SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ____ to ____
Commission file number 0-16772
PEOPLES BANCORP INC.
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(Exact name of Registrant as specified in its charter)
Ohio 31-0987416
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(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
138 Putnam Street, P. O. Box 738, Marietta, Ohio 45750
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (614) 373-3155
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Securities registered pursuant to
Section 12(b) of the Act: None
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Securities registered pursuant to
Section 12(g) of the Act: Common Shares, No Par Value
(3,118,334 outstanding
at February 29, 1996)
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Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 Regulation S-K is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
Based upon the closing price of the Common Shares of the
Registrant on the The NASDAQ National Market as of February 29,
1996, the aggregate market value of the Common Shares of the
Registrant held by nonaffiliates on that date was $69,057,264.
For this purpose, certain executive officers and directors are
considered affiliates.
Documents Incorporated by Reference:
1) Portions of Registrant's Annual Report to Stockholders
for the fiscal year ended December 31, 1995, are
incorporated by reference into Parts I and II of this
Annual Report on Form 10-K.
2) Portions of Registrant's Definitive Proxy Statement
relating to the annual meeting to be held April 9, 1996 are
incorporated by reference into Part III of this
Annual Report on Form 10-K.
Exhibit Index Appears on Pages 14 through 16
Page 1 of 228 Pages
PART I
ITEM 1. BUSINESS.
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Introduction
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Peoples Bancorp Inc. (the "Company") was incorporated under the
laws of the State of Delaware on April 1, 1980. The Company was
merged, following Shareholder approval, into the Peoples Bancorp
Inc., an Ohio corporation, effective April 6, 1993, pursuant to
a reincorporation proceeding. Its principal business is to act
as a multi-bank holding company. Its wholly-owned subsidiaries
are The Peoples Banking and Trust Company, Marietta, Ohio
("Peoples Bank"), The First National Bank of Southeastern Ohio
("First National Bank") and The Northwest Territory Life
Insurance Company, an Arizona corporation ("Northwest
Territory").
At December 31, 1995, Peoples Bancorp Inc. (parent company
only) had 31 full-time equivalent employees.
The Peoples Banking and Trust Company
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Peoples Bank was chartered as an Ohio banking corporation under
its present name in Marietta, Ohio, in 1902. At December 31,
1995, it had assets of $468,804,000; deposits of $375,643,000;
and net loans of $326,811,000.
Peoples Bank is a full-service commercial bank. It provides
checking accounts, NOW accounts, Super NOW accounts, money
market deposit accounts, savings accounts, time certificates of
deposit, commercial loans, installment loans, commercial and
residential real estate mortgage loans, credit cards, automatic
teller machines, banking by phone, lease financing, corporate
and personal trust services and safe deposit rental facilities.
Peoples Bank also sells travelers checks, money orders and
cashier's checks. Services are provided through ordinary
walk-in offices, automated teller facilities called
"SuperTeller", and automobile drive-in facilities called "Motor
Bank". At December 31, 1995, the Trust Department of Peoples
Bank held approximately $390 million (market value) in trust and
custodial accounts apart from the assets of the Bank.
With all of its offices located in Ohio, Peoples Bank serves
principally Washington, Athens and Meigs Counties, together with
portions of Hocking, Perry and Vinton Counties in Ohio and
adjacent parts of Northern West Virginia. The business
production office in Newark-Granville, Ohio, serves that
immediate area in Licking County. Peoples Bank provides
services to its customers at its principal banking office in
downtown Marietta and through SuperTeller and other banking
facilities. A full-service office, Motor Bank and SuperTeller
are located at the Frontier Shopping Center in Marietta. Also,
a full-service office and SuperTeller are located inside a
grocery store at Pike and Acme Streets in Marietta. A
full-service office, two Motor Banks and a SuperTeller are
operated in Belpre, Ohio. Full-service offices with Motor Banks
are located in Lowell, Reno and Nelsonville, Ohio. A
full-service branch and SuperTeller are located at One North
Court Street in downtown Athens, Ohio. A full-service office,
Motor Bank and SuperTeller are located at the Athens Mall.
Also, three SuperTeller machines are located on the campus of
Ohio University in Athens, Ohio. A full-service bank is located
at Middleport, Ohio.
On December 18, 1995, the Company announced that Peoples Bank
had reached a definitive agreement to purchase three
full-service banking offices from an unrelated financial
institution. In the transaction, Peoples Bank will assume
approximately $75 million in deposits. The offices are located
in Gallipolis, Pomeroy, and Rutland, Ohio. The Gallipolis
office is located downtown in Gallipolis and currently operates
a full-service office, Motor Bank, and an automated teller
machine. A full-service office and separate Motor Bank are
located in downtown Pomeroy. An automated teller machine is
also located in Pomeroy outside a local convenience store. The
Rutland office is a full-service and Motor Bank facility.
At December 31, 1995, Peoples Bank had 190 full-time equivalent
employees.
The First National Bank of Southeastern Ohio
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First National Bank is a national banking association chartered
in 1900. It provides banking services and products that are
substantially the same as those of Peoples Bank. First National
Bank operates a commercial bank and Motor Bank at one location
at 415 Main Street, Caldwell, Ohio. It also has a full-service
office and Motor Bank on Marion Street in Chesterhill, Ohio. It
also operates a full-service office on Kennebec Street,
McConnelsville, Ohio. First National Bank's market area is
comprised of Caldwell, Chesterhill, McConnelsville and the
surrounding area in Noble and Morgan Counties, Ohio. At
December 31, 1995, it had assets of $70,004,000, deposits of
$54,077,000 and net loans of $45,993,000.
At December 31, 1995, First National Bank had 29 full-time
equivalent employees.
First National Bank also operates two insurance agency
subsidiaries, Northwest Territory Life Insurance Agency, Inc.
and Northwest Territory Property & Casualty Insurance Agency,
Inc. (the "Agencies"). The Agencies were created in compliance
with federal regulations allowing insurance powers to national
banks in communities with populations of 5,000 people or less.
On December 22, 1995, each Agency received a Certificate of
Qualification (license) to operate the Agency from the Ohio
Department of Insurance, thereby allowing the Agencies the
ability to engage in the insurance agency business, subject to
the regulations of the Ohio Department of Insurance and the
Comptroller of the Currency. These are the first insurance
agencies in Ohio associated with a financial institution to
receive licenses to conduct a broad-based insurance business.
At December 31, 1995, the Agencies had 4 full-time equivalent
employees.
The Northwest Territory Life Insurance Company
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Northwest Territory was organized under Arizona law in 1983 and
was issued a Certificate of Authority to act as a reinsurance
company by the State of Arizona on February 8, 1984. Northwest
Territory reinsures credit life and disability insurance issued
to customers of banking subsidiaries of the Company by the
issuing insurance company. At November 30, 1995, Northwest
Territory had total assets of $1,327,000 and had gross premium
income of $244,000 in 1995, $238,000 in 1994 and $231,000 in
1993. Northwest Territory reinsures risks (currently not
exceeding $15,000 per insured on a present value basis) within
limits established by governmental regulations and management
policy. Northwest Territory has no employees.
Customers and Markets
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The Company's service area has a diverse economic structure.
Principal industries in the area include metals, plastics and
petrochemical manufacturing; oil, gas and coal production and
related support industries. In addition, tourism, education and
other service-related industries are important and growing
industries. Consequently, the Company is not dependent upon any
one industry segment for its business opportunities.
Competition
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The banking subsidiaries of the Company experience significant
competition in attracting depositors and borrowers. Competition
in lending activities comes principally from other commercial
banks in the lending areas of the banks and, to a lesser extent,
from savings associations, insurance companies, governmental
agencies, credit unions, brokerage firms and pension funds. The
primary factors in competing for loans are interest rate and
overall lending services. Competition for deposits comes from
other commercial banks, savings associations, money market funds
and credit unions as well as from insurance companies and
brokerage firms. The primary factors in competing for deposits
are interest rates paid on deposits, account liquidity,
convenience of office location and overall financial condition.
The Company believes that its size, overall banking services and
financial condition place it in a favorable competitive position.
Northwest Territory operates in the highly competitive industry
of credit life and disability insurance. The principal methods
of competition in the credit life and disability insurance
industry are the availability of coverages and premium rates.
The Company believes Northwest Territory has a competitive
advantage due to the fact that the business of Northwest
Territory is limited to the accepting of life and disability
reinsurance ceded in part to Northwest Territory from the credit
life and disability insurance purchased by loan customers of
Peoples Bank and First National Bank.
The Agencies operate in the extremely competitive life
insurance and property and casualty insurance industries, due
mostly to the large number of companies and agents located
within the southeastern Ohio market. The Agencies intend to
provide several insurance product options to consumers,
including traditional life insurance and property and casualty
insurance, as well as investments in mutual funds, variable and
fixed annuities and securities. The Agencies' future
competitive advantage will be based on their ability to provide
products to consumers efficiently with sensitivity to customer
service and cost price issues.
Supervision and Regulation
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The following is a summary of certain statutes and regulations
affecting the Company and its subsidiaries. The summary is
qualified in its entirety by reference to such statutes and
regulations.
The Company is a bank holding company under the Bank Holding
Company Act of 1956, as amended, which restricts the activities
of the Company and the acquisition by the Company of voting
stock or assets of any bank, savings association or other
company. The Company is also subject to the reporting
requirements of, and examination and regulation by, the Board of
Governors of the Federal Reserve System (the "Federal Reserve
Board"). Subsidiary banks of a bank holding company are subject
to certain restrictions imposed by the Federal Reserve Act on
transactions with affiliates, including any loans or extensions
of credit to the bank holding company or any of its
subsidiaries, investments in the stock or other securities
thereof and the taking of such stock or securities as collateral
for loans to any borrower; the issuance of guarantees,
acceptances or letters of credit on behalf of the bank holding
company and its subsidiaries; purchases or sales of securities
or other assets; and the payment of money or furnishing of
services to the bank holding company and other subsidiaries. A
bank holding company and its subsidiaries are prohibited from
engaging in certain tying arrangements in connection with
extensions of credit and/or the provision of other property or
services to a customer by the bank holding company or its
subsidiaries.
Bank holding companies are prohibited from acquiring direct or
indirect control of more than 5% of any class of voting stock or
substantially all of the assets of any bank holding company
without the prior approval of the Federal Reserve Board. In
addition, acquisitions across state lines are limited to
acquiring banks in those states specifically authorizing such
interstate acquisitions. However, since September 1995, federal
law has permitted interstate acquisitions of banks, if the bank
acquired retains its separate charter.
As a national bank, First National Bank is supervised and
regulated by the Comptroller of the Currency. As an Ohio
state-chartered bank, Peoples Bank is supervised and regulated
by the Ohio Division of Banks and the Federal Deposit Insurance
Corporation ("FDIC"). The deposits of First National Bank and
Peoples Bank are insured by the FDIC and those entities are
subject to the applicable provisions of the Federal Deposit
Insurance Act. A subsidiary of a bank holding company can be
liable to reimburse the FDIC if the FDIC incurs or anticipates a
loss because of a default of another FDIC-insured subsidiary of
the bank holding company or in connection with FDIC assistance
provided to such subsidiary in danger of default. In addition,
the holding company of any insured financial institution that
submits a capital plan under the federal banking agencies'
regulations on prompt corrective action, guarantees a portion of
the institution's capital shortfall, as discussed below.
Various requirements and restrictions under the laws of the
United States and the State of Ohio affect the operations of
Peoples Bank and First National Bank, including requirements to
maintain reserves against deposits, restrictions on the nature
and amount of loans which may be made and the interest that may
be charged thereon, restrictions relating to investments and
other activities, limitations on credit exposure to
correspondent banks, limitations on activities based on capital
and surplus, limitations on payment of dividends, and
limitations on branching. Pursuant to recent federal
legislation, First National Bank may branch across state lines,
if permitted by the law of the other state. In addition,
effective June 1997, such interstate branching by First National
Bank will be authorized, unless the law of the other state
specifically prohibits the interstate branching authority
granted by federal law.
The Federal Reserve Board has adopted risk-based capital
guidelines for bank holding companies and for state member
banks, such as Peoples Bank and First National Bank. The
risk-based capital guidelines include both a definition of
capital and a framework for calculating weighted-risk assets by
assigning assets and off-balance sheet items to broad risk
categories. The minimum ratio of total capital to weighted-risk
assets (including certain off-balance sheet items, such as
standby letters of credit) is 8%. At least 4.0 percentage
points is to be comprised of common stockholder's equity
(including retained earnings but excluding treasury stock),
noncumulative perpetual preferred stock, a limited amount of
cumulative perpetual preferred stock, and minority interests in
equity accounts of consolidated subsidiaries, less goodwill and
certain other intangible assets ("Tier 1 capital"). The
remainder ("Tier 2 capital") may consist, among other things, of
mandatory convertible debt securities, a limited amount of
subordinated debt, other preferred stock and a limited amount of
allowance for loan and lease losses. The Federal Reserve Board
also imposes a minimum leverage ratio (Tier 1 capital to total
assets) of 4% for bank holding companies and state member banks
that meet certain specified conditions, including no
operational, financial or supervisory deficiencies and including
having the highest regulatory rating. The minimum leverage
ratio is 1.0 - 2.0% higher for other bank holding companies and
state member banks based on their particular circumstances and
risk profiles and those experiencing or anticipating significant
growth. National bank subsidiaries, such as First National
Bank, are subject to similar capital requirements adopted by the
Comptroller of the Currency, and state non-member bank
subsidiaries, such as Peoples Bank, are subject to similar
capital requirements adopted by the FDIC. Under an outstanding
proposal of the Comptroller and the FDIC to establish an
interest rate risk component, First National Bank and Peoples
Bank may be required to have additional capital if their
interest rate risk exposure exceeds acceptable levels provided
for in the regulation as when adopted.
The Company and its subsidiaries currently satisfy all capital
requirements. Failure to meet applicable capital guidelines
could subject a banking institution to a variety of enforcement
remedies available to federal and state regulatory authorities,
including the termination of deposit insurance by the FDIC.
The federal banking regulators have established regulations
governing prompt corrective action to resolve capital deficient
banks. Under these regulations, institutions which become
undercapitalized become subject to mandatory regulatory scrutiny
and limitations, which increase as capital continues to
decrease. Such institutions are also required to file capital
plans with their primary federal regulator, and their holding
companies must guarantee the capital shortfall up to 5% of the
assets of the capital deficient institution at the time it
becomes undercapitalized.
The ability of a bank holding company to obtain funds for the
payment of dividends and for other cash requirements is largely
dependent on the amount of dividends which may be declared by
its subsidiary banks and other subsidiaries. However, the
Federal Reserve Board expects the Company to serve as a source
of strength to its subsidiary banks, which may require it to
retain capital for further investment in subsidiaries, rather
than for dividends for shareholders of the Company. Peoples
Bank and First National Bank may not pay dividends to the
Company if, after paying such dividends, they would fail to meet
the required minimum levels under the risk-based capital
guidelines and the minimum leverage ratio requirements. Peoples
Bank and First National Bank must have the approval of their
respective regulative authorities if a dividend in any year
would cause the total dividends for that year to exceed the sum
of the current year's net profits and the retained net profits
for the preceding two years, less required transfers to surplus.
First National Bank may not pay a dividend either in an amount
greater than its net profits then on hand, after deducting its
losses and bad debts, or if less than 1/10th of net profits for
the preceding six months, for a quarterly or semi-annual
dividend, or the preceding year, for an annual dividend, was
transferred to surplus. Payment of dividends by the bank
subsidiaries may be restricted at any time at the discretion of
the regulatory authorities, if they deem such dividends to
constitute an unsafe and/or unsound banking practice. These
provisions could have the effect of limiting the Company's
ability to pay dividends on its outstanding common shares.
Northwest Territory is chartered by the State of Arizona and is
subject to regulation, supervision and examination by the
Arizona Department of Insurance. The powers of regulation and
supervision of the Arizona Department of Insurance relate
generally to such matters as minimum capitalization, the grant
and revocation of certificates of authority to transact
business, the nature of and limitations on investments, the
maintenance of reserves, the form and content of required
financial statements, reporting requirements and other matters
pertaining to life and disability insurance companies.
The Agencies are incorporated in the State of Ohio and licensed
by the Ohio Department of Insurance, which regulates, supervises
and has authority to examine the Agencies.
Monetary Policy and Economic Conditions
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The commercial banking business is affected not only by general
economic conditions, but also by the policies of various
governmental regulatory agencies, including the Federal Reserve
Board. The Federal Reserve Board regulates money and credit
conditions and interest rates in order to influence general
economic conditions primarily through open market operations in
U.S. Government securities, changes in the discount rate on bank
borrowings, and changes in the reserve requirements against bank
deposits. These policies and regulations significantly affect
the overall growth and distribution of bank loans, investments
and deposits, and the interest rates charged on loans, as well
as the interest rates paid on deposits and accounts.
The monetary policies of the Federal Reserve Board have had a
significant effect on the operating results of commercial banks
in the past and are expected to continue to have significant
effects in the future. In view of the changing conditions in
the economy and the money markets and the activities of monetary
and fiscal authorities, no definitive predictions can be made as
to future changes in interest rates, credit availability or
deposit levels.
Statistical Financial Information Regarding the Company
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The following listing of statistical financial information,
which is included in the Company's Annual Report to Shareholders
for the fiscal year ended December 31, 1995 (the "Company's 1995
Annual Report") and incorporated herein by reference, provides
comparative data for the Company over the past three and five
years, as appropriate. These tables should be read in
conjunction with "Management's Discussion and Analysis" and the
Consolidated Financial Statements of the Company and its
subsidiaries found at pages 35 through 43 and 14 through 29,
respectively, of the Company's 1995 Annual Report.
Average Balances and Analysis of Net Interest Income:
Please refer to page 31 of the Company's 1995 Annual Report.
Rate Volume Analysis:
Please refer to page 32 of the Company's 1995 Annual Report.
Loan Maturities:
Please refer to page 32 of the Company's 1995 Annual Report.
Average Deposits:
Please refer to page 31 of the Company's 1995 Annual Report.
Maturities Schedule of Large Certificates of Deposit:
Please refer to page 32 of the Company's 1995 Annual Report.
Loan Portfolio Analysis:
Please refer to pages 33 and 34 of the Company's 1995 Annual Report.
Securities Analysis:
Please refer to pages 20 through 22 and page 41 of the
Company's 1995 Annual Report.
Return Ratios:
Please refer to page 11 of the Company's 1995 Annual Report.
Effect of Environmental Regulation
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Compliance with federal, state and local provisions regulating
the discharge of materials into the environment, or otherwise
relating to the protection of the environment, has not had a
material effect upon the capital expenditures, earnings or
competitive position of the Company and its subsidiaries. The
Company believes that the nature of the operations of its
subsidiaries has little, if any, environmental impact. The
Company, therefore, anticipates no material capital expenditures
for environmental control facilities for its current fiscal year
or for the foreseeable future. The Company's subsidiaries may
be required to make capital expenditures for environmental
control facilities related to properties which they may acquire
through foreclosure proceedings in the future; however, the
amount of such capital expenditures, if any, is not currently
determinable.
ITEM 2. PROPERTIES
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The principal office of the Company and Peoples Bank is located
at 138 Putnam Street, Marietta, Ohio. This location consists of
a five-story, stone-block building and one other smaller
building attached by interior corridors. In 1993, Peoples Bank
completed construction of a five-story addition to its primary
facility in downtown Marietta. Peoples Bank also owns several
nearby vacant lots for parking and a nearby Motor Bank. Peoples
Bank owns property on which three additional full-service and
two additional Motor Banks are located, leases the land on which
one full-service branch is located and leases its other
full-service branch. Peoples Bank's business production office
in Newark-Granville is also leased. Peoples Bank also owns a
two-story, block building on the Public Square in Nelsonville,
Ohio, an additional office in Nelsonville, together with an
office consisting of a two-story concrete structure at One North
Court Street, Athens, Ohio, and a brick full-service office in
the Athens Mall. The building in the Mall is owned by Peoples
Bank on leased real property. The office located in The Plains
is operated under a lease which expires in June, 2001.
First National Bank owns a three-story office building of brick
and stone at 415 Main Street in Caldwell, Ohio, and a one-story
masonry and brick building located on Marion Street in
Chesterhill, Morgan County, Ohio, together with a two-story
brick structure in McConnelsville, Morgan County, Ohio, located
on Kennebec Street. The Agencies headquarters are also located
in the Caldwell office of First National Bank.
All other properties occupied by the Company and its
subsidiaries are owned by the Company or its subsidiaries. The
Company and its subsidiaries own other real property which, when
considered in the aggregate, is not material to their
operations.
Management believes that all of the properties described above are in
satisfactory condition for their intended use.
ITEM 3. LEGAL PROCEEDINGS.
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There are no pending legal proceedings to which the Company or
its subsidiaries are a party or to which any of their property
is subject other than ordinary routine litigation incidental to
their business, none of which is material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
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Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
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Please refer to pages 12 and 13 of the Company's 1995 Annual
Report, which are incorporated by reference herein.
ITEM 6. SELECTED FINANCIAL DATA.
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The table of Selected Financial Data on page 11 of the Company's
1995 Annual Report is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION.
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Please refer to pages 35 through 43 of the Company's 1995 Annual
Report, which are incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
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The Consolidated Financial Statements of Peoples Bancorp Inc.
and it subsidiaries, included on pages 14 through 29 of the
Company's 1995 Annual Report, and the Report of Ernst & Young
LLP included therein at page 30 are incorporated herein by
reference. Following is an index to the financial statements
included in the Company's 1995 Annual Report:
1995
Annual
Report
Financial Statements: Pages
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Peoples Bancorp Inc. and Subsidiaries:
Report of Independent Auditors 30
Consolidated Balance Sheets as of December 31, 1995
and 1994 14
Consolidated Statements of Income for the Three Years
Ended December 31, 1995 15
Consolidated Statements of Stockholders' Equity for
the Three Years Ended December 31, 1995 16
Consolidated Statements of Cash Flows for the
Three Years Ended December 31, 1995 17
Notes to the Consolidated Financial Statements 18-29
Peoples Bancorp Inc.: (Parent Company Only Financial
Statements are included in Note 15 of the Notes to
the Consolidated Financial Statements) 28-29
Quarterly financial data set forth at page 29 of the Company's
1995 Annual Report are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
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No response required.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
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Directors and Executive Officers of the Company include those
persons enumerated under "Election of Directors" on pages 5 and
6 of the Company's definitive Proxy Statement relating to the
Company's Annual Meeting of Shareholders to be held April 9,
1996, which section is expressly incorporated by reference.
Other Executive Officers are Carol A. Schneeberger (39), Vice
President/Operations; Rolland B. Swart (57), Vice
President/Business Development; John (Jack) W. Conlon (50),
Chief Financial Officer; Jeffrey D. Welch (41), Treasurer; and
RobRoy Walters (37), Controller. Ms. Schneeberger became Vice
President/Operations of the Company in October, 1988. Prior
thereto, she was Auditor of the Company from August, 1987 to
October, 1988, and Auditor of Peoples Bank from January, 1986 to
October, 1988. She was Assistant Auditor of Peoples Bank from
January, 1979 to January, 1986. Mr. Swart joined the Company in
October, 1990 at his current position, left this position in
August, 1993, to become an executive vice president with Peoples
Bank, and then rejoined the Company at his current position in
September, 1994. Mr. Conlon has been Chief Financial Officer of
the Company since April, 1991. He has also been Chief Financial
Officer and Treasurer of Peoples Bank for more than five years.
Mr. Welch has been Treasurer of the Company since 1985. Mr.
Walters joined the Company in July, 1995. Mr. Walters has been
Controller for Peoples Bank since January, 1993. Prior thereto,
Mr. Walters was Assistant Controller from April, 1991 to
December, 1992, and Accounting Manager from February, 1989 to
March, 1991.
No disclosure is required to be made by the Company under Item
405 of Regulation S-K.
ITEM 11. EXECUTIVE COMPENSATION.
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See "Compensation Committee Interlocks and Insider
Participation" and "Compensation of Executive Officers and
Directors" on page 10, and pages 10 through 13, respectively, of
the Company's definitive Proxy Statement relating to the
Company's Annual Meeting of Shareholders to be held April 9,
1996, which are expressly incorporated by reference.
Neither the report on executive compensation nor the
performance graph included in the Company's definitive Proxy
Statement relating to the Company's Annual Meeting of
Shareholders to be held on April 9, 1996, shall be deemed to be
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
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See "Security Ownership of Certain Beneficial Owners and
Management" on pages 2 through 4 of the Company's definitive
Proxy Statement relating to the Company's Annual Meeting of
Shareholders to be held April 9, 1996, which section is
expressly incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
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See "Transactions Involving Management" on pages 7 and
8 of the Company's definitive Proxy Statement relating to the
Company's Annual Meeting of Shareholders to be held April 9,
1996, which section is expressly incorporated by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K.
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(a) (1) Financial Statements
--------------------
For a list of all financial statements included in this
Annual Report on Form 10-K, see "Index to Financial
Statements" at Page 13.
(a) (2) Financial Statement Schedules
-----------------------------
All schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange
Commission are not required under the related instructions
or are inapplicable and, therefore, have been omitted.
(a) (3) Exhibits
--------
Exhibits filed with this Annual Report on Form 10-K are
attached hereto. For a list of such exhibits, see "Exhibit
Index" beginning at page 14. The following table provides
certain information concerning executive compensation plans and
arrangements required to be filed as exhibits to this Annual
Report on Form 10-K.
Executive Compensation Plans and Arrangements
---------------------------------------------
Exhibit No. Description Location
----------- ---------------------------- -------------------
10(a) Deferred Compensation Incorporated herein
Agreement dated November 16, by reference to
1976 between Robert E. Evans Exhibit 6(g) to
and The Peoples Banking and Registration Statement
Trust Company, as amended No. 2-68524 on Form
March 13, 1979. S-14 of Peoples
Bancorp Inc., a
Delaware corporation
and the Company's
predecessor
("Peoples Delaware").
10(b) Peoples Bancorp Inc. Pages 60 through 89.
Retirement Savings Plan.
(Amended and Restated
Effective January 1, 1996.)
10(d) Peoples Bancorp Inc. Pages 90 through 149.
Retirement Plan and Trust.
(Amended and Restated
Effective January 1, 1989.)
10(e) Summary of the Incentive Incorporated herein
Bonus Plan of Peoples by reference to
Bancorp Inc. Exhibit 10(f) of
Peoples Delaware's
Annual Report on
Form 10-K for fiscal
year ended December
31, 1992 (File No.
0-16772).
10(f) Peoples Bancorp Inc. Amended Incorporated herein by
and Restated 1993 Stock reference to Exhibit 4
Option Plan. of the Company's
Registration
Statement on Form S-8
filed August 25, 1993
(Registration
Statement No.
33-67878).
10(g) Form of Stock Option Pages 150 thorugh 154.
Agreement used in connection
with grant of non-qualified
stock options under Peoples
Bancorp Inc. Amended and
Restated 1993 Stock Option
Plan.
10(h) Form of Stock Option Pages 155 through 159.
Agreement dated May 20, 1993,
used in connection with grant
of incentive stock options
under Peoples Bancorp Inc.
Amended and Restated 1993
Stock Option Plan.
10(i) Form of Stock Option Pages 160 through 164.
Agreement dated November 10,
1994, used in connection
with grant of incentive
stock options under Peoples
Bancorp Inc. Amended and
Restated 1993 Stock Option
Plan.
10(j) Peoples Bancorp Inc. 1995 Incorporated herein by
Stock Option Plan. reference to Exhibit
4 of the Company's
Form S-8 filed May 24,
1995 (Registration
Statement No.
33-59569).
10(k) Form of Stock Option Pages 165 through 169.
Agreement used in connection
with grant of non-qualified
stock options to non-employee
directors of the Company under
Peoples Bancorp Inc. 1995
Stock Option Plan.
10(l) Form of Stock Option Pages 170 through 174.
Agreement used in connection
with grant of non-qualified
stock options to non-employee
directors of the Company's
subsidiaries under Peoples
Bancorp Inc. 1995 Stock
Option Plan.
(b) Reports on Form 8-K
-------------------
There were no current reports on Form 8-K filed during the
quarter ended December 31, 1995.
(c) Exhibits
--------
Exhibits filed with Annual Report on Form 10-K are attached
hereto. For a list of such exhibits, see "Exhibit Index"
beginning at page 14.
(d) Financial Statement Schedules
-----------------------------
None.
SIGNATURES
- ----------
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
PEOPLES BANCORP INC.
Date: March 25, 1996 By: /s/ ROBERT E. EVANS
Robert E. Evans, President
Pursuant to the requirements of the Securities Exchange
Act of 1934, this Report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.
Signatures Title Date
- --------------------------- ------------------------- --------------
/s/ ROBERT E. EVANS President and Chief March 25, 1996
Robert E. Evans Executive Officer and
Director
Director March 25, 1996
Jewell Baker
/s/ DENNIS D. BLAUSER Director March 25, 1996
Dennis D. Blauser
/s/ GEORGE W. BROUGHTON Director March 25, 1996
George W. Broughton
/s/ WILFORD D. DIMIT Director March 25, 1996
Wilford D. Dimit
Director March 25, 1996
Barton S. Holl
/s/ NORMAN J. MURRAY Director March 25, 1996
Norman J. Murray
/s/ JAMES B. STOWE Director March 25, 1996
James B. Stowe
/s/ PAUL T. THEISEN Director March 25, 1996
Paul T. Theisen
/S/ THOMAS C. VADAKIN Director March 25, 1996
Thomas C. Vadakin
/S/ JOSEPH H. WESEL Chairman of the Board March 25, 1996
Joseph H. Wesel and Director
/s/ JEFFREY D. WELCH Treasurer (Principal March 25, 1996
Jeffrey D. Welch Accounting Officer)
/s/ JOHN W. CONLON Chief Financial Officer March 25, 1996
John W. Conlon
PEOPLES BANCORP INC.
INDEX TO FINANCIAL STATEMENTS
1995
Annual
Report
Financial Statements: Pages
- --------------------------------------------------------- -----------
Peoples Bancorp Inc. and Subsidiaries:
Report of Independent Auditors (Ernst & Young LLP) 30
Consolidated Balance Sheets as of December 31, 1995
and 1994 14
Consolidated Statements of Income for the Three Years
Ended December 31, 1995 15
Consolidated Statements of Stockholders' Equity for
the Three Years Ended December 31, 1995 16
Consolidated Statements of Cash Flows for the
Three Years Ended December 31, 1995 17
Notes to the Consolidated Financial Statements 18-29
Peoples Bancorp Inc.: (Parent Company Only Financial
Statements are included in Note 15 of Notes to
the Consolidated Financial Statements) 28-29
The report of Coopers & Lybrand L.L.P. is included at Exhibit 99
and is incorporated herein by reference.
EXHIBIT INDEX
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1995
Exhibit
Number Description Exhibit Location
- ------- ----------------------------------- -----------------------------
2 Office Purchase and Assumption Pages 17 to 59.
Agreement between Peoples Bank
and Bank One, Athens, N.A.,
dated December 14, 1995.
3 (a) Amended Articles of Incorporated herein by
Incorporation of Peoples reference to Exhibit 3(a) to
Bancorp Inc. the Company's Registration
Statement on Form 8-B filed
July 20, 1993 (File No.
0-16772).
3 (b) Regulations of Peoples Bancorp Inc. Incorporated herein by
reference to Exhibit 3(b)
to the Company's
Registration Statement on
Form 8-B filed July 20,
1993 (File No. 0-16772).
10 (a) Deferred Compensation Agreement Incorporated herein by
dated November 16, 1976 between reference to Exhibit 6(g)
Robert E. Evans and The Peoples to Registration Statement
Banking and Trust Company, as No. 2-68524 on Form S-14
amended March 13, 1979. of Peoples Bancorp Inc.,
a Delaware corporation and
the Company's predecessor
("Peoples Delaware").
10 (b) Peoples Bancorp Inc. Retirement Pages 60 through 89.
Savings Plan. (Amended and
Restated Effective January 1,
1996.)
10 (c) Amended and Restated Loan Agreement Incorporated herein by
dated June 30, 1994 between the reference to Exhibit 10(c)
Company and Fifth Third Bank. of the Company's Annual
Report on Form 10-K for
fiscal year ended December
31, 1994 (File No. 0-16772).
10 (d) Peoples Bancorp Inc. Retirement Pages 90 through 149.
Plan and Trust. (Amended and
Restated Effective January 1,
1989.)
10 (e) Summary of the Incentive Bonus Incorporated herein by
Plan of Peoples Bancorp Inc. reference to Exhibit 10(f)
of Peoples Delaware's
Annual Report on Form 10-K
for fiscal year ended
December 31, 1992 (File
No. 0-16772).
10 (f) Peoples Bancorp Inc. Amended Incorporated herein by
and Restated 1993 Stock Option reference to Exhibit 4 of
Plan. the Company's Registration
Statement on Form S-8 filed
August 25, 1993
(Registration Statement
No. 33-67878).
10 (g) Form of Stock Option Agreement Pages 150 through 154.
used in connection with grant of
non-qualified stock options under
Peoples Bancorp Inc. Amended and
Restated 1993 Stock Option Plan.
10 (h) Form of Stock Option Agreement Pages 155 through 159.
dated May 20, 1993, used in
connection with grant of incentive
stock options under Peoples Bancorp
Inc. Amended and Restated 1993
Stock Option Plan.
10 (i) Form of Stock Option Agreement Pages 160 through 164.
dated November 10, 1994, used in
connection with grant of incentive
stock options under Peoples Bancorp
Inc. Amended and Restated 1993 Stock
Option Plan.
10 (j) Peoples Bancorp Inc. 1995 Stock Incorporated herein by
Option Plan. reference to Exhibit 4 of
the Company's Form S-8
filed May 24, 1995
(Registration Statement No.
33-59569).
10 (k) Form of Stock Option Agreement Pages 165 through 169.
used in connection with grant of
non-qualified stock options to
non-employee directors of the
Company under Peoples Bancorp Inc.
1995 Stock Option Plan.
10 (l) Form of Stock Option Agreement Pages 170 through 174.
used in connection with grant of
non-qualified stock options to
non-employee directors of the
Company's subsidiaries under
Peoples Bancorp Inc. 1995 Stock
Option Plan.
11 Computation of Earnings Per Share. Page 175.
12 Statements of Computation of Page 176.
Ratios.
13 Peoples Bancorp Inc. Annual Report Page 177 through 223.
to Shareholders for the fiscal year
ended December 31, 1995 (not deemed
filed except for portions thereof
which are specifically incorporated
by reference into this Annual Report
on Form 10-K).
21 Subsidiaries of Peoples Bancorp Page 224.
Inc.
