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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>
[X] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
</Table>
Ohio Legacy Corp
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(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: ...........................................................
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OHIO LEGACY CORP
305 WEST LIBERTY STREET
WOOSTER, OHIO 44691
--------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
--------------------
To our Shareholders:
The 2003 Annual Meeting of Shareholders of Ohio Legacy Corp will be
held at 225 North Clay Street, Millersburg, Ohio on April 24, 2003, at 10:00
a.m. for the following purposes:
1. To elect four (4) Class I directors to serve until the 2006
annual meeting and until their successors are elected and
qualified.
2. To consider and approve a proposal to increase the number of
authorized Common Shares, without par value, of the Company
from 2,500,000 to 5,000,000 shares, and to approve an
amendment to the Company's Articles of Incorporation to
reflect such increase.
3. To act upon such other matters as may properly come before the
Annual Meeting or any adjournments thereof.
Shareholders of record as of close of business on March 1, 2003, are
entitled to notice of and to vote at the Annual Meeting.
WHETHER YOU EXPECT TO ATTEND THE MEETING OR NOT, PLEASE MARK, DATE,
SIGN AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED, SELF-ADDRESSED ENVELOPE AS
PROMPTLY AS POSSIBLE. YOU HAVE THE OPTION TO REVOKE YOUR PROXY AT ANY TIME PRIOR
TO THE ANNUAL MEETING REGARDLESS OF YOUR VOTING METHOD, OR TO VOTE YOUR SHARES
PERSONALLY ON REQUEST IF YOU ATTEND THE MEETING.
By Order of the Board of Directors
/S/ Daniel H. Plumly
Daniel H. Plumly
Secretary
March [21], 2003
OHIO LEGACY CORP
305 WEST LIBERTY STREET
WOOSTER, OHIO 44691
PROXY STATEMENT
VOTING INFORMATION
The accompanying proxy is solicited by the Board of Directors of the
Company and will be voted in accordance with the instructions given, unless
revoked. If no direction is indicated, such shares will be voted in favor of all
the proposals set forth in this Proxy Statement and in favor of the election to
the Board of Directors of the nominees named in this Proxy Statement. A
shareholder may revoke his or her proxy without affecting any vote previously
taken by giving notice to Secretary of the Company in writing or by voting in
person at the Annual Meeting.
The record date for determination of shareholders entitled to vote at
the Annual Meeting is March 1, 2003. On that date, the outstanding common shares
of the Company were 2,115,700, having no par value. Each shareholder will be
entitled to one vote per share on all matters to be submitted at the Annual
Meeting. Shareholders representing the majority of the then outstanding shares
entitled to vote at the Annual Meeting shall constitute a quorum. An abstention
will be considered present at the meeting for purposes of determining a quorum,
but will not be counted as voting for or against the issue to which it relates.
The approximate date upon which this Proxy Statement and proxy will
first be mailed to shareholders is March [21], 2003. All costs associated with
the solicitation of proxies will be paid by the Company. Proxies will be
solicited primarily by mail, but certain officers and employees of the Company,
or its subsidiary, Ohio Legacy Bank, may solicit proxies, personally or by
telephone, without additional compensation.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Company presently consists of 13 members
divided into three classes, designated as Class I, Class II and Class III, with
Class I and II currently consisting of four directors and Class III currently
consisting of five directors. The directors in each class are elected for terms
of three years so that at each annual meeting the term of office of one class of
directors expires. The terms of office of the four Class I directors of the
Company will expire on the day of the 2003 annual meeting, upon the election of
their successors.
Proxies solicited pursuant to this Proxy Statement granting authority
to vote on the election of directors will be voted for the election of the
following Class I directors, whose present terms of office will expire at the
meeting, to serve for three-year terms expiring in 2006 and until their
successors are elected and qualified: William T. Baker, J. Edward Diamond, L.
Dwight Douce and Daniel H. Plumly.
-1-
All nominees have consented to be named in this Proxy Statement and
have agreed to serve if elected. If, prior to election, any nominee becomes
unable or unwilling to serve, and the number of directors is not decreased
accordingly, proxies will be voted for such other nominee as the Board of
Directors may select. However, the Company has no reason to believe that any of
the nominees will not be available. Information is set forth below regarding the
principal occupation of each nominee for director and each director who will
continue in office after the Annual Meeting.
The nominees who receive the greatest number of votes for the director
positions to be filled will be elected to those positions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ELECTION OF THE
COMPANY'S NOMINEES FOR DIRECTOR.
NOMINEES TO THE BOARD OF DIRECTORS
CLASS I NOMINEES WILLIAM T. BAKER (age 49)
TERM ENDING IN 2006 Director since 2001
Mr. Baker has served as President of Multi
Products Co. since 1978. He is the
co-founder of Share-a-Christmas of Holmes
Co., Chairman of West Holmes Stadium
Project, Co-Chairman of the Knights Track
Project, Chairman of Rails to Trails of
Holmes County, a member of the Society of
Petroleum Engineers and past President of
the Holmes County Chamber of Commerce. Mr.
