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:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
Commission Only (as permitted by
[X] Definitive Proxy Statement Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or 14a-12
Home City Financial Corporation
_______________________________
(Name of Registrant as Specified in Its Charter)
Home City Financial Corporation
_______________________________
(Name of Person(s) Filing Proxy Statement)
Payment fo 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:
N/A
_________________________
(2) Aggregate number of securities to which transaction applies:
N/A
_________________________
(3) Per unit price of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
was calculated and state houw it was determined):
N/A
_________________________
(4) Proposed maximum aggregate value of transaction:
N/A
_________________________
(5) Total fee paid:
N/A
_________________________
[ ] Fee paid previously with preliminary materials:
N/A
_________________________
[ ] 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:
N/A
_________________________
(2) Form, schedule or registration no.:
N/A
_________________________
(3) Filing party:
N/A
_________________________
(4) Date filed:
N/A
_________________________
<PAGE>
HOME CITY FINANCIAL CORPORATION
63 West Main Street
Springfield, Ohio 45502
(937) 324-5736
PROXY STATEMENT
PROXIES
The enclosed proxy (the "Proxy") is being solicited by the Board of
Directors of Home City Financial Corporation, an Ohio corporation ("HCFC"),
for use at the Annual Meeting of Shareholders of HCFC to be held at The
Springfield Inn, 100 S. Fountain Avenue, Springfield, Ohio, on October 20, 1997,
at 3:00 p.m., local time (the "Annual Meeting"). Without affecting any vote
previously taken, the Proxy may be revoked by a shareholder by execution of a
later dated proxy which is received by HCFC before the Proxy is exercised or
by giving notice of revocation to HCFC in writing or in open meeting before
the Proxy is exercised. Attendance at the Annual Meeting will not, of itself,
revoke a proxy.
Each properly executed Proxy received prior to the Annual Meeting and
not revoked will be voted as specified thereon or, in the absence of specific
instructions to the contrary, will be voted:
FOR the re-election of John D. Conroy, P. Clark Engelmeier, James Foreman,
Terry A. Hoppes and Douglas L. Ulery as directors of HCFC for terms
expiring in 1998;
FOR the approval of the Home City Financial Corporation 1997 Stock Option
and Incentive Plan (the "Stock Option Plan"), a copy of which is attached
hereto as Exhibit A;
FOR the approval of the Home City Financial Corporation Recognition and
Retention Plan and Trust Agreement (the "RRP"), a copy of which is attached
hereto as Exhibit B; and
FOR the ratification of the selection of Robb, Dixon, Francis, Davis,
Oneson & Company ("Robb, Dixon") as the auditors of HCFC for the current
fiscal year.
The cost of soliciting Proxies will be borne by HCFC. Proxies may be
solicited by the directors, officers and other employees of HCFC and Home City
Federal Savings Bank of Springfield, the wholly owned subsidiary of HCFC ("Home
City"), in person or by telephone, telecopy, telegraph or mail only for use at
the Annual Meeting. HCFC may also retain D. F. King & Co., Inc., a professional
proxy solicitation firm, to assist in the solicitation of proxies. Such firm
would be paid a fee of approximately $4,000 and reimbursement for out-of-pocket
expenses. Proxies solicited in connection with the Annual Meeting will not be
used for any other meeting.
Only shareholders of record as of the close of business on September 2,
1997 (the "Voting Record Date"), are entitled to vote at the Annual Meeting.
Each such shareholder will be entitled to cast one vote for each share owned.
HCFC's records disclose that, as of the Voting Record Date, there were 904,590
votes entitled to be cast at the Annual Meeting.
This Proxy Statement is first being mailed to shareholders of HCFC on or
about September 19, 1997.
<PAGE>
VOTE REQUIRED
Election of Directors
Under Ohio law and HCFC's Code of Regulations (the "Regulations"), the five
nominees receiving the greatest number of votes will be elected as directors.
Each shareholder will be entitled to cast one vote for each share owned. Shares
as to which the authority to vote is withheld are not counted toward the
election of directors or toward the election of the individual nominees
specified in the enclosed Proxy. If the enclosed Proxy is signed and dated by
the shareholder but no vote is specified thereon, the shares held by such share-
holder will be voted FOR the re-election of the five nominees.
Approval of the Stock Option Plan and the RRP
The affirmative vote of the holders of at least a majority of the out-
standing shares of HCFC is necessary to approve the Stock Option Plan and the
RRP. Generally, shares which are held by a nominee for a beneficial owner and
which are represented in person or by proxy at the Annual Meeting, but not voted
with respect to such proposals ("Non-votes"), will have the same effect as a
vote against the approval of the Stock Option Plan and the RRP. If, however,
shares are represented at the Annual Meeting by a shareholder who signed and
dated a proxy in the form of the enclosed Proxy, but who did not vote on the
approval of the Stock Option Plan or the RRP by marking the appropriate block
on the Proxy, such shares will be voted FOR the adoption of the Stock Option
Plan and the RRP and will not be considered Non-votes.
Ratification of Selection of Auditors
The affirmative vote of the holders of a majority of the shares of HCFC
represented in person or by proxy at the Annual Meeting is necessary to ratify
the selection of Robb, Dixon as the auditors of HCFC for the current fiscal
year. Non-votes will have the same effect as a vote against the approval of
such ratification, as will abstentions. If, however, a shareholder has signed
and dated a proxy in the form of the enclosed Proxy, but has not voted on the
ratification of the selection of Robb, Dixon by checking the appropriate block
on the proxy, such person's shares will be voted FOR the ratification of the
selection of Robb, Dixon and will not be considered Non- votes.
<PAGE>
VOTING SECURITIES AND OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
only persons known to HCFC to own beneficially more than five percent of the
outstanding common shares of HCFC as of August 31, 1997:
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name and Address Beneficial Ownership Shares Outstanding
________________ ____________________ __________________
<S> <C> <C>
Jerome H. Davis and 92,541 <F1> 10.23%
Susan B. Davis
11 Baldwin Farms North
Greenwich, CT 06831
First Bankers Trust, N.A., Trustee 76,176 <F2> 8.42
Home City Financial Corporation
Employee Stock Ownership Plan
1201 Broadway
Quincy, IL 62301
<FN>
<F1>
According to a Schedule 13D and amendments thereto provided to HCFC by Jerome
H. Davis and Susan B. Davis to HCFC, Mr. Davis holds 38,997 shares, Mrs. Davis
holds 9,522 shares, and Mr. and Mrs. Davis jointly hold 44,022 shares. Mr. and
Mrs. Davis may each be deemed to share voting and dispositive power with
respect to the shares held by the other.
<F2>
First Bankers Trust, N.A., holds such shares as the trustee of the Home City
Financial Corporation Employee Stock Ownership Plan (the "ESOP").
</FN>
</TABLE>
<PAGE>
The following table sets forth certain information with respect to the
number of common shares of HCFC beneficially owned by each director and
executive officer of HCFC and by all directors and executive officers ofHCFC
as a group at August 31, 1997:
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name and Address <F1> Beneficial Ownership <F2> Shares Outstanding
_____________________ _________________________ __________________
<S> <C> <C>
John D. Conroy 19,044<F3> 2.11%
P. Clark Engelmeier 19,044<F4> 2.11
James Foreman 19,044<F5> 2.11
Terry A. Hoppes 16,200<F6> 1.79
Douglas L. Ulery 18,400<F7> 2.03
Gary E. Brown 2,000<F8> 0.22
Jo Ann Holdeman 1,025<F9> 0.11
All directors and executive officers
as a group (7 persons) 94,757 10.48
_____________________________
<FN>
<F1>
Each of the persons listed on this table may be contacted at the address of
HCFC.
<F2>
The beneficial owner has sole voting and dispositive power unless otherwise
indicated.
<F3>
Includes 9,522 shares held by Mr. Conroy's spouse, with respect to which Mr.
Conroy shares voting and dispositive power.
<F4>
Includes 9,522 shares held by Mr. Engelmeier's spouse, with respect to which
Mr. Engelmeier shares voting and dispositive power.
<F5>
Includes 9,522 shares held by Mr. Foreman's spouse, with respect to which Mr.
Foreman shares voting and dispositive power.
<F6>
Includes 6,678 shares held by Mr. Hoppes' spouse, with respect to which Mr.
Hoppes shares voting and dispositive power.