23 (a) Consent of Independent Auditors Page 225.
- Ernst & Young LLP.
23 (b) Consent of Independent Accountants Page 226.
- Coopers & Lybrand L.L.P.
27 Financial Data Schedule. Page 227.
99 Report of Independent Accountants Page 228.
- Coopers & Lybrand L.L.P.
EXHIBIT 2
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1995
OFFICE PURCHASE AND ASSUMPTION AGREEMENT
BETWEEN PEOPLES BANK AND BANK ONE, ATHENS, N.A.
Dated December 14, 1995
OFFICE PURCHASE AND ASSUMPTION AGREEMENT
- ----------------------------------------
This Office Purchase and Assumption Agreement (the "Agreement"
herein), made and entered into this 14th day of December, 1995,
by and between The Peoples Bank and Trust Company of Marietta,
Ohio, an Ohio banking corporation with its principal office at
138 Putnam St., Marietta, Ohio 45750 (hereinafter called
"Peoples") and Bank One, Athens, National Association, a
national banking association with its principal office at 2
South Court Street, Athens, Ohio 45701 (hereinafter called "BANK
ONE").
WHEREAS, Peoples desires to purchase and assume from BANK ONE,
and BANK ONE desires to sell and assign to Peoples certain
assets and liabilities associated with offices of BANK ONE in
Gallipolis, Pomeroy, and Rutland, Ohio, as hereinafter described;
NOW, THEREFORE, in consideration of the premises hereinafter set
forth and other good and valuable consideration, the sufficiency
of which is hereby acknowledged, Peoples and BANK ONE hereby
agree as follows:
1. PURCHASE AND ASSUMPTION.
------------------------
1.01 Purchase and Sale of Assets. At the Closing, as defined
in Section 6.01 hereof (the "Closing"), Peoples shall purchase
and acquire and BANK ONE shall sell and assign the real estate
and other assets described in Section 1.02 hereof (collectively,
the "Assets") all of which are used in and/or relate to business
conducted by BANK ONE at its branch offices known as and located at:
(a) 352 2nd Ave., Gallipolis, Ohio (the "Gallipolis Branch");
(b) Court and 2nd Street, Pomeroy, Ohio (the "Pomeroy
Branch"); and
(c) Salem Street, Rutland, Ohio (the "Rutland Branch")
pursuant to the terms and conditions set forth herein and
subject to exceptions, if any, set forth herein. The foregoing
offices are hereinafter sometimes collectively referred to as
the "Offices" and each, individually, sometimes as an "Office."
The transactions contemplated by this Agreement and the purchase
of assets and assumption of liabilities provided for herein is
sometimes referred to herein as the "Acquisition."
1.02 Transfer of Assets. Subject to the terms and conditions
of this Agreement, BANK ONE shall assign, transfer, convey and
deliver to Peoples, on and as of the Closing on the Closing
Date, as defined in Section 6.01 hereof, the Assets, which shall
include the following:
(a) Owned Real Estate. All of BANK ONE's right, title and
interest in and to the real estate described in attached
Schedule A on which an Office is situated, together with all of
BANK ONE's rights in and to all improvements thereon; and all
easements rights, privileges and appurtenances associated
therewith (the "Owned Real Estate");
(b) Furniture and Equipment. All of BANK ONE's right, title
and interest in and to the furniture, fixtures and equipment,
excluding the teller calculators, CRTs, controller and printer
and signs, printed supplies and documents bearing the BANK ONE
name and/or logo, owned by BANK ONE and located at the Offices,
but specifically including that listed on Schedule C attached
hereto (the "Fixed Assets");
(c) Safe Deposit Business. All right, title and interest of
BANK ONE in and to the safe deposit business (subject to the
allocation of safe deposit rental payments as provided in
Section 1.03(c)(ii) hereof) located at the Offices as of the
close of business on the Closing Date;
(d) Cash on Hand. All cash on hand at the Offices as of the
close of business on the Closing Date including vault cash,
petty cash, ATM cash and tellers' cash;
(e) Prepaid Expenses. All prepaid expenses recorded or
otherwise reflected on the books of BANK ONE as at October 31,
1995, or incurred in the ordinary course of business thereafter,
as being attributable to the Offices as of the close of business
on the day immediately preceding the Closing Date, but only to
the extent attributable to the Assets sold, assigned or
transferred to Peoples by BANK ONE pursuant to this Agreement
and only to the extent arising by reason of Peoples's use or
ownership of such Assets after the close of business on the
Closing Date. Any and all prepaid expenses incurred by BANK ONE
with respect to the Offices subsequent to October 31, 1995,
shall be subject to the prior written consent of Peoples;
(f) Office Loans. All right, title and interest in and to
all those loans which, as of the close of business on the
Closing Date, are (i) secured, in whole or in part, by Deposit
Accounts (as hereinafter defined) attributable to an Office and
being assumed by Peoples pursuant to this Agreement (the
"Deposit Account Loans") or (ii) automatically created as the
result of an overdraft of a Deposit Account pursuant to a
pre-approved overdraft protection program offered by BANK ONE
(the "Overdraft Loans"). The Deposit Account Loans and
Overdraft Loans are hereinafter referred to collectively as the
"Office Loans." BANK ONE shall not make any material change to
its customary policies for making Office Loans at the Offices or
extend Office Loans which are materially different than loans
offered by BANK ONE's other offices in Athens, Ohio. The
transfer of the Office Loans will be made without any reserve
for loan losses;
(g) Records of the Offices. All original records and
documents related to the Assets transferred or liabilities
assumed by Peoples including, but not limited to the deposit
accounts; and
(h) Contracts or Agreements. All of BANK ONE's right, title
and interest in and to the maintenance and service agreements
related to the Offices, as listed on Schedule D annexed hereto
and made a part hereof (the "Assumed Contracts"), provided the
same are assignable.
1.03 Acceptance and Assumption. Subject to the terms and
conditions of this Agreement, on and as of the Closing on the
Closing Date, Peoples shall:
(a) Assets. Receive and accept all of the Assets assigned,
transferred, conveyed and delivered to Peoples by BANK ONE
pursuant to this Agreement, including those identified in
Section 1.02 above.
(b) Deposit Liabilities. Assume and thereafter discharge,
pay in full and perform all of BANK ONE's obligations and duties
relating to the "Deposit Liabilities" (as hereinafter defined).
The term "Deposit Liabilities" is defined herein as all of BANK
ONE's obligations, duties and liabilities of every type and
character relating to all deposit accounts, other than (i) KEOGH
accounts and (ii) deposit accounts securing any loan of BANK ONE
which is not an Office Loan, for which Peoples assumes no
liability, which, as reflected on the books of BANK ONE as of
the close of business on the Closing Date, are attributable to
the Offices. The deposit accounts referred to in the
immediately preceding sentence (hereinafter the "Deposit
Accounts") include, without limitation, passbook accounts,
checking, Money Market and NOW accounts, Individual Retirement
Accounts for which BANK ONE has not received, on or before the
Closing Date, the written advice from the account holder of such
account holder's objection or failure to accept Peoples as
successor custodian ("IRA's") and certificates of deposit. The
"obligations, duties and liabilities" referred to in the
immediately preceding sentence include, without limitation, the
obligation to pay and otherwise process all Deposit Accounts in
accordance with applicable law and their respective contractual
terms and the duty to supply all applicable reporting forms for
post-closing periods including, without limitation, Form 1099's,
relating to the Deposit Accounts. With regard to each IRA
included within the Deposit Accounts, Peoples shall also assume
the plan pertaining thereto and the trustee or custodial
arrangement in connection therewith.
(c) Liabilities Under Leases/Safe Deposit Business. Assume
and thereafter fully and timely perform and discharge, in
accordance with their respective terms, all of the liabilities
and obligations of BANK ONE arising after the Closing Date with
respect to:
(i) all leases listed on Schedule E to this Agreement
(including safe deposit leases if any) and sold, assigned or
transferred to Peoples by BANK ONE pursuant to this Agreement;
(ii) the safe deposit business of the Offices including, but
not limited to, the maintenance of all necessary facilities for
the use of safe deposit boxes by the renters thereof during the
periods for which such persons have paid rent therefor in
advance to BANK ONE, subject to the agreed allocation of such
rents, which allocation shall be satisfied in full by BANK ONE
paying to Peoples, in the manner specified in Section 6.04
hereof, the amount of rental payment received by BANK ONE for
each such safe deposit box attributable to and prorated to
reflect the period from and after the Closing Date, subject to
the provisions of the applicable leases or other agreements
relating to such boxes; and
(iii) all safekeeping items and agreements listed on
Schedule E to this Agreement and delivered to Peoples by BANK
ONE pursuant to this Agreement, including, but not limited to,
all applicable safekeeping agreements, memoranda, or receipts so
delivered to Peoples by BANK ONE hereunder.
(d) Other Liabilities. Fully and timely perform and
discharge, as the same may be or become due the Assumed
Contracts and all additional liabilities, obligations and
deferred expenses of BANK ONE as of the date of this Agreement,
which are (i) reflected on the books of BANK ONE as being
attributable to an Office as of the close of business on the
Closing Date, and (ii) disclosed, by description and an estimate
of the amount, to Peoples in writing prior to the date of this
Agreement), but only to the extent attributable to the Assets
sold, assigned or transferred to Peoples by BANK ONE pursuant to
this Agreement and only to the extent arising by reason of
Peoples's use or ownership of such Assets after the close of
business on the Closing Date. No additional liabilities and
obligations of BANK ONE incurred subsequent to the date of this
Agreement shall be assumed by Peoples unless the prior written
consent of Peoples has been obtained prior to the incursion of
the liability or obligation by BANK ONE.
(e) Other Obligations. Fully and timely perform its
obligations relative to employees of the Offices, if any, as set
forth hereinafter.
1.04 Payment of Funds. Subject to the terms and conditions
hereof, at the Closing:
(a) Consideration. In consideration of Peoples's assumption
of the Deposit Liabilities and its other agreements herein, BANK
ONE shall make available and transfer to Peoples, in the manner
specified in Section 6.04 hereof, funds equal to the aggregate
balance of all Deposit Accounts (including interest posted or
accrued to such accounts as of the close of business on the day
immediately preceding the Closing Date) plus the deferred
expenses identified in Section 1.03(d) hereof prorated as of the
close of business on the day preceding the Closing Date less an
amount equal to the sum of:
(i) the amount of cash on hand at the Offices transferred to
Peoples as of the close of business on the Closing Date; and
(ii) 8.366% of the aggregate "Core Deposits" (as hereinafter
defined) of the Offices as of the close of business on the
Closing Date. The term "Core Deposits" shall mean the aggregate
balance of all Deposit Liabilities of the Offices (which
aggregate balance shall include interest posted to such accounts
as of the close of business on the Closing Date but shall
exclude interest accrued but not posted to such accounts as of
such dates). In the event that the Core Deposits as of close of
business on the Closing Date shall be less than $73,815,000,
BANK ONE may, at its sole option, provide funds which shall
constitute Core Deposits for purposes of this Agreement, so that
the Core Deposits assumed by People's hereunder as of the
Closing Date shall be not less than $73,815,000. The amount
calculated as the product of 8.366 % times the Core Deposits of
the Offices as of the close of business on the Closing Date, up
to a maximum of $81,585,000 of Core Deposits, is hereinafter
called the "Acquisition Consideration;" and
(iii) the amount of prepaid expenses described in Section
1.02(f) of this Agreement, prorated as of the close of business
on the day immediately preceding the Closing Date; and
(iv) the book value of the Office Loans together with
accrued and unpaid interest thereon computed as of the close of
business on the Closing Date.
In the event that BANK ONE provides supplemental funds as
Core Deposits pursuant to subsection (ii) herein, the rate and
maturity of such supplemental funds shall be equal to the
average rate and maturity of the other Core Deposits assumed by
Peoples hereunder.
In the event that the sum of items (i) through (vi) above
should be in excess of the aggregate amount to be transferred by
BANK ONE pursuant to the first paragraph of this Section
1.04(a), the full amount of such excess shall constitute an
amount due from Peoples to BANK ONE, and shall be paid to BANK
ONE at the Closing in the manner specified in Section 6.04
hereof. The parties shall execute a Preliminary Settlement
Statement at the Closing and Final Settlement post-closing, in
substantially the same forms as those attached as Schedules P
and Q.
(b) Reimbursement and Proration of Certain Expenses. All
other expenses (i) due and payable at times after the Closing
Date for periods prior to the close of business on the Closing
Date or (ii) paid prior to the close of business on the Closing
Date for periods following the Closing Date, including the
prepaid expenses described in Section 1.02(f) hereof and
deferred expenses described in Section 1.03(d) hereof, including
without limitation, real estate taxes and assessments which are
a lien but not yet due and payable, utility payments, payments
due on leases assigned, payments due on assigned service and
maintenance contracts and similar expenses relating to the
Offices shall be prorated between BANK ONE and Peoples as of the
close of business on the day immediately preceding the Closing
Date, provided, however, that all real estate taxes and
assessments, and to the extent payable by Seller and/or Buyer,
shall be prorated at the Closing on the basis of the most
recently certified real estate taxes and assessments, and all
utility payments and lease payments shall be prorated on the
basis of the best information available at Closing. With
respect to premiums paid to the FDIC deposit insurance for the
Deposit Liabilities it shall be assumed that all the Deposit
Liabilities are insured under the Bank Insurance Fund; the
proration of FDIC insurance premiums will be based on the amount
of the Deposit Liabilities as of the close of business on the
Closing Date and the number of days during any period for which
BANK ONE has prepaid premiums to the FDIC but during which
Peoples has held or will hold the Deposit Liabilities. For
prorations, if any, which cannot be reasonably calculated as of
the Closing, a post-closing adjustment shall be made in the
manner specified in Section 6.04 hereof.
(c) Expenses Relating to Real Property. The transfer (or
conveyance) fees relating to the Owned Real Estate and the
costs, fees and expenses of all title commitments, title
guaranties and title examinations relating to the procurement of
the Title Commitments related to the Owned Real Estate and the
referred to in Sections 2.01(c) and 5.02(g) herein, shall be
allocated to, and shall be borne, solely and exclusively by BANK
ONE. The costs, fees and expenses relating to the premiums and
endorsements for all title insurance policies (net of the costs
of all title commitments, guaranties and examinations),
recording costs and other similar costs, fees and expenses, if
any, relating to the sale and transfer of the Owned Real Estate
or the transfer of BANK ONE's interest in the , shall be
allocated to, and shall be borne, solely and exclusively, by
Peoples. BANK ONE shall reimburse Peoples at the Closing for
all the costs, fees and expenses allocated to BANK ONE pursuant
to this Section 1.04(c) but paid by Peoples, and Peoples shall
reimburse BANK ONE at the Closing for all of the costs, fees and
expenses allocated to Peoples pursuant to this Section 1.04(c)
but paid by BANK ONE in the manner specified in Section 6.04
herein. If this transaction does not close by virtue of a
breach of this Agreement, the breaching party shall be
responsible for and shall, as appropriate, reimburse the other
party for its expenses as set forth herein. If this transaction
does not close for any other reason, each party shall reimburse
the other party upon termination of this Agreement for such
party's share of expenses so that each party shall pay the same
share of expenses as it would have paid at Closing.
2. CONDUCT OF THE PARTIES PRIOR TO CLOSING.
----------------------------------------
2.01 Covenants of BANK ONE. BANK ONE hereby covenants to
Peoples that, from October 31, 1995, until the Closing, it will
do or cause the following to occur:
(a) Operation of the Offices. BANK ONE shall continue to
operate the Offices in a manner equivalent to that manner and
system of operation employed immediately prior to October
31,1995; provided, however, that it is contemplated by the
parties that, prior to Closing, BANK ONE will be terminating
certain programs which are currently in effect which allow
depositors to access Deposit Accounts through electronic means.
BANK ONE will use its best efforts to ensure that no harm or
damage to the reputation of the Offices or material reduction in
the existing deposit liabilities of the Offices occurs.
Notwithstanding the foregoing and except as may be required
to obtain the required authorizations referred to in Section
2.03 of this Agreement, between the date of this Agreement and
the Closing Date, and except as may be otherwise required by a
regulatory authority, BANK ONE shall not, without the prior
consent of Peoples, which consent shall not be unreasonably
withheld:
(i) cause any Office to engage or participate in any
material transaction or incur or sustain any obligation which,
in the aggregate, is material to its business, condition or
operations except in the ordinary course of business;
(ii) cause any Office to transfer to BANK ONE's other
operations any material amount of Assets, except for (a)
supplies, if any, which have unique function in BANK ONE's
business and ordinarily would not be useful to Peoples, (b) cash
and other normal intrabank transfers which may be transferred in
the ordinary course of business in accordance with normal
banking practices and (c) signs, or those parts thereof, bearing
the BANK ONE name and/or logo;
(iii) cause the Offices to transfer to BANK ONE's other
operations any deposits other than deposits securing loans made
by BANK ONE which are not Office Loans, except in the ordinary
course of business at the unsolicited request of depositors, or
cause any of BANK ONE's other operations to transfer to the
Offices any deposits, except in the ordinary course of business
at the unsolicited request of depositors and except as BANK ONE
may provide pursuant section 1.04(a)(ii) herein, provided,
however, that BANK ONE shall be permitted to make such transfers
of any deposits to or from the Offices provided that neither (A)
the net amount of transfers to the Offices minus the amount of
transfers from the Offices nor (B) the net amount of transfers
from the Offices minus transfers to the Offices exceeds $50,000;
(iv) invest in any Fixed Assets on behalf of any Office,
except for commitments made on or before the date of this
Agreement which are disclosed to Peoples on Schedule C of this
Agreement and for replacements of furniture, furnishings and
equipment and normal maintenance and refurbishing purchased or
made in the ordinary course of Office business;
(v) enter into or amend any continuing contract (other than
Deposit Liabilities and Office Loans) relating to the Offices,
which cannot be terminated without cause and without payment of
any amounts as a penalty, bonus, premium or other compensation
for termination, or which is not made in the ordinary course of
Office business;
(vi) undertake any actions which are inconsistent with a
program to use all reasonable efforts to maintain good relations
with customers and with employees employed at the Offices,
unless such actions are required or permitted by this Agreement;
(vii) hire (other than to replace a departing employee
and/or to bring the number of employees at the Offices to normal
staffing levels), transfer, reassign or terminate any employee
of the Offices, increase the compensation of any employee of the
Offices, or promote any of the employees except pursuant to and
consistent with customary BANK ONE procedures and policies; or
(viii) make any material change to its customary policies
for setting rates on deposits offered at the Offices.
(b) Information Concerning the Offices. Upon reasonable
notice, BANK ONE shall permit officers and authorized
representatives of Peoples access to inspect the Offices during
normal business hours or at such other time mutually agreed upon
by both parties and permit Peoples to make or cause to be made
such reasonable investigation of information and materials
relating to the financial condition of the Offices, including
general and subsidiary ledgers, deposit records, audit reports
and any other information concerning the business, property,
personnel and legal questions concerning the Offices (and
related to the physical condition of the Offices), as Peoples
reasonably deems necessary or advisable; provided, however, that
such access and investigation shall be reasonably related to the
transactions contemplated hereby and shall not interfere
unnecessarily with the normal operations of the Offices or BANK
ONE; and provided, further, that nothing in this Section 2.01(b)
shall be deemed to require BANK ONE to breach any obligation of
confidentiality or to reveal any proprietary information, trade
secrets, marketing, strategic plans or information not related
to the transaction contemplated by this Agreement. The
information and materials related to the financial condition of
the Offices which will be made available to Peoples from BANK
ONE pursuant to this subsection will be accurate in all material
respects and will accurately and completely reflect the Deposit
Liabilities attributable to the Offices as of the date the
information is provided.
(c) Title Commitments for Real Estate. BANK ONE shall
deliver to Peoples, at BANK ONE's expense, with respect to the
Owned Real Estate no later than thirty (30) days after the date
of this Agreement, a commitment or commitments (the "Title
Commitments") having an effective date as near as feasible to
the date of delivery of such Title Commitments from a title
insurance company authorized to do business in Ohio designated
by BANK ONE and reasonably satisfactory to Peoples, to issue to
Peoples as soon as practicable after the Closing Date, as
applicable, an American Land Title Association (ALTA) owners
(1992), including "gap", contiguity, access, EPA, and Form 9
endorsements, and/or leasehold title insurance (1975 Form)
policies having an effective date as of the Closing Date in an
amount satisfactory to Peoples (but not in excess of the
appraised value of such properties) covering the Owned Real
Estate, subject to the exceptions specified in the Title
Commitments. Such commitments shall show title vested in BANK
ONE. If title to all or part of the Owned Real Estate or Lease
Real Estate is unmarketable or is subject to any defect, lien,
encumbrance, easement, condition, restriction or encroachment
other than the Permitted Exceptions as defined in Section
10.08(c) herein, then Peoples shall provide written notice
thereof to BANK ONE. BANK ONE shall have thirty days after
written notice thereof from Peoples, to elect to remedy or
remove any such defect, lien, encumbrance, easement, condition,
restriction or encroachment but, if BANK ONE does not, Peoples
may elect to attempt to cure or remove such defect or
encumbrance or other matter, for a period of thirty days
thereafter. If such defect or encumbrance or other matter is
not cured, then, in addition to any other rights which Peoples
may have hereunder, Peoples shall have the right (i) to declare
this Agreement terminated by written notice to BANK ONE, or (ii)
to waive any objection to such defect or encumbrance or other
matter in which event such defect, encumbrance, or other matter
shall be deemed to be a Permitted Exception. The Owned Real
Estate is being sold by BANK ONE to Peoples hereunder free and
clear of all liens, claims, encumbrances and rights of tenants
in possession except for the Permitted Exceptions, and the
conveyance by Warranty Deed to be delivered by BANK ONE pursuant
hereto shall be subject only to the Permitted Exceptions. BANK
ONE also shall execute and deliver to Peoples at the time of
Closing such affidavits and other instruments, if any, as the
title insurance issuing the Title Commitments may require to
delete the standard exceptions appearing as Schedule B items in
a standard ALTA owners or leasehold owners title insurance
policy, other than those which may only be deleted by a survey.
BANK ONE also shall execute and deliver a so-called FIRPTA
affidavit at Closing. Peoples shall have the right to obtain at
its sole cost and expense duly certified surveys, and BANK ONE
hereby grants to Peoples and its surveyors, agents and
contractors right of access to the Owned Real Estate for the
purpose of performing the surveys.If such surveys are performed,
the resulting legal descriptions shall be used in all deeds of
conveyance or assignment, as necessary.
(d) Required Authorizations. BANK ONE shall obtain and
procure all necessary corporate approvals and authorizations, if
any, required on its part to enable it to fully perform all
obligations imposed on it hereunder which must be performed by
it at or prior to the Closing.
(e) Creation of Liens and Encumbrances. With respect to the
Owned Real Estate, BANK ONE shall not create or allow any liens,
imperfections in title, charges, easements, restrictions or
encumbrances other than the Permitted Exceptions.
(f) Condemnation. If prior to Closing all or any portion of
the Owned Real Estate is taken or is made subject to eminent
domain or other governmental acquisition proceedings, then BANK
ONE shall promptly notify Peoples thereof, and Peoples may
either complete the Closing and receive the proceeds paid or
payable on account of such acquisition proceedings, or terminate
this Agreement. If Peoples terminates this Agreement, both
parties shall thereupon be relieved from all further obligations
hereunder.
(g) Insurance Proceeds, Casualty and Condemnation Payments.
BANK ONE shall maintain adequate insurance on all the Assets
consisting of Owned Real Estate and Fixed Assets. In the event
of any damage, destruction or condemnation affecting such Assets
between the date hereof and the time of the Closing, BANK ONE
shall deliver to Peoples any insurance proceeds and other
payments, to the extent of the applicable amount set forth in
Section 1.04(a)(ii) or (iii) hereof with respect to Owned Real
Estate and the replacement cost with respect to the Fixed
Assets, as the case may be, received (or with respect to
insurance proceeds, which would be received assuming BANK ONE's
insurance policy had no deductible) by BANK ONE as a result
thereof unless, in the case of damage or destruction, BANK ONE
has repaired or replaced the damaged or destroyed property.
(h) IRA Accounts. Not later than thirty days prior to the
expected Closing Date, BANK ONE shall, at BANC ONE's expense,
mail notice of BANK ONE's resignation as Custodian and the
appointment of Peoples as the Successor Custodian, effective
upon Closing, of each Individual Retirement Account maintained
at the Offices. The notice shall include such other information
that is mutually agreed upon by BANK ONE and Peoples.
2.02 Covenants of Peoples. Peoples hereby covenants to BANK
ONE that, from the date hereof until the Closing, it will do or
cause the following to occur:
(a) Regulatory Applications. Peoples shall prepare and
submit for filing, at no expense to BANK ONE, any and all
applications, filings, and registrations with, and notifications
to, all federal and state authorities required on the part of
Peoples or any shareholder or affiliate of Peoples for the
Acquisition to be consummated at the Closing as contemplated in
Section 6.01 herein and for Peoples to operate the Offices
following the Closing. Peoples shall provide BANK ONE with a
draft copy of each application for BANK ONE's review and comment
prior to filing, which review and comment by BANK ONE will occur
not later than 10 business days following receipt thereof by
BANK ONE. Such applications will be submitted to BANK ONE in
draft form within thirty (30) days from the date of this
Agreement and filed by Peoples without delay following BANK
ONE's review and receipt of comments thereon, if any; provided,
however, that in no event will such applications be filed later
than sixty (60) days from the date of this Agreement.
Thereafter, Peoples shall pursue all such applications, filings,
registrations, and notifications diligently and in good faith,
and shall file such supplements, amendments, and additional
information in connection therewith as may be reasonably
necessary for the Acquisition to be consummated at such Closing
and for Peoples to operate the Offices following the Closing.
Peoples shall deliver to BANK ONE evidence of the filing of each
and all of such applications, filings, registrations and
notifications (except for any confidential portions thereof),
and any supplement, amendment or item of additional information
in connection therewith (except for any confidential portions
thereof). Peoples shall also deliver to BANK ONE a copy of each
material notice, order, opinion and other item of correspondence
received by Peoples from such federal and state authorities
(except for any confidential portions thereof) and shall advise
BANK ONE, at BANK ONE's request, of developments and progress
with respect to such matters.
(b) Required Authorizations. Peoples shall obtain and
procure all necessary corporate approvals and authorizations, if
any, required on its part to enable it to fully perform all
obligations imposed on it hereunder which must be performed by
it at or prior to the Closing.
(c) Satisfaction of Conditions. Peoples shall not
voluntarily undertake any course of action inconsistent with the
satisfaction of the requirements or the conditions applicable to
it, or its agreements, undertakings, obligations, or covenants
set forth in this Agreement, and it shall promptly do all such
reasonable acts and take all such reasonable measures as may be
appropriate to enable it to perform as early as possible the
agreements, undertakings, obligations, and covenants herein
provided to be performed by it, and to enable the conditions
precedent to BANK ONE's obligations to consummate the Closing of
the Acquisition to be fully satisfied. Additionally, Peoples
shall not knowingly, directly or through any existing or future
subsidiary or affiliate, take any action that would be in
conflict with, or result in the denial, delay, termination, or
withdrawal of, any of the regulatory approvals referred to in
this Agreement.
2.03 Covenants of All Parties. BANK ONE hereby covenants to
Peoples, and Peoples hereby covenants to BANK ONE that, from the
date hereof until the Closing, such party shall cooperate fully
with the other party in attempting to obtain all consents,
approvals, permits, or authorizations which are required to be
obtained pursuant to any federal or state law, or any federal or
state regulation thereunder, for or in connection with the
transactions described and contemplated in this Agreement.
3. REPRESENTATIONS AND WARRANTIES.
-------------------------------
3.01 Representations and Warranties of BANK ONE. BANK ONE
represents and warrants to Peoples as follows:
(a) Good Standing and Power of BANK ONE. BANK ONE is a
national banking association duly organized, validly existing,
and in good standing under the laws of the United States with
corporate power to own its properties and to carry on its
business as presently conducted. BANK ONE is an insured bank as
defined in the Federal Deposit Insurance Act and applicable
regulations thereunder.
(b) Authorization of Agreement. The execution and delivery
of this Agreement, and the transactions contemplated hereby,
have been duly authorized by all necessary corporate action on
the part of BANK ONE, and this Agreement is a valid and binding
obligation of BANK ONE.
(c) Effective Agreement. Subject to the receipt of any and
all necessary regulatory approvals and required consents, the
execution, delivery, and performance of this Agreement by BANK
ONE and the consummation of the transactions contemplated
hereby, will not conflict with, result in the breach of,
constitute a violation or default, result in the acceleration of
payment or other obligations, or create a lien, charge or
encumbrance, under any of the provisions of Articles of
Association or By-Laws of BANK ONE, under any judgment, decree
or order, under any law, rule, or regulation of any government
or agency thereof, or under any material contract, material
agreement or material instrument to which BANK ONE is subject,
where such conflict, breach, violation, default, acceleration or
lien would have a material adverse effect on the Assets or BANK
ONE's ability to perform its obligations hereunder.
(d) Title to Real Estate And Other Assets. Except for the
Owned Real Estate, BANK ONE is the sole owner of each of the
Assets free and clear of any mortgage, lien, encumbrance or
restrictions of any kind or nature. As to the Owned Real
Estate, BANK ONE is the sole owner of a fee simple interest in,
and has good and marketable title to, such Owned Real Estate,
free and clear of all liens, claims, encumbrances and rights of
tenants in possession except for the Permitted Exceptions and
shall convey such real estate to Peoples by delivery at the
Closing of a warranty deed conveying such title subject only to
the Permitted Exceptions.
(e) Zoning Variations. As of the date of this Agreement,
BANK ONE has neither received written notice of nor has it any
notice of any contemplation to provide BANK ONE with any written
notice from any governmental authority of any uncorrected
violations of zoning and/or building codes relating to the Owned
Real Estate. The Owned Real Estate is zoned to permit Peoples
to use said properties as offices of a financial institution.
(f) IRA Account Documentation. The form of Individual
Retirement Custodial Account Agreement for individual retirement
accounts, and the related Amended and Restated Individual
Retirement Account Disclosure Statement annexed hereto as
Schedule F, constitute the form of the document establishing the
trustee or custodial arrangement in connection with all IRAs's
maintained at the Offices.
(g) Condemnation Proceedings. BANK ONE has received no
written notice of any pending or threatened, nor is it aware of
any contemplated, condemnation proceeding affecting or relating
to the Offices.
(h) No Broker. No broker or finder, or other party or agent
performing similar functions, has been retained by BANK ONE or
is entitled to be paid based upon any agreements, arrangements,
or understandings made by BANK ONE in connection with the
transactions contemplated hereby, and no brokerage fee or other
commission has been agreed to be paid by BANK ONE on account of
the transactions contemplated hereby.
(i) Taxes. All federal, state and local payroll,
withholding, property, sales, use and transfer taxes, if any,
which are due and payable by BANK ONE relating to the Offices
prior to the date of Closing shall be paid in full as of the
Closing Date or BANK ONE shall have made appropriate provision
for such payment in accordance with ordinary business practices.
Any claims for refunds of taxes which have been paid by BANK
ONE shall remain the property of BANK ONE.
(j) Operations Lawful. The conduct of banking business at
the Offices is in compliance in all material respects with all
federal, state, county and municipal laws, ordinances and
regulations applicable to conduct of such business.
(k) Third-Party Claims. There are no actions, suits or
proceedings, pending or, to the best of BANK ONE's knowledge,
threatened against or affecting BANK ONE which could have a
material adverse effect on the aggregate value of the banking
business and Assets of the Offices.
(l) Insurance. BANK ONE maintains such insurance on the
Offices and the Fixed Assets to be purchased by or assigned to
Peoples as may be required or as is customary in the business of
banking.
(m) Labor Relations. No employee located at any of the
Offices is represented, for purposes of collective bargaining,
by a labor organization of any type. BANK ONE is unaware of any
efforts during the past three years to unionize or organize any
employees at any Office, and no material claim related to
employees at the Offices under the Fair Labor Standards Act,
National Labor Relations Act, Civil Rights of 1964, Walsh-Healy
Act, Davis Bacon Act, Civil Rights of Act of 1866, Age
Discrimination in Employment Act, Equal Pay Act of 1963,
Executive Order No. 11246, Federal Unemployment Tax Act, Vietnam
Era Veterans Readjustment Act, Occupational Safety and Health
Act, Americans with Disabilities Act or any state or local
employment related law, order, ordinance or regulation, no
unfair labor practice, discrimination or wage-and-hour claim is
pending or, to the best of BANK ONE's knowledge, threatened
against or with respect to BANK ONE.
(n) Governmental Notices. BANK ONE has not received notice
from any federal or state governmental agency indicating that it
would oppose or not grant or issue its consent or approval, if
required, with respect to the transactions contemplated by this
Agreement.
(o) Environmental. To the actual knowledge of the executive
officers of BANK ONE, there are no actions, proceedings or
investigations pending before any environmental regulatory body,
federal or state court with respect to or threatened against or
affecting BANK ONE in respect of any Office under the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"), or under the any federal,
state, local or municipal environmental statute, ordinance or
regulation in respect thereof and in connection with any release
of any toxic or "hazardous substance," pollutant or contaminant
into the "environment," nor, to the best knowledge of the
executive officers of BANK ONE, is there any reasonable basis
for the institution of any such actions or proceedings or
investigations which is probable of assertion, nor are there any
such actions or proceedings or investigations in which BANK ONE
is a plaintiff or complainant. To the actual knowledge of the
executive officers of BANK ONE, BANK ONE is not responsible in
any material respect under any applicable environmental law for
any release by BANK ONE or for any release by an other "Person"
at or in the vicinity of any Office of a hazardous or toxic
substance, contaminant or pollutant caused by the spilling,
leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping or disposing of hazardous
wastes or other chemical substances, pollutants or contaminants
into the environment, nor is BANK ONE responsible for any
material costs (as a result of the acts or omissions of BANK
ONE, or, to the actual knowledge of the executive officers of
BANK ONE, as a result of the acts or omissions of any other
"person") of any remedial action including, without limitation,
costs arising out of security fencing, alternative water
supplies, temporary evacuation and housing and other emergency
assistance undertaken by any environmental regulatory body
having jurisdiction over BANK ONE to prevent or minimize any
actual or threatened release by BANK ONE on premises any
hazardous wastes or other chemical substances, pollutants and
contaminants into the environment which would endanger the
public health or the environment. All terms contained in
quotation marks in this paragraph and the paragraph immediately
following shall have the meaning ascribed to such terms as
defined in all federal, state and local statutes, regulations or
ordinances.