Baker received a B.S. in Agriculture from
The Ohio State University in 1975.
J. EDWARD DIAMOND (age 64)
Director since 1999
Mr. Diamond, a private investor since 1984
in the Canton area, is the retired Chairman
of Glendale Oxygen Company, a Canton-based
supplier of cryogenic gases and welding
supplies. He has served on the boards of
Arrowhead Country Club, The Canton Club, The
Canton Ballet and The Canton Symphony
Orchestra Association. He is a graduate of
the University of Virginia and has been a
lifelong Canton resident.
L. DWIGHT DOUCE (age 54)
Director since 1999
Mr. Douce is President and Chief Executive
Officer of the Company and has more than 29
years of financial institution experience in
a diverse number of positions, with 19 years
experience in the Wooster area. From October
1996 to February 1999, Mr. Douce served as
-2-
President-Chief Operating Officer of Signal
Bank, a $1.8 billion commercial bank
headquartered in Wooster, which operated
more than 25 branches prior to its sale to
FirstMerit Corporation. From 1985 to October
1996, Mr. Douce served as Executive Vice
President and Chief Financial Officer of
First Federal Savings and Loan Association
(Signal Bank's predecessor). During Mr.
Douce's tenure, Signal Bank grew from a $200
million to a $1.8 billion financial services
institution. Mr. Douce graduated from
Capital University with a B.S. in Business
Administration. He has been a resident of
the Wooster area for the last 19 years and
has been very active in community
organizations, including the American Red
Cross, Wooster Chamber of Commerce Board,
Kiwanis and the United Way.
DANIEL H. PLUMLY (age 49)
Director since 1999
Since 1981, Mr. Plumly has been a member of
Critchfield, Critchfield & Johnston, Ltd.
and currently serves as its Managing Member.
The law firm has five offices located in
central Ohio. Mr. Plumly served on the board
of directors of Signal Corporation and
Signal Bank from 1986 to 1999. Mr. Plumly
graduated from Muskingum College in 1975
with a B.A. in History and received his J.D.
from Case Western Reserve University in
1978. Mr. Plumly is the President of Meals
on Wheels of Stark and Wayne Counties and
has been involved in coaching youth
football, basketball and lacrosse. He also
serves as a member of the Board of Trustees
of the United Methodist Church, as a member
of the Board of Directors of Main Street,
Inc. and is a member of the Wayne County
Children Services Advisory Board. Mr. Plumly
previously served on the board of Goodwill
Industries of Wayne County, Inc., as
President and Trustee of the Wooster
Lacrosse Club, as President of the Board of
Trustees of Wooster Country Club and as
Chairman of the Board of Governors of
Wooster Country Club. Mr. Plumly is the
Secretary of the Company.
DIRECTORS CONTINUING IN OFFICE
CLASS II ROBERT F. BELDEN (age 55)
CONTINUING DIRECTORS Director since 1999
TERM ENDING IN 2005 Since 1995, Mr. Belden has served as the
President of the Belden Brick Company, a
company based in Canton since
-3-
1885. From 1983 to 1995, Mr. Belden served
as the Vice President of Marketing for
Belden Brick. Mr. Belden served as a
director of both Signal Corporation and
Signal Bank from 1988 to 1999. He graduated
from the University of Notre Dame in 1969
with a B.S. degree in Mathematics and then
graduated from the University of Michigan
Graduate School of Business in 1971. Mr.
Belden has been very active in community
affairs including the American Red Cross,
Canton Regional Chamber of Commerce, Junior
Achievement of Stark County, Stark County
Foundation and others.
GREGORY A. LONG (age 53)
Director since 1999
Mr. Long is a licensed CPA with over 30
years experience as an accountant. He
graduated from Kent State University in
1971. Mr. Long currently serves as the
President of Long, Cook & Samsa, Inc. CPA's
of Wooster, Ohio. Mr. Long is actively
involved as a board member and President of
the Wayne County Historical Society and is
the past President of Buckeye Council, Inc.,
Boy Scouts of America. He is also a
Treasurer of the Rotary Club and Wooster
Area Chamber of Commerce, a coach and board
member of Wooster Youth Baseball and is
Troop Committee Chairman of Boy Scout Troop
61 of Wooster. Mr. Long is retired from the
Army Reserve as a Lieutenant Colonel.
BENJAMIN M. MAST (age 50)
Director since 2001
Since 1978, Mr. Mast has served as President
of B-L Transport Inc. He is also the founder
and, since 1990, has served as President of
Holmes County Amish Flea Market, Inc. Mr.
Mast is the President of Mast Holdings and
serves as the President of the Ohio Flea
Market Association, a director of Holmes
County Tourism Commission and a member of
the East Holmes Building Council.
