SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[ X ] Filed by the registrant
[ ] 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 Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
PEOPLES-SIDNEY FINANCIAL CORPORATION
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(Name of Registrant as Specified in Its Charter)
<PAGE>
[PEOPLES-SIDNEY FINANCIAL CORPORATION LETTERHEAD]
April 20, 1998
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of Peoples-Sidney
Financial Corporation (the "Company"), we cordially invite you to attend a
Special Meeting of Stockholders of the Company. The meeting will be held at
10:00 a.m., Sidney, Ohio, time, on May 22, 1998 at The Fairington located at
1103 Fairington Drive, Sidney, Ohio.
An important aspect of the meeting process is the stockholder vote on
corporate business items. We urge you to exercise your rights as a stockholder
to vote and participate in this process. Stockholders are being asked to
consider and vote upon the proposals to ratify the adoption of the 1998 Stock
Option and Incentive Plan and the 1998 Management Recognition Plan. The Board of
Directors has carefully considered both of these proposals and believes that
their approval will enhance the ability of the Company to recruit and retain
quality directors and management. Accordingly, your Board of Directors
unanimously recommends that you vote "For" both of the proposals.
We encourage you to attend the meeting in person. Whether or not you
plan to attend, please read the enclosed Proxy Statement and then complete, sign
and date the enclosed proxy card and return it in the accompanying postage
prepaid return envelope as promptly as possible. This will save the Company
additional expense in soliciting proxies and will ensure that your shares are
represented at the meeting.
Sincerely,
/s/Douglas Stewart
------------------
Douglas Stewart
President and Chief Executive Officer
<PAGE>
PEOPLES-SIDNEY FINANCIAL CORPORATION
101 East Court Street
Sidney, Ohio 45365
(937) 492-6129
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To be Held on May 22, 1998
Notice is hereby given that a Special Meeting of Stockholders (the
"Meeting") of Peoples-Sidney Financial Corporation (the "Company") will be held
at The Fairington located at 1103 Fairington Drive, Sidney, Ohio, 10:00 a.m.,
Sidney, Ohio time, on May 22, 1998.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The ratification of the adoption of the Company's 1998 Stock Option
and Incentive Plan;
2. The ratification of the adoption of the Company's 1998 Management
Recognition Plan;
and such other matters as may properly come before the Meeting, or any
adjournments thereof. The Board of Directors is not aware of any other business
to come before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on
the date specified above, or on any date or dates to which the Meeting may be
adjourned. Stockholders of record at the close of business on April 13, 1998 are
the stockholders entitled to vote at the Meeting and any adjournments thereof. A
complete list of stockholders entitled to vote at the Meeting will be available
for inspection by stockholders at the office of the Company, 101 East Court
Street, Sidney, Ohio, during the ten days prior to the Meeting, during the hours
of 8:30 a.m. to 5:00 p.m., Monday through Friday, as well as at the Meeting.
You are requested to complete and sign the enclosed form of proxy,
which is solicited on behalf of the Board of Directors, and to mail it promptly
in the enclosed envelope. The proxy will not be used if you attend and vote at
the Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Gary N. Fullenkamp
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Gary N. Fullenkamp
Corporate Secretary
Sidney, Ohio
April 20, 1998
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF
MAILED WITHIN THE UNITED STATES.
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<PAGE>
PROXY STATEMENT
PEOPLES-SIDNEY FINANCIAL CORPORATION
101 East Court Street
Sidney, Ohio 45365
(937) 492-6129
SPECIAL MEETING OF STOCKHOLDERS
May 22, 1998
This Proxy Statement is furnished in connection with the solicitation
on behalf of the Board of Directors of Peoples-Sidney Financial Corporation (the
"Company"), the parent company of Peoples Savings and Loan Association of Sidney
("Peoples" or the "Association"), of proxies to be used at the Special Meeting
of Stockholders of the Company (the "Meeting") which will be held at The
Fairington located at 1103 Fairington Drive, Sidney, Ohio on May 22, 1998, at
10:00 a.m., Sidney, Ohio time, and all adjournments of the Meeting. The
accompanying Notice of Special Meeting and this Proxy Statement are first being
mailed to stockholders on or about April 20, 1998.
At the Meeting, stockholders of the Company are being asked to consider
and vote upon the proposals to ratify the adoption of the Peoples-Sidney
Financial Corporation 1998 Stock Option and Incentive Plan (the "Stock Option
Plan") and the Peoples-Sidney Financial Corporation 1998 Management Recognition
Plan (the "MRP").
Vote Required and Proxy Information
All shares of the Company's Common Stock, par value $.01 per share (the
"Common Stock"), represented at the Meeting by properly executed proxies
received prior to or at the Meeting, and not revoked, will be voted at the
Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for the proposals set forth
in this Proxy Statement. The Company does not know of any matters, other than
those described in the Notice of Special Meeting, that are to come before the
Meeting. If any other matters are properly presented at the Meeting for action,
the persons named in the enclosed form of proxy and acting thereunder will have
the discretion to vote on such matters in accordance with their best judgment.
Proposals to ratify the adoption of the Stock Option Plan and the MRP
require the affirmative vote of a majority of shares entitled to vote at the
Meeting. Proxies marked to abstain with respect to any proposal have the same
effect as votes against the proposal. Broker non-votes have no effect on the
vote. One-third of the shares of the Common Stock, present in person or
represented by proxy, shall constitute a quorum for purposes of the Meeting.
Abstentions and broker non-votes are counted for purposes of determining a
quorum.
A proxy given pursuant to the solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary of
the Company at or before the Meeting a written notice of revocation bearing a
later date than the proxy, (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of the Company at or before
the Meeting, or (iii) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute revocation of a
proxy). Any written notice revoking a proxy should be delivered to Gary N.
Fullenkamp, Secretary, Peoples-Sidney Financial Corporation, 101 East Court
Street, Sidney, Ohio 45365.
<PAGE>
Voting Securities and Certain Holders Thereof
Stockholders of record as of the close of business on April 13, 1998
will be entitled to one vote for each share of Common Stock then held. As of
that date, the Company had 1,785,375 shares of Common Stock issued and
outstanding. The following table sets forth information regarding share
ownership of (i) those persons or entities known by management to beneficially
own more than five percent of the Common Stock ("Five Percent Beneficial
Owners"), (ii) each member of the Company's board of directors, (iii) each
officer of the Company and the Association who made in excess of $100,000
(salary and bonus) (the "Named Officers") during the fiscal year ended June 30,
1997 ("fiscal 1997"); and (iv) all directors and executive officers of the
Company and the Association as a group.
<TABLE>
<CAPTION>
Shares Beneficially Owned Percent
Name and Address of Beneficial Owner at April 13, 1998 of Class
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<S> <C> <C>
Directors and Named Officers
Douglas Stewart 21,649 1.21%
President, Chief Executive Officer and Director
Richard T. Martin 28,308 1.59%
Chairman of the Board
Robert W. Bertsch 20,000 1.12%
Director
Harry N. Faulkner 9,097 .51%
Director
James W. Kerber 20,000 1.12%
Director
John W. Sargeant 12,000 .67%
Director
All directors and executive officers of the Company 162,978 9.13%
and the Association, as a group (9 persons)
</TABLE>
Director Compensation
The Company pays directors a fee of $500 per month, which is in
addition to any fees payable to such persons for attendance at meetings of the
Board of Directors of the Association.
For information regarding option and restricted stock awards to be
granted to directors pursuant to the Stock Option Plan and the MRP, subject to
stockholder approval of such plans, see "Proposal I - Ratification of the 1998
Stock Option and Incentive Plan" and "Proposal II - Ratification of the 1998
Management Recognition Plan."
<PAGE>
Executive Compensation
The following table sets forth information concerning the compensation
paid or granted to the Association and Company's Chief Executive Officer. No
other executive officer of the Company had aggregate cash compensation exceeding
$100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
------------------------------- ------------------- -------
Name and Fiscal Year Restricted Options All Other
Principal Ended Other Annual Stock Shares LTIP Compen-
Position June 30(1) Salary Bonus Compensation Award(s) (#) Payouts sation
-------- ---------- ------ ----- ------------ -------- --- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Douglas Stewart 1997 $105,848 $45,225 $--- --- --- --- $24,593(2)
President and Chief Executive 1996 70,000 35,000 --- --- --- --- 11,500(3)
Officer
</TABLE>
(1) In accordance with the transitional provisions applicable to the rules on
executive compensation disclosure adopted by the SEC, summary compensation
information is excluded for the year ended June 30, 1995, as Peoples-Sidney
was not a public company during such period.
(2) Represents an ESOP allocation of $23,086 and a contribution by the Company
to Mr. Stewart's account through the Company's 401(k) plan of $1,507 at June
30, 1997.
(3) Includes pension costs under the Association's defined benefit plan which
was terminated on January 31, 1997.
Employment Agreements and Severance Agreements
The Association has entered into employment agreements with Douglas
Stewart, President and Chief Executive Officer; David R. Fogt, Vice President of
Operations and Financial Services; Gary N. Fullenkamp, Vice President of
Mortgage Loans and Corporate Secretary; and Debra A. Geuy, Chief Financial
Officer and Treasurer. The employment agreements are designed to assist the
Association in maintaining a stable and competent management team. The continued
success of the Association depends to a significant degree on the skills and
competence of its officers. The employment agreements provide for an annual base
salary in an amount not less than each employee's current salary. The initial
term of Mr. Stewart's agreement is three years and each of the other officers'
agreements is for one year. The agreements provide for extensions for a period
of one year on each annual anniversary date, subject to review and approval of
the extension by disinterested members of the Board of Directors of the
Association. The agreements provide for termination upon each employee's death,
termination of employment for cause or in certain events specified by OTS
regulations. The employment agreements are also terminable by the employee upon
90 days notice to the Association.