Except as previously disclosed to Peoples in writing, to the
actual knowledge of the executive officers of BANK ONE, each
Office is, in all material respects, in compliance with all
applicable Federal, state, local or municipal statutes,
ordinances, laws and regulations and all orders, rulings or
other decisions of any court, administrative agency or other
governmental authority relating to the protection of the
environment.
For purposes of this section, the term "executive officer"
shall refer to all executive officers of BANK ONE as defined in
12 CFR e215.2 as of the date of this Agreement.
(p) Access to Real Estate. No fact or condition exists which
would result in the termination or impairment of access to the
Owned Real Estate from adjoining public or private streets or
ways or which could result in discontinuation of necessary
sewer, water, electric, gas, telephone, or other utilities or
services. All sewage, sanitation, plumbing, refuse disposal,
and similar facilities servicing the Owned Real Estate are in
full compliance with applicable governmental regulations.
(q) Mechanic's Liens. BANK ONE has paid or will pay in full
all bills and invoices for labor and material of any kind
arising from the ownership, operation, management, repair,
maintenance, or leasing of the Owned Real Estate, and no actual
or potential mechanic's lien or other claims are outstanding or
available to any party in connection with the ownership,
operation, management, repair, maintenance, or leasing said
properties.
(r) Deposit. Attached hereto as Schedules G is a true and
accurate schedule of all Deposit Accounts (including individual
retirement accounts) domiciled at the Offices, prepared as of
October 31, 1995, listing by Office and by category the amount
of all deposits and the interest rates and maturity dates
associated with such deposits, and indicating the deposits that
constitute Core Deposits. The maturity and mix (but not the
amount) of the Deposit Accounts, by category of account, shall
be substantially the same at the Closing as on October 31, 1995,
subject, in all respects, to any and all variances which may
occur as a result of customer actions and any and all market
conditions affecting depository institutions in the markets
served by the Offices
(s) Office Loans. Attached hereto as Schedule H is a true
and accurate schedule of all Office Loans, including accrued and
unpaid interest thereon, computed as of a date within thirty
(30) days prior to the date of this Agreement, excluding,
however, such Office Loans which are more than 30 days past due
for payment.
(t) Personal Property. Schedule C is a true and accurate
schedule of Fixed Assets owned by BANK ONE at any of the
Offices, which Schedule specifies the original cost and net book
value of each such item, as shown on the financial records of
BANK ONE, computed as of the month-end immediately prior to the
date of execution of this Agreement and describing any security
interest therein or lien thereon.
(u) Assumed Contracts. Schedule D is a true and accurate
schedule of all Assumed Contracts related to the Offices. Each
Assumed Contract is valid and subsisting in full force and
effect.
(v) FIRPTA. BANK ONE is not a "foreign person" within the
meaning of the Internal Revenue Code e 1445.
3.02 Representations and Warranties of Peoples. Peoples
represents and warrants to BANK ONE as follows:
(a) Good Standing and Power of Peoples. Peoples is a banking
corporation duly organized, validly existing, and in good
standing under the laws of the State of Ohio with corporate
power to own its properties and to carry on its business as
presently conducted. Peoples is an insured bank, as defined in
the Federal Deposit Insurance Act and applicable regulations
thereunder.
(b) Authorization of Agreement. The execution and delivery
of this Agreement, and the transactions contemplated hereby,
have been duly authorized by all necessary corporate action on
the part of Peoples, and this Agreement is a valid and binding
obligation of Peoples.
(c) Effective Agreement. Subject to the receipt of any and
all necessary regulatory approvals, the execution, delivery, and
performance of this Agreement by Peoples, and the consummation
of the transactions contemplated hereby, will not conflict with,
result in the breach of, constitute a violation or default,
result in the acceleration of payment or other obligations, or
create a lien, charge or encumbrance, under any of the
provisions of the Articles of Incorporation or Code of
Regulations of Peoples, under any judgment, decree or order,
under any law, rule or regulation of any government or agency
thereof, or under any material agreement, material contract or
material instrument to which Peoples is subject, where such
conflict, breach, violation, default, acceleration or lien would
have a material adverse effect on Peoples's ability to perform
its obligations hereunder.
(d) No Broker. No broker or finder, or other party or agent
performing similar functions, has been retained by Peoples or is
entitled to be paid based upon any agreements, arrangements, or
understandings made by Peoples in connection with the
transactions contemplated hereby, and no brokerage fee or other
commission has been agreed to be paid by Peoples on account of
the transactions contemplated hereby.
4. ACTIONS RESPECTING EMPLOYEES AND PENSION AND EMPLOYEE BENEFIT PLANS.
--------------------------------------------------------------------
4.01 Employment of Employees
(a) Peoples may, but shall be under no obligation to, extend
offers of employment, as of the Closing Date to employees of the
Offices.
(b) Not later than thirty (30) days following the date of
this Agreement, Peoples shall advise BANK ONE, in writing, of
its election, at its sole discretion, to offer employment to, as
of the Closing Date, any or all of the persons assigned to the
Offices as employees of Peoples (such selected persons, who
thereafter accept such offer of employment, are hereinafter
referred to as "Transferred Employees"), but the language of
this Agreement shall not be construed as an offer of employment
to any such persons. Following the expiration of said 30 days,
BANK ONE shall be permitted to offer employment to any employees
of the Offices who are not Transferred Employees.
(c) BANK ONE will cooperate with Peoples to the extent
reasonably requested and legally permissible to provide Peoples
with information about employees of the Offices including,
without limitation, providing Peoples with the personnel files
of those employees of the Offices who provide BANK ONE with
their written consent thereto, and a means to meet with
employees of the Offices for the purpose of selecting
Transferred Employees.
4.02 Terms and Conditions of Employment. Except as otherwise
provided explicitly in this Agreement, the terms of employment
for each Transferred Employee shall be determined solely by
Peoples's policies, procedures, and programs; provided, however,
that for purposes of Peoples's various employee benefit plans at
and following the Closing Date, (i) time of service with BANK
ONE will be credited to Transferred Employees for purposes of
determining and calculating their eligibility for and vesting
with respect to such plans and (ii) all pre-existing conditions
of Transferred Employees will be waived by Peoples with respect
to all Peoples's plans.
4.03 Compliance with Law. BANK ONE agrees that it shall
comply with any applicable requirements, if any, for the Worker
Adjustment and Retraining Notification Act in connection with
the transaction contemplated by this Agreement.
4.04 Actions to be Taken by BANK ONE. BANK ONE covenants to
Peoples that it will do or cause the following to occur:
(a) Solicitation of Transferred Employees. Except with the
written consent of Peoples, for six months following the Closing
Date, BANK ONE will not solicit Transferred Employees as
prospective officers or employees of BANK ONE.
(b) Employee Benefit Programs. BANK ONE's obligations to
employees of the Offices, including Transferred Employees, will
be as set forth in established policies of BANC ONE CORPORATION
and/or BANK ONE and BANK ONE shall continue its employee benefit
programs in full force and effect as benefit programs for
Transferred Employees through the Closing Date. After the
Closing, BANK ONE shall retain the responsibility and liability
for the funding and payment of all claims incurred under such
employee benefit programs through the Closing Date. Peoples
shall have no obligation or liability to compensate Transferred
Employees for benefits of any kind earned, accrued, promised
and/or provided to Transferred Employees as employees of BANK
ONE, except with respect to eligibility and vesting as set forth
in Section 4.02, above.
(c) Employees of the Offices. BANK ONE shall not, without
Peoples's prior written consent (i) increase the aggregate
full-time equivalent size of the work force at the Offices above
the aggregate normal staffing levels designated by BANK ONE for
the Offices at the date hereof, (ii) terminate any Transferred
Employee prior to the Closing Date, unless such person is
dismissed for cause and written notice of such dismissal is
provided to Peoples, (iii) transfer or assign any Transferred
Employee prior to the Closing Date to a position of permanent
employment with BANK ONE; or (iv) increase the compensation of
any Transferred Employee except pursuant to existing BANK ONE
policies and procedures.
The obligations of BANK ONE pursuant to this Section 4.04
shall survive the Closing.
5. CONDITIONS PRECEDENT TO CLOSING.
--------------------------------
5.01 Conditions to BANK ONE's Obligations. The obligations of
BANK ONE to consummate the Acquisition are subject to the
satisfaction, or the waiver in writing by BANK ONE to the extent
permitted by applicable law, of the following conditions at or
prior to the Closing:
(a) Prior Regulatory Approval. All filings and registrations
with, and notifications to, all federal and state authorities
required for consummation of the Acquisition shall have been
made, all approvals and authorizations of all federal and state
authorities required for consummation of the Acquisition shall
have been received and shall be in full force and effect, and
all applicable waiting periods shall have passed.
(b) Corporate Action. The Board of Directors of Peoples
shall have taken all corporate action necessary by it to
effectuate this Agreement and the Acquisition and Peoples shall
have furnished BANK ONE with a certified copy of each such
resolution adopted by the Board of Directors of Peoples
evidencing the same.
(c) Representations and Warranties. The representations and
warranties of Peoples set forth in this Agreement shall be true
and correct in all material respects on the Closing Date with
the same effect as though all such representations and
warranties had been made on and as of such date, and Peoples
shall have delivered to BANK ONE a Certificate to that effect,
dated as of the Closing Date to the effect specified in Schedule
I to this Agreement.
(d) Covenants. Each and all of the covenants and agreements
of Peoples to be performed or complied with at or prior to
Closing pursuant to this Agreement shall have been duly
performed or complied with in all material respects by Peoples,
or waived by BANK ONE, and Peoples shall have delivered to BANK
ONE a Certificate to that effect, dated as of the Closing Date
to the effect specified in Schedule I to this Agreement.
(e) No Proceeding or Prohibition. At the time of the
Closing, there shall not be any litigation, investigation,
inquiry, or proceeding pending or threatened in or by any court
or agency of any government or by any third party which in the
judgment of the executive officers of BANK ONE, with the advice
of counsel, presents a bona fide claim to restrain, enjoin, or
prohibit consummation of the transaction contemplated by this
Agreement or which might result in rescission in connection with
such transactions; and BANK ONE shall have been furnished with a
Certificate, substantially in the form as specified in Schedule
I to this Agreement, dated as of the Closing Date and signed by
the Chairman, President, or an Executive Vice President and
Secretary or Assistant Secretary of Peoples, to the effect that
no such litigation, investigation, inquiry, or proceeding is
pending or, to the best of their knowledge, threatened.
(f) Opinion of Counsel. Peoples shall have delivered to BANK
ONE an opinion, dated as of the Closing Date, of legal counsel
reasonably satisfactory to BANK ONE and its counsel, in form and
substance reasonably satisfactory to BANK ONE and its counsel,
to the effect specified in Schedule J to this Agreement.
5.02 Conditions to Peoples's Obligations. The obligations of
Peoples to consummate the Acquisition are subject to the
satisfaction, or the waiver in writing by Peoples to the extent
permitted by applicable law, of the following conditions at or
prior to the Closing:
(a) Prior Regulatory Approval. All filings and registrations
with, and notifications to, all federal and state authorities
required for consummation of the Acquisition and operation of
the Offices by Peoples shall have been made, all approvals and
authorizations of all federal and state authorities required for
consummation of the Acquisition and operation of the Offices by
Peoples shall have been received and shall be in full force and
effect, and all applicable waiting periods shall have passed.
(b) Corporate Action. The Board of Directors of BANK ONE
shall have taken all corporate action necessary to effectuate
this Agreement and the Acquisition; and BANK ONE shall have
furnished Peoples with a certified copy of each such resolution
adopted by the Board of Directors of BANK ONE evidencing the
same.
(c) Representations and Warranties. The representations and
warranties of BANK ONE set forth in this Agreement shall be true
and correct in all material respects on the Closing Date with
the same effect as though all such representations and
warranties had been made on and as of such date (unless a
different date is specifically indicated in such representations
and warranties), and BANK ONE shall have delivered to Peoples a
Certificate to that effect, dated as of the Closing Date to the
effect specified in Schedule K to this Agreement.
(d) Covenants. Each and all of the covenants and agreements
of BANK ONE to be performed or complied with pursuant to this
Agreement shall have been duly performed or complied with in all
material respects by BANK ONE, or waived by Peoples, and BANK
ONE shall have delivered to Peoples a Certificate to that
effect, dated as of the Closing Date to the effect specified in
Schedule K to this Agreement.
(e) No Proceedings or Prohibitions. At the time of the
Closing, there shall not be any litigation, investigation,
inquiry, or proceeding pending or threatened in or by any court
or agency of any government or by any third party which in the
judgment of the executive officers of Peoples, with the advice
of counsel, presents a bona fide claim to restrain, enjoin, or
prohibit consummation of the transactions contemplated by this
Agreement or which might result in rescission in connection with
such transactions; and Peoples shall have been furnished with a
Certificate, in substantially the form specified in Schedule K
to this Agreement, dated as of the Closing Date and signed by
the Chairman, President, or Vice President, and the Secretary or
Assistant Secretary of BANK ONE, to the effect that no such
litigation, investigation, inquiry, or proceeding is pending or
threatened to the best of their knowledge.
(f) Opinion of Counsel. BANK ONE shall have delivered to
Peoples an opinion, dated as of the Closing Date, of legal
counsel reasonably satisfactory to Peoples and its counsel, in
form and substance reasonably satisfactory to Peoples and its
counsel, to the effect specified in Schedule L to this Agreement.
(g) Real Property. The Title Commitment (as defined in
Section 2.01(c) herein) shall have been delivered to Peoples,
and updated to or as close as practicable to (but in no event
more than five (5) business days prior to) the Closing Date, in
accordance with the terms of such Section, and such updated
Title Commitment shall not include any special exceptions other
than those set forth in the original Title Commitment and any
other Permitted Exceptions.
(h) Fixed Assets. There shall have been no material
alteration in or adjustment to the Fixed Assets. For purposes
of this subsection (h), it will not be considered to be a
material alteration or adjustment to the Fixed Assets if (i)
there is damage or destruction to the Fixed Assets as
contemplated by Section 2.01(g) herein and BANK ONE complies
with said Section 2.01(g), (ii) BANK ONE makes additions to the
Fixed Assets with the prior written consent of Peoples or (iii)
BANK ONE makes additions to the Fixed Assets without Peoples's
consent in order to correct emergency situations which are
threatening to impair BANK ONE's operations at an Office.
5.03 Non-Satisfaction of Conditions Precedent. The
non-occurrence or delay of the Closing of the Acquisition by
reason of the failure of timely satisfaction of all conditions
precedent to the obligations of any party hereto to consummate
the Acquisition shall in no way relieve such party of any
liability to the other party hereto, nor be deemed a release or
waiver of any claims the other party hereto may have against
such party, if and to the extent the failure of timely
satisfaction of such conditions precedent is attributable to the
actions or inactions of such party.
5.04 Waiver of Conditions Precedent. The conditions specified
in Sections 5.01 and 5.02 herein shall be deemed satisfied or,
to the extent not satisfied, waived if the Closing occurs unless
such failure of satisfaction is reserved in a writing executed
by Peoples and BANK ONE at or prior to the Closing.
6. CLOSING.
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6.01 Closing and Closing Date. The Acquisition contemplated
by this Agreement shall be consummated and closed (the
"Closing") at such location as shall be mutually agreed upon by
Peoples and BANK ONE, on a date to be mutually agreed upon by
Peoples and BANK ONE which date is after all required regulatory
approvals have been obtained and all applicable regulatory
waiting periods associated therewith have expired. The precise
date on which the Closing shall occur (the "Closing Date") shall
be confirmed by the parties in writing not less than five (5)
days after receiving all required regulatory approvals.
6.02 BANK ONE's Actions at Closing. At the Closing (unless
another time is specifically stated in Section 6.04 hereof),
BANK ONE shall, with respect to the Offices:
(a) deliver to Peoples at the Offices such of the Assets
purchased hereunder as shall be capable of physical delivery,
including, without limitation, all assets comprising the safe
deposit box business, if any, of the Offices; and
(b) execute, acknowledge and deliver to Peoples all such
warranty deeds (qualified, as necessary, to reflect all
Permitted Exceptions), endorsements, assignments, bills of sale,
and other instruments of conveyance, assignment, and transfer as
shall reasonably be necessary or advisable to consummate the
sale, assignment, and transfer of the Assets sold or assigned to
Peoples hereunder and such other documents as the title company
may reasonably require; the originals of all blueprints,
construction plans, specifications and plat relating to the
Owned Real Estate, which are now in BANK ONE's possession or
which BANK ONE has reasonable access to; and such other
documents or instruments as may be reasonably required by
Peoples, required by other provisions of this Agreement, or
reasonably necessary to effectuate the Closing. All of the
documents and instruments to be delivered by BANK ONE hereunder
shall be in form and substance reasonably satisfactory to
counsel for Peoples; and
(c) assign, transfer, and deliver to Peoples such of the
following records (in whatever form or medium then maintained by
BANK ONE) pertaining to the Deposit Liabilities and accrued
interest thereon of the Offices assumed by Peoples hereunder as
exist and are available:
(i) signature cards, orders and contracts between BANK ONE
and depositors of the Offices, and records of similar character; and
(ii) canceled checks and/or negotiable orders of withdrawal
representing charges to depositors; and
(iii) a trial balance listing of records of account; and
(iv) all other miscellaneous records, statements and other
data and materials maintained by BANK ONE relative to any
Deposit Liabilities being assumed by Peoples; and
(d) assign, transfer, and deliver to Peoples such safe
deposit and safekeeping files and records (in whatever form or
medium then maintained by BANK ONE) pertaining to the safe
deposit business of the Offices transferred to Peoples hereunder
as exist and are available, together with the contents of the
safe deposit boxes maintained at the Offices, as the same exist
as of the close of business on the day immediately preceding the
Closing Date (subject to the terms and conditions of the leases
or other agreements relating to the same) and all securities and
other records, if any, held by the Offices for their customers
as of the close of business on the day immediately preceding the
Closing Date (subject to the terms and conditions of the
agreements or receipts relating to the same); and
(e) make available and transfer to Peoples on the Closing
Date and prior to the conclusion of the Closing any funds
required to be paid to Peoples pursuant to the terms of this
Agreement; and
(f) execute, acknowledge and deliver to Peoples all
Certificates and other documents required to be delivered to
Peoples by BANK ONE at the Closing pursuant to the terms hereof;
and
(g) assign by endorsement substantially in a form as provided
in Schedule N attached hereto, transfer and deliver to Peoples
the contract, promissory note or other evidence of indebtedness
related to the Office Loans together with the loan file and
records (in whatever form or medium then maintained by BANK ONE)
pertaining to such Office Loans;
(h) assign to Peoples all BANK ONE's rights in and to the
Assumed Contracts which are assignable and which constitute part
of the Assets; and
(i) execute and deliver to People's the Assignment, Transfer,
and Appointment of Successor Custodian for Individual IRA's
in the form set forth in Schedule M to this Agreement.
6.03 Peoples's Actions at the Closing. At the Closing (unless
another time is specifically stated in Section 6.04 hereof),
Peoples shall, with respect to the Offices:
(a) execute, acknowledge, and deliver to BANK ONE, to
evidence the assumption of the liabilities and obligations of
BANK ONE by Peoples hereunder, an instrument of assumption in
the form set forth in Schedule O to this Agreement, and BANK ONE
shall then accept, execute, and acknowledge such instrument.
Copies of such instrument may be recorded in the public records
at the option of either party hereto. The execution and
acknowledgment of such instrument shall not be deemed to be a
waiver of any rights or obligations of any party to this
Agreement;
(b) receive, accept and acknowledge delivery of all Assets,
and all records and documentation relating thereto, sold,
assigned, transferred, conveyed or delivered to Peoples by BANK
ONE hereunder; and
(c) execute and deliver to BANK ONE such written receipts for
the Assets, properties, records, and other materials assigned,
transferred, conveyed, or delivered to Peoples hereunder as BANK
ONE may reasonably have requested at or before the Closing;
(d) pay to BANK ONE on the Closing Date and prior to the
conclusion of the Closing any funds required to be paid to BANK
ONE at the Closing pursuant to the terms of this Agreement;
(e) execute, acknowledge and deliver to BANK ONE all
Certificates and other documents required to be delivered to
BANK ONE by Peoples at the Closing pursuant to the terms hereof;
(f) execute, acknowledge and deliver to BANK ONE an agreement
wherein Peoples assumes obligations with respect to the Assumed
Contracts for all periods following the Closing Date with
respect thereto; and
(g) execute and deliver to BANK ONE the Assignment, Transfer,
and Appointment of Successor Custodian for Individual IRA's in
the form set forth in Schedule M to this Agreement.
6.04 Methods of Payment. Subject to the adjustment procedures
set forth in this Section 6.04, the transfer of the funds, if
any, due to Peoples or to BANK ONE, as the case may be, as set
forth pursuant to the terms of Section 1.04(a) hereof, shall be
made on the Closing Date in immediately available United States
Federal Funds. At least two business days prior to the Closing,
BANK ONE and Peoples shall provide written notice to one another
indicating the account and bank to which such funds shall be
wire transferred. In order to facilitate the Closing, the
parties agree: (i) that the amount of funds transferred on the
Closing Date, pursuant to Section 1.04(a) hereof, shall be
computed based upon (a) the aggregate book value plus accrued
interest of the Office Loans as of the close of business on the
day immediately preceding the Closing Date, (b) cash on hand at
the Offices as of the close of business on the day immediately
preceding the Closing Date, and (c) the aggregate balance of all
Deposit Accounts (including interest posted or accrued to such
accounts and Individual Retirement Accounts which have become
IRAs as a result of the written appointment of Peoples as the
successor custodian and the failure of the account holders to
object to such appointment) as of the close of business on the
day immediately preceding the Closing Date; and (ii) that within
ten (10) business days after the Closing, the parties shall make
appropriate post-closing adjustments, consistent with the
provisions of Section 1.04 hereof, based upon actual Deposit
Accounts, Office Loans and cash transactions which took place on
the Closing Date or which took place prior to the Closing Date
but which were not reflected as of the close of business on the
day immediately preceding the Closing Date and execute the Final
Settlement in a form substantially to Schedule Q, attached. In
addition, prorations of prepaid and deferred income and expenses
that cannot be reasonably calculated at the Closing shall be
settled and paid based on actual figures as soon as possible
after the Closing.
6.05 Availability of Closing Documents. The documents
proposed to be used and delivered at the Closing shall be made
available for examination by the respective parties not later
than 12:00 noon, Ohio time, on the tenth Business Day prior to
the Closing Date.
6.06 Effectiveness of Closing. Upon the satisfactory
completion of the Closing, which does not include and shall not
require completion of the adjustment and proration arrangements
set forth in Section 6.04, the Acquisition shall be deemed to be
effective and the Closing shall be deemed to have occurred.
7. CERTAIN TRANSITIONAL MATTERS.
-----------------------------
7.01 Transitional Action by Peoples. After the Closing,
unless another time is otherwise indicated:
(a) Peoples shall: (i) pay in accordance with the law and
customary banking practices and applicable Deposit Account
contract terms, all properly drawn and presented checks,
negotiable orders of withdrawal, drafts, debits, and withdrawal
orders presented to Peoples by mail, over the counter, through
electronic media, or through the check clearing system of the
banking industry, by depositors of the Deposit Accounts assumed
by Peoples hereunder, whether drawn on checks, negotiable orders
or withdrawal, drafts, or withdrawal order forms provided by
Peoples or BANK ONE; and (ii) in all other respects discharge,
in the usual course of the banking business, the duties and
obligations of BANK ONE with respect to the balances due and
owing to the depositors whose Deposit Accounts are assumed by
Peoples hereunder; provided, however, that any obligations of
Peoples pursuant to this Section 7.01 to honor checks,
negotiable orders of withdrawal, drafts, and withdrawal orders
on forms provided by BANK ONE and carrying its imprint
(including its name and transit routing number) shall not apply
to any checks, draft, or withdrawal order (i) presented to
Peoples more than one hundred twenty (120) days following the
Closing Date, (ii) with a date more than one hundred twenty
(120) days prior to (a) the Closing Date or (b) the date of
Peoples's receipt thereof, or (iii) on which a stop payment has
been requested by the deposit customer. The provisions of this
subsection 7.01(a) shall in no way limit Peoples's duties or
obligations arising under Section 1.03(b) hereof.
(b) Peoples shall, not earlier than the time of procurement
of all regulatory approvals required for consummation of the
transaction contemplated by this Agreement nor later than ten
days prior to the Closing Date, notify all depositors of the
Offices by letter, acceptable to BANK ONE, produced in, if
appropriate, several similar, but different forms calculated to
provide necessary and specific information to the owners of
particular types of accounts, of Peoples's pending assumption of
the Deposit Liabilities hereunder, and, in appropriate
instances, notify depositors that on and after the Closing Date
certain BANK ONE deposit-related services and/or BANK ONE's
debit card and automatic teller machine services, will be
terminated. As an enclosure to such notices, Peoples may
furnish appropriate depositors with brochures, forms and other
written materials related or necessary to the assumption of the
Deposit Accounts by Peoples and the conversion of said accounts
to Peoples accounts, including the provision of checks to
appropriate depositors using the forms of Peoples with
instructions to such depositors to utilize such Peoples checks
on and after the Closing Date and thereafter to destroy any
unused checks on BANK ONE's forms. The expenses of the
printing, processing and mailing of such letter notices and
providing new Peoples checks and other forms and written
materials to appropriate customers shall be borne by Peoples.
Before Closing, except as provided in this paragraph, Peoples
will not contact BANK ONE's customers except as may occur in
connection with advertising or solicitations directed to the
public generally or in the course of obtaining the requisite
regulatory approvals of the transaction.
(c) Peoples shall promptly pay to BANK ONE an amount
equivalent to the amount of any checks, negotiable orders of
withdrawal, drafts, or withdrawal orders (net of the applicable
Acquisition Consideration paid by Peoples with respect to the
Deposit Liabilities represented by any such instrument) credited
as of the close of business on the Closing Date to a Deposit
Account assumed by Peoples hereunder which are returned
uncollected to BANK ONE after the Closing Date and which shall
include an amount equivalent to holds placed upon such deposit
account for items cashed by BANK ONE as of the close of business
on the Closing Date which items are subsequently dishonored.
(d) All tasks and obligations concerning the provision of
data processing services to or for the Offices after the
Closing, other than those specifically set forth in, and to the
extent assumed by BANK ONE pursuant to, Section 7.02(b) herein,
are the sole and exclusive responsibility of, and shall be
performed solely and exclusively by, Peoples.
(e) Peoples shall, not later than the close of business on
the business day immediately following the Closing Date, supply
suitable government-backed securities as security for any
deposits of governmental units included among the Deposit
Liabilities for which BANK ONE had provided similar security.
(f) Peoples shall, as soon as practicable after the Closing
Date, prepare and transmit at Peoples's expense to each of the
obligors on Office Loans transferred to Peoples pursuant to this
Agreement a notice to the effect that the loan has been
transferred and directing that payment be made to Peoples at the
address specified by Peoples, with Peoples's name as payee on
any checks or other instruments used to make payments, and, with
respect to such loan on which a payment notice or coupon book
has been issued, to issue a new notice or coupon book reflecting
the name and an address of Peoples as the person to whom and
place at which payments are to be made.
(g) If the balance due on any Office Loan transferred to
Peoples pursuant to this Agreement has been reduced by BANK ONE
as a result of a payment by check or draft received prior to the
close of business on the Closing Date, which item is returned
unpaid to BANK ONE after the day immediately preceding the
Closing Date, the asset value represented by the loan
transferred shall be correspondingly increased and an amount in
cash equal to such increase shall be promptly paid by Peoples to
BANK ONE.
(h) Peoples shall use its best efforts to cooperate with BANK
ONE in assuring an orderly transition of ownership of the Assets
and responsibility for the liabilities, including the Deposit
Liabilities, assumed by Peoples hereunder.
7.02 Transitional Actions by BANK ONE. After the Closing,
unless another time is otherwise indicated:
(a) BANK ONE shall use its best efforts to cooperate with
Peoples in assuring an orderly transition of ownership of the
Assets and responsibility for the liabilities, including the
Deposit Liabilities, assumed by Peoples hereunder. BANK ONE is
responsible for all tax and customer reporting up to the date
of closing including, but not limited to, dropping off and
mailing cut-off statement at the time of closing on all checking
account and the payment of interest payable at the time of
closing on all interest bearing checking accounts.
(b) BANK ONE's sole and exclusive responsibilities concerning
the provision of data processing services to or for the Deposit
Accounts of the Offices after the Closing Date shall be as set
forth in this Section 7.02(b). Within 10 business days following
the date of this Agreement, BANK ONE shall provide Peoples with
applicable product functions and specifications relating to the
data processing support required for the Deposit Accounts,
Office
Loans, and safe deposit business (if such data processing
support currently is provided with respect to such business)
maintained at the Offices (such Deposit Accounts, Office Loans
and safe deposit business, if applicable, hereinafter called the
"Accounts"). Within 10 business days of the date of this
Agreement, BANK ONE shall provide to Peoples all automated
customer and account data related to the Deposit Liabilities
available over the last 12 months in generic form which are
machine readable on IBM (or IBM compatible) equipment or which
shall be on EBCDIC format eighteen or 36 track 3480 cartridges
(non-compressed data and fixed length records). A format
description of all data field definitions must accompany the
data. By not later than 2:00 P.M. E.S.T. immediately following
the Closing Date, BANK ONE shall make available for Peoples's
pick-up at Columbus, Ohio, tapes containing all pertinent data
and descriptive information relating to the Accounts which is
then available to BANK ONE, which tapes shall constitute BANK
ONE's records maintained as of and current to the close of
business on the Closing Date with respect to the Accounts. BANK
ONE shall bear all costs and expenses relating to the
performance of its obligations pursuant to this Section 7.02(b).
(c) Prior to the Closing Date, BANK ONE shall cooperate with
Peoples, at Peoples's expense and at no expense to BANK ONE, in
making Transferred Employees available at reasonable times for
whatever program of training Peoples deems advisable; provided,
however, that Peoples shall conduct such training program in a
manner that does not materially interfere with or prevent the
performance of the normal duties and activities of
suchTransferred Employees. Peoples shall make request of BANK
ONE for training opportunities prior to the Closing Date. Such
requests, which shall specify the time, duration and place of
such training, must be approved by BANK ONE. Such approvals
will not be unreasonably withheld by BANK ONE.
(d) BANK ONE shall cooperate with and permit Peoples, at
Peoples's option and expense and at no expense to BANK ONE, to
make provision for the installation of teller equipment in the
Offices; provided, however, that Peoples shall arrange for the
installation and placement of such equipment at such times and
in a manner that does not significantly interfere with the
normal business activities and operation of BANK ONE or the
Offices.
(e) BANK ONE shall resign as custodian of each IRA account
maintained at the Offices and assign the custodianship of such
accounts to Peoples upon Closing.
(f) Not sooner than one (1) business day prior to the Closing
nor later than the close of business on the Closing Date, BANK
ONE shall terminate its debit card service and convert and
change over its direct deposit or payroll and retirement
payments service for the Deposit Accounts from BANK ONE to
Peoples. Such terminations will be preceded by the notice
described in Section 7.01(b) herein.
(g) As of the opening of business on the first business day
after the Closing Date, BANK ONE and Peoples shall provide the
Federal Reserve Bank of Cleveland with all information necessary
in order to expedite the clearing and sorting of all checks,
drafts, instruments and other commercial paper relative to the
Deposit Liabilities and/or the Office Loans (hereinafter
collectively referred to as "Paper Items"). Peoples shall bear
all charges and costs imposed by the Federal Reserve in
connection with the reassignment of account number ranges for
sorting the Paper Items.
In the event the Federal Reserve and/or any other regional or
local clearinghouse for negotiable instruments fails, refuses or
is unable to direct sort such Paper Items for delivery to
Peoples with the result that such Paper Items are presented to
BANK ONE, by not later than : .m. local time of each
business day following the Closing and continuing for one
hundred twenty (120) days after the Closing, BANK ONE will make
available to Peoples for pick up from BANK ONE's offices or the
offices of BANK ONE's agent and/or processor at Columbus, Ohio,
all of the Paper Items which are received by BANK ONE from the
Federal Reserve Bank of Cleveland and/or any regional or local
clearinghouse during the morning of each such business day on an
"as-received basis." At the same time BANK ONE shall also make
available to Peoples information and records, including but not
limited to systems printouts, concerning such Paper Items and
concerning incoming Automated Clearing House items ("ACH items")
as well as outstanding Automatic Teller Machine ("ATM")
transactions. Such information and records, including but not
limited to systems printouts, will utilize the most recent
account number designated by BANK ONE for each of the Deposit
Accounts and/or the Office Loans. Each business day BANK ONE
will endeavor to see that the sum of (a) the actual Paper Items
provided to Peoples plus (b) all ACH items and ATM transactions
captured by BANK ONE in its information and records balance with
the sum of (c) the information and records, including but not
limited to systems printouts, provided by BANK ONE relative to
the Paper Items plus (d) the information and records, including
but not limited to systems printouts, provided relative to the
ACH items and ATM transactions affecting the Deposit Accounts
and/or the Office Loans.
BANK ONE shall provide the foregoing at no charge to Peoples
except that Peoples shall pay any charges assessed to BANK ONE
by the Federal Reserve Bank of Cleveland a national or local
clearinghouse and/or BANK ONE's agent and/or processor to the
extent such assessments relate to the Deposit Accounts. Peoples
shall be responsible for pick up of the data to be provided by
BANK ONE.
BANK ONE and Peoples shall arrange for appropriate daily
settlement with one another in order that the transmission of
all monies associated with the matters set forth in this Section
7.02(g) might be effected promptly.
BANK ONE shall not be liable to Peoples for any failure to
provide the data required by this Section 7.02(g) to the extent
any such failure results from causes beyond BANK ONE's control
including war, strike or other labor disputes, acts of God,
errors or failures of the Federal Reserve Bank of Cleveland
and/or a participating regional or local clearinghouse, or
equipment failure or other emergency wherein BANK ONE and/or its
agent processor has been unable to process inclearings from the
Federal Reserve Bank of Cleveland or such clearinghouse.
(h) BANK ONE shall, not earlier than the time of procurement
of all regulatory approvals required for consummation of the
transaction contemplated by this Agreement nor later than twenty
days prior to the Closing Date, notify all depositors of the
Offices and all borrowers of any Office Loan by letter
acceptable to Peoples, produced in, if appropriate, several
similar, but different forms calculated to provide necessary and
specific information to the owners of particular types of
accounts and/or loans, of Peoples's pending assumption of the
Deposit Liabilities and acquisition of the Office Loans
hereunder, and, in appropriate instances, notify depositors that
on and after the Closing Date certain BANK ONE deposit-related
services and/or BANK ONE's debit card and automatic teller
machine services, will be terminated. The expenses of the
printing, processing and mailing of such letter notices shall be
borne by BANK ONE.