-4-
THOMAS W. SCHERVISH (age 62)
Director since 1999
Since 1968, Mr. Schervish has been the owner
and President of Stark Management Services,
Inc. The company provides bookkeeping,
management and consulting services to
restaurants and other local businesses. He
graduated from the University of Detroit
with a B.S. in Marketing. Mr. Schervish is
very active in community affairs, serving
the Pro Football Hall of Fame Board, the
Stark Development Board, Canton Rotary Club,
Junior Achievement, Downtown Canton
Redevelopment Organization, Stark Community
Foundation and several others.
CLASS III D. WILLIAM ALLEN (51)
CONTINUING DIRECTORS Director since 1999
Term ending in 2004 Mr. Allen is Vice President of Sales for
Bocko Inc., a custom injection molder in
North Canton. Mr. Allen also is President of
SPC Realty Company, a real estate investment
company. From 1994 to 1997, Mr. Allen served
as the President, Chief Operating Officer
and owner of Service Packaging Corporation.
Mr. Allen currently serves as President of
Congress Lake Club and as Secretary of the
Board of Governors of Mercy Medical
Hospital. Mr. Allen is also involved with
the Pro Football Hall of Fame Festival,
where his involvement spans 27 years, and
served as its General Chairman in 1993. Mr.
Allen's activities also include serving on
the Board of Trustees of the Greater Canton
Chamber of Commerce as its immediate past
Chairman of the Board and is a trustee of
Meals on Wheels of Stark and Wayne Counties
where he served as President in 1999 and
2000.
SCOTT J. FITZPATRICK (50)
Director since 1999
Since 1973, Mr. Fitzpatrick has served as a
partner in Fitzpatrick Enterprises in
Canton, Ohio. Mr. Fitzpatrick is primarily
involved in the development of commercial
real estate for his own portfolio.
-5-
RANDY G. JONES (47)
Director since 1999
Since 1979, Mr. Jones has served as
President and owner of R&L Jones Trucking,
Inc., a long-distance trucking company. He
has also served as President and 50% owner
of Snyder Brothers Sales & Service, Inc.
since 1981, which sells new and used trucks
and trailers.
MICHAEL D. MEENAN (49)
Director since 1999
Since 1989, Mr. Meenan has served as the
President and owner of Riverview Industrial
Wood Products, Inc., which is based in
Wooster. He graduated from Kent State
University in 1976 with a Bachelor's degree
in Business Administration. Mr. Meenan is a
member and past President of the Wooster All
Sports Booster Club and has served on the
Wooster City Charter Review Commission.
STEVEN G. PETTIT (45)
Director since 1999
Mr. Pettit is Senior Loan Officer and
President, Stark County Region, Ohio Legacy
Bank. Mr. Pettit has 17 years of commercial
banking experience in a diverse number of
lending positions in both Stark and Wayne
Counties. From February to September 1999,
Mr. Pettit held the position of Senior Vice
President, Senior Loan Officer for two
regions of FirstMerit Bank, N.A. From March
1996 to February 1999, Mr. Pettit held the
same position at Signal Bank, N.A., a $1.8
billion financial institution. From January
1994 to March 1996, Mr. Pettit served as
Manager of Commercial Lending for
FirstMerit. Mr. Pettit graduated from the
University of Tennessee with a B.S. degree
in Business Administration and from Ashland
University with an MBA in Executive
Management. Mr. Pettit has been a resident
of the Canton area his entire life and has
been active in various social and civic
activities, including Meals on Wheels of
Stark and Wayne Counties, Mercy Medical
Center, Boy Scouts of America and Plain
Local Schools.
-6-
PROPOSAL 2
AMENDMENT OF THE COMPANY'S AMENDED AND RESTATED ARTICLES
OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED
COMMON SHARES
INTRODUCTION
Currently, the Company's Amended and Restated Articles of Incorporation
authorize the issuance of 2,500,000 common shares. As of March 1, 2003, there
were 2,115,700 common shares issued and outstanding and 87,000 common shares
were reserved for issuance upon the exercise of outstanding options under the
Company's Omnibus Stock Option, Stock Ownership and Long Term Incentive Plan, as
amended. In addition, as of January 30, 2003, we had outstanding warrants for a
total of 339,600 common shares at a price of $10.00. The exercise price of the
warrants may be subject to adjustment pursuant to the warrants' anti-dilution
provision.
AMENDMENT
On January 21, 2003, the Board of Directors approved an increase in the
authorized number of common shares from 2,500,000 to 5,000,000 shares, subject
to shareholder approval. If this amendment is approved by the Company's
shareholders, 2,413,450 common shares will be authorized and available for
issuance or sale by the Company immediately after the Annual Meeting (excluding
shares reserved for issuance as set forth above).
PURPOSES OF PROPOSED AMENDMENT
The Board of Directors believes that it is necessary and desirable to
increase the number of common shares that the Company is authorized to issue in
order to give the Company additional flexibility to raise equity capital,
reserve additional common shares for issuance under the Company's employee
benefit plans, to ensue that the Company has a sufficient number of shares to
issue upon the exercise of all options and warrants and make acquisitions
through the use of Company stock.