<F7>
Includes 9,200 shares held by Mr. Ulery's spouse, with respect to which Mr.
Ulery shares voting and dispositive power.
<F8>
Includes 2,000 shares held by Mr. Brown jointly with his spouse.
<F9>
Includes 1,000 shares held by Ms. Holdeman jointly with her spouse.
</FN>
PROPOSAL ONE - ELECTION OF DIRECTORS
The Regulations provide for a Board of Directors consisting of five
persons. In accordance with Section 2.03 of the Regulations, nominees for
election as directors may be proposed only by the directors or by any
shareholder entitled to vote for the election of directors if such shareholder
has submitted a written notice of a proposed nominee to the Secretary of HCFC
by the sixtieth day before the first anniversary of the most recent annual
meeting of shareholders held for the election of directors. Each such written
notice of a proposed nominee shall set forth the name, age, business or
residence address of the nominee, the principal occupation or employment of the
nominee, the numbers of shares of HCFC owned beneficially and/or of record by
the nominee and the length of time such shares have been so owned.
<PAGE>
The Board of Directors proposes the re-election of the following persons
to serve until the Annual Meeting of Shareholders in 1998 and until their
successors are duly elected and qualified or until their earlier resignation,
removal from office or death:
</TABLE>
<TABLE>
<CAPTION>
Director of Director of
Name Age <F1> Positions(s) Held Home City Since HCFC Since
____ _______ _________________ _______________ __________
<S> <C> <C> <C> <C>
John D. Conroy 47 Director 1988 1996
P. Clark Engelmeier 66 Director, 1977 1996
Chairman of the Board
James Foreman 57 Director 1995 1996
Terry A. Hoppes 48 Director 1994 1996
Douglas L. Ulery 50 Director, President, 1993 1996
CEO
_____________________________
<FN>
<F1>
As of August 31, 1997.
<FN>
</TABLE>
If any nominee is unable to stand for election, any proxies granting
authority to vote for such nominee will be voted for such substitute as the
Board of Directors recommends.
Mr. Conroy has been the owner and President of Conroy Funeral Home, Inc.,
in Springfield, Ohio, since 1971. Mr. Conroy is a licensed funeral director
and embalmer. From January 1995 to March 1996, Mr. Conroy was the Secretary
of Home City.
Mr. Engelmeier has been a self-employed life insurance agent and securities
broker during the past 41 years and is a Chartered Life Underwriter. Mr.
Engelmeier retired from the U.S. Army in 1991 as a lieutenant colonel.
Mr. Foreman has been the President, Chief Executive Officer and owner of
Foreman-Blair Pontiac, Buick, GMC, Springfield, Ohio, and the President and
owner of SKDP Insurance Agency for the past 27 years. Mr. Foreman is a member
of the Board of Directors of the Springfield Chamber of Commerce. Mr. Foreman
served as Vice President of Home City from January 1995 to March 1996.
Mr. Hoppes is a professional engineer and surveyor and has been the owner
and the President of Hoppes Engineering and Surveying Company since 1977 and
the President of Hoppes Builders and Development Company since 1981. From
January 1995 to March 1996, Mr. Hoppes was the Treasurer of Home City.
Mr. Ulery has been the President and the Chief Executive Officer of Home
City since 1992 and a director of Home City since 1993. From 1985 until joining
Home City, Mr. Ulery was the Vice President of Regional Banking Office
Operations with Society Corporation. Mr. Ulery is also a director of Intrieve,
Incorporated.
Meetings of Directors
HCFC was incorporated in August 1996. The Board of Directors of HCFC met
seven times for regularly scheduled and special meetings during the fiscal year
ended June 30, 1997. No director attended fewer than 75% of the aggregate of
such meetings and all meetings of the committees of which such director was a
member.
Each director of HCFC is also a director of Home City. The Board of
Directors of Home City met 12 times during the fiscal year ended June 30, 1997.
No director attended fewer than 75% of the aggregate of such meetings and all
meetings of the committees of which such director was a member.
<PAGE>
Committees of Directors
The Board of Directors of HCFC has an Audit Committee, an ESOP Committee,
a Stock Option Committee and an RRP Committee. The Board of Directors of HCFC
does not have either a nominating or a compensation committee.
The Audit Committee recommends audit firms to the full Board of Directors
and reviews and approves the annual independent audit report. The members of
the Audit Committee are Messrs. Conroy, Foreman and Hoppes. The Audit Committee
of HCFC did not meet during the fiscal year ended June 30, 1997. Prior to
August 1997, an Audit Committee of Home City performed such functions and met
once during fiscal year 1997.
The ESOP Committee administers the ESOP and presently consists of Messrs.
Conroy, Hoppes and Ulery. The ESOP Committee did not meet during the fiscal
year ended June 30, 1997.
The Stock Option Committee is responsible for administering the Stock
Option Plan, including interpreting the Stock Option Plan and awarding options
pursuant to its terms. Its members are Messrs. Engelmeier, Foreman and Hoppes.
The Stock Option Committee was appointed in August 1997.
The RRP Committee administers the RRP. Such committee consists of Messrs.
Conroy, Engelmeier and Hoppes. The RRP Committee was appointed in August 1997.
The Board of Directors of Home City does not have an audit, compensation or
nominating committee.
Executive Officers
In addition to Mr. Ulery, the President and CEO of HCFC and Home City,
the following persons are executive officers of HCFC and Home City and hold the
designated positions:
<TABLE>
<CAPTION>
Name Age<F1> Position(s) Held
____ ______ ________________
<S> <C> <C>
Gary E. Brown 57 Treasurer of HCFC and Treasurer and Vice President of
Home City
Jo Ann Holdeman 41 Secretary of HCFC and Secretary and Vice President of
Home City
Charles A. Mihal 58 Chief Financial Officer of Home City
_____________________________________
<FN>
<F1>
As of August 31, 1997.
</FN>
</TABLE>
Mr. Brown has been employed by Home City since October 1995, as Assistant
Vice President from October 1995 to March 1996 and as Vice President and
Treasurer since March 1996. During the five years prior to joining Home City,
Mr. Brown was employed as an Assistant Vice President at Huntington Bank.
Ms. Holdeman has been employed by Home City since 1986. Ms. Holdeman
served as Assistant Vice President and Assistant Secretary from 1992 to March
1996 and has served as Vice President and Secretary since March 1996.
Mr. Mihal has been employed by Home City since January 1997. From 1993 to
December 1996, Mr. Mihal served as Vice President and Controller of First
National Bank of Pennsylvania. From 1990 to 1993, Mr. Mihal was Vice President
and Controller of Bank One, Akron, N.A.
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Directors' Compensation
Each director of Home City receives a retainer fee of $1,000 per month
for service as a director of Home City. In addition, the Chairman of the
Board of Directors receives an additional fee of $150 per month. No fees are
paid for service as a director of HCFC.
Four of Home City's directors participate in a deferred compensation
plan whereby payment of part or all of their directors' fees is deferred. Home
City records the deferred fees as expenses and in a liability account. Interest
is periodically credited on each account. Each director is fully vested in
his account, and the balance is payable upon termination of directorship prior
to death or retirement. Home City has provided for the contingent liability
created by the deferred compensation plan by purchasing a single-premium
universal life insurance policy on each director. Upon retirement or death,
a director or his estate will receive the benefits payable pursuant to the
policy on his life.
Executive Officers' Compensation
The following table presents certain information regarding the cash
compensation received by Douglas L. Ulery, the President and Chief Executive
Officer of HCFC and Home City. During the year ended June 30, 1997, Mr. Ulery
received the compensation included in the following table from Home City and
received no compensation from HCFC. No other executive officer of Home City
or HCFC received salary and bonus compensation exceeding $100,000 during
fiscal year 1997.
Summary Compensation Table
<TABLE>
<CAPTION>
_______________________________________________________________________________________________
Annual Compensation
___________________________
Name and Principal Fiscal Year All Other
Position Ended June 30 Salary ($)<F1> Bonus ($) Compensation<F2>
_______________________________________________________________________________________________
<S> <C> <C> <C> <C>
Douglas L. Ulery
President and Chief 1997 $100,000 $25,000 $3,390
Executive Officer 1996 100,000 30,000 3,338
_______________________________________________________________________________________________
<FN>
<F1>
Includes directors' fees of $12,000 paid by Home City. Does not include amounts
attributable to other miscellaneous benefits received by executive officers.