(i) For a period of sixty (60) days after the Closing Date,
BANK ONE will forward to Peoples, within two (2) business days
of receipt, loan payments received by BANK ONE with respect to
the Office Loans. Peoples will forward, within two (2) business
days of receipt payments received by Peoples with respect to any
loans not assigned to Peoples under this Agreement. Peoples and
BANK ONE further agree to refer customers to the offices of the
other when such customers present payments over the counter to
the party not holding their respective loan.
7.03 Overdrafts and Transitional Action. Overdrafts paid on
the Deposit Accounts with respect to ledger dates after the
Closing Date will be the responsibility and risk of Peoples.
Overdrafts approved with respect to ledger dates more than four
(4) business days prior to the Closing Date will be the
responsibility and risk of BANK ONE. Overdrafts approved with
respect to ledger dates during the period beginning four (4)
business days prior to the Closing Date through the Closing
Date, inclusive, will initially be the responsibility and risk
of Peoples (other than overdrafts of customers who are
specifically identified in writing by Peoples to BANK ONE not
less than four (4) business days prior to the Closing Date);
provided, however, that Peoples shall have the right to
retransfer any such overdrafts back to BANK ONE for BANK ONE's
responsibility and at its risk within six (6) days following the
Closing Date, and BANK ONE will repurchase all rights in respect
of such overdrafts from Peoples for the amount of each such
overdraft outstanding at the time it is retransferred back to
BANK ONE less the amount of the Acquisition Consideration paid
by Peoples to BANK ONE attributable to such overdrafts;
provided, however, that Peoples shall have closed all accounts
on which each such overdraft exists not later than the date of
such retransfer.
7.04 ATMs.
(a) Within ten (10) business days following the date of this
Agreement, BANK ONE shall provide Peoples all automated customer
and account data related to the purchased ATM accounts,
including all transaction history available over the last twelve
(12) months related to the accounts in generic form which are
machine readable on IBM equipment or which shall be on EBCDIC
format eithteen or thirty-six track 3480 cartridges
(non-compressed data and fixed length records. As format
description of all data fields with field definitions must
accompany the data. The information on these tapes must contain,
but is not limited to, customer name, address, card number, card
status (open, closed or blocked), personal identification number
("PIN"), withdrawal limits, the Deposit Accounts activated by,
accessible to or committed to such cards, issue dates and/or
open dates, last transaction dates, expiration dates and social
security numbers as to all ATM cards issued to customers of the
BANK ONE Offices processor to deactivate the operation of the
BANK ONE ATM Cards completely or to deactivate or disconnect the
Deposit Accounts from such BANK ONE ATM Cards no later than the
business day cutoff on the date prior to the Closing Date so
that all activity generated by the BANK ONE ATM Cards shall have
settled prior to the Closing Date. All transactions and
activity related to the BANK ONE ATM Cards following the Closing
Date which are received or forwarded to BANK ONE will be
returned by BANK ONE to its processor for forwarding to Peoples
or will be accepted and forwarded by BANK ONE to Peoples along
with all corresponding funds. BANK ONE thereafter agrees to
immediately notify its processor to deactivate such ATM Cards
and to forward all transactions related thereto directly to
Peoples.
(b) BANK ONE agrees to deactivate the ATMs located at the
Offices on or before the business day cutoff on the day prior to
the Closing Date. Thereafter, Peoples shall reconfigure the
ATMs to its standards for activation after the business day
cutoff on the Closing Date.
(c) Peoples and BANK ONE agree to cooperate with each other
to assure that all transactions originated through the ATM or
originated with the ATM Cards prior to or on the Closing Date
shall be for the account of BANK ONE and all transactions
originated after the Closing Date shall be for the account of
Peoples. A post closing adjustment shall be made in the manner
set forth in Section 6.04 hereof to reflect all such
transactions which cannot be reasonably calculated as of the
Closing.
7.05 Effect of Transitional Action. Except as and to the
extent expressly set forth in this Article 7, nothing contained
in this Article 7 shall be construed to be an abridgment or
nullification of the rights, customs and established practices
under applicable banking laws and regulations as they affect any
of the matters addressed in this Article 7.
8. GENERAL COVENANTS AND INDEMNIFICATION.
--------------------------------------
8.01 Confidentiality Obligations of Peoples. From and after
the date hereof, Peoples and its affiliates and parent company
shall treat all information received from BANK ONE concerning
the business, assets, operations, and financial condition of
BANK ONE (including without limitation the Offices), as
confidential, unless and to the extent that Peoples can
demonstrate that such information was already known to Peoples
and its affiliates, if any, or in the public domain or received
from a third person not known by Peoples to be under any
obligation to BANK ONE; and Peoples shall not use any such
information (so required to be treated as confidential) for any
purpose except in furtherance of the transactions contemplated
hereby. Upon the termination of this Agreement, Peoples shall,
and shall cause its affiliates, if any, to, promptly return all
documents and workpapers containing, and all copies of, any such
information (so required to be treated as confidential) received
from or on behalf of BANK ONE in connection with the
transactions contemplated hereby. The covenants of Peoples
contained in this Section 8.01 are of the essence and shall
survive any termination of this Agreement, but shall terminate
at the Closing, if it occurs, with respect to any information
that is limited solely to the activities and transactions of the
Offices; provided, however, that neither Peoples nor any of its
affiliates shall be deemed to have violated the covenants set
forth in this Section 8.01 if Peoples shall in good faith
disclose any of such confidential information in compliance with
any legal process, order or decree issued by any court or agency
of government of competent jurisdiction. It is expressly
acknowledged by BANK ONE that all information provided to
Peoples related to this purchase and assumption transaction may
be provided to Peoples's affiliates for the purpose of
consummating the transaction which is the subject of this
Agreement.
8.02 Confidentiality Obligations of BANK ONE. From and after
the date hereof, BANK ONE, its affiliates and its parent
corporation shall treat all information received from Peoples
concerning Peoples's business, assets, operations, and financial
condition as confidential, unless and to the extent BANK ONE can
demonstrate that such information was already known to BANK ONE
or its affiliates or in the public domain, and BANK ONE shall
not use any such information (so required to be treated as
confidential) for any purpose except in furtherance of the
transactions contemplated hereby. Upon the termination of this
Agreement, BANK ONE shall promptly return all documents and
workpapers containing, and all copies of, any such information
(so required to be treated as confidential) received from or on
behalf of Peoples in connection with the transactions
contemplated hereby. The covenants of BANK ONE contained in
this Section 8.02 are of the essence and shall survive any
termination of this Agreement; provided, however, that BANK ONE
nor any of its affiliates shall be deemed to have violated the
covenants set forth in this Section 8.02 if BANK ONE shall in
good faith disclose any of such confidential information in
compliance with any legal process, order or decree issued by any
court or agency of government of competent jurisdiction. It is
expressly acknowledged by Peoples that all information provided
to BANK ONE related to this purchase and assumption transaction
may be provided to Banc One Corporation and BANK ONE's
affiliates for the purpose of consummating the transaction which
is the subject of this Agreement.
8.03 Indemnification by BANK ONE. From and after the Closing
Date, BANK ONE shall indemnify, hold harmless, and defend
Peoples from and against all claims, losses, liabilities,
demands and obligations, including without limitation reasonable
attorneys' fees and expenses, which People's may receive,
suffer, or incur arising out of any actions, suits, or
proceedings commenced prior to the Closing (other than
proceedings to prevent or limit the consummation of the
Acquisition) relating to operations at the Offices and/or the
Deposit Liabilities or Office Loans of the Offices; and BANK ONE
shall further indemnify, hold harmless, and defend Peoples from
and against all losses and liabilities, including reasonable
attorneys' fees and expenses, arising out of any actions, suits,
or proceedings commenced on or after the Closing to the extent
the same relate to operations at the Offices and/or the Deposit
Liabilities or Office Loans prior to the Closing. The
obligations of BANK ONE under this Section 8.03 shall be
contingent upon Peoples giving BANK ONE written notice (i) of
receipt by Peoples of any process and/or pleadings in or
relating to any actions, suits, or proceedings of the kinds
described in this Section 8.03, including copies thereof, and
(ii) of the assertion of any claim or demand relating to the
operation of the Offices and/or the Deposit Liabilities or
Office Loans prior to the Closing, including, to the extent
known to Peoples, the identity of the person(s) or entity(ies)
asserting such claim or making such demand and the nature
thereof, and including copies of any correspondence or other
writings relating thereto. All notices required by the
preceding sentence shall be given within fifteen days of the
receipt by Peoples of any such process or pleadings or any oral
or written notice of the assertion of any such claims or
demands. BANK ONE shall have the right to take over Peoples's
defense in any such actions, suits, or proceedings through
counsel selected by BANK ONE, to compromise and/or settle the
same and to prosecute any available appeals or reviews of any
adverse judgment or ruling that may be entered therein. The
obligations of BANK ONE pursuant to this Section 8.03 shall
survive the Closing.
8.04 Indemnification by Peoples. From and after the Closing
Date, Peoples shall indemnify, hold harmless and defend BANK ONE
from and against all claims, losses, liabilities, demands and
obligations, including without limitation reasonable attorneys'
fees and operating expenses which BANK ONE may receive, suffer,
or incur in connection with (i) any losses incurred by BANK ONE
related to BANK ONE's compliance with instructions from Peoples
made pursuant to Section 7.04 of this Agreement and not related
to any negligence or malfeasance on the part of BANK ONE and
(ii) operations and transactions occurring after the Closing and
which involve the Assets transferred, the Deposit Liabilities or
Office Loans and the other obligations and liabilities assumed
pursuant to this Agreement. The obligations of Peoples under
this Section 8.04 shall be contingent upon BANK ONE giving
Peoples written notice (i) of the receipt by BANK ONE of any
process and/or pleadings in or relating to any actions, suits or
proceedings of the kinds described in this Section 8.04,
including copies thereof, and (ii) of the assertion of any claim
or demand relating to the Assets transferred to and/or the
Deposit Liabilities or Office Loans and the other obligations
and liabilities assumed by Peoples on or after the Closing,
including, to the extent known to BANK ONE, the identity of the
person(s) or entity(ies) asserting such claim or making such
demand and the nature thereof, and including copies of any
correspondence or other writings relating thereto. All notices
required by the preceding sentence shall be given within fifteen
(15) days of the receipt by BANK ONE of any such process or
pleadings or any oral or written notice of the assertion of any
such claims or demands. Peoples shall have the right to take
over BANK ONE's defense in any such actions, suits, or
proceedings through counsel selected by Peoples, to compromise
and/or settle the same and to prosecute any available appeals or
review of any adverse judgment or ruling that may be entered
therein. The obligations of Peoples pursuant to this Section
8.04 shall survive the Closing.
8.05 Solicitation of Customers by Peoples Prior to Closing.
At any time prior to the Closing Date, Peoples will not, and
will not permit any of its affiliates, if any, to conduct any
marketing, media or customer solicitation campaign which is
specifically targeted to induce customers whose Deposit Account
liabilities are to be assumed or Office Loans are to be acquired
by Peoples pursuant to this Agreement to discontinue their
account relationships with BANK ONE, except as may occur in
connection with advertising or solicitations directed to the
public generally. Additionally, at any time prior to the
Closing, Peoples shall not offer to pay on any transaction
accounts or any new or renewal savings accounts or certificates
of deposits, rates of interest greater than those offered or
then being paid on similar accounts for like term and amount by
the main office and all Washington County, Ohio offices of
Peoples.
8.06 Solicitation of Customers by BANK ONE After the Closing.
From the date of this Agreement and for three (3) years
following the Closing Date, BANK ONE will not, and BANK ONE will
not permit any of its affiliates, including the directors,
officers, employees or principal shareholders of BANK ONE, to
directly compete for or solicit deposit accounts from customers
whose Deposit Liabilities and/or Office Loans are assumed or
acquired by Peoples pursuant to this Agreement, except as may
occur in connection with (i) advertising or solicitations
directed to the public generally, (ii) solicitations outside
Meigs County and Gallia County, Ohio and (iii) BANK ONE
customers with a banking relationship with BANK ONE at offices
other than the Offices as of the Closing Date.
8.07 Further Assurances. From and after the date hereof, each
party hereto agrees to execute and deliver such instruments and
to take such other actions as the other party hereto may
reasonably request in order to carry out and implement this
Agreement. Without limiting the foregoing, BANK ONE agrees to
execute and deliver such deeds, bills of sale, acknowledgments,
and other instruments of conveyance and transfer as, in the
reasonable judgment of Peoples, shall be necessary and
appropriate to vest in Peoples the legal and equitable title to
the Assets of BANK ONE being conveyed to Peoples hereunder. The
covenants of each of the parties hereto pursuant to this Section
8.07 shall survive the Closing.
8.08 Operation of the Offices. Except as otherwise provided
in this Agreement, neither BANK ONE, its subsidiaries,
affiliates or parent corporation shall be obligated to provide
for any managerial, financial, business, or other services to
the Offices, including without limitation any personnel,
employee benefit, data processing, accounting, risk management,
or other services or assistance that may have been provided to
the Offices prior to the close of business on the Closing Date,
and Peoples shall take such action as may in its judgment appear
to be necessary or advisable to provide for the ongoing
operation and management of, and the provision of services and
assistance to, the Offices after the Closing Date. As soon as
possible after the Closing Date, Peoples shall change the legal
name of the Offices and, except for any documents or materials
in possession of the customers of the Offices (including but not
limited to deposit tickets and checks), shall not use and shall
cause the Offices to cease using any signs, stationery,
advertising, documents, or printed or written materials that
refer to the Offices by any name that includes the words "BANK
ONE" or "BANC ONE." Preceding the Closing, BANK ONE shall
cooperate with any reasonable requests of Peoples directed to
obtaining specifications for the procurement of new signs of
Peoples's choosing so that Peoples is in a position to install
new signs immediately following the close of business on the
Closing Date; provided, however, that Peoples's receipt of all
sign specifications shall be obtained by Peoples in a manner
that does not significantly interfere with the normal business
activities and operations of the Offices, and further provided
that the procurement of all new signs shall be at the sole and
exclusive expense of Peoples. As indicated in Section 1.02(c),
BANK ONE will retain its signs located at the Offices. If
removed by Peoples in conjunction with its installation of new
signs, Peoples shall obtain BANK ONE's approval for such removal
and shall insure that said signs are removed without damaging
them. It is understood by the parties hereto that, with the
exception of the signs themselves, all mounting facilities for
the signs shall be considered as fixtures or as part of the
Fixed Assets.
8.09 Information After Closing. For a period of seven (7)
years following the Closing, upon written request of BANK ONE to
Peoples or Peoples to BANK ONE, as the case may be, such
requested party shall provide the requesting party with
reasonable access to, or copies of, information and records
relating to the Offices which are then in the possession or
control of the requested party reasonably necessary to permit
the requesting party or any of its subsidiaries or affiliates to
comply with or contest any applicable legal, tax, banking,
accounting, or regulatory policies or requirements, or any legal
or regulatory proceeding thereunder or requests related to
customer relationships at the Offices prior to Closing. In the
event of any such requests, the requesting party shall reimburse
the requested party for the reasonable costs of the requested
party related to such request.
8.10 Survival of Covenants. The obligations and covenants of
the parties under this Section 8 shall survive the Closing.
8.11 Individual Retirement Accounts. All Individual
Retirement Accounts related to the Offices that shall not have
become IRAs by the close of business on the 30th day following
the Closing shall not be assigned by BANK ONE to Peoples or
assumed by Peoples. BANK ONE may thereafter, at its option,
elect to retain such Individual Retirement Accounts, advise the
account holders that it has withdrawn its resignation as
custodian or transfer the amount in such Individual Retirement
Accounts to the account holders.
9. TERMINATION.
------------
9.01 Termination by Mutual Agreement. This Agreement may be
terminated and the transactions contemplated hereby may be
abandoned by mutual consent of the parties authorized by a vote
of a majority of the Board of Directors (or by the vote of the
Executive Committee of such Board, if so empowered) of each of
BANK ONE and Peoples.
9.02 Termination by BANK ONE. This Agreement may be
terminated and the transactions contemplated hereby abandoned by
a vote of a majority of the Board of Directors (or by the vote
of the Executive Committee of such Board, if so empowered) of
BANK ONE:
(a) in the event of a material breach by Peoples of this
Agreement; or
(b) in the event any of the conditions precedent specified in
Section 5.01 of this Agreement has not been met as of the date
required by this Agreement and, if not so met, has not been
waived by BANK ONE; or
(c) in the event any regulatory approval required for
consummation of the Acquisition is denied by the applicable
regulatory authority or in the event that at any time prior to
the Closing Date it shall become reasonably certain to BANK ONE,
with the advice of counsel, that a regulatory approval required
for consummation of the Acquisition will not be obtained; or
(d) on or after June 30, 1996 if the Closing has not then
occurred.
9.03 Termination by Peoples. This Agreement may be terminated
and the transactions contemplated hereby abandoned by a vote of
a majority of the Board of Directors (or by the vote of the
Executive Committee of such Board, if so empowered) of Peoples:
(a) in the event of a material breach by BANK ONE of this
Agreement; or
(b) in the event any of the conditions precedent specified in
Section 5.02 of this Agreement has not been met as of the date
required by this Agreement and, if not so met, has not been
waived by Peoples; or
(c) in the event any regulatory approval required for
consummation of the Acquisition is denied by the applicable
regulatory authority or in the event that at any time prior to
the Closing Date it shall become reasonably certain to Peoples,
with the advice of counsel, that a regulatory approval required
for consummation of the Acquisition will not be obtained; or
(d) on or after June 30, 1996 if the Closing has not then
occurred.
9.04 Effect of Termination. The termination of this Agreement
pursuant to Sections 9.02 or 9.03 of this Article 9 shall not
release any party hereto from any liability or obligation to the
other party hereto arising from (i) a breach of any provision of
this Agreement occurring prior to the termination hereof or (ii)
the failure of timely satisfaction of conditions precedent to
the obligations of a party to the extent that such failure of
timely satisfaction is attributable to the actions or inactions
of such party.
10. MISCELLANEOUS PROVISIONS.
-------------------------
10.01 Expenses. Except as and to the extent specifically
allocated otherwise herein, each of the parties hereto shall
bear its own expenses, whether or not the transactions
contemplated hereby are consummated.
10.02 Certificates. All statements contained in any
certificate ("Certificate") delivered by or on behalf of BANK
ONE or Peoples pursuant to this Agreement or in connection with
the transactions contemplated hereby shall be deemed to be
representations and warranties of the party delivering the
Certificate hereunder. Each such Certificate shall be executed
on behalf of the party delivering the Certificate by duly
authorized officers of such party.
10.03 Termination of Representations and Warranties. The
respective representations and warranties of BANK ONE and
Peoples contained or referred to in this Agreement or in any
Certificate, schedule, or other instrument delivered or to be
delivered pursuant to this Agreement shall terminate at the
Closing, except for:
(a) those representations and warranties contained in any
warranty deeds delivered by BANK ONE to Peoples at the Closing;
(b) those representations and warranties contained in any
bill of sale relating to the Assets delivered by BANK ONE to
Peoples at Closing;
(c) those representations and warranties contained in any
instrument of assumption or in any Certificate in the forms of
Schedule I and Schedule O, respectively, attached hereto and
delivered by Peoples to BANK ONE at the Closing;
(d) those representations and warranties contained in any
Certificate in the form of Schedule K attached hereto, delivered
by BANK ONE to Peoples at the Closing; and
(e) those representations and warranties of BANK ONE
contained in Section 3.01(o) of this Agreement.
10.04 Waivers. Each party hereto, by written instrument
signed by duly authorized officers of such party, may extend the
time for the performance of any of the obligations or other acts
of the other party hereto and may waive, but only as affects the
party signing such instrument:
(a) any inaccuracies in the representations or warranties of
the other party contained or referred to in this Agreement or in
any document delivered pursuant hereto;
(b) compliance with any of the covenants or agreements of the
other party contained in this Agreement;
(c) the performance (including performance to the
satisfaction of a party or its counsel) by the other party of
such of its obligations set out herein; and
(d) satisfaction of any condition to the obligations of the
waiving party pursuant to this Agreement.
10.05 Notices. All notices and other communications hereunder
may be made by mail, hand-delivery or by courier service and
notice shall be deemed to have been given when received;
provided, however, if notices and other communications are made
by nationally recognized overnight courier service for overnight
delivery, such notice shall be deemed to have been given one
business day after being forwarded to such a nationally
recognized overnight courier service for overnight delivery.
If to BANK ONE:
1. Bank One, Athens, National Association
Attention: Larry Headlee
125 Putnam Street
Marietta, Ohio 45750
With a copy to:
BANC ONE CORPORATION
Attention: Steven A. Bennett
Senior Vice President
100 East Broad Street
Columbus, Ohio 43271-0158
If to Peoples:
The Peoples Bank and Trust Company of Marietta, Ohio
Attention: Robert E. Evans
P.O. Box 738
Marietta, Ohio 45750
With a copy to:
Peoples Bancorp, Inc.
Attention: C. R. Hunsaker
P.O. Box 738
Marietta, Ohio 45750
or such other person or address as any such party may
designate by notice to the other parties, and shall be deemed to
have been given as of the date received.
10.06 Parties in Interest: Assignment; Amendment. This
Agreement is binding upon and is for the benefit of the parties
hereto and their respective successors, legal representatives,
and assigns, and no person who is not a party hereto (or a
successor or assignee of such party) shall have any rights or
benefits under this Agreement, either as a third party
beneficiary or otherwise. This Agreement cannot be assigned,
and this Agreement cannot be amended or modified, except by a
written agreement executed by the parties hereto or their
respective successors and assigns.
10.07 Headings. The headings, table of contents, and index to
defined terms (if any) used in this Agreement are inserted for
convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
10.08 Terminology. The specific terms of art that are defined
in various provisions of this Agreement shall apply throughout
this Agreement (including without limitation each Schedule
hereto), unless expressly indicated otherwise. In addition, the
following terms and phrases shall have the meanings set forth
for purposes of this Agreement (including such Schedule):
(a) The term "business day" shall mean any day other than a
Saturday, Sunday, or a day on which Peoples is closed in
accordance with the laws of the State of Ohio or the United
States of America. Any action, notice, or right which is to be
taken or given or which is to be exercised or lapse on or by a
given date which is not a business day may be taken, given, or
exercised, and shall not lapse, until the next business day
following.
(b) The term "affiliate" shall mean, with respect to any
person, any other person directly or indirectly controlling,
controlled by or under common control with such person.
(c) The term "Permitted Exceptions" shall mean, with respect
to the Owned Real Estate, (i) those five standard exceptions
appearing as Schedule B items in a standard ALTA owners or
leasehold title insurance policy, and any other exceptions,
restrictions, easements, rights of way, and encumbrances
referenced in the Title Commitment delivered by BANK ONE to
Peoples as indicated in Section 2.01(c) of this Agreement; (ii)
statutory liens for current taxes or assessments not yet due, or
if due not yet delinquent, or the validity of which is being
contested in good faith by appropriate proceedings; (iii) such
other liens, imperfections in title, charges, easements,
restrictions, and encumbrances (but in all cases of Owned Real
Estate excluding those which secure borrowed money) which,
individually and in the aggregate, do not materially detract
from the value of, or materially interfere with the present use
of, any property subject thereto or affected thereby; and (iv)
such other exceptions as are approved by Peoples in writing.
(d) The term "person" shall mean any individual, corporation
partnership, limited liability company, association, trust, or
other entity, whether business, personal, or otherwise.
(e) Unless expressly indicated otherwise in a particular
context, the terms "herein," "hereunder," "hereto," "hereof,"
and similar references refer to this Agreement in its entirety
and not to specific articles, sections, schedules, or
subsections of this Agreement. Unless expressly indicated
otherwise in a particular context, references in this Agreement
to enumerated articles, sections, and subsections refer to
designated portions of this Agreement (but do not refer to
portions of any Schedule unless such Schedule is specifically
referenced) and do not refer to any other document.
(f) The term "subsidiary" shall mean a corporation,
partnership, limited liability company, joint venture, or other
business organization more than 50% of the voting securities or
interests in which are beneficially owned or controlled by the
indicated parent of such entity.
10.09 Flexible Structure. References in this Agreement to
federal or state laws or regulations, jurisdictions, or
chartering or regulatory authorities shall be interpreted
broadly to allow maximum flexibility in consummating the
transactions contemplated hereby in light of changing business,
economic, and regulatory conditions. Without limiting the
foregoing, in the event BANK ONE and Peoples agree in writing to
alter the legal structure of the Acquisition contemplated by
this Agreement references in this Agreement to such laws,
regulations, jurisdictions, and authorities shall be deemed to
be altered to reflect the laws, regulations, jurisdictions, and
authorities that are applicable in light of such change.
10.10 Press Releases. BANK ONE and Peoples shall approve the
form and substance of any press release of any matters relating
to this Agreement issued by the other.
10.11 Entire Agreement. This Agreement supersedes any and all
oral or written agreements and understandings heretofore made
relating to the subject matter hereof and contains the entire
agreement of the parties relating to the subject matter hereof.
All schedules, exhibits, and appendices to this Agreement are
incorporated into this Agreement by reference and made a part
hereof.
10.12 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Ohio and
the National Banking Laws of the United States.
10.13 Counterparts. This Agreement may be executed in several
counter- parts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
10.14 Tax Matters. Peoples and BANK ONE agree that they will
file applicable tax returns and other related schedules and
documents based on the allocations in this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers
thereunto duly authorized, all as of the date first above
written.
Bank One, Athens,
ATTEST: National Association
/s/ EARL D. WESTBROOK By: /s/ LARRY HEADLEE
Earl D. Westbrook Larry Headlee
Its: Chairman and CEO
ATTEST: The Peoples Bank and Trust Company
of Marietta, Ohio
/s/ CHARLES R. HUNSAKER By: /s/ ROBERT E. EVANS
Charles R. Hunsaker Robert E. Evans
Its: Chairman and CEO
SUPPLEMENTAL INFORMATION TO THE "OFFICE PURCHASE AND ASSUMPTION
AGREEMENT" BETWEEN PEOPLES BANK AND BANK ONE, ATHENS, N.A.
- ---------------------------------------------------------------
THE COMPANY WILL FURNISH SUPPLEMENTAL INFORMATION TO THE
COMMISSION UPON REQUEST THE FOLLOWING OMITTED EXHIBITS AND
SCHEDULES TO THE OFFICE PURCHASE AND ASSUMPTION AGREEMENT
BETWEEN PEOPLES BANK AND BANK ONE, ATHENS, N.A.
Schedule A: Description of Owned Real Estate.
Schedule B: Description of Leased Real Estate and Third Party Lease.
Schedule C: Furniture, Fixtures and Equipment.
Schedule D: Assumed Contracts.
Schedule E: List of Leases, Safekeeping Items and Agreements.
Schedule F: Form of Individual Retirement Custodial Account
Agreement and Amended and Restated Individual Retirement
Account Disclosure Statement.
Schedule G: Deposit Accounts.
Schedule H: Office Loans.
Schedule I: Certification of Peoples Bank.
Schedule J: Form of Opinion of Counsel for Peoples Bank.
Schedule K: Certification of Bank One, Athens, N.A.
Schedule L: Form of Opinion of Counsel for Bank One, Athens, N.A.
Schedule M: Assignment, Transfer and Appointment of Successor
Custodian for IRAs.
Schedule N: Form of Assignment of Office Loans, Notes,
Agreements and Pledge.
Schedule O: Form of Instrument of Assumption.
Schedule P: Form of Preliminary Settlement Statement.
Schedule Q: Form of Final Settlement Statement.
EXHIBIT 10(b)
- -------------
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1995
PEOPLES BANCORP INC.
RETIREMENT SAVINGS PLAN
Amended and Restated Effective January 1, 1996
PEOPLES BANCORP INC.
RETIREMENT SAVINGS PLAN
TABLE OF CONTENTS
- -----------------
I. DEFINITIONS 4
II. PARTICIPATION
2.01 Eligibility and Election to Participate 8
2.02 Reemployment 8
2.03 Employment After Normal Retirement Age 8
2.04 Designation of Beneficiary 9
III. CONTRIBUTIONS
3.01 Contribution of Participant Deferrals 9
3.02 Participant Nondeductible Contributions 10
3.03 Rollover Contributions 10
3.04 Employer Matching Contributions 10
3.05 Limitation of Participant Deferrals 11
3.06 Maximum Participant and Matching
Contributions for Highly-Compensated Employees 11
3.07 Combined Alternative Limitation on Participant
Deferrals and Employer Matching Contributions 12
IV. PARTICIPANT'S ACCOUNTS; ALLOCATIONS
4.01 Participant's Accounts 12
4.02 Allocation of Employer Matching Contributions 13
4.03 Allocation of Net Gains or Losses;
Crediting of Accounts 13
4.04 Limitation of Annual Additions 13
4.05 Limitation of Reversion of Contributions 15
V. INVESTMENT OF CONTRIBUTIONS AND VALUATION OF FUNDS
5.01 Investment Funds 16
5.02 Investment Fund Options 16
5.03 Qualifying Employer Securities 17
5.04 Valuation of Trust Fund 17
VI. WITHDRAWALS OF PARTICIPANT DEFERRALS WHILE EMPLOYED
6.01 Withdrawal of Employee Deferral Accounts 17
6.02 Hardship Withdrawals 17
6.03 Withdrawal of Nondeductible Contributions 18
6.04 Amount and Payment of Withdrawals 18
VII. AMOUNT AND DISTRIBUTION OF BENEFITS
7.01 Retirement Benefits 19
7.02 Death Benefits 19
7.03 Disability Benefits 19
7.04 Benefits Upon Termination of Employment 19
7.05 Distribution of Benefits 19
7.06 Timing of Distributions 20
VIII. DEFERRAL PLAN COMMITTEE
8.01 Appointment of Committee 21
8.02 Powers and Duties 21
8.03 Actions by the Committee 22
8.04 Interested Committee Members 22
8.05 Indemnification 22
8.06 Conclusiveness of Action 23
8.07 Payment of Expenses 23
8.08 Claims Procedure 23
IX. AMENDMENT TO THE PLAN
9.01 Right to Amend 24
X. TERMINATION OF THE PLAN
10.01 Right to Terminate 24
10.02 Plan Merger and Consolidation 24
10.03 Successor Employer 24
XI. TRUST AND THE TRUSTEE
11.01 Employer to Select Trustee 25
XII. TOP HEAVY PLAN PROVISIONS
12.01 Definitions 25
12.02 Top Heavy Status 26
12.03 Minimum Contributions 26
XIII. MISCELLANEOUS
13.01 Voluntary Plan 27
13.02 Designation of Dates 27
13.03 Non-alienation of Benefits 27
13.04 Participant Loans 27
13.05 Inability to Receive Benefits 29
13.06 Lost Participants 29
13.07 Limitation of Rights 29
13.08 Gender 29
13.09 Invalid Provision 29
13.10 One Plan 29
13.11 Governing Law 30
PEOPLES BANCORP INC.
RETIREMENT SAVINGS PLAN
Peoples Bancorp Inc. hereby adopts the following retirement
savings plan pursuant to Sections 401(a) and 401(k) of the Code,
effective January 1, 1996. The Plan is an amendment and
restatement of the Peoples Bancorp Inc. Retirement Savings Plan,
effective January 1, 1989 and effective December 31, 1985. The
Plan shall be for the exclusive benefit of the Participants and,
where applicable, the Beneficiaries of such Participants. It is
intended that this Plan, together with the Trust Agreement,
shall comply with the applicable provisions of the Internal
Revenue Code of 1986, as amended, and the Employee Retirement
Income Security Act of 1974, as amended.
ARTICLE I
DEFINITIONS
- -----------
Whenever used herein, the following words and phrases shall
have the meaning specified below. Additional words and phrases
may be defined in the text of the Plan.
"Accounts" means a Participant's Employee Deferral Account, his
Voluntary Contributions Account, his Rollover Account and his
Employer Matching Contributions Account.
"Affiliate" means any other employer which, together with the
Employer, is a member of a controlled group of corporations or
of a commonly controlled trade or business [as defined in Code
Sections 414(b) and (c) and as modified by Code Section 415(h)]
or of an affiliated service group [as defined in Code Section
414(m)] or other organization described in Code Section 414(o).
"Beneficiary" means the person, persons or entity designated by
a Participant pursuant to the terms of Section 2.04 to receive
the death benefit payable under the Plan.
"Break in Service" means a Period of Severance of one year.
"Code" means the Internal Revenue Code of 1986, as may be
amended from time to time.
"Committee" means the Deferral Plan Committee as described in
Article VIII.
"Compensation" means the total amount reflected on a
Participant's Form W-2 for the Plan Year, excluding any benefits
paid under this Plan, except Compensation shall include any
salary deferrals made by a Participant pursuant to Section 3.01.
Notwithstanding the preceding sentence, for purposes of
allocating the Employer's contribution under the Plan, for the
year in which a Participant begins or resumes participation in
the Plan, Compensation before his participation began or resumed
shall be disregarded. Effective for Plan Years beginning after
December 31, 1988, Compensation paid by the Employer during any
Plan Year in excess of $200,000 as adjusted under Code Section
401(a)(17) shall be excluded and effective for Plan Years
beginning after December 31, 1993, Compensation paid by the
Employer during any Plan Year in excess of $150,000 as adjusted
under Code Section 401(a)(17) shall be excluded. In determining
the Compensation of a Participant for purposes of the $200,000
or $150,000 limit, the family aggregation rules of Code Section
414(q)(6) will apply, except in applying such rules, the term
"family" will include only the Spouse of the Participant and any
lineal descendants of the Participant who have not attained age
19 before the close of the year. If, as a result of the
application of such rules, Compensation would exceed the
adjusted $200,000 or $150,000 limitation, then the limitation
will be prorated among the affected persons in proportion to
each such person's compensation as determined under this
paragraph prior to the application of this limitation.
"Effective Date" means, for this amended and restated Plan,
January 1, 1996, unless some other effective date is provided
for in any specific provision herein.
"Employee" means any person who, on or after the Effective
Date, is receiving remuneration for personal services rendered
to the Employer (or who would be receiving such remuneration
except for an authorized leave of absence). In addition, any
Leased Employee shall be treated as an Employee of the Employer.
However, contributions or benefits provided by the leasing
organization for any Leased Employee which are attributable to
services performed for the Employer shall be treated as provided
by the Employer. The preceding sentences shall not apply to any
Leased Employee of the Employer if (a) Leased Employees do not
constitute more than 20% of the Employer's
non-highly-compensated work force [as defined by reference to
Section 414(q) of the Code]; and (b) the Leased Employee is
covered by a money purchase pension plan maintained by the
leasing organization which provides (i) a nonintegrated employer
contribution rate for each participant of at least 10% of
compensation; (ii) full and immediate vesting; and (iii)
immediate participation for all employees of the leasing
organization (except for those individuals whose compensation is
less than $1,000 in each plan year during the four-year period
ending with the plan year).