<PAGE>
The employment agreements provide for payment to each employee of his
salary for the remainder of the term of the agreement, plus up to 299%, in the
case of Mr. Stewart and 100% for each of the other officers, of the employee's
base compensation, in the event there is a "change in control" of the
Association and employment terminates involuntarily in connection with such
change in control or within twelve months thereafter. This termination payment
may not exceed three times the employee's average annual compensation over the
most recent five year period or be non-deductible by the Association for federal
income tax purposes. For the purposes of the employment agreements, a "change in
control" is defined as (1) an event of a nature that (i) results in a change in
control of the Association or the Company within the meaning of the Home Owners'
Loan Act of 1933 and 12 C.F.R. Part 574; or (ii) would be required to be
reported in response to Item 1 of the current report on Form 8-K, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act");
(2) any person (as the term is used in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly of securities of the Association or the
Company representing 20% or more of the Association's or the Company's
outstanding securities; (3) individuals who are members of the board of
directors of the Association or the Company cease for any reason to constitute
at least a majority thereof, provided that any person becoming a director
subsequent to the date of the contract whose election was approved by a vote of
at least three-quarters of the directors comprising the Incumbent Board, or
whose nomination for election by the Company's stockholders was approved by the
nominating committee serving under an Incumbent Board, shall be considered a
member of the Incumbent Board; or (4) a reorganization, merger, consolidation,
sale of all or substantially all of the assets of the Association or the Company
or a similar transaction in which the Association or the Company is not the
resulting entity would require the filing of an application for acquisition of
control or notice of change in control. The agreements guarantee participation
in an equitable manner in employee benefits applicable to executive personnel.
The Association has also entered into a change in control severance
agreement with Assistant Vice President of Financial Services, Steven Goins. The
agreement provides for an initial term of twelve months and for extensions of
one year, on each anniversary of the effective date of the agreement, subject to
a formal performance evaluation performed by disinterested members of the Board
of Directors of the Association. The agreement provides for termination for
cause or in certain events specified by OTS regulations.
The agreement provides for a lump sum payment to the employee of 100%
of his annual base compensation and the continued payment for the remaining term
of the contract of life and health insurance coverage maintained by the
Association in the event there is a "change in control" of the Association where
employment terminates involuntarily within 12 months of such change in control.
This termination payment is subject to reduction to the extent non-deductible
for federal income tax purposes. For the purposes of the agreement, a "change in
control" is defined as any event which would require the filing of an
application for acquisition of control or notice of change in control pursuant
to 12 C.F.R. ss. 574.3 or 4 or any successor regulation. Such events are
generally triggered prior to the acquisition of control of 10% of the Company's
Common Stock.
Based on current salaries, if the employment of Messrs. Stewart, Fogt,
Fullenkamp or Goins or Ms. Geuy had been terminated as of December 31, 1997,
under circumstances entitling him or her to severance pay as described above, he
or she would have been entitled to receive a lump sum cash payment of
approximately $299,200, $49,650, $42,150, $32,050 and $42,300, respectively.
<PAGE>
Benefit Plans
General. Peoples Federal currently provides health care benefits to its
employees, including hospitalization, disability and major medical insurance,
subject to certain deductibles and copayments by employees.
Pension Plan. Prior to January 31, 1997, the Association maintained a
defined benefit pension plan for the benefit of its employees. The pension plan
was terminated as of January 31, 1997. The noncontributory pension plan covered
all employees who met certain minimum service requirements. The benefits under
the pension plan were distributed upon termination.
Incentive Bonus Plan. The Association intends to establish an incentive
bonus plan which provides for annual cash bonuses to certain officers as a means
of recognizing achievement on the part of such employees. The bonuses will be
determined based on a combination of the Association's and the individual
employee's performance during the year. No amounts were paid or accrued pursuant
to the incentive plan during fiscal 1997.
401(k) Plan. In connection with the termination of its defined benefit
pension plan, the Association has recently adopted a qualified, tax-exempt
pension plan with a "cash-or-deferred arrangement" qualifying under Section
401(k) of the Internal Revenue Code (the "401(k) Plan"). With certain
exceptions, all employees who have attained age 21 and who have completed one
year of employment, during which they worked at least 1,000 hours, are eligible
to participate in the 401(k) Plan as of the earlier of the first day of the plan
year or the next July 1 or January 1. Eligible employees are permitted to
contribute up to 15% of their compensation to the 401(k) Plan on a pre-tax
basis, up to a maximum of $7,000. The Association matches 50% of the first 6% of
each participant's salary reduction contribution to the 401(k) Plan.
Participant contributions to the 401(k) Plan are fully and immediately
vested. Withdrawals are not permitted before age 62 except in the event of
death, disability, termination of employment or reasons of proven financial
hardship. With certain limitations, participants may make withdrawals from their
accounts while actively employed. Upon termination of employment, the
participant's accounts will be distributed, unless he or she elects to defer the
payment.
The 401(k) Plan may be amended by the Board of Directors, except that
no amendment may be made which would reduce the interest of any participant in
the 401(k) Plan trust fund or divert any of the assets of the 401(k) Plan trust
fund to purposes other than the benefit of participants or their beneficiaries.
The cash contribution and related expense included in salaries and
employee benefits was $5,219 for fiscal 1997.
Employee Stock Ownership Plan. The Association and the Company have
established an Employee Stock Ownership Plan ("ESOP") for the benefit of
employees of the Company and its subsidiaries, including Peoples. The ESOP is
designed to meet the requirements of an employee stock ownership plan as
described at Section 4975(e)(7) of the Code and Section 407(d)(6) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The ESOP
may borrow in order to finance purchases of the Company's Common Stock.
All employees of the Association are eligible to participate in the
ESOP after they attain age 21 and complete one year of service, during which at
least 1,000 hours were worked. During that year of service. Employees will be
<PAGE>
credited for years of service to the Association prior to the adoption of the
ESOP for participation and vesting purposes. The Association's contribution to
the ESOP is allocated among participants on the basis of compensation. Each
participant's account will be credited with cash and shares of Company Common
Stock based upon compensation earned during the year with respect to which the
contribution is made. Contributions credited to a participant's account are
vested on a graduated basis and become fully vested when such participant
completes ten years of service. ESOP participants are entitled to receive
distributions from their ESOP accounts only upon termination of service.
Distributions will be made in cash and in whole shares of the Company's Common
Stock. Fractional shares will be paid in cash. Participants will not incur a tax
liability until a distribution is made.
Each participating employee is entitled to instruct the trustee of the
ESOP as to how to vote the shares allocated to his or her account. The trustee
will not be affiliated with the Company or Peoples.
The ESOP may be amended by the Board of Directors, except that no
amendment may be made which would reduce the interest of any participant in the
ESOP trust fund or divert any of the assets of the ESOP trust fund to purposes
other than the benefit of participants or their beneficiaries.
Stock Option and Incentive Plan. The Stock Option Plan was adopted by
the Board of Directors, subject to ratification by stockholders at the Meeting.
See "Proposal I - Ratification of the 1998 Stock Option and Incentive Plan."
Management Recognition Plan. The Board has adopted a Management
Recognition Plan subject to ratification by stockholders at the Meeting. See
"Proposal II - Ratification of the 1998 Management Recognition Plan."
Certain Transactions
The Association has followed a policy of granting loans to eligible
directors, officers, employees and members of their immediate families for the
financing of their personal residences and for consumer purposes. Under the
Association's current policy, all such loans to directors and senior officers
are required to be made in the ordinary course of business and on the same
terms, including collateral and interest rates, as those prevailing at the time
for comparable transactions and do not involve more than the normal risk of
collectibility. However, prior to August 1989, the Association waived loan
origination fees on loans to directors and employees.
<PAGE>
PROPOSAL I - RATIFICATION OF THE 1998 STOCK OPTION AND INCENTIVE PLAN
General
Establishment and implementation of the Stock Option Plan is subject to
ratification by stockholders. The Stock Option Plan is in compliance with OTS
regulations, however, the OTS has not endorsed or approved the Stock Option Plan
and no written or oral representation to the contrary is made hereby.
The Stock Option Plan has been adopted by the Board of Directors of the
Company, subject to ratification by stockholders at the Meeting. Ratification by
stockholders of the adoption of the Stock Option Plan will ratify the awards
proposed thereunder and as described in "Awards Under the Stock Option Plan"
herein, and will ratify the granting of additional awards pursuant to the
provisions of the Stock Option Plan. Pursuant to the Stock Option Plan, the
Company will reserve for issuance thereunder either from authorized but unissued
shares or from issued shares reacquired and held as treasury shares, 178,538
shares of the Common Stock (10% of the shares issued in the Association's
Conversion). Management may, to the extent practicable and feasible, fund the
Stock Option Plan from issued shares reacquired by the Company in the open
market. To the extent the Company utilizes authorized but unissued Common Stock
to fund the Stock Option Plan, the exercise of stock options will have the
effect of diluting the holdings of persons who own the Common Stock. Assuming
all options under the Stock Option Plan are awarded and exercised through the
use of authorized but unissued Common Stock, current stockholders would be
diluted by approximately 9.1%. Upon ratification of the Stock Option Plan by
stockholders, it is proposed that options to purchase an aggregate of 142,824
shares of Common Stock will be awarded, which will leave available 35,714 shares
for future awards.
The Board of Directors believes that it is appropriate for the Company
to adopt a flexible and comprehensive Stock Option Plan which permits the
granting of a variety of long-term incentive awards to directors, officers and
employees as a means of enhancing and encouraging the recruitment and retention
of those individuals on whom the continued success of the Company most depends.
However, because the awards are granted only to persons affiliated with the
Company, the adoption of the Stock Option Plan could make it more difficult for
a third party to acquire control of the Company and therefore could discourage
offers for the Company's stock that may be viewed by the Company's stockholders
to be in their best interest. In addition, certain provisions included in the
Company's Certificate of Incorporation and Bylaws may discourage potential
takeover attempts, particularly those that have not been negotiated directly
with the Board of Directors of the Company. Included among these provisions are
provisions (i) limiting the voting power of shares held by persons owning 10% or
more of the Common Stock, (ii) requiring a supermajority vote of stockholders
for approval of certain business combinations, (iii) establishing a staggered
Board of Directors, (iv) permitting special meetings of stockholders to be
called only by the Board of Directors and (v) authorizing a class of preferred
stock with terms to be established by the Board of Directors. These provisions
could prevent the sale or merger of the Company even where a majority of the
stockholders approve of such transaction.
In addition, federal regulations prohibit the beneficial ownership of
more than 10% of the stock of a converted savings institution or its holding
company without prior approval of the OTS. Federal law and regulations also
require OTS approval prior to the acquisition of "control" (as defined in the
OTS regulations) of an insured institution, including a holding company thereof.
These regulations could have the effect of discouraging takeover attempts of the
Company.
<PAGE>
Attached as Exhibit A to this Proxy Statement is the complete text of
the Stock Option Plan. The principal features of the Stock Option Plan are
summarized below.