Except as described above or as permitted or required by the Company's
existing employee benefit plans, and for common shares that will be issued upon
exercise of warrants, the Board of Directors has no definitive agreements or
commitments to issue additional common shares for any of these purposes. In
December 2002, the Company completed a public offering in which it issued
1,000,000 common shares, and in January 2003, the Company issued an additional
150,000 shares to cover the over allotments . The proposed increase in
authorized common shares would make it unnecessary to hold a special
shareholders' meeting in the future for the purpose of authorizing an increase
in the authorized common shares should the Company decide to use its shares for
one or more of such previously mentioned purposes.
-7-
EFFECTS OF PROPOSED AMENDMENT
Under the Company's Articles, the Company's shareholders do not have
preemptive rights with respect to the common shares. Thus, should the Board of
Directors elect to issue additional common shares, existing shareholders would
not have any preferential rights to purchase such shares, and any such issuances
could, therefore, have a dilutive effect on the shareholdings of current
shareholders.
The proposed amendment to increase the number of common shares could,
under certain circumstances, have an anti-takeover effect, although this is not
the intention of this proposal. In the event of a hostile attempt to take over
the Company, it might be possible for the Company to try to impede such an
attempt by issuing common shares through "private placement" to a friendly
party, thereby diluting the voting power of the other outstanding shares and
increasing the potential cost to acquire control of the Company. Therefore, the
overall effect could be to discourage unsolicited takeover attempts and make it
more difficult to remove the Company's current management. By potentially
discouraging initiation of any such unsolicited takeover attempt, the proposed
amendment may limit the opportunity for the Company's shareholders to dispose of
their shares at the higher price generally available in takeover attempts or
that may be available under a merger proposal. The proposed amendment may have
the effect of permitting the Company's current management, including the current
Board, to retain its position and place it in a better position to resist
changes that shareholders may wish to make if they are dissatisfied with the
conduct of the Company's business.
The Company also has certain other mechanisms in place that may have an
anti-takeover effect. The Company's Articles: (a) authorize the Board of
Directors, without any action by the shareholders, to establish the rights and
preferences of up to 500,000 shares of undesignated serial preferred stock (all
of such shares remain undesignated as of the date of the Proxy Statement); and
(b) provide that the affirmative vote of both a majority of the voting power
represented at the meeting, and a majority of that portion of such voting power
excluding any "interested shares" - that is, those shares held by the acquiring
person and our officers and any of our directors who are also employees of the
Company - is necessary in connection with a merger, consolidation or transfer of
substantially all of the Company's assets. The Company also has entered into
change in control agreements with three executive officers that provide for the
payment of certain benefits to such executive officers upon the occurrence of a
"change in control" of the Company.
As previously stated, however, the only intended purpose of the
proposed amendment is to increase the number of available common shares in order
to give the Company more flexibility in conducting its normal business
operations, and the proposal is not being presented as, nor is it part of, a
plan to adopt a series of anti-takeover measures.
PROPOSED RESOLUTION
A resolution in substantially the following form will be submitted to
the shareholders at the Annual Meeting:
-8-
"RESOLVED, that the Company's authorized common shares be increased
from 2,500,000 shares to 5,000,000 shares;
RESOLVED, that the Company's Articles of Incorporation be amended and
restated to reflect the increase in the Company's authorized common
shares; and
RESOLVED FURTHER, that appropriate officers of the Company be, and the
same are, hereby resolved, empowered and directed in the name on behalf
of the Company to take such action and execute such documents as may be
deemed necessary or desirable to carry out the intent and purpose of
the foregoing resolution."
RECOMMENDATIONS OF THE BOARD
The affirmative vote of the holders of a majority of common shares
present in person or by proxy at the Annual Meeting, assuming a quorum is
present, is necessary for approval. Unless a contrary choice is specified,
proxies solicited by the Board will be voted for approval of such increase.
THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO COMPANY'S
ARTICLES TO INCREASE THE NUMBER OF AUTHORIZED COMMON SHARES.
-9-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Information is provided below about each person known by the Company to
be the beneficial owner of more than 5% of its outstanding common shares.
COMMON SHARES
UNDERLYING
COMMON SHARES WARRANTS AND OPTIONS
BENEFICIALLY EXERCISABLE WITHIN 60
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED DAYS TOTAL PERCENT OF CLASS
------------------------------------ ----- ---- ----- ----------------
Bay Pond Partners, L.P. 153,000 -0- 153,000 7.23%
75 State Street
Boston, Massachusetts 02109
J. Edward Diamond 125,625 33,700 159,325 7.41
P. O. Box 9187
Canton, OH 44711
United Community Financial Corp. 136,000 -0- 136,000 6.43
275 Federal Plaza West
Youngstown, Ohio 44503-1203
Wellington Management Company, LLP 194,200 -0- 194,200 9.18
75 State Street
Boston, Massachusetts 02109
-10-
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
Information is set forth below regarding beneficial ownership of common
shares of the Company by each director and all directors and executive officers
as a group. Except as otherwise noted, each person has sole voting and
investment power as to his common shares. The information set forth below is as
of February 18, 2003.