"Employer" means Peoples Bancorp Inc., its Affiliates and any
successor business or organization which shall assume the
obligations of the Plan.
"Employment Commencement Date" means the date on which the
Employee first performs an Hour of Service for the Employer or
an Affiliate.
"Entry Date" means the first day of January, April, July and
October of each Plan Year.
"ERISA" means the Employee Retirement Income Security Act of
1974, as periodically amended.
"Family Member" means, with respect to any individual, such
individual's Spouse and lineal ascendants or descendants and the
spouses of such lineal ascendants or descendants.
"Highly-Compensated Employee" means a highly-compensated active
employee and a highly-compensated former employee. A
highly-compensated active employee includes any Employee who
performs service for the Employer or an Affiliate during the
determination year and who, during the look-back year (a)
received compensation in excess of $75,000 (as adjusted by the
Secretary of the Treasury); (b) received compensation in excess
of $50,000 (as adjusted by the Secretary of the Treasury) and
was a member of the top-paid group for such year; or (c) was an
officer of the Employer or an Affiliate and received
compensation during such year that is greater than 50% of the
dollar limitation in effect under Code Section 415(b)(1)(A).
The term Highly-Compensated Employee also includes (a)
Employees who are both described in the preceding paragraph if
the term "determination year" is substituted for the term
"look-back year" and one of the 100 Employees who received the
most compensation from the Employer or an Affiliate during the
determination year; and (b) Employees who are 5% owners at any
time during the look-back year or determination year. If no
officer has satisfied the compensation requirement of (c) in the
preceding paragraph during either a determination year or
look-back year, the highest paid officer for such year shall be
treated as a Highly-Compensated Employee. For this purpose, the
determination year shall be the Plan Year. The look-back year
shall be the 12-month period immediately preceding the
determination year.
A highly-compensated former Employee includes any Employee who
separated from service (or was deemed to have separated) prior
to the determination year, performs no service for the Employer
or an Affiliate during the determination year and was a
highly-compensated active employee for either the separation
year or any determination year ending on or after the Employee's
55th birthday. A separation year is the determination year the
Employee separates from service. If an Employee is, during a
determination year or look-back year, a Family Member of either
a 5% owner who is an active or former Employee or a
Highly-Compensated Employee who is one of the 10 most
highly-compensated employees ranked on the basis of compensation
paid by the Employer or its Affiliates during such year, then
the Family Member and the 5% owner or top-10 highly-compensated
employee shall be aggregated. In such case, the Family Member
and 5% owner or top-10 highly-compensated employee shall be
treated as a single Employee receiving compensation and Plan
contributions or benefits equal to the sum of such compensation
and contributions or benefits of the Family Member and 5% owner
or top-10 highly-compensated employee.
The determination of who is a Highly-Compensated Employee,
including the determinations of the number and identity of
Employees in the top-paid group, the top 100 Employees, the
number of Employees treated as officers and the compensation
that is considered will be made in accordance with Code Section
414(q) and the regulations thereunder.
"Hour of Service" means:
(a) each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer or an
Affiliate. These hours shall be credited to the Employee for
the computation period or periods in which the duties are performed;
(b) each hour for which an Employee is paid, or entitled to
payment, by the Employer or an Affiliate on account of a period
of time during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability),
layoff, jury duty, military duty or leave of absence; and
(c) each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer or an
Affiliate. An Hour of Service credited under paragraph (a) or
(b) above will not be credited under this paragraph (c). These
hours shall be credited to the Employee for the computation
period or periods to which the award or agreement pertains
rather than the computation period in which the award, agreement
or payment is made.
"Inactive Participant" means a Participant whose employment
with the Employer or an Affiliate has continued but (a) whose
participation has been suspended as a result of making a
withdrawal pursuant to Section 6.02 hereof; or (b) who has
suspended his deferrals pursuant to Section 3.01(c) hereof.
"Investment Funds" means the investment funds as determined by
the Committee and described in Section 5.02 for the investment
of Participant Accounts pursuant to Participant directions.
"Leased Employee" means any person (other than an employee of
the recipient) who, pursuant to an agreement between the
recipient and any other person (leasing organization), has
performed services for the recipient [or for the recipient and
related persons determined in accordance with Code Sections
414(n) and 414(o)] on a substantially full-time basis for a
period of at least one year, and such services are of a type
historically performed by employees in the business field of the
recipient employer.
"Lower-Compensated Employee" means any Employee who is not a
Highly-Compensated Employee.
"Normal Retirement Age" means the Participant's 65th birthday;
provided, however, that this Plan shall not be interpreted to
require that a Participant retire prior to attaining any
specific age.
"Participant" means either (a) an Employee who is participating
in the Plan in accordance with Article II and for whom Accounts
are being maintained; or (b) a former Employee of the Employer
or an Affiliate for whom Accounts are being maintained.
"Period of Severance" means the time period between an
Employee's Severance from Service and the date on which he is
next credited with an Hour of Service.
"Plan" means the plan designated as the Peoples Bancorp Inc.
Retirement Savings Plan, as described in this document and as it
may be periodically amended.
"Plan Year" means the 12 months beginning on each January 1 and
ending each December 31. The Plan Year shall be the "Limitation
Year" for purposes of Code Section 415 and Section 4.04 of the
Plan.
"Projected Annual Benefit" means the annual benefit to which a
Participant would be entitled under all Employer sponsored
defined benefit plans, assuming that the Participant continues
employment until his normal retirement date, that the
Participant's Compensation continues until his normal retirement
date at the rate in effect during the current calendar year and
that all other factors relevant for determining benefits under
the Plan remain constant at the level in effect during the
current calendar year.
"Severance from Service" means the earliest of the date on
which an Employee either
(a) quits;
(b) retires;
(c) is discharged;
(d) dies; or
(e) is continuously absent (with or without pay) beyond (i) the
first anniversary of the first day of his approved absence; or
(ii) the expiration of his approved absence, whichever is longer.
An Employee will not be deemed to have incurred a Severance
from Service while in active service with the United States
armed forces and while his reemployment rights are protected by
law. If a Participant retires because of disability and
recovers before his normal retirement date but is not rehired by
the Employer or an Affiliate, he will be treated as having quit
(rather than retired) on the date his disability began.
"Spouse" or "Surviving Spouse" means an individual who is
legally married to the Participant, provided that an individual
who was formerly married to the Participant will be treated as
the Spouse or Surviving Spouse to the extent provided under a
qualified domestic relations order, as described in Code Section
414(p).
"Trust Agreement" means the agreement, and any amendments made
thereto, by and between the Employer and the Trustee for the
management, investment and disbursement of funds held in the
Trust Fund.
"Trust Fund" means the Employer's portion of the fund
established pursuant to the terms of the Trust Agreement, which
fund may be comprised of one or more Investment Funds.
"Trustee" means the bank, trust company and/or individual
designated by the Employer to hold and invest the Trust Fund and
to pay benefits and expenses as authorized by the Committee in
accordance with the terms and provisions of the agreement by and
between the Employer and such bank, trust company and/or
individual.
"Valuation Date" means each March 31, June 30, September 30 and
December 31, or more frequently if determined to be necessary by
the Committee.
"Year of Service" means each 12-month period between an
Employee's Employment Commencement Date and his Severance from
Service.
(a) Years of Service include an Employee's Period of Severance
if he is reemployed by the Employer or an Affiliate before a
Break in Service;
(b) except for determining eligibility to participate, periods
of service less than a full year will be aggregated; and
(c) any portion of a Year of Service which is less than a full
year will be stated as a fractional year with each full or
partial month equal to 1/12th of a year.
If a Participant is absent for maternity/paternity purposes and
that absence begins during Plan Years beginning after December
31, 1984, the 12-consecutive-month period beginning on the first
anniversary of the date the absence began will not be counted as
a Break in Service. For purposes of this section, an absence from
work for maternity/paternity purposes means an absence due to
(a) the pregnancy of the Employee;
(b) the birth of a child of the Employee;
(c) the placement of a child with the Employee in connection
with the adoption of such child by the Employee; or
(d) the caring for a child for a period beginning immediately
after birth or placement.
ARTICLE II
PARTICIPATION
- -------------
2.01. Eligibility and Election to Participate
---------------------------------------
Each individual who was a Participant in the Plan on the day
before the Effective Date shall remain a Participant in this
Plan on the Effective Date. Each Employee who is classified by
the Employer as a full-time employee who is not a Participant on
the Effective Date shall become a Participant in the Plan on the
Entry Date coincident with or next following his Employment
Commencement Date. Each Employee who is classified by the
Employer as a part-time employee who is not a Participant on the
Effective Date shall become a Participant in the Plan on the
Entry Date coincident with or next following the date as of
which he has been credited with 1,000 Hours of Service.
To be eligible to make Participant deferrals, a Participant
must complete an enrollment form and agree to make contributions
to the Plan, authorize the Employer to withhold such
contributions from his Compensation and pay the same to the
Trustee and designate a Beneficiary. An Employee who declines
to make Participant deferrals at the time when he is initially
eligible shall be a Participant for all other purposes of the
Plan and may elect to make Participant deferrals on the next
Entry Date thereafter, provided the Employee completes the
required form at least five days prior to such date.
2.02. Reemployment
------------
If a Participant whose employment has terminated is
subsequently reemployed, he shall be eligible to participate in
the Plan on the Entry Date following his reemployment.
2.03. Employment After Normal Retirement Age
--------------------------------------
A Participant who continues in the employ of the Employer after
his Normal Retirement Age shall continue to be a Participant for
all purposes of the Plan.
2.04. Designation of Beneficiary
--------------------------
(a) Each Participant shall designate a Beneficiary to receive
any death benefit payable under the Plan. In the event the
Participant dies before a distribution has occurred pursuant to
Section 7.01, 7.03 or 7.04, such distribution shall be paid to
the Participant's Surviving Spouse.
If there is no Surviving Spouse, or if the Surviving Spouse
consents to forego receipt of the distribution in accordance
with paragraph (b) below, distribution shall be made to any
person, persons or entity designated by the Participant as a
Beneficiary hereunder. If more than one Beneficiary is named,
the Participant may specify the sequence and/or proportion in
which payments must be made to each Beneficiary. In the absence
of such specification, payments shall be made in equal shares to
all named Beneficiaries. To the extent otherwise consistent
with this Plan, a Participant may change his Beneficiary from
time to time by written notice delivered to the Committee in the
manner prescribed by the Committee. If no Beneficiary has been
designated or if no designated Beneficiary is living at the time
of the Participant's death, payment of such death benefit, if
any, to the extent permitted by law, shall be made to the
surviving person or persons in the first of the following
classes of successive preference of Beneficiaries: (i)
Surviving Spouse; (ii) issue, then living, per stirpes; (iii)
executors or administrators. Any minor's share shall be paid to
such adult or adults as have been appointed legal guardian and
have assumed custody and support of such minor. Proof of death
satisfactory to the Committee must be furnished prior to the
payment of any death benefit under the Plan.
(b) If the Participant's Beneficiary under the Plan is someone
other than the Participant's Spouse, then such designation is
subject to the Spouse's consent. Spousal consent shall be valid
only if (i) it is made in writing on a form prescribed by the
Committee; (ii) the Spouse acknowledges the effect of the
consent; and (iii) the consent and acknowledgment are witnessed
by a Plan representative or a notary public. If the Participant
establishes to the satisfaction of the Committee that such
written consent may not be obtained because his Spouse cannot be
located, a designation of a Beneficiary other than his Spouse
will be deemed to have been made with spousal consent.
ARTICLE III
CONTRIBUTIONS
- -------------
3.01. Contribution of Participant Deferrals
-------------------------------------
(a) Effective January 1, 1987, each Participant may elect, by
entering into a salary reduction agreement with the Employer,
for each Plan Year to defer a portion of his Compensation, not
to exceed the lesser of (i) 15% of his Compensation; or (ii) the
maximum amount permitted under Section 402(g) of the Code,
taking into account elective deferrals made under other
qualified cash or deferred arrangements in which the Participant
participates. Such deferred amounts shall be contributed by the
Employer to the Participant's Employee Deferral Account.
(b) A Participant's election to make Participant deferrals
shall be effective for each payroll period during which an
effective salary reduction agreement is on file with the
Employer.
(c) A Participant's deferral percentage will remain in effect,
notwithstanding any change in his Compensation, until he elects
to change such percentage. A Participant may elect to increase,
decrease or cease his deferral percentage, as of the first
payroll period starting on or after the first day of a quarter
of the Plan Year, by submitting a salary reduction agreement at
least 15 days in advance of the first day of the quarter (or
such greater of lesser period as the Committee may establish for
purposes of administrative convenience).
A Participant who has elected a deferral percentage for a prior
portion of a Plan Year who fails to change such percentage on an
allowable date for a subsequent portion of a Plan Year shall be
deemed to have kept his prior deferral percentage in effect for
such subsequent portion of the Plan Year.
(d) Participant deferrals under this section shall be made by
payroll deductions authorized by the Participant and shall be
contributed to the Plan by the Employer. Participant deferrals
constitute Employer contributions under the Plan and are
intended to qualify as elective contributions under Code Section
401(k). Amounts allocated to a Participant's Employee Deferral
Account shall be fully vested in such Participant and
nonforfeitable at all times. The salary-deferral arrangement of
this Plan and any other plans of the Employer [which include a
cash or deferred arrangement under Section 401(k) of the Code
and which are considered one plan for purposes of Section
401(a)(4) or Section 401(b) of the Code] shall be treated as one
salary-deferral arrangement for purposes of applying the
provisions of this Article III.
(e) Effective January 1, 1987, in the event a Participant
notifies the Committee in writing by any March 1 that, with
respect to the previous calendar year, such Participant has made
elective Participant deferrals in excess of the maximum amount
permitted under Section 402(g)(5) of the Code for such calendar
year (taking into account for this purpose the aggregate salary
deferrals made by the Participant to all qualified cash or
deferred arrangements in which he participates), then the
Committee shall return to such Participant by the next following
April 15 the amount specified in such written notification of
his Participant deferral contributions to the Plan during the
previous calendar year, together with allocable earnings
thereon. To the extent that a Participant has made elective
Participant deferrals in excess of the maximum amount permitted
under Code Section 402(g)(5) to this Plan or any other plan
maintained by the Employer or an Affiliate, such Participant
shall be deemed to have notified the Committee of such excess
deferrals.
3.02. Participant Nondeductible Contributions
---------------------------------------
Each Participant may, if he so elects, contribute to the
Trustee of this Plan in any Plan Year amounts not in excess of
10% of the Compensation paid or accrued to the Participant by
the Employer during such Plan Year. All amounts contributed by
a Participant under this section shall be credited to his
Voluntary Contributions Account and shall be fully vested in the
Participant and nonforfeitable at all times. Contributions may
be in cash, by means of salary reductions or otherwise, in
accordance with such rules as the Committee may determine.
3.03. Rollover Contributions
----------------------
Subject to such restrictions as the Committee may apply or
affirmative refusal by the Committee to accept such rollovers,
an Employee may roll over a distribution from another qualified
pension or profit sharing plan; provided, however, that
notwithstanding any provision contained herein, no Employee
shall roll over more than a maximum amount of $500,000 in any
one particular Plan Year into any Investment Fund or Funds in
which investments are made in equity securities of the Employer.
Amounts so rolled over shall be credited to the Employee's
Rollover Account and shall be fully vested in such Employee and
nonforfeitable at all times. Amounts transferred directly from
another qualified pension or profit sharing plan shall be
treated hereunder as a rollover.
3.04. Employer Matching Contributions
-------------------------------
For each Plan Year, the Employer shall contribute an amount
equal to a percentage of the total amount of contributions
agreed to be made by it pursuant to salary reduction agreements
under Section 3.01 entered into between the Employer and
Participants for such Plan Year. The amount of this matching
contribution, if any, shall be determined in the discretion of
the Board of Directors.
Contributions made pursuant to this Section 3.04 shall be
allocated to the Employer Matching Contributions Account of
Participants who both (a) made Participant deferrals during the
Plan Year for which such matching contribution is made by the
Employer; and (b) are employed by the Employer or an Affiliate
on the last day of such Plan Year. Matching contributions shall
be allocated to each eligible Participant in the proportion
which the total Participant deferral contributions of such
Participant for the Plan Year bears to the total Participant
deferral contributions of all Participants who are eligible for
matching contributions for the Plan Year. Any amounts
contributed by the Employer pursuant to this paragraph shall be
paid on an annual basis to the Trustee.
3.05. Limitation of Participant Deferrals
-----------------------------------
(a) Notwithstanding Section 3.01, effective January 1, 1987,
the deferral percentages under Section 3.01 shall be modified as
provided in paragraph (c) if the requirements of paragraph (b)
are not satisfied.
(b) An actual deferral percentage shall be determined for each
Employee who is eligible to become a Participant. Such
percentage shall be his total Participant deferrals, divided by
his Compensation during the portion of the Plan Year during
which he was eligible to participate in the Plan. With respect
to Employees who are eligible to but make no deferrals under
this Plan for the year, such actual deferral percentage shall be
zero.
The average of the actual deferral percentages for all eligible
Employees who are Highly-Compensated Employees (High Average),
when compared to the average of the actual deferral percentages
for all eligible Employees who are Lower-Compensated Employees
(Low Average), must meet one of the following requirements:
(i) the High Average is no greater than the Low Average times
1.25; or
(ii) the excess of the High Average over the Low Average is
not greater than 2% and the High Average is no greater
than the Low Average times 2.0.
(c) The Committee shall make a determination as of the last day
of the Plan Year regarding the maximum Participant deferral
contribution which each Participant who is a Highly-Compensated
Employee may elect to defer, and any Participant who elected to
defer more than his maximum permissible Participant deferral
contribution shall be deemed to have elected to defer the
maximum permissible Participant deferral contribution as
determined by the Committee. For this purpose, all cash or
deferred arrangements under which a Highly-Compensated Employee
is eligible to participate shall be treated as a single
arrangement. If it is determined as of the end of the Plan Year
that any amounts withheld by the Employer for such Participant
exceed the amounts determined permissible by the Committee or,
if the amount of the Participant's Participant deferral
contribution would limit the contribution the Employer has
determined to make for its corresponding fiscal year, then the
excess amount or the portion of the Participant's Participant
deferral contribution which would so limit the Employer's
contribution, together with interest thereon (if any) for the
Plan Year, shall be returned by the Employer or the Trustee to
the Participant within 2 1/2 months after the end of the Plan
Year, but in no event later than the last day of the following
Plan Year.
For purposes of this paragraph (c), the amount of excess
contributions for a Highly-Compensated Employee will be
determined in the following manner. First, the actual deferral
ratio (ADR) of the Highly-Compensated Employee with the highest
ADR is reduced to the extent necessary to satisfy the actual
deferral percentage (ADP) test or cause such ratio to equal the
ADR of the Highly-Compensated Employee with the next highest
ratio. Second, this process is repeated until the ADP test is
satisfied. The amount of excess contributions for a
Highly-Compensated Employee is then equal to the total of
elective and other contributions taken into account for the ADP
test minus the product of the Employee's contribution ratio as
determined above and the Employee's Compensation. The Committee
shall have the right to limit or reduce the Participant deferral
contributions of Participants, as it determines necessary and in
any manner it determines, to ensure that the aggregate
allocation to the Employee Deferral Accounts of all Participants
will not exceed the amount permitted as a deduction by the
Employer pursuant to the Code and to ensure that, with respect
to any particular Participant, the amount credited to such
Participant's Employee Deferral Account for the Plan Year does
not exceed the amount permissible under Section 415 of the Code.
3.06. Maximum Participant and Matching Contributions for
Highly-Compensated Employees
--------------------------------------------------
(a) Effective January 1, 1987, the contribution percentage for
eligible Highly-Compensated Employees under this Plan shall not
exceed the greater of (i) 125% of such percentage for all other
eligible Employees; or (ii) the lesser of 200% of such
percentage for all other eligible Employees or the percentage
for all other eligible Employees plus two percentage points.
(b) For purposes of this section, the contribution percentage
for a specified group of Employees for a Plan Year shall be the
average of the ratios (calculated separately for each Employee
in such group) of (i) the sum of the Participant's nondeductible
contributions and the Employer matching contributions made under
the Plan on behalf of each such Employee for such Plan Year to
(ii) the Employee's compensation [within the meaning of Section
414(s) of the Code] for the portion of such Plan Year during
which he was eligible to participate in the Plan.
(c) Any Employee who is eligible to make a Participant deferral
contribution under the Plan shall be considered an "eligible
employee" for purposes of this section.
(d) The Plan shall not be treated as failing to meet the
requirements of this section for any Plan Year if, before the
close of the following Plan Year, the amount of the excess
aggregate contributions for such Plan Year and any income
allocable to such contributions is distributed. For this
purpose, income allocable to excess contributions shall include
only income for the Plan Year for which the excess aggregate
contributions were made. Any distribution of the excess
aggregate contributions for any Plan Year shall be made to
Highly-Compensated Employees on the basis of the respective
portions of such amounts attributable to each of such Employees.
For purposes of this section, the term "excess aggregate
contributions" shall mean, with respect to any Plan Year, the
excess of (i) the amount of the Participant nondeductible
contributions and Employer matching contributions actually made
by or on behalf of Highly-Compensated Employees for such Plan
Year over (ii) the maximum amount of such contributions
permitted under the contribution percentage requirement
described above (determined by reducing contributions made on
behalf of Highly-Compensated Employees in order of their
contribution percentages beginning with the highest of such
percentages).
3.07. Combined Alternative Limitation on Participant Deferrals
and Employer Matching Contributions
--------------------------------------------------------
Notwithstanding any provision of this Article III, effective
January 1, 1987, if, as of any Plan Year, both the High Average
specified in Section 3.05 (relating to actual deferral
percentages) and the contribution percentage for
Highly-Compensated Employees specified in Section 3.06 (relating
to actual contribution percentages) exceed the Low Average
specified in Section 3.05 and the contribution percentage for
Lower-Compensated Employees specified in Section 3.06 by more
than 25%, the Committee shall apply the aggregate alternative
limitation in accordance with Section 1.401(m)-2 of the Income
Tax Regulations. In the event the combined alternative
limitation is not satisfied for any given Plan Year, the
Employer shall direct the Committee to reduce the High Average
of Section 3.05 and/or the contribution percentage for
Highly-Compensated Employees of Section 3.06 as permitted by
Sections 3.05 and 3.06 hereof to the extent necessary to satisfy
the combined alternative limitation.
ARTICLE IV
PARTICIPANT'S ACCOUNTS; ALLOCATIONS
- -----------------------------------
4.01. Participant's Accounts
----------------------
The Committee shall maintain Accounts as follows for each
Participant in the Plan:
(a) an Employer Matching Contributions Account to record
(i) his share of the Employer matching contributions,
allocated under Section 3.03; and
(ii) his share of the net income, or net losses, resulting
from the investment thereof.
(b) an Employee Deferral Account to record
(i) the Participant's Participant deferrals made pursuant to
Section 3.01, minus any withdrawals; and
(ii) his share of the net income, or net losses, resulting
from the investment thereof.
(c) a Voluntary Contributions Account to record:
(i) his nondeductible contributions, minus any withdrawals; and
(ii) his share of the net income, or net losses, resulting
from the investment thereof.
(d) a Rollover Account to record
(i) the Participant's rollovers made pursuant to Section 3.03; and
(ii) his share of the net income, or net losses, resulting
from the investment thereof.
4.02. Allocation of Employer Matching Contributions
---------------------------------------------
Employer matching contributions made under Section 3.04 shall
be allocated to each Participant in accordance with the
provisions of Section 3.04.
4.03. Allocation of Net Gains or Losses; Crediting of Accounts
--------------------------------------------------------
As of each Valuation Date, the fair market value of the Trust
Fund shall be determined in accordance with Section 5.04. The
net increase or decrease in such values resulting from the
investment of the assets therein and from administrative
expenses charged to the Trust Fund, if any, pursuant to Section
8.07 shall be apportioned to each Participant's Employer
Matching Contributions Account and Rollover Account in
proportion to the value thereof as of the last preceding
Valuation Date. The net increase or decrease in the value of
the Trust Fund resulting from investment of the assets therein
and from administrative expenses charged to the Trust Fund, if
any, pursuant to Section 8.07 shall be apportioned to each
Participant's Employee Deferral Account in the ratio that the
sum of the value of such Participant's Employee Deferral Account
as of the preceding Valuation Date plus a weighted average of
any Participant deferrals made to such Employee Deferral Account
since the preceding Valuation Date less any withdrawals made
from such Employee Deferral Account since the preceding
Valuation Date bears to the total value of all Participants'
Employee Deferral Accounts as of the preceding Valuation Date
plus a weighted average of all Participant deferrals made to the
Plan since the preceding Valuation Date less any withdrawals
made from all Employee Deferral Accounts since the preceding
Valuation Date. The net increase or decrease in the value of
the Trust Fund resulting from investment of the assets therein
and from administrative expenses charged to the Trust Fund, if
any, pursuant to Section 8.07 shall be apportioned to each
Participant's Voluntary Contributions Account in the ratio that
the sum of the value of such Participant's Voluntary
Contributions Account as of the preceding Valuation Date plus a
weighted average of any Participant nondeductible contributions
made to such Voluntary Contributions Account since the preceding
Valuation Date less any withdrawals made from such Voluntary
Contributions Account since the preceding Valuation Date bears
to the total value of all Participants' Voluntary Contributions
Accounts as of the preceding Valuation Date plus a weighted
average of all Participant nondeductible contributions made to
the Plan since the preceding Valuation Date less any withdrawals
made from all Voluntary Contributions Accounts since the
preceding Valuation Date.
4.04. Limitation of Annual Additions
------------------------------
(a) Basic Limitation. Notwithstanding Sections 3.01 and 3.05
and subject to the provisions of paragraphs (b) and (c) below,
Annual Additions to each Participant's Account shall not exceed
the lesser of (i) $30,000 or such larger amount as may be
determined by the Secretary of the Treasury for Limitation Years
ending on or after January 1, 1988; or (ii) 25% of the
Participant's compensation for the Limitation Year.
For purposes of this Section 4.04, "compensation" shall mean
compensation as defined in Treasury Regulation Section
1.415-2(d) and shall include wages, salaries, fees for
professional services, percentage of profits, earned income in
the case of a self-employed Participant, disability payments,
paid or reimbursed moving expenses to the extent not deductible
by the Participant, medical reimbursement items and the value of
a non-qualified stock option to the extent includable in an
Employee's gross income upon making the election under Code
Section 83(b). Specifically excluded are salary deferral
contributions, contributions to the distributions from most
deferred compensation plans, amounts realized from the sale of a
non-qualified stock option or from the sale, exchange or other
disposition of stock acquired under a qualified stock option
plan and most amounts which receive special tax benefits. Also
for purposes of this section, "Annual Additions" means the sum
of the following amounts credited to a Participant's Account for
the Limitation Year under all defined contribution plans
maintained by the Employer:
(i) Employer contributions;
(ii) Forfeitures;
(iii) Employee contributions;
(iv) amounts allocated after March 31, 1984 to an individual
medical account, as defined in Code Section 415(l)(2),
which is part of a defined benefit plan maintained by the
Employer; and
(v) amounts derived from contributions paid or accrued after
December 31, 1985 in taxable years ending after such date
which are attributable to postretirement medical benefits
allocated to the separate account of a Key Employee [as
defined in Code Section 416(i)] under a welfare benefit fund
[as defined in Code Section 419(e)] maintained by the
Employer. The amounts described under this subparagraph (v)
shall not be subject to the 25% of compensation limit
provided in Section 4.04(a).
(b) Participation in Other Defined Contribution Plan. The
limitation of this Section 4.04 with respect to any Participant
who at any time has participated in any other qualified defined
contribution plan [as defined in Section 3(34) of ERISA and Code
Section 414(i)] maintained by the Employer will apply as if the
total contributions allocated under all such defined
contribution plans in which the Participant has participated
were allocated under one plan.
(c) Participation in this Plan and Defined Benefit Plan. If a
Participant has been a Participant in a qualified defined
benefit plan [as defined in Section 3(35) of ERISA and Code
Section 414(j)] maintained by the Employer, the sum of the
Participant's defined benefit plan fraction and defined
contribution plan fraction for any year shall not exceed one.
The defined benefit plan fraction is a fraction, the numerator
of which is the sum of the Participant's Projected Annual
Benefit under all defined benefit plans (whether or not
terminated) maintained by the Employer, and the denominator of
which is the lesser of (i) 1.25 times the dollar limitation of
Code Section 415(b)(1)(A) in effect for the limitation year; or
(ii) 1.4 times the Participant's average annual earnings for the
three consecutive years that produce the highest average.
The defined contribution plan fraction is a fraction, the
numerator of which is the sum of the Annual Additions to the
Participant's Accounts under all defined contribution plans
maintained by the Employer (whether or not terminated) for the
current and all prior years, and the denominator of which is the
sum of the lesser of the following amounts determined for such
years and for each prior Year of Service with the Employer: (i)
1.25 times the dollar limitation in effect under Code Section
415(c)(1)(A) for such year; or (ii) 1.4 times the amount which
may be taken into account under Code Section 415(c)(1)(B).
For any years in which the Plan is "top heavy" as defined in
Section 12.02, "1.0" shall be substituted for "1.25" in the
preceding two paragraphs.
As to each Participant, if, in any Limitation Year, the sum of
the defined benefit plan fraction and the defined contribution
plan fraction exceeds 1.0, the rate of benefit accruals under
this Plan will be reduced so that the sum of the fractions
equals 1.0.
(d) Adjustments. If the limitation described in this Section
4.04 is effective in limiting the amount to be allocated to the
Accounts of a Participant for a Plan Year, the annual
contributions hereunder will be reduced as necessary to bring
them within the limitation, as follows:
(i) first, amounts attributable to Participant nondeductible
contributions will be reduced. Such amounts will be
returned to the Participant;
(ii) second, amounts attributable to the Participant's
deferrals will be reduced. Such amounts will be returned
to the Participant as cash Compensation and will be subject
to all federal, state, municipal and/or county taxes and other
deductions which would apply to cash Compensation; and
(iii) third, the Employer matching contribution allocated to
the Participant's Employer Matching Contributions Account will
be reduced. The amount of the reduction will be credited to an
unallocated Employer Matching Contributions Account and will
reduce current or future Employer matching contributions.
(e) Members of Controlled Group. The determination of the
limitation on Annual Additions described in this Section 4.04
will be made considering the Employees of all members of a
controlled group of corporations or commonly controlled trades
or businesses [as defined in Code Sections 414(b) and (c) as
modified by Code Section 415(h)] or affiliated service groups
[as defined in Code Section 414(m)] of which the Employer is a
part as employed by a single employer. Such determination will
be made assuming the phrase "more than 50%" is substituted for
the phrase "at least 80%" each place it appears in Code Section
1563(a)(1).
4.05. Limitation of Reversion of Contributions
----------------------------------------
Except as provided in paragraphs (a) through (c) below,
contributions made under the Plan shall be held for the
exclusive benefit of Participants and their Beneficiaries and
may not revert to the Employer.
(a) In the case of a contribution which is made by the Employer
by a mistake of fact, such contribution shall be returned to the
Employer within one year after it is contributed to the Plan.
(b) In the case of a contribution conditioned on the Plan's
qualification under Code Section 401(a), if the Plan fails to
qualify initially, such contribution shall be returned to the
Employer within one year after the date that the Plan's
qualification is denied.
(c) In the case of a contribution conditioned upon its
deductibility under Code Section 404, to the extent the
deduction is disallowed, the amount disallowed shall be returned
to the Employer within one year after the disallowance.
ARTICLE V
INVESTMENT OF CONTRIBUTIONS AND VALUATION OF FUNDS
- --------------------------------------------------
5.01. Investment Funds
----------------
Each Participant will have his Employer Matching Contributions
Account, his Employee Deferral Account, his Voluntary
Contributions Account and his Rollover Account invested in the
Trust Fund.
5.02. Investment Fund Options
-----------------------
The Committee shall establish and maintain one or more
Investment Funds for the investment of Participant Accounts
under the Plan. Each sum credited to a Participant's Accounts
shall be invested in such Investment Funds by the Trustee
pursuant to directions received from the Participant. There
shall be six such Investment Funds, as hereinafter indicated:
(a) The Peoples Stock Fund shall be a common stock fund of the
Trustee which consists of a diversified portfolio of
high-quality common stocks. While awaiting investment in common
stocks, any cash held by the Trustee may be invested in common
or collective short-term investment funds of the Trustee.
(b) The Certificate of Deposit Fund shall be a fixed income
fund of the Plan which consists of investments in various
deposit instruments of The Peoples Banking and Trust Company or
The First National Bank of Southeastern Ohio, which bear a
reasonable interest rate. While awaiting investment into the
fixed income fund, any cash held by the Trustee may be invested
in common or collective short-term investment funds of the
Trustee.
(c) The Peoples Bancorp Stock Fund shall consist of common
shares of Peoples Bancorp Inc. While awaiting investment into
Peoples Bancorp Inc. common shares, any cash held by the Trustee
may be invested in common or collective short-term investment
funds of the Trustee.
(d) The Peoples Special Stock Fund shall be a common stock fund
which consists of a diversified portfolio of small company
common stocks and common stock mutual funds. While awaiting
investment in common stocks and/or common stock mutual funds,
any cash held by the Trustee may be invested in common or
collective short-term investment funds of the Trustee.
(e) The Acorn Fund shall be a common stock fund, managed by
Wanger Asset Management, L.P., which consists of a diversified
portfolio of common stocks of small and medium sized companies
in the United States and overseas. While awaiting investment in
Acorn Fund, any cash held by the Trustee may be invested in
common or collective short-term investment funds of the Trustee.
(f) The Vanguard S&P 500 Index Fund shall be a common stock
fund, managed by the Vanguard Group of Investment Companies,
which consists of a diversified portfolio of common stocks of
large companies in the United States. While awaiting investment
in the Vanguard S&P Index Fund, any cash held by the Trustee may
be invested in common or collective short-term investment funds
of the Trustee.
Each Participant will direct, at the time he elects to make
Participant deferrals, voluntary contributions and/or rollover
contributions, that contributions be invested in one or more of
the Investment Funds. If the Participant elects to have his
contributions invested in more than one such Investment Fund, he
shall designate the portion of contributions that will be
invested in each Investment Fund.