Principal Features of the Stock Option Plan
The Stock Option Plan provides for awards in the form of stock options,
stock appreciation rights ("SARs") and limited stock appreciation rights
("LSARs"). Each award shall be on such terms and conditions, consistent with the
Stock Option Plan and applicable OTS regulations, as the committee administering
the Stock Option Plan may determine. Subject to certain exceptions described
herein, awards made under such plan vest at a rate of at least one-fifth of the
initial award per year, subject to the participant maintaining continuous
service to the Company or its subsidiaries from the date of grant.
Pursuant to OTS regulations, each non-employee director of the Company
and all non-employee directors of the Company as a group, may not be awarded
more than 5% and 30% of the total shares subject to the Stock Option Plan,
respectively. In addition, no individual may be granted awards with respect to
more than 25% of the total shares subject to the Stock Option Plan.
Shares awarded pursuant to the Stock Option Plan may be either
authorized but unissued shares or reacquired shares held by the Company in its
treasury. Any shares subject to an award which expires or is terminated
unexercised will again be available for issuance under the Stock Option Plan or
any other plan of the Company or its subsidiaries. Generally, no award or any
right or interest therein is assignable or transferable except under certain
limited exceptions set forth in the Stock Option Plan.
The Stock Option Plan is administered by the Compensation Committee of
the Board of Directors of the Company (the "Compensation Committee"), which is
comprised of non-employee directors of the Company. Directors Martin, Kerber and
Faulkner have been appointed as the present members of the Compensation
Committee. Pursuant to the terms of the Stock Option Plan, any director, officer
or employee of the Company or its affiliates is eligible to participate in the
Stock Option Plan, which currently includes approximately 20 persons. In
granting awards under the Stock Option Plan, the Compensation Committee
considers, among other things, position and years of service, value of the
participant's services to the Company and the Association and the added
responsibilities of such individuals as employees, directors and officers of a
public company.
Stock Options
The term of stock options may not exceed ten years from the date of
grant. The Compensation Committee may grant either "incentive stock options" as
defined under Section 422 of the Code or stock options not intended to qualify
as such ("non-Equalified stock options").
In general, stock options will not be exercisable after the expiration
of their terms. Unless otherwise determined by the Compensation Committee, in
the event a participant ceases to maintain continuous service (as defined in the
Stock Option Plan) with the Company or one of its affiliates, for any reason
(excluding death, disability and termination for cause), an exercisable stock
option will continue to be exercisable for three months thereafter but in no
event after the expiration date of the option. Unless otherwise provided by the
Compensation Committee, in the event of disability of a participant during such
service, all options not then exercisable shall become exercisable in full and
remain exercisable for a period of three months from the date of such
<PAGE>
disability. Unless otherwise provided by the Compensation Committee, in the
event of death of a participant, all options not then exercisable shall become
exercisable in full. Unless otherwise provided by the Compensation Committee, in
the event of the death of a participant during such service or within the
three-month period described above following termination of service described
above, an exercisable option will continue to be exercisable for one year, to
the extent exercisable by the participant upon his death, but in no event later
than ten years after grant. Following the death of any participant, the
Compensation Committee may, as an alternative means of settlement of an option,
elect to pay to the holder thereof an amount of cash equal to the amount by
which the market value of the shares covered by the option on the date of
exercise exceeds the exercise price. A stock option will automatically terminate
and will no longer be exercisable as of the date a participant is notified of
termination for cause.
The exercise price for the purchase of shares subject to a stock option
at the date of grant may not be less than 100% of the market value of the shares
covered by the option on that date. The exercise price must be paid in full in
cash or, if permitted by the Compensation Committee, shares of Common Stock, or
a combination of both.
The Stock Option Plan provides for the grant of a non-qualified stock
option to purchase 8,926 shares of Common Stock to each non-employee director of
the Company, as of the date of stockholder ratification of the Stock Option
Plan. Such options have a term of ten years, are not transferable, and vest at
the rate of 20% per year commencing on the one-year anniversary of the date of
grant. The exercise price per share of such options shall be equal to the fair
market value of the Common Stock on the date of grant.
Stock Appreciation Rights
The Compensation Committee may grant SARs at any time, whether or not
the participant then holds stock options, granting the right to receive the
excess of the market value of the shares represented by the SARs on the date
exercised over the exercise price. SARs generally will be subject to the same
terms and conditions and exercisable to the same extent as stock options, as
described above. Upon the exercise of a SAR, the participant will receive the
amount due in cash or shares, or a combination of both, as determined by the
Compensation Committee. SARs may be related to stock options ("tandem SARs"), in
which case the exercise of one will reduce to that extent the number of shares
represented by the other.
SARs will require an expense accrual by the Company each year for the
appreciation on the SARs which it is anticipated will be exercised. The amount
of the accrual is dependent upon whether and the extent to which the SARs are
granted and the amount, if any, by which the market value of the SARs exceeds
the exercise price.
Limited Stock Appreciation Rights
Limited SARs will be exercisable only for a limited period in the event
of a tender or exchange offer for shares of the Company's Common Stock, other
than by the Company, where 25% or more of the outstanding shares are acquired in
that offer or any other offer which expires within 60 days of that offer. The
amount paid on exercise of a Limited SAR will be the excess of (a) the market
value of the shares on the date of exercise, or (b) the highest price paid
pursuant to the offer, over the exercise price. Payment upon exercise of a
Limited SAR will be in cash.
<PAGE>
Limited SARs may be granted at the time of, and must be related to, the
grant of a stock option or SAR. The exercise of one will reduce to that extent
the number of shares represented by the other. Subject to vesting requirements
contained in OTS regulations, Limited SARs will be exercisable only for the 45
days following the expiration of the tender or exchange offer, during which
period the related stock option or SAR will be exercisable.
Effect of Merger and Other Adjustments
Shares as to which awards may be granted under the Stock Option Plan,
and shares then subject to awards, will be adjusted appropriately by the
Compensation Committee in the event of any merger, consolidation,
reorganization, recapitalization (including a return of capital), combination or
exchange of shares, stock dividend, stock split or other change in the corporate
structure or Common Stock of the Company.
In the event of any merger, consolidation or combination of the Company
with or into another company or other entity, whereby either the Company is not
the continuing entity or its outstanding shares of Common Stock are converted
into or exchanged for different securities, cash or property, or any combination
thereof, pursuant to a plan or agreement the terms of which are binding upon all
stockholders, any participant to whom a stock option or SAR has been granted at
least six months prior to such event will have the right upon exercise of the
option or SAR (subject to the terms of the Stock Option Plan and any other
limitation or vesting period applicable to such option or SAR) to an amount
equal to the excess of fair market value on the date of exercise of the
consideration receivable in the merger, consolidation or combination with
respect to the shares covered or represented by the stock option or SAR over the
exercise price of the option or SAR multiplied by the number of shares with
respect to which the option or SAR has been exercised.
Amendment and Termination
The Board of Directors of the Company may at any time amend, suspend or
terminate the Stock Option Plan or any portion thereof, subject to compliance
with OTS regulations, but may not, without the prior ratification of the
stockholders, make any amendment which shall (i) increase the aggregate number
of securities which may be issued under the Stock Option Plan (except as
specifically set forth under the Stock Option Plan), (ii) materially change the
requirements as to eligibility for participation in the Stock Option Plan or
(iii) change the class of persons eligible to participate in the Stock Option
Plan, provided, however, that no such amendment, suspension or termination shall
impair the rights of any participant, without his consent, in any award made
pursuant to the Stock Option Plan. Unless previously terminated, the Stock
Option Plan shall continue in effect for a term of ten years, after which no
further awards may be granted under the Stock Option Plan.
Federal Income Tax Consequences
Under present federal income tax laws, awards under the Stock Option
Plan will have the following consequences:
(1) The grant of an award will by itself neither result in the recognition of
taxable income to the participant nor entitle the Company to a deduction
at the time of such grant.
<PAGE>
(2) In order to qualify as an "Incentive Stock Option," a stock option awarded
under the Stock Option Plan must meet the conditions contained in Section
422 of the Code, including the requirement that the shares acquired upon
the exercise of the stock option be held for one year after the date of
exercise and two years after the grant of the option. The exercise of an
Incentive Stock Option will generally not, by itself, result in the
recognition of taxable income to the participant nor entitle the Company
to a deduction at the time of such exercise. However, the difference
between the exercise price and the fair market value of the option shares
on the date of exercise is an item of tax preference which may, in certain
situations, trigger the alternative minimum tax. The alternative minimum
tax is incurred only when it exceeds the regular income tax. The
alternative minimum tax will be payable at the rate of 26% on the first
$175,000 of "minimum taxable income" above the exemption amount ($33,750
single person or $45,000 married person filing jointly). This tax applies
at a flat rate of 28% of so much of the taxable excess as exceeds $175,000
and 28% on minimum taxable income more than $175,000 above the applicable
exemption amounts. If a taxpayer has alternative minimum taxable income in
excess of $150,000 (married persons filing jointly) or $112,500 (single
person), the $45,000 or $33,750 exemptions are reduced by an amount equal
to 25% of the amount by which the alternative minimum taxable income of
the taxpayer exceeds $150,000 or $112,500, respectively. Provided the
applicable holding periods described above are satisfied, the participant
will recognize long term capital gain or loss upon the resale of the
shares received upon such exercise.
(3) The exercise of a stock option which is not an Incentive Stock Option will
result in the recognition of ordinary income by the participant on the
date of exercise in an amount equal to the difference between the exercise
price and the fair market value on the date of exercise of the shares
acquired pursuant to the stock option.
(4) The exercise of a SAR will result in the recognition of ordinary income by
the participant on the date of exercise in an amount equal to the cash
received pursuant to the exercise.
(5) The Company will be allowed a deduction at the time, and in the amount of,
any ordinary income recognized by the participant under the various
circumstances described above, provided that the Company meets its federal
reporting obligations.
Awards Under the Stock Option Plan
The following table presents information at April 13, 1998 with respect
to the number of awards of options which are currently intended to be granted
under the Stock Option Plan, subject to stockholder ratification of the Stock
Option Plan, to (i) the Named Officers, (ii) all executive officers of the
Company and the Association as a group, (iii) directors who are not executive
officers of the Company and the Association as a group, and (iv) all
non-executive officer employees of the Company or the Association as a group. On
April 13, 1998, the closing price for the Common Stock as quoted on the Nasdaq
National Market System was $18.125 per share.