COMMON SHARES
UNDERLYING
COMMON WARRANTS AND
SHARES OPTIONS PERCENT
BENEFICIALLY EXERCISABLE OF
NAME OWNED WITHIN 60 DAYS TOTAL CLASS
- ---------------------------------- ----------------- ------------------------ ----------- --------
DIRECTORS:
D. William Allen 13,000 13,700 26,700 1.25%
William T. Baker 54,000 12,000 66,000 3.10%
Robert F. Belden(1) 85,000 32,700 117,700 5.48%
J. Edward Diamond 125,000 33,700 158,700 7.38%
L. Dwight Douce 70,800 36,366 107,166 4.98%
Scott J. Fitzpatrick 55,000 29,700 84,700 3.95%
Randy G. Jones 22,000 5,000 27,000 1.27%
Gregory A. Long 33,500 25,700 59,200 2.76%
Benjamin M. Mast 23,000 5,600 28,600 1.35%
Michael D. Meenan 21,750 25,000 46,750 2.18%
Steven G. Pettit 18,200 10,066 28,266 1.33%
Daniel H. Plumly 24,500 25,000 49,500 2.31%
Thomas W. Schervish 64,504 29,700 94,204 4.39%
ALL DIRECTORS AND EXECUTIVE
OFFICERS AS A GROUP
(15 PERSONS) 631,079 295,898 926,977 38.44%
(1) Common shares held in the name of Belden Brick Company, of which Mr. Belden
is President.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company during 2002 and Forms 5 and amendments thereto
furnished to the Company with respect to 2002, no director, officer or
beneficial owner of more than ten percent of its outstanding
-11-
common shares failed to file on a timely basis during 2002 or prior fiscal years
any reports required by Section 16(a) of the Exchange Act.
COMMITTEES OF THE BOARD OF DIRECTORS
During 2002, the Board of Directors of the Company met 12 times.
During 2002, each director attended at least 75% of the total number of meetings
of the Board of Directors of the Company and the board committees on which he
served.
The Loan Committee is comprised of eight directors. The directors
currently serving on this committee include Messrs. Plumly, the Chairman of the
Committee, Baker, Douce, Diamond, Fitzpatrick, Meenan, Long, Pettit and
Schervish. The primary responsibilities of the Loan Committee are to review and
approve loans over particular limits and review and approve changes to Ohio
Legacy Bank's lending policies and procedures.
The Executive Committee is comprised of four directors. The directors
currently serving on this committee include Messrs. Douce, Diamond, Baker and
Belden. The Executive Committee meets on an as needed basis, and its primary
responsibility is to exercise the authority of the Board of Directors in between
board meetings, to the extent permitted by law.
The Compensation Committee is comprised of four directors, with its
primary responsibilities being the review of personnel policies and practices
and evaluation of senior management. The directors currently serving on this
Committee include Messrs. Plumly, Schervish, Mast and Belden.
The Audit and Compliance Committee of the Company is comprised of four
directors, none of whom are officers of the Company or Ohio Legacy Bank. The
Audit and Compliance Committee's primary responsibilities are the review of
internal and external auditors' reports, the review of internal loan review
reports, evaluation of the internal auditor and external audit firm, and the
review of regulatory examination results. The directors currently serving on
this Committee include Messrs. Long, Allen, Jones and Fitzpatrick. Each member
of the Audit and Compliance Committee is "independent" under the NASD listing
standards.
CORPORATE GOVERNANCE
The Company's Board of Directors has set in place a course of action
designed to develop and implement sound corporate governance principles. In
light of new statutory mandates, developing regulations and an enhanced focus on
the processes utilized by corporations in the conduct of their business, the
Company's Board of Directors has elected to initiate a corporate governance
program. The highlights of the program are as follows:
-12-
- the positions of CEO and Chairman will be held by different
people. The separation of these offices will provide focused
leadership at the board level, which is independent of
management;
- new or revised charters will be adopted for the Audit and
Compliance Committee, the Compensation Committee and the
Corporate Governance and Nominating Committee. These charters
will incorporate new rules and regulations of the Securities
and Exchange Commission and NASD listing standards, as well
as provide specific and concrete guidance to these committees;
- the Company's Code of Conduct will be reviewed and revised as
is necessary in accordance with the new SEC rules and
regulations and listing standards. The Code of Conduct will
disclose to Company employees and customers what is expected
or required of the Company's directors, executive officers and
employees;
- the Board of Directors established a Corporate Governance and
Nominating Committee that will be responsible for implementing
the corporate governance program described above and any
additional requirements mandated by law or deemed necessary or
appropriate by the Board of Directors; and
The development and implementation of this corporate governance program
is intended to be proactive in nature, comprehensive in scope and forceful in
application. Our goal is to establish a governance process that fosters,
promotes and mandates that appropriate actions are taken and appropriate
behavior is maintained, at both the corporate and employee level, to ensure the
ongoing success of the Company.