Any investment election given by a Participant for investment
of contributions will continue in effect until changed by the
Participant. A Participant may make or change an investment
election as of the first day of a quarter of the Plan Year by
submitting an instruction in a way prescribed by the Committee,
at least 15 days in advance (or such greater of lesser period as
the Committee may establish for purposes of administrative
convenience).
5.03. Qualifying Employer Securities
------------------------------
Notwithstanding any other provision of this Plan, the Plan is
authorized to invest and hold up to 100% of the Trust assets in
"qualifying employer securities" [as that term is defined in
Section 407(d)(5) of ERISA] and "bank deposits" [as that term is
defined in Section 4975(d)(4) of the Code]. The Plan may
purchase such common shares or other securities of the Employer
from the Employer or from any other source, and such common
shares or securities may be outstanding, newly issued or
treasury securities. All such purchases shall be made at fair
market values. If no common shares or other securities of the
Employer are available for purchase, the Plan may retain cash
uninvested or may invest all or any part thereof in any other
investment if such retention is prudent under all the facts and
circumstances then prevailing.
Each Participant may vote Employer securities, which are
entitled to vote and are allocated to the Accounts of such
Participant. The Trustee shall provide to each Participant
materials pertaining to the exercise of such rights containing
all of the information distributed to other shareholders of the
Employer. A Participant shall have the opportunity to exercise
any such rights within the same time period as other
shareholders of the Employer. In the exercise of voting
rights, votes representing fractional common shares and common
shares held in unallocated inventory shall be voted in the same
ratio for the election of Directors and for and against each
issue as the applicable vote directed by Participants with
respect to whole common shares .
Notwithstanding any other provision of this Plan, a Participant
who is entitled to a distribution from the Plan (other than a
hardship withdrawal or a withdrawal of his nondeductible
contributions) has a right to demand that his benefits be
distributed in the form of Employer securities to the extent his
Accounts reflect ownership of whole common shares or consist of
Employer securities.
5.04. Valuation of Trust Fund
-----------------------
As of each Valuation Date, the Trustee shall determine the
current market value of the net assets of the Trust Fund,
including the current market value of each Investment Fund
established by the Committee pursuant to Section 5.02.
ARTICLE VI
WITHDRAWALS OF PARTICIPANT DEFERRALS WHILE EMPLOYED
- ---------------------------------------------------
6.01. Withdrawal of Employee Deferral Accounts
----------------------------------------
Except as provided in Section 3.01(e) and Section 3.05, the
balance to the credit of a Participant in his Employee Deferral
Account shall not be distributable until the Participant's
retirement, death, disability, separation from service with the
Employer, termination of the Plan (provided a total distribution
is made and the Employer does not establish a successor plan),
the date of the sale by the Employer of all of its assets
(provided the affected Participant continues in the employ of
the corporation acquiring such assets) or the date of the sale
by the Employer of its interest in a subsidiary (provided the
affected Participant continues in the employ of the subsidiary),
except for any withdrawal distributions for hardship, if
permitted under Section 6.02 of the Plan. No portion of a
Participant's Employee Deferral Account shall be distributable
merely by reason of the completion of a stated period of
participation or the lapse of a fixed number of years.
6.02. Hardship Withdrawals
--------------------
Upon 15 days' written notice to the Committee and subject to
Committee approval, a Participant may withdraw all or a portion
of his Employee Deferral Account (excluding any earnings
credited thereto) as of the Valuation Date immediately preceding
his withdrawal request to the extent necessary to meet a
financial hardship. Requests for withdrawal pursuant to this
Section 6.02 may only be made once in a 12-month period. The
amount of any withdrawal under this section due to financial
hardship shall not be less than $500 nor in excess of the amount
necessary to meet such financial hardship plus any amounts
necessary to pay any federal, state or local income taxes
reasonably anticipated to result from the withdrawal. For
purposes of the Plan, a financial hardship shall include any of
the following events:
(a) expenses for medical care described in Code Section 213(d)
previously incurred by the Participant or his Spouse or
dependents (as defined in Code Section 152) or necessary for
these persons to obtain medical care described in Code Section
213(d);
(b) costs directly related to the purchase of a principal
residence for the Participant (excluding mortgage payments);
(c) the payment of tuition and related educational fees for the
next 12 months of post-secondary education for the Participant,
his Spouse, children or dependents; or
(d) payments necessary to prevent the eviction of the
Participant from the Participant's principal residence or
foreclosure on the mortgage on that residence.
An application for withdrawal pursuant to this section may only
be approved by the Committee if a Participant either (a)
certifies that his financial need cannot be met by insurance,
reasonable liquidation of assets (not itself creating a
hardship), cessation of Participant deferrals, by other
distributions or nontaxable loans from plans maintained by the
Employer or by borrowing from commercial sources on reasonable
commercial terms; or (b) elects to (i) first obtain all other
distributions and all other nontaxable loans currently available
under the Plan and any other Plans maintained by the Employer;
(ii) suspend his Participant deferrals and contributions to this
Plan and all other plans maintained by the Employer for a period
of 12 months following his receipt of a hardship distribution
pursuant to this section; and (iii) have his Participant
deferrals to this Plan for his taxable year immediately
following the taxable year of the hardship distribution limited
to the applicable limit on Participant deferrals under Section
402(g) of the Code minus his Participant deferrals for the
taxable year of the hardship distribution.
6.03. Withdrawal of Nondeductible Contributions
-----------------------------------------
A Participant shall, upon 30 days' prior written notice to the
Committee, be entitled to withdraw at any time his entire
Voluntary Contributions Account, or any portion of such
Voluntary Contributions Account. Requests for withdrawal
pursuant to this Section 6.03 may only be made once in a
12-month period.
6.04. Amount and Payment of Withdrawals
---------------------------------
All withdrawals under Article VI shall be effective as of the
Valuation Date immediately preceding the date the Committee
receives a timely withdrawal request from the Participant. The
amount of such withdrawal shall be taken from the Participant's
Account as of such Valuation Date and paid to the Participant in
a single lump sum as soon as administratively possible.
ARTICLE VII
AMOUNT AND DISTRIBUTION OF BENEFITS
- -----------------------------------
7.01. Retirement Benefits
-------------------
The retirement benefit payable under the Plan in the case of a
Participant whose employment with the Employer is terminated on
or after his Normal Retirement Age shall be 100% of his Accounts
on the Valuation Date immediately following his termination of
employment if the termination of employment occurs after the
mid-point of any calendar quarter. If the Participant's
termination of employment occurs on or before the mid-point of a
calendar quarter, the benefit payable shall be 100% of the
Participant's Accounts on the Valuation Date immediately
preceding his termination of employment, plus any contributions
and earnings subsequently allocated to such Accounts and less
any subsequent distributions from and losses subsequently
allocated to such Accounts.
7.02. Death Benefits
--------------
The death benefit payable to a Beneficiary under the Plan in
the case of a Participant whose employment with the Employer is
terminated due to his death shall be 100% of his Accounts on the
Valuation Date immediately following the Participant's death if
the death occurs after the mid-point of any calendar quarter.
If the Participant's death occurs on or before the mid-point of
a calendar quarter, the benefit payable shall be 100% of the
Participant's Accounts on the Valuation Date immediately
preceding his death, plus any contributions and earnings
subsequently allocated to such Accounts and less any subsequent
distributions from and losses subsequently allocated to such
Accounts.
7.03. Disability Benefits
-------------------
The disability benefit payable under the Plan in the case of a
Participant who becomes totally and permanently disabled shall
be 100% of his Accounts on the Valuation Date immediately
following the date of his total and permanent disability if the
termination of employment occurs after the mid-point of any
calendar quarter. If the Participant's termination of
employment occurs on or before the mid-point of a calendar
quarter, the benefit payable shall be 100% of the Participant's
Accounts on the Valuation Date immediately preceding his
termination of employment, plus any contributions and earnings
subsequently allocated to such Accounts and less any subsequent
distributions from and losses subsequently allocated to such
Accounts. A Participant shall be deemed totally and permanently
disabled if the Participant qualifies for Social Security
disability benefits.
7.04. Benefits Upon Termination of Employment
---------------------------------------
The benefit payable under the Plan in the case of a Participant
whose employment with the Employer is terminated for any reason
other than retirement, death or disability shall be 100% of his
Accounts, as of the Valuation Date immediately following his
termination of employment if the termination of employment
occurs after the mid-point of any calendar quarter. If the
Participant's termination of employment occurs on or before the
mid-point of a calendar quarter, the benefit payable shall be
100% of the Participant's Accounts on the Valuation Date
immediately preceding his termination of employment, plus any
contributions and earnings subsequently allocated to such
Accounts and less any subsequent distributions from and losses
subsequently allocated to such Accounts.
7.05. Distribution of Benefits
------------------------
(a) At the time a Participant becomes entitled to receive any
amount because of his retirement, death, disability or
termination of employment, the Trustee, acting in accordance
with the written instructions of the Committee, shall either
make payment from the Trust Fund to such Participant or his
Beneficiary (i) in a lump sum; or (ii) in such periodic
installments as may be elected by the Participant or Beneficiary
over a time period not to exceed 10 years.
Effective January 1, 1993, if a Participant is entitled to a
distribution under this Section 7.05 which qualifies as an
Eligible Rollover Distribution and he (a) elects to have such
distribution paid directly to an Eligible Retirement Plan; and
(b) specifies the Eligible Retirement Plan to which such
distribution is to be paid (in a manner required by the Plan
Administrator), such distribution shall be made from the Plan in
the form of a direct trustee-to-trustee transfer to the Eligible
Retirement Plan so specified. The preceding sentence shall only
be applicable to the extent that a Participant's Eligible
Rollover Distribution would be includible in the Participant's
gross income if it were not transferred to an Eligible
Retirement Plan. For purposes of this paragraph, the term
"Eligible Rollover Distribution" shall have the meaning given to
such term under Section 401(a)(31)(C) of the Code and the term
"Eligible Retirement Plan" shall have the meaning given to such
term under Section 401(a)(31)(D) of the Code.
If a Participant's Accounts are to be distributed in other than
an immediate lump sum, minimum annual payments under the Plan
must be paid over one of the following periods (or a combination
thereof):
(i) a period certain not extending beyond the life expectancy
of the Participant; or
(ii) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a designated
Beneficiary.
(b) If the Participant's Accounts are to be distributed in
other than a lump sum, then the amount to be distributed each
year must be at least an amount equal to the quotient obtained
by dividing the total amount of the Participant's Accounts by
the life expectancy of the Participant or joint and last
survivor expectancy of the Participant and designated
Beneficiary. If the Participant's Spouse is not the designated
Beneficiary, the method of distribution selected must assure
that at least 50% of the present value of the amount available
for distribution is paid within the life expectancy of the
Participant.
If the distribution of the Participant's Accounts has begun and
he dies before such Accounts have been distributed to him, the
remaining portion of such Accounts will be distributed at least
as rapidly as under the method of distribution being used prior
to the Participant's death.
Subject to the succeeding paragraph, if the Participant dies
before his distribution has begun, his Accounts shall be
distributed within five years of his death unless (i) a portion
of such Accounts is payable to or on behalf of a designated
Beneficiary; (ii) such portion will be distributed over the life
of such designated Beneficiary; and (iii) such distribution
begins not later than one year after the date of the
Participant's death (or such date as prescribed by the Secretary
of Treasury).
Notwithstanding the preceding paragraph, if the designated
Beneficiary is the Participant's Surviving Spouse, the date by
which the distribution must commence under (iii) in the
preceding paragraph shall be the date the Participant would have
attained age 70 1/2. If the Surviving Spouse dies before
distribution to said Spouse begins, this section shall apply as
if the Surviving Spouse were the Participant. Life expectancy
of a Surviving Spouse may be recalculated annually; however, in
the case of any other designated Beneficiary, such life
expectancy will be calculated at the time that payment first
commences without further calculations. In addition, any amount
paid to a child of the Participant will be treated as if it had
been paid to the Surviving Spouse if the amount becomes payable
to the Surviving Spouse when the child reaches the age of
majority.
7.06. Timing of Distributions
-----------------------
(a) Distributions under the Plan pursuant to this Article VII
will begin as soon as practicable, but, unless otherwise elected
by the Participant, not later than 60 days following the end of
the Plan Year in which the Participant attains age 65,
celebrates his tenth anniversary of participation in the Plan or
terminates employment, whichever is latest. In no event will
the entire interest of a Participant be distributed, or commence
to be distributed, later than April 1 following the year in
which the Participant attains age 70 1/2.
(b) Notwithstanding the previous paragraph, if a Participant
terminates service and the value of his Accounts does not exceed
$3,500 (and did not exceed $3,500 at the time of any prior
distribution), the Participant shall receive a distribution of
the value of his Accounts as soon as administratively feasible
following his termination of service. If a Participant
terminates service and the value of his Accounts exceeds $3,500
(or exceeded $3,500 at the time of any prior distribution), the
Participant may elect to receive a distribution of the value of
his Accounts as soon as administratively feasible following his
termination of service. For purposes of this paragraph, if the
value of a Participant's Accounts is zero, the Participant shall
be deemed to have received a distribution of such Accounts.
ARTICLE VIII
DEFERRAL PLAN COMMITTEE
- -----------------------
8.01. Appointment of Committee
------------------------
A Deferral Plan Committee consisting of not less than three
members nor more than five members shall be appointed by the
Board of Directors of the Employer to administer the Plan.
Vacancies in the Committee, which result from death, resignation
or otherwise, shall be filled from time to time by appointment
of a new Committee member by the Employer; and any member of the
Committee may be removed at any time at the discretion of the
Employer.
8.02. Powers and Duties
-----------------
(a) The Committee shall, in its discretion, have full power to
administer the Plan and to construe and apply all of its
provisions on behalf of the Employer. The Employer shall be the
Named Fiduciary within the meaning of Section 402(a) of ERISA
for purposes of Plan administration. The Committee may delegate
to any other person or organization any of its powers and duties
with respect to the operation of this Plan. The Committee's
powers and duties, unless properly delegated, shall include, but
shall not be limited to
(i) deciding questions relating to eligibility, continuity of
service and amount of benefits;
(ii) deciding disputes which may arise with regard to the
rights of Employees, Participants and their legal
representatives or Beneficiaries under the terms of the
Plan. Such decisions by the Committee shall be deemed
final in each case;
(iii) obtaining such information from the Employer with
respect to its Employees as shall be necessary to
determine the rights and benefits of such Employees
under the Plan. The Committee may rely conclusively
upon such information furnished by the Employer;
(iv) compiling and maintaining all records necessary for the
Plan;
(v) furnishing the Employer, upon request, such reports with
respect to the administration of the Plan as are
reasonable and appropriate;
(vi) authorizing the Trustee to make payment of all benefits
as they become payable under the Plan;
(vii) engaging such legal, administrative, actuarial,
investment, accounting, consulting and other professional
services as the Committee deems proper;
(viii) adopting rules and regulations for the administration
of the Plan not inconsistent with the Plan;
(ix) doing and performing such other actions as may be
provided for in other parts of this Plan.
(b) The Committee shall determine whether domestic relations
orders represent "qualified domestic relations orders" as that
term is defined in Code Section 414(p) or a successor provision.
If the Committee determines the order is a qualified domestic
relations order, it shall direct the manner and time of
distribution pursuant to the order. Prior to such
determination, the Committee shall promptly notify the
Participant affected with respect to the order and any payee
under the order of the receipt of the order. The Committee
shall send such notices to the address set forth in the order,
or if the address is not set forth therein, to the last known
address. Such notice shall state that the Committee is in the
process of determining whether the order is a qualified domestic
relations order and such notice shall also permit a reasonable
period under the circumstances for comment with respect to such
determination. During such period, the Committee shall cause
the amounts otherwise payable under the order to be segregated
in a separate account. After the determination is made, the
Committee shall notify the Participant and any payee under the
order of such determination. Any payee may designate a
representative for receipt of copies of notices sent to the
payee with respect to the order.
8.03. Actions by the Committee
------------------------
The Committee may act at a meeting, or in writing without a
meeting, by the vote or assent of a majority of its members.
The Committee shall appoint one of its members to act as a
secretary to record all action taken by it. The Committee shall
have authority to designate in writing one or more of its
members as the person(s) authorized to execute papers and
perform other ministerial duties on behalf of the Committee.
8.04. Interested Committee Members
----------------------------
No member of the Committee shall participate in any action of
the Committee on a matter in which such member has a specialized
individual interest as a Participant in the Plan. Such matters
shall be determined by a majority of the remainder of the
Committee.
8.05. Indemnification
---------------
The Employer shall indemnify and hold harmless any person who
is or was a member of the Committee or any person who is or was
an employee who performs or performed services with respect to
the Plan against all liabilities and all reasonable expenses
(including, without limitation, counsel fees and amounts paid in
settlement other than to the Employer) incurred or paid in
connection with any threatened or pending action, suit or
proceeding to which such person (or his executor, administrator
or other legal representative) may be made a party or in which
such person may otherwise be involved by reason of the fact that
he serves or has served as a member of the Committee or
otherwise performs or has performed services with respect to the
Plan; provided that (a) if such action, suit or proceeding shall
be prosecuted against such person (or his executor,
administrator or other legal representative) to final
determination on the merits or otherwise, it shall not be
finally adjudged in such action, suit or proceeding that such
person is liable for gross negligence or willful misconduct in
the performance of his duty to the Employer or the Plan in
relation to the matter or matters in respect of which
indemnification is claimed; or (b) if such action, suit or
proceeding shall be settled or otherwise terminated as against
such person (or his executor, administrator or other legal
representative) without a final determination, it shall be
determined that such person was not guilty of gross negligence
or willful misconduct in the performance of his duty to the
Employer or the Plan in relation to the matter or matters in
respect of which indemnification is claimed, such determination
to be made by a majority of the members of the Board of
Directors of the Employer or by independent counsel to whom the
question may be referred by the Board of Directors.
The Employer's obligations under this section may be satisfied
through the purchase of a policy or policies of insurance
providing equivalent protection.
8.06. Conclusiveness of Action
------------------------
Any action on matters within the discretion of the Committee
shall be conclusive, final and binding upon all Participants of
the Plan and upon all persons claiming any rights hereunder
including Beneficiaries.
8.07. Payment of Expenses
-------------------
The members of the Committee shall serve without compensation
for services as such. Notwithstanding the preceding sentence,
the Trust Fund shall reimburse the Committee and its members for
all necessary and proper expenses incurred in carrying out their
duties under the Plan. The compensation or fees of accountants,
counsel and other specialists may be paid directly by the
Employer or by the Trust Fund; and any other costs of
administering the Plan or Trust may be charged to the Trust;
and, at the discretion of the Employer, such costs may be
reimbursed by the Employer.
8.08. Claims Procedure
----------------
(a) A Participant or Beneficiary or the Employer acting on
behalf of such Participant or Beneficiary shall notify the
Committee of a claim for benefits under the Plan. Such request
shall be in writing to the Committee and shall set forth the
basis of such claim and shall authorize the Committee to conduct
such examinations as may be necessary for the Committee to
determine, in its discretion, the validity of the claim and to
take such steps as may be necessary to facilitate the payment of
benefits to which the Participant or Beneficiary may be entitled
under the terms of the Plan.
A decision by the Committee shall be made promptly and not
later than 90 days after the Committee's receipt of the claim of
benefits under the Plan, unless special circumstances require an
extension of the time for processing; in which case, a decision
shall be rendered as soon as possible, but not later than 180
days after the initial receipt of the claim for benefits.
(b) Whenever a claim for benefits by any Participant or
Beneficiary has been denied by the Committee, a written notice
prepared in a manner calculated to be understood by the
Participant or Beneficiary must be provided setting forth
(i) the specific reasons for the denial;
(ii) the specific reference to the pertinent Plan provisions
on which the denial is based;
(iii) a description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why such material or information is
necessary; and
(iv) an explanation of the Plan's claim review procedure.
(c) Upon denial of his claim by the Committee, a Participant or
Beneficiary
(i) may request a review by a named fiduciary, other than the
Committee, upon written application to the Employer;
(ii) may review pertinent Plan documents; and
(iii) may submit issues and comments in writing to a named
fiduciary.
A Participant or Beneficiary shall have 60 days after receipt
by the claimant of written notification of a denial of a claim
to request a review of a denied claim.
A decision by a named fiduciary shall be made promptly and not
later than 60 days after the named fiduciary's receipt of a
request for review, unless special circumstances require an
extension of the time for processing; in which case, a decision
shall be rendered as soon as possible, but not later than 120
days after receipt of a request for review. The decision on
review by a named fiduciary shall be in writing and shall
include specific reasons for the decision, written in a manner
calculated to be understood by the claimant, and specific
references to the pertinent Plan provisions on which the
decision is based.
ARTICLE IX
AMENDMENT TO THE PLAN
- ---------------------
9.01. Right to Amend
--------------
The Employer shall have the right at any time, by an instrument
in writing, to modify, alter or amend this Plan in whole or in
part; provided, however, that no such amendment shall in any way
affect the vested rights of the Participants under this Plan.
The Board of Directors of the Employer, an executive committee
of the Board of Directors, or other committee of the Board of
Directors or any executive officer to which or whom the Board of
Directors delegates discretionary authority with respect to the
Plan, may exercise the Employer's right to amend the Plan. If
an amendment changes the vested rights provided in this Plan,
each Participant having not less than three Years of Service may
elect, during the period beginning when the amendment is adopted
and ending no earlier than the latest of (a) 60 days after the
amendment's adoption; (b) 60 days after the amendment's
effective date; or (c) 60 days after the Participant is issued a
written notice of the amendment, to have his vested rights
computed without regard to such amendment. No amendment shall
be made to this Plan which shall attempt to transfer any part of
the corpus or income of the Trust to purposes other than the
exclusive benefit of Participants and their Beneficiaries. No
amendment to the Plan shall eliminate or reduce an early
retirement benefit or eliminate an optional form of distribution.
ARTICLE X
TERMINATION OF THE PLAN
- -----------------------
10.01. Right to Terminate
------------------
The Employer shall have the right to terminate the Plan in
whole or in part at any time. The Board of Directors of the
Employer, an executive committee of the Board of Directors, or
other committee of the Board of Directors or any executive
officer to which or whom the Board of Directors delegates
discretionary authority with respect to the Plan, may exercise
the Employer's right to terminate the Plan. In the event of a
termination, partial termination or complete discontinuation of
contributions, each affected Participant shall be 100% vested in
the value of all his Accounts.
10.02. Plan Merger and Consolidation
-----------------------------
If the Plan is merged or consolidated with any other plan, or
if the assets or liabilities of the Plan are transferred to any
other plan, each Participant shall be entitled to a distribution
immediately after such merger, consolidation or transfer
(determined as if such plan then terminated) at least equal to
the distribution to which he would have been entitled had the
Plan terminated immediately prior to such merger, consolidation
or transfer.
10.03. Successor Employer
------------------
In the event of the dissolution, merger, consolidation or
reorganization of the Employer, provision may be made by which
the Plan and Trust will be continued by the successor; and, in
that event, such successor shall be substituted for the Employer
under the terms and provisions of this Trust Agreement upon the
filing in writing of its election to do so with the Trustee and
acceptance by the Trustee, and providing such successor meets
the requirements of the Code. The substitution of the successor
shall constitute an assumption of Plan liabilities by the
successor; and the successor shall have all of the powers,
duties and responsibilities of the Employer under the Plan.
ARTICLE XI
TRUST AND THE TRUSTEE
- ---------------------
11.01. Employer to Select Trustee
--------------------------
The Employer shall select a Trustee to hold and invest the
Trust Fund in accordance with the terms of a Trust Agreement.
The Trustee shall be a bank or trust company incorporated under
the laws of the United States or of any state and qualified to
operate as a trustee or a combination of such entities or an
individual. The Employer may, from time to time, change the
Trustee then serving under the Trust Agreement to another
Trustee or elect to terminate the Trust and hold the Plan assets
in any other method acceptable under ERISA.
The Trustee shall invest, manage, acquire and dispose of the
Plan's assets. However, the Employer may, in its sole
discretion, retain an investment manager [as defined in Section
3(38) of ERISA] to direct the manner in which some or all of the
Plan's assets are invested, managed, acquired or disposed of by
the Trustee. The Trustee shall be the Named Fiduciary within
the meaning of ERISA with respect to the investment, management
and control of the Trust Fund, unless such duties are delegated
to an investment manager or otherwise delegated under the terms
of the Trust Agreement. The Trust Agreement may include
provision for participation in a joint or associated Trust Fund
or pooled separate account for the purpose of pooling investment
experience.
ARTICLE XII
TOP HEAVY PLAN PROVISIONS
- -------------------------
12.01. Definitions
-----------
If the Plan is or becomes top heavy in any Plan Year, the
provisions of this Article XII will supersede any conflicting
provisions in the Plan. The following definitions and rules are
necessary to comply with related federal tax requirements:
(a) Key Employee: Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the
determination period was (i) an officer of the Employer if such
individual's annual compensation exceeds 50% of the dollar
limitation under Code Section 415(b)(1)(A); (ii) an owner (or an
individual who is considered an owner under Code Section 318) of
one of the ten largest interests in the Employer if such
individual's annual compensation exceeds the dollar limitation
under Code Section 415(c)(1)(A); (iii) a 5% owner of the
Employer; or (iv) a 1% owner of the Employer who has annual
compensation of more than $150,000. For purposes of this
section, annual compensation means compensation as defined in
Code Section 415(c)(3), but including amounts contributed by the
Employer pursuant to a salary reduction agreement which are
excludable from the Employee's gross income under Code Section
125, 402(a)(8), 402(h) or 403(b). The determination period is
the Plan Year containing the Determination Date and the four
preceding Plan Years. The determination of who is a Key
Employee will be made in accordance with Code Section 416(i)(1)
and the regulations thereunder.
(b) Non-Key Employee: Any Employee or former Employee of the
Employer who is not a Key Employee. The Beneficiary of a
Non-Key Employee will be treated as a Non-Key Employee, and the
Beneficiary of a former Non-Key Employee will be treated as a
former Non-Key Employee.
(c) Determination Date: For any Plan Year subsequent to the
first Plan Year, the last day of the preceding Plan Year. For
the first Plan Year, the last day of such Plan Year.
(d) Permissive Aggregation Group: The Required Aggregation
Group of plans plus any other plan or plans of the Employer
which, when considered as a group with the Required Aggregation
Group, would continue to satisfy the requirements of Code
Sections 401(a)(4) and 410.
(e) Required Aggregation Group: (i) Each qualified plan of the
Employer in which at least one Key Employee participates or
participated at any time during the determination period
(regardless of whether the Plan has terminated); and (ii) any
other qualified plan of the Employer which enables a plan
described in (i) to meet the requirements of Code Section
401(a)(4) or 410.
(f) Top Heavy Plan: The Plan, if it meets the requirements of
Section 12.02.
12.02. Top Heavy Status
----------------
This Plan, and any other plans aggregated with it, will become
top heavy pursuant to this Section 12.02, as of the
Determination Date, if the present value of accrued benefits for
Key Employees is more than 60% (90% in the case of "super top
heavy") of the sum of the present value of accrued benefits of
all Employees, excluding former Key Employees. In the case of
more than one plan which is to be aggregated, the present value
of the accrued benefits (including distributions for Key
Employees and all Employees) is first determined separately for
each plan as of each plan's determination date. The plans then
will be aggregated by adding the results of each plan as of the
determination dates for such plans that fall within the same
calendar year. The combined results will indicate whether the
plans are top heavy. For purposes of any plan that is
aggregated with this Plan, such computations shall be made, for
such plan, by using the interest rate and mortality assumptions
contained in such plan.
The Account balances and accrued benefits of a Participant who
has not performed services for the Employer maintaining the Plan
during the five-year period ending on the Determination Date
will be disregarded.
The present value of accrued benefits as of the Determination
Date for any individual is the sum of (a) the Account balance as
of the most recent Valuation Date occurring within a 12-month
period ending on the Determination Date; (b) an adjustment for
contributions due as of the Determination Date; and (c) the
aggregate distributions made with respect to such individual
under the Plan during the five-year period ending on the
Determination Date. For a profit sharing plan, the adjustment
in (b) is generally the amount of contributions actually made
after the Valuation Date but on or before the Determination Date.
In determining whether the Plan is top heavy, it must be
aggregated with each plan included in the Required Aggregation
Group. In addition, the Employer may aggregate plans included
in the Permissive Aggregation Group.
12.03. Minimum Contributions
---------------------
For each Plan Year in which the Plan is top heavy, each
Participant who is a Non-Key Employee (including those
Participants who did not complete 1,000 Hours of Service in the
Plan Year) must receive an annual allocation of contributions
(disregarding Social Security benefits) equal to at least 3% of
his Compensation; provided that, if the largest percentage of
Compensation allocated to a Key Employee for a Plan Year is less
than 3%, that largest percentage will be substituted for 3%.
For any year in which the Employer maintains a defined benefit
plan in addition to this Plan, the requirements of this
paragraph will be satisfied by providing each Non-Key Employee
with the 2% minimum annual benefit provided under the top heavy
provisions of the defined benefit plan. For any year in which
the Employer maintains another defined contribution plan in
addition to this Plan, the minimum benefit described in this
paragraph shall be provided by such other defined contribution
plan.
ARTICLE XIII
MISCELLANEOUS
- -------------
13.01. Voluntary Plan
--------------
The Plan is purely voluntary on the part of the Employer; and
neither the establishment of the Plan nor any amendment thereof
nor the creation of any fund or account nor the payment of any
benefits shall be construed as giving any person a legal or
equitable right against the Employer, the Trustee or the
Committee unless the same shall be specifically provided for in
this Plan or conferred by affirmative action of the Committee or
the Employer in accordance with the terms and provisions of this
Plan. Nor shall such actions be construed as giving any
Employee or Participant the right to be retained in the service
of the Employer. All Employees and/or Participants shall remain
subject to discharge to the same extent as though this Plan had
not been established.
13.02. Designation of Dates
--------------------
Whenever any date designated herein shall fall on a Saturday,
Sunday or holiday, the next succeeding day which is not a
Saturday, Sunday or holiday will be substituted therefor, except
that where a date is designated as the last day of a period and
such date falls on a Saturday, Sunday or holiday, the next
preceding day which is not a Saturday, Sunday or holiday shall
be substituted therefor.
13.03. Non-alienation of Benefits
--------------------------
Participants and their Beneficiaries shall be entitled to all
the benefits specifically set out under the terms of the Plan,
but said benefits or any of the property rights therein shall
not be assignable or distributable to any creditor or other
claimant of such Participant. A Participant shall not have the
right to anticipate, assign, pledge, accelerate or in any way
dispose of or encumber any of the monies or benefits or other
property which may be payable or become payable to such
Participant or his Beneficiary. The preceding sentence shall
also apply to the creation, assignment or recognition of a right
to any benefit payable with respect to a Participant pursuant to
a domestic relations order, unless such order is determined to
be a qualified domestic relations order, as defined in Code
Section 414(p) and determined pursuant to Section 8.02(b) of the
Plan.
13.04. Participant Loans
-----------------
The Committee shall direct the Trustee to loan a Participant or
Beneficiary an amount from his Accounts, on a reasonably
equivalent basis and in accordance with the following rules:
A Participant's loan, when added to the balance of any other
outstanding loans the Participant may have under this Plan or
any other qualified retirement plan maintained by the Employer
or an Affiliate, shall not exceed the lesser of
(a) $50,000 reduced to the extent of (i) the highest
outstanding loan balance of the Participant's loans outstanding
during the immediately prior 12-month period (ending the day
before the new loan is granted) over (ii) the total of all
outstanding loans the day the new loan is granted; or
(b) 50% of the Participant's Total Vested Account Balance.
For purposes of this section, "Total Vested Account Balance"
means the total dollar value as of the Valuation Date coinciding
with or immediately preceding the date of the loan, of the
vested portion of the Participant's Employer Matching
Contributions Account, Voluntary Contributions Account and
Employee Deferral Account.
In addition to such rules and regulations as the Committee may
adopt, all loans shall comply with the following terms and
conditions:
(a) all loans shall be subject to the approval of the Committee
or its agent;
(b) an application for a loan by a Participant shall be made in
writing to the Committee or its agent, whose action thereon
shall be final;
(c) in reviewing applications for loans, the Committee shall
apply nondiscriminatory criteria to determine whether to
approve or deny an applicant's request;
(d) the period of repayment for any loan shall be arrived at by
mutual agreement between the Committee or its agent and the
borrower, but all loans shall become due and payable upon
termination of employment and the period in no event shall
exceed five years, except that a ten-year repayment rule shall
apply to any loan used for the purpose of establishing or
preserving a home which is the Participant's principal residence;
(e) each loan shall be made at a reasonable rate of interest,
based upon prevailing interest rates for similar loans in the
surrounding business community in which the Plan is administered;
(f) each loan shall be treated as a separate investment of the
funds credited to such Participant's Accounts and the Committee
shall reduce such Participant's Accounts in any Investment Funds
as the Participant has so directed;
(g) payments by a Participant on any such loan shall be
credited to such Participant's Accounts in the various
Investment Funds in the same proportions as the Participant's
deferral contributions are made to such Investment Funds at the
time such loan payments are made;
(h) an amount equal to all unpaid loans to such Participant,
including accrued interest thereon, shall be deducted from the
amount otherwise distributable to any Participant or to a
Beneficiary of any such Participant pursuant to Article VII for
purposes of repayment of such loans;
(i) repayment of loans shall be by payroll deduction or other
approved method on a level amortization basis except that a
Participant may prepay the outstanding principal balance of his
loan at any time;
(j) the Committee will also notify the Participant that, to the
extent his loan is secured by the balance in his Employee
Deferral Account, no interest deduction is allowable;
(k) loans shall be made available to all Participants and
Beneficiaries on a reasonably equivalent basis;
(l) loans shall not be made available to Highly-Compensated
Employees in an amount greater than the amount made available to
other Employees;
(m) each loan shall be secured by the balance remaining in the
Participant's Accounts and/or by such other security usually and
customarily utilized in the banking industry as the Committee
may deem adequate;
(n) the Committee shall approve and deny loans on a
nondiscriminatory basis using criteria customary and usual in
the banking industry;
(o) no participant loan shall exceed the present value of the
Participant's Accounts;
(p) a Participant must obtain the consent of his or her Spouse,
if any, to use of his Accounts as security for the loan.
Spousal consent shall be obtained no earlier than the beginning
of the 90-day period that ends on the date on which the loan is
to be secured. The consent must be in writing, must acknowledge
the effect of the loan and must be witnessed by a Plan
representative or notary public. Such consent shall thereafter
be binding with respect to that loan. A new consent shall be
required if the Accounts are used for renegotiation, extension,
renewal or other revisions of the loan; and
(q) in the event of default, foreclosure on the note and
attachment of security will not occur until a distributable
event occurs in the Plan.