<PAGE>
<TABLE>
<CAPTION>
1998 STOCK OPTION AND INCENTIVE PLAN
Name and Position Dollar Value(1) Number of Shares
----------------- --------------- ----------------
<S> <C> <C>
Richard T. Martin, Chairman and Director $ 161,783.75 8,926
Robert W. Bertsch, Director 161,783.75 8,926
James W. Kerber, Director 161,783.75 8,926
Harry N. Faulkner, Director 161,783.75 8,926
John W. Sargeant, Director 161,783.75 8,926
Douglas Stewart, President, Chief Executive Officer and Director 808,991.25 44,634
David R. Fogt, Vice President of Operations 218,424.37 12,051
Debra A. Geuy, Chief Financial Officer and Treasurer 169,885.62 9,373
Gary N. Fullenkamp, Vice President of Mortgage Loans and Secretary 97,077.50 5,356
Shares Held for Future Grants 647,316.25 35,714
Executive Officer Group (4 persons)......................................... 1,294,378.70 71,414
Non-Executive Director Group (5 persons).................................... 808,918.75 44,630
Non-Executive Officer Employee Group (11 persons)........................... 485,387.50 26,780
Total shares 178,538
=======
</TABLE>
- ------------------
(1) Any value realized will be the difference between the exercise price
and the market value upon exercise. Since the options have not been
granted, there is no current value. At the date of grant, which is
intended to be the date of stockholder ratification, the value realized
will be zero.
Subject to the conditions of the Stock Option Plan, the proposed awards
described in the preceding table will vest in not less than five equal annual
installments with the first installment vesting on the one-year anniversary of
the date of grant and the additional installments vesting ratably on each
subsequent anniversary of the date of grant. Pursuant to the terms of the Stock
Option Plan, all options are required to be granted with an exercise price equal
to not less than the fair market value of the shares on the date of grant. To
the extent permitted under applicable law, all options granted to officers are
intended to be incentive stock options. All awards to directors who are not full
time employees of the Company will be non-qualified stock options. No awards are
intended to be made to the Association's current directors emeriti under the SOP
at this time.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE ADOPTION OF THE 1998 STOCK OPTION AND INCENTIVE PLAN.
PROPOSAL II - RATIFICATION OF THE 1998 MANAGEMENT RECOGNITION PLAN
General
Establishment and implementation of the MRP is subject to ratification
by stockholders. The MRP is in compliance with OTS regulations, however, the OTS
has not endorsed or approved the MRP and no written or oral representation to
the contrary is made hereby.
<PAGE>
The MRP has been adopted by the Board of Directors of the Company,
subject to stockholder ratification. The MRP is designed to provide directors,
officers and employees with a proprietary interest in the Company in a manner
designed to encourage such individuals to remain with the Company and the
Association. Ratification by stockholders of the adoption of the MRP will ratify
the awards proposed thereunder and as described in "Awards under the MRP"
herein, and will ratify the granting of additional restricted stock awards
pursuant to the provisions of the MRP. Pursuant to the MRP, 71,415 shares of
Common Stock (or 4% of the shares sold in the Association's Conversion), funded
from either authorized but unissued shares or issued shares subsequently
reacquired and held as treasury shares, will be available for awards. Management
currently intends, to the extent practicable and feasible, to fund the MRP from
issued shares reacquired by the Company in the open market. To the extent the
Company utilizes authorized but unissued shares to fund the MRP the interests of
current stockholders will be diluted. Assuming all MRP Shares are awarded
through the use of authorized but unissued Common Stock, current stockholders
would be diluted by approximately 3.8%. Upon ratification of the MRP by
stockholders, it is proposed that an aggregate of 57,128 shares of Common Stock
will be awarded to directors and officers of the Company and the Association,
which will leave 14,287 shares available for future awards.
Attached as Exhibit B to this Proxy Statement is the complete text of
the form of the MRP. The principal features of the MRP are summarized below.
Principle Features of the MRP
The MRP provides for the award of shares of Common Stock ("MRP Shares")
subject to the restrictions described below. Each award under the MRP will be
made on such terms and conditions, consistent with the terms of the MRP and
applicable OTS regulations, as the Compensation Committee shall determine.
The MRP is administered by the Company's Compensation Committee. The
Compensation Committee will select the recipients and terms of awards pursuant
to the MRP. For information regarding the membership of this Committee, see
"Proposal I - Ratification of the 1998 Stock Option and Incentive Plan." In
determining to whom and in what amount to grant awards, the Compensation
Committee considers the position and responsibilities of eligible individuals,
the value of their services to the Company and the Association and other factors
it deems relevant. Pursuant to the terms of the MRP, any director, officer or
employee of the Company or its affiliates may be selected by the Compensation
Committee to participate in the MRP, which currently includes eligible
participants of approximately 10 persons.
The MRP provides that MRP Shares used to fund awards under the MRP may
be either authorized but unissued shares or reacquired shares held by the
Company in its treasury. Any MRP Shares which are forfeited will again be
available for issuance under the MRP.
As required by OTS regulations, award recipients earn (i.e., become
vested in) awards, over a period of time as determined by the Compensation
Committee at the time of grant, provided that no award may vest earlier than one
year from the date of stockholder approval of the MRP and shall vest at a rate
not to exceed 20% of the initial award per year except in the event of death or
disability. Pursuant to OTS Regulations, no director who is not an employee of
the Company shall be granted awards with respect to more than 5% of the total
shares subject to the MRP. All non-employee directors of the Company, in the
aggregate, may not be granted awards with respect to more than 30% of the total
<PAGE>
MRP Shares and no individual shall be granted awards with respect to more than
25% of the total MRP Shares. It is intended that no award granted to an
executive officer of the Company or its affiliates shall vest in any fiscal year
(and shall be carried over to the subsequent fiscal year) in which the
Association fails to meet all of its fully phased-in capital requirements.
Subject to compliance with OTS regulations, the Compensation Committee
may, in its discretion, accelerate the time at which any or all restrictions
will lapse, or may remove any or all of the restrictions. In the event a
participant ceases to maintain continuous service with the Company or the
Association by reason of death or disability, MRP Shares still subject to
restrictions will be free of these restrictions and shall not be forfeited. In
the event of termination for any other reason, all shares will be forfeited and
returned to the Company.
Holders of MRP Shares may not vote or sell, assign, transfer, pledge or
otherwise encumber any of the MRP Shares during the restricted period. During
the restricted period, MRP Shares will be voted by an independent trustee and
not by the holder of such shares. In addition, all dividends declared and paid
on MRP Shares still subject to restrictions will be deferred and held for the
account of the participant thereof until the earlier to lapse of the
restrictions on such shares or the death or disability of the participant.
Finally, the MRP provides for an award as of the date of stockholder
ratification of the MRP of 3,570 Shares to each non-employee director of the
Company. As provided in the MRP, no MRP Shares granted to a non-employee
director shall be earned in any fiscal year (and shall be carried over to the
subsequent fiscal year) in which the Association fails to meet all of its fully
phased-in capital requirements.
Adjustments Upon Changes in Capitalization
MRP Shares awarded under the MRP will be adjusted by the Compensation
Committee in the event of a reorganization, recapitalization, stock split, stock
dividend, combination or exchange of shares, merger, consolidation or other
change in corporate structure or the Common Stock of the Company.
Federal Income Tax Consequences
Holders of MRP Shares will recognize ordinary income on the date that
the MRP Shares are no longer subject to a substantial risk of forfeiture, in an
amount equal to the fair market value of the shares on that date. In certain
circumstances, a holder may elect to recognize ordinary income and determine
such fair market value on the date of the grant of the MRP Shares. Holders of
MRP Shares will also recognize ordinary income equal to their dividend or
dividend equivalent payments when such payments are received. Generally, the
amount of income recognized by participants will be a deductible expense for tax
purposes for the Company.
Amendment to the MRP
The Board of Directors of the Company may amend, suspend or terminate
the MRP or any portion thereof at any time, subject to OTS Regulations,
provided, however, that no such amendment, suspension or termination shall
impair the rights of any participant, without his consent, in any award
theretofore made pursuant to the MRP.
<PAGE>
Awards Under the MRP
The following table presents information at April 13, 1998 with respect
to the number of MRP Shares which are currently intended to be granted under the
MRP, subject to stockholder ratification of the MRP, to (i) the Named Officers,
(ii) all executive officers of the Company and the Association as a group, (iii)
directors who are not executive officers of the Company or the Association as a
group, and (iv) all non-executive officer employees of the Company or the
Association as a group. No awards are intended to be made to the Association's
current directors emeriti under the MRP at this time.
<TABLE>
<CAPTION>
1998 MANAGEMENT RECOGNITION PLAN
Name and Position Dollar value(1) Shares of Restricted Stock
----------------- --------------- --------------------------
<S> <C> <C>
Richard T. Martin, Chairman and Director $ 64,706.25 3,570
Robert W. Bertsch, Director 64,706.25 3,570
James W. Kerber, Director 64,706.25 3,570
Harry N. Faulkner, Director 64,706.25 3,570
John W. Sargeant, Director 64,706.25 3,570
Douglas Stewart, President, Chief Executive Officer and Director 323,603.75 17,854
David R. Fogt, Vice President of Operations 155,331.25 8,570
Debra A. Geuy, Chief Financial Officer and Treasurer 116,489.37 6,427
Gary N. Fullenkamp, Vice President of Mortgage Loans and Secretary 77,665.63 4,285
Shares Held for Future Grants 258,951.87 14,287
Executive Officer Group (4 persons)..................................... 673,090.00 37,136
Non-Executive Director Group (5 persons)................................ 323,531.25 17,850
Non-Executive Officer Employee Group (1 person)......................... 38,823.75 2,142
Total shares 1,294,396.80 71,415
============ =======
</TABLE>
- -------------
(1) Assumes an aggregate market value of the MRP Shares based on the closing
price of the Common Stock of $18.125 as reported on the Nasdaq National
Market System on April 13, 1998.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE ADOPTION OF THE 1998 MANAGEMENT RECOGNITION PLAN.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials
for the next annual meeting of stockholders, any stockholder proposal to take
action at such meeting must have been received at the Company's office located
at 101 East Court Street, Sidney, Ohio 45365, no later than May 13, 1998. Any
such proposal shall be subject to the requirements of the proxy rules adopted
under the Exchange Act.
<PAGE>
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matter should properly come before the Meeting, it is
intended that holders of the proxies will act in accordance with their best
judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition, directors, officers and
regular employees of the Company and/or the Association may solicit proxies
personally or by telegraph or telephone without additional compensation.
