Registration No. 33- -----
As filed with the Securities and Exchange Commission on
March 10, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PEOPLES BANCORP, INC.
(Exact name of registrant as specified in charter)
Delaware 6712 To be applied for
- ----------------- ---------- ----------------------
(State or other (Primary SIC No.) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
134 Franklin Corner Road
Lawrenceville, New Jersey 08648-0950
(609) 844-3100
(Address, including Zip Code, and telephone number, including
area code of Registrant's principal executive offices)
Eric Luse, Esq.
Kenneth R. Lehman, Esq.
Luse Lehman Gorman Pomerenk & Schick
A Professional Corporation
5335 Wisconsin Avenue, N.W.
Suite 400
Washington, D.C. 20015
(202) 274-2000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale of the
securities to the public:
As soon as practicable after receipt of all regulatory approvals.
If the securities being registered on this form are being offered
in connection with the formation of a holding company and there
is compliance with General Instruction G, check the following
box. / X /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
-----------------------------------------
Proposed
Title of each maximum
class of Amount offering
securities to to be price Proposed max. Amount of
be registered registered per unit offering price registration fee
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 3,242,000 $15.94(1) $51,677,480 $15,660
$.10 par value shares
Common Stock 311,650 $13.50(2) $ 4,207,300 $ 1,275
$.10 par value
Total Fee Paid $16,935
</TABLE>
(1) Pursuant to Rule 457(c), the registration fee is based upon
the average of the high and low prices for Trenton Savings
Bank, FSB as of March 5, 1997.
(2) Represents shares underlying options. Such options have an
exercise price of $13.50 per share.
<PAGE>
Trenton
Savings Bank
Community Banking At Its Best
March 14, 1997
Dear Stockholder:
We cordially invite you to attend the Annual Meeting of
Stockholders of Trenton Savings Bank ("the Bank"). The Annual
Meeting will be held at the Trenton Country Club, Sullivan Way,
West Trenton, New Jersey, at 10:00 a.m. (New Jersey time) on
April 25, 1997.
The enclosed Notice of Annual Meeting and Proxy Statement/
Prospectus describe the formal business to be transacted. During
the meeting we will also report on the operations of the Bank.
Directors and officers of the Bank, as well as a representative
of our independent auditors, will be present to respond to any
questions that stockholders may have.
The business to be conducted at the annual meeting includes the
election of one director, the approval of the reorganization of
the Bank into a "two-tier " holding company structure, and the
ratification of the appointment of KPMG Peat Marwick, LLP as
auditors for the Bank's 1997 fiscal year.
The Board of Directors of the Bank has determined that the
matters to be considered at the Annual Meeting are in the best
interest of the Bank and its stockholders. For the reasons set
forth in the Proxy Statement/Prospectus, the Board of Directors
unanimously recommends a vote "FOR" each matter to be considered.
Also enclosed for your review is our Annual Report to
Stockholders, which contains detailed information concerning the
activities and operating performance of the Bank. On behalf of
the Board of Directors, we urge you to sign, date and return the
enclosed proxy card as soon as possible even if you currently
plan to attend the Annual Meeting. This will not prevent you
from voting in person, but will assure that your vote is counted
if you are unable to attend the meeting.
Sincerely,
Wendell T. Breithaupt
President and Chief Executive Officer
John B. Sill, Jr.
Chairman
<PAGE>
TRENTON SAVINGS BANK
134 Franklin Corner Road
Lawrenceville, New Jersey 08648-0950
(609) 844-3100
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On April 25, 1997
Notice is hereby given that the Annual Meeting of Trenton
Savings Bank (the "Bank") will be held at the Trenton Country
Club, Sullivan Way, West Trenton, New Jersey, on April 25, 1997
at 10:00 a.m. New Jersey time.
A Proxy Card and a Proxy Statement/Prospectus for the
Meeting are enclosed.
The Meeting is for the purpose of considering and acting
upon:
1. The election of one director of the Bank;
2. The approval of an Agreement and Plan of Reorganization
(the "Plan of Reorganization ") providing for the establishment
of Peoples Bancorp, Inc. (the "Stock Holding Company ") as a
stock holding company parent of the Bank which stock holding
company will be majority owned by Peoples Bancorp, MHC (the
"Mutual Holding Company "), the Bank's mutual holding company.
Pursuant to the Plan of Reorganization: (i) the Bank will become
a wholly owned subsidiary of the Stock Holding Company which will
become a majority owned subsidiary of the Mutual Holding Company,
and (ii) each outstanding share of common stock, par value $.10
per share, of the Bank will be converted into one share of common
stock, par value $.10 per share, of the Stock Holding Company;
3. The ratification of the appointment of KPMG Peat
Marwick, LLP as auditors for the Bank for the fiscal year ending
December 31, 1997; 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 February 28, 1997, are the stockholders
entitled to vote at the Meeting, and any adjournments thereof.
EACH STOCKHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE
MEETING, IS REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY
CARD WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. ANY
PROXY GIVEN BY THE STOCKHOLDER MAY BE REVOKED AT ANY TIME BEFORE
IT IS EXERCISED. A PROXY MAY BE REVOKED BY FILING WITH THE
SECRETARY OF THE BANK A WRITTEN REVOCATION OR A DULY EXECUTED
PROXY BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE
MEETING MAY REVOKE HIS OR HER PROXY AND VOTE PERSONALLY ON EACH
MATTER BROUGHT BEFORE THE MEETING. HOWEVER, IF YOU ARE A
STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU
WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER TO
VOTE PERSONALLY AT THE MEETING.
By Order of the Board of Directors
Robert C. Hollenbeck
Corporate Secretary
Lawrenceville, New Jersey
March 14, 1997
<PAGE>
<TABLE>
<CAPTION>
INDEX
Page
<S> <C>
REVOCATION OF PROXIES 1
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF 1
MARKET INFORMATION 2
DIVIDEND POLICY 3
PROPOSAL I ELECTION OF DIRECTORS 4
Board Meetings and Committees of the Board of Directors 6
Compensation Committee Interlocks and Insider
Participation 7
Board Compensation Committee Report of Directors
on Executive Compensation 7
Performance Graph 8
Directors Compensation 8
Executive Compensation 8
Indebtedness of Management 10
PROPOSAL II APPROVAL OF AN AGREEMENT AND PLAN OF
REORGANIZATION 10
Reasons for the Stock Holding Company Reorganization 10
Risks of the Reorganization 11
Plan of Reorganization 11
Effective Date 13
Optional Exchange of Stock Certificates 13
Rights of Dissenting Stockholders 13
Tax Consequences 13
Consequences Under Federal Securities Laws 14
Conditions to the Reorganization 14
Amendment, Termination or Waiver 14
Business of the Bank 15
Business of the Stock Holding Company 15
Management of the Stock Holding Company 16
Comparison of Stockholder Rights and Certain Anti-Takeover
Provisions 18
Regulation of the Stock Holding Company 23
Description of Capital Stock of the Stock Holding Company 24
Holding Company Common Stock 24
Preferred Stock 24
Accounting Treatment 25
Vote Required 25
Recommendation 25
PROPOSAL III RATIFICATION OF APPOINTMENT OF AUDITORS 25
STOCKHOLDER PROPOSALS 25
OTHER MATTERS 26
MISCELLANEOUS 26
APPENDIX A--Plan of Reorganization
APPENDIX B--Peoples Bancorp, Inc. Certificate of Incorporation
APPENDIX C--Peoples Bancorp, Inc. Bylaws
</TABLE>
<PAGE>
PROXY STATEMENT/PROSPECTUS
TRENTON SAVINGS BANK
134 Franklin Corner Road
Lawrenceville, New Jersey 08648-0950
(609) 844-3100
ANNUAL MEETING OF STOCKHOLDERS
April 25, 1997
This Proxy Statement/Prospectus is furnished in connection
with the solicitation of proxies on behalf of the Board of
Directors of Trenton Savings Bank (the "Bank") to be used at the
Annual Meeting of Stockholders of Trenton Savings Bank (the
"Meeting"), which will be held at the Trenton Country Club,
Sullivan Way, West Trenton, New Jersey, on April 25, 1997, at
10:00 a.m., local time, and all adjournments of the Meeting. The
accompanying Notice of Annual Meeting of Stockholders and this
Proxy Statement/Prospectus are first being mailed to stockholders
on or about March 25, 1997.
REVOCATION OF PROXIES
Stockholders who execute proxies in the form solicited
hereby retain the right to revoke them in the manner described
below. Unless so revoked, the shares represented by such proxies
will be voted at the Meeting and all adjournments thereof.
Proxies solicited on behalf of the Board of Directors of the Bank
will be voted in accordance with the directions given thereon.
Please sign and return your Proxy to the Bank in order for your
vote to be counted. Proxies which are signed, but contain no
instructions for voting, will be voted "FOR" the proposals set
forth in this Proxy Statement for consideration at the Meeting.
Proxies may be revoked by sending written notice of
revocation to the Secretary of the Bank, Robert C. Hollenbeck, at
the address of the Bank shown above, or by filing a duly executed
proxy bearing a later date. The presence at the Meeting of any
stockholder who has given a proxy shall not revoke such proxy
unless the stockholder delivers his or her ballot in person at
the Meeting or delivers a written revocation to the Secretary of
the Bank prior to the voting of such proxy.
(continued on next page)
---------------------------------
THE SECURITIES ISSUED HEREBY HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, THE
OFFICE OF THRIFT SUPERVISION, THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY STATE SECURITIES AUTHORITY. NOR HAS ANY SUCH
COMMISSION, OFFICE OR AUTHORITY PASSED ON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS/INFORMATION STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A FEDERAL OFFENSE.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS
ACCOUNTS OR DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Holders of record of the Bank's common stock, par value $.10
per share ("Bank Common Stock") as of the close of business on
February 28, 1997 (the "Record Date"), are entitled to one vote
for each share then held. As of the Record Date, there were
9,037,160 shares of Bank Common Stock issued and outstanding,
5,796,000 of which were held by Peoples Bancorp, MHC (the "Mutual
Holding Company"), and 3,241,160 of which were held by
stockholders other than the Mutual Holding Company ("Minority
Stockholders"). The presence in person or by proxy of a majority
of the outstanding shares of Bank Common Stock entitled to vote
is necessary to constitute a quorum at the Meeting. Directors
are elected by a plurality of votes cast. Approval of Proposal
II requires the affirmative vote of a majority of the outstanding
shares of Bank Common Stock, and, consequently, broker non-votes
will have the same effect as a vote against Proposal II.
Approval of Proposal III requires the affirmative vote of holders
of a majority of the total votes present at the Meeting in person
or by proxy, and, consequently, broker non-votes will have no
effect. The Bank believes that the Mutual Holding Company will
vote in favor of the matters submitted for vote at the Meeting.
Because the Mutual Holding Company owns more than a majority of
the outstanding shares of Bank Common Stock, such affirmative
vote will assure approval of all matters presented for vote at
the Meeting. However, Minority Stockholder participation is
encouraged by management.
Persons and groups who beneficially own in excess of 5% of
Bank Common Stock are required to file certain reports with the
Office of Thrift Supervision (the "OTS") regarding such ownership
pursuant to the Securities Exchange Act of 1934 (the "Exchange
Act"). The following table sets forth, as of March 1, 1997, the
shares of Bank Common Stock beneficially owned by executive
officers and directors as a group and by each person who was the
beneficial owner of more than 5% of the outstanding shares of
Bank Common Stock on such date.
<TABLE>
<CAPTION>
Amount of Shares
Owed and Nature Percent of Shares
Name and Address of of Beneficial of Common Stock
Beneficial Owners Ownership Outstanding
- -----------------------------------------------------------------
<S> <C> <C>
Peoples Bancorp, MHC(2) 5,796,000 64.14%
134 Franklin Corner Road
Lawrenceville, NJ 08648-0950
All Directors and Executive 223,984 2.47%
Officers as a Group
(14 persons)
- -----------------------
</TABLE>
(1) In accordance with Rule 13d-3 under the Securities Exchange
Act of 1934, a person is deemed to be the beneficial owner
for purposes of this table, of any shares of Common Stock if
he has sole or shared voting or investment power with
respect to such shares, or has a right to acquire beneficial
ownership at any time within 60 days from the Record Date.
As used herein, "voting power" is the power to vote or
direct the voting of shares and "investment power" is the
power to dispose or direct the disposition of shares.
Includes all shares held directly as well as shares owned by
spouses and minor children, in trust and other indirect
ownership, over which shares the named individuals
effectively exercise sole or shared voting or investment
power.
(2) The Bank's directors are also directors of Peoples Bancorp,
MHC.
MARKET INFORMATION
The Bank Common Stock is listed on the Nasdaq National
Market under the symbol "TSBS." As of the Record Date, there
were approximately 19 market makers for Bank Common Stock, 1,245
stockholders of record (excluding the number of persons or
entities holding stock in street name through various brokerage
firms), and 9,037,160 shares outstanding, which includes shares
held by the Mutual Holding Company. The following table sets
forth market price and dividend information for the Bank Common
Stock in each quarterly period subsequent to the Bank's minority
stock offering in August 1995.
<PAGE>
<TABLE>
<CAPTION>
Quarter Ended High Low Dividends
- ------------- -------- ------- -------------
<S> <C> <C> <C>
1995
- ----
September 30 14 1/8 11 .0575
December 31 13 3/4 12 7/8 .0875
1996
- ----
March 31 15 12 7/8 .0875
June 30 15 13 1/4 .0875
September 30 15 1/8 13 3/4 .0875
December 31 16 3/8 14 .0875
- ----------------------
</TABLE>
The last trade of the Bank Common Stock on August 16, 1996,
the date immediately prior to the Bank's announcement of its
intention to reorganize pursuant to the Plan of Reorganization,
was at a price of $13 1/2 per share.
DIVIDEND POLICY
The Bank has paid quarterly cash dividends every quarter
since the completion of its mutual holding company reorganization
and minority stock offering in August 1995. It is the intention
of the Stock Holding Company to continue to pay cash dividends.
Dividends paid by the Stock Holding Company will be determined by
the Stock Holding Company's Board of Directors and will be based
upon its consolidated financial condition, results of operations,
tax considerations, economic conditions, regulatory restrictions
which affect the payment of dividends by the Bank to the Stock
Holding Company, and other factors. There can be no assurance
that dividends will be paid on the Common Sock or that, if paid,
such dividends will not be reduced or eliminated in the future.
See "Proposed Formation of Stock Holding Company--Comparison of
Stockholder Rights and Certain Anti-Takeover Provisions Payment
of Dividends" for information regarding regulatory restrictions
on the Bank's ability to pay dividends or make cash contributions
to the Stock Holding Company.
The Stock Holding Company is not subject to OTS regulatory
restrictions on the payment of dividends to its stockholders
other than with respect to maintaining minimum levels of capital,
although the source of such dividends will be dependent upon the
factors set forth above. The Stock Holding Company is subject,
however, to the requirements of Delaware law, which generally
limit dividends to an amount equal to the excess of the net
assets of the Stock Holding Company (the amount by which total
assets exceed total liabilities) over its stated capital, or if
there is no such excess, to its net profits for the current
and/or immediately preceding year.
The Mutual Holding Company has waived the right to receive
all dividends that have been paid by the Bank, although it
determines whether to do so on a quarterly basis and may elect to
accept dividends in the future. OTS regulations require the
Mutual Holding Company to notify the OTS of any proposed waiver
of the right to receive dividends. It is the OTS' recent
practice to review dividend waiver notices on a case-by-case
basis, and, in general, not object to any such waiver if: (i) the
mutual holding company's board of directors determines that such
waiver is consistent with such directors' fiduciary duties to the
mutual holding company's members; (ii) for as long as the savings
association subsidiary is controlled by the mutual holding
company, the dollar amount of dividends waived by the mutual
holding company are considered as a restriction on the retained
earnings of the savings association, which restriction, if
material, is disclosed in the public financial statements of the
savings association as a note to the financial statements; (iii)
the amount of any dividend waived by the mutual holding company
is available for declaration as a dividend solely to the mutual
holding company, and, in accordance with SFAS 5, where the
savings association determines that the payment of such dividend
to the mutual holding company is probable, an appropriate dollar
amount is recorded as a liability; (iv) the amount of any waived
dividend is considered as having been paid by the savings
association in evaluating any proposed dividend under OTS capital
distribution regulations; and (v) in the event the mutual holding
company converts to stock form, the appraisal submitted to the
OTS in connection with the
<PAGE>
conversion application takes into account the aggregate amount of
the dividends waived by the mutual holding company.
As of December 31, 1996, the Mutual Holding Company had
waived an aggregate of $2.4 million of dividends. It is the OTS'
policy that in the event of a Conversion Transaction by a mutual
holding company formed after February 1, 1994, such as the Mutual
Holding Company, the aggregate amount of dividends waived by the
Mutual Holding Company would be credited to the Mutual Holding
Company and would adjust the percentage of the converted holding
company's common stock issued to Minority Stockholders in
exchange for Bank Common Stock. The percentage of the converted
holding company's common stock that would be issued to Minority
Stockholders would be determined by multiplying the percentage of
Bank Common Stock held by Minority Stockholders by a fraction the
numerator of which is equal to the Bank's stockholders' equity
less the aggregate amount of dividends waived by the Holding
Company, and the denominator of which is equal to the Bank's
stockholders' equity. The Reorganization is not expected to have
an effect on the manner in which the Mutual Holding Company's
dividend waiver affects a Conversion Transaction.
PROPOSAL I--ELECTION OF DIRECTORS
Directors of the Bank are generally elected to serve for a
three-year period or until their respective successors shall have
been elected and shall qualify. One director will be elected at
the Meeting to serve for a three-year period and until his
successor has been elected and qualified. The Nominating
Committee, consisting of directors Pruitt, Reinhard and Trainer,
has nominated John B. Sill, Jr. to serve as director. Mr. Sill
is a current member of the Board of Directors.
The table below sets forth certain information regarding the
Bank's Directors as of March 1, 1997 who will continue in office
after the Meeting, including the terms of office of Board members
and executive officers of the Bank, and shares of Bank Common
Stock beneficially owned by such persons as of March 1, 1997. It
is intended that the proxies solicited on behalf of the Board of
Directors (other than proxies in which the vote is withheld as to
the nominee) will be voted at the Meeting for the election of the
nominee identified below. If the nominee is unable to serve, the
shares represented by all such proxies will be voted for the
election of such substitute as the Board of Directors may
recommend. At this time, the Board of Directors knows of no
reason why the nominee might be unable to serve, if elected.
Except as indicated herein, there are no arrangements or
understandings between the nominee and any other person pursuant
to which such nominee was selected.<PAGE>
<TABLE>
<CAPTION>
Shares of
Positions Common Stock
Held in the Director Current Term Beneficially Percent
Name Age Bank Since(1) to Expire Owned(2) of Class
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NOMINEE
John B. Sill, Jr. 74 Chairman 1977 1997 16,864 *
DIRECTORS CONTINUING IN OFFICE
Wendell T. Breithaupt 63 Director, 1979 1998 47,093 *
Chief Executive
Office
Peter S. Longstreth 51 Director 1992 1998 30,257 *
George A. Pruitt 49 Director 1991 1999 7,747 *
George W. Reinhard 63 Director 1983 1999 116,124 1.3
Charles E. Stokes, III 65 Director 1978 1998 13,364 *
Raymond E. Trainer 48 Director 1986 1999 41,364 *
Miles W. Truesdell, Jr. 53 Director 1992 1998 27,257 *
DIRECTORS EMERITUS
F. Glenn Breen Director Emeritus 1966 N/A N/A N/A
Edward L. Hoffman Director Emeritus 1976 N/A N/A N/A
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Leo J. Bellarmino 47 Executive Vice N/A N/A 448 *
President
Richard L. Gallaudet 52 Vice President N/A N/A 11,131 *
and Senior
Lending Officer
Dean H. Lippincott 43 Vice President N/A N/A 14,402 *
Robert Russo 41 Vice President N/A N/A 6,760 *
and Treasurer
Robert C. Hollenbeck 51 Vice President N/A N/A 8,503 *
and Corporate
Secretary
</TABLE>
PAGE
<PAGE>
* Less than 1%.
(1) Reflects initial appointment to the Board of Directors of
the Bank's mutual predecessor.
(2) See definition of "beneficial ownership" in the table in
"Voting Securities and Principal Holders Thereof." Does not
include shares purchased during January and February 1997 by
the Bank's 401(k) Plan.
Currently, the Bank's Board of Directors consist of nine
members. Harry Van Sciver, a current director, has announced his
plans to resign from the Board in April. The principal
occupation during the past five years of each director and
executive officer of the Bank is set forth below. All directors
have held their present positions for five years unless otherwise
stated.
John B. Sill, Jr. is President of Ivins & Taylor, Inc.,
funeral directors located in Trenton, New Jersey.
Wendell T. Breithaupt is President and Chief Executive Officer
of the Bank and serves also as a Director. He has served as
President since 1981 and as Chief Executive Officer since 1982.
He has been a Director since 1979. He is a Director, member of
the Executive Committee, and Vice President of the Mercer County
Chamber of Commerce, and is on the Board of Trustees and a member
of the Finance Committee of the Mercer Medical Center. He is a
member of the Mercer County Economic Development Commission and
serves as a trustee of the Drumthwacket Foundation, Inc. Mr.
Breithaupt serves as a director of RSI Retirement Systems, a New
York Corporation.
Peter S. Longstreth is Managing Partner of Aegis Property
Group, Ltd., a real estate development and project management
company.
George A. Pruitt is President of Thomas A. Edison State
College.
George W. Reinhard is President of Lester Fellows Co., Inc.,
an interstate trucking firm.
Charles E. Stokes, III is the retired President of The Home
Rubber Company, which manufactures mechanical rubber goods,
hoses, etc.
Raymond E. Trainer is Chairman of General Sullivan Group,
which is an industrial distribution holding company. He also is
a director and secretary of the TRAF Group which owns a medical
collection agency.
Miles W. Truesdell, Jr. is Co-President of The Truesdell
Company which operates as a specialty distributor that services
the industrial market with process control instrumentation.
<PAGE>
Executive Officers Who Are Not Directors. Set forth below is a
brief description of the background of each person who serves as
an executive officer of the Bank and who is not a director of the
Bank. Unless otherwise noted, all executive officers who are not
directors have held their present position for five years.
Leo J. Bellarmino is Executive Vice President, responsible for
the Bank's Human Resources, Marketing, Branch Network, Project
Planning, Information Services, Loan Operations, Staff Services
and Corporate Finance. He joined the Bank in October of 1995.
He was a former Senior Vice President with CoreStates New Jersey
National Bank where he served in various management capacities,
including division manager of their 140 New Jersey branch
offices.
Richard L. Gallaudet is Vice President and Senior Lending
Officer, responsible for the direct management of all the Bank's
lending activities. He joined the Bank in 1990, prior to which
he held a number of management positions with other banks,
including three years of service (1986-1989) as President and
Chief Executive Officer of Cherry Hill National Bank and thirteen
years of service (1973-1986) as a Senior Vice President with
MidLantic National Bank/South (formerly Heritage Bank).
Dean H. Lippincott has been Vice President in charge of the
Bank's Mortgage Department since 1988 and has served the Bank in
a number of other capacities since joining it in 1970. His
responsibilities include home mortgage loan originations. He
participates as a member of The West Ward Community Partnership
Corp.
Robert Russo is Vice President and Treasurer, responsible for
all bank operations, financial reporting, and accounting systems.
He joined the Bank in 1985 as an Assistant Vice President. He
has held other positions in the thrift industry since 1978.
Robert C. Hollenbeck is Vice President and Corporate Secretary
responsible for investor relations, bank investments, budgeting
and corporate regulatory matters. He joined the Bank in November
1994. He has 28 years of banking experience including 11 years as
Executive Vice President and Director of New Brunswick Savings
Bank and five years as Executive Vice President of Constellation
Bank.
Board Meetings and Committees of the Board of Directors
Regular meetings of the Board of Directors of the Bank are,
and will be, held on at least a monthly basis and special
meetings of the Board of Directors of the Bank are, and will be,
held from time to time as needed. There were 15 meetings of the
Board of Directors of the Bank held during the year ended on
December 31, 1996. During the year ended December 31, 1996, no
Director attended fewer than 85% of the total number of meetings
of the Board of Directors of the Bank and the total number of
meetings held by all committees of the Board of Directors on
which he served.
The Board of Directors of the Bank has established various
committees, including the Executive, Examining (Audit),
Compensation, Benefits, Loan, Emergency Operations, Merger and
Acquisition and Trust Committees.
The Executive Committee generally has the power and authority
to act on behalf of the Board of Directors on matters between
scheduled meetings unless specific Board of Directors action is
required or unless otherwise restricted by the Bank's charter or
bylaws or its Board of Directors. The Executive Committee
currently is chaired by Mr. Sill with Messrs. Breithaupt, Pruitt,
Reinhard, Longstreth, Trainer and Truesdell as members. The
Executive Committee met once during 1996.
The Examining (Audit) Committee reviews (i) reports from the
internal audit department, (ii) the independent auditors' reports
and results of their examination, prior to review by and with the
entire Board of Directors and (iii) the OTS and FDIC and other
regulatory reports, prior to review by and with the entire Board
of Directors. Currently, Mr. Stokes serves as chairman of this
Committee and Messrs. Trainer, Pruitt and Truesdell serve as
members. The Examining (Audit) Committee met three times during
1996.
<PAGE>
The Compensation Committee is currently chaired by Mr. Sill,
with Messrs. Longstreth, Pruitt and Trainer as members. Its
members review and approve salaries, promotions and bonuses
provided to the Bank's employees. The Compensation Committee met
five times during 1996.
The Merger and Acquisition Committee is responsible for
developing and implementing a corporate acquisition strategy
including recommendations for specific targets. Currently,
Messrs. Breithaupt, Longstreth, Sill, Reinhard and Trainer serve
as members of the committee. The Merger and Acquisition
Committee met twice in 1996.
The Benefits Committee reviews and approves the various
benefit plans for Bank management and employees. Currently,
Messrs. Breithaupt, Reinhard, Sill, Stokes and Truesdell serve as
members. The Benefits Committee met once in 1996.
The Loan Committee (i) reviews and approves the loan requests
exceeding dollar limitations as defined in the Bank's lending
policy and (ii) reviews a loan quality control and classification
report on a monthly basis. Currently, Messrs. Breithaupt,
Longstreth, Reinhard, Sill, Trainer and Truesdell serve as
members of the Committee and Mr. Stokes serves as an alternate.
The Loan Committee met 12 times during 1996.
The Emergency Operations Committee reviews and approves plans
to continue Bank functions during a national or local emergency.
The Committee is currently chaired by Mr. Breithaupt, Messrs.
Sill, Reinhard, Gallaudet, Russo, Bellarmino and James W. Sorge,
General Services Manager, are members of the Committee. The
Emergency Operations Committee did not meet during 1996.
The Trust Committee reviews and approves all Trust Department
operations including all transactions, opening and closing of all
accounts, audits, and regulatory exams. Messrs. Breithaupt,
Sill, Reinhard and Truesdell serve as members. The Trust
Committee met three times in 1996.
Pursuant to the requirements of the Bank's bylaws, a
Nominating Committe is appointed each year at least 30 days prior
to the date of the Bank's annual meeting. For the 1996 Annual
Meeting, the Bank's Nominating Committee, comprising directors
Pruitt, Reinhard, and Trainer, met once.
During 1996, the Bank's Compensation Committee was chaired by
Mr. Sill, and Messrs. Longstreth, Pruitt, and Trainer served as
members. No such member has ever been an employee of the Bank or
its subsidiaries, or has been involved in any transaction with
the Bank required to be disclosed by SEC rules, regarding
transactions with officials.
Board Compensation Committee Report on Executive Compensation
The Compensation Committee annually reviews the performance of
the Chief Executive Officer and other executive officers and
recommends changes to base compensation as well as the level of
bonus, if any, to be awarded. In determining whether the base
salary of the Chief Executive Officer and other executive
officers should be increased, the Bank's Board of Directors takes
into account individual performance, performance of the Bank, the
size of the Bank and the complexity of its operations, and
information regarding compensation to executives performing
similar duties for financial institutions in the Bank's market
area.
While the Compensation Committee does not use strict numerical
formulas to determine changes in compensation for the Chief
Executive Officer and while it weighs a variety of different
factors in its deliberations, it has emphasized and will continue
to emphasize earnings, profitability, capital position and income
level, and return on average assets as factors in setting the
compensation of the Chief Executive Officer. Other non-quantitative factors
considered by the Bank's Compensation
Committee in fiscal 1996 included general management oversight of
the Bank, the quality of communication with the Board of
Directors, and the productivity of employees. Finally, the
Compensation Committee considered the standing of the Bank with
customers and the community, as evidenced by the level of
customer/community complaints and compliments. While each of the
quantitative and non-quantitative factors described above was
considered by the Compensation Committee, such factors were not
assigned a specific weight in evaluating the performance of the
Chief Executive Officer. Rather, all factors were considered, and
based upon the effectiveness of such officers in addressing each
of the factors, and the range of compensation paid to officers of
peer institutions, the Board of Directors approved a
recommendation of the Compensation Committee for an increase in
the base salary of the Chief Executive Officer, such that the
salary for the year ended December 31, 1996 is as set
<PAGE>
forth in "--Cash Compensation." In addition, the Board of
Directors approved increases in the aggregate salary paid to the
Bank's executive officers.
Performance Graph
Set forth hereunder is a performance graph comparing the
cumulative total return including dividends on (a) the Bank
Common Stock for the period beginning with the sale of the Bank
Common Stock for $10.00 per share in the Bank's minority stock
offering on August 3, 1995, through December 31, 1996, (b) stocks
including in the Nasdaq Bank Index for the period beginning with
the close of trading on August 3, 1995, through December 31,
1996, and (c) stocks included in the Nasdaq Stock Market--U.S.
Index over the period beginning with the close of trading on
August 31, 1995, through December 31, 1996.
<TABLE>
<CAPTION>
Comparison of 16 Month Cumulative Total Return*
Among Trenton Savings Bank, the Nasdaq Stock Market-US Index
and the Nasdaq Bank Index
Cumulative Total Return
---------------------------------
8/3/95 12/95 12/96
<S> <C> <C> <C>
Trenton Savings Bank 100 131 165
Nasdaq Stock Market-US 100 108 133
Nasdaq Bank 100 118 156
* $100 invested on 8/3/95 in stock or index
including reinvestment of dividends.
Fiscal year ending December 31.
</TABLE>
<PAGE>
Directors Compensation
Fees. Each member of the Board of Directors of the Bank,
except Mr. Breithaupt, is paid a fee of $650 per Board meeting
attended and $500 for attending meetings of the Executive,
Examining (Audit) and Emergency Operations Committees. Directors
attending Loan Committee meetings receive $300 per meeting,
directors attending Benefits and Compensation Committee meetings
receive $250 per meeting. The Chairman of the Board receives
$800 per meeting of the Board of Directors and Executive
Committee, and the Chairman of the Examining (Audit) Committee
receives $700 per meeting of the Examining (Audit) Committee. In
addition, non-officer directors other than the Chairman are paid
an annual retainer of $5,000, and the Chairman is paid an annual
retainer of $12,000.
1996 Option Plan. During 1996 the Bank and the Mutual Holding
Company adopted the Trenton Savings Bank and Peoples Bancorp, MHC
1996 Stock Option Plan (the "1994 Option Plan"), which was
approved by the Bank's stockholders. Under the 1996 Option Plan,
directors Sill, Stokes, Reinhard, Trainer, Pruitt, Longstreth and
Truesdell each received options to purchase 12,000 shares of Bank
Common Stock. The options vest in five equal annual installments
commencing in August 1997, and the exercise price per share for
each option awarded during 1996 is equal to the fair market value
of the Bank Common Stock on the date the option was granted, or
$13.50 per share. Awards become fully vested upon a director's
disability, death, retirement or following termination of service
in connection with a change in control of the Bank or the Mutual
Holding Company. All options granted under the 1996 Option Plan
expire upon the earlier of ten years following the date of grant
or, generally, nine years following the date the optionee ceases
to be a director.
1996 Recognition Plan. During 1996 the Bank adopted the
Trenton Savings Bank and Peoples Bancorp, MHC 1996 Recognition
and Retention Plan (the "1996 Recognition Plan"), which was
approved by the Bank's stockholders. During 1996, 9,364 shares
of Bank Common Stock were awarded under the plan to directors
Sill, Stokes, Reinhard and Trainer, 7,491 shares were awarded to
director Pruitt, and 7,257 shares were awarded to directors
Longstreth and Truesdell. Such awards of Bank Common Stock
("Restricted Stock") are restricted by the terms of the 1996
Recognition Plan. Participants earn (become vested in) shares of
Restricted Stock covered by an award and all restrictions lapse
in five equal annual installments commencing in August 1997.
Awards become fully vested upon a director's disability, death,
retirement or following termination of service in connection with
a change in control of the Bank or the Mutual Holding Company.
Unvested shares of Restricted Stock are forfeited by a director
who is not an employee upon failure to seek reelection, failure
to be reelected, or resignation from the Board. Prior to
vesting, recipients of awards under the 1996 Recognition Plan
receive dividends and may vote the shares of Restricted Stock
allocated to them.
Executive Compensation
Summary Compensation Table. The following table sets forth
for the years ended December 31, 1996, 1995, and 1994, certain
information as to the total remuneration paid by the Bank to the
Chief Executive Officer and executive officers whose salary and
bonuses exceeded $100,000 in 1996 ("Named Executive Officers").
PAGE
<PAGE>
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
--------------------------------------- ------------------------
Year Other Restricted Shares
Name and Ended Annual Stock Underlying LTIP All Other
Principal Position(1) Dec. 31 Salary(2) Bonus(3) Compensation(4) Awards(5) Options(6) Payouts Compensation(7)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
Wendell T. Breithaupt 1996 $187,425 $50,000 -- $560,426 78,000 -- $80,712
President and Chief 1995 178,500 50,000 -- -- -- -- 80,231
Executive Officer 1994 170,000 45,000 -- -- -- -- 78,238
Leo J. Bellarmino 1996 $140,000 $10,000 -- -- 34,000 -- $ 1,713
1995 25,846 -- -- -- -- -- --
Richard L. Gallaudet 1996 $ 94,500 $ -- -- $ 65,948 10,000 -- $ 5,694
Vice President 1995 91,500 10,660 -- -- -- -- 5,533
1994 87,000 7,395 -- -- -- -- 5,467
- ---------------------------
(1) No other executive officer received salary and bonuses that in the aggregate exceeded $100,000.
(2) Includes amounts deferred at the election of the named executive officer pursuant to the Bank's 401(k) Plan.
(3) Includes amounts earned during the year and awarded pursuant to the Bank's Profit Sharing Plan. Payments pursuant to the
Profit Sharing Plan are reflected in the year earned, rather than the year in which the payment is received.
(4) The Bank provides certain members of senior management with the use of an automobile and other personal benefits which have
not been included in the table. The aggregate amount of such other benefits did not exceed the lesser of $50,000 or 10%
of each Named Executive Officer's cash compensation.
(5) Includes awards of 41,513 and 4,885 shares of restricted stock to Messrs. Breithaupt and Gallaudet, respectively, that vest in
five equal annual installments commencing in August 1997. The value of the awards is based on the last sale price of the Bank
Common Stock on the date of the award. Dividends are paid to the holder of the restricted stock. As of December 31, 1996,
the fair market value of the shares of restricted stock held by Messrs. Breithaupt and Gallaudet was $664,208 and $78,160,
respectively.
(6) Options vest in five equal annual installments commencing on August 1997.
(7) Includes the Bank's contribution to the 401(k) Plan and the Bank's Supplemental Executive Retirement Plan, and insurance
premiums paid by the Bank on behalf of Named Executive Officers.
</TABLE>
PAGE
<PAGE>
1996 Stock Option Plan. The Bank's 1996 Option Plan is
available to directors and officers and other employees of the
Bank and its affiliates. The plan is administered by a committee
of outside directors. The plan authorizes the grant of incentive
stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986 (the "Code"), "non-statutory options," which
do not qualify as incentive stock options, and certain "Limited
Rights," exercisable only upon a change in control of the Bank or
the Mutual Holding Company. The following tables set forth
certain information regarding awards under the 1996 Option Plan
and information regarding the shares acquired and the value
realized during 1996 by Named Executive Officers upon exercise of
options and the number of shares of Bank Common Stock underlying
options and the value of options held by Named Executive Officers
at December 31, 1996.
PAGE
<PAGE>
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Potential
Realizable Value
at Assumed Annual
Rates of Stock Price
Individual Grants Appreciation for Option
-------------------------- Term
Percent of -----------------------
Total Options
Number of Granted to
Securities Employees
Underlying in FY Exercise of Expiration
Name Options 1996 Base Price Date 5% 10%
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Wendell T. Breithaupt 78,000 52.0% $13.50 August 2006 $979,680 $2,183,990
Leo J. Bellarmino 34,000 22.7% $13.50 August 2006 $427,00 $ 952,000
Richard L. Gallaudet 10,000 6.7% $13.50 August 2006 $125,600 $ 280,000
</TABLE>
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised In-
Unexercised Options at The-Money Options at
Fiscal Year-End Fiscal Year-End(1)
------------------------- -------------------------
Shares Acquired Value
Name Upon Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Wendell T. Breithaput -- -- 0/78,000 $ 0/195,000
Leo J. Bellarmino -- -- 0/34,000 $ 0/ 85,000
Richard L. Gallaudet -- -- 0/10,000 $ 0/ 25,000
</TABLE>
PAGE
<PAGE>
(1) Equals the difference between the aggregate exercise price
of such options and the aggregate fair market value of the
shares of Bank Common Stock that would be received upon
exercise, assuming such exercise occurred on December 31,
1996, on which date the last sale of the Bank Common Stock
was at a price of $16.00.
Employment Memoranda
Mr. Breithaupt is a party to a memorandum relating to
compensation authorized by the Board of Directors and executed by
the then members of the Compensation Committee and Mr. Breithaupt
dated August 27, 1994. The memorandum provides for employment by
Mr. Breithaupt at the Bank through December 31, 1999, with
compensation continued through date. Pursuant to that
memorandum, provided performance is satisfactory, Mr. Breithaupt
is guaranteed a base salary of at least $170,000 per annum during
this period plus an annual payment, intended to be invested by
him to supplement his retirement income, of $70,000 per annum
payable prior to each January 30 following the completion of each
year of service or, at his option, in monthly installments. In
addition, the memorandum also contemplates eligibility for an
annual bonus of up to $50,000 depending on obtaining strategic
and operational goals. Bonuses, if earned and awarded, are to be
paid no later than ninety days following conclusion of each
fiscal year during this period.
Retirement Plan
The Bank maintains a defined benefit pension plan
("Retirement Plan") for all employees who have attained the age
of 21 and have completed one year of service with the Bank. In
general, the Retirement Plan provides for
<PAGE>
annual benefits payable monthly upon retirement at age 65 in an
amount equal to 1.65% of the "Average Compensation" of the
employee (which is equal to the average of the total compensation
paid to him or her during the 60 consecutive calendar months
within the final 120 consecutive calendar months of service
affording the highest average), for each year of service, plus,
if applicable, 0.65% of Average Compensation in excess of an
employee's average social security taxable wage base for each
year of the 35 year period ending with the employee's social
security retirement age, multiplied by his or her years of
service, not in excess of 25 years.
Under the Retirement Plan, an employee's benefits are
unvested prior to the completion of five years of service and are
fully vested after five years of service. A year of service is
any year in which an employee works a minimum of 1,000 hours.
The Retirement Plan provides for an early retirement option with
reduced benefits for participants who are age 55 and who have 15
years of service. The Bank's contribution for the Retirement
Plan for 1996 was $188,285, 1995 was $168,308, and for 1994 was
$148,233.
The following table illustrates annual pension benefits for
retirement at age 65 under various levels of compensation and
years of service. The figures in the table assume that the
Retirement Plan continues in its present form, that the
participants retire at age 65 and that the participants elect a
straight life annuity form of benefit.
<TABLE>
<CAPTION>
Five Year
Average 10 Years of 15 Years of 20 Years of 25 Years of
Compensation Service Service Service Service
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
$40,000 $ 7,295 $10,942 $14,590 $18,238
50,000 9,595 14,392 19,190 23,988
60,000 11,895 17,842 23,790 29,738
70,000 14,195 21,292 28,390 35,488
80,000 16,495 24,742 32,990 41,238
90,000 18,795 28,192 37,590 46,988
100,000 21,095 31,642 42,190 52,738
110,000 23,395 35,092 46,790 58,488
120,000 25,695 38,542 51,390 64,238
130,000 27,995 41,992 55,990 69,988
140,000 30,295 45,442 60,590 75,738
150,000 32,595 48,892 65,190 81,488
</TABLE>
The maximum annual compensation which may be taken into
account under the Code (as adjusted from time to time by the IRS)
for calculating contributions under qualified defined benefit
plans is currently $150,000, and the maximum annual benefit
permitted under such plan is currently $120,000.
At December 31, 1996, Mr. Breithaupt had 17 and Mr.
Gallaudet had six years of service, respectively, under the
Retirement Plan, and the five-year average compensation for Mr.
Breithaupt was $150,000 and for Mr. Gallaudet it was $94,725.
Indebtedness of Management
All loans made by the Bank to the Bank's directors,
executive officers, and members of such persons' families were
made in the ordinary course of business, on substantially the
same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other
persons and did not involve more than the normal risk of
collectibility or present other unfavorable factors. All such
loans comply with federal regulations relating to loans to such
persons.
<PAGE>
PROPOSAL II--APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION
The formation of the Stock Holding Company will be
accomplished under the Plan of Reorganization, pursuant to which
the Bank will become a wholly owned subsidiary of the Stock
Holding Company. Under the terms of the Plan of Reorganization,
each outstanding share of Bank Common Stock will be converted
into one share of Common Stock and the holders of Bank Common
Stock will become the holders of all of the outstanding Common
Stock of the Stock Holding Company. The Stock Holding Company
was incorporated in November 1996, solely for the purpose of
becoming a savings and loan holding company and has no prior
operating history. Following the Reorganization, it is intended
that the Bank will continue its operations at the same locations,
with the same management, and subject to all the rights,
obligations and liabilities of the Bank existing immediately
prior to the Reorganization.
Reasons for and Risks of the Reorganization
Reasons for the Reorganization. The Board of Directors of
the Bank believes that the formation of the Stock Holding Company
as a subsidiary of the Mutual Holding Company will be in the best
interests of stockholders and will offer greater operating
flexibility than is currently available to the Bank in its
existing mutual holding company structure, although the final OTS
rules regarding mid-tier stock holding companies and the
conditions that may be imposed by the OTS as part of its approval
of the Reorganization will limit the degree to which the
operating flexibility is increased. See "Risks of the
Reorganization." The Mutual Holding Company does not operate as
a traditional holding company at the present time because it is a
mutual organization and represents only the mutual ownership
interest in the Bank. Establishing the Stock Holding Company as
a subsidiary of the Mutual Holding Company will permit the Stock
Holding Company to conduct activities and make investments for
the benefit of all stockholders. Management believes that it
will also provide enhanced ability to invest through the Stock
Holding Company, facilitate mergers and acquisitions, and
facilitate stock repurchases, all as described below.
Enhanced Ability to Invest Through the Stock Holding
Company. Under the existing mutual holding company structure the
Mutual Holding Company cannot make investments in other financial
institutions or business enterprises for the benefit of all
stockholders of the Bank, and the Bank itself is limited by law
or regulation in its permissible investment activities. For
example, if the Mutual Holding Company invests in 5% of the
common stock of another bank or thrift holding company, any gain
on such investment would accrue only to the Mutual Holding
Company. The Reorganization will permit the entity that issues
stock (i.e., the Stock Holding Company) to make investments,
diversify business activities, or acquire other financial
institutions, for the benefit of all stockholders. No specific
investments, new business activities or acquisitions by the Stock
Holding Company that would be facilitated by the Reorganization
are planned at the present time.
Facilitate Mergers and Acquisitions. The Reorganization
will also facilitate the approval and completion of mergers and
acquisitions since the Stock Holding Company, acting as the sole
stockholder of the Bank, will be able to approve mergers and
acquisitions involving the Bank. This is consistent with the
manner in which other stock holding companies are able to approve
mergers of their bank or savings institution subsidiaries.
Moreover, the Reorganization will enable the Stock Holding
Company to acquire other financial institutions and to operate
them as separate subsidiaries for the benefit of all stockholders
of the Stock Holding Company.
Stock Repurchases. The Reorganization will enable the Stock
Holding Company to repurchase Holding Company Common Stock which,
particularly in recent years, has been an important, if not
essential, means for banks and savings institutions to enhance
stockholder value and invest capital resources. Historically,
the Bank has used the percentage of taxable income method for
establishing its bad debt reserves for tax purposes. Federal tax
laws generally require that thrift institutions recapture into
income and pay the tax on their excess bad debt reserves in the
event of certain distributions and redemptions, such as stock
repurchases. Accordingly, if the Bank were to repurchase any of
its outstanding shares of common stock, it would cause recapture
of all or part of its pre-1988 excess tax bad debt reserves.
Because distributions or redemptions by entities, such as the
Stock Holding Company, that have not used the percentage of
taxable income method for computing bad debt reserves are not
subject to recapture, the Stock Holding Company will be permitted
to repurchase Holding Company Common Stock without causing any
recapture of the Bank's tax bad debt reserves.
Stock Holding Company Powers. The Bank may engage only in
those activities that are permissible for federal savings
associations under the Home Owners' Loan Act ("HOLA") and
applicable regulations thereunder. Pursuant to current OTS
policy, the Stock Holding Company will be subject to the same
restrictions, including but not limited to activity limitations
applicable to the Mutual Holding Company under Section 10(o)5 of
the HOLA and the regulations promulgated thereunder. The Stock
Holding Company will be permitted to engage in activities that
are not permissible for the Bank, such as making investments in
up to 5% of the common stock of another financial institution.
The Stock Holding Company generally would be permitted to engage
in the activities that are permissible for bank holding companies
under the Bank Holding Company Act (i.e., activities that are
closely related to banking). See "Risks of the Reorganization,"
and "Stock Holding Company Regulation."
Risks of the Reorganization. Management believes that there
are substantial benefits that will be achieved through the
Reorganization, as discussed above. However, stockholders should
note that although the OTS has approved two-tier mutual holding
company reorganizations, (i) on November 13, 1996, the OTS issued
an advance notice of proposed rulemaking (the "Notice") in which
it requested comment concerning certain questions relating to the
two-tier structure, (ii) the outcome of such rule-making and the
ultimate OTS policy regarding two-tier mutual holding companies
is uncertain, and (iii) in approving previous two-tier mutual
holding company reorganizations the OTS has imposed a significant
number of conditions that may limit the benefits that can be
achieved in the two-tier structure.
The questions raised by the OTS in the Notice include, among
others, the following: whether the stock holding company should
be regulated as a multiple or unitary savings and loan holding
company; whether the restrictions imposed by OTS regulations on
mutual holding companies (e.g., restrictions on pledges of
subsidiary savings association stock, waivers of dividends, and
limitations on indemnification and employment contracts) should
also be imposed on mid-tier stock holding companies; whether the
mid-tier stock holding company should be required to obtain the
approval of the OTS prior to issuing securities to persons other
than the mutual holding company, whether and under what
conditions the subsidiary savings association may issue minority
voting stock or other classes of securities and how such stock
would be treated in any mutual-to-stock conversion of the mutual
holding company; whether and to what extent the charter and
bylaws (and amendments thereto) of the mid-tier stock holding
company should be regulated by the OTS and whether the OTS should
require that the mid-tier stock holding company's charter be
consistent with the federal mutual holding company charter; and
whether the OTS regulations regarding stock issuances of savings
association subsidiaries of mutual holding companies should apply
to mid-tier stock holding companies.
Although rules have not yet been issued relating to the two-
tier structure, it is the current OTS policy to review and on a
case-by-case basis approve applications to reorganize into the
two-tier structure subject to compliance with a significant
number of conditions that may include, among others, the
following: The mid-tier stock holding company shall be subject
to the provisions of OTS regulations pertaining to minority stock
issuances as if it were a former mutual savings association that
reorganized into a mutual holding company structure; the mid-tier
stock holding company shall be subject to the same restrictions
(including, but not limited to, the activities limitations) to
which the parent mutual holding company is subject under federal
law and OTS regulations; the mid-tier stock holding company must
hold all of the issued and outstanding common stock of the
subsidiary savings association, and the subsidiary savings
association may not issue any other class of equity security; the
mid-tier stock holding company and the subsidiary savings
association must obtain approval from the OTS prior to issuing
any securities; the mid-tier stock holding company must receive
the OTS's non-objection to any proposed amendments to its charter
and bylaws; the mid-tier stock holding company shall cease any
activity, reverse any action, or amend any provision of its
charter or bylaws, to which the OTS objects as being contrary to
the OTS regulations in effect at the time of OTS approval of the
Reorganization, or as subsequently amended; and if the mutual
holding company undertakes a mutual-to-stock conversion, OTS
policies regarding purchases of stock in the conversion will
apply to shareholders of the stock holding company.
<PAGE>
Plan of Reorganization
The Reorganization will be accomplished under the Plan of
Reorganization, which is attached as Exhibit A hereto. The
following discussion is qualified in its entirety by reference to
the Plan of Reorganization. The Plan of Reorganization was
unanimously approved by the Board of Directors on October 9,
1996.
The Stock Holding Company is a newly organized Delaware
corporation which was formed by the Bank solely for the purpose
of effecting the Reorganization. Therefore, the Stock Holding
Company has no prior operating history. The Plan of
Reorganization is by and among the Stock Holding Company, the
Bank, and Interim, a to-be-formed interim federal stock savings
bank.
The Reorganization and the establishment of the Stock
Holding Company will be accomplished as follows: (i) the Bank
will organize the Stock Holding Company as a wholly owned
subsidiary; (ii) the Stock Holding Company will organize an
interim federal stock savings bank ("Interim") as a wholly owned
subsidiary; (iii) Interim will merge into the Bank, with the Bank
as the surviving corporation; (iv) in connection with the merger
in step (iii) above, all of the issued and outstanding shares of
Holding Company Common Stock held by the Bank will be canceled,
all of the issued and outstanding shares of Bank Common Stock
will be converted by operation of law into an equal number of
shares of Holding Company Common Stock, and the issued and
outstanding shares of Interim, all of which are held by the Stock
Holding Company, will automatically be converted by operation of
law into common stock of the Bank. As a result of steps (i)
through (iii) above, the Bank will become the wholly owned
subsidiary of the Stock Holding Company, the Stock Holding
Company will become the majority owned subsidiary of the Mutual
Holding Company, and Minority Stockholders will become minority
stockholders of the Stock Holding Company.
The following diagram sets forth the Bank's current mutual
holding company structure:
- -------------------------
| Peoples Bancorp, MHC |
| |
- -------------------------|
|
|65% of Bank
|Common Stock
|
- ------------------------- -------------------
| Trenton Savings Bank |35% of Bank | Minority |
| FSB |Common Stock | Shareholders |
| |-------------- | |
- -------------------------| -------------------|
PAGE
<PAGE>
The following diagram sets forth the Bank's proposed mutual
holding company structure following completion of the
Reorganization:
- -------------------------
| Peoples Bancorp, MHC |
| |
- -------------------------|
|
| 65% of
|Common Stock
|
- ------------------------- -------------------
| Peoples Bancorp, Inc. |35% of | |
| |Common | Minority |
| |Stock | Shareholders |
| |-------------- | |
- -------------------------| -------------------|
|
|100% of Bank Common Stock
|
- -------------------------
| Trenton Savings Bank |
| FSB |
- -------------------------|
The Board of Directors of the Bank presently intends to
capitalize the Stock Holding Company with up to $100,000, subject
to the approval of the OTS. Future capitalization of the Stock
Holding Company will depend upon dividends declared by the Bank
based on future earnings, or the raising of additional capital by
the Stock Holding Company through a future issuance of
securities, debt or by other means. The Board of Directors of
the Stock Holding Company has no present plans or intentions with
respect to any future issuance of securities or debt at this
time. Furthermore, as long as it is in existence, the Mutual
Holding Company must own at least a majority of the Stock Holding
Company's outstanding voting stock.
After the Reorganization, the Bank will continue its
existing business and operations as a wholly owned subsidiary of
the Stock Holding Company and the consolidated capitalization,
assets, liabilities, and form of financial statements of the
Stock Holding Company immediately following the Reorganization
will be substantially the same as those of the Bank immediately
prior to consummation of the Reorganization. The Federal Stock
Charter and the Bylaws of the Bank will continue in effect, and
will not be affected in any manner by the Reorganization. The
name "Trenton Savings Bank" will continue to be utilized. The
corporate existence of the Bank will continue unaffected and
unimpaired by the Reorganization.
Effective Date
The "Effective Date" of the Reorganization will be the date
upon which the Articles of Combination are filed with the OTS.
Although management of the Bank does not anticipate any
significant delays in obtaining the OTS' endorsement of the
Articles, the effects of any such delays on holders of the Bank
Common Stock cannot be determined at this time.
Optional Exchange of Stock Certificates
After the Effective Date stock certificates evidencing
shares of Bank Common Stock will represent, by operation of law,
the same number of shares of Common Stock. Former holders of
Bank Common Stock will not be required to exchange their Bank
Common Stock certificates for Common Stock certificates, but will
have the option to do so. DO NOT SEND YOUR STOCK CERTIFICATES TO
THE BANK AT THIS TIME. Any stockholder desiring more information
about such exchange may request additional information from the
Bank by writing the Secretary of the Bank at the address given
above.
<PAGE>
Rights of Dissenting Stockholders
Federal regulations applicable to the Bank generally provide
that a stockholder of a federally chartered savings association
that engages in a merger transaction shall have the right to
demand from the savings association the payment of the fair or
appraised value of his or her stock in the savings association,
subject to the satisfaction of specified procedural requirements.
These regulations also provide that stockholders of a federally
chartered savings association with stock that is quoted on the
Nasdaq Stock Market are not entitled to exercise dissenters'
rights of appraisal if the stockholder is required to accept
cash, shares of stock of any association or corporation which at
the effective date of the merger will be quoted on the Nasdaq
Stock Market, or any combination of such shares of stock and
cash. Since the Common Stock will be quoted on the Nasdaq Stock
Market at the effective date of the Reorganization, the Bank's
stockholders will not have dissenters' rights of appraisal in
connection with the Reorganization.
Tax Consequences
The Bank has received an opinion of its special counsel,
Luse Lehman Gorman Pomerenk & Schick, A Professional Corporation,
Washington, D.C., as to certain federal income tax consequences
of the Reorganization. This opinion of counsel, which is not
binding upon the Internal Revenue Service, provides substantially
as follows: (i) the merger of Interim with and into the Bank
will constitute a reorganization under Section 368 of the
Internal Revenue Code of 1986, as amended ("Code"), and the Stock
Holding Company, the Bank and Interim will each be a "party to a
reorganization" within the meaning of Section 368(b) of the Code,
provided that the merger of Interim with and into the Bank
qualifies as a statutory merger under applicable law, after the
transaction the Bank will hold substantially all of the assets of
Interim and Bank stockholders exchange solely for Stock Holding
Company voting stock an amount of stock constituting "control" of
the Bank; (ii) no gain or loss will be recognized by Bank
stockholders on the exchange of Bank Common Stock for the Common
Stock; (iii) no gain or loss will be recognized by the Stock
Holding Company on the receipt by it of Bank Common Stock solely
in exchange for Common Stock; (iv) the basis of the Common Stock
received by the Bank's stockholders will be the same as the basis
of the Bank Common Stock surrendered in exchange therefor; (v)
the holding period of the Common Stock to be received by Bank
stockholders will include the holding period of the Bank Common
Stock surrendered in exchange therefor, provided the Bank Common
Stock was held as a capital asset on the date of the exchange;
and (vi) no gain or loss will be recognized by Bank stockholders
as a result of conversion of their option to purchase Bank Common
Stock into options to purchase Holding Company Common Stock.
Each Bank stockholder should consult his own tax counsel as
to specific federal, state and local tax consequences of the
Reorganization, if any, to such stockholder.
Consequences Under Federal Securities Laws
The Bank Common Stock is registered under Section 12 of the
Exchange Act, as administered by the OTS. Upon consummation of
the Reorganization, the Stock Holding Company will register the
Common Stock under the Section 12 of the Exchange Act as
administered by the SEC. The Exchange Act will apply to the
Stock Holding Company to the same degree that it currently
applies to the Bank, except that the powers, functions and duties
to administer and enforce the Exchange Act requirements regarding
periodic and other reports, proxies, tender offers, and short
swing profits, and certain other requirements of the Exchange Act
that are vested in the OTS as regards securities of insured
savings associations such as the Bank, are vested in the SEC as
regards securities of corporations such as the Stock Holding
Company.
The issuance of the Common Stock in connection with the
Reorganization will be registered under the Securities Act.
<PAGE>
Conditions to the Reorganization
The Plan of Reorganization sets forth a number of conditions
to the completion of the Reorganization, including: (i) approval
of the Plan of Reorganization by the holders of a majority of the
outstanding shares of Bank Common Stock; (ii) receipt of an
opinion of counsel that the Reorganization will be treated as a
non-taxable transaction for federal income tax purposes; (iii)
approval of the Reorganization by the OTS; and (iv) registration
of the Common Stock to be issued in the Reorganization under the
Exchange Act and the compliance by the Stock Holding Company with
all applicable state securities laws relating to the issuance of
the Stock Holding Company's Common Stock.
The Mutual Holding Company, which owns a majority of the
outstanding shares of Bank Common Stock, intends to vote its
shares in favor of the Plan of Reorganization. Furthermore, the
Bank has received an opinion of special counsel that the
Reorganization will be treated as a non-taxable transaction for
federal income tax purposes.
Amendment, Termination or Waiver
The Board of Directors of the Bank may cause the Plan of
Reorganization to be amended or terminated if the Board
determines for any reason that such amendment or termination
would be advisable. Such amendment or termination may occur at
any time prior to the filing of Articles of Combination with the
OTS, provided that no such amendment may be made to the Plan of
Reorganization after stockholder approval if such amendment is
deemed to be materially adverse to the stockholders of the Bank.
Additionally, any of the terms or conditions of the Plan of
Reorganization may be waived by the party which is entitled to
the benefit thereof.
Business of the Bank
The Bank is a federally chartered savings bank headquartered
in Lawrenceville, New Jersey. The Bank's deposits are insured by
the Federal Deposit Insurance Corporation ("FDIC"). The Bank is
a member of the Federal Home Loan Bank System. At December 31,
1996, the Bank had total assets of $601.0 million, total deposits
of $491.2 million, and stockholders' equity of $103.4 million.
The Bank is primarily engaged in the business of attracting
deposits from the general public in the Bank's market area, and
investing such deposits, together with other sources of funds, in
loans secured by one- to four-family residential real estate,
and, to a lesser extent, multi-family and commercial mortgage
loans, commercial mortgage loans, home equity and property
improvement loans, commercial business loans, and consumer loans.
The Bank does not engage in securities trading and limits its
investments to U.S. Treasury and federal government agency
obligations, mortgage-backed securities that are issued by
federal government agencies or sponsored corporations, and
corporate obligations which are rated A or higher by a national
rating agency. The Bank's principal sources of funds are
deposits and principal and interest payments on loans. Primary
sources of income are interest received from loans and investment
securities. The Bank's primary expense is interest paid on
deposits and employee compensation and benefits.
The Bank's principal executive office is located at 134
Franklin Corner Road, Lawrenceville, New Jersey, and its
telephone number at that address is (609) 844-3100.
Business of the Stock Holding Company
General. The Stock Holding Company was formed only recently
and currently has no business activities. Upon the completion of
the Reorganization, the Bank will become a wholly-owned
subsidiary of the Stock Holding Company and each stockholder of
the Bank will become a stockholder of the Stock Holding Company
with the same ownership interest therein as such stockholder's
ownership interest in the Bank immediately prior to the
Reorganization.
Immediately upon consummation of the Reorganization, it is
expected that the Stock Holding Company will not engage in any
business activity other than to hold all of the voting stock of
the Bank. The Stock Holding Company does not presently have any
arrangements or understandings regarding any acquisition or
merger opportunities. It is
<PAGE>
anticipated, however, that in the future that the Stock Holding
Company may pursue other investment opportunities, including
possible diversification through acquisitions and mergers.
Property. The Stock Holding Company is not expected
initially to own or lease real or personal property. Instead, it
intends to utilize the premises, equipment and furniture of the
Bank without the direct payment of any rental fees to the Bank.
Legal Proceedings. Since its organization, the Stock
Holding Company has not been a party to any legal proceedings.
Employees. At the present time, the Stock Holding Company
does not intend to employ any persons other than its management.
It will utilize the support staff of the Bank from time to time.
If the Stock Holding Company acquires other savings institutions
or pursues other lines of business, it may hire additional
employees at such time.
Competition. It is expected that immediately following the
Reorganization, the primary business of the Stock Holding Company
will be the ownership of the Bank Common Stock. Therefore, until
such time as the Stock Holding Company pursues other investment
opportunities, the competitive conditions to be faced by the
Stock Holding Company will be the same as those faced by the
Bank.
Management of the Stock Holding Company
Directors. The directors of the Stock Holding Company are,
and upon completion of the Reorganization will continue to be,
the same persons who are at present the directors of the Bank.
The three-year terms of the directors are staggered to provide
for the election of approximately one-third of the board members
each year.
Executive Officers. The executive officers of the Stock
Holding Company are, and upon completion of the Reorganization
will be the same persons who are at present the executive
officers of the Bank.
Remuneration. Since the formation of the Stock Holding
Company, none of its executive officers or directors has received
any remuneration from the Stock Holding Company. It is expected
that unless and until the Stock Holding Company becomes actively
involved in additional businesses, no compensation will be paid
to its directors and officers in addition to compensation paid to
them by the Bank. However, the Stock Holding Company may
determine that separate and additional compensation is
appropriate in the future.
Indemnification of Officers and Directors and Limitation of
Liability. OTS regulations require the Bank to indemnify its
directors, officers and employees against legal and other
expenses incurred in defending lawsuits brought or threatened
against them by reason of the performance as a director, officer,
or employee. Indemnification may be made to such person only if
final judgment on the merits is in his favor or in case of (i)
settlement, (ii) final judgment against him, or (iii) final
judgment in his favor, other than on the merits, if a majority of
the disinterested directors of the Bank determine that he was
acting in good faith within the scope of his employment or
authority as he could reasonably have perceived it under the
circumstances and for a purpose he could have reasonably believed
under the circumstances was in the best interests of the Bank or
its stockholders. If a majority of the disinterested directors
of the Bank concludes that in connection with an action any
person ultimately may become entitled to indemnification, the
directors may authorize payment of reasonable costs and expenses
arising from defense or settlement of such action. The Bank is
required to give the OTS at least 60 days notice of its intention
to make indemnification and no indemnification shall be made if
the OTS objects to the Bank in writing.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons
controlling the Stock Holding Company pursuant to the following
provisions, the Stock Holding Company has been informed that in
the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is therefore
unenforceable. In addition, Federal banking regulations restrict
the Bank or the Stock Holding Company from indemnifying officers
and directors for civil monetary penalties or judgments resulting
from administrative or civil actions instituted by any Federal
banking agency, or any other liability or legal expense with
regard to any administrative proceeding or civil action
instituted by any Federal banking agency, which results in a
final order or settlement pursuant to which such person is
assessed a civil monetary penalty, removed from office
<PAGE>
or prohibited from participating in the conduct of the affairs of
an insured depository institution, or required to cease and
desist from or take certain actions.
The OTS has indicated that as a matter of policy the Stock
Holding Company will be subject to the same resolutions described
above, to which the Bank is subject. In addition, the
Certificate of Incorporation of the Stock Holding Company
provides that any individual who is or was a director, officer,
employee or agent of the Stock Holding Company in any proceeding
in which the person has been made a party or is otherwise
involved as a result of his service in such capacity shall be
indemnified and held harmless to the fullest extent authorized
under the Delaware General Corporation Law. Under the
Certificate of Incorporation, an indemnified person may be
reimbursed for all expenses, liabilities and losses (including
attorney's fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement) reasonably incurred or
suffered. An indemnified person may be advanced expenses
incurred in defending any proceeding prior to final disposition
to the extent permitted under Delaware law. In accordance with
Delaware law, an individual may not be indemnified (i) in
connection with a proceeding by or in the right of the Stock
Holding Company in which the individual was adjudged liable to
the Stock Holding Company or (ii) in connection with any other
proceeding charging improper personal benefit to him in which he
was adjudged liable on the basis that personal benefit was
improperly received by him, unless a court of competent
jurisdiction determines he is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances.
Management does not have any plans to provide for indemnification
rights beyond those provided in the Stock Holding Company's
Certificate of Incorporation.
The Stock Holding Company's Certificate of Incorporation
also provides that a director shall not be personally liable to
the Stock Holding Company or its stockholders for monetary
damages for breach of his fiduciary duty as a director, except
(i) for breach of the director's duty of loyalty to the Stock
Holding Company or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for certain unlawful
distributions, or (iv) for any transaction from which the
director derived an improper personal benefit.
This provision eliminates the potential liability of the
Stock Holding Company's directors for failure, through negligence
or gross negligence, to satisfy their duty of care, which
requires directors to exercise informed business judgment in
discharging their duties. It may thus reduce the likelihood of
derivative litigation against directors and discourage or deter
stockholders or management from bringing a lawsuit against
directors for breach of their duty of care, even though such an
action, if successful, might otherwise have been beneficial to
the Stock Holding Company and its stockholders. Stockholders
will thus be surrendering a cause of action based upon negligent
business decisions, including those relating to attempts to
change control of the Stock Holding Company. The provision will
not, however, affect the right to pursue equitable remedies for
breach of the duty of care, although such remedies might not be
available as a practical matter.
To the best of management's knowledge, there is currently no
pending or threatened litigation for which indemnification may be
sought or any recent litigation involving directors of the Bank
that might have been affected by the limited liability provision
in the Stock Holding Company's Certificate of Incorporation had
it been in effect at the time of the litigation.
Federal regulations contain no provisions for the limitation
of director liability.
The above-described provisions seek to ensure that the
ability of the Stock Holding Company's directors to exercise
their best business judgment in managing the Stock Holding
Company's affairs, subject to their continuing fiduciary duties
of loyalty to the Stock Holding Company and its stockholders, is
not unreasonably impeded by exposure to the potentially high
personal costs or other uncertainties of litigation. The nature
of the tasks and responsibilities undertaken by directors and
officers often requires such persons to make difficult judgments
of great importance which can expose such persons to personal
liability, but from which they will acquire no personal benefit
(other than as stockholders). In recent years, litigation
against corporations and their directors and officers, often
amounting to mere "second guessing" of good-faith judgments and
involving no allegations of personal wrongdoing, has become
common. Such litigation often claims damages in large amounts
which bear no relationship to the amount of compensation received
by the directors or officers, particularly in the case of
directors who are not officers of the corporation, and the
expense of defending such litigation, regardless of whether it is
well founded, can be enormous.
<PAGE>
Individual directors and officers can seldom bear either the
legal defense costs involved or the risk of a large judgment.
In order to attract and retain competent and conscientious
directors and officers in the face of these potentially serious
risks, corporations have historically provided for corporate
indemnification in their bylaws and have obtained liability
insurance protecting the company and its directors and officers
against the cost of litigation and related expenses. The Bank
currently has insurance coverage for its directors and officers,
and the Bank's management anticipates that the Stock Holding
Company will be able to obtain such coverage for its directors
and officers. The Stock Holding Company's Board of Directors,
the individual members of which will benefit from the inclusion
of the indemnification and limitation of liability provisions,
has a personal interest in including these provisions in the
Stock Holding Company's Certificate of Incorporation at the
potential expense of stockholders.
Comparison of Stockholder Rights and Certain Anti-Takeover
Provisions
Introduction. As a result of the Reorganization, holders of
Bank Common Stock, whose rights are presently governed by federal
law and the OTS' Rules and Regulations as well as the Bank's
federal stock charter and Bylaws, will become stockholders of the
Stock Holding Company, a Delaware corporation. Accordingly,
their rights will be governed solely by the Delaware General
Corporation Law and the Certificate of Incorporation and Bylaws
of the Stock Holding Company, as well as any conditions set forth
in the OTS order approving the Reorganization. (See "--OTS
Policy Regarding Two-Tier Mutual Holding Companies."). Certain
differences arise from this change of governing law, as well as
from distinctions between the federal stock charter and Bylaws of
the Bank and the Certificate of Incorporation and Bylaws of the
Stock Holding Company. The following discussion is not intended
to be a complete statement of the differences affecting the
rights of stockholders, but summarizes certain significant
differences. The Certificate of Incorporation and Bylaws of the
Stock Holding Company are attached hereto as Exhibits B and C,
respectively, and should be reviewed for more detailed
information.
A number of provisions of the Stock Holding Company's
Certificate of Incorporation and Bylaws and the Bank's Charter
and Bylaws deal with matters of corporate governance and certain
rights of stockholders. Provisions relating to the calling of a
special meeting of stockholders, nomination of directors and new
business provisions, removal of directors, cumulative voting for
the election of directors, staggered directors' terms and
amendments to the organizational documents of the Stock Holding
Company and the Bank, and certain statutory provisions relating
to stock ownership and transfers, and business combinations, may
make it difficult to gain control of the Stock Holding Company or
the Bank or replace all of incumbent management even if the
Mutual Holding Company is no longer in existence. The following
discussion is a general summary and comparison of certain
provisions of the Stock Holding Company's Certificate of
Incorporation and Bylaws and the Bank's Charter and Bylaws and
certain other statutory and regulatory provisions that might be
deemed to have potential anti-takeover effects. These provisions
may have the effect of discouraging a future takeover attempt or
change of control which is not approved by the Board of Directors
but which a majority of individual stockholders may deem to be in
their best interests or in which stockholders may receive a
substantial premium for their shares over then current market
prices. As a result, stockholders who desire to participate in
such a transaction may not have an opportunity to do so. The
following discussion is necessarily general and reference should
be made in each case to the Stock Holding Company's Certificate
of Incorporation and Bylaws, which are incorporated herein by
reference.
Issuance of Capital Stock. The Bank's federal stock charter
authorizes the issuance of 30,000,000 shares of capital stock:
20,000,000 of which are Bank Common Stock, par value $.10 per
share; and 10,000,000 shares of serial preferred stock. The
Certificate of Incorporation of the Stock Holding Company
authorizes the issuance of 20,000,000 shares of Common Stock, par
value $.10 per share and 1,000,000 shares of serial preferred
stock. Following the Reorganization, there will be the same
number of outstanding shares of Common Stock outstanding as there
were outstanding shares of Bank Common Stock outstanding
immediately prior to the Reorganization.
The Stock Holding Company has no present intention to issue
additional shares of stock, other than upon the exercise of stock
options. If additional shares are issued, the percentage
ownership interests of existing stockholders would be reduced
and, depending on the terms pursuant to which new shares are
issued, the book value and earnings per share of outstanding
stock might be diluted. Moreover, such additional share issuance
could be construed as having an anti-takeover effect. The
ability to issue additional shares, which exists under both the
federal stock charter of the Bank and the Certificate of
Incorporation of the Stock Holding Company, gives management
greater flexibility
<PAGE>
in financing corporate operations. The ability of the Stock
Holding Company to issue additional shares will be limited so
long as the Mutual Holding Company exists because the Mutual
Holding Company must at all times own at least 50.1% of the
outstanding voting stock of the Stock Holding Company.
Payment of Dividends. An OTS regulation governs capital
distributions by savings institutions, which include cash
dividends, stock redemptions or repurchases, cash-out mergers,
interest payments on certain convertible debt and other
transactions charged to the capital account of a savings
institution to make capital distributions. Generally, the
regulation creates a safe harbor for specified levels of capital
distributions from institutions meeting at least their minimum
capital requirements, so long as such institutions notify the OTS
and receive no objection to the distribution from the OTS.
Institutions and distributions that do not qualify for the safe
harbor are required to obtain prior OTS approval before making
any capital distributions.
Generally, a savings institution that before and after the
proposed distribution meets or exceeds its regulatory capital
requirements (a "Tier 1 institution") may make capital
distributions during any calendar year up to the higher of (a)
100% of net income for the calendar year-to-date plus 50% of its
"surplus capital ratio" at the beginning of the calendar year or
(b) 75% of net income over the most recent four-quarter period.
The "surplus capital ratio" is defined to mean the percentage by
which the institution's ratio of total capital to assets exceeds
the ratio of its capital requirements to assets. An institution
satisfies its regulatory capital requirements if it maintains
tangible capital of not less than 1.5%, core capital of not less
than 3.0% of total adjusted assets and risk-based capital no less
than 8.0%. Failure to meet regulatory capital requirements will
result in further restrictions on capital distributions,
including possible prohibition of capital distributions without
specific OTS approval. The Bank is a Tier 1 institution under
the OTS capital distribution regulation.
In order to make distributions under these safe harbors, a
Tier 1 institution must submit 30 days written notice to the OTS
prior to making the distribution. The OTS may object to the
distribution during that 30-day period based on safety and
soundness concerns. In addition, a Tier 1 institution deemed to
be in need of more than normal supervision by the OTS may have
additional limitations imposed by the OTS on its ability to make
a capital distribution.
The ability of the Bank to pay dividends on Bank Common
Stock is restricted by tax considerations related to thrift
institutions and by federal regulations applicable to savings
associations. Income appropriated to bad debt reserves and
deducted for federal income tax purposes may not be used to pay
cash dividends without the payment of federal income taxes by the
Bank on the amount of such income removed from reserves for such
purpose at the then current income tax rate. Additionally, the
Bank is precluded from paying dividends on its Bank Common Stock
if its regulatory capital would thereby be reduced below the
regulatory capital requirements prescribed for savings
associations. The Bank currently satisfies its applicable
regulatory capital requirements.
Under the Delaware General Corporation Law, dividends may be
paid either out of surplus or, if there is no surplus, out of net
profits for the fiscal year in which the dividend is declared
and/or the preceding fiscal year. After the Reorganization, the
Stock Holding Company's principal source of income will initially
consist of its equity in the earnings, if any, of the Bank.
Although the Stock Holding Company will not be subject to the
above dividend restrictions regarding dividend payments to its
stockholders, the restrictions on the Bank's ability to pay
dividends to the Stock Holding Company will continue in effect.
The payment of future cash dividends by the Bank, and thus
by the Stock Holding Company, will continue to depend upon the
Bank's earnings, financial condition and capital requirements, as
well as the tax and regulatory considerations discussed herein.
The Bank's Board of Directors considers many factors including
the Bank's profitability, maintenance of adequate capital, the
Bank's current and anticipated future income, outstanding loan
commitments, adequacy of loan loss reserves, cash flow
requirements and economic conditions prior to declaring a
dividend. Moreover, before declaring a dividend, the Board of
Directors must determine that the Bank will exceed its regulatory
capital requirements after the payment of the dividend.
The Mutual Holding Company has waived the right to receive
all dividends paid by the Bank. See "Dividend Policy."
<PAGE>
Special Meetings of Stockholders. For a period of five
years following completion of its mutual holding company
reorganization in August 1995, special meetings of the Bank's
stockholders relating to a change in control of the Bank or an
amendment to the Charter of the Bank may be called only by the
Bank's Board of Directors. Special meetings of the Bank's
stockholders for other purposes may be called by the chairman of
the board, the president or a majority of the Board of Directors.
The Certificate of Incorporation of the Stock Holding Company
provides that special meetings of the stockholders of the Stock
Holding Company may be called by the Board of Directors pursuant
to a resolution adopted by a majority of the total number of
directors which the Stock Holding Company would have if there
were no vacancy on the Board. This provision will make it more
difficult for stockholders to call for a special meeting of
stockholders.
Cumulative Voting. Cumulative voting entitles each
stockholder to cast a number of votes in the election of
directors equal to the number of such stockholder's shares of
common stock multiplied by the number of directors to be elected,
and to distribute such votes among one or more of the nominees to
be elected. The Certificate of Incorporation of the Stock
Holding Company does not provide for cumulative voting, and the
Charter of the Bank states that cumulative voting is not
permitted. The absence of cumulative voting rights means that
the holders of a majority of the shares voted at a meeting of
stockholders may elect all directors of the Bank and the Stock
Holding Company thereby precluding minority stockholder
representation on the Bank's and Stock Holding Company's Boards
of Directors. Because the Mutual Holding Company owns a majority
of the Bank Common Stock, and will own a majority of the Common
Stock, the Mutual Holding Company is able to elect all of the
directors of the Bank's Board of Directors, and after the
Reorganization will be able to elect all of the members of Stock
Holding Company's Board of Directors.
Rights of Stockholders to Dissent. Stockholders of the Bank
have dissenters' appraisal rights in connection with certain
combinations of the Bank if such stockholder has not voted in
favor of the combination and complies with the procedural
requirements of Federal regulations. A stockholder of the Bank
does not have dissenters' rights of appraisal if, generally, such
stockholder receives cash and/or securities listed on the Nasdaq
Stock Market in exchange for Bank securities in the combination,
and the Bank's stock is listed on the Nasdaq Stock Market or
stockholder approval of the combination is not required.
Stockholders of the Stock Holding Company who have neither
voted in favor of nor consented to certain mergers and
consolidations have appraisal rights under Delaware law, provided
that no appraisal rights are generally
<PAGE>
available for holders of shares of stock that on the record date
were listed in a national securities exchange or the Nasdaq Stock
Market, or held of record by more than 2,000 holders.
Notwithstanding the preceding sentence, appraisal rights are
generally available for stockholders who have neither voted in
favor of nor consented to such mergers and consolidations where
the stockholder is required by the terms of the merger agreement
to accept for such stock anything other than, generally, shares
of the surviving corporation, shares of another corporation which
at the effective time of the merger are either listed on a
national securities exchange or the Nasdaq Stock Market or held
of record by more than 2,000 stockholders, cash in lieu of
fractional shares, or any combination of shares and cash in lieu
of fractional shares.
Vacancies on the Board of Directors. Any vacancy on the
Board of Directors of the Bank may be filled by the affirmative
vote of a majority of the remaining directors, and any director
so appointed is to serve the remainder of the unexpired term of
the director whose vacancy has been filled. Additionally, any
directorship of the Bank to be filled by reason of an increase in
the number of directors may be filled by election by the Board of
Directors for a term of office only until the next election of
directors by the stockholders. The Certificate of Incorporation
of the Stock Holding Company provides that vacancies on the board
and newly created directorships may be filled by a majority vote
of the directors then in office. Directors appointed to fill a
vacancy may serve until the annual meeting of stockholders at
which the term of office of the class of directors to which they
have been chosen expires.
Number and Term of Directors. The Bank's federal stock
charter provides that its Board of Directors shall consist of not
less than five nor more than 15 members, as set forth in the
Bylaws, and the Bylaws state that the Board of Directors shall
consist of ten members. The Stock Holding Company's Certificate
of Incorporation and Bylaws provide that its Board of Directors
shall be fixed from time to time, generally, pursuant to a
resolution adopted by a majority of the Board of Directors. The
Bank's Federal Stock Charter provides for a classified board of
directors, consisting of three substantially equal classes of
directors, each serving for a three year term, with the term of
each class of directors ending in successive years. The Stock
Holding Company's Certificate of Incorporation also provides for
a classified board of directors.
Presentation of New Business at Meetings of Stockholders.
The Bank's Bylaws generally provide that any stockholder desiring
to make a nomination for the election of directors or a proposal
for new business at a meeting of stockholders must submit written
notice to the Bank at least five days in advance of the meeting.
Failure to comply with these advance notice requirements will
preclude such nominations or new business from being considered
at the meeting.
The Stock Holding Company's Bylaws provide that a
stockholder wishing to make nominations or proposals must give
written notice to the Secretary of the Stock Holding Company not
less than 90 days before the meeting; provided, however, that in
the event that less than 100 days prior public disclosure of the
annual or special meeting is given to stockholders, notice by the
stockholder must be given to the Stock Holding Company no later
than 10 business days following the date on which notice of the
meeting is mailed or public disclosure of the meeting is made,
together with certain information relating to the nomination or
proposed new business.
Mutual Holding Company Ownership. So long the Mutual
Holding Company is in existence, the Mutual Holding Company must
own at least a majority of the outstanding voting stock of the
Bank, and following the Reorganization, of the Stock Holding
Company. The Mutual Holding Company currently is able to elect
the Bank's directors and direct the affairs and business
operations of the Bank, and after the Reorganization, will be
able to elect the Stock Holding Company's directors and direct
the affairs and business operations of the Stock Holding Company.
Limitation on Voting Rights. The Certificate of
Incorporation of the Stock Holding Company provides that in no
event shall any record owner of any outstanding Common Stock
which is beneficially owned, directly or indirectly, by a person
other than the Mutual Holding Company who beneficially owns in
excess of 10% of the then outstanding shares of Common Stock (the
"Limit") be entitled or permitted to any vote in respect of the
shares held in excess of the Limit. Beneficial ownership is
determined pursuant to Rule 13d-3 of the rules and regulations
promulgated pursuant to the Exchange Act, and includes shares
beneficially owned by such person or any of his affiliates (as
defined in the Certificate of Incorporation), shares which such
person or his affiliates have the right to acquire upon the
exercise of conversion rights or options and shares as to which
such person and his affiliates have or share investment or voting
power, but shall not include shares beneficially owned by any
employee stock ownership plan or similar plan of the Stock
Holding Company or directors, officers and employees of the Bank
or the Stock
<PAGE>
Holding Company or shares that are subject to a revocable proxy
and that are not otherwise beneficially owned, or deemed by the
Stock Holding Company to be beneficially owned, by such person
and his affiliates. The Certificate of Incorporation of the
Stock Holding Company further provides that the provision
limiting voting rights may only be amended upon the vote of 80%
of the outstanding shares of voting stock.
Stockholder Vote Required to Approve Business Combinations
with Principal Stockholders. The Stock Holding Company's
Certificate of Incorporation requires the approval of the holders
of at least 80% of the Stock Holding Company's outstanding shares
of voting stock to approve certain "Business Combinations," as
defined therein, and related transactions. Under Delaware
General Corporation Law, absent this provision, Business
Combinations, including mergers, consolidations and sales of all
or substantially all of the assets of a corporation must, subject
to exceptions, be approved by the vote of the holders of only a
majority of the outstanding shares of Common Stock of the Stock
Holding Company and any other affected class of stock.
Under the Certificate of Incorporation, at least 80%
approval of shareholders is required in connection with any
transaction involving an Interested Stockholder (as defined
below) except (i) in cases where the proposed transaction has
been approved in advance by two-thirds of those members of the
Stock Holding Company's Board of Directors who are unaffiliated
with the Interested Stockholder and were directors prior to the
time when the Interested Stockholder became an Interested
Stockholder or (ii) if the proposed transaction met certain
conditions set forth therein which are designed to afford the
stockholders a fair price in consideration for their shares, in
which cases approval of only a majority of the outstanding shares
of voting stock is required. The term "Interested Stockholder"
is defined to include any individual, corporation, partnership or
other entity (other than the Stock Holding Company or its
subsidiaries) which owns beneficially or controls, directly or
indirectly, 10% or more of the outstanding shares of voting stock
of the Stock Holding Company. This provision of the Certificate
of Incorporation applies to any "Business Combination," which is
defined to include (i) any merger or consolidation of the Stock
Holding Company or any of its subsidiaries with or into any
Interested Stockholder or Affiliate (as defined in the
Certificate of Incorporation) of an Interested Stockholder; (ii)
any sale, lease, exchange, mortgage, transfer, or other
disposition to or with any Interested Stockholder or Affiliate of
25% or more of the assets of the Stock Holding Company or
combined assets of the Stock Holding Company and its subsidiary;
(iii) the issuance or transfer to any Interested Stockholder or
its Affiliate by the Company (or any subsidiary) of any
securities of the Stock Holding Company in exchange for any
assets, cash or securities the value of which equals or exceeds
25% of the fair market value of the Common Stock of the Stock
Holding Company; (iv) the adoption of any plan for the
liquidation or dissolution of the Stock Holding Company proposed
by or on behalf of any Interested Stockholder or Affiliate
thereof, and (v) any reclassification of securities,
recapitalization, merger or consolidation of the Stock Holding
Company which has the effect of increasing the proportionate
share of Common Stock or any class of equity or convertible
securities of the Stock Holding Company owned directly or
indirectly, by an Interested Stockholder or Affiliate thereof.
The Bank's Charter has no similar provision.
Evaluation of Offers. The Certificate of Incorporation of
the Stock Holding Company further provides that the Board of
Directors of the Stock Holding Company, when evaluating any offer
of another "Person" (as defined therein), to (i) make a tender or
exchange offer for any equity security of the Stock Holding
Company, (ii) merge or consolidate the Stock Holding Company with
another corporation or entity or (iii) purchase or otherwise
acquire all or substantially all of the properties and assets of
the Stock Holding Company, may, in connection with the exercise
of its judgment in determining what is in the best interest of
the Stock Holding Company, the Bank and the stockholders of the
Stock Holding Company, give due consideration to all relevant
factors, including, without limitation, the social and economic
effects of acceptance of such offer on the Stock Holding
Company's customers and the Bank's present and future account
holders, borrowers and employees; on the communities in which the
Stock Holding Company and the Bank operate or are located; and on
the ability of the Stock Holding Company to fulfill its corporate
objectives as a savings and loan holding company and on the
ability of the Bank to fulfill the objectives of a federally
chartered stock savings bank under applicable statutes and
regulations. By having these standards in the Certificate of
Incorporation of the Stock Holding Company, the Board of
Directors may be in a stronger position to oppose such a
transaction if the Board concludes that the transaction would not
be in the best interest of the Stock Holding Company, even if the
price offered is significantly greater than the then market price
of any equity security of the Stock Holding Company.
The Bank's Charter has no similar provision.
<PAGE>
Amendment of Certificate of Incorporation and Bylaws.
Amendments to the Stock Holding Company's Certificate of
Incorporation must be approved by a majority vote of its Board of
Directors and also by a majority of the outstanding shares of its
voting stock, provided, however, that an affirmative vote of at
least 80% of the outstanding voting stock entitled to vote (after
giving effect to the provision limiting voting rights) is
required to amend or repeal certain provisions of the Certificate
of Incorporation, including the provision limiting voting rights,
the provisions relating to approval of certain business
combinations, calling special meetings, the number and
classification of directors and director and officer
indemnification by the Stock Holding Company. The Stock Holding
Company's Bylaws may be amended by its Board of Directors, or by
a vote of 80% of the total votes eligible to be voted at a duly
constituted meeting of stockholders.
Corporate Law. In 1988, Delaware enacted a statute designed
to provide Delaware corporations with additional protection
against hostile takeovers. The takeover statute, which is
codified in Section 203 of the Delaware General Corporation Law
("Section 203"), is intended to discourage certain takeover
practices by impeding the ability of a hostile acquiror to engage
in transactions with the target company.
In general, Section 203 provides that a "Person" (as defined
therein) who owns 15% or more of the outstanding voting stock of
a Delaware corporation (an "Interested Stockholder") may not
consummate a merger or other business combination transaction
with such corporation at any time during the three-year period
following the date such "Person" became an Interested
Stockholder. The term "business combination" is defined broadly
to cover a wide range of corporate transactions including
mergers, sales of assets, issuances of stock, transactions with
subsidiaries and the receipt of disproportionate financial
benefits.
The statute exempts the following transactions from the
requirements of Section 203: (i) any business combination if,
prior to the date a person became an Interested Stockholder, the
Board of Directors approved either the business combination or
the transaction which resulted in the stockholder becoming an
Interested Stockholder; (ii) any business combination involving a
person who acquired at least 85% of the outstanding voting stock
in the transaction in which he became an Interested Stockholder,
calculated without regard to those shares owned by the
corporation's directors who are also officers or certain employee
stock plans; (iii) any business combination with an Interested
Stockholder that is approved by the Board of Directors and by a
two-thirds vote of the outstanding voting stock not owned by the
Interested Stockholder; and (iv) certain business combinations
that are proposed after the corporation had received other
acquisition proposals and which are approved or not opposed by a
majority of certain continuing members of the Board of Directors.
A corporation may exempt itself from the requirements of the
statute by adopting an amendment to its Certificate of
Incorporation or Bylaws electing not to be governed by Section
203. At the present time, the Board of Directors of the Stock
Holding Company does not intend to propose any such amendment.
Federal corporate law does not include a similar statute
that would apply to the Bank.
Regulation of the Stock Holding Company
Pursuant to OTS Policy, the Stock Holding Company will be
regulated as a multiple savings and loan holding company within
the meaning of the Home Owners' Loan Act ("HOLA"). As such, the
Stock Holding Company will be registered with and be subject to
OTS examination and supervision as well as certain reporting
requirements. In addition, the operations of the Stock Holding
Company are subject to regulations promulgated by the OTS from
time to time. As an FDIC-insured subsidiary of a savings and
loan holding company, the Bank will be subject to certain
restrictions in dealing with the Stock Holding Company and with
other persons affiliated with the Stock Holding Company, and will
continue to be subject to examination and supervision by the OTS
and the FDIC.
The HOLA prohibits a savings and loan holding company,
directly or indirectly, from (i) acquiring control (as defined)
of another insured institution (or holding company thereof)
without prior OTS approval; (ii) acquiring more than 5% of the
voting shares of another insured institution (or holding company
thereof) which is not a subsidiary, subject to certain
exceptions; (iii) acquiring through merger, consolidation or the
purchase of assets, another savings institution or holding
company thereof, or acquiring all or substantially all of the
assets of such institution (or holding company thereof) without
prior OTS approval; or (iv) acquiring control of a bank that is
not a "savings association" (as defined therein), except through
a merger with and into the holding company's savings institution
subsidiary that is approved by the OTS. A savings and loan
holding company may acquire up to 15% of
<PAGE>
the voting shares of an undercapitalized savings institution. A
savings and loan holding company may not acquire as a separate
subsidiary an insured institution that has principal offices
outside of the state where the principal offices of its
subsidiary institution is located, except (i) in the case of
certain emergency acquisitions approved by the FDIC, (ii) if the
holding company controlled (as defined) such insured institution
as of March 5, 1987, or (iii) if the laws of the state in which
the insured institution to be acquired is located specifically
authorize a savings institution chartered by that state to be
acquired by a savings institution chartered by the state where
the acquiring savings institution or savings and loan holding
company is located, or by a holding company that controls such a
state chartered institution. No director or officer of a
savings and loan holding company or person owning or controlling
more than 25% of such holding company's voting shares may, except
with the prior approval of the OTS, acquire control of any
savings association that is not a subsidiary of such holding
company. If the OTS approves such an acquisition, any holding
company controlled by such officer, director or person shall be
subject to the activities limitations that apply to multiple
savings and loan holding companies, unless certain supervisory
exceptions apply.
Description of Capital Stock of The Stock Holding Company
The Stock Holding Company is authorized to issue 20,000,000
shares of Common Stock having a par value of $.10 per share and
1,000,000 shares of serial preferred stock (the "Preferred
Stock"). The Stock Holding Company currently will issue a number
of shares Common Stock equal to the number of shares of Bank
Common Stock outstanding immediately prior to the Reorganization,
and will issue no shares of Preferred Stock in the
Reorganization. Each share of the Common Stock will have the
same relative rights as, and will be identical in all respects
with, each other share of Common Stock.
The Common Stock of the Stock Holding Company will represent
nonwithdrawable capital, will not be an account of an insurable
type, and will not be insured by the FDIC or any government
agency.
Holding Company Common Stock
Dividends. The Stock Holding Company can pay dividends out
of statutory surplus or from certain net profits if, as, and when
declared by its Board of Directors. The payment of dividends by
the Stock Holding Company is subject to limitations which are
imposed by law and applicable regulation. The holders of Common
Stock of the Stock Holding Company will be entitled to receive
and share equally in such dividends as may be declared by the
Board of Directors of the Stock Holding Company out of funds
legally available therefor. If the Stock Holding Company issues
Preferred Stock, the holders thereof may have a priority over the
holders of the Common Stock with respect to dividends.
Voting Rights. The holders of Common Stock will possess
exclusive voting rights in the Stock Holding Company. They will
elect the Stock Holding Company's Board of Directors and act on
such other matters as are required to be presented to them under
Delaware law or as are otherwise presented to them by the Board
of Directors. If the Stock Holding Company issues Preferred
Stock, holders of the Preferred Stock may also possess voting
rights. Certain matters require an 80% stockholder vote.
Liquidation. In the event of any liquidation, dissolution
or winding up of the Bank, the Stock Holding Company, as holder
of the Bank's capital stock, would be entitled to receive, after
payment or provision for payment of all debts and liabilities of
the Bank (including all deposit accounts and accrued interest
thereon) and after distribution of the balance in the special
liquidation account established in connection with the Bank's
mutual holding company reorganization, all assets of the Bank
available for distribution. In the event of liquidation,
dissolution or winding up of the Stock Holding Company, the
holders of its Common Stock would be entitled to receive, after
payment or provision for payment of all its debts and
liabilities, all of the assets of the Stock Holding Company
available for distribution. If Preferred Stock is issued, the
holders thereof may have a priority over the holders of the
Common Stock in the event of liquidation or dissolution.
Preemptive Rights. Holders of the Common Stock will not be
entitled to preemptive rights with respect to any shares which
may be issued. The Common Stock is not subject to redemption.
<PAGE>
Preferred Stock
None of the shares of the Stock Holding Company's authorized
Preferred Stock will be issued in the Reorganization. Such stock
may be issued with such preferences and designations as the Board
of Directors may from time to time determine. The Board of
Directors can, without shareholder approval, issue Preferred
Stock with voting, dividend, liquidation and conversion rights
which could dilute the voting strength of the holders of the
Common Stock and may assist management in impeding an unfriendly
takeover or attempted change in control.
Accounting Treatment
The Reorganization will be treated similar to a pooling of
interests for accounting purposes. Therefore, the consolidated
capitalization, assets, liabilities, income and financial
statements of the Stock Holding Company immediately following the
Reorganization will be substantially the same as those of the
Bank immediately prior to consummation of the Reorganization, all
of which will be shown on the Stock Holding Company's books at
their historical recorded values. Since the Reorganization will
not result in a change in such financial statements, this
document does not include financial statements of the Bank or the
Stock Holding Company.
Vote Required
Approval of the Plan of Reorganization requires the
affirmative vote of a majority of the total votes eligible to be
cast at the Special Meeting. Failure to vote or a vote to
abstain is equivalent to voting against the Plan of
Reorganization. The Board of Directors recommends a vote "FOR"
the approval of the Plan of Reorganization.
This description of the proposed Stock Holding Company for
the Bank does not purport to be complete, but is qualified in its
entirety by the Plan of Reorganization and Certificate of
Incorporation and Bylaws of the Stock Holding Company attached as
Exhibits A, B and C, respectively, to this Proxy Statement.
Recommendation
The Board of Directors of the Bank believes that the
Reorganization will enhance the ability of the Bank and the Stock
Holding Company to undertake mergers and acquisitions, enable the
Stock Holding Company to repurchase Holding Company Common Stock
as market conditions permit, and provide the Stock Holding
Company greater flexibility to diversify its business activities.
The Board of Directors of the Bank has unanimously approved the
Reorganization and recommends that the stockholders vote "FOR"
the Plan of Reorganization.
PROPOSAL III--RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Bank has approved the
engagement of KPMG Peat Marwick, LLP to be the Bank's auditors
for the year ending December 31, 1997, subject to the
ratification of the engagement by the Bank's stockholders. At
the Meeting, the stockholders will consider and vote on the
ratification of the engagement of KPMG Peat Marwick, LLP for the
Bank's fiscal year ending December 31, 1997. A representative of
KPMG Peat Marwick, LLP is expected to attend the Meeting to
respond to appropriate questions and to make a statement if he so
desires.
In order to ratify the selection of KPMG Peat Marwick, LLP
as the auditors for the fiscal year ended December 31, 1997, the
proposal must receive at least a majority of the votes cast,
either in person or by proxy, in favor of such ratification.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF KPMG PEAT MARWICK, LLP AS AUDITORS FOR THE 1997
FISCAL YEAR.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Bank's proxy
materials for next year's Annual Meeting of Stockholders, any
stockholder proposal to take action at such meeting must be
received at the Bank's executive office, 134 Franklin Corner
Road, Lawrenceville, New Jersey 08648-0950, no later than
November 24, 1997. Any such proposals shall be subject to the
requirements of the proxy rules adopted under the Securities
Exchange Act of 1934.
<PAGE>
OTHER MATTERS
The Board of Directors is not aware of any business to come
before the Meeting other than the matters described above in the
Proxy Statement. However, if any matters should properly come
before the Meeting, it is intended that holders of the proxies
will act in accordance with their best judgment.
MISCELLANEOUS
The cost of solicitation of proxies will be borne by the
Bank. The Bank 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 to solicitations by mail,
directors, officers and regular employees of the Bank may solicit
proxies personally or by telegraph or telephone without
additional compensation. The Bank's Annual Report to
Stockholders has been mailed to all stockholders of record as of
the close of business on February 28, 1997. Any stockholder who
has not received a copy of such Report may obtain a copy by
writing the Bank. Such Report is not to be treated as a part of
the proxy solicitation material nor as having been incorporated
herein by reference.
A COPY OF THE BANK'S REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1996, WILL BE FURNISHED WITHOUT CHARGE TO
STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN REQUEST TO ROBERT
C. HOLLENBECK, CORPORATE SECRETARY, TRENTON SAVINGS BANK, 134
FRANKLIN CORNER ROAD, LAWRENCEVILLE, NEW JERSEY 08648-0950.
BY ORDER OF THE BOARD OF DIRECTORS
Robert C. Hollenbeck
Corporate Secretary
Lawrenceville, New Jersey
March 14, 1997
<PAGE>
EXHIBIT A
<PAGE>
TRENTON SAVINGS BANK
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, dated October 9,
1996, is by and among TRENTON SAVINGS BANK, a Federal stock
savings bank (the "Bank"); PEOPLES BANCORP, a Delaware
corporation (the "Stock Holding Company"), and TSB INTERIM
SAVINGS BANK, FSB, a to-be-formed interim federal stock savings
bank ("Interim").
The parties hereto desire to enter into an Agreement and
Plan of Reorganization whereby the corporate structure of the
Bank will be reorganized into the stock holding company form of
ownership. The result of such reorganization will be that
immediately after the Effective Date (as defined in Article V
below), all of the issued and outstanding shares of common stock,
par value $.10 per share, of the Bank will be held by the Stock
Holding Company, and the holders of the issued and outstanding
shares of common stock of the Bank will become the holders of the
issued and outstanding shares of common stock of the Stock
Holding Company.
The reorganization of the Bank will be accomplished by the
following steps: (1) the formation by the Bank of the Stock
Holding Company as a wholly owned subsidiary; (2) the formation
of an interim federal stock savings bank, "Interim," which will
be wholly owned by the Stock Holding Company; and (3) the merger
of Interim into the Bank, with the Bank as the surviving
corporation. Pursuant to such merger: (i) each of the issued and
outstanding shares of common stock of the Bank will be converted
by operation of law into an equal number of issued and
outstanding shares of common stock of the Stock Holding Company;
and (ii) each of the issued and outstanding shares of common
stock of Interim will automatically be converted by operation of
law into an equal number of issued and outstanding shares of
common stock of the Bank.
NOW, THEREFORE, in order to consummate this Agreement and
Plan of Reorganization, and in consideration of the mutual
covenants herein set forth, the parties agree as follows:
ARTICLE I
MERGER OF INTERIM INTO
THE BANK AND RELATED MATTERS
1.1 On the Effective Date, Interim will be merged with and
into the Bank (the "Merger") and the separate existence of
Interim shall cease, and all assets and property (real, personal
and mixed, tangible and intangible, choses in action, rights and
credits) then owned by Interim, or which would inure to it, shall
immediately and automatically, by operation of law and without
any conveyance, transfer, or further action, become the property
of the Bank. The Bank shall be deemed to be a continuation of
Interim, and the Bank shall succeed to the rights and obligations
of Interim.
1.2 Following the Merger, the existence of the Bank shall
continue unaffected and unimpaired by the Merger, with all the
rights, privileges, immunities and powers, and subject to all the
duties and liabilities, of a corporation organized under Federal
law. The Charter and Bylaws of the Bank, as presently in effect,
shall continue in full force and effect and shall not be changed
in any manner whatsoever by the Merger.
<PAGE>
1.3 From and after the Effective Date, and subject to the
actions of the Board of Directors of the Bank, the business
presently conducted by the Bank (whether directly or through its
subsidiaries) will continue to be conducted by it, as a wholly
owned subsidiary of Stock Holding Company, and the present
directors and officers of the Bank will continue in their present
positions. The home office and branch offices of the Bank in
existence immediately prior to the Effective Date shall continue
to be the home office and branch offices, respectively, of the
Bank from and after the Effective Date.
ARTICLE II
CONVERSION OF STOCK
2.1 The terms and conditions of the Merger, the mode of
carrying the same into effect, and the manner and basis of
converting the common stock of the Bank into common stock of the
Stock Holding Company pursuant to this Agreement shall be as
follows:
A. On the Effective Date, each share of common stock,
par value $.10 per share, of the Bank issued and outstanding
immediately prior to the Effective Date shall automatically by
operation of law be converted into and shall become one share of
Common Stock, par value $0.10 per share, of the Stock Holding
Company (the "Stock Holding Company Common Stock"). Each share
of common stock of Interim issued and outstanding immediately
prior to the Effective Date shall, on the Effective Date,
automatically by operation of law be converted into and become
one share of common stock, $.10 par value per share, of the Bank
and shall not be further converted into shares of the Stock
Holding Company, so that from and after the Effective Date, all
of the issued and outstanding shares of common stock of the Bank
shall be held by the Stock Holding Company.
B. On the Effective Date, the current stock option
plans and recognition plans of the Bank (collectively, the
"Benefit Plans") shall automatically, by operation of law, be
continued as Benefit Plans of the Bank and/or the Stock Holding
Company. Each option to purchase shares of the Bank common stock
under the Bank's stock option plan outstanding at that time will
be automatically converted into an identical option, with
identical price, terms and conditions, to purchase an identical
number of shares of Stock Holding Company Common Stock in lieu of
shares of the Bank common stock. The Stock Holding Company and
the Bank may make appropriate amendments to the Benefit Plans to
reflect the adoption of the Benefit Plans as the plans of the
Stock Holding Company, without adverse effect on the Benefit
Plans and their participants.
C. From and after the Effective Date, each holder of
an outstanding certificate or certificates that, prior thereto,
represented shares of the Bank common stock, shall, upon
surrender of the same to the designated agent of the Bank, be
entitled to receive in exchange therefor a certificate or
certificates representing the number of whole shares of Stock
Holding Company Common Stock into which the shares theretofore
represented by the certificate or certificates so surrendered
shall have been converted, as provided in the foregoing
provisions of this Section 2.1. Until so surrendered, each such
outstanding certificate which, prior to the Effective Date,
represented shares of Bank common stock shall be automatically
deemed for all purposes to evidence the ownership of the equal
number of whole shares of Stock Holding Company Common Stock.
Former holders of shares of Bank common stock will not be
required to exchange their Bank common stock certificates for new
certificates evidencing the same number of shares of Stock
Holding Company Common Stock. If in the future the Stock Holding
Company
<PAGE>
determines to effect an exchange of stock certificates,
instructions will be sent to all holders of record of Stock
Holding Company Common Stock.
D. All shares of Stock Holding Company Common Stock
into which shares of the Bank common stock shall have been
converted pursuant to this Article II shall be deemed to have
been issued in full satisfaction of all rights pertaining to such
converted shares.
E. On the Effective Date, the holders of certificates
formerly representing the Bank common stock outstanding on the
Effective Date shall cease to have any rights with respect to the
stock of the Bank common stock, and their sole rights shall be
with respect to the Stock Holding Company Common Stock into which
their shares of the Bank common stock shall have been converted
by the Merger.
ARTICLE III
CONDITIONS
3.1 The obligations of the Bank, Stock Holding Company and
Interim to effect the Merger and otherwise consummate the
transactions which are the subject matter hereof shall be subject
to satisfaction of the following conditions:
A. To the extent required by applicable law, rules,
and regulations, the holders of the outstanding shares of the
Bank common stock shall, at a meeting of the stockholders of the
Bank duly called, have approved this Agreement by the affirmative
vote of a majority of the outstanding shares of the Bank common
stock.
B. Any and all approvals from the OTS, the Securities
and Exchange Commission and any other state or federal
governmental agency having jurisdiction necessary for the lawful
consummation of the Merger and the issuance and delivery of Stock
Holding Company Common Stock as contemplated by this Agreement
shall have been obtained.
C. The Bank shall have received either (i) a ruling
from the Internal Revenue Service or (ii) an opinion from its
legal counsel, to the effect that the Merger will be treated as a
non-taxable transaction under applicable provisions of the
Internal Revenue Code of 1986, as amended, and that no gain or
loss will be recognized by the stockholders of the Bank upon the
exchange of the Bank common stock held by them solely for Stock
Holding Company Common Stock.
ARTICLE IV
TERMINATION
4.1 This Agreement may be terminated at the election of any
of the parties hereto if any one or more of the conditions to the
obligations of any of them hereunder shall not have been
satisfied and shall have become incapable of fulfillment and
shall not be waived. This Agreement may also be terminated at
any time prior to the Effective Date by the mutual consent of the
respective Boards of Directors of the parties.
<PAGE>
4.2 In the event of the termination of this Agreement
pursuant to any of the foregoing provisions, no party shall have
any further liability or obligation of any nature to any other
party under this Agreement.
ARTICLE V
EFFECTIVE DATE OF MERGER
Upon satisfaction or waiver (in accordance with the
provisions of this Agreement) of each of the conditions set forth
in Article III, the parties hereto shall execute and cause to be
filed the Merger Agreement and such certificates or further
documents as shall be required by the OTS and applicable state
law, and with such other federal or state regulatory agencies as
may be required. Upon approval by the OTS and endorsement of
such Merger Agreement by the OTS and, if necessary, applicable
state authorities, the Merger and other transactions contemplated
by this Agreement shall become effective. The Effective Date for
all purposes hereunder shall be the date of such endorsement by
the OTS.
ARTICLE VI
MISCELLANEOUS
6.1 Any of the terms or conditions of this Agreement, which
may legally be waived, may be waived at any time by any party
hereto that is entitled to the benefit thereof, or any of such
terms or conditions may be amended or modified in whole or in
part at any time, to the extent authorized by applicable law, by
an agreement in writing, executed in the same manner as this
Agreement.
6.2 Any of the terms or conditions of this Agreement may be
amended or modified in whole or in part at any time, to the
extent permitted by applicable law, rules, and regulations, by an
amendment in writing, provided that any such amendment or
modification is not materially adverse to the Bank, Stock Holding
Company or their stockholders. In the event that any
governmental agency requests or requires that the transactions
contemplated herein be modified in any respect as a condition of
providing a necessary regulatory approval or favorable ruling, or
that in the opinion of counsel such modification is necessary to
obtain such approval or ruling, this Agreement may be modified,
at any time before or after adoption thereof by the stockholders
of the Bank, by an instrument in writing, provided that the
effect of such amendment would not be materially adverse to the
Bank, Stock Holding Company or their stockholders.
6.3 This Agreement shall be governed by and construed under
the laws of the United States, except insofar as state law is
deemed to apply.
PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement and Plan of Reorganization as of the date first
above written.
TRENTON SAVINGS BANK
By: \s\ Wendell T. Breithaupt
-----------------------------------
Wendell T. Breithaupt
President and Chief Executive
Officer
PEOPLES BANCORP
By: \s\ Wendell T. Breithaupt
-----------------------------------
Wendell T. Breithaupt
President and Chief Executive
Officer
TSB INTERIM SAVINGS BANK,
FSB (in formation)
By: \s\ Wendell T. Breithaupt
-----------------------------------
Wendell T. Breithaupt
President and Chief Executive
Officer
<PAGE>
EXHIBIT B
<PAGE>
CERTIFICATE OF INCORPORATION
OF
PEOPLES BANCORP, INC.
FIRST: The name of the Corporation is Peoples Bancorp,
Inc. (hereinafter referred to as the "Corporation").
SECOND: The address of the registered office of the
Corporation in the State of Delaware is Corporation Trust Center,
1209 Orange Street, in the City of Wilmington, County of New
Castle. The name of the registered agent at that address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which a corporation may be organized
under the General Corporation Law of Delaware.
FOURTH:
A. The total number of shares of all classes of stock
which the Corporation shall have authority to issue is twenty-one
million (21,000,000) consisting of:
1. one million (1,000,000) shares of Preferred Stock,
par value ten cents ($.10) per share (the "Preferred Stock"); and
2. twenty million (20,000,000) shares of Common
Stock, par value ten cents ($.10) per share (the "Common Stock").
B. The Board of Directors is authorized, subject to any
limitations prescribed by law, to provide for the issuance of the
shares of Preferred Stock in series, and by filing a certificate
pursuant to the applicable law of the State of Delaware (such
certificate being hereinafter referred to as a "Preferred Stock
Designation"), to establish from time to time the number of
shares to be included in each such series, and to fix the
designation, powers, preferences, and rights of the shares of
each such series and any qualifications, limitations or
restrictions thereof. The number of authorized shares of
Preferred Stock may be increased or decreased (but not below the
number of shares thereof then outstanding) by the affirmative
vote of the holders of a majority of the Common Stock, without a
vote of the holders of the Preferred Stock, or of any series
thereof, unless a vote of any such holders is required pursuant
to the terms of any Preferred Stock Designation.
C. 1. Notwithstanding any other provision of this
Certificate of Incorporation, in no event shall any record owner
of any outstanding Common Stock which is beneficially owned,
directly or indirectly, by a person who, as of any record date
for the determination of stockholders entitled to vote on any
matter, beneficially owns in excess of 10% of the
then-outstanding shares of Common Stock (the "Limit"), be
entitled, or permitted to any vote in respect of the shares held
in excess of the Limit. The Limit shall not be applicable to
shares held by Peoples Bancorp, MHC. The number of votes which
may be cast by any record owner by virtue of the provisions
hereof in respect of Common Stock beneficially owned by such
person owning shares in excess of the Limit shall be a number
equal to the total number of votes which a single record owner
of all Common Stock owned by such person would be entitled to
cast, multiplied by a fraction, the numerator of which is the
number of shares of such class or series which are both
beneficially owned by such person and owned of record by such
record owner and the denominator
<PAGE>
of which is the total number of shares of Common Stock
beneficially owned by such person owning shares in excess of the
Limit.
2. The following definitions shall apply to this
Section C of this Article FOURTH:
(a) "Affiliate" shall have the meaning ascribed
to it in Rule 12b-2 of the General Rules and Regulations under
the Securities Act of 1934, as in effect on the date of filing of
this Certificate of Incorporation. However, the term Affiliate
shall not include Peoples Bancorp, MHC.
(b) "Beneficial ownership" shall be determined
pursuant to Rule 13d-3 of the General Rules and Regulations under
the Securities Exchange Act of 1934 (or any successor rule or
statutory provision), or, if said Rule 13d-3 shall be rescinded
and there shall be no successor rule or statutory provision
thereto, pursuant to said Rule 13d-3 as in effect on the date of
filing of this Certificate of Incorporation; provided, however,
that a person shall, in any event, also be deemed the "beneficial
owner" of any Common Stock:
(1) which such person or any of its
affiliates beneficially owns, directly or indirectly; or
(2) which such person or any of its
affiliates has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding (but
shall not be deemed to be the beneficial owner of any voting
shares solely by reason of an agreement, contract, or other
arrangement with this Corporation to effect any transaction which
is described in any one or more of clauses of Section A of
Article EIGHTH) or upon the exercise of conversion rights,
exchange rights, warrants, or options or otherwise, or (ii) sole
or shared voting or investment power with respect thereto
pursuant to any agreement, arrangement, understanding,
relationship or otherwise (but shall not be deemed to be the
beneficial owner of any voting shares solely by reason of a
revocable proxy granted for a particular meeting of stockholders,
pursuant to a public solicitation of proxies for such meeting,
with respect to shares of which neither such person nor any such
affiliate is otherwise deemed the beneficial owner); or
(3) which are beneficially owned, directly
or indirectly, by any other person with which such first
mentioned person or any of its affiliates acts as a partnership,
limited partnership, syndicate or other group pursuant to any
agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares of capital
stock of this Corporation;
and provided further, however, that (1) no
Director or Officer of this Corporation (or any affiliate of any
such Director or Officer) shall, solely by reason of any or all
of such Directors or Officers acting in their capacities as such,
be deemed, for any purposes hereof, to beneficially own any
Common Stock beneficially owned
<PAGE>
by another such Director or Officer (or any affiliate thereof),
and (2) neither any employee stock ownership plan or similar plan
of this Corporation or any subsidiary of this Corporation, nor
any trustee with respect thereto or any affiliate of such trustee
(solely by reason of such capacity of such trustee), shall be
deemed, for any purposes hereof, to beneficially own any Common
Stock held under any such plan. For purposes of computing the
percentage beneficial ownership of Common Stock of a person the
outstanding Common Stock shall include shares deemed owned by
such person through application of this subsection but shall not
include any other Common Stock which may be issuable by this
Corporation pursuant to any agreement, or upon exercise of
conversion rights, warrants or options, or otherwise. For all
other purposes, the outstanding Common Stock shall include only
Common Stock then outstanding and shall not include any Common
Stock which may be issuable by this Corporation pursuant to any
agreement, or upon the exercise of conversion rights, warrants or
options, or otherwise.
(c) A "person" shall mean any individual, firm,
corporation, or other entity.
3. The Board of Directors shall have the power to
construe and apply the provisions of this section and to make all
determinations necessary or desirable to implement such
provisions, including but not limited to matters with respect to
(i) the number of shares of Common Stock beneficially owned by
any person, (ii) whether a person is an affiliate of another,
(iii) whether a person has an agreement, arrangement, or
understanding with another as to the matters referred to in the
definition of beneficial ownership, (iv) the application of any
other definition or operative provision of the section to the
given facts, or (v) any other matter relating to the
applicability or effect of this section.
4. The Board of Directors shall have the right to
demand that any person who is reasonably believed to beneficially
own Common Stock in excess of the Limit (or holds of record
Common Stock beneficially owned by any person in excess of the
Limit) supply the Corporation with complete information as to (i)
the record owner(s) of all shares beneficially owned by such
person who is reasonably believed to own shares in excess of the
Limit, (ii) any other factual matter relating to the
applicability or effect of this section as may reasonably be
requested of such person.
5. Except as otherwise provided by law or expressly
provided in this section, the presence, in person or by proxy, of
the holders of record of shares of capital stock of the
Corporation entitling the holders thereof to cast a majority of
the votes (after giving effect, if required, to the provisions of
this section) entitled to be cast by the holders of shares of
capital stock of the Corporation entitled to vote shall
constitute a quorum at all meetings of the stockholders, and
every reference in this Certificate of Incorporation to a
majority or other proportion of capital stock (or the holders
thereof) for purposes of determining any quorum requirement or
any requirement for stockholder consent or approval shall be
deemed to refer to such majority or other proportion of the votes
(or the holders thereof) then entitled to be cast in respect of
such capital stock.
6. Any constructions, applications, or determinations
made by the Board of Directors pursuant to this section in good
faith and on the basis of such information and assistance as was
then reasonably available for such purpose shall be conclusive
and binding upon the Corporation and its stockholders.
<PAGE>
7. In the event any provision (or portion thereof) of
this section shall be found to be invalid, prohibited or
unenforceable for any reason, the remaining provisions (or
portions thereof) of this section shall remain in full force and
effect, and shall be construed as if such invalid, prohibited or
unenforceable provision had been stricken herefrom or otherwise
rendered inapplicable, it being the intent of this Corporation
and its stockholders that such remaining provision (or portion
thereof) of this section remain, to the fullest extent permitted
by law, applicable and enforceable as to all stockholders,
including stockholders owning an amount of stock over the Limit,
notwithstanding any such finding.
FIFTH: The following provisions are inserted for the
management of the business and the conduct of the affairs of the
Corporation, and for further definition, limitation and
regulation of the powers of the Corporation and of its Directors
and stockholders:
A. The business and affairs of the Corporation
shall be managed by or under the direction of the Board of
Directors. In addition to the powers and authority expressly
conferred upon them by statute or by this Certificate of
Incorporation or the Bylaws of the Corporation, the Directors are
hereby empowered to exercise all such powers and do all such acts
and things as may be exercised or done by the Corporation.
B. The Directors of the Corporation need not be
elected by written ballot unless the Bylaws so provide.
C. Any action required or permitted to be taken
by the stockholders of the Corporation must be effected at a duly
called annual or special meeting of stockholders of the
Corporation and may not be effected by any consent in writing by
such stockholders.
D. Special meetings of stockholders of the
Corporation may be called only by the Board of Directors pursuant
to a resolution adopted by a majority of the total number of
authorized directorships (whether or not there exist any
vacancies in previously authorized directorships at the time any
such resolution is presented to the Board for adoption) (the
"Whole Board") or as otherwise provided in the Bylaws.
SIXTH:
A. The number of Directors shall be fixed from time to
time exclusively by the Board of Directors pursuant to a
resolution adopted by a majority of the Whole Board. The
Directors shall be divided into three classes, with the term of
office of the first class to expire at the first annual meeting
of stockholders, the term of office of the second class to
expire at the annual meeting of stockholders one year thereafter
and the term of office of the third class to expire at the annual
meeting of stockholders two years thereafter. At each annual
meeting of stockholders following such initial classification and
election, Directors elected to succeed those Directors whose
terms expire shall be elected for a term of office to expire at
the third succeeding annual meeting of stockholders after their
election.
B. Subject to the rights of the holders of any series of
Preferred Stock then outstanding, newly created directorships
resulting from any increase in the authorized number of Directors
or any vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office or
other cause may be filled only by a majority vote of the
Directors then in office, though less than a quorum, and
Directors so chosen shall hold office for a term expiring at the
annual meeting of
<PAGE>
stockholders at which the term of office of the class to which
they have been chosen expires. No decrease in the number of
Directors constituting the Board of Directors shall shorten the
term of any incumbent Director.
C. Advance notice of stockholder nominations for the
election of Directors and of business to be brought by
stockholders before any meeting of the stockholders of the
Corporation shall be given in the manner provided in the Bylaws
of the Corporation.
D. Subject to the rights of the holders of any series of
Preferred Stock then outstanding, any Director, or the entire
Board of Directors, may be removed from office at any time, but
only for cause and only by the affirmative vote of the holders of
at least 80 percent of the voting power of all of the
then-outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of Directors (after
giving effect to the provisions of Article FOURTH of this
Certificate of Incorporation ("Article FOURTH")), voting together
as a single class.
SEVENTH: The Board of Directors is expressly empowered
to adopt, amend or repeal the Bylaws of the Corporation. Any
adoption, amendment or repeal of the Bylaws of the Corporation by
the Board of Directors shall require the approval of two-thirds
of the Whole Board. The stockholders shall also have power to
adopt, amend or repeal the Bylaws of the Corporation; provided,
however, that, in addition to any vote of the holders of any
class or series of stock of the Corporation required by law or by
this Certificate of Incorporation, the affirmative vote of the
holders of at least 80 percent of the voting power of all of the
then-outstanding shares of the capital stock of the Corporation
entitled to vote generally in the election of Directors (after
giving effect to the provisions of Article FOURTH), voting
together as a single class, shall be required to adopt, amend or
repeal any provisions of the Bylaws of the Corporation.
EIGHTH:
A. In addition to any affirmative vote required by law or
this Certificate of Incorporation, and except as otherwise
expressly provided in this section:
1. any merger or consolidation of the Corporation or
any Subsidiary (as hereinafter defined) with (i) any Interested
Stockholder (as hereinafter defined) or (ii) any other
corporation (whether or not itself an Interested Stockholder)
which is, or after such merger or consolidation would be, an
Affiliate (as hereinafter defined) of an Interested Stockholder;
or
2. any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series of
transactions) to or with any Interested Stockholder, or any
Affiliate of any Interested Stockholder, of any assets of the
Corporation or any Subsidiary having an aggregate Fair Market
Value (as hereinafter defined) equaling or exceeding 25% or more
of the combined assets of the Corporation and its Subsidiaries;
or
3. the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of
any securities of the Corporation or any Subsidiary to any
Interested Stockholder or any Affiliate of any Interested
Stockholder in exchange for cash, securities or other property
(or a combination thereof) having an aggregate Fair Market Value
(as hereinafter defined) equaling or exceeding 25% of the
combined Fair Market Value of the then-outstanding common
<PAGE>
stock of the Corporation and its Subsidiaries, except pursuant to
an employee benefit plan of the Corporation or any Subsidiary
thereof; or
4. the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or on
behalf of an Interested Stockholder or any Affiliate of an
Interested Stockholder; or
5. any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation, or
any merger or consolidation of the Corporation with any of its
Subsidiaries or any other transaction (whether or not with or
into or otherwise involving an Interested Stockholder) which has
the effect, directly or indirectly, of increasing the
proportional share of the outstanding shares of any class of
equity or convertible securities of the Corporation or any
Subsidiary which is directly or indirectly owned by an Interested
Stockholder or any Affiliate of an Interested Stockholder;
shall require the affirmative vote of the holders of at least 80%
of the voting power of the then-outstanding shares of stock of
the Corporation entitled to vote in the election of Directors
(the "Voting Stock") (after giving effect to the provision of
Article FOURTH), voting together as a single class. Such
affirmative vote shall be required notwithstanding the fact that
no vote may be required, or that a lesser percentage may be
specified, by law or by any other provisions of this Certificate
of Incorporation or any Preferred Stock Designation or in any
agreement with any national securities exchange or otherwise.
The term "Business Combination" as used in this Article
EIGHTH shall mean any transaction which is referred to in any one
or more of paragraphs 1 through 5 of Section A of this Article
EIGHTH.
B. The provisions of Section A of this Article EIGHTH
shall not be applicable to any particular Business Combination,
and such Business Combination shall require only the affirmative
vote of the majority of the outstanding shares of capital stock
entitled to vote, or such vote as is required by law or by this
Certificate of Incorporation, if, in the case of any Business
Combination that does not involve any cash or other consideration
being received by the stockholders of the Corporation solely in
their capacity as stockholders of the Corporation, the condition
specified in the following paragraph 1 is met or, in the case of
any other Business Combination, all of the conditions specified
in either of the following paragraphs 1 or 2 are met:
1. The Business Combination shall have been approved
by two-thirds of the Disinterested Directors (as hereinafter
defined).
2. All of the following conditions shall have been
met:
(a) The aggregate amount of the cash and the Fair
Market Value as of the date of the consummation of the Business
Combination of consideration other than cash to be received per
share by the holders of Common Stock in such Business Combination
shall at least be equal to the higher of the following:
(1) (if applicable) the Highest Per Share
Price (as hereinafter defined), including any brokerage
commissions, transfer taxes and soliciting dealers' fees, paid by
the Interested Stockholder or any of its Affiliates for any
shares of
<PAGE>
Common Stock acquired by it (i) within the two-year period
immediately prior to the first public announcement of the
proposal of the Business Combination (the "Announcement Date"),
or (ii) in the transaction in which it became an Interested
Stockholder, whichever is higher.
(2) the Fair Market Value per share of
Common Stock on the Announcement Date or on the date on which the
Interested Stockholder became an Interested Stockholder (such
latter date is referred to in this Article EIGHTH as the
"Determination Date"), whichever is higher.
(b) The aggregate amount of the cash and the Fair
Market Value as of the date of the consummation of the Business
Combination of consideration other than cash to be received per
share by holders of shares of any class of outstanding Voting
Stock other than Common Stock shall be at least equal to the
highest of the following (it being intended that the requirements
of this subparagraph (b) shall be required to be met with respect
to every such class of outstanding Voting Stock, whether or not
the Interested Stockholder has previously acquired any shares of
a particular class of Voting Stock):
(1) (if applicable) the Highest Per Share
Price (as hereinafter defined), including any brokerage
commissions, transfer taxes and soliciting dealers' fees, paid by
the Interested Stockholder for any shares of such class of Voting
Stock acquired by it (i) within the two-year period immediately
prior to the Announcement Date, or (ii) in the transaction in
which it became an Interested Stockholder, whichever is higher;
(2) (if applicable) the highest preferential
amount per share to which the holders of shares of such class of
Voting Stock are entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation; and
(3) the Fair Market Value per share of such
class of Voting Stock on the Announcement Date or on the
Determination Date, whichever is higher.
(c) The consideration to be received by holders
of a particular class of outstanding Voting Stock (including
Common Stock) shall be in cash or in the same form as the
Interested Stockholder has paid for shares of such class of
Voting Stock. If the Interested Stockholder has previously paid
for shares of any class of Voting Stock with varying forms of
consideration, the form of consideration to be received per share
by holders of shares of such class of Voting Stock shall be
either cash or the form used to acquire the largest number of
shares of such class of Voting Stock previously acquired by the
Interested Stockholder. The price determined in accordance with
subparagraph B.2 of this Article EIGHTH shall be subject to
appropriate adjustment in the event of any stock dividend, stock
split, combination of shares or similar event.
<PAGE>
(d) After such Interested Stockholder has become
an Interested Stockholder and prior to the consummation of such
Business Combination: (1) except as approved by a majority of
the Disinterested Directors, there shall have been no failure to
declare and pay at the regular date therefor any full quarterly
dividends (whether or not cumulative) on any outstanding stock
having preference over the Common Stock as to dividends or
liquidation; (2) there shall have been (i) no reduction in the
annual rate of dividends paid on the Common Stock (except as
necessary to reflect any subdivision of the Common Stock), except
as approved by a majority of the Disinterested Directors, and
(ii) an increase in such annual rate of dividends as necessary to
reflect any reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction which
has the effect of reducing the number of outstanding shares of
the Common Stock, unless the failure to so increase such annual
rate is approved by a majority of the Disinterested Directors;
and (3) neither such Interested Stockholder or any of its
Affiliates shall have become the beneficial owner of any
additional shares of Voting Stock except as part of the
transaction which results in such Interested Stockholder becoming
an Interested Stockholder.
(e) After such Interested Stockholder has become
an Interested Stockholder, such Interested Stockholder shall not
have received the benefit, directly or indirectly (except
proportionately as a stockholder), of any loans, advances,
guarantees, pledges or other financial assistance or any tax
credits or other tax advantages provided by the Corporation,
whether in anticipation of or in connection with such Business
Combination or otherwise.
(f) A proxy or information statement describing
the proposed Business Combination and complying with the
requirements of the Securities Exchange Act of 1934 and the rules
and regulations thereunder (or any subsequent provisions
replacing such Act, rules or regulations) shall be mailed to
stockholders of the Corporation at least 30 days prior to the
consummation of such Business Combination (whether or not such
proxy or information statement is required to be mailed pursuant
to such Act or subsequent provisions).
C. For the purposes of this Article EIGHTH:
1. A "Person" shall include an individual, a group
acting in concert, a corporation, a partnership, an association,
a joint venture, a pool, a joint stock company, a trust, an
unincorporated organization or similar company, a syndicate or
any other group formed for the purpose of acquiring, holding or
disposing of securities.
2. "Interested Stockholder" shall mean any person
(other than the Corporation or any holding company or Subsidiary
thereof) who or which:
(a) is the beneficial owner, directly or
indirectly, of more than 10% of the voting power of the
outstanding Voting Stock; or
<PAGE>
(b) is an Affiliate of the Corporation and at any
time within the two-year period immediately prior to the date in
question was the beneficial owner, directly or indirectly, of 10%
or more of the voting power of the then-outstanding Voting Stock;
or
(c) is an assignee of or has otherwise succeeded
to any shares of Voting Stock which were at any time within the
two-year period immediately prior to the date in question
beneficially owned by an Interested Stockholder, if such
assignment or succession shall have occurred in the course of a
transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
3. For purposes of this Article EIGHTH, "beneficial
ownership" shall be determined in the manner provided in Section
C of Article FOURTH hereof.
4. "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act
of 1934, as in effect on the date of filing of this Certificate
of Incorporation.
5. "Subsidiary" means any corporation of which a
majority of any class of equity security is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Interested Stockholder set forth in
paragraph 2 of this section, the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
6. "Disinterested Director" means any member of the
Board of Directors who is unaffiliated with the Interested
Stockholder and was a member of the Board of Directors prior to
the time that the Interested Stockholder became an Interested
Stockholder, and any Director who is thereafter chosen to fill
any vacancy of the Board of Directors or who is elected and who,
in either event, is unaffiliated with the Interested Stockholder
and in connection with his or her initial assumption of office is
recommended for appointment or election by a majority of
Disinterested Directors then on the Board of Directors.
7. "Fair Market Value" means: (a) in the case of
stock, the highest closing sales price of the stock during the
30-day period immediately preceding the date in question of a
share of such stock on the National Association of Securities
Dealers Automated Quotation System or any system then in use, or,
if such stock is admitted to trading on a principal United States
securities exchange registered under the Securities Exchange Act
of 1934, Fair Market Value shall be the highest sales price
reported during the 30-day period preceding the date in question,
or, if no such quotations are available, the Fair Market Value on
the date in question of a share of such stock as determined by
the Board of Directors in good faith, in each case with respect
to any class of stock, appropriately adjusted for any dividend or
distribution in shares of such stock or any stock split or
reclassification of outstanding shares of such stock into a
greater number of shares of such stock or any combination or
reclassification of outstanding shares of such stock into a
smaller number of shares of such stock, and (b) in the case of
property other than cash or stock, the Fair Market Value of such
property on the date in question as determined by the Board of
Directors in good faith.
<PAGE>
8. Reference to "Highest Per Share Price" shall in
each case with respect to any class of stock reflect an
appropriate adjustment for any dividend or distribution in shares
of such stock or any stock split or reclassification of
outstanding shares of such stock into a greater number of shares
of such stock or any combination or reclassification of
outstanding shares of such stock into a smaller number of shares
of such stock.
9. In the event of any Business Combination in which
the Corporation survives, the phrase "consideration other than
cash to be received" as used in subparagraphs (a) and (b) of
paragraph 2 of Section B of this Article EIGHTH shall include the
shares of Common Stock and/or the shares of any other class of
outstanding Voting Stock retained by the holders of such shares.
D. A majority of the Directors of the Corporation shall
have the power and duty to determine for the purposes of this
Article EIGHTH, on the basis of information known to them after
reasonable inquiry (a) whether a person is an Interested
Stockholder; (b) the number of shares of Voting Stock
beneficially owned by any person; (c) whether a person is an
Affiliate or Associate of another; and (d) whether the assets
which are the subject of any Business Combination have, or the
consideration to be received for the issuance or transfer of
securities by the Corporation or any Subsidiary in any Business
Combination has an aggregate Fair Market Value equaling or
exceeding 25% of the combined Fair Market Value of the common
stock of the Corporation and its Subsidiaries. A majority of the
Directors shall have the further power to interpret all of the
terms and provisions of this Article EIGHTH.
E. Nothing contained in this Article EIGHTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
F. Notwithstanding any other provisions of this
Certificate of Incorporation or any provision of law which might
otherwise permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class or series
of the Voting Stock required by law, this Certificate of
Incorporation or any Preferred Stock Designation, the affirmative
vote of the holders of at least 80 percent of the voting power of
all of the then-outstanding shares of the Voting Stock, voting
together as a single class, shall be required to alter, amend or
repeal this Article EIGHTH.
NINTH: The Board of Directors of the Corporation, when
evaluating any offer of another Person (as defined in Article
EIGHTH hereof) to (A) make a tender or exchange offer for any
equity security of the Corporation, (B) merge or consolidate the
Corporation with another corporation or entity or (C) purchase or
otherwise acquire all or substantially all of the properties and
assets of the Corporation, may, in connection with the exercise
of its judgment in determining what is in the best interest of
the Corporation and its stockholders, give due consideration to
all relevant factors, including, without limitation, the social
and economic effect of acceptance of such offer on the
Corporation's present and future customers and employees and
those of its Subsidiaries (as defined in Article EIGHTH hereof);
on the communities in which the Corporation and its Subsidiaries
operate or are located; on the ability of the Corporation to
fulfill its corporate objectives as a savings bank holding
company and on the ability of its subsidiary savings bank to
fulfill the objectives of a stock savings bank under applicable
statutes and regulations.
TENTH:
<PAGE>
A. Each person who was or is made a party or is threatened
to be made a party to or is otherwise involved in any action,
suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact
that he or she is or was a Director or an Officer of the
Corporation or is or was serving at the request of the
Corporation as a Director, Officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit
plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a
Director, Officer, employee or agent or in any other capacity
while serving as a Director, Officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest
extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than
such law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement) reasonably incurred or
suffered by such indemnitee in connection therewith; provided,
however, that, except as provided in Section C hereof with
respect to proceedings to enforce rights to indemnification, the
Corporation shall indemnify any such indemnitee in connection
with a proceeding (or part thereof) initiated by such indemnitee
only if such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation.
B. The right to indemnification conferred in Section A of
this Article TENTH shall include the right to be paid by the
Corporation the expenses incurred in defending any such
proceeding in advance of its final disposition (hereinafter an
"advancement of expenses"); provided, however, that, if the
Delaware General Corporation Law requires, an advancement of
expenses incurred by an indemnitee in his or her capacity as a
Director of Officer (and not in any other capacity in which
service was or is rendered by such indemnitee, including, without
limitation, service to an employee benefit plan) shall be made
only upon delivery to the Corporation of an undertaking
(hereinafter an "undertaking"), by or on behalf of such
indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which
there is no further right to appeal (hereinafter a "final
adjudication") that such indemnitee is not entitled to be
indemnified for such expenses under this Section or otherwise.
The rights to indemnification and to the advancement of expenses
conferred in Sections A and B of this Article TENTH shall be
contract rights and such rights shall continue as to an
indemnitee who has ceased to be a Director, Officer, employee or
agent and shall inure to the benefit of the indemnitee's heirs,
executors and administrators.
C. If a claim under Section A or B of this Article TENTH
is not paid in full by the Corporation within sixty days after a
written claim has been received by the Corporation, except in the
case of a claim for an advancement of expenses, in which case the
applicable period shall be twenty days, the indemnitee may at any
time thereafter bring suit against the Corporation to recover the
unpaid amount of the claim. If successful in whole or in part in
any such suit, or in a suit brought by the Corporation to recover
an advancement of expenses pursuant to the terms of an
undertaking, the indemnitee shall be entitled to be paid also the
expense of prosecuting or defending such suit. In (i) any suit
brought by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to enforce
a right to an advancement of expenses) it shall be a defense
that, and (ii) in any suit by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking
the Corporation shall be entitled to recover such expenses upon a
final adjudication that, the indemnitee has not met any
applicable standard for indemnification set forth in the Delaware
General Corporation Law. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or
its
<PAGE>
stockholders) to have made a determination prior to the
commencement of such suit that indemnification of the indemnitee
is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or
its stockholders) that the indemnitee has not met such applicable
standard of conduct, shall create a presumption that the
indemnitee has not met the applicable standard of conduct or, in
the case of such a suit brought by the indemnitee, be a defense
to such suit. In any suit brought by the indemnitee to enforce a
right to indemnification or to an advancement of expenses
hereunder, or by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or
to such advancement of expenses, under this Article TENTH or
otherwise shall be on the Corporation.
D. The rights to indemnification and to the advancement of
expenses conferred in this Article TENTH shall not be exclusive
of any other right which any person may have or hereafter acquire
under any statute, the Corporation's Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or
disinterested Directors or otherwise.
E. The Corporation may maintain insurance, at its expense,
to protect itself and any Director, Officer, employee or agent of
the Corporation or another corporation, partnership, joint
venture, trust or other enterprise against any expense, liability
or loss, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.
F. The Corporation may, to the extent authorized from time
to time by the Board of Directors, grant rights to
indemnification and to the advancement of expenses to any
employee or agent of the Corporation to the fullest extent of the
provisions of this Article TENTH with respect to the
indemnification and advancement of expenses of Directors and
Officers of the Corporation.
ELEVENTH: A Director of this Corporation shall not be
personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a Director,
except for liability (i) for any breach of the Director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law, or (iv) for any
transaction from which the Director derived an improper personal
benefit. If the Delaware General Corporation Law is amended to
authorize corporate action further eliminating or limiting the
personal liability of Directors, then the liability of a Director
of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so
amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any
right or protection of a Director of the Corporation existing at
the time of such repeal or modification.
TWELFTH: The Corporation reserves the right to amend or
repeal any provision contained in this Certificate of
Incorporation in the manner prescribed by the laws of the State
of Delaware and all rights conferred upon stockholders are
granted subject to this reservation; provided, however, that,
notwithstanding any other provision of this Certificate of
Incorporation or any provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any vote of
the holders of any class or
<PAGE>
series of the stock of the Corporation required by law or by this
Certificate of Incorporation, the affirmative vote of the holders
of at least 80 percent of the voting power of all of the
then-outstanding shares of the capital stock of the Corporation
entitled to vote generally in the election of Directors (after
giving effect to the provisions of Article FOURTH), voting
together as a single class, shall be required to amend or repeal
this Article TWELFTH, Section C of Article FOURTH, Sections C or
D of Article FIFTH, Article SIXTH, Article SEVENTH, Article
EIGHTH or Article TENTH.
I, THE UNDERSIGNED, being the President of this Corporation,
do make, file and record this Certificate of Incorporation, do
certify that the facts herein stated are true, and accordingly,
have hereto set my hand this 21st day of November, 1996.
/s/ Wendell T. Breithaupt
-----------------------------------
Wendell T. Breithaupt
ATTEST: President and Chief Executive
Officer
/s/ Robert C. Hollenbeck
- -------------------------
Robert C. Hollenbeck
Secretary
<PAGE>
EXHIBIT C
<PAGE>
PEOPLES BANCORP
BYLAWS
ARTICLE I - STOCKHOLDERS
Section 1. Annual Meeting.
An annual meeting of the stockholders, for the election of
Directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before
the meeting, shall be held at such place, on such date, and at
such time as the Board of Directors shall each year fix, which
date shall be within thirteen (13) months subsequent to the later
of the date of incorporation or the last annual meeting of
stockholders.
Section 2. Special Meetings.
Subject to the rights of the holders of any class or series
of preferred stock of the Corporation, special meetings of
stockholders of the Corporation may be called by the Board of
Directors pursuant to a resolution adopted by a majority of the
total number of Directors which the Corporation would have if
there were no vacancies on the Board of Directors (hereinafter
the "Whole Board").
Section 3. Notice of Meetings.
Written notice of the place, date, and time of all meetings
of the stockholders shall be given, not less than ten (10) nor
more than sixty (60) days before the date on which the meeting is
to be held, to each stockholder entitled to vote at such meeting,
except as otherwise provided herein or required by law (meaning,
here and hereinafter, as required from time to time by the
Delaware General Corporation Law or the Certificate of
Incorporation of the Corporation).
When a meeting is adjourned to another place, date or time,
written notice need not be given of the adjourned meeting if the
place, date and time thereof are announced at the meeting at
which the adjournment is taken; provided, however, that if the
date of any adjourned meeting is more than thirty (30) days after
the date for which the meeting was originally noticed, or if a
new record date is fixed for the adjourned meeting, written
notice of the place, date, and time of the adjourned meeting
shall be given in conformity herewith. At any adjourned meeting,
any business may be transacted which might have been transacted
at the original meeting.
Section 4. Quorum.
At any meeting of the stockholders, the holders of a
majority of all of the shares of the stock entitled to vote at
the meeting, present in person or by proxy (after giving effect
to the Article FOURTH of the Corporation's Certificate of
Incorporation), shall constitute a quorum for all purposes,
unless or except to the extent that the presence of a larger
number may be required by law. Where a separate vote by a class
or classes is required, a majority of the shares of such class or
classes present in person or represented by proxy shall
constitute a quorum entitled to take action with respect to that
vote on that matter.
<PAGE>
If a quorum shall fail to attend any meeting, the chairman
of the meeting or the holders of a majority of the shares of
stock entitled to vote who are present, in person or by proxy,
may adjourn the meeting to another place, date, or time.
If a notice of any adjourned special meeting of stockholders
is sent to all stockholders entitled to vote thereat, stating
that it will be held with those present constituting a quorum,
then except as otherwise required by law, those present at such
adjourned meeting shall constitute a quorum, and all matters
shall be determined by a majority of the votes cast at such
meeting.
Section 5. Organization.
Such person as the Board of Directors may have designated
or, in the absence of such a person, the Chairman of the Board of
the Corporation or, in his or her absence, the Chief Executive
Officer or, in his or her absence, such person as may be chosen
by the holders of a majority of the shares entitled to vote who
are present, in person or by proxy, shall call to order any
meeting of the stockholders and act as chairman of the meeting.
In the absence of the Secretary of the Corporation, the secretary
of the meeting shall be such person as the chairman appoints.
Section 6. Conduct of Business.
(a) The chairman of any meeting of stockholders shall
determine the order of business and the procedure at the meeting,
including such regulation of the manner of voting and the conduct
of discussion as seem to him or her in order. The date and time
of the opening and closing of the polls for each matter upon
which the stockholders will vote at the meeting shall be
announced at the meeting.
(b) At any annual meeting of the stockholders, only
such business shall be conducted as shall have been brought
before the meeting: (i) by or at the direction of the Board of
Directors or: (ii) by any stockholder of the Corporation who is
entitled to vote with respect thereto and who complies with the
notice procedures set forth in this Section 6(b). For business
to be properly brought before an annual meeting by a stockholder,
the business must relate to a proper subject matter for
stockholder action and the stockholder must have given timely
notice thereof in writing to the Secretary of the Corporation.
To be timely, a stockholder's notice must be delivered or mailed
to and received at the principal executive offices of the
Corporation not less than ninety (90) days prior to the date of
the annual meeting; provided, however, that in the event that
less than one hundred (100) days' notice or prior public
disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be
received not later than the close of business on the 10th day
following the day on which such notice of the date of the annual
meeting was mailed or such public disclosure was made. A
stockholder's notice to the Secretary shall set forth as to each
matter such stockholder proposes to bring before the annual
meeting: (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting
such business at the annual meeting; (ii) the name and address,
as they appear on the Corporation's books, of the stockholder
proposing such business; (iii) the class and number of shares of
the Corporation's capital stock that are beneficially owned by
such stockholder and (iv) any material interest of such
stockholder in such business. Notwithstanding anything in these
By-laws to the contrary, no business shall be brought before or
conducted at an annual meeting except in accordance with the
provisions of this Section 6(b). The Officer of the Corporation
or other person presiding over the annual meeting shall, if the
facts so warrant, determine and declare to the meeting that
business was not properly brought before the meeting in
accordance with the provisions of this Section 6(b) and, if he or
<PAGE>
she should so determine, he or she shall so declare to the
meeting and any such business so determined to be not properly
brought before the meeting shall not be transacted.
At any special meeting of the stockholders, only such
business shall be conducted as shall have been brought before the
meeting by or at the direction of the Board of Directors.
(c) Only persons who are nominated in accordance with the
procedures set forth in these By-laws shall be eligible for
election as Directors. Nominations of persons for election to
the Board of Directors of the Corporation may be made at a
meeting of stockholders at which Directors are to be elected
only: (i) by or at the direction of the Board of Directors or;
(ii) by any stockholder of the Corporation entitled to vote for
the election of Directors at the meeting who complies with the
notice procedures set forth in this Section 6(c). Such
nominations, other than those made by or at the direction of the
Board of Directors, shall be made by timely notice in writing to
the Secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered or mailed to and received at the
principal executive offices of the Corporation not less than
ninety (90) days prior to the date of the meeting; provided,
however, that in the event that less than one hundred (100) days'
notice or prior disclosure of the date of the meeting is given or
made to stockholders, notice by the stockholder to be timely must
be so received not later than the close of business on the 10th
day following the day on which such notice of the date of the
meeting was mailed or such public disclosure was made. Such
stockholder's notice shall set forth: (i) as to each person whom
such stockholder proposes to nominate for election or re-election
as a Director, all information relating to such person that is
required to be disclosed in solicitations of proxies for the
election of Directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of
1934 (including such person's written consent to being named in
the proxy statement as a nominee and to serving as a Director if
elected); and (ii) as to the stockholder giving notice (x) the
name and address, as they appear on the Corporation's books, of
such stockholder and (y) the class and number of shares of the
Corporation's capital stock that are beneficially owned by such
stockholder. At the request of the Board of Directors any person
nominated by the Board of Directors for election as a Director
shall furnish to the Secretary of the Corporation that
information required to be set forth in a stockholder's notice of
nomination which pertains to the nominee. No person shall be
eligible for election as a Director of the Corporation unless
nominated in accordance with the provisions of this Section 6(c).
The Officer of the Corporation or other person presiding at the
meeting shall, if the facts so warrant, determine that a
nomination was not made in accordance with such provisions and,
if he or she should so determine, he or she shall declare to the
meeting and the defective nomination shall be disregarded.
Section 7. Proxies and Voting.
At any meeting of the stockholders, every stockholder
entitled to vote may vote in person or by proxy authorized by an
instrument in writing or by a transmission permitted by law filed
in accordance with the procedure established for the meeting.
Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission created pursuant to
this paragraph may be substituted or used in lieu of the original
writing or transmission for any and all purposes for which the
original writing or transmission could be used, provided that
such copy, facsimile telecommunication or other reproduction
shall be a complete reproduction of the entire original writing
or transmission.
All voting, including on the election of Directors but
excepting where otherwise required by law or by the governing
documents of the Corporation, may be by a voice vote; provided,
however, that upon demand therefor by a stockholder entitled to
vote or by his or her proxy, a stock vote shall be taken.
<PAGE>
Every stock vote shall be taken by ballots, each of which shall
state the name of the stockholder or proxy voting and such other
information as may be required under the procedure established
for the meeting. The Corporation shall, in advance of any
meeting of stockholders, appoint one or more inspectors to act at
the meeting and make a written report thereof. The Corporation
may designate one or more persons as alternate inspectors to
replace any inspector who fails to act. If no inspector or
alternate is able to act at a meeting of stockholders, the person
presiding at the meeting shall appoint one or more inspectors to
act at the meeting. Each inspector, before entering upon the
discharge of his or her duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict
impartiality and according to the best of his or her ability.
All elections shall be determined by a plurality of the
votes cast, and except as otherwise required by the Certificate
of Incorporation or by law, all other matters shall be determined
by a majority of the votes present and cast at a properly called
meeting of stockholders.
Section 8. Stock List.
A complete list of stockholders entitled to vote at any
meeting of stockholders, arranged in alphabetical order for each
class of stock and showing the address of each such stockholder
and the number of shares registered in his or her name, shall be
open to the examination of any such stockholder, for any purpose
germane to the meeting, during ordinary business hours for a
period of at least ten (10) days prior to the meeting, either at
a place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or if not
so specified, at the place where the meeting is to be held.
The stock list shall also be kept at the place of the
meeting during the whole time thereof and shall be open to the
examination of any such stockholder who is present. This list
shall presumptively determine the identity of the stockholders
entitled to vote at the meeting and the number of shares held by
each of them.
Section 9. Consent of Stockholders in Lieu of Meeting.
Subject to the rights of the holders of any class or series
of preferred stock of the Corporation, any action required or
permitted to be taken by the stockholders of the Corporation must
be effected at an annual or special meeting of stockholders of
the Corporation and may not be effected by any consent in writing
by such stockholders.
ARTICLE II - BOARD OF DIRECTORS
Section 1. General Powers, Number and Term of Office.
The business and affairs of the Corporation shall be under
the direction of its Board of Directors. The number of Directors
who shall constitute the Whole Board shall be such number as the
Board of Directors shall from time to time have designated by
resolution. The Board of Directors shall annually elect a
Chairman of the Board from among its members who shall, when
present, preside at its meetings.
<PAGE>
The Directors, other than those who may be elected by the
holders of any class or series of Preferred Stock, shall be
divided, with respect to the time for which they severally hold
office, into three classes, with the term of office of the first
class to expire at the first annual meeting of stockholders, the
term of office of the second class to expire at the annual
meeting of stockholders one year thereafter and the term of
office of the third class to expire at the annual meeting of
stockholders two years thereafter, with each Director to hold
office until his or her successor shall have been duly elected
and qualified. At each annual meeting of stockholders,
commencing with the first annual meeting, Directors elected to
succeed those Directors whose terms then expire shall be elected
for a term of office to expire at the third succeeding annual
meeting of stockholders after their election, with each Director
to hold office until his or her successor shall have been duly
elected and qualified.
Section 2. Vacancies and Newly Created Directorships.
Subject to the rights of the holders of any class or series
of preferred stock, and unless the Board of Directors otherwise
determines, newly created Directorships resulting from any
increase in the authorized number of Directors or any vacancies
in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause
may be filled only by a majority vote of the Directors then in
office, though less than a quorum, and Directors so chosen shall
hold office for a term expiring at the annual meeting of
stockholders at which the term of office of the class to which
they have been elected expires and until such Director's
successor shall have been duly elected and qualified. No
decrease in the number of authorized Directors constituting the
Board shall shorten the term of any incumbent Director.
Section 3. Regular Meetings.
Regular meetings of the Board of Directors shall be held at
such place or places, on such date or dates, and at such time or
times as shall have been established by the Board of Directors
and publicized among all Directors. A notice of each regular
meeting shall not be required.
Section 4. Special Meetings.
Special meetings of the Board of Directors may be called by
a majority of the Directors then in office (rounded up to the
nearest whole number) or by the Chairman of the Board or by the
President and Chief Executive Officer and shall be held at such
place, on such date, and at such time as they or he or she shall
fix. Notice of the place, date, and time of each such special
meeting shall be given to each Director by whom it is not waived
by mailing written notice not less than five (5) days before the
meeting or be telegraphing or telexing or by facsimile
transmission of the same not less than twenty-four (24) hours
before the meeting. Unless otherwise indicated in the notice
thereof, any and all business may be transacted at a special
meeting.
Section 5. Quorum.
At any meeting of the Board of Directors, a majority of the
Whole Board shall constitute a quorum for all purposes. If a
quorum shall fail to attend any meeting, a majority of those
present may adjourn the meeting to another place, date, or time,
without further notice or waiver thereof.
<PAGE>
Section 6. Participation in Meetings By Conference Telephone
Members of the Board of Directors, or of any committee
thereof, may participate in a meeting of such Board or committee
by means of conference telephone or similar communications
equipment by means of which all persons participating in the
meeting can hear each other and such participation shall
constitute presence in person at such meeting.
Section 7. Conduct of Business.
At any meeting of the Board of Directors, business shall be
transacted in such order and manner as the Board may from time to
time determine, and all matters shall be determined by the vote
of a majority of the Directors present, except as otherwise
provided herein or required by law. Action may be taken by the
Board of Directors without a meeting if all members thereof
consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board of Directors.
Section 8. Powers.
The Board of Directors may, except as otherwise required by
law, exercise all such powers and do all such acts and things as
may be exercised or done by the Corporation, including, without
limiting the generality of the foregoing, the unqualified power:
(1) To declare dividends from time to time in
accordance with law;
(2) To purchase or otherwise acquire any property,
rights or privileges on such terms as it shall determine;
(3) To authorize the creation, making and issuance, in
such form as it may determine, of written obligations of every
kind, negotiable or non-negotiable, secured or unsecured, and to
do all things necessary in connection therewith;
(4) To remove any Officer of the Corporation with or
without cause, and from time to time to devolve the powers and
duties of any Officer upon any other person for the time being;
(5) To confer upon any Officer of the Corporation the
power to appoint, remove and suspend subordinate Officers,
employees and agents;
(6) To adopt from time to time such stock, option,
stock purchase, bonus or other compensation plans for Directors,
Officers, employees and agents of the Corporation and its
subsidiaries as it may determine;
(7) To adopt from time to time such insurance,
retirement, and other benefit plans for Directors, Officers,
employees and agents of the Corporation and its subsidiaries as
it may determine; and
(8) To adopt from time to time regulations, not
inconsistent with these By-laws, for the management of the
Corporation's business and affairs.
<PAGE>
Section 9. Compensation of Directors.
Directors, as such, may receive, pursuant to resolution of
the Board of Directors, fixed fees and other compensation for
their services as Directors, including, without limitation, their
services as members of committees of the Board of Directors.
ARTICLE III - COMMITTEES
Section 1. Committee of the Board of Directors.
The Board of Directors, by a vote of a majority of the Whole
Board, may from time to time designate committees of the Board,
with such lawfully delegable powers and duties as it thereby
confers, to serve at the pleasure of the Board and shall, for
those committees and any others provided for herein, elect a
Director or Directors to serve as the member or members,
designating, if it desires, other Directors as alternate members
who may replace any absent or disqualified member at any meeting
of the committee. Any committee so designated may exercise the
power and authority of the Board of Directors to declare a
dividend, to authorize the issuance of stock or to adopt a
certificate of ownership and merger pursuant to Section 253 of
the Delaware General Corporation Law if the resolution which
designates the committee or a supplemental resolution of the
Board of Directors shall so provide. In the absence or
disqualification of any member of any committee and any alternate
member in his or her place, the member or members of the
committee present at the meeting and not disqualified from
voting, whether or not he or she or they constitute a quorum, may
by unanimous vote appoint another member of the Board of
Directors to act at the meeting in the place of the absent or
disqualified member.
Section 2. Conduct of Business.
Each committee may determine the procedural rules for
meeting and conducting its business and shall act in accordance
therewith, except as otherwise provided herein or required by
law. Adequate provision shall be made for notice to members of
all meetings; a majority of the members shall constitute a
quorum, and all matters shall be determined by a majority vote of
the members present, subject to a quorum being present. Action
may be taken by any committee without a meeting if all members
thereof consent thereto in writing, and the writing or writings
are filled with the minutes of the proceedings of such committee.
Section 3. Nominating Committee.
The Board of Directors shall appoint a Nominating Committee
of the Board, consisting of not less than three (3) members, one
of which shall be the Chairman of the Board. The Nominating
Committee shall have authority (a) to review any nominations for
election to the Board of Directors made by a stockholder of the
Corporation pursuant to Section 6(c) (ii) of Article I of these
By-laws in order to determine compliance with such By-law
provision and (b) to recommend to the Whole Board nominees for
election to the Board of Directors to replace those Directors
whose terms expire at the annual meeting of stockholders next
ensuing.
<PAGE>
ARTICLE IV - OFFICERS
Section 1. Generally.
(a) The Board of Directors as soon as may be
practicable after the annual meeting of stockholders shall
choose a Chairman of the Board, a President and Chief Executive
Officer, one or more Vice Presidents, and a Secretary and from
time to time may choose such other Officers as it may deem
proper. The Chairman of the Board shall be chosen from among the
Directors. Any number of offices may be held by the same person.
(b) The term of office of all Officers shall be until
the next annual election of Officers and until their respective
successors are chosen, but any Officer may be removed from office
at any time by the affirmative vote of two-thirds of the
authorized number of Directors then constituting the Board of
Directors, or removed by an Officer pursuant to authority
delegated by the Board to such Officer in accordance with Section
8(5) of Article II
(c) All Officers chosen by the Board of Directors
shall each have such powers and duties as generally pertain to
their respective offices, subject to the specific provisions of
this Article IV. Such Officers shall also have such powers and
duties as from time to time may be conferred by the Board of
Directors or by any committee thereof.
Section 2. Chairman of the Board.
The Chairman of the Board shall, subject to the provisions
of these By-laws and to the direction of the Board of Directors,
serve in a general executive capacity and, when present, shall
preside at all meetings of the Board of Directors. The Chairman
of the Board shall perform all duties and have all powers which
are commonly incident to the office of Chairman of the Board or
which are delegated to him or her by the Board of Directors. He
or she shall have power to sign all stock certificates, contracts
and other instruments of the Corporation which are authorized.
Section 3. President and Chief Executive Officer.
The President and Chief Executive Officer (the "President")
shall have general responsibility for the management and control
of the business and affairs of the Corporation and shall perform
all duties and have all powers which are commonly incident to the
offices of President and Chief Executive Officer or which are
delegated to him or her by the Board of Directors. Subject to
the direction of the Board of Directors, the President shall have
power to sign all stock certificates, contracts and other
instruments of the Corporation which are authorized and shall
have general supervision of all of the other Officers (other than
the Chairman of the Board), employees and agents of the
Corporation.
Section 4. Vice President.
The Vice President or Vice Presidents shall perform the
duties of the President in his or her absence or during his
disability to act. In addition, the Vice Presidents shall
perform the duties and exercise the powers usually incident to
their respective offices and/or such other duties and powers as
may be properly assigned to them by the Board of Directors, the
Chairman of the Board or the President. A Vice President or Vice
Presidents may be designated as Executive Vice President or
Senior Vice President
<PAGE>
or any such designation as the Board of Directors, Chairman of
the Board or President deems appropriate.
Section 5. Secretary.
The Secretary or an Assistant Secretary shall issue notices
of meetings, shall keep their minutes, shall have charge of the
seal and the corporate books, shall perform such other duties and
exercise such other powers as are usually incident to such
offices and/or such other duties and powers as are properly
assigned thereto by the Board of Directors, the Chairman of the
Board or the President.
Section 6. Assistant Secretaries and Other Officers.
The Board of Directors may appoint one or more Assistant
Secretaries and such other Officers who shall have such powers
and shall perform such duties as are provided in these By-laws or
as may be assigned to them by the Board of Directors, the
Chairman of the Board or the President.
Section 7. Action with Respect to Securities of Other
Corporations.
Unless otherwise directed by the Board of Directors, the
President or any Officer of the Corporation authorized by the
President shall have power to vote and otherwise act on behalf of
the Corporation, in person or by proxy, at any meeting of
stockholders of or with respect to any action of stockholders of
any other corporation in which the Corporation may hold
securities and otherwise to exercise any and all rights and
powers which the Corporation may possess by reason of its
ownership of securities in such other corporation.
ARTICLE V - STOCK
Section 1. Certificates of Stock.
Each stockholder shall be entitled to a certificate signed
by, or in the name of the Corporation by, the Chairman of the
Board or the President, and by the Secretary or an Assistant
Secretary, or any Treasurer or Assistant Treasurer, certifying
the number of shares owned by him or her. Any or all of the
signatures on the certificate may be by facsimile.
Section 2. Transfers of Stock.
Transfers of stock shall be made only upon the transfer
books of the Corporation kept at an office of the Corporation or
by transfer agents designated to transfer shares of the stock of
the Corporation. Except where a certificate is issued in
accordance with Section 4 of Article V of these By-laws, an
outstanding certificate for the number of shares involved shall
be surrendered for cancellation before a new certificate is
issued therefor.
Section 3. Record Date.
In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders,
or to receive payment of any dividend or other distribution or
allotment of any rights or to exercise any rights in respect of
any change, conversion or exchange of stock or for the
<PAGE>
purpose of any other lawful action, the Board of Directors may
fix a record date, which record date shall not precede the date
on which the resolution fixing the record date is adopted and
which record date shall not be more than sixty (60) nor less than
ten (10) days before the date of any meeting of stockholders, nor
more than sixty (60) days prior to the time for such other action
as hereinbefore described; provided, however, that if no record
date is fixed by the Board of Directors, the record date for
determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given or, if notice
is waived, at the close of business on the day next preceding the
day on which the meeting is held, and, for determining
stockholders entitled to receive payment of any dividend or other
distribution or allotment of rights or to exercise any rights of
change, conversion or exchange of stock or for any other purpose,
the record date shall be at the close of business on the day on
which the Board of Directors adopts a resolution relating
thereto.
A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
Section 4. Lost, Stolen or Destroyed Certificates.
In the event of the loss, theft or destruction of any
certificate of stock, another may be issued in its place pursuant
to such regulations as the Board of Directors may establish
concerning proof of such loss, theft or destruction and
concerning the giving of a satisfactory bond or bonds of
indemnity.
Section 5. Regulations.
The issue, transfer, conversion and registration of
certificates of stock shall be governed by such other regulations
as the Board of Directors may establish.
ARTICLE VI - NOTICES
Section 1. Notices.
Except as otherwise specifically provided herein or required
by law, all notices required to be given to any stockholder,
Director, Officer, employee or agent shall be in writing and may
in every instance be effectively given by hand delivery to the
recipient thereof, by depositing such notice in the mails,
postage paid, or by sending such notice by prepaid telegram or
mailgram or other courier. Any such notice shall be addressed to
such stockholder, Director, Officer, employee or agent at his or
her last known address as the same appears on the books of the
Corporation. The time when such notice is received, if hand
delivered, or dispatched, if delivered through the mails or by
telegram or mailgram or other courier, shall be the time of the
giving of the notice.
Section 2. Waivers.
A written waiver of any notice, signed by a stockholder,
Director, Officer, employee or agent, whether before or after the
time of the event for which notice is to be given, shall be
deemed equivalent to the notice required to be given to such
stockholder, Director, Officer, employee or agent. Neither the
business nor the purpose of any meeting need be specified in such
a waiver.
<PAGE>
ARTICLE VII - MISCELLANEOUS
Section 1. Facsimile Signatures.
In addition to the provisions for use of facsimile
signatures elsewhere specifically authorized in these By-laws,
facsimile signatures of any Officer or Officers of the
Corporation may be used whenever and as authorized by the Board
of Directors or a committee thereof.
Section 2. Corporate Seal.
The Board of Directors may provide a suitable seal,
containing the name of the Corporation, which seal shall be in
the charge of the Secretary. If and when so directed by the
Board of Directors or a committee thereof, duplicates of the seal
may be kept and used by the Comptroller or by an Assistant
Secretary or an assistant to the Comptroller.
Section 3. Reliance upon Books, Reports and Records.
Each Director, each member of any committee designated by
the Board of Directors, and each Officer of the Corporation
shall, in the performance of his or her duties, be fully
protected in relying in good faith upon the books of account or
other records of the Corporation and upon such information,
opinions, reports or statements presented to the Corporation by
any of its Officers or employees, or committees of the Board of
Directors so designated, or by any other person as to matters
which such Director or committee member reasonably believes are
within such other person's professional or expert competence and
who has been selected with reasonable care by or on behalf of the
Corporation.
Section 4. Fiscal Year.
The fiscal year of the Corporation shall be as fixed by the
Board of Directors.
Section 5. Time Periods.
In applying any provision of these By-laws which requires
that an act be done or not be done a specified number of days
prior to an event or that an act be done during a period of a
specified number of days prior to an event, calendar days shall
be used, the day of the doing of the act shall be excluded, and
the day of the event shall be included.
ARTICLE VIII - AMENDMENT
The Board of Directors may by a two-thirds vote amend, alter
or repeal these By-laws at any meeting of the Board, provided
notice of the proposed change is given not less than two days
prior to the meeting. The stockholders shall also have power to
amend, alter or repeal these By-laws at any meeting of
stockholders, provided notice of the proposed change was given in
the Notice of the Meeting; provided, however, that,
notwithstanding any other provisions of these By-laws or any
provision of law which might otherwise permit a lesser vote or no
vote, but in addition to any affirmative vote of the holders of
any particular class or series of the Voting Stock Designation or
these By-laws, the affirmative votes of the holders of at least
80% of the voting power of all the then-outstanding shares of the
Voting Stock, voting together as a single class, shall be
required to alter, amend or repeal any provisions of these
By-laws.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Article TENTH of the Registrant's Certificate of
Incorporation provides for the following indemnification for
Directors and Officers:
A. Each person who was or is made a party or is threatened
to be made a party to or is otherwise involved in any action,
suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact
that he or she is or was a Director or an Officer of the
Corporation or is or was serving at the request of the
Corporation as a Director, Officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit
plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a
Director, Officer, employee or agent or in any other capacity
while serving as a Director, Officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest
extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than
such law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement) reasonably incurred or
suffered by such indemnitee in connection therewith; provided,
however, that, except as provided in Section C hereof with
respect to proceedings to enforce rights to indemnification, the
Corporation shall indemnify any such indemnitee in connection
with a proceeding (or part thereof) initiated by such indemnitee
only if such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation.
B. The right to indemnification conferred in Section A of
this Article TENTH shall include the right to be paid by the
Corporation the expenses incurred in defending any such
proceeding in advance of its final disposition (hereinafter an
"advancement of expenses"); provided, however, that, if the
Delaware General Corporation Law requires, an advancement of
expenses incurred by an indemnitee in his or her capacity as a
Director of Officer (and not in any other capacity in which
service was or is rendered by such indemnitee, including, without
limitation, service to an employee benefit plan) shall be made
only upon delivery to the Corporation of an undertaking
(hereinafter an "undertaking"), by or on behalf of such
indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which
there is no further right to appeal (hereinafter a "final
adjudication") that such indemnitee is not entitled to be
indemnified for such expenses under this Section or otherwise.
The rights to indemnification and to the advancement of expenses
conferred in Sections A and B of this Article TENTH shall be
contract rights and such rights shall continue as to an
indemnitee who has ceased to be a Director, Officer, employee or
agent and shall inure to the benefit of the indemnitee's heirs,
executors and administrators.
C. If a claim under Section A or B of this Article TENTH
is not paid in full by the Corporation within sixty days after a
written claim has been received by the Corporation, except in the
case of a claim for an advancement of expenses, in which case the
applicable period shall be twenty days, the indemnitee may at any
time thereafter bring suit against the Corporation to recover the
unpaid amount of the claim. If successful in whole or in part in
any such suit, or in a suit brought by the Corporation to recover
an
<PAGE>
advancement of expenses pursuant to the terms of an undertaking,
the indemnitee shall be entitled to be paid also the expense of
prosecuting or defending such suit. In (i) any suit brought by
the indemnitee to enforce a right to indemnification hereunder
(but not in a suit brought by the indemnitee to enforce a right
to an advancement of expenses) it shall be a defense that, and
(ii) in any suit by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking the Corporation
shall be entitled to recover such expenses upon a final
adjudication that, the indemnitee has not met any applicable
standard for indemnification set forth in the Delaware General
Corporation Law. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or
its stockholders) to have made a determination prior to the
commencement of such suit that indemnification of the indemnitee
is proper in the circumstances because the indemnitee has met the
applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or
its stockholders) that the indemnitee has not met such applicable
standard of conduct, shall create a presumption that the
indemnitee has not met the applicable standard of conduct or, in
the case of such a suit brought by the indemnitee, be a defense
to such suit. In any suit brought by the indemnitee to enforce a
right to indemnification or to an advancement of expenses
hereunder, or by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or
to such advancement of expenses, under this Article TENTH or
otherwise shall be on the Corporation.
D. The rights to indemnification and to the advancement of
expenses conferred in this Article TENTH shall not be exclusive
of any other right which any person may have or hereafter acquire
under any statute, the Corporation's Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or
disinterested Directors or otherwise.
E. The Corporation may maintain insurance, at its expense,
to protect itself and any Director, Officer, employee or agent of
the Corporation or another corporation, partnership, joint
venture, trust or other enterprise against any expense, liability
or loss, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.
F. The Corporation may, to the extent authorized from time
to time by the Board of Directors, grant rights to
indemnification and to the advancement of expenses to any
employee or agent of the Corporation to the fullest extent of the
provisions of this Article TENTH with respect to the
indemnification and advancement of expenses of Directors and
Officers of the Corporation.
Item 21. Exhibits and Financial Statement Schedules
The exhibits and financial statements filed as part of this
Registration Statement are as follows:
(a) Exhibits
The Index of Exhibits immediately precedes the attached
Exhibits.
(b) Financial Statements
Not applicable.
(c) Report or Appraisal
Not applicable.
Item 22. Undertakings
(a) The undersigned registrant hereby undertakes:
<PAGE>
(1) to file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement; (i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933; (ii) to reflect in the
prospectus any facts or events arising after the effective date
of the registration statement (or most recent post effective
amendment thereof) which individually or in the aggregate,
represent a fundamental change in the information set forth in
the registration statement; (iii) to include any material
information with respect to the plan of distribution not
previously disclosed in the registration statement or any
material change to such information in the registration
statement.
(2) That, for purposes of determining any liability under
the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be a bona fide
offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b)(1) The undersigned registrant hereby undertakes as
follows: that prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a part
of this registration statement, by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c),
the issuer undertakes that such reoffering prospectus will
contain the information called for by the applicable registration
form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the
other items of the applicable form.
(2) The registrant undertakes that every prospectus (i)
that is filed pursuant to paragraph (1) immediately preceding, or
(ii) that purports to meet the requirements of section 10(a)(3)
of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used
until such amendment is effective, and for the purpose of
determining any liability under the Securities Act of 1933, each
such post-
effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes to supply
by means of a post-effective amendment all information concerning
a transaction, and the company being acquired involved therein,
that was not the subject of, and included in the registration
statement when it became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in Lawrenceville, New Jersey, on March 6, 1997.
PEOPLES BANCORP, INC.
By: /s/ Wendell T. Breithaupt
------------------------------
Wendell T. Breithaupt
President and Chief Executive
Officer
POWER OF ATTORNEY
We, the undersigned Directors of Peoples Bancorp, Inc.
severally constitute and appoint Wendell T. Breithaupt with full
power of substitution, our true and lawful attorney and agent, to
do any and all things and acts in our names in the capacities
indicated below which said Wendell T. Breithaupt may deem
necessary or advisable to enable Peoples Bancorp, Inc. to comply
with the Securities Act of 1933, and any rules, regulations and
requirements of the Securities and Exchange Commission, in
connection with the Registration Statement on Form S-4 relating
to the offering of Peoples Bancorp, Inc. Common Stock, including
specifically, but not limited to, power and authority to sign for
us or any of us in our names in the capacities indicated below
the Registration Statement and any and all amendments (including
post-effective amendments) thereto; and we hereby ratify and
confirm all that said Wendell T. Breithaupt shall do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
By: /s/ Wendell T. Breithaupt By: /s/ Robert Russo
--------------------------- -------------------------
Wendell T. Breithaupt, Robert Russo,
President and Chief Executive Vice President and
Office Treasurer
(Principal Executive Officer) (Chief Financial and
Accounting Officer)
Date: March 6, 1997 Date: March 6, 1997
By: /s/ John B. Sill, Jr. By: /s/ Peter S. Longstreth
-------------------------- -------------------------
John B. Sill, Jr., Chairman Peter S. Longstreth,
Director
Date: March 6, 1997 Date: March 6, 1997
By: /s/ George A. Pruitt By: /s/ George W. Reinhard
-------------------------- -------------------------
George A. Pruitt, Director George W. Reinhard,
Director
Date: March 6, 1997 Date: March 6, 1997
By: /s/ Charles E. Stokes By: /s/ Raymond E. Trainer
-------------------------- -------------------------
Charles E. Stokes Director Raymond E. Trainer,
Director
Date: March 6, 1997 Date: March 6, 1997
By: /s/ Miles W. Truesdell, Jr.
--------------------------
Miles W. Truesdell, Jr., Director
Date: March 6, 1997
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<S> <C>
2 Agreement and Plan of Reorganization
(Incorporated herein by reference to Exhibit
A of the Proxy Statement/Prospectus)
3.1 Certificate of Incorporation of Peoples
Bancorp, Inc. (Incorporated herein by
reference to Exhibit B of the Proxy
Statement/Prospectus)
3.2 Bylaws of Peoples Bancorp, Inc. (Incorporated
herein by reference to Exhibit C of the Proxy
Statement/Prospectus)
4 Form of Common Stock Certificate of Peoples
Bancorp, Inc.*
5.1 Form of Opinion of Luse Lehman Gorman
Pomerenk & Schick, A Professional Corporation
regarding legality of securities*
5.2 Form of Tax Opinion of Luse Lehman Gorman
Pomerenk & Schick, A Professional
Corporation*
10.1 Supplemental Executive Retirement Plan*
10.2 Employment Agreement between the Bank and
Wendell T. Breithaupt*
10.3 Trenton Savings Bank, FSB and Peoples
Bancorp, M.H.C. 1996 Stock Option Plan*
10.4 Trenton Savings Bank, FSB and Peoples
Bancorp, M.H.C. 1996 Recognition and
Retention Plan for Employees and Outside
Directors*
21 Subsidiaries of The Registrant*
24.1 Power of Attorney (Incorporated herein by
reference to the signature page of this
registration statement)
24.2 Consent of Luse Lehman Gorman Pomerenk &
Schick, A Professional Corporation (contained
in its opinion filed as Exhibit 5.1)*
99 Form of proxy to be mailed to shareholders of
Trenton Savings Bank, FSB
-----------------------------
* To be filed by amendment
</TABLE>
PAGE
<PAGE>
REVOCABLE PROXY
TRENTON SAVINGS BANK
ANNUAL MEETING OF STOCKHOLDERS
April 25, 1997
The undersigned hereby appoints the official proxy committee
consisting of the entire Board of Directors with full powers of
substitution to act as attorneys and proxies for the undersigned
to vote all shares of Common Stock of the Bank which the
undersigned is entitled to vote at the Annual Meeting of
Stockholders ("Meeting") to be held at the Trenton Country Club,
Sullivan Way, West Trenton, New Jersey, on April 25, 1997 at
10:00 a.m. New Jersey time. The official proxy committee is
authorized to cast all votes to which the undersigned is entitled
as follows:
<TABLE>
<CAPTION>
VOTE
FOR WITHHELD
<S> <C> <C> <C>
1. The election as director of the nominee listed
below.
John B. Sill, Jr. / / / /
FOR AGAINST ABSTAIN
2. The approval of an Agreement and Plan of / / / / / /
Reorganization (the "Plan of Reorganization")
providing for the establishment of Peoples
Bancorp, Inc. (the "Stock Holding Company") as
a stock holding company parent of the Bank which
stock holding company will be majority owned by
Peoples Bancorp, MHC (the "Mutual Holding Company"),
the Bank's mutual holding company. Pursuant to the
Plan of Reorganization: (i) the Bank will become
a wholly owned subsidiary of the Stock Holding
Company which will become a majority owned subsidiary
of the Mutual Holding Company, and (ii) each
outstanding share of common stock, par value $.10 per
share, of the Bank will be converted into one share
of common stock, par value $.10 per share, of the
Stock Holding Company.
FOR AGAINST ABSTAIN
3. The ratification of the appoint of KPMG Peat / / / / / /
Marwick, LLP as auditors for the fiscal year
ending December 31, 1997.
</TABLE>
The Board of Directors recommends a vote "FOR" each of the listed proposals.
- -----------------------------------------------------------------
THE SIGNED PROXY MUST BE RETURNED TO THE BANK FOR YOUR VOTE TO BE
COUNTED. THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF
THE PROPOSITIONS STATED ABOVE. IF ANY OTHER BUSINESS IS
PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THE
MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME, THE
BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT
THE MEETING.
- -----------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
<PAGE>
Should the undersigned be present and elect to vote at the
Meeting or at any adjournment thereof and after notification to
the Secretary of the Bank at the Meeting of the stockholder's
decision to terminate this proxy, then the power of said
attorneys and proxies shall be deemed terminated and of no
further force and effect. This proxy may also be revoked by
sending written notice to the Secretary of the Bank at the
address set forth on the Notice of Annual Meeting of
Stockholders, or by the filing of a later proxy prior to a vote
being taken on a particular proposal at the Meeting.
The undersigned acknowledges receipt from the Bank prior to the
execution of this proxy of notice of the Meeting, a proxy
statement dated March 14, 1997, and audited financial statements.
Dated: ------------, 1997 / / Check Box if You Plan to
Attend Annual Meeting
- ------------------------------ ------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ------------------------------ ------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears 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.
- -----------------------------------------------------------------
Please complete and date this proxy and return it promptly
in the enclosed postage-prepared envelope.
- -----------------------------------------------------------------