The cost to Home City of providing such benefits to Mr. Ulery was less than 10%
of his cash compensation.
<F2>
Consists of Home City's contribution to Mr. Ulery's 401(k) defined contribution
plan account.
</FN>
</TABLE>
Employment Agreement
Home City has entered into an employment agreement with Mr. Ulery effective
December 30, 1996 (the "Employment Agreement"). Home City and HCFC currently
have no employment agreements with any other officers. The Employment Agreement
provides for a term of three years and a salary and performance review by the
Board of Directors not less often than annually, as well as inclusion of the
employee in any formally established employee benefit, bonus, pension and
profit-sharing plans for which senior management personnel are eligible. The
Employment Agreement also provides for vacation and sick leave.
The Employment Agreement is terminable by Home City at any time. In the
event of termination by Home City for "just cause," as defined in the Employment
Agreement, Mr. Ulery will have no right to receive any compensation or other
benefits for any period after such termination. In the event of termination by
Home City other than for just cause, at the end of the term of the Employment
Agreement or in connection with a "change of
<PAGE>
control," as defined in the Employment Agreement, Mr. Ulery will be entitled
to a continuation of salary payments for a period of time equal to the term of
the Employment Agreement and a continuation of benefits substantially equal to
those being provided at the date of termination of employment until the earliest
to occur of (1) the end of the term of the Employment Agreement or (2) the date
Mr. Ulery becomes employed full-time by another employer.
The Employment Agreement also contains provisions with respect to the
occurrence within six months before or at any time after a "change of control"
of (1) the termination by Home City of employment of Mr. Ulery for any reason
other than just cause, retirement or termination at the end of the term of the
Employment Agreement, (2) certain changes in the capacity or circumstances in
which he is employed or (3) a material reduction in his responsibilities,
authority, compensation or other benefits provided under the Employment
Agreement without his written consent. In the event of Home City's termination
of Mr. Ulery's employment during such period of time and during the term of the
Employment Agreement, Mr. Ulery will be entitled to payment of an amount equal
to an amount equal to three times the greater of the amount of salary set forth
in the Employment Agreement or the amount of annual salary payable to Mr Ulery
as a result of any annual salary review. If Mr. Ulery terminates his employment
within six months prior to or one year after a change of control due to certain
material changes in the circumstances of his employment or a material reduction
in his responsibilities or authority, Mr. Ulery will be entitled to payment of
an amount equal to three times his average annual compensation during the most
recent five taxable years. If Mr Ulery's employment is so terminated either by
him or by Home City, Mr.Ulery will be entitled to continued coverage under all
benefit plans until the earliest of the end of the term of the Employment
Agreement or the date on which he is included in another employer's benefit
plans as a full-time employee. The maximum payment that Mr. Ulery may receive,
however, is limited to an amount which will not result in the imposition of a
penalty tax pursuant to Section 280G(b)(3) of the Internal Revenue Code of 1986,
as amended (the "Code"), or exceed limitations imposed by the OTS. "Control,"
as defined in the Employment Agreement, generally refers to the acquisition by
any person or entity of the power to vote or ownership of 10% or more of the
voting stock of Home City or HCFC, the control of the election of a majority of
Home City's or HCFC's directors or the exercise of a controlling influence over
the management or policies of Home City or HCFC.
Certain Transactions With Home City
Home City has extended loans to certain of its and HCFC's directors and
executive officers, their affiliates and members of their families. All such
loans were made in the ordinary course of business on substantially the
same terms, including interest rates and collateral requirements, as those
prevailing at the time for comparable transactions with other persons and did
not present more than the normal risk of collectibility or other unfavorable
features.
PROPOSAL TWO - APPROVAL OF THE HOME CITY FINANCIAL CORPORATION
1997 STOCK OPTION AND INCENTIVE PLAN
General
On August 18, 1997, the Board of Directors of HCFC adopted the Stock Option
Plan. In accordance with the terms of the Stock Option Plan and the regulations
of the Office of Thrift Supervision (the "OTS"), the Stock Option Plan must
also be approved by the holders of a majority of the outstanding shares of HCFC.
The provisions of the Stock Option Plan comply with OTS regulations. The OTS in
no way endorses or approves the Stock Option Plan. The Board of Directors of
HCFC recommends that the shareholders of HCFC approve the Stock Option Plan.
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 hereto as Exhibit A.
Purpose, Administration and Eligibility
The purposes of the Stock Option Plan include retaining and providing
incentives to the directors, officers and employees of HCFC and its subsidiaries
by facilitating their purchase of a stock interest in HCFC. Pursuant to the
Stock Option Plan, 95,220 common shares of HCFC have been reserved for issuance
by HCFC upon the exercise of options to be granted to certain directors,
officers and employees of Home City and HCFC from time to time under the Stock
Option Plan. At August 31, 1997, approximately nine persons were eligible to
receive options granted under the Stock Option Plan. If all shares reserved for
issuance pursuant to the exercise of options granted under the Stock Option
<PAGE>
Plan are issued, the voting power of existing shareholders will be diluted by
approximately 9.52% and the influence of directors and officers of HCFC over the
outcome of the vote on any matters submitted to HCFC shareholders, including
changes of control, will increase.
The Stock Option Plan will be administered by a committee composed of at
least three directors of HCFC (the "Stock Option Committee"). The Stock Option
Committee may grant options under the Stock Option Plan at such times as they
deem most beneficial to Home City and HCFC on the basis of the individual
participant's position and duties and the value of the individual's services and
responsibilities to Home City and HCFC. Grants must be made in accordance with
OTS regulations which provide that no individual may receive options to purchase
more than 25% of the shares that are reserved for issuance under the Stock
Option Plan and that directors who are not employees of HCFC or Home City may
not receive options to purchase more than 5% of such shares individually or
30% in the aggregate.
Without further approval of the shareholders, the Board of Directors may
at any time terminate the Stock Option Plan or may amend it from time to time
in such respects as the Board of Directors may deem advisable, with certain
exceptions. The Board of Directors may not, without the approval of the share-
holders, amend the Stock Option Plan to (a) increase the aggregate number of
common shares that may be issued under the Stock Option Plan (except for
adjustments to reflect certain changes in the capitalization of HCFC), (b)
materially modify the requirements as to eligibility for participation in the
Stock Option Plan, or (c) materially increase the benefits accruing to
participants under the Stock Option Plan. Notwithstanding the foregoing, the
Board of Directors may, without shareholder approval, amend the Stock Option
Plan to take into account changes in applicable securities, federal income tax
and other applicable laws.
Option Terms
Options granted under the Stock Option Plan may be "incentive stock
options" within the meaning of Section 422 of the Code ("ISOs") or may not be
ISOs ("Non-qualified Options"). The option exercise price for ISOs and Non-
qualified Options will be determined by the Stock Option Committee at the time
of the grant, but must not be less than 100% of the fair market value of the
shares on the date of the grant. No stock option will be exercisable after
the expiration of ten years from the date of grant. In the case of an ISO
granted to an employee who owns more than 10% of HCFC's outstanding common
shares at the time an ISO is granted under the Stock Option Plan, however, the
exercise price of the ISO may not be less than 110% of the fair market value of
the shares on the date of the grant and the ISO may not be exercisable after the
expiration of five years from the date of the grant.
Options may not be transferred or assigned other than by will or in
accordance with the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act, as amended. If an officer or director is
"terminated for cause," as defined in the Stock Option Plan, any option that
has not been exercised shall terminate as of the date of such termination for
cause.
HCFC will receive no monetary consideration for the granting of options
under the Stock Option Plan. Upon the exercise of options, HCFC will receive
payment of cash or, if acceptable to the Stock Option Committee, common shares
of HCFC or surrendered outstanding stock options. The market value of the
common shares underlying the options reserved for the Stock Option Plan is
$1,475,910, based upon the number of shares reserved, multiplied by the $15.50
per share closing sale price quoted by The Nasdaq SmallCap Market ("Nasdaq") on
August 25, 1997.
Tax Treatment of Incentive Stock Options
An optionee who is granted an ISO will not recognize taxable income either
on the date of grant or on the date of exercise, although the alternative
minimum tax may apply. Upon disposition of shares acquired from the exercise
of an ISO, 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 optionee disposes of the shares within two
years of the date of grant or within one year from the date of the transfer of
the shares to the optionee (a "Disqualifying Disposition"), then the optionee
<PAGE>
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, mid-term or long-term
capital gain or loss, depending upon the period of time the shares have been
held.