Sidney, Ohio
April 20, 1998
<PAGE>
EXHIBIT A
PEOPLES-SIDNEY FINANCIAL CORPORATION
1998 STOCK OPTION AND INCENTIVE PLAN
1. Plan Purpose. The purpose of the Plan is to promote the long-term
interests of the Corporation and its stockholders by providing a means for
attracting and retaining directors, advisory directors, directors emeriti,
officers and employees of the Corporation and its Affiliates. It is intended
that designated Options granted pursuant to the provisions of this Plan to
persons employed by the Corporation or its Affiliates will qualify as Incentive
Stock Options. Options granted to persons who are not employees will be
Non-Qualified Stock Options.
2. Definitions. The following definitions are applicable to the Plan:
"Affiliate" - means any "parent corporation" or "subsidiary corporation"
of the Corporation, as such terms are defined in Section 424(e) and (f),
respectively, of the Code.
"Association" - means Peoples Federal Savings & Loan Association of
Sidney and any successor entity.
"Award" - means the grant of an Incentive Stock Option, a Non-Qualified
Stock Option, a Stock Appreciation Right, a Limited Stock Appreciation Right or
any combination thereof, as provided in the Plan.
"Code" - means the Internal Revenue Code of 1986, as amended.
"Committee" - means the Committee referred to in Section 3 hereof.
"Continuous Service" - means the absence of any interruption or
termination of service as a director, advisory director, director emeritus,
officer or employee of the Corporation or an Affiliate, except that when used
with respect to any Options or Rights which at the time of exercise are intended
to be Incentive Stock Options, continuous service means the absence of any
interruption or termination of service as an employee of the Corporation or an
Affiliate. Service shall not be considered interrupted in the case of sick
leave, military leave or any other leave of absence approved by the Corporation
or in the case of transfers between payroll locations of the Corporation or
between the Corporation, its parent, its subsidiaries or its successor. With
respect to any advisory director or director emeritus, continuous service shall
mean the availability to perform such functions as may be required of such
persons.
"Corporation" - means Peoples-Sidney Financial Corporation, a Delaware
corporation.
"Employee" - means any person, including an officer or director, who is
employed by the Corporation or any Affiliate.
"ERISA" - means the Employee Retirement Income Security Act of 1974, as
amended.
"Exercise Price" - means (i) in the case of an Option, the price per
Share at which the Shares subject to such Option may be purchased upon exercise
of such Option and (ii) in the case of a Right, the price per Share (other than
<PAGE>
the Market Value per Share on the date of exercise and the Offer Price per Share
as defined in Section 10 hereof) which, upon grant, the Committee determines
shall be utilized in calculating the aggregate value which a Participant shall
be entitled to receive pursuant to Sections 9, 10 or 12 hereof upon exercise of
such Right.
"Incentive Stock Option" - means an option to purchase Shares granted by
the Committee pursuant to Section 6 hereof which is subject to the limitations
and restrictions of Section 8 hereof and is intended to qualify under Section
422(b) of the Code.
"Limited Stock Appreciation Right" - means a stock appreciation right
with respect to Shares granted by the Committee pursuant to Sections 6 and 10
hereof.
"Market Value" - means the average of the high and low quoted sales price
on the date in question (or, if there is no reported sale on such date, on the
last preceding date on which any reported sale occurred) of a Share on the
Composite Tape for the New York Stock Exchange-Listed Stocks, or, if on such
date the Shares are not quoted on the Composite Tape, on the New York Stock
Exchange, or, if the Shares are not listed or admitted to trading on such
Exchange, on the principal United States securities exchange registered under
the Securities Exchange Act of 1934 on which the Shares are listed or admitted
to trading, or, if the Shares are not listed or admitted to trading on any such
exchange, the mean between the closing high bid and low asked quotations with
respect to a Share on such date on the NASDAQ System, or any similar system then
in use, or, if no such quotations are available, the fair market value on such
date of a Share as the Committee shall determine.
"Non-Employee Director" - means a director who (a) is not currently an
officer or employee of the Corporation; (b) is not a former employee of the
Corporation who receives compensation for prior services (other than from a
tax-qualified retirement plan); (c) has not been an officer of the Corporation;
(d) does not receive renumeration from the Corporation in any capacity other
than as a director; and (e) does not possess an interest in any other
transactions or is not engaged in a business relationship for which disclosure
would be required under Item 404(a) or (b) of Regulation S-K.
"Non-Qualified Stock Option" - means an option to purchase Shares granted
by the Committee pursuant to Section 6 hereof, which is not intended to qualify
under Section 422(b) of the Code.
"Option" - means an Incentive Stock Option or a Non-Qualified Stock
Option.
"Participant" - means any director, advisory director, director emeritus,
officer or employee of the Corporation or any Affiliate who is selected by the
Committee to receive an Award or who is granted an Award pursuant to Section 19
hereof.
"Plan" - means the 1998 Stock Option and Incentive Plan of the
Corporation.
"Related" - means (i) in the case of a Right, a Right which is granted in
connection with, and to the extent exercisable, in whole or in part, in lieu of,
an Option or another Right and (ii) in the case of an Option, an Option with
respect to which and to the extent a Right is exercisable, in whole or in part,
in lieu thereof has been granted.
<PAGE>
"Right" - means a Limited Stock Appreciation Right or a Stock
Appreciation Right.
"Shares" - means the shares of common stock, par value $0.01 per share,
of the Corporation.
"Stock Appreciation Right" - means a stock appreciation right with
respect to Shares granted by the Committee pursuant to Sections 6 and 9 hereof.
3. Administration. The Plan shall be administered by a Committee
consisting of two or more members, each of whom shall be a Non-Employee
Director. The members of the Committee shall be appointed by the Board of
Directors of the Corporation. Except as limited by the express provisions of the
Plan, the Committee shall have sole and complete authority and discretion,
subject to Office of Thrift Supervision Regulations, to (i) select Participants
and grant Awards; (ii) determine the number of Shares to be subject to types of
Awards generally, as well as to individual Awards granted under the Plan; (iii)
determine the terms and conditions upon which Awards shall be granted under the
Plan; (iv) prescribe the form and terms of instruments evidencing such grants;
and (v) establish from time to time regulations for the administration of the
Plan, interpret the Plan, and make all determinations deemed necessary or
advisable for the administration of the Plan.
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by a majority of the Committee without a meeting, shall
be acts of the Committee.
4. Participation in Committee Awards. The Committee may select from time
to time Participants in the Plan from those directors (including advisory
directors and directors emeriti), officers and employees (other than
Disinterested Persons), of the Corporation or its Affiliates who, in the opinion
of the Committee, have the capacity for contributing to the successful
performance of the Corporation or its Affiliates.
5. Shares Subject to Plan. Subject to adjustment by the operation of
Section 11 hereof, the maximum number of Shares with respect to which Awards may
be made under the Plan is 178,538 Shares. The Shares with respect to which
Awards may be made under the Plan may be either authorized and unissued shares
or issued shares heretofore or hereafter reacquired and held as treasury shares.
Shares which are subject to Related Rights and Related Options shall be counted
only once in determining whether the maximum number of Shares with respect to
which Awards may be granted under the Plan has been exceeded. An Award shall not
be considered to have been made under the Plan with respect to any Option or
Right which terminates and new Awards may be granted under the Plan with respect
to the number of Shares as to which such termination has occurred.
6. General Terms and Conditions of Options and Rights. The Committee
shall have full and complete authority and discretion, subject to Office of
Thrift Supervision Regulations and except as expressly limited by the Plan, to
grant Options and/or Rights and to provide the terms and conditions (which need
not be identical among Participants) thereof. In particular, the Committee shall
prescribe the following terms and conditions: (i) the Exercise Price of any
Option or Right, which shall not be less than the Market Value per Share at the
date of grant of such Option or Right, (ii) the number of Shares subject to, and
the expiration date of, any Option or Right, which expiration date shall not
exceed ten years from the date of grant, (iii) the manner, time and rate
(cumulative or otherwise) of exercise of such Option or Right, and (iv) the
<PAGE>
restrictions, if any, to be placed upon such Option or Right or upon Shares
which may be issued upon exercise of such Option or Right. The Committee may, as
a condi tion of granting any Option or Right, require that a Participant agree
not to thereafter exercise one or more Options or Rights previously granted to
such Participant. Notwithstanding the foregoing and subject to compliance with
applicable Office of Thrift Supervision Regulations, no individual shall be
granted Awards in any calendar year with respect to more than 25% of the total
shares subject to the Plan.
No director who is not an employee of the Corporation shall be granted
Awards with respect to more than 5% of the total shares subject to the Plan. All
non-employee directors of the Corporation, in the aggregate, may not be granted
Awards with respect to more than 30% of the total shares subject to the Plan and
no individual shall be granted Awards with respect to more than 25% of the total
shares subject to the Plan.
Any Award made pursuant to this Plan, which Award is subject to the
requirements of Office of Thrift Supervision Regulations, shall vest in at least
five equal annual installments with the first installment vesting on the
one-year anniversary of the date of grant, except in the event of death or
disability.
In the event Office of Thrift Supervision Regulations are amended (the
"Amended Regulations") to permit shorter vesting periods, any Award made
pursuant to this Plan, which Award is subject to the requirements of such
Amended Regulations, may vest, at the sole discretion of the Committee, in
accordance with such Amended Regulations.
Furthermore, at the time of any Award, the Participant shall enter into
an agreement with the Corporation in a form specified by the Committee, agreeing
to the terms and conditions of the Award and such other matters as the
Committee, in its sole discretion, shall determine (the "Option Agreement").
7. Exercise of Options or Rights.
(a) Except as provided herein, an Option or Right granted under the Plan
shall be exercisable during the lifetime of the Participant to whom such
Option or Right was granted only by such Participant and, except as
provided in paragraphs (c) and (d) of this Section 7, no such Option or
Right may be exercised unless at the time such Participant exercises such
Option or Right, such Participant has maintained Continuous Service since
the date of grant of such Option or Right.
(b) To exercise an Option or Right under the Plan, the Participant to whom
such Option or Right was granted shall give written notice to the
Corporation in form satisfactory to the Committee (and, if partial
exercises have been permitted by the Committee, by specifying the number
of Shares with respect to which such Participant elects to exercise such
Option or Right) together with full payment of the Exercise Price, if any
and to the extent required. The date of exercise shall be the date on
which such notice is received by the Corporation. Payment, if any is
required, shall be made either (i) in cash (including check, bank draft
or money order) or (ii) by delivering (A) Shares already owned by the
Participant and having a fair market value equal to the applicable
exercise price, such fair market value to be determined in such
appropriate manner as may be provided by the Committee or as may be
required in order to comply with or to conform to requirements of any
applicable laws or regulations, or (B) a combination of cash and such
Shares.