If a valid spousal consent has been obtained in accordance with
(q), then, notwithstanding any other provision of this Plan, the
portion of the Participant's Accounts used as a security
interest held by the Plan by reason of a loan outstanding to the
Participant shall be taken into account for purposes of
determining the amount of the Accounts payable at the time of
death or distribution, but only if the reduction is used as
repayment of the loan. If less than 100% of the Participant's
Accounts (determined without regard to the preceding sentence)
are payable to the Surviving Spouse, then the Accounts shall be
adjusted by first reducing the Accounts by the amount of the
security used as repayment of the loan and then determining the
benefit payable to the Surviving Spouse.
13.05. Inability to Receive Benefits
-----------------------------
If the Committee receives evidence that (a) a person entitled
to receive any payment under the Plan is physically or mentally
incompetent to receive payment and to give a valid release
therefor; and (b) another person or an institution is then
maintaining or has custody of such person and no guardian,
committee or other representative of the estate of such person
has been duly appointed by a court of competent jurisdiction,
such payment may be made to such other person or institution
referred to in (b) above. The release to such other person or
institution shall be a valid and complete discharge for the
payment.
13.06. Lost Participants
-----------------
If the Committee is unable, after reasonable and diligent
effort, to locate a Participant or Beneficiary who is entitled
to payment under the Plan, the payment due such person shall
become a forfeiture (and applied to reduce Employer
contributions); provided, however, that if the Participant or
Beneficiary later files a claim for his benefit, it shall be
reinstated. Notification by certified or registered mail to the
last known address of the Participant or Beneficiary shall be
deemed a reasonable and diligent effort to locate such person.
13.07. Limitation of Rights
--------------------
Nothing in the Plan, expressed or implied, is intended or shall
be construed to confer upon or give to any person, firm or
association other than the Employer, the Participants and their
successors in interest any right, remedy or claim under or by
reason of this Plan.
13.08. Gender
------
Whenever used in this Plan, the masculine pronoun refers to
both men and women.
13.09. Invalid Provision
-----------------
In case any provision of this Plan shall be held illegal or
invalid for any reason, said illegality or invalidity shall not
affect the remaining parts of this Plan; but this Plan shall be
construed and enforced as if said illegal and invalid
provision(s) had never been inserted herein.
13.10. One Plan
--------
This Plan may be executed in any number of counterparts, each
of which shall be deemed an original; and said counterparts
shall constitute but one and the same instrument and may be
sufficiently evidenced by any one counterpart.
13.11. Governing Law
-------------
The Plan shall be governed by and construed in accordance with
the federal laws governing employee benefit plans qualified
under the Code and in accordance with the local laws of the
State of Ohio where such laws are not in conflict with the
aforementioned federal laws.
IN WITNESS WHEREOF, the undersigned has caused this Plan to be
executed by a duly authorized individual effective as of the
date first above written.
PEOPLES BANCORP INC.
By: /s/ LARRY HOLDREN
Larry Holden, Executive
Vice President - Personnel
Date: December 28, 1995
EXHIBIT 10(d)
- -------------
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1995
PEOPLES BANCORP INC. RETIREMENT PLAN
As Amended and Restated
Effective January 1, 1989
PEOPLES BANCORP INC. RETIREMENT PLAN
Peoples Bancorp, Inc., a corporation organized under the laws
of the State of Ohio, herein referred to as Employer, does
hereby amend and restate and, as amended and restated, continue
a Pension Plan for the benefit of its Eligible Employees on the
terms and conditions described hereinafter.
ARTICLE 1
PREFACE
- -------
Section 1.1. Effective Date. Except as otherwise provided
herein, the effective date of the Plan as amended and restated
herein is January 1, 1989.
Section 1.2. Purpose of the Plan. The purpose of the Plan is
to provide a systematic program for the retirement of the
Eligible Employees of the Employer by continuing the program
under which the Employer makes regular contributions to a Trust
Fund, which contributions are accepted, invested and disbursed
by a Trustee or Trustees to provide definitely determinable
benefits for such Employees or their Beneficiaries.
Section 1.3. Legal Effect. The terms and conditions of the
Plan as restated herein shall amend and supersede prospectively
and in their entirety the terms and conditions of the Prior Plan
originally effective January 1, 1982, and as amended and
restated effective January 1, 1984, and all subsequent
amendments thereto except as otherwise expressly stated herein;
notwithstanding, however, the provisions of such Prior Plan
shall continue to govern the rights of all Employees who retired
or otherwise ceased to work for the Employer prior to the date
of execution hereof, except as is otherwise expressly stated
herein.
Section 1.4. Form of Plan. The Plan shall be a single plan of
a controlled group, as defined in Code Sections 414(b), 414(c)
and 414(m). Only service and Compensation with the Employer by
an Eligible Employee shall be used to determine the amount of
any benefit under the Plan.
Section 1.5. Governing Law. This Plan shall be regulated,
construed and administered under the laws of the State of Ohio,
except when preempted by federal law.
Section 1.6. Headings. The headings and subheadings in this
Plan have been inserted for convenience and reference only and
are to be ignored in any construction of the provisions hereof.
Section 1.7. Gender and Number. The masculine gender shall be
deemed to include the feminine, the feminine gender shall be
deemed to include the masculine, and the singular shall include
the plural unless otherwise clearly required by the context.
ARTICLE 2
DEFINITIONS
- -----------
The words and phrases defined and used hereinafter shall have
the following meaning, unless a different meaning is clearly
required by the context of the Plan.
Section 2.1. Accrual Date shall mean the first day of the
month coincident with or next following the date a Participant
is no longer employed by the Employer.
Section 2.2. Accrued Benefit of a Participant as of the
Accrual Date, before his Normal Retirement Age shall equal the
product of (a) and (b) where:
(a) is a fraction, not exceeding 1, the numerator of which is
the total number of his Years of Service as of such Accrual Date
and the denominator of which is the total number of Years of
Service he would have if he separated from service at his Normal
Retirement Age; and
(b) is the projected annual normal retirement benefit,
defined in Section 5.1, calculated to reflect the number of
Years of Service he would have if he separated from service at
his Normal Retirement Age and his Average Compensation as if he
had attained his Normal Retirement Age on the Accrual Date.
The minimum Accrued Benefit shall not be less than the Accrued
Benefit as of the date this Plan is executed under the
provisions of the Peoples Bancorp Inc. Retirement Plan and Trust
or the Peoples Banking and Trust Company Employees' Pension
Plan, as appropriate, except as otherwise provided by actions
taken in accordance with Internal Revenue Service Notice 88-131,
Notice 89-92, IRS Revenue Procedure 89-65, IRS Notice 91-38,
IRS Announcement 92-29, IRS Notice 92-36, or any other such IRS
guidance regarding the timing of the implementation of changes
made by the Tax Reform Act of 1986 affecting the Plan.
The Accrued Benefit of a Participant who has attained his
Normal Retirement Age shall be based on the benefits provided
under Section 5.4.
Section 2.3. Act shall mean the Employee Retirement Income
Security Act of 1974 as amended or as it may be amended from
time to time.
Section 2.4. Actuarial Equivalent shall mean equality in value
of the aggregate amounts expected to be received under different
forms of payment. Such equality in value shall be based on
assumptions as to the occurrence of future events. The future
events to be taken into account are mortality for Participants,
mortality for Beneficiaries, and an interest discount for the
time value of money. For this Plan, the actuarial assumptions
are as follows:
(a) Mortality assumption for payments to Participants: UP
Mortality Table projected to 1984, adjusted for twenty percent
(20%) female content.
(b) Mortality assumption for payments to Beneficiaries and
survivors: UP Mortality Table projected to 1984, adjusted for
eighty percent (80%) female content.
(c) Interest assumption: Interest rate used as of the first
day of the current Plan Year by the Pension Benefit Guaranty
Corporation for purposes of valuing immediate or deferred (as
appropriate) annuities for terminating plans under Act Section
4062. The interest rate in effect during the Plan Year in which
benefits are to commence shall be applied exclusively in all
determinations of actuarial equivalence.
The Actuarial Equivalent of the Accrued Benefit as of the date
this amendment and restatement is executed shall be the greater of:
(a) the Actuarial Equivalent of the Accrued Benefit as of such
date under the terms of the Plan as in effect on the day
preceding the date this amendment and restatement is executed,
or
(b) the Actuarial Equivalent as determined under the definition
of Actuarial Equivalent as amended herein.
Section 2.5. Actuary shall mean an enrolled actuary or firm of
actuaries which has on its staff an enrolled actuary selected by
the Committee to provide actuarial services for the Plan.
Section 2.6. Age shall mean attained age at latest anniversary
of birth.
Section 2.7. Annuity Starting Date shall mean:
(a) the first day of the first period for which an amount is
payable as an annuity, or
(b) in the case of a benefit not payable in the form of an
annuity, the first day on which all events have occurred which
entitle the Participant to such benefit.
Section 2.8. Average Compensation shall mean the average of
the Participant's annual Compensation paid during five
consecutive Years of Service out of the last ten Years of
Service preceding the Plan Year which contains the Participant's
accrual date, such five consecutive years chosen so as to
produce the highest average. If a Participant has less than
five consecutive years of actual Compensation, the average will
be taken over his total Years of Service during such period.
Section 2.9. Beneficiary shall mean the person or persons or
legal entity designated as such by a Participant or Inactive
Participant to receive the benefits, if any, payable in the
event of the Participant's or Inactive Participant's death. A
Beneficiary may only be designated as appropriate, pursuant to
Article 5 or Article 7. When Article 5 or Article 7 allows the
designation of a Beneficiary, each Participant or Inactive
Participant may name a Beneficiary on a form provided by the
Plan Administrator and delivered to the Plan Administrator.
Such designation may include more than one person with one or
more secondary or contingent Beneficiaries and shall be subject
to change upon written request of such Participant or Inactive
Participant in the same manner as the original designation.
Section 2.10. Board shall mean the Board of Directors of the
Employer.
Section 2.11. Break in Service shall mean the failure of an
Employee to complete more than 500 Hours of Service during a
Plan Year. Such Break in Service shall be effective as of the
first day of the Plan Year in which such event occurs. A Break
in Service shall not result solely from Disability or illness,
an authorized leave of absence, or military service.
Section 2.12. Code shall mean the Internal Revenue Code of
1986, as amended or as it may be amended from time to time.
Section 2.13. Committee shall mean the Committee, as described
in Article 9 hereof.
Section 2.14. Compensation, except for purposes of Articles 8
and 14 herein, shall mean remuneration paid by the Employer to
an Employee for services rendered as reported or reportable on
Form W-2 for federal income tax withholding purposes (or similar
form required for such purposes) including incentive pay,
overtime and bonuses, but excluding directors fees.
Compensation shall also include any employee deferrals under a
Code Section 401(k) plan maintained by the Employer and salary
reduced under a Code Section 125 arrangement maintained by the
Employer.
Compensation in excess of $200,000 shall not be considered for
any Plan Year. The $200,000 limitation shall be adjusted for
cost-of-living increases as allowed by the Secretary of the
Treasury pursuant to Code Section 401(a)(17). In determining
the Compensation of a Participant for purposes of this
limitation, the family aggregation rules of Code Section
414(q)(6) shall apply, except that in applying such rules, the
term "family" shall include only the Spouse of the Participant
and any descendants of the Participant who have not attained Age
19 before the close of the Plan Year. The $200,000 limitation
shall be applied to a family aggregation unit on a pro rata
basis according to each such Participant's Compensation without
regard to such limitation.
Section 2.15. Covered Compensation shall mean, with respect to
a Participant, the average of the taxable wage bases (rounded to
the nearest multiple of $600) in effect under Section 230 of the
Social Security Act for each year during the 35 year period
ending with the year in which the Participant attains his Social
Security Retirement Age. In determining a Participant's Covered
Compensation for a Plan Year, the taxable wage base for the
current Plan Year and any subsequent Plan Year shall be assumed
to be the same as the taxable wage base in effect as of the
first day of the Plan Year for which the determination is being
made.
Section 2.16. Date of Employment shall mean the first date on
which an Employee completes an Hour of Service.
Section 2.17. Date of Reemployment shall mean the first date
on which an Employee completes an Hour of Service following a
Break in Service. If an Employee incurs a Break in Service
without terminating employment, such date will be deemed to
occur on the first day of the first Plan Year following the year
in which such Break in Service occurs.
Section 2.18. Disability shall mean the permanent and total
inability of a Participant, by reason of physical or mental
infirmity or both, to perform the work customarily assigned to
him by the Employer. The determination of the existence or
nonexistence of Disability shall be made by the Committee
pursuant to a medical examination by a medical doctor selected
or approved by the Committee.
Section 2.19. Early Retirement Age shall mean the first day of
the month coincident with or next following Age 50 and the
completion of 10 Years of Service.
Section 2.20. Early Retirement Date shall mean the date on or
after his Early Retirement Age on which the Participant elects,
pursuant to Section 5.2, to retire from employment and begin
receipt of early retirement benefits.
Section 2.21. Eligible Employee shall mean any Employee who is
not included in a unit of Employees covered by an agreement
which the Secretary of Labor finds to be a collective bargaining
agreement between Employee representatives and the Employer. In
no event shall a "leased employee," as defined in Code Section
414(n)(2), be an Eligible Employee.
Section 2.22. Employee shall mean any person who is employed
by the Employer.
Section 2.23. Employer shall mean Peoples Bancorp, Inc. or any
Related Employer who, with the written consent of the Board of
Directors of Peoples Bancorp, Inc., agrees in writing to be a
party hereto.
Section 2.24. Entry Date shall mean the first day of each Plan
Year.
Section 2.25. Fund, Trust or Trust Fund shall mean the sum of
the contributions made by the Employer and held by the Trustee
in a trust created herein, increased by the profits and income
thereto and decreased by any losses and reasonable expenses
incurred in the administration of the trust and any payments
made therefrom under the Plan.
Section 2.26. Hour of Service shall mean:
(a) Each hour for which an Employee is paid or entitled to
payment for the performance of duties for the Employer. These
hours shall be credited to the Employee for the computation
period in which the duties are performed, and
(b) Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during
which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation,
holiday, illness, incapacity (including disability), layoff,
jury duty, military duty or leave of absence.
Notwithstanding the preceding sentence:
(1) No more than 501 hours will be credited under this
paragraph to an Employee on account of any single continuous
period during which the Employee performs no duties (whether or
not such period occurs in a single computation period);
(2) An hour for which an Employee is directly or indirectly
paid, or entitled to payment, on account of a period during
which no duties are performed will not be credited to the
Employee if such payment is made or due under a plan maintained
solely for the purpose of complying with applicable workmen's
compensation, or unemployment compensation or disability
insurance laws; and
(3) Hours will not be credited for a payment which solely
reimburses an Employee for medical or medically related expenses
incurred by the Employee.
(c) Each hour for which back pay, irrespective of mitigation or
damages, is either awarded or agreed to by the Employer. The
same hours shall not be credited both under paragraph (a) or
paragraph (b), as the case may be, and under this paragraph (c).
These hours shall be credited to the Employee for the
computation period or periods to which the award or agreement
pertains rather than the computation period in which the award,
agreement or payment is made.
(d) Each hour for which an Employee is required to be credited
for military service under applicable law and regulations and
which is not otherwise credited under this Section.
(e) Hours under this Section shall be calculated and credited
pursuant to Section 2530.200b-2 of the Department of Labor
Regulations which is incorporated herein by reference.
(f) Solely for purposes of determining whether a Break in
Service for vesting and participation has occurred, an Employee
or former Employee who is absent from work for maternity or
paternity leave shall receive credit either for the Hours of
Service, as described in subsections (a) - (e) above, which
would otherwise have been credited to such Employee or former
Employee but for such absence, or in any case in which such
Hours of Service cannot be determined, eight Hours of Service
per day of absence. The total number of Hours of Service
credited under this subsection (f) shall not exceed 501. Hours
of Service pursuant to this paragraph shall be credited in the
computation period during which the absence begins if doing so
would prevent a Participant from incurring a one-year Break in
Service in that computation period. In any other case, these
hours shall be credited in the following computation period.
For purposes of this paragraph, an absence from work for
maternity or paternity leave means an absence (1) by reason of
pregnancy of the Employee or former Employee, (2) by reason of
the birth of a child of the Employee or former Employee, (3) by
reason of placement of a child with the Employee or former
Employee in connection with the adoption of such child by such
Employee or former Employee, or (4) for purposes of caring for
such child for a period beginning immediately following such
birth or placement. Notwithstanding the above, no credit shall
be given for Hours of Service pursuant to this subsection (f)
unless the Employee or former Employee furnishes sufficient
information to the Plan Administrator or the Committee to
establish that the absence is due to maternity or paternity
leave and the number of days of such absence.
Section 2.27. Inactive Participant shall mean a person who
terminates employment or otherwise ceases to be a Participant
but who is entitled to receive an immediate or a deferred vested
benefit from the Plan.
Section 2.28. Limitation Year shall mean the calendar year.
Section 2.29. Normal Form of Benefit shall mean an annuity
paid in equal monthly installments on the first day of each
calendar month in which the Participant shall have lived the
entire preceding calendar month.
Section 2.30. Normal Retirement Age shall mean for
Participants who entered the Plan before the first day of the
first Plan Year beginning after December 31, 1987, the
sixty-fifth birthday of the Participant. For Participants who
entered the Plan on or after the first day of the first Plan
Year beginning after December 31, 1987, it shall mean the later
of the sixty-fifth birthday of the Participant or the first day
of the Plan Year which includes the fifth anniversary of the
date the Participant commences participation in the Plan.
Section 2.31. Normal Retirement Date shall mean the first day
of the month coincident with or next following the Normal
Retirement Age.
Section 2.32. Participant shall mean every Eligible Employee
who has met the requirements of Article 3 and who is not an
Inactive Participant.
Section 2.33. Plan shall mean the Peoples Bancorp Inc.
Retirement Plan, as amended and restated herein and as it may be
subsequently amended.
Section 2.34. Plan Administrator shall mean the Chairman of
the Committee.
Section 2.35. Plan Year shall mean the 12-month period ending
on December 31.
Section 2.36. Prior Plan shall mean the Peoples Bancorp Inc.
Retirement Plan and Trust and the Peoples Banking and Trust
Company Employees' Pension Plan.
Section 2.37. Related Employer shall mean a corporation which
is a member of a controlled group of corporations, within the
meaning of Sections 1563(a)(1), (a)(2) and (a)(3) of the Code,
of which the Employer is also a member. Related Employer shall
also mean any other trade or business, whether or not
incorporated, which is under common control with the Employer,
within the meaning of Section 414(c) of the Code, and/or all
members of an affiliated service group within the meaning of
Section 414(m) of the Code. For purposes of Article 14,
however, the phrase "more than 50 percent" shall be substituted
for the phrase "at least 80 percent" each place it appears in
Section 1563(a)(1) of the Code.
Section 2.38. Social Security Retirement Age shall mean
generally the Age at which unreduced old-age insurance benefits
will commence under the Social Security Act as shown below.
Date of Birth Social Security Retirement Age
Before January 1, 1938 65
After December 31, 1937 but
Before January 1, 1955 66
After December 31, 1954 67
Section 2.39. Spouse shall mean the Participant's or Inactive
Participant's spouse as determined under the laws of the state
or commonwealth in which the Participant or Inactive Participant
resides.
Section 2.40. Trustee shall mean the bank, trust company,
other financial institution or individual or individuals holding
and managing the Fund according to the terms of Peoples Bancorp
Inc. Retirement Plan Trust Agreement.
Section 2.41. Year of Service shall mean a Plan Year during
which an Employee has completed at least 1,000 Hours of Service,
subject to the following qualifications and exceptions:
(a) Service performed prior to a Break in Service shall be
disregarded if such Break in Service commenced prior to July 1, 1976.
(b) In the case of a nonvested Participant, Years of Service
before any period of consecutive one-year Breaks in Service
shall be disregarded if the number of consecutive one-year
Breaks in Service equals or exceeds the greater of five or the
aggregate number of Years of Service before such period. Any
Years of Service disregarded pursuant to the previous sentence
shall also be disregarded when applying the provisions of that
sentence to a subsequent period of Breaks in Service.
If an individual would have lost credit for Years of Service
under the rule of parity as stated in the Prior Plan as of the
end of the Plan Year beginning in 1984, the rules of this
paragraph shall not apply to that individual with respect to
Years of Service before the Plan Year beginning in 1985. Credit
for those prior years in such a case is forever lost. If an
individual would not have lost credit for Years of Service under
the rule of parity as stated in the Prior Plan as of the end of
the Plan Year beginning in 1984, the rules of this paragraph
shall apply to that individual with respect to all Years of
Service.
(c) Service after Normal Retirement Date shall be credited,
including such service before January 1, 1988, for any Employee
who has at least one Hour of Service in any Plan Year beginning
after December 31, 1987, subject to the other provisions of this
Section.
(d) For purposes of vesting, Years of Service, as determined
above, with a Related Employer for the period of time during
which employers are related shall be counted as service with the
Employer.
(e) Where the Employer maintains the plan of a predecessor
employer, as defined in Section 1.411(a)-5(b) of the Income Tax
Regulations, Years of Service, as determined above, with such
predecessor employer shall be treated as Years of Service with
the Employer for purposes of vesting.
(f) For purposes of vesting, an Employee who was covered by the
Peoples Banking & Trust Company Employees' Pension Plan as of
January 1, 1989 and who is credited with at least 1,000 Hours of
Service in both the period beginning January 1, 1989 and ending
on December 31, 1989, and the period beginning on July 1, 1988
and ending on June 30, 1989 shall be credited with two Years of
Service.
(g) For purposes of determining a Participant's Accrued
Benefit, with respect to those Participants covered by the
Peoples Banking & Trust Company Employees' Pension Plan as of
January 1, 1989, the accrual computation period beginning July 1
shall be changed to the 12-consecutive-month period beginning on
January 1. The period from July 1, 1988 to January 1, 1989,
shall be treated as a partial accrual computation period. In
order to receive pro rata credit for purposes of benefit accrual
for service in the partial accrual computation period, such a
Participant must be credited with 1,000 Hours of Service.
(h) Any Employee who has at least one Hour of Service in any
Plan Year beginning after December 31, 1987 and who was
previously excluded from participation because he was hired
after Age 60 shall receive retroactive service from their Date
of Employment, subject to the other provisions of this Section.
ARTICLE 3
ELIGIBILITY AND PARTICIPATION
- -----------------------------
Section 3.1. Eligibility. An Eligible Employee who has
attained Age 20 1/2 and who has been an Employee for six months
shall become a Participant at the time specified in Section 3.2.
The Age 60 exclusion contained in the Prior Plan is eliminated
effective January 1, 1988.
Section 3.2. Participation. Any Eligible Employee who has
satisfied the requirements of Section 3.1 shall become a
Participant on the first Entry Date coincident with or next
following the date on which such requirements are met unless
such Employee separated from service and did not return to
employment before his Entry Date.
Once an Eligible Employee becomes a Participant he shall remain
a Participant until he terminates employment with an Employer
regardless of the number of Hours of Service he completes in a
Plan Year.
An Eligible Employee who terminates employment before his Entry
Date, after meeting the requirements of Section 3.1, and is
rehired before his Entry Date shall become a Participant on his
Entry Date.
An Eligible Employee who terminates employment or who incurs a
Break in Service without terminating employment, after meeting
the requirements of Section 3.1, and is rehired or avoids a
Break in Service in a Plan Year shall become a Participant on
his Date of Reemployment.
Section 3.3. Transfer to or from Eligible Class of Employees.
In the event a Participant is no longer an Eligible Employee and
becomes ineligible to participate but has not terminated
employment or incurred a Break in Service, such Employee will
participate immediately upon again becoming an Eligible
Employee. If such a Participant terminates employment or incurs
a Break in Service, eligibility to participate will be
determined under the Break in Service rules of Section 3.2 above.
In the event an Employee who is not an Eligible Employee
becomes an Eligible Employee, such Eligible Employee will
participate immediately if such Eligible Employee has satisfied
the minimum age and service requirements and would otherwise
have previously become a Participant. Notwithstanding, such
Eligible Employee shall be subject to the Break in Service rules
of Section 3.2 above.
Section 3.4. Service with a Related Employer. Service with a
Related Employer not adopting this Plan shall be considered
service with the Employer when determining if an Employee has
completed the service requirement for eligibility.
A Participant who transfers employment to a company which is a
Related Employer not adopting this Plan shall remain covered by
the Plan, but such Inactive Participant shall receive credit,
for purposes of determining his Accrued Benefit, for service
only to the extent of his service while an Eligible Employee of
the Employer. For vesting purposes, such Inactive Participant
shall continue to accrue Years of Service hereunder. If such
Inactive Participant is transferred again to the Employer as an
Eligible Employee, he shall participate in the Plan on his date
of transfer. If such individual remains in the employ of a
Related Employer not adopting this Plan until his termination of
employment, his benefits shall be calculated based on the
provisions of Articles 5, 6 and 7.
Section 3.5. Service as a Leased Employee. Each "leased
employee" who performs services for the Employer or Related
Employer on a substantially full-time basis for a period of at
least one year shall be considered an Employee or an employee of
a Related Employer as appropriate for purposes of determining if
this Plan satisfies the minimum coverage requirements of Code
Section 410(b). An individual will be considered to have
performed services on a substantially full-time basis if that
individual is credited with the lesser of 1,500 Hours of Service
or 75% of the Hours of Service that are customarily performed in
the particular position by an Employee or an employee of a
Related Employer.
If a "leased employee" becomes an Eligible Employee by being
hired in a capacity other than as a "leased employee," service
in any Plan Year beginning in or after 1984, while a "leased
employee" shall be considered when determining such Employee's
Years of Service for vesting purposes.
ARTICLE 4
CONTRIBUTIONS
- -------------
Section 4.1. Contributions by the Employer. The Employer
contemplates that the contributions to the Trust under this Plan
shall be made by the Employer, based upon the recommendation of
the Actuary, as recommended by the Committee. All Employer
contributions under this Plan are expressly conditioned on their
current deductibility under the Code.
Section 4.2. Gains from Terminations. Any gains arising from
the death of Participants or from forfeitures shall not be
utilized to increase the benefits to the remaining Participants.
Section 4.3. Funding Requirements. The Employer shall fund
the Plan in a manner consistent with the provisions of the Code,
the Act, and such other laws and regulations as shall be
applicable, to the end that the Plan shall be funded on a lawful
and sound actuarial basis; but to the extent permitted by
governing law, the Employer shall be free to determine the
manner and means of making provision for funding the Plan.
Section 4.4. Contributions by Participants. Contributions by
Participants are neither required nor permitted.
ARTICLE 5
RETIREMENT
- ----------
Section 5.1. Normal Retirement. As of his Normal Retirement
Date, a Participant shall be eligible to retire and to receive
his normal retirement benefit. The annual normal retirement
benefit, subject to the provisions of Articles 8 and 14, shall
be calculated as the Normal Form of Benefit as follows:
(a) Forty percent (40%) of the Participant's Average
Compensation, plus
(b) Seventeen percent (17%) of the excess of the Participant's
Average Compensation over his Covered Compensation;
(c) Such sum multiplied by the ratio of his total Years of
Service to 30, such ratio not to exceed 1.
In no event shall the normal retirement benefit for any
Participant other than a highly compensated Employee (as defined
in Code Section 414(q)) be less than his minimum projected
benefit under the Prior Plan at Age 65 using his Compensation as
of January 1, 1993.
In no event shall the normal retirement benefit be less than
the highest early retirement benefit that would have been
payable to the Participant as of the beginning of any Plan Year.
In no event shall the normal retirement benefit under this Plan
be less than the Accrued Benefit to the credit of the
Participant as of the date before this amendment and restatement
is executed.
Section 5.2. Early Retirement. A Participant who has not
attained his Normal Retirement Age, but has attained his Early
Retirement Age, may elect to retire as of the first day of any
calendar month following written notice to the Employer and to
the Committee. At the option of the Participant, subject to
Section 5.10, benefits may begin as of any calendar month
following his early retirement and preceding the date which
would have been his Normal Retirement Date had he remained an
Employee. Such early retirement benefit of a Participant shall
be calculated as the Normal Form of Benefit payable pursuant to
Section 5.1 hereof and shall equal his Accrued Benefit as of his
Early Retirement Date, reduced by one-fifteenth for each of the
first five years and one-thirtieth for each of the next ten
years by which his Early Retirement Date precedes his Normal
Retirement Date.
Section 5.3. Disability Retirement. A Participant who has not
attained his Normal Retirement Age, and suffers Disability may
retire as of the first day of any calendar month next following
the date the Committee determines that he is disabled. Payment
of his Disability benefit may begin on the first day of any
calendar month prior to his Normal Retirement Age at the request
of the disabled Participant, subject to Section 5.8.
If the Participant is covered under a long-term disability
insurance plan maintained by the Employer and receives
disability payments thereunder, his benefits shall begin on the
first day of the month chosen by the Participant, but in no
event before the termination of the long-term disability plan
payments, subject to the provisions of Section 15.8.
The Disability retirement benefit shall equal his Accrued
Benefit as of the first day of the month following last receipt
of Compensation from the Employer reduced for each year by which
the starting date of the Disability retirement benefit precedes
his Normal Retirement Date in the same manner as described in
Section 5.2 and actuarially reduced for each additional year
before Age 50. The Disability retirement benefit shall be
payable under one of the methods of payment specified in Section
5.6, subject to Section 5.7.
Section 5.4. Delayed Retirement. If a Participant is in
service following his Normal Retirement Date, payment of his
normal retirement benefit shall be deferred until the first day
of the calendar month coincident with or next following his
actual retirement, hereinafter called his Delayed Retirement
Date. In no event shall benefit payments be delayed beyond the
date specified in Article 15. Notwithstanding the above, a
Participant may elect to begin receiving payment on the first
day of any month following his Normal Retirement Date.
If a Participant is in service following his Normal Retirement
Date, his benefit shall continue to accrue until his actual
retirement date. In no event, however, shall a Participant's
benefit at actual retirement be less than the Accrued Benefit at
the Normal Retirement Date increased actuarially to his actual
date of retirement. For purposes of this adjustment the
assumptions shall be those specified in the definition of
Actuarial Equivalent except that when determining the increase
in value for the period between Normal Retirement Date and
Delayed Retirement Date, only the interest assumption shall be
used.
Section 5.5. Reemployment Following Retirement. If a
Participant begins to receive a periodic benefit following early
retirement and is subsequently reemployed prior to attaining
Normal Retirement Age, benefit payments shall cease during the
period of reemployment. If a Participant begins to receive a
benefit following Disability retirement, recovers and resumes
employment prior to attaining his Normal Retirement Age, benefit
payments shall cease. Upon his subsequent retirement, his
benefit accrued to that date shall be based on the total of both
periods of Years of Service and shall reflect Compensation as if
the period of employment were contiguous to the prior period of
employment. However, the benefit paid to such Participant shall
be adjusted by the Actuarial Equivalent of any benefits
previously paid. If a Participant begins to receive a benefit
following Normal Retirement Age, early retirement or Disability
and is subsequently reemployed after attaining Normal Retirement
Age he shall be treated as a Participant eligible for delayed
retirement. The continuation or cessation of benefit payments
as well as the continuation of benefit accrual shall be
consistent with the provisions of Section 5.4.
If an individual receives a distribution from the Plan which
then represents the Actuarial Equivalent of the present value of
his full Accrued Benefit and is subsequently reemployed or
otherwise earns additional service under the Plan, his Years of
Service for purposes of determining his Accrued Benefit shall
include service prior to his termination on which the earlier
distribution was based. However, the benefit subsequently paid
to such Participant shall be adjusted by the Actuarial
Equivalent of the benefit previously paid.
Section 5.6. Methods of Payment. Each retiring Participant
shall be offered the optional methods of payment listed below.
Any benefits payable under such optional methods of payment
shall be the Actuarial Equivalent of the Normal Form of Benefit
and shall be subject to the distribution restrictions of Article
15.
(a) Life Annuity: An annuity payable in equal monthly
installments during the Participant's lifetime only, on the
first day of each calendar month in which the Participant has
lived the entire preceding month.
(b) Five Years Certain and Life Annuity: An annuity payable in
monthly installments on the first day of each calendar month for
60 months certain and thereafter on the first day of each
calendar month in which the Participant has lived the entire
preceding month.
(c) Ten Years Certain and Life Annuity: An annuity payable in
monthly installments on the first day of each calendar month for
120 months certain and thereafter on the first day of each
calendar month in which the Participant has lived the entire
preceding month.
(d) Joint and Full Survivor Annuity: An annuity whereby a
monthly installment shall be paid to the Participant during his
lifetime and thereafter in the same monthly amount to the
Beneficiary during the Beneficiary's lifetime, on the first day
of each calendar month in which the Participant or his
Beneficiary has lived the entire preceding month.
(e) Joint and One-Half Survivor Annuity: An annuity, whereby a
monthly installment shall be paid to the Participant during his
lifetime and thereafter in one-half of such monthly amount to
the Beneficiary during the Beneficiary's lifetime, on the first
day of each calendar month in which the Participant or his
Beneficiary has lived the entire preceding month.
(f) Joint and Three-Fourths Survivor Annuity: An annuity,
whereby a monthly installment shall be paid to the Participant
during his lifetime and thereafter in three-fourths of such
monthly amount to the Beneficiary during the Beneficiary's
lifetime, on the first day of each calendar month in which the
Participant or his Beneficiary has lived the entire preceding
month.
(g) Lump Sum: A single lump sum payment shall be distributed.
Such lump sum payment shall be the Actuarial Equivalent of the
vested Accrued Benefit payable at the time of distribution as
the Normal Form of Benefit. The commencement of a lump sum
benefit shall be effective as of the later of the effective date
of the Participant's retirement unless the Participant or
Inactive Participant specifically elects to waive the 30 day
advance notice requirement. Such waiver shall only be applicable
to a distribution for which Code Sections 401(a)(11) and 417 are
not applicable, and for which the plan administrator has
informed the participant of the right to a period of at least 30
days after receipt of the notice to consider the decision to
elect a distribution. Any such lump sum which is $200 or more
shall include the right of the Participant to make a direct
rollover under Code Section 401(a)(31), as provided in Article
16.
Section 5.7. Election of Option. The provisions of Sections
5.7, 5.8 and 5.9 shall apply to any Participant or Inactive
Participant who is credited with at least one Hour of Service on
or after August 23, 1984. A payment option as set forth in
Section 5.6 shall be elected, changed or revoked by the
Participant, his guardian, or attorney-in-fact, by written
notice filed with the Committee during the election period
specified below; provided, however:
(a) A married Participant shall be deemed to have elected a
joint and one-half survivor annuity with his Spouse as his
Beneficiary unless he makes an affirmative election not to take
such an annuity.