CORPORATE GOVERNANCE AND NOMINATING COMMITTEE
The composition of the Corporate Governance and Nominating Committee
and its duties will be established in conjunction with the Company's corporate
governance review. It is also expected that once the corporate governance review
is complete and the duties of all committees are finalized, membership of the
various committees will be adjusted to meet the listing standards of the Nasdaq
National Market System and to place directors on committees where their
experience and expertise can best be utilized.
-13-
REPORT OF THE AUDIT COMMITTEE
The Audit Committee has reviewed and discussed with the Company's
management the audited financial statements of the Company for the fiscal year
ended December 31, 2002. The Audit Committee has also discussed with Crowe,
Chizek and Company LLP, the Company's independent auditors, all matters required
by Statements on Auditing Standards No. 61, Communications with Audit
Committees. The Audit Committee has also received the written disclosures and
the letter from Crowe Chizek required by Independence Standards Board Standard
No. 1, and has discussed with Crowe Chizek its independence.
Based on the review and discussions noted above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2002 for filing with the Securities and Exchange Commission.
The Audit Committee
Gregory A. Long, Chairperson
D. William Allen
Scott J. Fitzpatrick
Randy G. Jones
DIRECTOR COMPENSATION
Employee directors receive no compensation for their services as
directors. Each non-employee director receives reimbursement of out-of-pocket
expenses incurred in serving as a director. In addition, subject to compliance
with the restrictions and requirements of the FDIC stock benefit plan policy,
each non-employee director will receive automatic awards of nonqualified stock
options under the Ohio Legacy Corp Omnibus Stock Option, Stock Ownership and
Long-Term Incentive Plan consisting of initial options to purchase 2,500 common
shares of the Company awarded on the date of commencement of service as a
non-employee director, and, thereafter, annual options to purchase 1,000 common
shares of the Company. Initial options vest and become exercisable over a period
of five years at the rate of 20% per year, while annual options vest and become
exercisable upon their grant dates. The Company granted the initial options to
each non-employee director on February 19, 2002, along with the annual options
for the fiscal year 2002, representing, in the aggregate, options to purchase
38,500 common shares of the Company at an exercise price of $10.00 per share.
For the fiscal year 2003, the Company granted annual options, representing, in
the aggregate, options to purchase 11,000 common shares of the Company at an
exercise price of $8.50 per share.
-14-
EXECUTIVE OFFICERS
Mr. Douce is the President and Chief Executive Officer of the Company.
Mr. Pettit is the Company's Senior Loan Officer and President of the Stark
County Region of Ohio Legacy Bank. Their biographical information appears above.
Robert E. Boss, age 46, is a Senior Vice President of Commercial
Lending and the President of the Homes County Region of Ohio Legacy Bank. Mr.
Boss has more than 21 years of financial institution experience in a variety of
lending positions. From January 1990 to March 2000, Mr. Boss held several
positions at the Commercial and Savings Bank of Millersburg, Ohio, the last of
which was the position of Senior Vice President and Senior Lending Officer. Mr.
Boss previously worked in various loan areas for Bank One of Wooster from 1987
to 1990. Mr. Boss is on the board of the Holmes County Training Center,
President of the Holmes County Chamber of Commerce, Treasurer of the Holmes
County Economic Development Council and a director of the Buckeye Council of the
Boy Scouts of America. Mr. Boss is a graduate of Mount Union College with a B.A.
in Accounting.
Eric S. Nadeau, CPA, age 32, has been hired to fill the position of
Chief Financial Officer and Vice President of Ohio Legacy Bank and will be
appointed officially to the position upon the approval of the office of the
Comptroller of the Currency. Mr. Nadeau has 10 years of financial management
experience. He was employed most recently with Horizon PCS, Inc., a wireless
personal communications services carrier and PCS affiliate of Sprint Corp., as
Director of Financial Reporting. Before that he worked for Crowe, Chizek and
Company LLP in Columbus, Ohio, providing audit, tax and profitability consulting
services to regional and community banks and thrifts. Mr. Nadeau graduated from
the Richard T. Farmer School of Business Administration at Miami University in
Oxford, Ohio, with a B.S. in Business Administration, majoring in Accountancy.
He is a member of the Ohio Society of Certified Public Accountants, the American
Institute of Certified Public Accountants, and the Institute of Management
Accountants.
EXECUTIVE COMPENSATION
The Company and Ohio Legacy Bank have entered into one-year employment
agreements with Mr. Douce, its President and Chief Executive Officer, Mr.
Pettit, its Senior Loan Officer and President of Stark County division, and Mr.
Boss, its Senior Vice President of Commercial Lending and President of the
Holmes County Division. Each employment agreement renews automatically for an
additional year unless either party furnishes at least 60 days prior notice to
the other of its intent to terminate the agreement.
Upon a change in control of the Company or a diminution in the
officer's duties, each executive officer will have the right to terminate his
employment and receive a severance equal to 2.99 times his current annual
compensation. In addition, all stock options previously granted will vest in the
event of a termination of employment upon a change in control or a diminution in
the officer's duties.