<PAGE>
(c) If a Participant to whom an Option or Right was granted shall cease to
maintain Continuous Service for any reason (excluding death, disability
and termination of employment by the Corporation or any Affiliate for
cause), such Participant may, but only within the period of three months
immediately succeeding such cessation of Continuous Service and in no
event after the expiration date of such Option or Right, exercise such
Option or Right to the extent that such Participant was entitled to
exercise such Option or Right at the date of such cessation, provided,
however, that such right of exercise after cessation of Continuous
Service shall not be available to a Participant if the Committee
otherwise determines and so provides in the applicable instrument or
instruments evidencing the grant of such Option or Right. If a
Participant to whom an Option or Right was granted shall cease to
maintain Continuous Service by reason of death or disability then, unless
the Committee shall have otherwise provided in the instrument evidencing
the grant of an Option or Right, all Options and Rights granted and not
fully exercisable shall become exercisable in full upon the happening of
such event and shall remain so exercisable (i) in the event of death for
the period described in paragraph (d) of this Section 7 and (ii) in the
event of disability for a period of three months following such date. If
the Continuous Service of a Participant to whom an Option or Right was
granted by the Corporation is terminated for cause, all rights under any
Option or Right of such Participant shall expire immediately upon the
effective date of such termination.
(d) In the event of the death of a Participant while in the Continuous
Service of the Corporation or an Affiliate or within the three-month
period referred to in paragraph (c) of this Section 7, the person to whom
any Option or Right held by the Participant at the time of his death is
transferred by will or the laws of descent and distribution, or in the
case of an Award other than an Incentive Stock Option, pursuant to a
qualified domestic relations order, as defined in the Code or Title 1 of
ERISA or the rules thereunder may, but only to the extent such
Participant was entitled to exercise such Option or Right upon his death
as provided in paragraph (c) above, exercise such Option or Right at any
time within a period of one year succeeding the date of death of such
Participant, but in no event later than ten years from the date of grant
of such Option or Right. Following the death of any Participant to whom
an Option was granted under the Plan, irrespective of whether any Related
Right shall have theretofore been granted to the Participant or whether
the person entitled to exercise such Related Right desires to do so, the
Committee may, as an alternative means of settlement of such Option,
elect to pay to the person to whom such Option is transferred by will or
by the laws of descent and distribution, or in the case of an Option
other than an Incentive Stock Option, pursuant to a qualified domestic
relations order, as defined in the Code or Title I of ERISA or the rules
thereunder, the amount by which the Market Value per Share on the date of
exercise of such Option shall exceed the Exercise Price of such Option,
multiplied by the number of Shares with respect to which such Option is
properly exercised. Any such settlement of an Option shall be considered
an exercise of such Option for all purposes of the Plan.
(e) Notwithstanding the provisions of subparagraphs (c) and (d) above, the
Committee may, in its sole discretion, establish different terms and
conditions pertaining to the effect of termination to the extent
permitted by applicable federal and state law.
<PAGE>
8. Incentive Stock Options. Incentive Stock Options may be granted only
to Participants who are Employees. Any provision of the Plan to the contrary
notwithstanding, (i) no Incentive Stock Option shall be granted more than ten
years from the date the Plan is adopted by the Board of Directors of the
Corporation and no Incentive Stock Option shall be exercisable more than ten
years from the date such Incentive Stock Option is granted, (ii) the Exercise
Price of any Incentive Stock Option shall not be less than the Market Value per
Share on the date such Incentive Stock Op tion is granted, (iii) any Incentive
Stock Option shall not be transferable by the Participant to whom such Incentive
Stock Option is granted other than by will or the laws of descent and
distribution, and shall be exercisable during such Participant's lifetime only
by such Participant, (iv) no Incentive Stock Option shall be granted to any
individual who, at the time such Incentive Stock Option is granted, owns stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Corporation or any Affiliate unless the Exercise Price
of such Incentive Stock Option is at least 110 percent of the Market Value per
Share at the date of grant and such Incentive Stock Option is not exercisable
after the expiration of five years from the date such Incentive Stock Option is
granted, and (v) the aggregate Market Value (determined as of the time any
Incentive Stock Option is granted) of the Shares with respect to which Incentive
Stock Options are exercisable for the first time by a Participant in any
calendar year shall not exceed $100,000.
9. Stock Appreciation Rights. A Stock Appreciation Right shall, upon its
exercise, entitle the Participant to whom such Stock Appreciation Right was
granted to receive a number of Shares or cash or combination thereof, as the
Committee in its discretion shall determine, the aggregate value of which (i.e.,
the sum of the amount of cash and/or Market Value of such Shares on date of
exercise) shall equal (as nearly as possible, it being understood that the
Corporation shall not issue any fractional shares) the amount by which the
Market Value per Share on the date of such exercise shall exceed the Exercise
Price of such Stock Appreciation Right, multiplied by the number of Shares with
respect of which such Stock Appreciation Right shall have been exercised. A
Stock Appreciation Right may be Related to an Option or may be granted
independently of any Option as the Committee shall from time to time in each
case determine. At the time of grant of an Option the Committee shall determine
whether and to what extent a Related Stock Appreciation Right shall be granted
with respect thereto, provided, however, and notwithstanding any other provision
of the Plan, that if the Related Option is an Incentive Stock Option, the
Related Stock Appreciation Right shall satisfy all the restrictions and
limitations of Section 8 hereof as if such Related Stock Appreciation Right were
an Incentive Stock Option and as if other rights which are Related to Incentive
Stock Options were Incentive Stock Options. In the case of a Related Option,
such Related Option shall cease to be exercisable to the extent of the Shares
with respect to which the Related Stock Appreciation Right was exercised. Upon
the exercise or termination of a Related Option, any Related Stock Appreciation
Right shall terminate to the extent of the Shares with respect to which the
Related Option was exercised or terminated.
10. Limited Stock Appreciation Rights. At the time of grant of an Option
or Stock Appreciation Right to any Participant, the Committee shall have full
and complete authority and discretion to also grant to such Participant a
Limited Stock Appreciation Right which is Related to such Option or Stock
Appreciation Right, provided, however and notwithstanding any other provision of
the Plan, that if the Related Option is an Incentive Stock Option, the Related
Limited Stock Appreciation Right shall satisfy all the restrictions and
limitations of Section 8 hereof as if such Related Limited Stock Appreciation
<PAGE>
Right were an Incentive Stock Option and as if all other Rights which are
Related to Incentive Stock Options were Incentive Stock Options. Subject to
vesting requirements contained in 12 C.F.R. ss. 563b.3(g)(4) or any successor
regulation, a Limited Stock Appreciation Right shall be exercisable only during
the period beginning on the first day following the date of expiration of any
"offer" (as such term is hereinafter defined) and ending on the forty-fifth day
following such date.
A Limited Stock Appreciation Right shall, upon its exercise, entitle the
Participant to whom such Limited Stock Appreciation Right was granted to receive
an amount of cash equal to the amount by which the "Offer Price per Share" (as
such term is hereinafter defined) or the Market Value on the date of such
exercise, as shall have been provided by the Committee in its discretion at the
time of grant, shall exceed the Exercise Price of such Limited Stock
Appreciation Right, multiplied by the number of Shares with respect to which
such Limited Stock Appreciation Right shall have been exercised. Upon the
exercise of a Limited Stock Appreciation Right, any Related Option and/or
Related Stock Appreciation Right shall cease to be exercisable to the extent of
the Shares with respect to which such Limited Stock Appreciation Right was
exercised. Upon the exercise or termination of a Related Option or Related Stock
Appreciation Right, any Related Limited Stock Appreciation Right shall terminate
to the extent of the Shares with respect to which such Related Option or Related
Stock Appreciation Right was exercised or terminated.
For the purposes of this Section 10, the term "Offer" shall mean any
tender offer or exchange offer for Shares other than one made by the
Corporation, provided that the corporation, person or other entity making the
offer acquires pursuant to such offer either (i) 25% of the Shares outstanding
immediately prior to the commencement of such offer or (ii) a number of Shares
which, together with all other Shares acquired in any tender offer or exchange
offer (other than one made by the Corporation) which expired within sixty days
of the expiration date of the offer in question, equals 25% of the Shares
outstanding immediately prior to the commencement of the offer in question. The
term "Offer Price per Share" as used in this Section 10 shall mean the highest
price per Share paid in any Offer which Offer is in effect any time during the
period beginning on the sixtieth day prior to the date on which a Limited Stock
Appreciation Right is exercised and ending on the date on which such Limited
Stock Appreciation Right is exercised. Any securities or property which are part
or all of the consideration paid for Shares in the Offer shall be valued in
determining the Offer Price per Share at the higher of (A) the valuation placed
on such securities or property by the corporation, person or other entity making
such Offer or (B) the valuation placed on such securities or property by the
Committee.
11. Adjustments Upon Changes in Capitalization. In the event of any
change in the outstanding Shares subsequent to the effective date of the Plan by
reason of any reorganization, recapitalization, stock split, stock dividend,
cash distribution in excess of normal dividend levels, combination or exchange
of shares, merger, consolidation or any change in the corporate structure or
Shares of the Corporation, the maximum aggregate number and class of shares as
to which Awards may be granted under the Plan and the number, class and exercise
price of shares with respect to which Awards theretofore have been granted under
the Plan shall be appropriately adjusted by the Committee, whose determination
shall be conclusive.
12. Effect of Merger. In the event of any merger, consolidation or
combination of the Corporation (other than a merger, consolidation or
combination in which the Corporation is the continuing entity and which does not
<PAGE>
result in the outstanding Shares being converted into or exchanged for different
securities, cash or other property, or any combination thereof) pursuant to a
plan or agreement the terms of which are binding upon all stockholders of the
Corporation (except to the extent that dissenting stockholders may be entitled,
under statutory provisions or provisions contained in the certificate or
articles of incorporation, to receive the appraised or fair value of their
holdings), any Participant to whom an Option or Right has been granted shall
have the right (subject to the provisions of the Plan and any limitation or
vesting period applicable to such Option or Right), thereafter and during the
term of each such Option or Right, to receive upon exercise of any such Option
or Right an amount equal to the excess of the fair market value on the date of
such exercise of the securities, cash or other property, or combination thereof,
receivable upon such merger, consolidation or combination in respect of a Share
over the Exercise Price of such Right or Option, multiplied by the number of
Shares with respect to which such Option or Right shall have been exercised.