HCFC will not be entitled to a tax deduction upon either the exercise of
an ISO or the disposition of shares acquired pursuant to such exercise, except
to the extent that the optionee 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.
If the holder of an ISO pays the exercise price, in whole or in part, with
previously acquired shares, the exchange should not affect the ISO tax treatment
of the exercise. Upon such exchange, and except as otherwise described herein,
no gain or loss is recognized by the optionee upon delivering previously
acquired shares to HCFC, and shares received by the optionee equal in number
to the previously acquired common shares exchanged therefor will have the same
basis and holding period for long-term or mid-term capital gain purposes as the
previously acquired shares. (The optionee, however, will not be able to utilize
the prior holding period for the purpose of satisfying the ISO statutory holding
period requirements for avoidance of a Disqualifying Disposition.) Shares
received by the optionee in excess of the number of shares previously acquired
will have a basis of zero and a holding period which commences as of the date
the shares are transferred to the optionee upon exercise of the ISO.
If the exercise of an ISO is effected using shares previously acquired through
the exercise of an ISO, 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.
Tax Treatment of Non-qualified Options
An optionee receiving a Non-qualified Option does not recognize taxable
income on the date of grant of the option, provided that the option does not
have a readily ascertainable fair market value at the time it is granted.
The optionee 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 HCFC
generally will be required. The amount of ordinary income recognized by an
optionee will be deductible by HCFC in the year that the optionee recognizes
the income if HCFC complies with the applicable withholding requirement.
If, at the time of exercise, the sale of the shares could subject the
optionee 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 optionee is no longer subject to such Section 16(b)
liability. Upon such date, the optionee 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 optionee may elect under Section 83(b)
of the 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 optionee will recognize
long-term capital gain or loss if the optionee has held the shares for more
than eighteen months prior to disposition, mid-term capital gain or loss if the
optionee has held the shares for more than one year but no more than eighteen
months prior to disposition, or short-term capital gain or loss if the optionee
has held the shares for one year or less prior to disposition.
If a holder of a Non-qualified Option pays the exercise price, in whole
or in part, with previously acquired shares, the optionee will recognize
ordinary income in the amount by which the fair market value of the shares
received exceeds the exercise price. The optionee will not recognize gain or
loss upon delivering such previously acquired shares to HCFC. Shares received
by an optionee 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 an optionee in excess of the number of such
<PAGE>
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.
Anticipated Grants
If the shareholders approve the Stock Option Plan, the Stock Option
Committee expects to grant the following options:
<TABLE>
<CAPTION>
Name of Recipient Shares Subject to Options
_________________ _________________________
<S> <C> <C>
John D. Conroy 4,761
P. Clark Engelmeier 4,761
James Foreman 4,761
Terry A. Hoppes 4,761
Douglas L. Ulery 23,805
Gary E. Brown 9,522
Jo Ann Holdeman 9,522
</TABLE>
Options to purchase 9,522 common shares of HCFC are also expected to be
granted to employees of HCFC and Home City who are not executive officers of
HCFC. No determination has yet been made with respect to the extent to which
the options granted to employees will be ISOs.
The Stock Option Committee may grant options under the Stock Option Plan to
the directors, officers and employees of HCFC and Home City in the future at
such times as they deem most beneficial to HCFC and Home City on the basis of
the individual participant's responsibility, tenure and future potential.
The Board of Directors of HCFC recommends that the shareholders of HCFC
approve the Stock Option Plan. Accordingly, the shareholders of HCFC will be
asked to approve the following resolution at the Annual Meeting:
RESOLVED, that the Home City Financial Corporation 1997 Stock Option and
Incentive Plan be, and it hereby is, approved.
PROPOSAL THREE - APPROVAL OF THE HOME CITY FINANCIAL CORPORATION
RECOGNITION AND RETENTION PLAN AND TRUST AGREEMENT
General
On August 18, 1997, the Board of Directors of HCFC adopted the RRP. In
accordance with the terms of the RRP and regulations of the OTS, the RRP must
also be approved by the holders of a majority of the outstanding shares of HCFC.
The provisions of the RRP comply with OTS regulations. The OTS in no way
endorses or approves the RRP. The Board of Directors of HCFC recommends that
the shareholders of HCFC approve the RRP.
The following is a summary of the terms of the RRP and is qualified in its
entirety by reference to the full text of the RRP, a copy of which is attached
hereto as Exhibit B.
Purpose, Administration and Eligibility
The purpose of the RRP is to provide directors, officers and certain key
employees of HCFC and Home City with an ownership interest in HCFC in a manner
designed to compensate such directors, officers and key employees for services
to HCFC and Home City. At August 31, 1997, approximately nine persons were
eligible to receive awards under the RRP. If the shareholders approve the RRP
at the Annual Meeting, HCFC expects to contribute sufficient funds to enable
<PAGE>
the RRP to purchase up to 38,088 common shares of HCFC either in the market
at the market price at the time of such purchase or from authorized but unissued
shares of HCFC. In the event that the RRP purchases all 38,088 shares from
authorized but unissued shares of HCFC, the voting power of the current
shareholders will be diluted by 4.04%.
The RRP will be administered by a committee composed of at least three
directors of HCFC (the "RRP Committee"). The RRP Committee may make awards
under the RRP to the officers and employees of HCFC and Home City at such times
as they deem most beneficial to HCFC on the basis of the individual
participant's responsibility, tenure and future potential. Grants must be made
in accordance with OTS regulations, which provide that no individual may be
awarded more than 25% of the shares which are reserved for issuance under the
RRP and that directors who are not employees of HCFC or Home City may not
receive more than 5% of such shares individually or 30% in the aggregate.
The Board of Directors of HCFC may, by resolution, amend or terminate the
RRP.
Terms
Unless the RRP Committee specifies a longer period of time, one-fifth of
the number of shares awarded to an individual will become earned and non-
forfeitable on each of the first five anniversaries of the date of such award.
Compensation expense in the amount of the fair market value of the RRP shares
will be recognized as the shares are earned. Until shares awarded are earned
by the participant, such shares will be forfeited in the event that the
participant ceases to be either a director or an employee of HCFC or Home City,
except that in the event of the death or disability of a participant, the
participant's shares will be deemed to be earned and non-forfeitable.
The shares, together with any cash dividends or distributions paid thereon,
will be distributed as soon as practicable after they are earned. A
participant may direct the voting of all shares awarded to him or her which have
been earned, but which have not yet been distributed to him or her. Shares that
have been awarded, but not earned, will be voted in the discretion of the RRP
Trustee to be appointed by the RRP Committee. Shares that have been awarded,
but not earned, may not be transferred.
Tax Treatment of Shares Awarded Under the RRP
Persons receiving shares under the RRP generally will not recognize income
upon the award of such shares, but will recognize ordinary income when and to
the extent such shares become earned and non-forfeitable, in an amount equal
to the fair market value of the shares at the time such shares become earned and
non-forfeitable plus the amount of any earnings distributed to the participant
with respect to such shares. If applicable withholding requirements are
satisfied, HCFC will be entitled to a deduction each year in an amount equal to
the income, if any, recognized by participants for such year.
Anticipated Awards
If the shareholders approve the RRP, HCFC expects to contribute sufficient
funds to enable the RRP to purchase up to 38,088 common shares of HCFC at the
market price at the time of such purchase. The RRP Committee expects to make
the following awards under the RRP:
<TABLE>
<CAPTION>
Name of Recipient Shares to be Awarded
_________________ ____________________
<S> <C> <C>
John D. Conroy 1,904
P. Clark Engelmeier 1,904
James Foreman 1,904
Terry A. Hoppes 1,904
Douglas L. Ulery 6,665
Gary E. Brown 1,904
Jo Ann Holdeman 3,047
</TABLE>
<PAGE>
The RRP Committee also expects to award 4,570 common shares to employees of HCFC
and Home City who are not executive officers of HCFC. The RRP Committee may
award shares under the RRP to the directors, officers and key employees of HCFC
and Home City in the future at such times as they deem most beneficial to HCFC
and Home City on the basis of the individual participant's responsibility,
tenure and future potential.