-15-
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the
annual and long-term compensation of the chief executive officer of the Company
and other executive officers who received an annual salary or bonus during the
last completed fiscal year that exceeded $100,000 (together, the "Named
Executives").
Fiscal Annual Stock Options
Year Salary Granted
------ ------ -------------
L. Dwight Douce 2002 $106,300 10,000
Chairman, President and 2001 100,000 -
Chief Executive Officer 2000 100,000 -
Steven G. Pettit 2002 $106,300 10,000
Senior Loan Officer and 2001 100,000 -
President, Stark County Region 2000 100,000 -
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding stock option
grants to the Named Executives during the 2002 fiscal year. All options were
awarded at exercise prices that were equal to the market price of the Company's
stock on the date of grant and are subject to vesting at a rate of 33.3% per
year from the date of grant. Any unexercised shares lapse on the earliest of 10
years from the grant date or 90 days after termination of employment with the
Company.
Potential Realized Value at
Assumed Annual Rates
Number of % of Total of Stock Price
Securities Options Granted Exercise Appreciation for
Underlying To Employees in Price Expiration Option Term
Options Granted Fiscal Year ($/Share) Date 5% ($) 10% ($)
--------------- --------------- --------- ---------- --------- ---------
L. Dwight Douce 10,000 11.2% $ 10.00 February 19, 2012 $62,890 $159,370
Steven G. Pettit 10,000 11.2% 10.00 February 19, 2012 62,890 159,370
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
No stock options were exercised by the Named Executives during 2002.
The following table sets forth certain information concerning the value of
unexercised stock options held as of December 31, 2002, by the Named Executives.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at Fiscal Year End (#) Fiscal Year End ($) (1)
------------------------------ -----------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
L. Dwight Douce - 10,000 $ - $ -
Steven G. Pettit - 10,000 - -
- ----------
(1) At December 31, 2002, there were no unexercised options in-the-money as the
market price of the Company's stock was less than the exercise price of the
options held by the Named Executives.
-16-
OHIO LEGACY CORP OMNIBUS STOCK OPTION,
STOCK OWNERSHIP AND LONG-TERM INCENTIVE PLAN
The Ohio Legacy Corp Omnibus Stock Option, Stock Ownership and
Long-Term Incentive Plan provides for discretionary grants of incentive stock
options (under Internal Revenue Code Section 422) and nonqualified stock options
to employees, automatic grants of nonqualified stock options to non-employee
directors, and discretionary grants of restricted Company common shares to both
employees and non-employee directors. The Plan is administered by the
Compensation Committee and provides that the exercise price of options granted
thereunder shall not be less than the fair market value of the outstanding
common shares of the Company on the date the options are granted. In February
2002, the Company issued options to employees for the right to purchase common
shares representing, in the aggregate, 51,000 common shares of the Company for
the fiscal year 2002, at an exercise price of $10.00 per share. For the fiscal
year 2003, the Company issued options to employees for the right to purchase
shares representing, in the aggregate, 33,250 common shares of the Company at an
exercise price of $8.50 per share. In addition, as described under "Director
Compensation" on page 14, the Company issued options and warrants to
non-employee directors of the Company.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
During fiscal year 2002, certain directors and executive officers and
their associates were customers of, or had transactions with, Ohio Legacy Bank.
All outstanding loans that were part of such transactions were made in the
ordinary course of business and on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with unrelated parties, and did not involve more risk than a normal
risk of collectability or present other unfavorable features. The Company
expects that similar transactions will occur in the future.
Loans to individual directors and officers also must comply with Ohio
Legacy Bank's lending policies, regulatory restrictions and statutory lending
limits, and directors with personal interest in any loan application are
excluded from the consideration of that loan application. As of December 31,
2002, the aggregate balance of all such loans was approximately $2.8 million, or
3.5% of the total net loans then outstanding.
Our Holmes County banking center is leased from an entity that is owned
by two of our directors, Messrs. Baker and Jones.
During 2002 the law firm of Critchfield, Critchfield & Johnston, Ltd.
provided legal services to the Company. Mr. Daniel Plumly is the corporate
Secretary and a director of the Company and Ohio Legacy Bank and also is the
Managing Member of the law firm of Critchfield, Critchfield & Johnston, Ltd. We
believe that the cost of legal services provided by Critchfield, Critchfield &
Johnson, Ltd. is similar to that available from a non-affiliated law firm.
-17-
AUDITORS
Crowe, Chizek and Company LLP ("Crowe Chizek") have been acting as the
auditors of the Company since the Company's founding. The Board of Directors has
appointed them, to continue as the Company's auditors for the current year.
Representatives of Crowe Chizek will be at the annual meeting of shareholders.
They will have an opportunity to make a statement if they so desire and will be
available to respond to appropriate questions.
AUDIT FEES
Crowe Chizek billed the Company aggregate fees of $42,650 for the audit
of the Company's annual financial statements and for the review of the financial
statements included in the Company's Forms 10-QSB, all for the year ended
December 31, 2002.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
For the 2002 fiscal year, Crowe Chizek did not provide financial
information systems design and implementation services to the Company.