Such amount may be payable fully in cash, fully in one or more of the kind or
kinds of property payable in such merger, consolidation or combination, or
partly in cash and partly in one or more of such kind or kinds of property, all
in the discretion of the Committee.
13. Effect of Change in Control. If a tender offer or exchange offer for
Shares (other than such an offer by the Corporation) is commenced, or if the
stockholders of the Corporation shall approve an agreement providing either for
a transaction in which the Corporation will cease to be an independent publicly
owned entity or for a sale or other disposition of all or substantially all the
assets of the Corporation or the Association, unless the Committee shall have
otherwise provided in the instrument evidencing the grant of an Option or Stock
Appreciation Right, all Options and Stock Appreciation Rights theretofore
granted and not fully exercisable shall become exercisable in full upon the
happening of such event and shall remain so exercisable for a period of sixty
days following such date, after which they shall revert to being exercisable in
accordance with their terms; provided, however, that no Option or Stock
Appreciation Right which has previously been exercised or otherwise terminated
shall become exercisable.
14. Assignments and Transfers. No Award nor any right or interest of a
Participant under the Plan in any instrument evidencing any Award under the Plan
may be assigned, encumbered or transferred except, in the event of the death of
a Participant, by will or the laws of descent and distribution or in the case of
Awards other than Incentive Stock Options pursuant to a qualified domestic
relations order, as defined in the Code or Title I of ERISA or the rules
thereunder.
15. Employee Rights Under the Plan. No director, officer or employee
shall have a right to be selected as a Participant nor, having been so selected,
to be selected again as a Participant and no director, officer, employee or
other person shall have any claim or right to be granted an Award under the Plan
or under any other incentive or similar plan of the Corporation or any
Affiliate. Neither the Plan nor any action taken thereunder shall be construed
as giving any employee any right to be retained in the employ of the Corporation
or any Affiliate.
16. Delivery and Registration of Stock. The Corporation's obligation to
deliver Shares with respect to an Award shall, if the Committee so requests, be
conditioned upon the receipt of a representation as to the investment intention
of the Participant to whom such Shares are to be delivered, in such form as the
Committee shall determine to be necessary or advisable to comply with the
<PAGE>
provisions of the Securities Act of 1933 or any other Federal, state or local
securities legislation or regulation. It may be provided that any representation
requirement shall become inoperative upon a registration of the Shares or other
action eliminating the necessity of such representation under such Securities
Act or other securities legislation. The Corporation shall not be required to
deliver any Shares under the Plan prior to (i) the admission of such shares to
listing on any stock exchange or other system on which Shares may then be
listed, and (ii) the completion of such registration or other qualification of
such Shares under any state or Federal law, rule or regulation, as the Committee
shall determine to be necessary or advisable.
This Plan is intended to comply with Rule 16b-3 under the Securities
Exchange Act of 1934. Any provision of the Plan which is inconsistent with said
Rule shall, to the extent of such inconsistency, be inoperative and shall not
affect the validity of the remaining provisions of the Plan.
17. Withholding Tax. The Corporation shall have the right to deduct from
all amounts paid in cash with respect to the exercise of a Right under the Plan
any taxes required by law to be withheld with respect to such cash payments.
Where a Participant or other person is entitled to receive Shares pursuant to
the exercise of an Option or Right pursuant to the Plan, the Corporation shall
have the right to require the Participant or such other person to pay the
Corporation the amount of any taxes which the Corporation is required to
withhold with respect to such Shares, and may, in its sole discretion, withhold
sufficient Shares to cover the amount of taxes which the Corporation is required
to withhold.
18. Amendment or Termination. The Board of Directors of the Corporation
may amend, suspend or terminate the Plan or any portion thereof at any time,
subject to Office of Thrift Supervision Regulations, but no amendment shall be
made without approval of the stockholders of the Corporation which shall, (i)
increase the aggregate number of Shares with respect to which Awards may be made
under the Plan (except pursuant to Section 4), (ii) materially change the
requirements as to eligibility for participation in the Plan or (iii) change the
class of persons eligible to participate in the Plan; provided, however, that no
such amendment, suspension or termination shall impair the rights of any
Participant, without his consent, in any Award theretofore made pursuant to the
Plan.
19. Effective Date and Term of Plan. The Plan shall become effective upon
its ratification by stockholders of the Corporation. It shall continue in effect
for a term of ten years unless sooner terminated under Section 18 hereof.
20. Initial Grant. By, and simultaneously with, the ratification of this
Plan by the stockholders of the Corporation, each member of the Board of
Directors of the Corporation at the time of stockholder ratification of this
Plan who is not a full-time Employee, is hereby granted a ten-year,
Non-Qualified Stock Option to purchase 8,926 Shares. Each such Option shall be
evidenced by a Non-Qualified Stock Option Agreement in a form approved by the
Board of Directors and shall be subject in all respects to the terms and
conditions of this Plan, which are controlling. All Options granted pursuant to
this section shall vest in five equal annual installments with the first
installment vesting on the first anniversary of the date of grant, subject to
the Director maintaining Continuous Service with the Corporation or its
Affiliates since the date of grant.
<PAGE>
EXHIBIT B
PEOPLES-SIDNEY FINANCIAL CORPORATION
1998 MANAGEMENT RECOGNITION PLAN
1. Plan Purpose. The purpose of the Plan is to promote the long-term
interests of the Corporation and its stockholders by providing a means for
attracting and retaining directors, executive officers and employees of the
Corporation and its Affiliates.
2. Definitions. The following definitions are applicable to the Plan:
"Award" - means the grant of Restricted Stock pursuant to the terms of
Section 12 of the Plan or by the Committee, as provided in the Plan.
"Affiliate" - means any "parent corporation" or "subsidiary corporation"
of the Corporation, as such terms are defined in Section 424(e) and (f),
respectively, of the Code.
"Association" - means Peoples Federal Savings & Loan Association of
Sidney, a savings institution and its successors.
"Beneficiary" - means the person or persons designated by a Participant
to receive any benefits payable under the Plan in the event of such
Participant'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 Participant's surviving spouse, if
any, or if none, his estate.
"Code" - means the Internal Revenue Code of 1986, as amended.
"Committee" - means the Committee of the Board of Directors of the
Corporation referred to in Section 6 hereof.
"Continuous Service" - means the absence of any interruption or
termination of service as a director, director emeritus, advisory director,
executive officer or employee of the Corporation or any Affiliate. Service shall
not be considered interrupted in the case of sick leave, military leave or any
other leave of absence approved by the Corporation or any Affiliate or in the
case of transfers between payroll locations of the Corporation or between the
Corporation, its Affiliates or its successor. With respect to any director
emeritus or advisory director, continuous service shall mean the availability to
perform such functions as may be required of such individuals.
"Corporation" - means Peoples-Sidney Financial Corporation, a Delaware
corporation.
"Disability" - means any physical or mental impairment which qualifies
an employee, director, director emeritus or advisor director for disability
benefits under any applicable long-term disability plan maintained by the
Association or an Affiliate, or, if no such plan applies, which renders such
employee or director, in the judgment of the Committee, unable to perform his
customary duties and responsibilities.
"ERISA" - means the Employee Retirement Income Security Act of 1974, as
amended.
<PAGE>
"Participant" - means any director, director emeritus, advisory
director, executive officer or employee of the Corporation or any Affiliate who
is selected by the Committee to receive an Award or is granted an Award pursuant
to Section 12.
"Non-Employee Director" - means a director who (a) is not currently an
officer or employee of the Corporation; (b) is not a former employee of the
Corporation who receives compensation for prior services (other than from a
tax-qualified retirement plan); (c) has not been an officer of the Corporation;
(d) does not receive renumeration from the Corporation in any capacity other
than as a director; and (e) does not possess an interest in any other
transactions or is not engaged in a business relationship for which disclosure
would be required under Item 404(a) or (b) of Regulation S-K.
"Plan" - means the 1998 Management Recognition Plan of the Corporation.
"Restricted Period" - means the period of time selected by the Committee
for the purpose of determining when restrictions are in effect under Section 3
hereof with respect to Restricted Stock awarded under the Plan.
"Restricted Stock" - means Shares which have been contingently awarded
to a Participant by the Committee subject to the restrictions referred to in
Section 3 hereof, so long as such restrictions are in effect.
"Shares" - means the common stock, par value $0.01 per share, of the
Corporation.
3. Terms and Conditions of Restricted Stock. The Committee shall have
full and complete authority, subject to the limitations of the Plan, to grant
Awards and, in addition to the terms and conditions contained in paragraphs (a)
through (f) of this Section 3, to provide such other terms and conditions (which
need not be identical among Participants) in respect of such Awards, and the
vesting thereof, as the Committee shall determine, subject to OTS regulations.
(a) At the time of an Award, the Committee shall establish for each
Participant a Restricted Period which shall not be less than five years,
during which or at the expiration of which, as the Committee shall
determine and provide in the agreement referred to in paragraph (d) of
this Section 3, the Shares awarded as Restricted Stock shall vest, and
subject to any such other terms and conditions as the Committee shall
provide, Shares of Restricted Stock may not be sold, assigned,
transferred, pledged, voted or otherwise encumbered by the Participant,
except as hereinafter provided, during the Restricted Period. During the
restricted period, MRP Shares will be voted by an independent trustee
and not by the holder of such shares. Except for such restrictions, and
subject to paragraphs (c) and (e) of this Section 3 and Section 4
hereof, the Participant as owner of such shares shall have all the
rights of a stockholder. The Committee shall have the authority, in its
discretion, subject to compliance with OTS regulations, to accelerate
the time at which any or all of the restrictions shall lapse with
respect to an Award, or to remove any or all of such restrictions,
whenever it may determine that such action is appropriate by reason of
changes in applicable tax or other laws or other changes in
circumstances occurring after the commencement of such Restricted
Period.
<PAGE>
No director who is not an employee of the Corporation shall be granted
Awards with respect to more than 5% of the total shares subject to the
Plan. All non-employee directors of the Corporation, in the aggregate,
may not be granted Awards with respect to more than 30% of the total
shares subject to the Plan and no individual shall be granted Awards
with respect to more than 25% of the total shares subject to the Plan.
Any Award made pursuant to this Plan, which Award is subject to the
requirements of Office of Thrift Supervision Regulations, shall vest in
not less than five equal annual installments with the first installment
vesting on the one-year anniversary of the date of grant, except in the
event of death or disability in which case all unvested shares shall
rest immediately.