The Board of Directors of HCFC recommends that the shareholders of HCFC
approve the RRP. Accordingly, the shareholders of HCFC will be asked to approve
the following resolution at the Annual Meeting:
RESOLVED, that the Home City Financial Corporation Recognition and
Retention Plan and Trust Agreement be, and it hereby is, approved.
NEW PLAN BENEFITS
The following table sets forth certain information with respect to the
options expected to be granted pursuant to the Stock Option Plan and the awards
expected to be made pursuant to the RRP:
<TABLE>
<CAPTION>
Stock Option Plan RRP
_________________________ _________________________________
Name and Position Shares Subject to Options Dollar Value ($)<F1> Shares (#)
_________________ _________________________ ____________________ __________
<S> <C> <C> <C>
Douglas L. Ulery, President 23,805 $103,308 6,665
All executive officers, as a group
(3 persons) 42,849 $180,048 11,616
All directors who are not officers,
as a group (4 persons) 19,044 $118,048 7,616
All employees who are not executive
officers, as a group (2 persons) 9,522 $ 70,835 4,570
____________________________
<FN>
<F1>
Based upon the number of shares awarded multiplied by the $15.50 per share
closing sale price quoted by Nasdaq on August 25, 1997.
</FN>
</TABLE>
PROPOSAL FOUR - SELECTION OF AUDITORS
The Board of Directors of HCFC has selected Robb, Dixon to act as HCFC's
independent auditor for the current fiscal year and recommends that the share-
holders ratify the selection. The firm has audited the books of HCFC or Home
City since 1976. Management expects that a representative of Robb, Dixon will
be present at the Annual Meeting, will have the opportunity to make a statement
if he or she so desires and will be available to respond to appropriate
questions.
The Board of Directors of HCFC recommends that the shareholders of HCFC
ratify the selection of the auditors for the current fiscal year. Accordingly,
the shareholders of HCFC will be asked to approve the following resolution at
the Annual Meeting:
RESOLVED, that the selection of Robb, Dixon, Francis, Davis, Oneson &
Company as the auditors of HCFC for the current fiscal year be, and it
hereby is, ratified.
<PAGE>
PROPOSALS OF SHAREHOLDERS AND OTHER MATTERS
Any proposals of shareholders intended to be included in the proxy
statement for the 1998 Annual Meeting of Shareholders of HCFC should be sent
to HCFC by certified mail and must be received by HCFC by May 22, 1998.
Management knows of no other business that may be brought before the Annual
Meeting. It is the intention of the persons named in the enclosed Proxy to
vote such Proxy in accordance with their best judgment on any other matters
that may be brought before the Annual Meeting.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO FILL IN, SIGN AND
RETURN THE PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.
By Order of the Board of Directors
/s/ Douglas L. Ulery
Douglas L. Ulery, President
Springfield, Ohio
September 19, 1997
<PAGE>
EXHIBIT A
HOME CITY FINANCIAL CORPORATION
1997 STOCK OPTION AND INCENTIVE PLAN
1. Purpose. The purpose of the Home City Financial Corporation 1997
Stock Option and Incentive Plan (this "Plan") is to promote and advance the
interests of Home City Financial Corporation (the "Company") and its share-
holders by enabling the Company to attract, retain and reward directors,
managerial and other key 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) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended, or
any successor thereto, together with rules, regulations and
interpretations promulgated thereunder.
(c) "Committee" means the Committee of the Board constituted as
provided in Section 3 of this Plan.
(d) "Common Shares" means the common shares, without par value, of
the Company or any security of the Company issued in substitution, in
exchange or in lieu thereof.
(e) "Company" means Home City Financial Corporation, an Ohio
corporation, or any successor corporation.
(f) "Conversion" means the conversion of Home City Federal Savings
Bank of Springfield from a federally-chartered mutual savings bank to a
permanent capital stock savings bank chartered under federal law.
(g) "Employment" means regular employment with the Company or a
Subsidiary and does not include service as a director only.
(h) "ERISA" means the Employee 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" shall be determined as follows:
(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 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.
<PAGE>
(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 be the mean between the closing high bid and low
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 that is intended to be and
is specifically designated as an "incentive stock option" within the
meaning of Section 422 of the Code.
(l) "Non-Qualified Stock Option" means any Stock Option granted
pursuant to the provisions of Section 6 of this Plan that is not an
Incentive Stock Option.
(m) "OTS" means the Office of Thrift Supervision, Department of the
Treasury.
(n) "Participant" means an employee or director of the Company or a
Subsidiary who is granted an Award 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.
(o) "Plan" means the Home City Financial Corporation 1997 Stock
Option and Incentive Plan, as set forth herein and as it may be hereafter
amended from time to time.
(p) "Stock Option" means an award to purchase Common Shares granted
pursuant to the provisions of Section 6 of this Plan.
(q) "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 and includes, without
limitation, Home City Federal Savings Bank of Springfield.
(r) "Terminated for Cause" means any removal of a director or dis-
charge of an employee for the 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) or a material violation of a final cease-
and-desist order or for 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 to 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,
<PAGE>
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 effective date of the Plan, 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.
(b) Common Shares Subject to Plan. The maximum number of Common
Shares in respect of which Stock Options may be granted under this Plan,
subject to adjustment as provided in Section 9 of this Plan, shall be
ten percent of the total Common Shares sold in connection with the
conversion of Home City Federal Savings Bank of Springfield from mutual
to stock form.
For the purpose of computing the total number of Common Shares available
for Stock Options 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 are forfeited, terminated or exchanged for other
Stock Options, or expire unexercised, the Common Shares which were thereto-
fore subject to such Stock Options shall again be available for Stock Options
under this Plan to the extent of such forfeiture, termination or expiration of
such Stock Options, to the extent permissible under Rule 16b-3 promulgated
under the Exchange Act, or any successor rule or regulation thereto as in effect
from time to time.
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 Stock Options 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 Stock Options will be awarded
and the number of shares subject to such Stock Options, 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, and 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; provided,
however, that no more than 25% of the shares subject to Stock Options may
be awarded to any individual who is an employee of the Company or a
Subsidiary, no more than 5% of such shares may be awarded to any director
who is not an employee of the Company or a Subsidiary, and no more than
30% of such shares may be awarded to non-employee directors in the
aggregate.
<PAGE>
(b) Stock Option Price. The option exercise price per Common Share
purchasable under a Stock Option granted to a non-employee director shall
be the Fair Market Value of the Common Shares on the date of grant. The
option exercise price for Common Shares purchasable under a Stock Option
granted to an employee shall be determined by the Committee at the time of
grant; provided, however, that in no event shall the exercise price of a
Stock Option be less than 100% of the Fair Market Value of the Common
Shares on the date of the grant of such Stock Option. Notwithstanding the
foregoing, 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.
(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 Incentive
Stock Options 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 Incentive Stock Option
is granted, the term of the Incentive Stock Option shall not exceed five
years.
(d) Exercisability. Except as set forth in Section 6(f) and Section
7 of this Plan, Stock Options awarded under this Plan shall become
exercisable at the rate of one-fifth per year commencing on the date that
is one year after the date of the grant of the Stock Option and shall be
subject to such other terms and conditions as shall be determined by the
Committee at the date of grant.
(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 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. Termination of Employment or Directorship.
(a) Except in the event of the death or disability of a Participant,
upon the resignation, removal or retirement from the board of directors
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, any Stock Option which has not yet become
exercisable shall thereupon terminate and be of no further force or effect,
and, subject to extension by the Committee, any Stock Option which has
become exercisable shall terminate if it is not exercised within 12 months
of such resignation, removal or retirement.
(b) Unless the Committee shall specifically state otherwise at the
time an Option is granted, all 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
Options shall terminate if not exercised within 12 months of the
Participant's death or disability.
<PAGE>
(c) In the event the Employment or the directorship of a Participant
is Terminated for Cause (hereinafter defined), any Option which has not
been exercised shall terminate as of the date of such termination for
cause.
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 or
pursuant to a qualified domestic relations order as defined by the Code or Title
I of ERISA. 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) The existence of this Plan and the Stock Options granted here-
under shall not affect or restrict in any way the right or power of the
Board or the shareholders of the Company to make or authorize 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 Stock Option outstanding at the time of such corporate transaction or
which would involve the termination of all Stock Options 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, recapitaliza-
tion, 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
Stock Options 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 Stock
Option, and the exercise price per share in respect of outstanding Stock
Options.