ALL OTHER FEES
For the 2002 fiscal year, Crowe Chizek billed $60,525 in fees for all
services other than those described above. These services include, among other
things, preparation of the Company's tax returns and performance of extended
audit services and professional services during the recently completed public
offering of the Company' shares. The Audit Committee of the Board of Directors
has considered whether the provision of these other services is compatible with
maintaining Crowe Chizek's independence.
SHAREHOLDER PROPOSALS FOR THE 2004 ANNUAL MEETING
Any shareholder who intends to present a proposal at the 2004 annual
meeting and who wishes to have the proposal included in the Company's proxy
statement and form of proxy for that meeting must deliver the proposal to the
Company at its executive offices, 305 West Liberty Street, Wooster, Ohio 44691,
not later than November 25, 2003.
-18-
Any shareholder who intends to present a proposal at the 2004 annual
meeting other than for inclusion in the Company's proxy statement and form of
proxy must deliver the proposal to the Company at its executive offices, 305
West Liberty Street, Wooster, Ohio 44691, not less than 60 days nor more than 90
days prior to the annual meeting; provided, however, that in the event that less
than 75 days' notice or prior public disclosure of the date of the meeting is
given or made to the shareholders, notice by the shareholder to be timely must
be received not later than on the 15th day following the earlier of the day on
which such notice of the date was mailed or such public disclosure was made. The
Company reserves the right to exercise discretionary voting authority with
respect to any untimely shareholder proposal.
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on
the Company's common shares from December 24, 2002 (the date the Company's
common shares became publicly traded), until December 31, 2002, with the
cumulative total return of (a) the Nasdaq Composite Index and (b) the Nasdaq
Bank Index. The graph assumes the investment of $100 in the Company's common
shares, the Nasdaq Composite Index and the Nasdaq Bank Index. The 2002 public
offering price of the Company's common shares was $8.50 per share.
[GRAPH]
Cumulative Return
---------------------------
12/24/2002 12/31/2002
---------- ----------
Ohio Legacy Corp (OLCB) 100 101
NASDAQ Composite Index 100 98
NASDAQ Bank Index 100 99
-19-
OTHER MATTERS
The Board of Directors is unaware of any matters other than those
outlined in this Proxy Statement that may be presented at the Annual Meeting for
action on the part of the shareholders. In case any other matters should
properly come before the Annual Meeting, or any adjournment thereof, it is the
intention of the person named in the enclosed proxy to vote in accordance with
his best judgment.
By Order of the Board of Directors
/s/ Daniel H. Plumly
Daniel H. Plumly
Secretary
March [21], 2003
-20-
OHIO LEGACY CORP
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF OHIO
LEGACY CORP.
The undersigned hereby appoints L. Dwight Douce the proxy of the
undersigned, with full power of substitution to vote all Common Shares of Ohio
Legacy Corp, which the undersigned is entitled to vote at the Annual Meeting of
shareholders of Ohio Legacy Corp, to be held April 24, 2003, as specified below:
1. Election of Directors:
Class II: William T. Baker
J. Edward Diamond
L. Dwight Douce
Daniel H. Plumly
FOR all Nominees WITHHOLD AUTHORITY
--------- --------- to vote for all
Nominees
(Instructions: If you wish to withhold authority to vote for any
individual nominee, write that nominee's name in the space below.)
--------------------------------------------------------------------
2. Proposal to consider and approve an increase in the number of
authorized common shares, without par value, of the Company
from 2,500,000 to 5,000,000 shares and to approve an amendment
to the Company's Articles of Incorporation to reflect such
increase.
FOR AGAINST ABSTAIN
--------- --------- ---------
IF NO INSTRUCTION IS INDICATED, AUTHORITY IS GRANTED TO CAST THE VOTE
OF THE UNDERSIGNED FOR THE PROPOSAL TO INCREASE THE NUMBER OF AUTHORIZED COMMON
SHARES OF THE COMPANY FROM 2,500,000 TO 5,000,000 SHARES AND TO AMEND THE
COMPANY'S ARTICLES OF INCORPORATION.
3. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the meeting.
Date: , 2003
-----------------------------------------
------------------------------------------------------
Signature
------------------------------------------------------
Signature, if jointly held
------------------------------------------------------
Print your name(s) here
NOTE: THE SIGNATURE(S) ON THIS PROXY SHOULD CORRESPOND WITH THE NAME(S)
IN WHICH YOUR SHARES ARE REGISTERED. WHEN SHARES ARE REGISTERED JOINTLY IN THE
NAMES OF TWO OR MORE PERSONS, ALL SHOULD SIGN. WHEN SIGNING AS AN ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE YOUR FULL TITLE AS
SUCH. A PROXY GIVEN BY A CORPORATION SHOULD BE SIGNED IN THE CORPORATE NAME BY
THE CHAIRMAN OF ITS BOARD OF DIRECTORS, ITS PRESIDENT, VICE PRESIDENT, SECRETARY
OR TREASURER.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.