print Name
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Please Print Number of Shares
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(WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN, PLEASE
GIVE FULL TITLE. IF MORE THAN ONE TRUSTEE, ALL SHOULD SIGN. ALL JOINT OWNERS
MUST SIGN.)
PLEASE SIGN AND RETURN IMMEDIATELY IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU
PLAN TO ATTEND THE ANNUAL MEETING.