10. 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 participa-
tion 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.
11. 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.
12. Miscellaneous.
(a) Tax Withholding. The Company shall have the right to deduct from
any settlement, including the delivery or vesting of Common Shares, made
under this Plan 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
<PAGE>
obligations 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 Stock Option 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
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 a Stock Option 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 a Stock Option or portion of a
Stock Option should be included to accurately reflect competitive
compensation practices or to recognize that a Stock Option has been made in
lieu of a portion of competitive annual cash compensation. Stock Options
under this Plan may be made in combination with or in tandem with, or as
alternatives 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.
(f) Stock Option Agreement. Each Participant receiving a Stock
Option 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 Stock Option 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 to be held no sooner than
six months after the effective date of the Conversion.
<PAGE>
EXHIBIT B
HOME CITY FINANCIAL CORPORATION
RECOGNITION AND RETENTION PLAN
AND TRUST AGREEMENT
ARTICLE I
DEFINITIONS
The following words and phrases, when used in this Agreement with an
initial capital letter, shall have the meanings set forth below, unless the
context clearly indicates otherwise. Wherever appropriate, the masculine
pronoun shall include the feminine pronoun and the singular shall include the
plural:
1.01 "Agreement" means the Home City Financial Corporation Recognition and
Retention Plan and Trust Agreement.
1.02 "Award" means a right granted to a Director or an Employee under this
Plan to receive Plan Shares.
1.03 "Bank" means Home City Federal Savings Bank of Springfield, a savings
bank chartered under the laws of the United States.
1.04 "Beneficiary" means the person or persons designated by a Recipient to
receive any benefits payable under this Plan in the event of such Recipient's
death. Such person or persons shall be designated in writing on forms provided
for this purpose by the Committee and may be changed from time to time by
similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Recipient's estate.
1.05 "Board" means the Board of Directors of the Corporation.
1.06 "Committee" means the Recognition and Retention Plan Committee
appointed by the Board pursuant to Article IV hereof.
1.07 "Common Shares" means common shares of the Corporation.
1.08 "Conversion" means the conversion of the Bank from mutual to stock
form.
1.09 "Corporation" means Home City Financial Corporation, a savings and
loan holding company incorporated under the laws of the State of Ohio for the
purpose of holding all of the common shares of the Bank issued in connection
with the Conversion, or any successor thereto.
1.10 "Director" means any person who is a member of the Board of Directors
of the Corporation, the Bank or a Subsidiary.
1.11 "Employee" means any person who is employed by the Corporation, the
Bank or a Subsidiary.
1.12 "Person" means an individual, corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein.
1.13 "Plan" means the Recognition and Retention Plan established by this
Agreement.
1.14 "Plan Shares" means the Common Shares held pursuant to the Trust and
which are awarded or issuable to a Recipient pursuant to the Plan.
<PAGE.
1.15 "Plan Share Reserve" means the Common Shares held by the Trustee
pursuant to Sections 5.02 and 5.03 of this Agreement.
1.16 "Recipient" means any Director or Employee who receives an Award under
the Plan.
1.17 "Subsidiaries" means subsidiaries of the Corporation or the Bank which,
with the consent of the Board, agree to participate in the Plan.
1.18 "Trust" means the trust established by this Agreement.
1.19 "Trustee(s)" means the person(s) or entity approved by the Board
pursuant to Sections 4.01 and 4.02 to hold legal title to the Plan assets for
the purposes set forth herein.
ARTICLE II
ESTABLISHMENT OF THE PLAN AND TRUST
2.01 The Corporation hereby establishes a Recognition and Retention Plan
and Trust upon the terms and subject to the conditions set forth in this
Agreement.
2.02 The Trustee hereby accepts the Trust and agrees to hold the Trust
assets existing on the date of this Agreement and all additions and accretions
thereto upon the terms and conditions of this Agreement.
ARTICLE III
PURPOSE OF THE PLAN
3.01 The purpose of the Plan is to reward and retain the Directors and
Employees of the Corporation, the Bank and the Subsidiaries who are in key
positions of responsibility by providing such Directors and Employees with an
equity interest in the Corporation as reasonable compensation for their
contributions to the Corporation, the Bank and the Subsidiaries.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 Role of the Committee. The Plan shall be administered and
interpreted by the Committee, which shall consist of not less than three
members of the Board. The Committee shall have all of the powers set forth in
this Plan. The interpretation and construction by the Committee of any
provisions of this Agreement or of any Award granted hereunder shall be final,
conclusive and binding. The Committee shall act by the vote, or the written
consent, of a majority of its members. The Committee shall report actions and
decisions with respect to the Plan to the Board upon request by the Board.
4.02 Role of the Board. The members of the Committee and the Trustee(s)
shall be appointed or approved by and will serve at the pleasure of the Board.
The Board may in its discretion from time to time remove members from or add
members to the Committee and may remove, replace or add Trustee(s).
4.03 Limitation on Liability. No member of the Board or the Committee,
nor any Trustee, shall be liable for any determination made in good faith with
respect to the Plan or any Plan Shares or Awards granted under the Plan. If
a member of the Board or of the Committee or any Trustee 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,
by reason of anything done or not done by such member in such capacity under or
with respect to this Plan, the Corporation shall indemnify such member against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such member in connection with
such action, suit or proceeding if such member acted in good faith and in a
<PAGE>
manner such member reasonably believed to be in or not opposed to the best
interests of the Corporation, the Bank and the Subsidiaries and, with respect to
any criminal action or proceeding, had no reasonable cause to believe such
member's conduct was unlawful.
ARTICLE V
CONTRIBUTIONS; PLAN SHARE RESERVE
5.01 Amount and Timing of Contributions. The Board shall determine the
amounts (or the method of computing the amounts) to be contributed by the
Corporation to the Trust. Such amounts shall be paid to the Trustee at the
time of contribution. No contributions to the Trust by Directors or Employees
shall be permitted.
5.02 Investment of Trust Assets. Except as otherwise permitted by Section
8.02 of this Agreement, the Trustee shall invest all of the Trust's assets,
after providing for any required withholding as needed for tax purposes,
exclusively in Common Shares; provided, however, that the Trust shall not
purchase a number of Common Shares equal to more than 3% of the number of
Common Shares issued in connection with the Conversion, except that if the
Bank's tangible capital exceeds 10%, the Trust may purchase a number of Common
Shares equal to up to 4% of the Common Shares issued in connection with the
Conversion. After such investment, the Common Shares shall be held by the
Trustee in the Plan Share Reserve until such Common Shares are subject to
one or more Awards. Any funds held by the Trust before purchasing Common Shares
shall be invested by the Trustee in such interest-bearing account or accounts
at the Bank as the Trustee shall determine to be appropriate.
5.03 Effect of Allocations, Returns and Forfeitures Upon Plan Share
Reserves. Upon the allocation of Awards under Section 6.02 of this Agreement,
or the decision of the Committee to return Plan Shares to the Corporation, the
Plan Share Reserve shall be reduced by the number of Plan Shares so allocated or
returned. Any Plan Shares subject to an Award which is subject to forfeiture by
the Recipient pursuant to Section 7.01 of this Agreement shall be retained in
the Plan Share Reserve.
ARTICLE VI
ELIGIBILITY; ALLOCATIONS
6.01 Eligibility. Directors and Employees are eligible to receive Awards
within the sole discretion of the Committee.
6.02 Allocations. The Committee will determine which of the Directors and
Employees will be granted Awards and the number of Plan Shares covered by each
Award; provided, however, that the aggregate number of Plan Shares covered by
Awards to any one Employee shall not exceed 25% of the total number of Plan
Shares and Directors who are not Employees may not be awarded more than 5% of
the total number of Plan Shares individually or more than 30% in the aggregate.
No Award shall be granted if such grant would result in a violation
or possible violation of federal or state securities laws. In the event Plan
Shares are forfeited for any reason or additional Plan Shares are purchased by
the Trustee, the Committee may, from time to time, determine which of the
Directors and Employees will be granted additional Awards to be awarded from
forfeited or additional Plan Shares.
In selecting the Directors and Employees to whom Awards will be granted and
the number of shares covered by such Awards, the Committee shall consider the
position, duties and responsibilities of the eligible Directors and Employees,
the value of their services to the Corporation, the Bank and the Subsidiaries
and any other factors the Committee may deem relevant.