In the event that Office of Thrift Supervision Regulations are amended
(the "Amended Regulations") to permit shorter vesting periods, any Award
made pursuant to this Plan, which Award is subject to the requirements
of such Amended Regulations, may vest, at the sole discretion of the
Committee, in accordance with such Amended Regulations.
(b) Except as provided in Section 5 hereof, if a Participant ceases to
maintain Continuous Service for any reason (other than death or
disability), unless the Committee shall otherwise determine, all Shares
of Restricted Stock theretofore awarded to such Participant and which at
the time of such termination of Continuous Service are subject to the
restrictions imposed by paragraph (a) of this Section 3 shall upon such
termination of Continuous Service be forfeited and returned to the
Corporation. If a Participant ceases to maintain Continuous Service by
reason of death or disability, Restricted Stock then still subject to
restrictions imposed by paragraph (a) of this Section 3 will be free of
those restrictions.
(c) Each certificate in respect of Shares of Restricted Stock awarded under
the Plan shall be registered in the name of the Participant and
deposited by the Participant, together with a stock power endorsed in
blank, with the Corporation and shall bear the following (or a similar)
legend:
The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and conditions
(including forfeiture) contained in the 1998 Management Recognition
Plan of Peoples-Sidney Financial Corporation. Copies of such Plan
are on file in the offices of the Secretary of Peoples-Sidney
Financial Corporation, 101 East Court Street, Sidney, Ohio 45365.
(d) At the time of the granting of any Award, the Participant shall enter
into an Agreement with the Corporation in a form specified by the
Committee, agreeing to the terms and conditions of the Award and such
other matters as the Committee, in its sole discretion, shall determine
(the "Restricted Stock Agreement").
(e) The payment to the Participant of any dividends declared or paid by the
Corporation on any Restricted Stock shall be deferred and held by the
Corporation for the account of the Participant until the earlier to
occur of (i) the lapsing of the restrictions imposed under paragraph (a)
of this Section 3 or (ii) the forfeiture of such shares under paragraph
(b) of this Section 3. There shall be credited at the end of each year
(or portion thereof) interest on the amount of the Participant's account
<PAGE>
at a rate per annum as the Committee, in its discretion, may determine.
Payment of deferred dividends to the Participant, together with interest
accrued thereon, shall be made upon the lapsing of the restrictions
imposed under paragraph (a) of this Section 3, Shares of Restricted
Stock shall not be voted by the Participant during the Restricted
Period. Shares of Restricted Stock still subject to restriction shall be
voted by an independent party to be named in the Restricted Stock
Agreement.
(f) At the lapsing of the restrictions imposed by paragraph (a) of this
Section 3, the Corporation shall deliver to the Participant (or where
the relevant provision of paragraph (b) of this Section 3 applies in the
case of a deceased Participant, to his legal representative, beneficiary
or heir) the certificate(s) and stock power deposited with it pursuant
to paragraph (c) of this Section 3 and the Shares represented by such
certificate(s) shall be free of the restrictions referred to in
paragraph (a) of this Section 3.
4. Adjustments Upon Changes in Capitalization. In the event of any change
in the outstanding Shares subsequent to the effective date of the Plan by reason
of any reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or any change in the
corporate structure or Shares of the Corporation, the maximum aggregate number
and class of shares as to which Awards may be granted under the Plan and the
number and class of shares with respect to which Awards theretofore have been
granted under the Plan shall be appropriately adjusted by the Committee, whose
determination shall be conclusive. Any shares of stock or other securities
received, as a result of any of the foregoing, by a Participant with respect to
Restricted Stock shall be subject to the same restrictions and the
certificate(s) or other instruments representing or evidencing such shares or
securities shall be legended and deposited with the Corporation in the manner
provided in Section 3 hereof.
5. Assignments and Transfers. During the Restricted Period, no Award nor
any right or interest of a Participant under the Plan in any instrument
evidencing any Award under the Plan may be assigned, encumbered or transferred
except (i) in the event of the death of a Participant, by will or the laws of
descent and distribution, or (ii) pursuant to a qualified domestic relations
order as defined in the Code or Title I of ERISA or the rules thereunder.
6. Administration. The Plan shall be administered by a Committee
consisting of two or more members, each of whom shall be a Non-Employee
Director. The members of the Committee shall be appointed by the Board of
Directors of the Corporation. Except as limited by the express provisions of the
Plan, the Committee shall have sole and complete authority and discretion,
subject to OTS regulations, to: (i) select Participants and grant Awards; (ii)
determine the number of Shares to be subject to types of Awards generally, as
well as individual Awards granted under the Plan; (iii) determine the terms and
conditions upon which Awards shall be granted under the Plan; (iv) prescribe the
form and terms of instruments evidencing such grants; and (v) establish from
time to time regulations for the administration of the Plan, interpret the Plan,
and make all determinations deemed necessary or advisable for the administration
of the Plan.
<PAGE>
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by a majority of the Committee without a meeting, shall
be acts of the Committee.
7. Shares Subject to Plan. Subject to adjustment by the operation of
Section 4 hereof, the maximum number of Shares with respect to which Awards may
be made under the Plan is 71,415 Shares. The Shares with respect to which Awards
may be made under the Plan may be either authorized and unissued Shares or
issued Shares heretofore or hereafter reacquired and held as treasury Shares. An
Award shall not be considered to have been made under the Plan with respect to
Restricted Stock which is forfeited and new Awards may be granted under the Plan
with respect to the number of Shares as to which such forfeiture has occurred.
The Corporation's obligation to deliver Shares with respect to an Award
shall, if the Committee so requests, be conditioned upon the receipt of a
representation as to the investment intention of the Participant to whom such
Shares are to be delivered, in such form as the Committee shall determine to be
necessary or advisable to comply with the provisions of the Securities Act of
1933 or any other Federal, state or local securities legislation or regulation.
It may be provided that any representation requirement shall become inoperative
upon a registration of the Shares or other action eliminating the necessity of
such representation under such Securities Act or other securities legislation.
The Corporation shall not be required to deliver any Shares under the Plan prior
to (i) the admission of such shares to listing on any stock exchange on which
Shares may then be listed, and (ii) the completion of such registration or other
qualification of such Shares under any state or Federal law, rule or regulation,
as the Committee shall determine to be necessary or advisable.
8. Employee Rights Under the Plan. No director, director emeritus,
advisory director, officer or employee shall have a right to be selected as a
Participant nor, having been so selected, to be selected again as a Participant
and no director, officer, employee or other person shall have any claim or right
to be granted an Award under the Plan or under any other incentive or similar
plan of the Corporation or any Affiliate. Neither the Plan nor any action taken
thereunder shall be construed as giving any officer or employee any right to be
retained in the employ of the Corporation, the Association or any Affiliate.
9. Withholding Tax. Upon the termination of the Restricted Period with
respect to any shares of Restricted Stock (or at such earlier time, if any, that
an election is made by the Participant under Section 83(b) of the Code, or any
successor provision thereto, to include the value of such shares in taxable
income), the Corporation may, in its sole discretion, withhold from any payment
or distribution made under this Plan sufficient Shares or withhold sufficient
cash to cover any applicable withholding and employment taxes. The Corporation
shall have the right to deduct from all dividends paid with respect to shares of
Restricted Stock the amount of any taxes which the Corporation is required to
withhold with respect to such dividend payments. No discretion or choice shall
be conferred upon any Participant with respect to the form, timing or method of
any such tax withholding.
10. Amendment or Termination. The Board of Directors of the Corporation
may amend, suspend or terminate the Plan or any portion thereof at any time,
subject to OTS regulations; provided, however, that no such amendment,
suspension or termination shall impair the rights of any Participant, without
his consent, in any Award theretofore made pursuant to the Plan.
<PAGE>
11. Term of Plan. The Plan shall become effective upon its ratification by
the stockholders of the Corporation. It shall continue in effect for a term of
ten years unless sooner terminated under Section 11 hereof.
This Plan is intended to comply with Rule 16b-3 under the Securities
Exchange Act of 1934. Any provision of the Plan which is inconsistent with said
Rule shall, to the extent of such inconsistency, be inoperative and shall not
affect the validity of the remaining provisions of the Plan.
12. Director Awards. By, and simultaneously with, the ratification of this
Plan by the stockholders of the Corporation, each non-employee member of the
Board of Directors of the Corporation is hereby granted an Award equal to 3,570
Shares. Each such Award shall be evidenced by a Restricted Stock Agreement in a
form approved by the Corporation and shall be subject in all respects to the
terms and conditions of this Plan, which are controlling. All Awards granted
pursuant to this Section 12 shall be earned in five equal annual installments,
with the first installment vesting on the one-year anniversary of the date of
grant, as long as the director maintains Continuous Service with the Corporation
or its Affiliates, provided, however, no Award shall be earned in any fiscal
year in which the Association fails to meet its capital requirements.
<PAGE>
REVOCABLE PROXY
PEOPLES-SIDNEY FINANCIAL CORPORATION
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
SPECIAL MEETING OF STOCKHOLDERS
to be Held onMay 22, 1998
The undersigned hereby appoints the Board of Directors of Peoples-Sidney
Financial Corporation (the "Company"), and its survivor, with full power of
substitution, to act as attorneys and proxies for the undersigned to vote all
shares of common stock of the Company which the undersigned is entitled to vote
at the Special Meeting of Stockholders (the "Meeting") to be held on May 22,
1998 at The Fairington located at 1103 Fairington Drive, Sidney, Ohio, at 10:00
a.m., Sidney, Ohio time, and at any and all adjournments and postponements
thereof, as follows:
I. Ratification of the adoption of the 1998 Stock Option and Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
II. Ratification of the adoption of the 1998 Management Recognition Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote on such other matters
as may properly come before the Meeting or any adjournment or postponement
thereof.
The Board of Directors recommends
a vote "FOR" the listed proposals.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE PROPOSALS STATED. IF ANY OTHER BUSINESS IS
PRESENTED AT SUCHMEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY
IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO
OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting or at any
adjournments or postponements thereof, and after notification to the Secretary
of the Company at the Meeting of the stockholder's decision to terminate this
proxy, then the power of such attorneys and proxies shall be deemed terminated
and of no further force and effect.
The undersigned acknowledges receipt from the Company, prior to the execution
of this Proxy, of Notice of the Special Meeting and a Proxy Statement dated
April 20, 1998.
Please sign exactly as your name appears above on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
<PAGE>
Please be sure to sign and date
this Proxy in the box below.
_________________________________________
Date
_________________________________________
Stockholder sign above
_________________________________________
Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
PEOPLES-SIDNEY FINANCIAL CORPORATION
PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS
PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE
