Registration No. 33-23029
As filed with the Securities and Exchange Commission on
April 17, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1 TO THE 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)
Kenneth R. Lehman, Esq.
John J. Gorman, 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(3)
- ------------------------------------------------------------------------------
<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.
(3) A filing fee of $16,935 was paid with the initial filing of
the Registration Statement.
<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. local 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. local 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 2
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 9
Executive Compensation 10
Indebtedness of Management 12
PROPOSAL II APPROVAL OF AN AGREEMENT AND PLAN OF
REORGANIZATION 13
Reasons for and Risks of the Reorganization 13
Plan of Reorganization 15
Effective Date 16
Optional Exchange of Stock Certificates 16
Rights of Dissenting Stockholders 17
Tax Consequences 17
Consequences Under Federal Securities Laws 17
Conditions to the Reorganization 18
Amendment, Termination or Waiver 18
Business of the Bank 18
Business of the Stock Holding Company 18
Management of the Stock Holding Company 19
Comparison of Stockholder Rights and Certain Anti-Takeover
Provisions 20
Regulation of the Stock Holding Company 21
Description of Capital Stock of the Stock Holding Company 22
Holding Company Common Stock 22
Preferred Stock 23
Accounting Treatment 23
Vote Required 23
Recommendation 23
PROPOSAL III RATIFICATION OF APPOINTMENT OF AUDITORS 23
STOCKHOLDER PROPOSALS 24
OTHER MATTERS 24
MISCELLANEOUS 24
APPENDIX A - AGREEMENT AND PLAN OF REORGANIZATION
</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 28, 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/Prospectus 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(1) 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 Exchange Act, a
person is deemed to be the beneficial owner for purposes of
this table, of any shares of Bank 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 Agreement and 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 Peoples Bancorp, Inc. (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 "Proposal II-
Approval of the Plan of Reorganization-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.
As of December 31, 1996, the Mutual Holding Company had
waived the right to receive all dividends that had 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
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, 1995, such as the Mutual
Holding Company, the aggregate amount of dividends
<PAGE>
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 Mutual Holding Company, and the
denominator of which is equal to the Bank's stockholders' equity.
The two-tier reorganization is not expected to have an effect on
the manner in which the Mutual Holding Company's dividend waiver
affects a Conversion Transaction. See "Proposal II-Approval of
the Agreement and Plan of Reorganization."
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. 75 Chairman 1977 1997 16,864 *
DIRECTORS CONTINUING IN OFFICE
Wendell T. Breithaupt 63 Director, 1979 1998 47,093 *
President and
Chief Executive
Office
Peter S. Longstreth 52 Director 1992 1998 30,257 *
George A. Pruitt 50 Director 1991 1999 7,747 *
George W. Reinhard 65 Director 1983 1999 116,124 1.3
Charles E. Stokes, III 67 Director 1978 1998 13,364 *
Raymond E. Trainer 49 Director 1986 1999 41,364 *
Miles W. Truesdell, Jr. 54 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 48 Executive Vice N/A N/A 448 *
President
Richard L. Gallaudet 53 Vice President N/A N/A 11,131 *
and Senior
Lending Officer
Dean H. Lippincott 44 Vice President N/A N/A 14,402 *
Robert Russo 42 Vice President N/A N/A 6,760 *
and Treasurer
Robert C. Hollenbeck 52 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.
<PAGE>
Currently, the Bank's Board of Directors consists of nine
members. Harry W. Van Sciver, a current director, has announced
his plans to retire 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.
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.
<PAGE>
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, 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 Federal Deposit
Insurance Corporation (the "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.
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,
<PAGE>
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.
Compensation Committee Interlocks and Insider Participation
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 Securities and Exchange
Commission ("SEC") rules regarding transactions with an
affiliate.
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 forth in "-
Cash Compensation." In addition, the Board of Directors approved
increases in the aggregate salary paid to the Bank's executive
officers.
<PAGE>
Performance Graph
The following graph compares 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>
8/3/95 12/95 12/96
<S> <C> <C> <C>
Trenton Savings Bank 100 131 165
Nasdaq Bank 100 118 156
Nasdaq Stock Market-US 100 108 133
</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
$900 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.
<PAGE>
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>
<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>
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 $427,040 $ 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. Breithaupt -- -- 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
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 reorganization into the two-tier mutual holding company
structure (the "Reorganization") will be accomplished under the
Agreement and Plan of Reorganization (the "Plan of
Reorganization"), which was unanimously adopted by the Board of
Directors on October 9, 1996. Pursuant to the Plan of
Reorganization, the Bank will become a wholly owned subsidiary of
Peoples Bancorp, Inc. (the "Stock Holding Company"), a newly
formed stock corporation which will be majority owned by the
Mutual Holding Company. In the Reorganization, each outstanding
share of Bank Common Stock will be converted into one share of
common stock of the Stock Holding Company, par value $.10 per
share ("Holding Company Common Stock"), and the holders of Bank
Common Stock will become the holders of all of the outstanding
shares of Holding Company Common Stock. Accordingly, as a result
of the Reorganization, the Bank's Minority Stockholders, will
become minority stockholders of the Stock Holding Company. The
Stock Holding Company was incorporated solely for the purpose of
becoming a savings and loan holding company and has no prior
operating history. The Reorganization will have no impact on the
operations of the Bank and the Mutual Holding Company. 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 stock holding company subsidiaries of mutual
holding companies ("mid-tier stock holding companies") may 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
<PAGE>
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. 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 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 and the outcome of such rule-making and the ultimate
OTS policy regarding two-tier mutual holding companies is
uncertain. 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.
On March 21, 1997, the OTS approved the Reorganization,
subject to the following conditions: prior to consummation of
the Reorganization, the Stock Holding Company must obtain a
federal charter from the OTS and submit bylaws acceptable to the
OTS; the Stock Holding Company is 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 Stock Holding Company is
subject to the same restrictions (including, but not limited to,
the activities limitations) to which the Mutual Holding Company
is subject under federal law and OTS regulations; the Stock
Holding Company must hold all of the issued and outstanding
common stock of the Bank, and the Bank may not issue any other
class of equity security; the Stock Holding Company and the Bank
must obtain approval from the OTS prior to issuing any
securities; the Stock Holding Company must comply with OTS
procedures applicable to federal stock associations regarding any
proposed amendments to its charter and bylaws; the 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 an Exhibit 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 corporation
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 Bank is entitled
to revise the manner of effecting the Reorganization, provided
that such revision shall not subject any of the Bank's
stockholders to adverse tax consequences.
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>
The following diagram sets forth the Bank's proposed two-
tier 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 Charter and
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 Holding Company Common Stock.
Former holders of Bank Common Stock will not be required to
exchange their Bank Common Stock certificates for Holding Company
Common Stock certificates, but will have the option to do so. DO
NOT SEND YOUR STOCK CERTIFICATES TO THE BANK
<PAGE>
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.
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 Holding Company 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 Reorganization will constitute a tax-free
transaction under the Internal Revenue Code of 1986, as amended
("Code"); (ii) no gain or loss will be recognized by Bank
stockholders on the exchange of Bank Common Stock for the Holding
Company 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 Holding Company Common Stock; (iv)
the basis of the Holding Company 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 Holding Company 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
Holding Company 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.
<PAGE>
The issuance of the Holding Company Common Stock in
connection with the Reorganization will be registered under the
Securities Act.
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 all
required regulatory approvals, and (iii) receipt of an opinion of
counsel that the Reorganization will be treated as a non-taxable
transaction for federal income tax purposes.
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 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.
<PAGE>
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 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 Stock Holding Company will have a classified board of
directors.
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. The OTS has indicated
that as a matter of policy the Stock Holding Company will be
subject to the same regulations described above, to which the
Bank is subject. The Bank currently has insurance coverage for
its directors and officers, and
<PAGE>
the Bank's management anticipates that the Stock Holding Company
will be able to obtain such coverage for its directors and
officers.
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 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.
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 the
Charter and Bylaws of the Bank, will become stockholders of the
Stock Holding Company, whose rights will be governed by the
Charter and Bylaws of the Stock Holding Company. Management
believes that the Stock Holding Company will generally be subject
to the same corporate governance regulations as those to which
the Bank is subject.
A number of provisions of the Charter and Bylaws of the Bank
and the Stock Holding Company 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 transfer may
make it difficult for stockholders to influence the Stock Holding
Company or the Bank or replace all of incumbent management. The
following discussion is a general summary and comparison of
certain provisions of the Charter and Bylaws of the Bank and the
Stock Holding Company that are not identical, and certain other
statutory and regulatory provisions some of which might be deemed
to have potential anti-takeover effects.
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.
<PAGE>
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.
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."
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
contains a similar provision that is not limited to a five year
period. This provision will make it more difficult for
stockholders to call for a special meeting of stockholders.
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.
Management believes that the OTS may require that the Stock
Holding Company provide similar dissenters' appraisal rights,
although the Stock Holding Company will not provide such rights
if the OTS does not require it to do so.
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 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
<PAGE>
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 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 30,000,000
shares of common stock having a par value of $.10 per share and
10,000,000 shares of serial preferred stock (the "Preferred
Stock"). The Stock Holding Company currently will issue a number
of shares Holding Company 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 Holding Company Common
Stock will have the same relative rights as, and will be
identical in all respects with, each other share of Holding
Company 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 payment of dividends by the Stock Holding
Company is subject to limitations which are imposed by law and
applicable regulation. The holders of Holding Company Common
Stock 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 Holding
Company Common Stock with respect to dividends.
Voting Rights. The holders of Holding Company 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 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.
<PAGE>
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 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 Holding Company 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 Holding Company Common Stock in
the event of liquidation or dissolution.
Preemptive Rights. Holders of the Holding Company Common
Stock will not be entitled to preemptive rights with respect to
any shares which may be issued. The Holding Company Common Stock
is not subject to redemption.
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
Holding Company 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 attached as Exhibit A to
this Proxy Statement/Prospectus.
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
<PAGE>
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.
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 Holding Company 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
AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
EXHIBIT A
TRENTON SAVINGS BANK FSB
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, dated October 9,
1996, is by and among TRENTON SAVINGS BANK FSB, a Federal stock
savings bank (the "Bank"); PEOPLES BANCORP, INC., a federal
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. Notwithstanding any other provision
herein, at any time prior to the Effective Date, the Bank shall
be entitled to revise the structure of the merger or the other
transactions contemplated hereby or the manner of effecting such
transactions; provided, that each of the transactions comprising
such revised structure or manner shall not, as a result of such
revision, subject any of the stockholders of the Bank to adverse
tax consequences. This Agreement and any related documents shall
be appropriately amended in order to reflect any such revised
structure.
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, chooses 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.
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
<PAGE>
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 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.
<PAGE>
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.
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.
<PAGE>
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.
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>
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 appointment 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.
- -----------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers. The
Registrant's successor will be a federal corporation. Federal
Regulations clearly define areas for indemnity coverage, as
follows:
(a) Any person against whom any action is brought by reason
of the fact that such person is or was a director or officer of
the Registrant shall be indemnified by the Registrant for:
(i) Reasonable costs and expenses, including
reasonable attorney's fees, actually paid or incurred by such
person in connection with proceedings related to the defense or
settlement of such action;
(ii) Any amount for which such person becomes liable by
reason of any judgment in such action;
(iii) Reasonable costs and expenses, including
reasonable attorney's fees, actually paid or incurred in any
action to enforce his rights under this section if the person
attains a final judgment in favor of such person in such
enforcement action.
(b) Indemnification provided for in subparagraph (a) shall
be made to such officer or director only if the requirements of
this subparagraph are met:
(i) The Registrant shall make the indemnification
provided by subparagraph (a) in connection with any such action
which results in a final judgment on the merits in favor of such
officer or director.
(ii) The Registrant shall make the indemnification
provided by subparagraph (a) in case of settlement of such
action, final judgment against such director or officer or final
judgment in favor of such director or officer other than on the
merits except in relation to matters as to which he shall be
adjudged to be liable for negligence or misconduct in the
performance of his duty, only if a majority of the directors of
the Registrant determines that such a director or officer was
acting in good faith within what he was reasonably entitled to
believe under the circumstances was the scope of his employment
and authority and for a purpose which he was reasonably entitled
to believe under the circumstances was in the best interest of
the Registrant or its stockholders.
(c) As used in Section (a) and (b):
(i) "Action" means any action, suit or other judicial
or administrative proceeding, or threatened proceedings, whether
civil, criminal, or otherwise, including any appeal or other
proceeding for review;
(ii) "Court" includes, without limitation, any court to
which or in which appeal or any proceeding for review is brought;
(iii) "Final Judgment" means a judgment, decree, or
order which is appealable and as to which the period for appeal
has expired and no appeal has been taken;
<PAGE>
(iv) "Settlement" includes the entry of a judgment by
consent or by confession or upon a plea of guilty or nolo
contendere.
The Registrant maintains a directors' and officers'
liability policy with Fidelity and Deposit Company of Maryland.
Such policy provides for an aggregate liability coverage of $ 10
million.
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:
(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.
<PAGE>
(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 April 10, 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, Vice
President and Chief Executive President and Treasurer
Officer (Principal Executive (Chief Financial and
Officer) Accounting Officer)
Date: April 15, 1997 Date: April 15, 1997
By: /s/ John B. Sill, Jr. By: /s/ Peter S. Longstreth
------------------------- -------------------------
John B. Sill, Jr., Chairman Peter S. Longstreth,
Director
Date: April 15, 1997 Date: April 15, 1997
By: /s/ George A. Pruitt By: /s/ George W. Reinhard
------------------------- -------------------------
George A. Pruitt, Director George W. Reinhard,
Director
Date: April 15, 1997 Date: April 15, 1997
By: /s/ Charles E. Stokes By: /s/ Raymond E. Trainer
------------------------- -------------------------
Charles E. Stokes, Director Raymond E. Trainer,
Director
Date: April 15, 1997 Date: April 15, 1997
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
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.*
3.2 Bylaws of Peoples Bancorp, Inc.*
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 Amended Employment Agreement between the Bank
and Wendell T. Breithaupt
10.2 Supplemental Executive Retirement Plan
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
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)
- ---------------------------
*To be filed by post-effective amendment
</TABLE>
<PAGE>
Chartered Under the Laws of the United States of America
No. PEOPLES BANCORP, INC. Shares
Lawrenceville, New Jersey
Fully Paid and Non-Assessable
Par Value $.10 Each
The shares represented by this
certificate are subject to
restrictions, See reverse side
THIS CERTIFIES that is the owner of
SHARES OF COMMON STOCK OF
PEOPLES BANCORP, INC.
a Federal corporation
The shares evidenced by this certificate are transferable
only on the books of Peoples Bancorp, Inc. by the holder hereof,
in person or by attorney, upon surrender of this certificate
properly endorsed. The capital stock evidenced hereby is not an
account of an insurable type and is not insured by the Federal
Deposit Insurance Corporation or any other Federal or state
governmental agency.
IN WITNESS WHEREOF, Peoples Bancorp, Inc. has caused this
certificate to be executed, by the facsimile signatures of its
duly authorized officers and has caused its a facsimile of its
seal to be hereunto affixed.
By: ------------------ SEAL By: ------------------
Secretary President
The Board of Directors of Peoples Bancorp, Inc. (The
"Company") is authorized by resolution or resolutions, from time
to time adopted, to provide for the issuance of serial preferred
stock in series and to fix and state the voting powers,
designations, preferences, limitations and restrictions thereof.
The Company will furnish to any shareholder upon request and
without charge a full description of each class of stock and any
series thereof.
The shares represented by this Certificate may not be
cumulatively voted on any matter.
The shares of common stock evidenced by this certificate are
subject to a limitation contained in the Federal Stock Charter of
the Company to the effect that, for a period of five years from
the August 3, 1995 reorganization from mutual to stock form of
Trenton Savings Bank FSB, no person other than Peoples Bancorp,
MHC, the parent mutual holding company of the Company, shall
directly or indirectly offer to acquire or acquire the beneficial
ownership of any class of any equity security of the Company.
This limitation shall not apply to (i) any offer with a view
toward public resale made exclusively to the Company or
underwriters or a selling group acting on its behalf, or (ii) the
purchase of shares by a tax-qualified employee stock benefit plan
or arrangement of the Company or a subsidiary of the Company and
any trustee of such a plan or arrangement. In the event shares
are acquired in violation of this provision, all shares
beneficially owned by any person in excess of 10% shall be
considered "excess shares" and shall not be counted as shares
entitled to vote and shall not be voted by any person or counted
as voting shares in connection with any matters submitted to
stockholders for a vote.
Special meetings of the Company's stockholders relating to a
change in control of the Company or to an amendment of the
Charter of the Company may be called only by the Company's board
of directors. Special meetings of the stockholders for any other
purpose or purposes shall be called upon the written request of
the holders of not less than 10% of all the outstanding capital
stock of the Company entitled to vote at the meeting.
The following abbreviations when used in the inscription on
the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or
regulations.
TEN COM - as tenants in common UNIF GIFT MIN ACT - --------Custodian--------
(Cust) (Minor)
TEN ENT - as tenants by the entireties
Under Uniform Gifts to Minors Act
JT TEN - as joint tenants with right
of survivorship and not as ---------------------------------
tenants in common (State)
Additional abbreviations may also be used though not in the above list
For value received, ---------------------- hereby sell, assign and transfer unto
- ----------------------------
| |
- ----------------------------
PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER
- -----------------------------------------------------------------
(please print or typewrite name and address including
postal zip code of assignee)
- -----------------------------------------------------------------
- ---------------------------------------- Shares of the Common
Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint ----------------------------
Attorney to transfer the said shares on the books of the within
named corporation with full power of substitution in the
premises.
Dated, -----------------------------
In the presence of Signature:
- ------------------------------ ------------------------------
NOTE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME OF THE STOCKHOLDER(S) AS WRITTEN UPON THE FACE OF THE
CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT, OR ANY CHANGE WHATEVER.
<PAGE>
(202) 274-2009
April --, 1997
Board of Directors
Peoples Bancorp, Inc.
134 Franklin Corner Road
Lawrenceville, New Jersey 08648-0950
Re: Peoples Bancorp, Inc.
Registration Statement on Form S-4
Gentlemen:
We have served as special counsel for Peoples Bancorp, Inc.,
a federal corporation, in connection with the registration under
the Securities Act of 1933, of 3,553,650 shares of Common Stock,
par value $0.10 per share of which 3,242,000 shares will be
issued immediately and 311,650 shares underly options.
Based upon the foregoing and having regard for such legal
considerations as we have deemed relevant, it is our opinion
that:
(1) the shares of Common Stock have been duly authorized;
(2) upon issuance, sale and delivery of the shares as
contemplated in the Registration Statement, the shares
will be legally issued, fully paid and non-assessable.
We hereby consent to the reference to our firm under the
heading "Proposed Formation of Stock Holding Company-Legal
Opinion" in the Prospectus and Proxy Statement in the
Registration Statement (and all amendments thereto) and to the
filing of this opinion as Exhibit 5.1 thereto.
Very truly yours,
----------------------------------------
LUSE LEHMAN GORMAN POMERENK & SCHICK
A Professional Corporation
<PAGE>
FORM OF
FEDERAL TAX OPINION
(202) 274-2000
- -------------------, 1997
Board of Directors
Trenton Savings Bank FSB
134 Franklin Corner Road
Lawrenceville, New Jersey 08648-0950
Re: Federal Income Tax Opinion Relating to the Exchange of
the Common Stock of Trenton Savings Bank FSB, for All
the Common Stock of a Newly Created Savings and Loan
Holding Company under Internal Revenue Code Sections
368(a)(1)(A) and 368(a)(2)(E) 1/
Gentlemen:
We are rendering this opinion to you in our capacity as
special counsel to Trenton Savings Bank FSB (the "Bank") in
connection with its proposed reorganization into a two-tier
holding company structure (the "Reorganization") by creating
Peoples Bancorp, a federal corporation (the "Stock Holding
Company") which will be the stock holding company of the Bank and
will be the majority owned subsidiary of Peoples Bancorp, MHC
(the "Mutual Holding Company").
For purposes of this opinion, we have examined such
documents and questions of law as we have considered necessary or
appropriate, including, but not limited to the Agreement and Plan
of Reorganization adopted by the Bank's Boards of Directors on
October 9, 1996 (the "Plan of Reorganization"); the Application
H-(e)1 ("Application") together with exhibits filed by the Stock
Holding Company with the Office of Thrift Supervision ("OTS") on
November 22, 1996, in connection with the Reorganization; the
Charter and Bylaws of the Mutual Holding Company; the Charter and
Bylaws of the Bank; the Certificate of Incorporation and Bylaws
of the Stock Holding Company; the Affidavit of Representations
dated --------------, 1997, provided to us by the Bank in
connection with this opinion (the "Affidavit"). In such
examination, we have assumed, and have not independently
verified, the genuineness of all signatures on original documents
where due execution and delivery are requirements to the
effectiveness thereof. Terms used but not defined herein,
whether capitalized or not, shall have the same meaning as
defined in the Plan.
- -------------------
1/ All Section references herein are to the Internal Revenue Code
of 1986, as amended (the "Code").
<PAGE>
Board of Directors
Trenton Savings Bank FSB
- ----------------, 1997
Page 2
The proposed transaction is described in the section of this
letter entitled "STATEMENT OF FACTS," and the tax consequences of
the proposed transaction will be as set forth in the section of
the letter entitled "OPINION."
STATEMENT OF FACTS
The Bank is a Federally chartered stock savings bank. On
August 3, 1995, the Bank reorganized from a mutual savings bank
to become the majority-owned stock subsidiary of the Mutual
Holding Company, a federally-chartered mutual holding company.
On October 9, 1996, the Board of Directors of the Bank
adopted the Plan of Reorganization, pursuant to which the Bank
will reorganize to form a two-tier holding company structure with
the Bank becoming the wholly-owned subsidiary of the Stock
Holding Company, which will be a majority owned subsidiary of the
Mutual Holding Company. Under the terms of the proposed
reorganization, each outstanding share of Bank Common Stock, par
value $.10 per share, will be converted into one share of common
stock of the Stock Holding Company, par value $.10 per share
("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 "Reorganization"). The Stock Holding
Company was incorporated in -----------, solely for the purpose
of becoming a savings and loan holding company and has no prior
operating history.
The Reorganization will be structured as follows:
(i) The Bank will organize the Stock Holding Company
which will issue to the Bank 1,000 shares of Common Stock,
consisting of all the issued and outstanding stock of the Stock
Holding Company for $100.00 per share. The Stock Holding Company
will thereby become a wholly-owned subsidiary of the Bank. The
Stock Holding Company will form TSB Interim Savings Bank, FSB
("Interim"), an interim federal stock savings bank, as a wholly-
owned subsidiary of the Stock Holding Company solely to
facilitate the Reorganization.
(ii) Pursuant to the Plan of Reorganization and in
accordance with applicable federal law, Interim will be merged
with and into the Bank, with the Bank as the surviving entity. As
a result, the Bank will acquire all of the assets and assume all
of the liabilities of Interim. Upon completion of the merger, the
separate corporate existence of Interim will cease.
<PAGE>
Board of Directors
Trenton Savings Bank FSB
- ----------------, 1997
Page 3
(iii) As part of the merger, each share of the Bank
Common Stock held immediately prior to the effective date of the
merger by stockholders of the Bank shall automatically be
converted by operation of law into one share of Common Stock of
the Holding Company.
(iv) Upon the effective date of the merger, all of the
previously issued and outstanding shares of common stock of
Holding Company owned by the Bank will be cancelled. All 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 Bank Common Stock,
which will be all of the issued and outstanding stock of the
Bank.
All unexercised stock options to acquire the Bank Common
Stock existing prior to the merger shall upon the consummation of
the merger be and become stock options to acquire shares of
Common Stock of the Stock Holding Company. Further, the stock
option plan of the Bank shall become the stock option plan of the
Stock Holding Company. Lastly, any stock option agreement of the
Bank shall become the stock option agreement of the Stock Holding
Company.
As a result of the proposed transaction, all stockholders of
the Bank will become the stockholders of Stock Holding Company,
and the Bank will become a wholly-owned subsidiary of Stock
Holding Company. After the Reorganization is consummated, the
Bank and Interim will constitute a single corporation and the
separate existence of Interim will cease by operation of law. All
assets and liabilities of Interim will be transferred to and
assumed by the Bank as of the date of the Reorganization. The
Bank will continue to operate as a savings bank and retain its
present name and Federal charter. Directors of the Bank will
continue as Directors of the Bank after the Reorganization is
consummated.
Consummation of the Reorganization requires that the Plan of
Reorganization receive the approval of at least a majority of the
issued and outstanding shares of Bank Common Stock and the
approval of the OTS upon appropriate application for approval.
* * * *
You have provided the following representations concerning
this transaction:
(a) The fair market value of Stock Holding Company Common
Stock to be received by each Bank shareholder will be
approximately equal to the fair market value of the Bank Common
Stock surrendered in the exchange.
<PAGE>
Board of Directors
Trenton Savings Bank FSB
- ----------------, 1997
Page 4
(b) The management of the Bank has no knowledge of any plan
or intention on the part of its shareholders who own 5% or more
of Bank Common Stock, and to the best of the knowledge of
management of the Bank, there is no plan or intention on the part
of the remaining shareholders of the Bank to sell, exchange, or
otherwise dispose of a number of shares of Stock Holding Company
Stock received in the Reorganization that would reduce the Bank
shareholders' ownership of Stock Holding Company Common Stock to
a number of shares having a value, as of the date of the
Reorganization, of less than 50% of the value of all of the
formerly outstanding Bank Common Stock as of the same date. For
purposes of this representation, shares of Bank Common Stock
exchanged for cash or other property or exchanged for cash in
lieu of fractional shares of Stock Holding Company Common Stock
will be treated as outstanding Bank Common Stock on the date of
the transaction. Moreover, shares of Bank Common Stock and shares
of Stock Holding Company Common Stock held by Bank shareholders
and otherwise sold, redeemed, or disposed of prior or subsequent
to the transaction as part of the Agreement will be considered in
making this representation.
(c) Following the Reorganization, the Bank will hold at
least 90% of the fair market value of its net assets and at least
70% of the fair market value of its gross assets and at least 90%
of the fair market value of Interim's net assets and at least 70
percent of the fair market value of Interim's gross assets held
immediately prior to the Reorganization. For purposes of this
representation, amounts paid by the Bank or Interim to
shareholders who receive cash or other property, amounts used by
the Bank or Interim to pay reorganization expenses, and all
redemptions and distributions (except for regular, normal
dividends) made by the Bank will be included as assets of the
Bank or Interim, respectively, immediately prior to the
Reorganization.
(d) Prior to the transaction, Stock Holding Company will be
in control of Interim within the meaning of Section 368(c).
(e) As of the date of the execution of the Agreement, the
Bank has no plan or intention to issue additional shares of its
stock that would result in Stock Holding Company losing control
of the Bank within the meaning of Section 368(c).
(f) As of the date of the Agreement, Stock Holding Company
has no plan or intention to reacquire any of its stock issued in
the transaction.
<PAGE>
Board of Directors
Trenton Savings Bank FSB
- ----------------, 1997
Page 5
(g) Stock Holding Company has no plan or intention to
liquidate the Bank; to merge the Bank with or into another
corporation; to sell or otherwise dispose of the stock of the
Bank except for transfers of stock to corporations controlled by
Stock Holding Company; or to cause the Bank to sell or otherwise
dispose of any of its assets or of any of the assets acquired
from Interim, except for dispositions made in the ordinary course
of business or transfers of assets to a corporation controlled by
the Bank.
(h) The liabilities of Interim, if any, assumed by the Bank
and the liabilities to which the transferred assets of Interim
are subject were incurred by Interim in the ordinary course of
its business.
(i) Following the transaction, the Bank will continue its
historic business or use a significant portion of its historic
business assets in a business.
(j) Stock Holding Company, Interim, the Bank, and the
shareholders of the Bank will pay their respective expenses, if
any, incurred in connection with the Reorganization. The Bank
will pay or assume only those expenses of Interim, if any, that
are solely and directly related to the transaction in accordance
with the guidelines established in Rev. Rul. 73-54, 1973-1 C.B.
187.
(k) There is no intercorporate indebtedness existing
between Stock Holding Company and the Bank or between Interim and
the Bank that was issued, acquired, or will be settled at a
discount.
(l) In the Reorganization, shares of Bank stock
representing control of the Bank, as defined in Section 368(c),
will be exchanged solely for voting stock of Stock Holding
Company. For purposes of this representation, shares of Bank
stock exchanged for cash or other property originating with Stock
Holding Company will be treated as outstanding Bank Common Stock
on the date of the Reorganization.
(m) At the time of the Reorganization, the Bank will not
have outstanding any warrants, options, convertible securities or
any other type of right pursuant to which any person could
acquire stock in the Bank that, if exercised or converted, would
affect Stock Holding Company's acquisition or retention of
control of the Bank, as defined in Section 368(c).
(n) Stock Holding Company does not own, nor has it owned
during the past five years, any shares of the stock of the Bank,
nor will Stock Holding Company acquire any such stock prior to
the proposed transaction.
<PAGE>
Board of Directors
Trenton Savings Bank FSB
- ----------------, 1997
Page 6
(o) No two parties to the transaction are investment
companies as defined in Section 368(a)(2)(F)(iii) and (iv).
(p) On the date of the Reorganization, the fair market
value of the assets of the Bank on a going concern basis will
exceed the sum of its liabilities, plus the amount of
liabilities, if any, to which the assets are subject.
(q) The Bank is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section
368(a)(3)(A).
(r) None of the compensation received by any of the
shareholder-employees of the Bank will be separate consideration
for, or allocable to, any of their shares of Bank Common Stock;
none of the shares of Stock Holding Company Common Stock received
by any shareholder-employees will be separate consideration for,
or allocable to, any employment agreement; and the compensation
paid to any shareholder-employees will be for services actually
rendered and will be commensurate with amounts paid to third
parties bargaining at arm's-length for similar services.
OPINION
Based solely upon the terms of the proposed transaction
described herein and the representations set forth, it is our
opinion that the following federal income tax consequences will
result from the Reorganization.
(1) Provided that the merger of Interim with and into the
Bank qualifies as a statutory merger under applicable law, and
after the Reorganization the Bank will hold substantially all of
the assets of Interim, and in the Reorganization, Bank
shareholders exchange solely for voting Stock Holding Company
Common Stock an amount of Bank Common Stock constituting
"control" of the Bank within the meaning of Section 368(c), the
Reorganization will constitute a reorganization within the
meaning of Section 368(a)(1)(A). 2/ The Reorganization will not
be disqualified by reason of the fact that Common Stock of Stock
Holding Company is used in the
- ---------------------
2/ For purposes of this opinion, "substantially all" means at
least 90 percent of the fair market value of the net assets and
at least 70 percent of the fair market value of the gross assets
of the Bank and Interim.
<PAGE>
Board of Directors
Trenton Savings Bank FSB
- ----------------, 1997
Page 7
transaction (Section 368(a)(2)(E)). The Bank, Stock Holding
Company and Interim will each be a party to the Reorganization
within the meaning of Section 368(b).
(2) Interim will not recognize any gain or loss on the
transfer of its assets to the Bank in exchange for Bank Common
Stock and the assumption by the Bank of the liabilities, if any,
of Interim (Sections 361(a) and 357(a)).
(3) The Bank will not recognize any gain or loss on the
receipt of the assets of Interim in exchange for Bank Common
Stock (Section 1032(a)).
(4) The Bank's basis in the assets received from Interim in
the exchange will, in each case, be the same as the basis of such
assets in the hands of Interim immediately prior to the
Reorganization (Section 362(b)).
(5) Stock Holding Company will not recognize any gain or
loss upon its receipt of Bank Common Stock solely in exchange for
Interim stock (Section 354(a)).
(6) The Bank's holding period for the assets received from
Interim in the exchange will, in each instance, include the
period during which such assets were held by Interim (Section
1223(2)).
(7) Bank shareholders will not recognize any gain or loss
upon their exchange of Bank Common Stock solely for shares of
Stock Holding Company Common Stock (Section 354(a)).
(8) A Bank shareholder's basis in his or her Stock Holding
Company Common Stock received in the exchange will be the same as
the basis of the Bank Common Stock surrendered in the exchange
therefor (Section 358(a)).
(9) A Bank shareholder's holding period in his or her Stock
Holding Company Common Stock received in the exchange will
include the period during which the Bank Common Stock surrendered
was held, provided that the Bank Common Stock surrendered is a
capital asset in the hands of the Bank shareholder on the date of
the exchange (Section 1223(1)).
(10) Bank shareholders will not recognize any gain or loss
as a result of the conversion of their Bank stock options into
options to purchase stock of the Stock Holding Company (Treasury
Regulation Section 1.83-8(b)(6)).
<PAGE>
Board of Directors
Trenton Savings Bank FSB
- ----------------, 1997
Page 8
SCOPE OF OPINION
Our opinion is limited to the federal income tax matters
described above and does not address any other federal income tax
considerations or any federal, state, local, foreign or other tax
considerations. If any of the information upon which we have
relied is incorrect, or if changes in the relevant facts occur
after the date hereof, our opinion could be affected thereby.
Moreover, our opinion is based on the case law, Code, Treasury
Regulations thereunder and Internal Revenue Service rulings as
they now exist. These authorities are all subject to change, and
such change may be made with retroactive effect. We can give no
assurance that, after such change, our opinion would not be
different. We undertake no responsibility to update or
supplement our opinion. This opinion is not binding on the
Internal Revenue Service and there can be no assurance, and none
is hereby given, that the Internal Revenue Service will not take
a position contrary to one or more of the positions reflected in
the foregoing opinion, or that our opinion will be upheld by the
courts if challenged by the Internal Revenue Service.
CONSENT
We hereby consent to the references to us under the heading
"Approval of the Plan of Reorganization - Tax Consequences" in
the Proxy Statement/Prospectus constituting a part of the
Registration Statement on Form S-4 filed on behalf of the Holding
Company with the Securities and Exchange Commission.
USE OF OPINION
This opinion is rendered solely for the benefit of Trenton
Savings Bank FSB, in connection with the proposed transaction and
is not to be relied upon or used for any other purpose without
our prior written consent.
Very truly yours,
LUSE LEHMAN GORMAN POMERENK & SCHICK
A Professional Corporation
By: -----------------------------------
Beverly J. White
<PAGE>
TO: FILE
FROM: COMPENSATION COMM. TSB
DATE: August 24, 1994
RE: 1994 Compensation Structure--CEO
This memo of understanding has been authorized by the Board of
Directors of Trenton Savings Bank at a regular meeting held on
August 24, 1994. The purpose of the memo is to record the
compensation program for the current CEO of the Bank and to
insure the long term execution of the program.
Qualifications: As a prerequisite of this package, the CEO must
continue to serve in his present capacity thru December 31, 1999.
He must do so in the same professional manner and with the same
technical capability as has been consistent with past
performance. With this having been stated, the board
acknowledges that there may be an alteration of duties during
this period that would be necessitated by the planned transition
to his successor, a possible reorganization of the Bank or an
acquisition or merger with another financial institution. In any
of these cases or other possible changes, the intent of this memo
is that the CEO's compensation does not negatively differ from
what is now directed.
a. The base salary of the CEO for 1994 is $170,000. This
base may be adjusted over time to reflect changes in the cost of
living or for other reasons to be determined by the Compensation
Committee of the Board of Directors.
b. There will be a bonus program, effective for 1994, that
establishes both operational and strategic goals that will focus
the CEO in the performance of his job. The specific annual
performance review will be done by the Compensation Committee no
later than ninety days following the conclusion of the Bank's
fiscal year, and will result in an award of either part or all of
the allowable bonus pool. At this point in time, the pool is to
be $50,000 to be divided 60% towards the strategic goals and 40%
towards the operational goals. 1994 goals are as follows:
STRATEGIC:
-- The selection and training of a successor,
-- the writing of a Strategic Plan that includes a
comprehensive operating credo,
-- the completion of the transition on Corporate structure
as may be appropriate,
-- the proper pursuit of merger opportunities at an
appropriate pace.
OPERATIONAL:
To include the continuance or improvement of historical
performance measurements relative to other comparable
institutions and adjusted for circumstances outside of the CEO's
direct control:
-- ratio of operating expenses to assets,
-- ROA,
-- growth in assets,
-- maintenance of minimum loan losses,
-- selection and training of quality personnel and
-- organizing and planning to bring the Bank to "state of
the art" in automation.
<PAGE>
These goals are not being tied to specific numbers but rather
will be valued by the subjective evaluation of the Compensation
Committee. It is being done in this manner because the Board
recognizes that these goals are more process oriented and are
subject to various conditions that, if not considered, would lead
to incorrect or unfair conclusions.
c. There will be an additional payment to the CEO for each
of the next five years. The payment is meant as an addition to
his current retirement resources. It is the intent of these
payment that they are sufficient, in addition to his other
resources, to provide an adequate flow of funds for him upon
retirement on 12/31/99. It is expressly understood that the
conditions of these payments include retirement at, or before,
12/31/99. It is also a condition of these payments that it is
expressly understood that the By-Laws of the Bank will be amended
to remove the vested right of a retired President to remain on
the Board for life. The Board agreed to amend those By-Laws at
its meeting held on August 24, 1994. It is expected, but not
guaranteed, that the CEO will serve as a Director until the
December following his seventieth birthday after which time he
may be elected as a Director on an annual basis based on the
wishes of the Board.
It is also the intent of this arrangement that the Bank does not
maintain the risk of investment of these payments. The CEO will
earn each payment ($70,000) upon the successful completion of
each calendar year starting in 1994. The payment by the Bank for
each year will be prior to Jan. 30 of the year following the year
of qualified completion. The CEO will have the choice of form
that the payment takes but it must qualify as an operating
expense deduction for each of the five years it is earned and it
must be tax deductible, in total no later than the year 2000.
If the CEO ceases to be able to perform his duties during the
contemplated term of this arrangement, he or his estate will be
entitled to a pro rated share of the annual ($70,000) payment for
the then current year. This paragraph assumes that the reasons
for interruption of duties would be health related and not due to
unacceptable performance.
This memo is meant to adequately memorialize the change in
compensation for the Bank's current CEO and will not, nor should
it be interrupted to, set a precedent or be applied to any other
current or future employee of the Bank. It should also be
understood that in the case of the Bank being acquired by another
entity, this compensation arrangement should form the minimum
compensation for the CEO thru retirement. It may be altered by
the new entity but not, so that the total present value will be
less than what is contemplated herein.
/s/ Peter Longstreth
------------------------------
Peter Longstreth
The Compensation Committee
/s/ John B. Sill, Jr. /s/ Wendell T. Breithaupt
- ------------------------------ ------------------------------
John B. Sill, Jr. Wendell T. Breithaupt
/s/ Raymond E. Trainer
- ------------------------------
Raymond E. Trainer
<PAGE>
Amendment to the Compensation Committee/Wendell T. Breithaupt
agreement of August 24, 1994.
Section c. paragraphs 2 and 3
It is also the intent of this agreement that the Bank does not
maintain the risk of the investment of these payments. The CEO
will receive $70,000 annually at the rate of $5,833.33 per month.
These payments must qualify as an operating expense deduction for
each of the five years and it must be tax deductible, in total,
no later than the year 2000.
If the CEO is unable to perform his duties during the
contemplated term of this agreement, he or his estate will be
entitled to the balance of the $350,000. This paragraph assumes
that the reason for interruption of duties would be health
related and not due to unacceptable performance.
Compensation Committee:
/s/ Peter S. Longstreth /s/ Wendell T. Breithaupt
- ------------------------------ ------------------------------
Peter S. Longstreth Wendell T. Breithaupt
/s/ George A. Pruitt
- ------------------------------
George A. Pruitt
/s/ Raymond E. Trainer
- ------------------------------
Raymond E. Trainer
/s/ John B. Sill, Jr.
- ------------------------------
John B. Sill, Jr.
March 19, 1997
<PAGE>
TRENTON SAVINGS BANK
SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN
<PAGE>
TABLE OF CONTENTS
<TABLE>
Article Page
<S> <C>
I. Introduction and Purpose 1
II. Definitions 1
III. Eligibility 2
IV. Amount of Benefit 2
V. Payment of Benefits 4
VI. General 5
VII. Exhibit A 7
</TABLE>
<PAGE>
ARTICLE I: INTRODUCTION AND PURPOSE
1.1 Purpose. This program, which is unfunded, is
established by Trenton Savings Bank as of January 1, 1993,
primarily for the purpose of providing supplemental retirement
benefits for a select group of senior management employees and
members of the Board of Directors.
ARTICLE II: DEFINITIONS
2.1 Definitions
(a) "Alternative Mode" means any of the forms of
benefit payment available under Article V.
(b) "Bank" means Trenton Savings Bank and its
subsidiaries and successors.
(c) "Code" means the Internal Revenue Code of
1986, as amended.
(d) "Compensation" means, for any Participant,
his Total Compensation received annually from the Bank.
(e) "Internal Rate of Return for the Bank" means
the average investment return of Bank funds on deposit during the
fiscal year.
(f) "Participant" means any senior management
employee of Trenton Savings Bank who is designated by the Board
of Directors of the Bank and attached hereto as Exhibit A, and
any member of the Board of Directors who elects participation.
(g) "Plan" means this Trenton Savings Bank
Supplemental Executive Retirement Plan.
(h) "Plan Administrator" means the individual or
committee appointed by the Bank to administer this Plan.
(i) "Plan Year" shall be the period from January
1st to December 31st.
(j) "Total and Permanent Disability" shall mean a
disability by reason of which the Participant is totally and
permanently disabled, as determined by the Plan Administrator.
(k) "Trust" shall mean the Trenton Savings Bank
Supplemental Executive Retirement Plan Trust, which is
established for the purpose of investing contributions made to
the credit of Participants' Accounts under this Plan.
(l) "Years of Service" shall include all complete
years of employment with the Bank, commencing from the
Participant's initial date of employment.
<PAGE>
ARTICLE III: ELIGIBILITY TO PARTICIPANT
Employees who have completed one (1) Year of Service (as
defined in 2.1(l)) with the Bank and who have been selected to
participate by the Board of Directors of the Bank. Members of
the Board of Directors may also elect to participate.
ARTICLE IV: AMOUNT OF BENEFIT
4.1 Benefit at Retirement or Disability
(a) Each Participant who retires from the Bank on
or after attaining normal retirement age of 65 or upon attaining
early retirement age which shall be the later of age 55 and 15
Years of Service or upon Total and Permanent Disability, shall be
eligible to receive a benefit under this Article IV, payable at
the time and in the form set forth in Article V, equal to the
Participant's accumulated Account Balances at the time of
retirement or disability.
(1) Employees' Accounts. Accounts shall be
established for each eligible Participant. Participant
Contributions shall be credited to a Participant Contribution
Account established for the Participant, and Bank Contributions
shall be credited to a Bank Contribution Account established for
the Participant. All Accounts shall be kept in dollars.
(2) Investment of Accounts. Accounts may be
invested in an investment portfolio through a Trust established
for such purpose and managed by the Plan Administrator, or may be
booked as a liability of the Bank. The investment return, either
from the Trust portfolio or the Internal Rate of Return of the
Bank, as applicable and as determined by the Plan Administrator
shall be credited to Participants' Accounts on a
nondiscriminatory basis. The Plan Administrator may establish
reasonable administrative rules to control the expense of
maintaining accounts and the Bank shall pay all costs associated
with the Plan.
(3) Valuation of Accounts. As of the last
day of each Plan Year, or at such more frequent intervals as may
be directed by the Plan Administrator, any increase or decrease
in the fair market value of the Trust investments since the last
adjustment under this Section and all income of the Trust or
booked liabilities of the Bank during that period shall be
credited or deducted from the account of Participants according
to the appropriate investment of each participant's accounts, if
such accounts are segregated, at the discretion of the Plan
Administrator.
(4) Effect of Distributions. If a
distribution is made, the Participant's appropriate Account or
Accounts shall be reduced by the amount of the distribution.
(5) Participant Contributions. Participants
may elect to make contributions to the credit of their
Participant Contribution Accounts through individual salary-
reduction or deferred compensation agreements with the Bank.
<PAGE>
(6) Bank Contributions. For each Plan Year,
effective January 1, 1991, the Bank shall contribute to the Bank
Contribution Account of each eligible Participant an amount equal
to the accumulated shortfall of the 401(k) plan, plus interest
thereon. The 401(k) shortfall, which is due to legislated
limitations on allowable contributions in the Bank's Thrift Plan,
shall be determined each year as follows:
MAXIMUM BANK MATCHING CONTRIBUTION UNDER THE THRIFT
PLAN less ALLOWED BANK MATCHING CONTRIBUTION IN THE
THRIFT PLAN
PLUS
33% (i.e., tax savings loss) times THE DIFFERENCE OF THE
FOLLOWING EMPLOYEE CONTRIBUTION GOALS AND
THE ALLOWABLE EMPLOYEE CONTRIBUTIONS:
<TABLE>
<S> <C>
W. BREITHAUPT 7%
J. MERZ 8%
R. GALLAUDET 6%
D. LIPPINCOTT 6%
All Others (when applicable) 6%
</TABLE>
Members of the Board of Directors are not eligible for any Bank
Contributions.
(b) Except as provided in Section 4.2, a
Participant who terminates employment with the Bank shall be 100%
vested and eligible to receive a benefit under this Plan upon the
completion of five (5) Years of Service.
Participant Accounts shall be 100% vested at
all times. Bank Contribution Accounts shall be vested as
described in 4.1(b).
(c) In accordance with the pertinent provisions
of the Trust, upon a Change of Control, as defined in the Trust,
all Accounts under this Plan shall immediately become 100% vested
and immediately payable to the Participants without reference to
age or retirement as soon as practicable, but in no event more
than 90 days after the Change in Control.
4.2 Benefit at Death
(a) The beneficiary of a Participant who dies
while actively employed by the Bank, shall be entitled to receive
a death benefit payable at the time and in the form set forth in
Article V. The amount of this death benefit shall be equal to
the amount of the Participant's accumulated Account Balances at
the time of death.
<PAGE>
(b) The beneficiary of a Participant who dies
after he has begun to receive benefits under this Plan shall
receive any payments remaining under the form of payment elected
by the Participant.
(c) Subject to applicable law, each Participant
shall have the right to file with the Plan Administrator a
written designation of one or more persons as the beneficiary who
shall be entitled to receive any amount payable under the Plan
upon his death. A Participant may, from time to time, revoke or
change such beneficiary designation without the consent of any
prior beneficiary by filing a new designation with the Plan
Administrator. The last such designation received by the Plan
Administrator shall be controlling; provided, however, that no
designation, or change or revocation thereof, shall be effective
unless received by the Plan Administrator prior to the
Participant's death, and in no event shall it be effective as of
a date prior to such receipt.
Notwithstanding anything in this Section 4.2
to the contrary, if no such beneficiary designation is in effect
at the time of a Participant's death, or if no designated
beneficiary survives the Participant, or if such designation
conflicts with applicable law, the amount, if any, payable under
the Plan upon his death shall be made to the Participant's
estate. If the Plan Administrator is in doubt as to the right of
any person to receive any amount, the Plan Administrator may
retain such amount, which shall continue to accrue interest,
until the rights thereto are determined, or the Plan
Administrator may pay such amount into any court of appropriate
jurisdiction, and such payment shall be a complete discharge of
the liability of the Plan, the Bank and the Plan Administrator
therefor.
ARTICLE V: PAYMENT OF BENEFITS
5.1 Time of Payment
A Payment of a Participant's Bank and
Participation Account benefits under this Plan shall begin on the
later of: (1) the first day of the month following the earlier of
the Participant's normal retirement on or after age 65, early
retirement on or after age 55 and 15 Years of Service, his Total
and Permanent Disability, Retirement or death; or (2) pursuant to
the schedule established by the Participant's or beneficiary's
election of an Alternative Mode of payment pursuant to Section
5.2, as applied to the pertinent payment-precipitating event.
5.2 Methods of Benefit Payment. A Participant's
benefit shall be paid in the form of a single lump sum
distribution, however, a Participant or beneficiary may elect to
receive benefits payable hereunder in any of the Alternative
Modes available to such Participant, as noted below.
Account Balances may be utilized to provide
actuarially equivalent benefits in the following forms:
(a) Single Life Annuity
<PAGE>
(b) Single Life Annuity for Period Certain.
Under a single life annuity for a period certain, payments begin
on the date provided in Article IV and continue until the first
day of the month in which the Participant's death occurs. If the
Participant dies before he has received 60, 120, or 180 payments,
according to whether the Participant has elected a period certain
of 5, 10 or 15 years, respectively, then beginning on the first
day of the month following the month in which the Participant's
death occurs and continuing until the balance of the period
certain payments have been made, payments in an amount equal to
the amount payable to the Participant shall be made to the
Participant's beneficiary. If the Participant's beneficiary dies
before the Participant, following the Participant's death the
Actuarial Equivalent of any balance of payments for the period
certain shall be paid in a single sum to the Participant's
estate.
(c) Joint and Survivor Annuity. Under a joint
and survivor annuity, payments begin on the date provided in
Article IV and continue until the first day of the month in which
the Participant's death occurs. On the first day of the
following month, payments equal to 50%, 66-2/3%, 75% or 100%,
whichever the Participant elects, of the payments made to the
Participant begin to the individual designated by the Participant
as his beneficiary. Such payments to the beneficiary shall end
with the payment on the first day of the month in which the
beneficiary's death occurs.
5.3 Events of Divestiture. Anything herein to the
contrary notwithstanding, if a Participant's employment is
terminated for cause, all Bank Account benefits otherwise payable
hereunder shall be forfeited. All Participant Accounts shall not
be forfeited and shall be distributed upon employee's
termination. For this purpose, termination for cause shall mean
termination of employment by reason of his/her dishonesty,
conviction of a felony, gross neglect of duties, fraud, willful
misconduct or conflict of interest, any of which has resulted or
is likely to result, in substantial and material damage to the
Bank. If, subsequent to termination of employment for other
reasons and prior to the payment of all benefits hereunder, it is
discovered that a Participant engaged in acts of conduct which,
had they been discovered, would have resulted in his/her
termination of employment for cause, his/her employment will be
deemed, for purposes of this plan, to have been terminated for
cause, and all unpaid benefits hereunder shall be forfeited.
ARTICLE VI: GENERAL
6.1 Source of Funds. This plan shall be unfunded and
payment of benefits hereunder shall be made from the general
assets of the Bank. Any such asset which may be set aside,
earmarked or identified as being intended for the provision of
benefits hereunder shall remain assets of the Bank and shall be a
general creditor of the Bank to the extent of the value of
his/her benefit accrued hereunder, but he/she shall have no
right, title or interest in any specific asset that the Bank may
set aside or designate as intended to be applied to the payment
of benefits under this program.
6.2 Amendment and Termination. The Bank reserves the
right to amend this program at any time and from time to time in
any fashion, and to terminate it at will. However, to the extent
that the Bank has the assets with which to pay such benefits, the
Bank guarantees to the Participant
<PAGE>
(and to persons becoming entitled to benefits under this program
by reason of the death of the Participant) the payment of
benefits contemplated hereunder, subject to the terms and
conditions set forth herein.
6.3 Nonalienation of Benefits. None of the benefits
or rights of a Participant or any beneficiary of a Participant
shall be subject to the claim of any creditor, and in particular,
to the fullest extent permitted by law, all such benefits and
rights shall be free from attachment, garnishment or any other
legal or equitable process available to any creditor of the
Participant or his/her beneficiary. Neither the Participant or
his/her beneficiary shall have the right to alienate, anticipate,
commute, pledge, encumber, or assign any of the benefit or
payments which he/she may expect to receive, contingently or
otherwise, under this Plan, except the right to designate a
beneficiary to receive death benefits provided hereunder.
6.4 Applicable Law. This Plan shall supersede any and
all prior plans of similar intent or purpose maintained by the
Bank and shall be construed under the laws of the State of New
Jersey, except to the extent such laws are inconsistent with
Federal law which shall otherwise prevail, if applicable.
IN WITNESS WHEREOF, and as evidence of the adoption of the
foregoing amendment of the program, Trenton Savings Bank has
caused the same to be executed by its duly authorized officers
and its corporate seal to be affixed this 23rd day of November,
1993.
ATTEST:
/s/ Joseph G. Merz By: /s/ Wendell T. Breithaupt
- ---------------------- --------------------------
Secretary President
[SEAL]
<PAGE>
TRENTON SAVINGS BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Exhibit A
W. Breithaupt
R. Gallaudet
D. Lippincott
J. Merz
<PAGE>
TRENTON SAVINGS BANK FSB
and PEOPLES BANCORP, MHC
1996 STOCK OPTION PLAN
1. Purpose
The purpose of the Trenton Savings Bank FSB and Peoples
Bancorp, MHC 1996 Stock Option Plan (the "Plan") is to advance
the interests of Trenton Savings Bank FSB (the "Bank") and its
shareholders by providing Employees and Outside Directors of the
Bank and its affiliates, including Peoples Bancorp, MHC, the
mutual holding company of the Bank (the "Company"), upon whose
judgment, initiative and efforts the successful conduct of the
business of the Bank and its affiliates largely depends, with an
additional incentive to perform in a superior manner as well as
to attract people of experience and ability.
2. Definitions
"Affiliate" means any "parent corporation" or "subsidiary
corporation" of the Bank or the Company, as such terms are
defined in Section 424(e) or 424(f), respectively, of the
Internal Revenue Code of 1986, as amended.
"Award" means an award of Nonstatutory Stock Options,
Incentive Stock Options, and/or Limited Rights granted under the
provisions of the Plan.
"Bank" means Trenton Savings Bank FSB
"Beneficiary" means the person or persons designated by a
Recipient to receive any benefits payable under the Plan in the
event of such Recipient's death. Such person or persons shall be
designated in writing on forms provided for this purpose by the
Committee and may be changed from time to time by similar written
notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Recipient's surviving
spouse, if any, or if none, his estate.
"Board" means the Board of Directors of the Bank or the
Company, as applicable.
"Cause" shall mean personal dishonesty, willful misconduct,
any breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, or the willful
violation of any law, rule or regulation (other than traffic
violations or similar offenses) or a final cease-and-desist
order, any of which results in a material loss to the Bank or an
Affiliate.
"Change in Control" means:
(1)(i) a reorganization, merger, merger conversion,
consolidation or sale of all or substantially all of the assets
of the Bank or the Company or a similar transaction in which the
Bank or Company is not the resulting entity or the Stock Holding
Company is not the resulting entity; (ii) individuals who
constitute the board of directors of the Bank or the board of
trustees of the Company as of the date hereof (the "Incumbent
Board"), cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent
to the date hereof whose election was approved by a vote of at
least three-fourths of the directors composing the Incumbent
Board or whose nomination for election by the Bank's or Company's
stockholders or members was approved by the nominating committee
serving under an Incumbent Board shall be for purposes of this
section considered as though he were a member of the Incumbent
Board; or (iii) an acquisition of "control" of the Bank or the
Company as defined by the
<PAGE>
Bank Holding Company Act of 1956, as amended, and applicable
rules and regulations promulgated thereunder as in effect at the
time of the Change in Control (collectively, the "BHCA"), or (iv)
an acquisition of the Bank's stock requiring submission of notice
under the Change in Bank Control Act;
(2) In the event of a Conversion Transaction at any time
subsequent to the effective date of this Plan, a "Change in
Control" shall mean, a change in control of the Bank or the Stock
Holding Company of a nature that: (i) would be required to be
reported in response to Item 1(a) of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"); or (ii) results in a change in control of the Bank or the
Stock Holding Company within the meaning of the BHCA; or (iii)
without limitation, such a Change in Control shall be deemed to
have occurred at such time as (a) any "person" (as such term is
used in Section 13(d) and 14(d) of the Exchange Act) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the
Bank or the Stock Holding Company representing 25% or more of the
Bank's or Stock Holding Company's outstanding securities
ordinarily having the right to vote at the election of directors,
except for any securities of the Bank issued to the Stock Holding
Company in connection with the Reorganization and Stock Offering
pursuant to the Bank's Plan of Reorganization and Stock Issuance
and securities purchased by the Bank's or the Stock Holding
Company's employee stock benefit plans; or (b) the Incumbent
Board ceases for any reason to constitute at least a majority of
the board of directors of the Bank or Stock Holding Company; or
(c) a reorganization, merger, consolidation, sale of all or
substantially all of the assets of the Bank or the Stock Holding
Company or similar transaction.
(3) Notwithstanding the foregoing, the formation of a stock
holding company subsidiary of the Company which acquires 100% of
the Bank's voting common stock, shall not be a Change in Control.
(4) Notwithstanding anything to the contrary, the
conversion of the Company to stock form on a stand-alone basis,
shall not be a Change in Control.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Stock Benefits Committee of the Board
of Directors appointed by the Bank consisting of at least three
Outside Directors of the Bank or the Company, and all of whom are
and must be Disinterested Persons.
"Common Stock" means the common stock of the Bank, par value
$0.10 per share.
"Company" means Peoples Bancorp, MHC.
"Continuous Service" means employment as an Employee or
service as an Outside Director without any interruption or
termination of such employment or service. In the case of an
Employee, employment shall not be considered interrupted in the
case of sick leave, military leave or any other leave of absence
approved by the Bank or in the case of transfers between payroll
locations of the Bank or between the Bank, its parent, its
subsidiaries or its successor.
"Conversion Transaction" means (i) the conversion of the
Company from the mutual to stock form of organization either on a
stand-alone basis or in the context of a merger conversion, as
contemplated by regulations of the Office of Thrift Supervision
("OTS") or any successor thereof, or (ii) the formation of a
stock holding company subsidiary of the Company which shall own
100% of the Bank's voting Common Stock.
"Date of Grant" means the actual date on which an Award is
granted by the Committee.
"Director" means a member of the Board of Directors of the
Bank or the Company.
<PAGE>
"Disability" means a physical or mental condition of a
Participant resulting from bodily injury, disease, or mental
disorder which renders him incapable of continuing any gainful
occupation and which condition constitutes total disability under
the federal Social Security Acts.
"Disinterested Person" - means any member of the Board who
(A) is an outside director as defined under Section 162(m) of the
Code and the regulations thereunder and (B) a person who within
the prior year has not been, and is not being, granted any awards
related to the shares under this Plan or any other plan of the
Company or any of its Affiliates except for awards which (i) are
calculated in accordance with a formula as contemplated in
paragraph (c)(2)(ii) of Rule 16b-3 ("Rule 16b-3") under the
Securities Exchange Act of 1934; (ii) result from participation
in an ongoing securities acquisition plan meeting the conditions
of paragraph (d)(2) of Rule 16b-3; or (iii) arise from an
election by a director to receive all or part of his board fees
in securities.
"Effective Date" shall be the date the Plan is ratified by
the Board of Directors following the approval of stockholders.
"Employee" means any person who is currently employed by the
Bank, the Company or an Affiliate, including officers.
"Fair Market Value" means, when used in connection with the
Common Stock on a certain date, the reported closing price of the
Common Stock as reported by the National Association of
Securities Dealers Automated Quotation ("Nasdaq") National Market
(as published by the Wall Street Journal, if published) on the
day prior to such date, or if the Common Stock was not traded on
such date, on the next preceding day on which the Common Stock
was traded thereon; provided, however, that if the Common Stock
is not reported on the Nasdaq National Market, Fair Market Value
shall mean the average sale price of all shares of Common Stock
sold during the 30-day period immediately preceding the date on
which such stock option was granted, and if no shares of stock
have been sold within such 30-day period, the average sale price
of the last three sales of Common Stock sold during the 90-day
period immediately preceding the date on which such stock option
was granted. In the event Fair Market Value cannot be determined
in the manner described above, then Fair Market Value shall be
determined by the Committee. The Committee shall be authorized
to obtain an independent appraisal to determine the Fair Market
Value of the Common Stock.
"Incentive Stock Option" means an Option granted by the
Committee to a Participant, which Option is designated as an
Incentive Stock Option pursuant to Section 8.
"Incumbent Board" means, in the case of (i) the Company or
the Stock Holding Company, or (ii) the Bank, the Board of
Directors of the Company or the Bank, respectively, on the date
hereof, provided that any person becoming a director subsequent
to the date hereof whose election was approved by a vote of at
least three-quarters of the directors comprising the Incumbent
Board, or whose nomination for election by members or
stockholders was approved by the same nominating committee
serving under an Incumbent Board, shall be considered as though
he were a member of the Incumbent Board.
"Limited Right" means the right to receive an amount of cash
or Common Stock based upon the terms set forth in Section 9.
"Nonstatutory Stock Option" means an Option granted to (i)
an Outside Director or (ii) to any other Participant and such
option is either (A) not designated as an Incentive Stock Option,
or (B) fails to satisfy the requirements of an Incentive Stock
Option as set forth in Section 422 of the Code and the
regulations thereunder.
"Normal Retirement" means retirement from employment as an
Employee or service as an Outside Director, on or after the
attainment of age 65. With respect to an Outside Director,
Normal Retirement also means retirement after completion of 15
years of service on the Board.
<PAGE>
"Offering" means the initial public offering of the Common
Stock of the Bank.
"Option" means Award granted under Section 7 or Section 8.
"Outside Director" means a Director who is not also an
employee.
"Participant" means (i) an Outside Director or (ii) an
Employee chosen by the Committee to participate in the Plan.
"Plan" means the Trenton Savings Bank FSB and Peoples
Bancorp, MHC 1996 Stock Option Plan.
"Reorganization" means the reorganization of Trenton Savings
Bank FSB as a mutual holding company and the establishment of the
Bank as its wholly-owned subsidiary.
"Stock Holding Company" means the stock holding company
resulting from (i) a stock conversion of the Company in a
Conversion Transaction or (ii) the reorganization and formation
of a stock holding company subsidiary of the Company which owns
100% of the Bank's voting common stock.
3. Administration
The Plan shall be administered by the Committee. The
Committee is authorized, subject to the provisions of the Plan,
to establish such rules and regulations as it deems necessary for
the proper administration of the Plan and to make whatever
determinations and interpretations in connection with the Plan it
deems necessary or advisable. All determinations and
interpretations made by the Committee shall be binding and
conclusive on all Participants in the Plan and on their legal
representatives and beneficiaries.
The awards of Nonstatutory Options to Outside Directors
under Section 7 of the Plan are intended to comply with Rule 16b-
3 under the Securities Exchange Act of 1934. Notwithstanding any
term to the contrary appearing herein, unless permitted by Rule
16b-3(c)(2)(ii), neither the Committee nor the Board shall have
the authority to determine the amount and price of securities to
be awarded and/or timing of awards under Section 7 of the Plan to
Outside Directors, which terms shall be set forth herein. To the
extent any provision of the Plan or action by Plan administrators
fails to comply with this Section 3, such provision or action
shall, to the extent permitted by law and deemed advisable by the
Board, be null and void.
4. Types of Awards
Awards under the Plan may be granted in any combination of
(a) Nonstatutory Stock Options as defined in Section 7;
(b) Incentive Stock Options as defined in Section 8; and (c)
Limited Rights as defined in Section 9.
5. Stock Subject to the Plan
Subject to adjustment as provided in Section 14, the maximum
number of shares reserved for issuance under the Plan is 311,650
shares.
The shares of Common Stock represented by such options may
be either authorized but unissued shares or shares previously
issued and reacquired by the Bank or the Company. To the extent
that options together with any related rights granted under the
Plan terminate, expire or are cancelled without having been
exercised or, in the case of Limited Rights exercised for cash,
new Awards may be made with respect to these shares.
<PAGE>
6. Eligibility
Officers and other employees of the Bank or the Company or
its affiliates shall be eligible to receive Incentive Stock
Options, Nonstatutory Stock Options and/or Limited Rights under
the Plan. Directors who are not employees or officers of the
Bank or the Company or its affiliates shall not be eligible to
receive Incentive Stock Options under the Plan. Outside
Directors shall be eligible to receive Nonstatutory Stock Options
and Limited Rights.
7. Nonstatutory Stock Options
7.1 Grant of Nonstatutory Stock Options
(a) Grants to Outside Directors. The following Outside
Directors serving on the Board of the Bank or the Company on the
Effective Date shall be issued an Award equal to the following
number of Options:
<TABLE>
Outside Director Award
<S> <C>
John B. Sill, Jr. 12,000
Charles E. Stokes, III 12,000
George W. Reinhard 12,000
Raymond E. Trainer 12,000
George A. Pruitt 12,000
Peter S. Longstreth 12,000
Miles W. Truesdell, Jr. 12,000
</TABLE>
Each person who becomes an Outside Director subsequent to
the Effective Date of the Stock Option Plan, shall be granted
Nonstatutory Stock Options to purchase 100 shares of the Common
Stock, subject to adjustment pursuant to Section 14, to the
extent shares remain available for Outside Directors under this
Stock Option Plan. Nonstatutory Stock Options granted under this
Plan are subject to the terms and conditions set forth in this
Section 7.
(b) Grants to Employees. The Committee may, from time to
time, grant Nonstatutory Stock Options to eligible Employees and,
upon such terms and conditions as the Committee may determine,
grant Nonstatutory Stock Options in exchange for and upon
surrender of previously granted Awards under the Plan.
Nonstatutory Stock Options granted under this Plan are subject to
the terms and conditions set forth in this Section 7.
(c) Option Agreement. Each Option shall be evidenced by a
written option agreement between the Bank and the employee
specifying the number of shares of Common Stock that may be
acquired through its exercise and containing such other terms and
conditions that are not inconsistent with the terms of this
grant. The maximum number of shares subject to a Nonstatutory
Option that may be awarded under the Plan to any Employee shall
be 150,000.
(d) Price. The purchase price per share of Common Stock
deliverable to an Outside Director upon the exercise of each
Nonstatutory Stock Option shall be 100% of the Fair Market Value
of the Bank's Common Stock on the date the Option is granted.
The purchase price per share of Common Stock deliverable to an
Employee upon the exercise of each Nonstatutory Stock Option
shall be determined by the Committee on the date the Nonstatutory
Stock Option is granted. Shares may be purchased only upon full
payment of the purchase price. Payment of the purchase price may
be made, in whole or in part, through the surrender of previously
acquired shares of the Common Stock of the Bank at the Fair
Market Value of such shares at the date of exercise of the
Nonstatutory Stock Option.
(e) Manner of Exercise. Nonstatutory Stock Options granted
under the Stock Option Plan shall vest in an Outside Director who
maintains Continuous Service at the rate of twenty percent (20%)
of the aggregate number of options covered by the Award per year
commencing one year from the date of grant. The Nonstatutory
Stock
<PAGE>
Options awarded to Employees shall be exercisable in
installments, as determined by the Committee. The Committee
shall determine the date on which each installment shall become
exercisable. The shares comprising each installment may be
purchased in whole or in part at any time after such installment
becomes exercisable. The Committee, in its sole discretion, may
accelerate the time at which any Nonstatutory Stock Option
awarded to Employees may be exercised in whole or in part. The
vested Option may be exercised from time to time, in whole or in
part, by delivering a written notice of exercise to the President
or Chief Executive Officer of the Bank. Such notice is
irrevocable and must be accompanied by full payment of the
purchase price in cash or shares of previously acquired Common
Stock of the Bank at the Fair Market Value of such shares
determined on the exercise date by the manner described in
Section 2 hereof.
(f) Terms of Options. Nonstatutory Stock Options may be
exercised by an Outside Director no later than 10 years and one
day from the Date of Grant. The term during which each
Nonstatutory Stock Option may be exercised by an Employee shall
be determined by the Committee, but in no event shall a
Nonstatutory Stock Option be exercisable in whole or in part more
than 10 years and one day from the Date of Grant.
(g) Termination of Employment or Service. Upon the
termination of an Employee's employment or upon termination of an
Outside Director's service for any reason other than Disability,
death, Change in Control, Normal Retirement or termination for
Cause, the Employee's or Outside Director's Nonstatutory Stock
Options shall be exercisable only as to those shares that were
immediately purchasable by the Employee or Outside Directors at
the date of termination; provided, however, that such
Nonstatutory Stock Options shall be and remain exercisable for
nine years following such termination and, provided, further,
that with respect to Nonstatutory Stock Options for Employees,
the Committee, in its sole discretion, can determine whether
nonvested Nonstatutory Stock Options shall become exercisable
upon termination of employment and the period over which such
Nonstatutory Stock Options shall be exercisable. In the event of
termination for Cause, all rights under his Nonstatutory Stock
Options shall expire upon termination. In the event of
termination of employment or service due to the death, Disability
or Normal Retirement of any Employee or Outside Director, all
Nonstatutory Stock Options held by such Employee or Outside
Director, whether or not vested at such time, shall be or become
exercisable by such person or his or her legal representatives or
beneficiaries for nine years following the date of his or her
cessation of employment or service, as applicable.
Notwithstanding the above, all Nonstatutory Stock Options held by
a Participant whose employment as an Employee or service as an
Outside Director terminates following a Change in Control of the
Bank or the Company shall be exercisable for nine years following
such termination of employment or service. In no event shall the
period for exercise extend beyond the expiration of the
Nonstatutory Stock Option term.
(h) Change in Control. Notwithstanding anything herein to
the contrary, in the event of a Change in Control of the Bank or
the Company, all Nonstatutory Stock Options shall become
immediately exercisable.
8. Incentive Stock Options
8.1 Grant of Incentive Stock Options
The Committee, from time to time, may grant Incentive Stock
Options to eligible Employees. Incentive Stock Options granted
pursuant to the Plan shall be subject to the following terms and
conditions:
(a) Option Agreement. Each Option shall be evidenced by a
written option agreement between the Bank and the Employee
specifying the number of shares of Common Stock that may be
acquired through its exercise and containing such other terms and
conditions that are not inconsistent with the terms of this
grant.
(b) Price. The purchase price per share of Common Stock
deliverable upon the exercise of each Incentive Stock Option
shall be not less than 100% of the Fair Market Value of the
Bank's Common Stock on the date the Incentive Stock Option is
granted. However, if an Employee owns stock possessing more
than 10% of the total combined voting power of all classes of
Common Stock of the Bank (or under Section 424(d) of the Code, is
deemed
<PAGE>
to own stock representing more than 10% of the total combined
voting power of all classes of stock of the Bank or its
Affiliates by reason of the ownership of such classes of common
stock directly or indirectly, by or for any brother, sister,
spouse, ancestor or lineal descendant of such Employee or by or
for any corporation, partnership, estate or trust of which such
employee is a shareholder, partner or beneficiary), the purchase
price per share of Common Stock deliverable upon the exercise of
each Incentive Stock Option shall not be less than 110% of the
Fair Market Value of the Bank's Common Stock on the date the
Incentive Stock Option is granted. Shares may be purchased only
upon payment of the full purchase price. Payment of the purchase
price may be made, in whole or in part, through the surrender of
shares of the Common Stock of the Bank. If previously acquired
shares of common stock are tendered in payment of all or part of
the exercise price, the value of such shares shall be determined
as of the date of exercise of the Incentive Stock Option.
(c) Manner of Exercise. Incentive Stock Options granted
under the Stock Option Plan shall vest in the manner determined
by the Committee. The vested Options may be exercised from time
to time, in whole or in part, by delivering a written notice of
exercise to the President or Chief Executive Officer of the Bank,
provided, however, that no Options shall be exercisable prior to
approval of the Plan by stockholders. Such notice is irrevocable
and must be accompanied by full payment of the purchase price in
cash or shares of previously acquired Common Stock of the Bank.
If previously acquired shares of Common Stock are tendered in
payment of all or part of the exercise price, the Fair Market
Value of such shares shall be determined as of the date of such
exercise of the Incentive Stock Option.
(d) Amount of Options. Incentive Stock Options may be
granted to any eligible Employee in such amounts as determined by
the Committee; provided that the amount granted is consistent
with the terms of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"). Notwithstanding the above, the
maximum number of shares that may be subject to an Incentive
Stock Option awarded under the Plan to any Employee shall be
100,000. In granting Incentive Stock Options, the Committee
shall consider the position and responsibilities of the eligible
Employee, the length and value of his or her service to the Bank,
the compensation paid to the Employee and the Committee's
evaluation of the performance of the Bank according to
measurements that include, among others, key financial ratios,
levels of classified assets, and independent audit findings. In
the case of an option intended to qualify as an Incentive Stock
Option, the aggregate Fair Market Value (determined as of the
time the option is granted) of the Common Stock with respect to
which Incentive Stock Options granted are exercisable for the
first time by the Participant during any calendar year (under all
plans of the Participant's employer corporation and its parent
and subsidiary corporations) shall not exceed $100,000. The
provisions of this Section 8.1(d) shall be construed and applied
in accordance with Section 422(d) of the Code and the
regulations, if any, promulgated thereunder.
(e) Term of Options. The term during which each Incentive
Stock Option may be exercised shall be determined by the
Committee, but in no event shall an Incentive Stock Option be
exercisable in whole or in part more than 10 years from the Date
of Grant. If any Employee, at the time an Incentive Stock Option
is granted to him, owns Common Stock representing more than 10%
of the total combined voting power of the Bank or its Affiliates
(or, under Section 424(d) of the Code, is deemed to own Common
Stock representing more than 10% of the total combined voting
power of all such classes of Common Stock, by reason of the
ownership of such classes of Common Stock, directly or
indirectly, by or for any brother, sister, spouse, ancestor or
lineal descendent of such Employee, or by or for any corporation,
partnership, estate or trust of which such employee is a
shareholder, partner or beneficiary), the Incentive Stock Option
granted to him or her shall not be exercisable after the
expiration of five years from the Date of Grant. No Incentive
Stock Option granted under this Plan is transferable except by
will or the laws of descent and distribution and is exercisable
during his lifetime only by the Employee to which it is granted.
The Committee shall determine the date on which each
Incentive Stock Option shall become exercisable and may provide
that an Incentive Stock Option shall become exercisable in
installments. The shares comprising each installment may be
purchased in whole or in part at any time after such installment
becomes purchasable, provided that the amount able to be first
exercised in a given year is consistent with the terms of Section
422 of the Code. To the extent required by Section 422 of the
Code, the aggregate fair market value (determined at the time the
Option is granted) of the Common Stock for which Incentive Stock
Options are exercisable for the first time by a Participant
<PAGE>
during any calendar year (under all plans of the Bank and its
Affiliates) shall not exceed $100,000. The Committee, in its
sole discretion, may accelerate the time at which any Incentive
Stock Option may be exercised in whole or in part; provided that
it is consistent with the terms of Section 422 of the Code.
Notwithstanding the above, in the event of a Change in Control of
the Bank or Company, all Incentive Stock Options shall become
immediately exercisable unless the fair market value of the
amount exercisable as a result of a Change in Control shall
exceed $100,000 (determined as of the date of grant). In such
event, the first $100,000 of Incentive Stock Options (determined
as of the date of grant) shall be exercisable as Incentive Stock
Options and any excess shall be exercisable as Nonstatutory Stock
Options
(f) Termination of Employment. Upon the termination of an
Employee's employment for any reason other than Disability,
Change in Control, death, Normal Retirement or termination for
Cause, his or her Incentive Stock Options shall be exercisable
only as to those shares which were immediately purchasable by him
at the date of termination for a period of nine years following
termination; provided, however, that such Option shall not be
eligible for treatment as an Incentive Stock Option in the event
such Option is exercised more than three months following
termination of employment; and provided, further, that in no
event shall the exercise period extend beyond the expiration of
the Incentive Stock Option term. In the event of termination for
Cause all rights under his or her Incentive Stock Options shall
expire upon termination.
In the event of death or Disability of any Employee, all
Incentive Stock Options held by such Employee, whether or not
vested at such time, shall be or become exercisable by such
Employee or his legal representatives or beneficiaries for nine
years following the date of his death or cessation of employment
due to Disability; provided, however, that in the event of
Disability, such Option will not be eligible for treatment as an
Incentive Stock Option in the event the Option is exercised more
than one year following the date of Disability. Upon termination
of an Employee's service following a Change in Control or Normal
Retirement, all Incentive Stock Options held by such Employee,
whether or not vested at such time, shall be or become
exercisable for a period of nine years following the date of his
cessation of employment; provided, however, that such Option
shall not be eligible for treatment as an Incentive Stock Option
in the event such Option is exercised more than three months
following the date of such termination due to a Change in Control
or Normal Retirement; and provided, further, that in no event
shall the exercise period extend beyond the expiration of the
Incentive Stock Option term.
(g) Compliance with Code. The Options granted under this
Section 8 of the Plan are intended to qualify as Incentive Stock
Options within the meaning of Section 422 of the Code, but the
Bank makes no warranty as to the qualification of any Option as
an incentive stock option within the meaning of Section 422 of
the Code. If an Option granted hereunder fails for whatever
reason to comply with the provisions of Section 422 of the Code
and such failure is not or cannot be cured, such Option shall be
a Nonstatutory Stock Option.
9. Limited Rights
9.1 Grant of Limited Rights
The Committee may grant a Limited Right simultaneously with
the grant of any Option to any Employee of the Bank, with respect
to all or some of the shares covered by such Option. Limited
Rights shall be granted to Outside Directors simultaneously with
the grant of Nonstatutory Stock Options equal to the number of
such Nonstatutory Stock Options. Limited Rights granted under
this Plan are subject to the following terms and conditions:
(a) Terms of Rights. In no event shall a Limited Right be
exercisable in whole or in part before the expiration of six
months from the date of grant of the Limited Right. A Limited
Right may be exercised only in the event of a Change in Control
of the Bank.
<PAGE>
The Limited Right may be exercised only when the underlying
Option is eligible to be exercised, provided that the Fair Market
Value of the underlying shares on the day of exercise is greater
than the exercise price of the related Option.
Upon exercise of a Limited Right, the related Option shall
cease to be exercisable. Upon exercise or termination of an
Option, any related Limited Rights shall terminate. The Limited
Rights may be for no more than 100% of the difference between the
exercise price and the Fair Market Value of the Common Stock
subject to the underlying Option. The Limited Right is
transferable only when the underlying Option is transferable and
under the same conditions.
(b) Payment. Upon exercise of a Limited Right, the holder
shall promptly receive from the Bank an amount of cash equal to
the difference between the Fair Market Value on the Date of Grant
of the underlying shares of Common Stock and the Fair Market
Value of the underlying shares on the date the Limited Right is
exercised, multiplied by the number of shares with respect to
which such Limited Right is being exercised. In the event of a
Change of Control in which pooling accounting treatment is a
condition to the transaction, the Limited Right shall be
exercisable solely for shares of stock of the Bank, or in the
event of a merger transaction, for shares of the acquiring
corporation, or its parent, as applicable. The number of shares
to be received on the exercise of such Limited Right shall be
determined by dividing the amount of cash that would have been
available under the first sentence above by the Fair Market Value
at the time of exercise of the shares underlying the Option
subject to the Limited Right.
10. Surrender of Option
In the event of a Participant's termination of employment or
termination of service as a result of death, Disability or Normal
Retirement, the Participant (or his personal representative(s),
heir(s), or devisee(s)) may, in a form acceptable to the
Committee, make application to surrender all or part of the
Options held by such Participant in exchange for a cash payment
from the Bank of an amount equal to the difference between the
Fair Market Value of the Common Stock on the date of termination
of employment and the exercise price per share of the Option on
the Date of Grant. Whether the Bank accepts such application or
determines to make payment, in whole or part, is within its
absolute and sole discretion, it being expressly understood that
the Bank is under no obligation to any Participant whatsoever to
make such payments. In the event that the Bank accepts such
application and determines to make payment, such payment shall be
in lieu of the exercise of the underlying Option and such Option
shall cease to be exercisable.
11. Rights of a Shareholder; Non-transferability
An optionee shall have no rights as a shareholder with
respect to any shares covered by a Nonstatutory and/or Incentive
Stock Option until the date of issuance of a stock certificate
for such shares. Nothing in this Plan or in any Award granted
confers on any person any right to continue in the employ of the
Bank or its Affiliates or to continue to perform services for the
Bank or its Affiliates or interferes in any way with the right of
the Bank or its Affiliates to terminate his or her services as an
officer or other employee at any time.
No Award under the Plan shall be transferable by the
optionee other than by will or the laws of descent and
distribution and may only be exercised during his or her lifetime
by the optionee, or by a guardian or legal representative.
12. Agreement with Grantees
Each Award of Options, and/or Limited Rights will be
evidenced by a written agreement, executed by the Participant and
the Bank or its Affiliates that describes the conditions for
receiving the Awards including the date of Award, the purchase
price if any, applicable periods, and any other terms and
conditions as may be required by the Board of Directors or
applicable securities law.
<PAGE>
13. Designation of Beneficiary
A Participant, with the consent of the Committee, may
designate a person or persons to receive, in the event of death,
any Option or Limited Rights Award to which he or she would then
be entitled. Such designation will be made upon forms supplied
by and delivered to the Bank and may be revoked in writing. If a
Participant fails effectively to designate a Beneficiary, then
his estate will be deemed to be the Beneficiary.
14. Dilution and Other Adjustments
In the event of any change in the outstanding shares of
Common Stock of the Bank by reason of any stock dividend or
split, recapitalization, pro-rata return of capital, merger,
consolidation, spin-off, reorganization, combination or exchange
of shares, or other similar corporate change, or other increase
or decrease in such shares without receipt or payment of
consideration by the Bank, the Committee will make such
adjustments to previously granted Awards, to prevent dilution or
enlargement of the rights of the Participant, including any or
all of the following:
(a) adjustments in the aggregate number or kind of shares of
Common Stock which may be awarded under the Plan;
(b) adjustments in the aggregate number or kind of shares of
Common Stock covered by Awards already made under the Plan;
(c) subject to Section 8.1(b) hereof, adjustments in the
purchase price of outstanding Incentive and/or Nonstatutory Stock
Options, or any Limited Rights attached to such options.
No such adjustments, however, may change materially the
value of benefits available to a Participant under a previously
granted Award; and provided, further, that no such adjustment
shall be made if it would be deemed to be a modification of an
Incentive Stock Option pursuant to Section 424 of the Code.
15. Limitations upon Exercise of Options
Notwithstanding any other provision of the Plan, so long as
the Company remains in the mutual form of organization and so
long as any applicable statute or regulation requires the
Company to own at least a majority of the outstanding Common
Stock of the Bank, an Option granted under this Plan may not be
exercised if the exercise of such an Option would result in the
Company owning less than a majority of the Common Stock of the
Bank. Nothing herein shall preclude the Bank from issuing
additional authorized but unissued shares of Common Stock to the
Company to allow for the exercise of options which would
otherwise have resulted in the Company owning less than a
majority of the Common Stock of the Bank.
16. Treatment of Options in the Event of a
Conversion Transaction
In the event of a Conversion Transaction, any Options
outstanding shall, at the option of the holder, (i) be
convertible into Options for Common Stock of the Stock Holding
Company, or (ii) to the extent exercisable, be exercised by the
holder prior to the effective date of the Conversion Transaction
and the holder shall be entitled to exchange, in the same manner
as other minority stockholders of the Bank, the shares of Common
Stock of the Bank received upon such exercise for shares of
Common Stock of the Stock Holding Company. If for any reason
such options are not to be converted or such shares are not
exchanged, the holders of Options under this plan shall receive
cash payment for the shares of stock represented by the Options
in an amount equal to the fair market value of the underlying
Options or the initial offering price of the Common Stock of the
Stock Holding Company for which the Common Stock underlying the
Option would otherwise be exchanged, less the original exercise
price of such options and, with respect to options that have been
exercised, the Stock Holding Company shall redeem such shares for
cash
<PAGE>
in the same manner as such redemption would occur for other
minority stockholders of the Bank. Any exchange, conversion of
Options, or cash payment for shares shall be subject to
applicable federal and state regulations and, if necessary,
subject to the approval of the appropriate regulatory
authorities.
17. Withholding
There may be deducted from each distribution of cash and/or
Common Stock under the Plan the amount of tax required by any
governmental authority to be withheld.
18. Amendment of the Plan
The Board of Directors may at any time, and from time to
time, modify or amend the Plan in any respect; provided, however,
that if necessary to continue to qualify the Plan under the
Securities and Exchange Commission Rule 16b-3, the approval by a
majority of the shares represented in person or by proxy at an
annual or special meeting of the Bank shall be required for any
such modification or amendment that: (i) materially increases
the benefits accruing to participants under the Plan; (ii)
materially increases the number of securities that may be issued
under the Plan; or (iii) materially modifies the requirements as
to eligibility for participation in the Plan.
Section 7.1(a) and (d) shall not be amended more than once
every six months, other than to comport with changes to the Code,
ERISA, or regulations thereunder.
No such termination, modification or amendment may affect
the rights of a Participant under an outstanding Award.
19. Approval by Stockholders
The Plan shall be approved by stockholders of the Bank
within 12 months after the Plan has been adopted by the Board of
the Bank and the Company.
20. Termination of the Plan
The right to grant Awards under the Plan will terminate upon
the earlier of ten (10) years after the Effective Date or the
date the Plan is approved by stockholders, or the date on which
the exercise of Options or related Rights equaling the maximum
number of shares reserved under the Plan occurs as set forth in
Section 5 hereof. The Board of Directors has the right to suspend
or terminate the Plan at any time; provided that no such action
will, without the consent of a Participant, affect adversely his
rights under a previously granted Award.
21. Applicable Law
The Plan will be administered in accordance with the laws of
the State of New Jersey.
Adopted ---------------, 1996
ATTEST: TRENTON SAVINGS BANK FSB
- ------------------------- By: -------------------------------
Secretary Wendell T. Breithaupt,
President and Chief Executive
Officer
ATTEST: PEOPLES BANCORP, MHC
- ------------------------- By: -------------------------------
Secretary Wendell T. Breithaupt,
President and Chief Executive
Officer
- -----------------------------
Date Approved by Stockholders
<PAGE>
TRENTON SAVINGS BANK FSB
AND PEOPLES BANCORP, MHC
1996 RECOGNITION AND RETENTION PLAN
FOR EMPLOYEES AND OUTSIDE DIRECTORS
1. Establishment of the Plan
Trenton Savings Bank FSB (the "Bank") and Peoples Bancorp,
MHC (the "Company") hereby establish the 1996 Recognition and
Retention Plan (the "Plan") upon the terms and conditions
hereinafter stated in this Plan.
2. Purpose of the Plan
The purpose of the Plan is to retain Employees and Outside
Directors of experience and ability by providing such persons
with a proprietary interest in the Bank as compensation for their
contributions to the Bank and the Company and their Affiliates
and as an incentive to make such contributions and to promote the
Bank's growth and profitability in the future.
3. Definitions
The following words and phrases when used in this Plan with
an initial capital letter, unless the context clearly indicates
otherwise, shall have the meanings set forth below. Wherever
appropriate, the masculine pronoun shall include the feminine
pronoun and the singular shall include the plural:
"Affiliate" means any "parent corporation" or "subsidiary
corporation" of the Bank or the Company, as such terms are
defined in Section 424(e) and (f), respectively, of the Code.
"Award" means the grant of Restricted Stock, as provided in
the Plan.
"Bank" means Trenton Savings Bank FSB.
"Beneficiary" means the person or persons designated by a
Recipient to receive any benefits payable under the Plan in the
event of such Recipient's death. Such person or persons shall be
designated in writing on forms provided for this purpose by the
Committee and may be changed from time to time by similar written
notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Recipient's surviving
spouse, if any, or if none, his estate.
"Board" means the Board of Directors of the Bank or the
Company, as applicable.
"Cause" shall mean personal dishonesty, willful misconduct,
any breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, or the willful
violation of any law, rule or regulation (other than traffic
violations or similar offenses) or a final cease-and-desist
order, any of which results in a material loss to the Bank or an
Affiliate.
"Change in Control" means:
(1)(i) a reorganization, merger, merger conversion,
consolidation or sale of all or substantially all of the assets
of the Bank or the Company or a similar transaction in which the
Bank or Company is not the resulting entity or the Stock Holding
Company is not the resulting entity; (ii) individuals who
constitute the board of directors of the Bank or the board of
trustees of the Company as of the date hereof (the "Incumbent
Board"), cease for any reason
<PAGE>
to constitute at least a majority thereof, provided that any
person becoming a director subsequent to the date hereof whose
election was approved by a vote of at least three-fourths of the
directors composing the Incumbent Board or whose nomination for
election by the Bank's or Company's stockholders or members was
approved by the nominating committee serving under an Incumbent
Board shall be for purposes of this section considered as though
he were a member of the Incumbent Board; or (iii) an acquisition
of "control" of the Bank or the Company as defined by the Bank
Holding Company Act of 1956, as amended, and applicable rules and
regulations promulgated thereunder as in effect at the time of
the Change in Control (collectively, the "BHCA"), or (iv) an
acquisition of the Bank's stock requiring submission of notice
under the Change in Bank Control Act;
(2) In the event of a Conversion Transaction at any time
subsequent to the effective date of this Plan, a "Change in
Control" shall mean, a change in control of the Bank or the Stock
Holding Company of a nature that: (i) would be required to be
reported in response to Item 1(a) of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"); or (ii) results in a Change in Control of the Bank or the
Stock Holding Company within the meaning of the BHCA; or (iii)
without limitation, such a change in control shall be deemed to
have occurred at such time as (a) any "person" (as such term is
used in Section 13(d) and 14(d) of the Exchange Act) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the
Bank or the Stock Holding Company representing 25% or more of the
Bank's or Stock Holding Company's outstanding securities
ordinarily having the right to vote at the election of directors,
except for any securities of the Bank issued to the Stock Holding
Company in connection with the Reorganization and Stock Offering
pursuant to the Bank's Plan of Reorganization and Stock Issuance
and securities purchased by the Bank's or the Stock Holding
Company's employee stock benefit plans; or (b) the Incumbent
Board ceases for any reason to constitute at least a majority of
the board of directors of the Bank or Stock Holding Company; or
(c) a reorganization, merger, consolidation, sale of all or
substantially all of the assets of the Bank or the Stock Holding
Company or similar transaction.
(3) Notwithstanding the foregoing, the formation of a stock
holding company subsidiary of the Company which acquires 100% of
the Bank's voting common stock, shall not be a Change in Control.
(4) Notwithstanding anything to the contrary, the
conversion of the Company to stock form on a stand-alone basis,
shall not be a Change in Control.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Stock Benefits Committee of the Board
appointed by the Bank which shall consist of at least three
Outside Directors of the Bank or the Company, all of whom are and
must be Disinterested Persons.
"Common Stock" means shares of the common stock of the Bank,
par value of $0.10 per share.
"Company" means Peoples Bancorp, MHC.
"Continuous Service" means employment as an Employee or
service as an Outside Director without any interruption or
termination of such employment or service. In the case of an
Employee, employment shall not be considered interrupted in the
case of sick leave, military leave or any other leave of absence
approved by the Bank or in the case of transfers between payroll
locations of the Bank or between the Bank, its parent, its
subsidiaries or its successor.
"Conversion Transaction" means (i) the conversion of the
Company from the mutual to stock form of organization either on a
stand-alone basis or in the context of a merger conversion, as
provided by regulations of the Office of Thrift Supervision
("OTS"), or (ii) the formation of a Stock Holding Company
subsidiary of the Company which owns 100% of the Bank's voting
common stock, shall not be a Change in Control.
<PAGE>
"Director" means a member of the Board of Directors of the
Bank or the Company.
"Disability" means a physical or mental condition of a
Recipient resulting from bodily injury, disease, or mental
disorder which renders him incapable of continuing any gainful
occupation and which condition constitutes total disability under
the federal Social Security Acts.
"Disinterested Person" means any member of the Board who (A)
is an outside director as defined under Section 162(m) of the
Code and the regulations thereunder and (B) a person who within
the prior year has not been, and is not being, granted any awards
related to the shares under this Plan or any other plan of the
Company or any of its Affiliates except for awards which (i) are
calculated in accordance with a formula as contemplated in
paragraph (c)(2)(ii) of Rule 16b-3 ("Rule 16b-3") under the
Securities Exchange Act of 1934; (ii) result from participation
in an ongoing securities acquisition plan meeting the conditions
of paragraph (d)(2) of Rule 16b-3; or (iii) arise from an
election by a director to receive all or part of his board fees
in securities.
"Effective Date" shall be the date the Plan is ratified by
the Board, following the approval of stockholders.
"Employee" means any person who is currently employed by the
Bank, the Company or an Affiliate, including officers.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Incumbent Board" means, in the case of (i) the Company or
the Stock Holding Company, or (ii) the Bank, the Board of the
Company or the Bank, respectively, on the date hereof, provided
that any person becoming a director subsequent to the date hereof
whose election was approved by a vote of at least three-quarters
of the directors comprising the Incumbent Board, or whose
nomination for election by members or stockholders was approved
by the same nominating committee serving under an Incumbent
Board, shall be considered as though he were a member of the
Incumbent Board.
"Normal Retirement" means retirement from employment as an
employee or service as an Outside Director on or after the
attainment of age 65. With respect to an Outside Director,
Normal Retirement also means retirement after completion of 15
years of service on the Board.
"Offering" means the initial public offering of the Common
Stock of the Bank.
"Outside Director" means a director who is not also an
Employee.
"Plan" means the Trenton Savings Bank FSB and Peoples
Bancorp, MHC 1996 Recognition and Retention Plan.
"Recipient" means an Employee or Director who receives an
Award under this Plan.
"Reorganization" means the reorganization of Trenton
Savings Bank FSB as a mutual holding company and the
establishment of the Bank as its wholly-owned subsidiary.
"Restricted Period" means the period of time selected by the
Committee for the purpose of determining when restrictions are in
effect under Section 6 hereof with respect to Restricted Stock
awarded under the Plan.
"Restricted Stock" means shares which have been contingently
awarded to a Recipient by the Committee subject to the
restrictions referred to in Section 6 hereof, so long as such
restrictions are in effect.
<PAGE>
"Stock Holding Company" means the stock holding company
resulting from (i) a stock conversion of the Company in a
Conversion Transaction or (ii) the reorganization and formation
of a stock holding company subsidiary of the Company which owns
100% of the Bank's voting common stock.
4. Administration of the Plan
4.1 Role of the Committee. The Plan shall be administered
and interpreted by the Committee, which shall have all of the
powers allocated to it in this and other Sections of the Plan.
The interpretation and construction by the Committee of any
provisions of the Plan or of any Award granted hereunder shall be
final and binding. The Committee shall act by vote or written
consent of a majority of its members. Subject to the express
provisions and limitations of the Plan, the Committee may adopt
such rules, regulations and procedures as it deems appropriate
for the conduct of its affairs. The Committee shall report its
actions and decisions with respect to the Plan to the Board at
appropriate times, but in no event less than one time per
calendar year.
4.2 Role of the Board. The members of the Committee shall
be appointed or approved by, and will serve at the pleasure of,
the Board. The Board may in its discretion from time to time
remove members from, or add members to, the Committee. The Board
shall have all of the powers allocated to it in this and other
Sections of the Plan, may take any action under or with respect
to the Plan which the Committee is authorized to take, and may
reverse or override any action taken or decision made by the
Committee under or with respect to the Plan, provided, however,
that except as provided in Section 6.5, the Board may not revoke
any Award except in the case of revocation for Cause, or with
respect to unearned Awards, in the event a Recipient of an Award
voluntarily terminates employment with the Bank prior to Normal
Retirement.
4.3 Plan Administration Restrictions. This Plan is
intended to comply with Rule 16b-3 under the Securities Exchange
Act of 1934. Notwithstanding any term to the contrary appearing
herein, unless permitted by Rule 16b-3(c)(2)(ii), subsequent to
the establishment of the Plan, neither the Committee nor the
Board shall have the authority to determine the amount and price
of securities to be awarded and/or timing of awards to Outside
Directors which terms shall be set forth in the Plan. To the
extent any provision of the Plan or action by Plan administrators
fails to comply with this Section, such provision or action
shall, to the extent permitted by law and deemed advisable by the
Board, be deemed null and void.
4.4 Limitation on Liability. No member of the Board or the
Committee shall be liable for any determination made in good
faith with respect to the Plan or any Awards granted under it.
If a member of the Board or the Committee is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of anything done or
not done by him in such capacity under or with respect to the
Plan, the Bank shall indemnify such member against expense
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in the best
interests of the Bank, the Company and its Affiliates and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful.
5. Eligibility; Awards
5.1 Eligibility. Employees and Outside Directors are
eligible to receive Awards.
5.2 Awards to Employees. The Committee may determine which
of the Employees referenced in Section 5.1 will be granted Awards
and the number of shares covered by each Award; provided,
however, that in no event shall any Awards be made that will
violate the Plan, the Charter, Bylaws or Plan of Reorganization
from Mutual Savings Bank to Mutual Holding Company and Stock
Issuance Plan of the Bank or any applicable federal or state law
or regulation. Shares of Restricted Stock which are awarded by
the Committee shall, on the date of the
<PAGE>
Award, be registered in the name of the Recipient and transferred
to the Recipient, in accordance with the terms and conditions
established under this Plan.
In the event Restricted Stock is forfeited for any reason,
the Committee, from time to time, may determine which of the
Employees referenced in Section 5.01 will be granted additional
Awards to be awarded from forfeited Restricted Stock. In
selecting those Employees to whom Awards will be granted and the
amount of Restricted Stock covered by such Awards, the Committee
shall consider the position and responsibilities of the eligible
Employees, the length and value of their services to the Bank and
its Affiliates, the compensation paid to the Employees and any
other factors the Committee may deem relevant, and the Committee
may request the written recommendation of the Chief Executive
Officer and other senior executive officers of the Bank, the
Company and its Affiliates. All allocations by the Committee
shall be subject to review, and approval or rejection, by the
Board.
Subject to Sections 6.3 and 6.4, no Restricted Stock shall
be earned unless the Employee maintains Continuous Service until
the restrictions lapse.
5.3 Awards to Outside Directors. The following Outside
Directors serving on the Board of the Bank or the Company on the
Effective Date shall be issued an Award equal to the following
number of shares of Restricted Stock.
<TABLE>
Outside Director Award
<S> <C>
John B. Sill, Jr. 9,364
Charles E. Stokes, III 9,364
George W. Reinhard 9,364
Raymond E. Trainer 9,364
George A. Pruitt 7,491
Peter S. Longstreth 7,257
Miles W. Truesdell, Jr. 7,257
</TABLE
Any person who becomes an Outside Director subsequent to the
date of approval of this Plan by stockholders shall receive an
Award of Restricted Stock equal to 100 shares, subject to
availability.
No Restricted Stock shall be earned by an Outside Director
unless the Outside Director maintains Continuous Service with the
Bank or the Company until the restrictions lapse.
5.4 Manner of Award. As promptly as practicable after a
determination is made pursuant to Sections 5.2 and 5.3 that an
Award has been granted, the Committee shall notify the Recipient
in writing of the grant of the Award, the number of shares of
Restricted Stock covered by the Award, and the terms upon which
the Restricted Stock subject to the Award may be earned. Upon
notification of an Award of Restricted Stock, the Recipient shall
execute and return to the Bank a restricted stock agreement
setting forth the terms and conditions under which the Recipient
shall earn the Restricted Stock (the "Restricted Stock
Agreement), together with a stock power endorsed in blank.
Thereafter, the Recipient's Restricted Stock and stock power
shall be deposited with an escrow agent specified by the Bank
(the "Escrow Agent") who shall hold such Restricted Stock under
the terms and conditions set forth in the Restricted Stock
Agreement. Each certificate representing an Award under the Plan
shall be registered in the name of the Recipient.
5.5 Treatment of Forfeited Shares. In the event shares of
Restricted Stock are forfeited by a Recipient hereunder, such
shares shall be returned to the Bank and shall be held and
accounted for and re-awarded pursuant to the terms of the Plan.
<PAGE>
6. Terms and Conditions of Restricted Stock
The Committee shall have full and complete authority,
subject to the limitations of the Plan, to grant Awards of
Restricted Stock and, in addition to the terms and conditions
contained in paragraphs 6.1 through 6.9 of this Section 6, to
determine such other terms and conditions (which need not be
identical among Recipients) in respect of such Awards, including
the vesting thereof, as the Committee shall determine.
6.1 General Rules. Restricted Stock shall be earned by an
Employee at the rate determined by the Committee at the time of
grant of the Award; provided, however, that no shares shall be
earned for any year in which the Bank is not meeting all of its
fully phased-in capital requirements. Awards granted to Outside
Directors shall be earned by an Outside Director at the rate of
twenty percent (20%) of the aggregate number of shares covered by
the Award per year commencing one year from the date of grant.
Subject to any such other terms and conditions as the Committee
shall provide with respect to awards to Employees, shares of
Restricted Stock may not be sold, assigned, transferred (within
the meaning of Code Section 83), pledged or otherwise encumbered
by the Recipient, except as hereinafter provided, during the
Restricted Period. The Committee shall have the authority, in
its discretion, to accelerate the time at which any or all of the
restrictions shall lapse with respect to Awards issued to
Employees, or to remove any or all of such restrictions, whenever
it may determine that such action is appropriate by reason of
changes in applicable tax or other laws or other changes in
circumstances occurring after the commencement of such Restricted
Period.
6.2 Continuous Service; Forfeiture. Except as provided in
Sections 6.3 and 6.4 hereof, if an Employee ceases to maintain
Continuous Service for any reason, unless the Committee shall
otherwise determine, all shares of Restricted Stock theretofore
awarded to such Employee and which at the time of such
termination of Continuous Service are subject to the restrictions
imposed by Section 6.1 shall upon such termination of Continuous
Service be forfeited.
6.3 Exception for Termination Due to Death, Disability or
Normal Retirement. Notwithstanding the general rule contained in
Sections 6.1 and 6.2, Awards to a Recipient whose employment or
service with the Bank, the Company or an Affiliate terminates due
to death, Disability, or Normal Retirement that has not
theretofore been earned, shall be deemed earned as of the
Recipient's last day of employment or service.
6.4 Exception for Terminations after a Change in Control.
Notwithstanding the general rule contained in Sections 6.1 and
6.2, all Restricted Stocks subject to an Award held by a
Recipient whose employment as an Employee or service as an
Outside Director terminates following a Change in Control of the
Bank or the Company shall be deemed earned as of the Recipient's
last day of employment or service.
6.5 Revocation for Cause. Notwithstanding anything herein
to the contrary, if a Recipient is terminated for cause or has
engaged in conduct that would justify termination for cause, the
Board may by resolution immediately revoke, rescind and terminate
any Award, or portion thereof, previously awarded under this
Plan, whether or not yet earned, to the extent Restricted Stock
has not been redelivered by the Escrow Agent to the Recipient.
6.6 Delivery of Restricted Stock to Escrow Agent; Use of
Restricted Stock Legend. Each certificate representing an Award
under the Plan shall be registered in the name of the Recipient
and deposited by the Recipient, together with a stock power
endorsed in blank, with the Escrow Agent and, in the discretion
of the Board, may bear the following (or a similar) legend:
<PAGE>
"The transferability of this certificate and the shares
of stock represented hereby are subject to the terms and
conditions (including forfeiture) contained in the Trenton
Savings Bank FSB and Peoples Bancorp, MHC 1996 Recognition and
Retention Plan. Copies of such Plan are on file in the offices
of the Secretary of Trenton Savings Bank FSB, 134 Franklin Corner
Road, Lawrenceville, New Jersey 08648.
6.7 Payment of Dividends and Return of Capital. After an
Award has been granted but before such Award has been earned, the
Recipient shall receive any cash dividends or stock dividends
paid with respect to such shares, or shall share in any pro rata
return of capital to all shareholders with respect to the Common
Stock of the Bank. Unless the Recipient has made an election
under Section 83(b) of the Internal Revenue Code, dividends so
paid on shares which have not yet been earned by the Recipient
shall be treated as compensation income to the Recipient when
paid. Stock dividends shall be delivered as Restricted Stock and
shall be subject to the same restrictions and vesting period as
the shares upon which such stock dividends were paid.
6.8 Voting of Restricted Shares. After an Award has been
granted, the Recipient as owner of such shares shall have the
right to vote such shares.
6.9 Delivery of Earned Shares. At the expiration of the
restrictions imposed by Section 6.1, the Escrow Agent shall
redeliver to the Recipient (or where the relevant provision of
Section 6.2 applies in the case of a deceased Recipient, to his
Beneficiary), the certificate(s) deposited with it pursuant to
Section 6.4 and the shares represented by such certificate(s)
shall be free of the restrictions referred to Section 6.1.
7. Adjustments Upon Changes in Capitalization
In the event of any change in the outstanding shares
subsequent to the effective date of the Plan by reason of any
reorganization (other than the Reorganization), recapitalization,
stock split, combination or exchange of shares, merger,
consolidation or any change in the corporate structure or shares
of the Bank, the maximum aggregate number and class of shares as
to which Awards may be granted under the Plan shall be
appropriately adjusted. Any shares of stock or other securities
received, as a result of any of the foregoing, by a Recipient
shall be subject to the same restrictions and the certificate(s)
or other instruments representing or evidencing such shares or
securities shall be legended and deposited with the Bank in the
manner provided in Section 6.6 hereof.
8. Assignments and Transfers
No Award nor any right or interest of a Recipient under the
Plan in any instrument evidencing any Award under the Plan may be
assigned, encumbered or transferred (within the meaning of Code
Section 83) except, in the event of the death of a Recipient, by
will or the laws of descent and distribution.
9. Employee Rights Under the Plan
No Employee shall have a right to be selected as a Recipient
nor, having been so selected, to be selected again as a Recipient
and no Employee or other person shall have any claim or right to
be granted an Award under the Plan or under any other incentive
or similar plan of the Bank or any Affiliate. Neither the Plan
nor any action taken thereunder shall be construed as giving any
Employee any right to be retained in the employ of the Bank or
any Affiliate.
<PAGE>
10. Withholding Tax
Upon the termination of the Restricted Period with respect
to any shares of Restricted Stock (or at any such earlier time,
if any, that an election is made by the Employee under Section
83(b) of the Code, or any successor provision thereto, to include
the value of such shares in taxable income), the Bank or its
Affiliate, as applicable, shall have the right to require the
Employee or other person receiving such shares to pay the Bank or
Affiliate the amount of any taxes which the Bank or Affiliate is
required to withhold with respect to such shares, or, in lieu
thereof, to retain or sell without notice, a sufficient number of
shares held by it to cover the amount required to be withheld.
The Bank or Affiliate shall have the right to deduct from all
dividends paid with respect to shares of Restricted Stock the
amount of any taxes which the Bank or Affiliate is required to
withhold with respect to such dividend payments.
11. Treatment of Restricted Stock in the Event of Conversion
Transaction
In the event of a Conversion Transaction, any Restricted
Stock shall be exchanged into shares of Common Stock of the Stock
Holding Company, provided, however, that if for any reason such
shares are not to be exchanged, the Stock Holding Company shall,
simultaneously with the closing of the Conversion Transaction,
purchase Restricted Stock for cash equal to the fair market value
of such Restricted Stock or Shares. Any exchange of shares or
cash payment for shares shall be subject to applicable federal
and state regulations and, if necessary, subject to the approval
of the appropriate Regulatory authorities.
12. Amendment or Termination
The Board of the Bank or the Company may amend, suspend or
terminate the Plan or any portion thereof at any time, but
(except as provided in Section 6 hereof) no amendment shall be
made without approval of the stockholders of the Bank which shall
(i) materially increase the benefits to participants under the
plan, (ii) materially increase the number of shares that may be
issued under the Plan, or (iii) materially modify the
requirements as to eligibility for participation in the Plan;
provided, however, that no such amendment, suspension or
termination shall impair the rights of any Recipient, without his
consent, in any Award theretofore made pursuant to the Plan.
Section 5.3 shall not be amended more than once every six
months, other than to comport with changes to the code, ERISA, or
regulations thereunder.
13. Governing Law
The Plan shall be governed by the laws of the State of New
Jersey.
14. Term of Plan
The Plan shall become effective upon its ratification by the
Board of the Bank and the Company, following the approval of the
Plan by stockholders. It shall continue in effect until the
earlier of (i) fifteen years from the Effective Date, unless
sooner terminated under Section 12 hereof, or (ii) the date upon
which all shares of Common Stock available for award hereunder,
have vested in the Recipients of such Awards.
[Remainder of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the Bank has caused this Plan to be
executed by its duly authorized officers and the corporate seal
to be affixed and duly attested, as of the _____ day of
__________, 1996.
ATTEST: TRENTON SAVINGS BANK FSB
- ------------------------- By: -------------------------------
Secretary Wendell T. Breithaupt,
President and Chief Executive
Officer
ATTEST: PEOPLES BANCORP, MHC
- ------------------------- By: -------------------------------
Secretary Wendell T. Breithaupt,
President and Chief Executive
Officer
- -----------------------------
Date Approved by Stockholders
</TABLE>