6.03 Form of Allocation. As promptly as practicable after a determination
is made pursuant to Section 6.02 of this Agreement that an Award is to be made,
the Committee shall notify the Recipient in writing of the grant of the Award,
the number of Plan Shares covered by the Award and the terms upon which the Plan
Shares subject to the Award may be earned. The date on which the Committee
<PAGE>
determines that an Award is to be made or a later date designated by the
Committee shall be considered the date of grant of the Awards. The Committee
shall maintain records as to all grants of Awards under the Plan.
6.04 Allocations Not Required. None of the Directors or Employees, either
individually or as a group, shall have any right or entitlement to receive an
Award under the Plan. The Committee may, with the approval of the Board, and
shall, if so directed by the Board, return all Common Shares and other assets in
the Plan Share Reserve to the Corporation at any time and thereafter cease
issuing Awards.
6.05 Shareholder Approval. This Agreement shall be submitted to the
shareholders of the Corporation at an annual or special meeting to be held no
sooner than six months after the effective date of the Conversion. Notwith-
standing anything to the contrary in this Agreement, no Awards shall be granted
hereunder until the shareholders of the Corporation approve this Agreement.
ARTICLE VII
EARNING AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 Earning Plan Shares; Forfeitures.
(a) General Rules. Unless the Committee shall specifically state a
longer period of time over which Awards shall be earned and non-forfeitable
at the time an Award is granted, Plan Shares shall be earned and non-forfeitable
by a Recipient over a period of five years at the rate of one-fifth per year
commencing on the date which is one year after the date of the grant of such
Award. As Plan Shares become earned and non-forfeitable, any cash dividends,
returned capital and earnings thereon shall also be earned and non-forfeitable.
(b) Revocation. Unless otherwise permitted by applicable laws and
regulations, any Plan Shares and any cash dividends, returned capital and
earnings thereon that have not been earned and are not non-forfeitable in
accordance with Section 7.01(a) of this Agreement shall be forfeited in the
event that (i) a Recipient who is a Director ceases to serve on the Board of
Directors of both the Corporation and the Bank or (ii) a Recipient who is not
a Director of the Corporation or the Bank ceases to be an Employee of the
Corporation or the Bank, except as otherwise provided in subsection (c) of this
Section 7.01.
(c) Exception for Terminations Due to Death or Disability. All Plan
Shares and cash dividends, returned capital and earnings thereon subject to an
Award held by a Recipient whose service as a Director or Employee of the
Corporation, the Bank or a Subsidiary terminates due to (i) death or (ii)
disability (as determined by the Committee) shall be deemed fully earned and
non-forfeitable as of the later of the Recipient's last day of service as a
Director or as an Employee and shall be distributed as soon as practicable
thereafter.
7.02 Distribution of Plan Shares.
(a) Timing of Distributions: General Rule. Except as otherwise
provided in this Agreement, Plan Shares shall be distributed to the Recipient or
his Beneficiary, as the case may be, as soon as practicable after they have
been earned, together with any cash dividends, returned capital and earnings
thereon with respect to Plan Shares that have been earned.
(b) Form of Distribution. All distributions of Plan Shares,
together with any shares representing stock dividends, shall be distributed
in the form of Common Shares. No fractional shares shall be distributed.
Payments representing cash dividends, returned capital and earnings thereon
shall be made in cash.
(c) Withholding. The Trustee may withhold from any cash payment
made under this Plan sufficient amounts to cover any applicable withholding
and employment taxes and, if the amount of such cash payment is not sufficient,
the Trustee may require the Recipient or Beneficiary to pay to the Trustee the
amount required to be withheld as a condition of delivering the Plan Shares.
The Trustee shall pay over to the Corporation, the Bank or the Subsidiary
<PAGE>
which employs or employed such Recipient or which the Recipient serves or served
as a Director, any such amount withheld from or paid by the Recipient or
Beneficiary.
(d) Regulatory Exceptions. Notwithstanding anything to the contrary
in this Agreement, no Plan Shares, upon becoming fully earned and non-
forfeitable, shall be distributed unless and until all of the requirements of
all applicable laws and regulations shall have been met.
7.03 Voting of Plan Shares. All Common Shares held by the Trustee in the
Plan Share Reserve which have not yet been earned by a Recipient pursuant to
Section 7.01 of this Agreement shall be voted by the Trustee. A Recipient
shall be entitled to direct the voting of Plan Shares which have been earned
pursuant to Section 7.01 of this Agreement but have not yet been distributed to
him.
ARTICLE VIII
TRUST
8.01 Trust. The Trustee shall receive, hold, administer, invest and make
distributions and disbursements from the Trust in accordance with the provisions
of the Plan and the Trust and the applicable directions, rules, regulations,
procedures and policies established by the Committee pursuant to this Agreement.
8.02 Management of Trust. The Trustee shall have complete authority and
discretion with respect to the management, control and investment of the
Trust, and the Trustee shall invest all assets of the Trust, except those
attributable to cash dividends paid with respect to Plan Shares not held in the
Plan Share Reserve, in Common Shares to the fullest extent practicable, and
except to the extent that the Trustee determines that the holding of monies
in cash or cash equivalents is necessary to meet the obligations of the Trust.
The Trustee shall have the power to do all things and execute such instruments
as may be deemed necessary or proper, including the following powers:
(a) To invest up to 100% of all Trust assets in Common Shares
without regard to any law now or hereafter in force limiting investments
for Trustees or other fiduciaries. The investment authorized herein may
constitute the only investment of the Trust, and, in making such
investment, the Trustee is authorized to purchase Common Shares from the
Corporation or from any other source. Such Common Shares so purchased may
be outstanding, newly issued or treasury shares;
(b) To invest any Trust assets not otherwise invested in accordance
with Section 8.02(a) of this Agreement in such deposit accounts and
certificates of deposit (including those issued by the Bank), obligations
of the United States government or its agencies or such other investments
as shall be considered the equivalent of cash;
(c) To sell, exchange or otherwise dispose of any property at any
time held or acquired by the Trust;
(d) To cause stocks, bonds or other securities to be registered in
the name of a nominee, without the addition of words indicating that such
security is an asset of the Trust (but accurate records shall be maintained
showing that such security is an asset of the Trust);
(e) To hold cash without interest in such amounts as may be
reasonable, in the opinion of the Trustee, for the proper operation of the
Plan and the Trust;
(f) To employ brokers, agents, custodians, consultants and
accountants;
(g) To hire counsel to render advice with respect to the Trustee's
rights, duties and obligations hereunder, and such other legal services or
representation as the Trustee may deem desirable; and
<PAGE>
(h) To hold funds and securities representing the amounts to be
distributed to a Recipient or his Beneficiary as a consequence of a
dispute as to the disposition thereof, whether in a segregated account or
held in common with other assets of the Trust.
Notwithstanding anything herein contained to the contrary, the Trustee shall not
be required to make any inventory, appraisal or settlement or report to any
court, or to secure any order of court for the exercise of any power herein
contained, or to give bond.
8.03 Records and Accounts. The Trustee shall maintain accurate and
detailed records and accounts of all transactions of the Trust, which shall be
available at all reasonable times for inspection by any legally entitled
person or entity to the extent required by applicable law, or any other person
determined by the Committee.
8.04 Earnings. All earnings, gains and losses with respect to Trust
assets shall be allocated, in accordance with a reasonable procedure adopted
by the Committee, to bookkeeping accounts for Recipients or to the general
account of the Trust, depending on the nature and allocation of the assets
generating such earnings, gains and losses. Without limiting the generality
of the foregoing, any earnings on cash dividends or returned capital received
with respect to Common Shares shall be allocated (a) to accounts for Recipients,
if such shares are the subject of outstanding Awards, and shall become earned
and be distributed as specified in Article VII of this Agreement, or (b) other-
wise to the Plan Share Reserve if such Plan Shares are not the subject of
outstanding awards.
8.05 Expenses. All costs and expenses incurred in the operation and
administration of the Plan shall be paid by the Corporation.
ARTICLE IX
MISCELLANEOUS
9.01 Adjustments for Capital Changes. The aggregate number of Plan Shares
available for issuance pursuant to the Awards and the number of Plan Shares
to which any Award relates shall be proportionately adjusted for any increase
or decrease in the total number of outstanding Common Shares issued subsequent
to the effective date of the Plan if such increase or decrease resulted from
any split, subdivision or consolidation of shares or other capital adjustment,
or other increase or decrease in such shares effected without receipt or payment
of consideration by the Corporation.
9.02 Amendment and Termination of Plan. The Board may, by resolution, at
any time amend or terminate the Plan; provided, however, that in no event shall
the provisions of the Plan with respect to the number of Plan Shares which may
be subject to Awards and the timing of grants of Awards be amended more often
than once every six (6) months, other than to comport with changes in the
Internal Revenue Code of 1986, as amended (the "Code"), the Employee Retirement
Income Security Act, as amended, or the rules and regulations promulgated
thereunder. The power to amend or terminate the Plan shall include the power to
direct the Trustee to return to the Corporation all or any part of the assets
of the Trust, including Common Shares held in the Plan Share Reserve, as well
as Common Shares and other assets subject to Awards which have not yet been
earned by the Directors or Employees to whom they are allocated; provided,
however, that the termination of the Trust shall not affect a Recipient's right
to earn Awards and to the distribution of Common Shares relating thereto,
including earnings thereon, in accordance with the terms of this Agreement
and the grant by the Committee or the Board.
9.03 Nontransferable. Awards shall not be transferable by a Recipient.
During the lifetime of the Recipient, an Award may only be earned by and paid
to the Recipient who was notified in writing of the Award by the Committee
pursuant to Section 6.03 of this Agreement. No Recipient or Beneficiary shall
have any right in or claim to any assets of the Plan or the Trust, nor shall
the Corporation, the Bank or any Subsidiary be subject to any claim for
benefits hereunder.
<PAGE>
9.04 Directorship Rights. Neither this Agreement nor any grant of an
Award hereunder nor any action taken by the Trustee, the Committee or the Board
in connection with the Plan shall create any right, either express or implied,
on the part of any Director to continue to serve as a Director of the Bank or a
Subsidiary.
9.05 Employment Rights. Neither this Agreement nor any grant of an Award
hereunder nor any action taken by the Trustee, the Committee or the Board in
connection with the Plan shall create any right, either express or implied,
on the part of any Employee to continue in the employ of the Corporation, the
Bank or a Subsidiary.
9.06 Voting and Dividend Rights. No Recipient shall have any voting or
dividend rights or other rights of a shareholder in respect of any Plan Shares
covered by an Award, except as expressly provided in Sections 7.01, 7.02 and
7.03 of this Agreement, prior to the time such Plan Shares are actually
distributed to such Recipient.
9.07 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Ohio, except to the extent that federal law
shall be deemed applicable.
9.08 Effective Date. Subject to Section 6.05 of this Agreement, this
Agreement shall be effective as of the ___ day of ____________, 1997.
9.09 Term of Plan. The Plan shall remain in effect until the earlier of
(a) the termination of the Plan by the Board or (b) the distribution of all
assets from the Trust. The termination of the Plan shall not affect any
Awards previously granted, and such Awards shall remain valid and in effect
until they have been earned and paid or by their terms expire or are forfeited.
9.10 Tax Status of Trust. It is intended that the trust established
hereby be treated as a grantor trust of the Bank under the provisions of
Section 671, et seq., of the Internal Revenue Code of 1986, as amended (26
U.S.C. section 671 et seq.).
IN WITNESS WHEREOF, the following Trustees execute this Agreement,
accepting and binding themselves to undertake and perform the obligations and
duties of the Trustee hereunder and consenting to the foregoing Agreement
effective the ___ day of ____________, 1997.
By: ___________________________ (Trustee)
By: ___________________________ (Trustee)
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officer and duly attested, all as of the ___
day of ____________, 1997.
HOME CITY FINANCIAL CORPORATION
By: ______________________________
Douglas L. Ulery
its President
ATTEST:
____________________________
Jo Ann Holdeman
its Secretary
HOME CITY FINANCIAL CORPORATION
63 West Main Street
Springfield, Ohio 45502
(937) 324-5736
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the 1997 Annual Meeting of Shareholders of
Home City Financial Corporation ("HCFC") will be held at The Springfield Inn,
100 S. Fountain Avenue, Springfield, Ohio, on October 20, 1997, at 3:00 p.m.,
local time (the "Annual Meeting"), for the following purposes, all of which are
more completely set forth in the accompanying Proxy Statement:
1. To re-elect five directors of HCFC for terms expiring in 1998;
2. To approve the Home City Financial Corporation 1997 Stock Option
and Incentive Plan, a copy of which is attached hereto as
Exhibit A;
3. To approve the Home City Financial Corporation Recognition and
Retention Plan and Trust Agreement, a copy of which is attached
hereto as Exhibit B;
4. To ratify the selection of Robb, Dixon, Francis, Davis, Oneson &
Company as the auditors of HCFC for the current fiscal year; and
5. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
Only shareholders of HCFC of record at the close of business on September
2, 1997, will be entitled to receive notice of and to vote at the Annual Meeting
and at any adjournments thereof. Whether or not you expect to attend the Annual
Meeting, we urge you to consider the accompanying Proxy Statement carefully and
to SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY SO THAT YOUR SHARES MAY BE
VOTED IN ACCORDANCE WITH YOUR WISHES AND THE PRESENCE OF A QUORUM MAY BE ASSURED
AT THE ANNUAL MEETING. The giving of a proxy does not affect your right to vote
in person in the event you attend the Annual Meeting.
By Order of the Board of Directors
/s/ Douglas L. Ulery
Douglas L. Ulery, President
Springfield, Ohio
September 19, 1997
REVOCABLE PROXY
HOME CITY FINANCIAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF HOME CITY FINANCIAL CORPORATION
The undersigned shareholder of Home City Financial Corporation ("HCFC")
hereby constitutes and appoints Gary E. Brown and Jo Ann Holdeman, or either one
of them, the Proxy or Proxies of the undersigned, with full power of
substitution and resubstitution, to vote at the Annual Meeting of Shareholders
of HCFC to be held at The Springfield Inn, 100 S. Fountain Avenue, Springfield,
Ohio, on October 20, 1997, at 3:00 p.m., local time (the "Annual Meeting"),
all of the shares of HCFC that the undersigned is entitled to vote at the Annual
Meeting, or at any adjournment thereof, on each of the following proposals, all
of which are described in the accompanying Proxy Statement:
1. The election of five directors:
FOR all nominees WITHHOLD authority to
_____ listed below _____ vote for all nominees
(except as marked to the listed below:
contrary below):
John D. Conroy
P. Clark Engelmeier
James Foreman
Terry A. Hoppes
Douglas L. Ulery
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below).
__________________________________________________________________________
2. The approval of the Home City Financial Corporation 1997 Stock Option and
Incentive Plan.
_____ FOR _____ AGAINST _____ ABSTAIN
3. The approval of the Home City Financial Corporation Recognition and
Retention Plan and Trust Agreement.
_____ FOR _____ AGAINST _____ ABSTAIN
4. The ratification of the selection of Robb, Dixon, Francis, Davis, Oneson &
Company, certified public accountants, as the auditors of HCFC for the
current fiscal year.
_____ FOR _____ AGAINST _____ ABSTAIN
5. In their discretion, upon such other business as may properly come before
the Annual Meeting or any adjournments thereof.
Important: Please sign and date this proxy on the reverse side.
<PAGE>
This Revocable Proxy will be voted as directed by the undersigned member.
If no direction is given, this Revocable Proxy will be voted FOR proposals 1,
2, 3 and 4.
All Proxies previously given by the undersigned are hereby revoked.
Receipt of the Notice of Annual Meeting of Shareholders of HCFC and of the
accompanying Proxy Statement is hereby acknowledged.
NOTE: Please sign your name exactly as it appears on this Proxy. Joint accounts
require only one signature. If you are signing this Proxy as an attorney,
administrator, agent, corporation, officer, executor, trustee or guardian, etc.,
please add your full title to your signature.
_______________________________ __________________________________
Signature Signature
_______________________________ __________________________________
Print or Type Name Print or Type Name
_______________________________ __________________________________
Date Date
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF HCFC. PLEASE
DATE, SIGN AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS
REQUIRED FOR MAILING IN THE U.S.A.
IMPORTANT: IF YOU RECEIVE MORE THAN ONE CARD, PLEASE SIGN AND RETURN ALL CARDS
IN THE ACCOMPANYING ENVELOPE.