(b) If the Beneficiary under a joint and survivor option dies
before the commencement of payments, the election shall be
inoperative.
(c) If a timely election shall not have been made, payment
shall be made under the Normal Form of Benefit to an unmarried
Participant, unless otherwise provided herein.
Notwithstanding the above, any election by a Participant not to
provide a joint and one-half (or greater) survivor annuity with
his Spouse as the named Beneficiary shall not take effect unless
the Participant's Spouse consents in writing to such election
and the consent acknowledges the effect of such election. The
Spouse's consent must be witnessed by a Plan representative or a
notary public or it must be established to the satisfaction of a
Plan representative that the consent cannot be obtained because
there is no Spouse, because the Spouse cannot be located or
because of such other circumstances as the Secretary of the
Treasury may prescribe by regulations. A Spouses's consent
under this Section must generally recognize the specific
non-spouse Beneficiary, if applicable, and the specific method
of payment. A Spouse may elect to irrevocably release all
rights to a qualified joint and survivor annuity and may
expressly permit that subsequent elections within the election
period be made by the Participant without any requirement of
further consent by the Spouse. A Spouse has the right to
restrict consent to a specific Beneficiary and/or method of
payment.
For purposes of this Section a former Spouse will be treated as
the Spouse to the extent provided under a qualified domestic
relations order as described in Code Section 414(p).
Section 5.8. Election Period. A Participant may elect the
method of benefit payment during the 90-day period ending on his
Annuity Starting Date. Any election made during the election
period shall be revocable, and another such election may be made
at any time prior to the close of the election period, at which
time the last such election which shall have been made shall be
irrevocable. Any such election, and any revocation thereof,
shall be made by notice in writing to the Committee in a form
which is satisfactory to the Committee.
In the case of a Participant who elects to begin receiving
retirement benefit payments on a date such that there is not
sufficient time to provide notice under this Section at least 30
days before his Annuity Starting Date, interim payments under
the method of payment elected shall be made unless a lump sum
payment is elected, but the initial election shall be revocable
by the Participant or his Spouse within 30 days of the date the
notice is given.
Section 5.9. Information to be Given Participants. Consistent
with regulations prescribed by the Secretary of the Treasury and
no less than 30 days and no more than 90 days before his Annuity
Starting Date, a written statement shall be mailed or personally
delivered to him setting forth a general description of the
joint and one-half survivor annuity, as well as the
circumstances under which it shall be provided unless the
Participant shall elect another form of payment, the
availability of such election, and a general explanation of the
financial effect of such election. Such written statement shall
also include a statement of the rights of the Participant's
Spouse as provided in Section 5.7. It shall further notify the
Participant that he may make a written request at any time
during the election period specified above, for an additional
written statement of the terms and conditions of the joint and
one-half survivor annuity and the financial effect of payment in
some method other than the joint and one-half survivor annuity.
Section 5.10. Consent Requirement. Notwithstanding anything
in this Plan to the contrary, no distribution shall commence to
a Participant before his Normal Retirement Age without the
written consent of the Participant or Inactive Participant and
his Spouse, if any (except in the case of a qualified joint and
survivor annuity), unless the Actuarial Equivalent present value
of the Participant's vested Accrued Benefit does not exceed
$3,500. Notwithstanding the above, no such distribution shall
be made if, at any previous time, the Actuarial Equivalent of
the benefit exceeded $3,500 and the Participant was eligible to
begin receipt of immediate monthly payments.
Section 5.11. Payment of Small Benefits. If the Actuarial
Equivalent present value of the Participant's vested Accrued
Benefit does not exceed $3,500, such amount shall be distributed
to the Participant at the time at which such retirement benefits
are to commence, as a lump sum without his consent, provided
such distribution represents the Participant's entire vested
interest in the Plan. Such distribution shall be made within
the time period specified in Article 15. Any such lump sum
which is $200 or more shall include the right of the Participant
to make a direct rollover under Code Section 401(a)(31), as
provided in Article 16.
Section 5.12. Transition Rule.
(a) Any living Participant not receiving benefits on August 23,
1984, who was credited with at least one Hour of Service under
this Plan or a predecessor plan on or after September 2, 1974,
and who is not otherwise credited with any service in a Plan
Year beginning on or after January 1, 1976, must be given the
opportunity to have his or her benefits paid in accordance with
subsection (c) of this Section 5.12.
(b) The opportunity to elect (as described in subsection (a)
above) must be afforded to the appropriate Participants during
the period commencing on August 23, 1984, and ending on the date
benefits would otherwise commence to said Participants.
(c) Any Participant who has elected, pursuant to subsection (a)
of this Section, shall have his or her benefits distributed in
accordance with all of the following requirements if benefits
would have been payable in the form of a life annuity:
(1) Automatic joint and survivor annuity. If benefits in the
form of a life annuity become payable to a married Inactive
Participant who:
(A) begins to receive payments under the Plan on or after
Normal Retirement Age; or
(B) begins to receive payments on or after the Qualified
Early Retirement Age; or
(C) separates from service on or after attaining Normal
Retirement Age (or the Qualified Early Retirement Age)
and after satisfying the eligibility requirements for
the payment of benefits under the plan and thereafter
dies before beginning to receive such benefits; then
such benefits will be received under this Plan in the
form of a qualified joint and survivor annuity, unless the
Participant has elected otherwise during the election period.
The election period must be at least a 90-day period and must
not end more than 90 days before the commencement of
benefits. Any election hereunder will be in writing and
may be changed by the Participant at any time.
(2) For purposes of this Section 5.12 only.
(A) Qualified Early Retirement Age is the latest of:
1) the earliest date, under the Plan, on which the
Participant may elect to receive retirement benefits,
2) the first day of the 120th month beginning before the
Participant reaches Normal Retirement Age, or
3) the date the Participant begins participation.
(B) Qualified joint and survivor annuity is an annuity for
the life of the Participant with a one-half (or greater, if
applicable) survivor annuity for the life of his Spouse as
described in Section 5.6.
ARTICLE 6
VESTING
- -------
Section 6.1. General. The Accrued Benefit of each
Participant, subject to the provisions of Article 8, shall be
fully vested in him (that is, not subject to forfeiture) upon
the first to occur of the following dates:
(a) Attainment of his Normal Retirement Age (whether or not the
Participant actually retires),
(b) Date on which he first becomes eligible to elect early
retirement (whether or not he actually elects such early
retirement),
(c) Date on which he first qualifies for Disability retirement, or
(d) Date of completion of five or more Years of Service.
Section 6.2. Payments Following Termination of Service.
(a) If a Participant shall terminate employment for any reason
other than normal retirement, Disability retirement, early
retirement or death and is not later reemployed, payment of his
vested Accrued Benefit, as determined pursuant to this Article,
shall be deferred until he is eligible for and elects to receive
an early retirement benefit under the Plan or his Normal
Retirement Date, whichever is earlier. On that date, if he is
then living, he shall receive his vested Accrued Benefit payable
to or with respect to him in the same manner as if he were then
a Participant entitled to an early or Normal Retirement Benefit
under the Plan.
(b) If the Actuarial Equivalent present value of the
Participant's vested Accrued Benefit does not exceed $3,500,
such amount shall be distributed as a lump sum without the
Participant's consent, provided such distribution represents the
Participant's entire vested interest in the Plan.
Notwithstanding the above, no such distribution shall be made
if, at any previous time, the Actuarial Equivalent of the
benefit exceeded $3,500 and the Participant was eligible to
begin receipt of immediate monthly payments.
If the Actuarial Equivalent present value of the Participant's
vested Accrued Benefit is greater than $3,500, distribution of
such benefit will be in accordance with the provisions of
Section 5.7. An unmarried Participant shall have the right to
elect an immediate life annuity, in lieu of such lump sum. Such
benefit shall be reduced in the same manner as early retirement
benefits in Section 5.2 and actuarially reduced for each
additional year before he would have attained his Early
Retirement Age.
Any lump sum distribution under this subsection (b) shall be
made as soon as administratively feasible following the Plan
Year in which such termination occurs. Any such lump sum which
is $200 or more shall include the right of the Participant to
make a direct rollover under Code Section 401(a)(31), as
provided in Article 16.
(c) If an individual receives a distribution from the Plan
which then represents the Actuarial Equivalent of the present
value of his full Accrued Benefit and is subsequently reemployed
or otherwise earns additional service under the Plan, his Years
of Service for purposes of determining his Accrued Benefit shall
include service prior to his termination on which the earlier
distribution was based. However, the benefit subsequently paid
to such Participant shall be adjusted by the Actuarial
Equivalent of the benefit previously paid.
Section 6.3. Rights of Employees. The adoption of the Plan
shall not be construed as conferring any legal or other rights
upon any Employee or any persons for continuation of employment,
nor shall it interfere with the right of the Employer to
discharge any Employee or to deal with him without regard to the
effect thereof under the Plan.
Section 6.4. Deemed Distribution. Any individual whose
employment with the Employer, or a Related Employer, has
terminated prior to that individual obtaining any nonforfeitable
Accrued Benefit under the Plan shall be treated as having been
cashed-out of the Plan on his termination date, and his status
as a Participant in the Plan shall cease as of that date,
subject to his right to again commence participation, as
otherwise provided by the Plan.
ARTICLE 7
DEATH
- -----
Section 7.1. General. Except as otherwise provided in Article
5 and in this Article 7, no death benefit shall be payable under
the Plan.
Section 7.2. Death Prior to the Annuity Starting Date. If a
vested married Participant or vested married Inactive
Participant dies prior to his Annuity Starting Date, his
surviving Spouse, if any, shall be entitled to an annuity equal
to the following amount.
In the case of a married Participant who dies on or before his
earliest retirement date, the survivor annuity shall be computed
as if the Participant had separated from service on the date of
his death, survived to the earliest retirement date under the
Plan, had commenced receiving payment of a joint and one-half
survivor annuity as provided in Section 5.6, then died on the
day after his earliest retirement date.
In the case of a married Inactive Participant who dies on or
before his earliest retirement date, the survivor annuity shall
be computed in the same manner as for an active Participant,
except that the date he separated from service instead of the
date of his death shall be used.
In the case of a married Participant or a married Inactive
Participant who dies after his earliest retirement date, such
survivor annuity shall be computed as if such Participant had
begun receiving a joint and one-half survivor annuity on the day
before his death.
Section 7.3. Payment of Small Benefits. Notwithstanding the
above, if the lump sum Actuarial Equivalent of the benefit
described in Section 7.2 is $3,500 or less, then payment shall
be made to the Spouse in a lump sum. Notwithstanding the above,
no such distribution shall be made if, at any previous time, the
Actuarial Equivalent of the benefit exceeded $3,500 and the
Participant was eligible to begin receipt of immediate monthly
payments.
Section 7.4. Commencement of and Period for Payment of Death
Benefits. The Spouse shall elect a benefit commencement date
which falls within the period beginning on the date the
Participant or Inactive Participant would have attained his
earliest retirement date and ending on the date on which the
deceased Participant or Inactive Participant would have attained
Age 70 1/2.
If the Participant's or Inactive Participant's Spouse, if any,
does not survive, no death benefit will be paid.
Section 7.5. Death Following the Annuity Starting Date. If a
Participant or Inactive Participant dies after the Annuity
Starting date, payments (if any are appropriate) shall be made
in accordance with the method of payment elected by the
Participant or Inactive Participant pursuant to Article 5, and
shall in all events be payable at least as rapidly as under the
method of payment in effect prior to the Participant's or
Inactive Participant's death.
Section 7.6. Qualified Domestic Relations Order. For purposes
of this Article 7, a former Spouse shall be treated as the
Spouse to the extent provided under a qualified domestic
relations order as described in Code Section 414(p).
Section 7.7. Transition Rule. Any living married Inactive
Participant not receiving benefits on August 23, 1984, who would
otherwise not receive the benefits prescribed by Section 7.2
shall have Section 7.2 apply to him if he is credited with at
least one Hour of Service under this Plan or a predecessor plan
in any Plan Year beginning on or after January 1, 1976, and if
he had at least ten Years of Service for vesting and had at
least a partially vested interest in the Plan at the time he
separated from service.
Section 7.8. Death After Election of Joint and Survivor
Annuity. If a Participant or Inactive Participant who had made
a valid election under Section 5.7 of a qualified joint and
survivor annuity with a survivorship portion payable to his
Spouse greater than 50% dies before his Annuity Starting Date,
the survivor annuity otherwise payable under this Article shall
not be less than the monthly amount the Spouse would have
received under the method of payment elected had the Participant
or Inactive Participant died on the day after his Annuity
Starting Date.
ARTICLE 8
TOP-HEAVY PLAN PROVISIONS
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Section 8.1. Determination Date. If, as of the Determination
Date, the Plan is a Top-Heavy Plan, as defined in Section 8.3,
the provisions of this Article 8 shall apply.
The Determination Date with respect to any Plan Year shall be
the last day of the preceding Plan Year.
Section 8.2. Valuation Date. The Valuation Date is the date
on which a Participant's Accrued Benefit is determined for
purposes of determining if this Plan is a Top-Heavy Plan.
Except as provided below, the Valuation Date shall be the most
recent date falling within the 12-month period ending on the
Determination Date, on which a computation was made for purposes
of computing plan costs for minimum funding purposes.
In the first Plan Year the Accrued Benefit for a Participant
shall be determined either (a) as if that Participant terminated
service as of the Determination Date or (b) as if that
Participant terminated service as of the Valuation Date, taking
into account the estimated Accrued Benefit as of the
Determination Date.
For the second Plan Year, the Accrued Benefit for a Participant
must not be less than his Accrued Benefit taken into account for
the first Plan Year unless the difference is attributable to
using an estimate of the Accrued Benefit as of the Determination
Date for the first Plan Year and using the actual Accrued
Benefit as of the Determination Date for the second Plan Year.
For any Plan Year after the second Plan Year the Accrued
Benefit for a Participant must be determined as if the Employee
terminated service as of the Valuation Date.
The Accrued Benefit of a Participant other than a Key Employee
shall be determined under (a) the method, if any, that uniformly
applies for accrual purposes under all defined benefit plans
maintained by the Employer, or (b) if there is no such method,
as if such benefit accrued not more rapidly than the slowest
accrual rate permitted under the fractional rule of Section
411(b)(1)(C) of the Internal Revenue Code.
Section 8.3. Top-Heavy Plan.
(a) The Plan shall be considered a Top-Heavy Plan, if, as of
the Determination Date, either:
(1) the aggregate of the present value of the Accrued Benefits
for Key Employees under the Plan exceeds 60% of the sum of the
present value of the Accrued Benefits of all Employees under the
Plan, or
(2) the Plan is part of a Top-Heavy Group, as defined in
Section 8.5. Notwithstanding anything in this subsection (a),
if this Plan is part of an aggregation group, as defined in
Section 8.5, that is found not to be Top-Heavy, then this
Plan shall not be a Top-Heavy Plan.
(b) The present value of Accrued Benefits for purposes of this
Section shall be determined according to the following
actuarial assumptions:
Annual effective interest rate of 5%
Mortality: PBGC I for males
PBGC II for females
For purposes of this Section the actuarial assumptions used for
all plans within the Top-Heavy Group must be the same.
(c) For purposes of determining whether the Top-Heavy rules
apply for any Plan Year:
(1) Rollover contributions initiated by an Employee and
accepted by this Plan after December 31, 1983, shall
not be recognized with respect to this Plan if the
rollover contribution came from a plan not maintained
by the Employer or Related Employer.
(2) Any Accrued Benefit for an Employee who is not currently
a Key Employee, but at one time was a Key Employee,
shall not be recognized for the Plan Year ending on the
Determination Date.
(3) Except as provided in (4) below, the Accrued Benefit for
an Employee shall include aggregate distributions made with
respect to such Employee under the Plan during the
five-year period ending on the Determination Date,
except for the distributions made to former Key
Employees excluded above, and distributions rolled over
to a plan maintained by the Employer or Related Employer.
(4) Effective for Plan Years beginning after December 31,
1984, if an individual has not performed any service for
the Employer at any time during the five-year period
ending on the Determination Date, any Accrued Benefit
for such individual shall not be taken into account.
(5) The Accrued Benefit shall include any non-proportional
subsidies but shall exclude proportional subsidies.
(d) Notwithstanding, when two or more plans constitute an
aggregation group, the present value of the accrued benefits
shall be determined separately for each plan as of each plan's
Determination Date and then aggregated for each plan as of the
Determination Date for such plans that fall within the same
calendar year.
Section 8.4. Key Employee shall mean any Employee or former
Employee who, at any time during the Plan Year or any of the
four preceding Plan Years, is:
(a) an officer of the Employer having an annual Compensation
greater than 50% of the defined benefit dollar limitation under
Section 415(b)(1)(A) of the Code (as it may be increased by the
Secretary of the Treasury for any applicable cost of living
increases); however, the maximum number of officers considered
Key Employees may not exceed (i) three if there are less than 30
Employees, (ii) ten percent of all Employees if there are
between 30 and 500 Employees, or (iii) 50 if there are more than
500 Employees. Officers shall include only those administrative
executives who regularly and continuously serve as such. Title
alone shall not be determinative of officer status;
(b) one of the ten Employees earning an annual Compensation
which exceeds the maximum defined contribution annual additions
dollar limit under Code Section 415 and owning (or considered as
owning within the meaning of Code Section 318) more than both
1/2 percent interest and the largest interests in the Employer;
(c) a five-percent owner of the Employer, meaning if the
employer is a Corporation, any person who owns (or is considered
as owning within the meaning of Section 318) more than five
percent of the outstanding stock of the Employer or stock
possessing more than five percent of the total combined voting
power of all stock of the corporation, or if the employer is not
a corporation, any person who owns more than five percent of the
capital or profits interest in the Employer; or
(d) a one-percent owner of the Employer having an annual
Compensation from the Employer of more than $150,000, meaning if
the employer is a corporation, any person who owns (or is
considered as owning within the meaning of Section 318) more
than one percent of the outstanding stock of the Employer or
stock possessing more than one percent of the total combined
voting power of all stock of the corporation, or if the Employer
is not a corporation, any person who owns more than one percent
of the capital or profits interest in the Employer.
For purposes of this Section 8.4, Employee shall mean any
Employee, as defined in Article 2, of the Employer, or any
employee of a Related Employer if the Plan is part of a
Top-Heavy Group with the plan of a Related Employer. Employee
and Key Employee shall include any beneficiary of an Employee or
a Key Employee, and former Key Employee shall include any
beneficiary of a former Key Employee.
For purposes of subsections (b), (c), and (d) above,
constructive ownership rules of Code Section 318 shall be
applied by substituting "5 percent" for "50 percent" in Code
Section 318(a)(2).
For purposes of determining ownership under subsections (b),
(c) and (d) above, the aggregation rules of Code Section 414(b),
(c) and (m) shall not apply.
Notwithstanding anything above, the criteria used in the
determination of Key Employees shall be consistent with Code
Section 416, which is incorporated herein by reference.
Non-Key Employee shall mean any Employee who is neither a Key
Employee nor a former Key Employee.
Section 8.5. Top-Heavy Group.
(a) Top-Heavy Group shall mean an aggregation group where the
sum, as of the Determination Date, of (1) and (2) exceeds 60% of
the same amount determined for all Employees, under all plans
included in the group, and
(1) is the present value of the cumulative accrued benefits
for Key Employees under any defined benefit plan included
in the group, and
(2) is the sum of the account balances of Key Employees under
any defined contribution plan included in the group.
(b) The aggregation group must include:
(1) any plan of the Employer or Related Employer in which a
Key Employee is a participant, and
(2) any plan on which a plan covering a Key Employee depends
for qualification under the requirements of Code Section
401(a)(4) or 410.
(c) The aggregation group may also include, at the election of
the Employer, any plan not required to be included in an
aggregation group if such group would continue to meet the
qualification requirements of Code Sections 401(a)(4) and 410.
If such an aggregation group is found not to be Top-Heavy, then
no plan shall be considered Top-Heavy. If the aggregation group
is found to be Top-Heavy, then all plans in the group, except
the plan which was not required to be included, would be
considered Top-Heavy Plans.
(d) All plans maintained by the Employer (including plans that
have terminated) during the 5-year period ending on a
Determination Date must be considered in determining the
Top-Heavy Group as of that Determination Date.
Section 8.6. Minimum Benefits for Top-Heavy Plans. If the
Plan is or becomes a Top-Heavy Plan, then, notwithstanding the
provisions of Section 2.2, the minimum accrued benefit expressed
as a single life annuity beginning at Normal Retirement Age for
each Non-Key Employee who is a Participant shall be the lesser of:
(a) two percent of his Top-Heavy Average Compensation times
Top-Heavy Years of Service, or
(b) 20% of his Top-Heavy Average Compensation.
If the form of benefit is other than a single life annuity, the
minimum benefit must be an amount that is the Actuarial
Equivalent of the above minimum benefit. If the benefit
commences at a date other than at Normal Retirement Age, the
Participant will receive an amount that is at least the
Actuarial Equivalent of the single life annuity benefit
commencing at Normal Retirement Age.
Each Non-Key Employee who is a Participant shall receive this
minimum benefit regardless of the Non-Key Employee's level of
Compensation and regardless of whether the Non-Key Employee is
employed on a specified date.
Section 8.7. Top-Heavy Group Minimum Benefits. In the case of
a Top-Heavy Group consisting of both defined benefit and defined
contribution plans, the required minimum accrued benefit or
Employer contribution for each Top-Heavy Year of Service for
Employees participating in each type of Plan shall be satisfied
by the minimum accrued benefit under this Plan.
The required minimum accrued benefit or Employer contribution
for each Top-Heavy Year of Service for Employees who do not
participate in this Plan but who do participate in another plan
of the Top-Heavy Group shall be satisfied by providing the
minimum accrued benefit or contribution under that plan.
Section 8.8. Compensation and Top-Heavy Average Compensation.
For purposes of determining the minimum benefit of Section 8.6,
Compensation shall mean compensation as defined in Section
14.1(c) of the Plan. Top-Heavy Average Compensation shall mean
the average Compensation paid during the consecutive Top-Heavy
Years of Service, not to exceed five years, which produces the
highest average Compensation. In determining the Top-Heavy
Average Compensation, years during which the Employee did not
earn a Year of Service shall be disregarded.
Section 8.9. Years of Service. Top-Heavy Years of Service
shall mean all Years of Service, excluding any Year of Service
after which the Plan was not a Top-Heavy Plan for the Plan Year
ending during such Year of Service and further excluding any
Year of Service completed in a Plan Year beginning before
January 1, 1984.
Section 8.10. No Duplication of Minimum Benefit. If the
Employer maintains another qualified plan which provides a
minimum benefit or contribution, then the minimum benefit or
contribution provided under this Plan shall not, when combined
with the benefit or contribution provided by the other plan,
exceed the amount required by Section 416(c) of the Code.
Section 8.11. Minimum Vesting Requirements. If the Plan is or
becomes a Top-Heavy Plan, as defined in Section 8.3, then,
notwithstanding the provisions of Section 6.1, a Participant
shall be 100% vested in his Accrued Benefit after three Years of
Service.
Years of Service for the purposes of vesting in a Top-Heavy
Plan shall include all Years of Service, including years prior
to January 1, 1984, and years during which the Plan is not
considered to be a Top-Heavy Plan. Vesting pursuant to this
Section 8.11 shall apply to each Participant's entire Accrued
Benefit. However, when the Plan becomes a Top-Heavy Plan, the
Accrued Benefit of any Employee who does not complete at least
one Hour of Service after the Plan becomes Top-Heavy is not
required to be subject to the minimum vesting schedule for
Top-Heavy Plans.
When the Plan ceases to be a Top-Heavy Plan, the vesting
schedule shall not revert to the schedule defined in Section 6.1.
Section 8.12. Adjustments in Section 415 Limits for Top-Heavy
Plans. If this Plan is a Top-Heavy Plan or if the Plan and one
or more other plans maintained by the Employer or Related
Employer in the aggregate are or become a Top-Heavy Group, then
the defined benefit plan fraction, as defined in Section 14.8,
shall be applied by substituting 1.0 for 1.25, and the defined
contribution plan fraction as defined in Section 14.8 shall be
applied by substituting 1.0 for 1.25.
The above paragraph shall not apply if (a) and (b) below are
satisfied:
(a) In the case of a Top-Heavy Group consisting of both defined
contribution and defined benefit plans, a minimum benefit shall
be provided for each Non-Key Employee who participates in
defined benefit plans equal to the lesser of three percent (3%)
of Top-Heavy Average Compensation as defined in Section 8.8, per
Top-Heavy Year of Service after January 1, 1984, or thirty
percent (30%) of Top-Heavy Average Compensation, as defined in
Section 8.8.
Notwithstanding, a minimum contribution of four percent (4%)
of Top-Heavy Average Compensation shall be provided for each
Non-Key Employee covered only by a defined contribution plan in
the Top-Heavy Group.
(b) The present value of the cumulative accrued benefits of all
Key Employees does not exceed ninety percent (90%) of the
present value of the cumulative accrued benefits of all
Employees participating in this Plan or participating in this
Plan and any other plans included in the Top-Heavy Group,
excluding former Key Employees.
Section 8.13. Transition Fraction. If this Plan is a
Top-Heavy Plan to which the above Section 8.12 applies, then
$41,500 shall be substituted for $51,875 in the Transition
Fraction defined in Article 14.
ARTICLE 9
ADMINISTRATION BY COMMITTEE
- ---------------------------
Section 9.1. The Committee shall consist of not less than
three nor more than five individuals who shall be appointed by
the Board to serve at the pleasure of the Board. Any member of
the Committee may resign, and his successor, if any, shall be
appointed by the Board. The Committee shall be responsible for
the general administration and interpretation of the Plan and
for carrying out its provisions, except to the extent all or any
of such obligations are specifically imposed on the Trustee or
the Board. The Committee shall constitute a named fiduciary
under the Plan.
Section 9.2. The members of the Committee shall elect a
Chairman and may elect an acting Chairman. They shall also
elect a Secretary and may elect an acting Secretary, either one
of whom may be, but need not be, members of the Committee. The
Committee may appoint from its membership such subcommittees
with such powers as the Committee shall determine and may
authorize one or more of its members, or any agent, to execute
or deliver any instruments or to make any payment on behalf of
the Committee.
Section 9.3. The Committee shall hold such meetings upon such
notice at such places and at such intervals as it may from time
to time determine. Notice of meetings shall not be required if
notice is waived in writing by all of the members of the
Committee or if all such members are present at the meeting.
Section 9.4. A majority of the members of the Committee shall
constitute a quorum for the transaction of business. All
resolutions or other actions taken by the Committee at any
meeting shall be by vote of a majority of those present and
entitled to vote at any such meeting. Resolutions may be
adopted or other action taken without a meeting only upon
written consent thereto signed by all of the members of the
Committee.
Section 9.5. The Committee shall maintain full and complete
records of its deliberations and decisions. Its records shall
contain all relevant data pertaining to individual Participants
and their rights under the Plan and in the Fund.
Section 9.6. Subject to the limitations of the Plan and of the
Act, the Committee may from time to time establish rules or
by-laws for the administration of the Plan and the transaction
of its business.
Section 9.7. No individual member of the Committee shall have
any right to vote or decide upon any matter relating solely to
himself or to any of his rights or benefits under the Plan.
Such member, however, may sign any unanimous written consent to
resolutions adopted or other action taken without a meeting.
Section 9.8. The Committee may correct errors and, insofar as
practicable, may adjust any benefit or credit or payment
accordingly.
Section 9.9. Subject to the claims procedure set forth in
Article 11, the Committee shall have the duty and authority to
interpret and construe the provisions of the Plan and to decide
any dispute which may arise regarding the rights of Participants
thereunder. Such determinations shall apply uniformly to all
persons similarly situated and shall be binding and conclusive
upon all interested persons.
Section 9.10. The Committee may, at its option, instruct the
Trustee to purchase annuity contracts from a legal reserve life
insurance company to provide any benefits due from the Plan.
Any such annuity contracts shall be nontransferable and
nonforfeitable.
Section 9.11. The Committee may engage an actuary, attorney,
accountant or any other technical advisor to perform such other
duties as shall be required regarding the operation of the Plan
and may employ such clerical and related personnel as the
Committee shall deem necessary or desirable in carrying out the
provisions of the Plan. Subject to the provisions of the Act,
the Committee may determine and recommend annually to the Board
the amount of contribution to be made to the Fund for the year.
Section 9.12. No fee or compensation shall be paid to any
member of the Committee for his services as such.
Section 9.13. The Committee shall be entitled to reimbursement
out of the Trust Fund for reasonable expenses properly and
actually incurred in the performance of its duties in the
administration of the Plan.
ARTICLE 10
ALLOCATION OF RESPONSIBILITIES AMONG NAMED FIDUCIARIES,
MANAGEMENT OF FUNDS AND AMENDMENT OR TERMINATION OF PLAN
- --------------------------------------------------------
Section 10.1. The responsibilities allocated to the named
fiduciaries are as follows:
(a) Board:
(1) to amend the Plan,
(2) to appoint and remove members of the Committee,
(3) to appoint and remove Trustees under the Plan,
(4) to determine the amount to be contributed to the Plan each
year by the Employer, and
(5) to terminate the Plan.
(b) Committee:
(1) to interpret the provisions of the Plan and to determine
the rights of the Participants under the Plan including
eligibility for participation or benefits, except to the extent
otherwise provided in Article 11 relating to the claims
procedure,
(2) to administer the Plan in accordance with its terms,
except to the extent powers to administer the Plan are
specifically delegated to another named fiduciary or other
person or persons as provided in the Plan,
(3) to calculate the service and to account for the Accrued
Benefits of Participants and to maintain service and employment
records, and
(4) to direct the Trustees in the distribution of Trust assets
and benefit payments.
(c) Plan Administrator:
(1) to file such reports as may be required to the United States
Department of Labor, the Internal Revenue Service, the
Pension Benefit Guaranty Corporation and any other government
agencies for which reports may be required to be submitted from
time to time,
(2) to comply with requirements of law for disclosure of Plan
provisions and other information relating to the Plan, to
Participants and other interested parties,
(3) to administer the claims procedure, as provided in Article 11,
(4) to direct the Trustee to withhold from distributions made
pursuant to this Plan those amounts required by law and further
to direct the Trustee to make any reports to Participants and to
any others as may be required by the Internal Revenue Code or
other controlling law, rules or regulations, and
(5) to establish and execute the funding policy of the Plan.
(d) Trustees:
(1) to invest and reinvest Trust assets,
(2) to make benefit payments to Plan Participants as directed
by the Committee,
(3) to render annual or other periodic or terminal accountings
to the Employer as provided in the Trust Agreement, and
(4) otherwise to hold, administer and control the assets of
the Trust as provided in the Plan and Trust Agreement.
(e) Investment Manager:
If appointed in accordance with the terms of the Trust
Agreement, the Investment Manager shall have the power to
manage, acquire and dispose of any assets under the Plan, or to
direct the Trustee in the management, acquisition or disposition
of any such assets.
Section 10.2. Except as otherwise provided in the Act, a named
fiduciary shall not be responsible or liable for acts or
omissions of another named fiduciary with respect to its
fiduciary responsibilities. A named fiduciary of the Plan shall
be responsible and liable only for its own acts or omissions
with respect to fiduciary duties specifically allocated to it
and designated as its responsibility.
Section 10.3. All assets of the Plan shall be held in a Trust
forming part of the Plan. The Trust shall be administered as a
Fund to provide for the payment of benefits out of the income
and principal of the Trust to the Participants or their
successors in interest as provided in the Plan. All fiduciaries
(as defined in the Act) with respect to the Plan shall discharge
their duties as such solely in the interest of the Participants
and their successors in interest (a) for the exclusive purposes
of providing benefits to Participants and their successors in
interest and of defraying reasonable expenses of administering
the Plan and Trust, (b) with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent
man acting in a like capacity and familiar with such matters
would use in the conduct of an enterprise of like character and
with like aims, and (c) in accordance with the Plan and Trust
Agreement, except to the extent such documents may be
inconsistent with the Act. Except when specifically provided in
this Plan or in the Trust, the assets of the Plan shall never
inure to the benefit of the Employer.
At no time shall it be possible for the Plan assets to be used
for, or diverted to, any purpose other than for the exclusive
benefit of the Participants and their Beneficiaries.
Notwithstanding the foregoing, contributions made by the
Employer may be returned to the Employer if:
(a) the contributions were conditioned on the initial
qualification of the Plan under the Code, the Commissioner of
Internal Revenue determines the Plan is not initially qualified
under the Internal Revenue Code and all assets attributable to
such employer contributions are returned within one year after
the plan is found to not so qualify; or
(b) the contribution was made due to a mistake of fact; the
contribution is returned within one year of the mistaken payment
of the contribution and the return satisfies the requirements of
paragraph (d) below; or
(c) the contribution was conditioned on its current
deductibility, under Code Section 404, the deduction is
disallowed, the contribution is returned within one year of the
disallowance of the deduction, the return satisfies the
requirements of paragraph (d) below.
(d) The return of a Plan contribution to the Employer satisfies
the requirements of this paragraph if the amount so returned
does not exceed the amount contributed over (1) the amount that
would have been contributed had there been no mistake of fact
or (2) the amount that would have been contributed had the
contribution been limited to the amount that is deductible after
any disallowance by the Internal Revenue Service. Earnings
aribution.
Section 10.4. The Employer and the Trustee shall enter into an
appropriate Trust Agreement, which shall be a part of the Plan,
for the administration of the Trust under the Plan. Such Trust
Agreement shall contain such powers and reservations as to
investment, reinvestment, control and disbursement of the funds
of the Trust and such other provisions as shall be agreed upon
and set forth therein which are not inconsistent with the
provisions of this Plan, its nature and purposes, and the Act.
Said Trust Agreement shall provide that the Board may remove the
Trustee at any time upon reasonable notice, that the Trustee may
resign at any time upon reasonable notice, and that upon such
removal or resignation of any Trustee, the Board shall designate
a successor Trustee.
Section 10.5. All requests, directions, requisitions and
instructions of the Committee to the Trustee shall be in writing
and signed by the Secretary of the Committee or by any one
member of the Committee authorized by the majority to sign.
Section 10.6. The Employer hereby reserves the right, by
action of the Board, to amend or terminate the Plan and Trust or
Trust Agreement at any time. Except, however, as provided in
Sections 10.3 and 12.3, no such amendment or termination shall
have the effect of diverting the Trust Funds to purposes other
than for the exclusive benefit of the Participants.
ARTICLE 11
CLAIMS PROCEDURE
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Section 11.1. Filing of a Claim for Benefits. If either a
Participant or a Beneficiary believes he is entitled to a
benefit from the Plan which he is not receiving, he (the
"claimant") shall file a written claim with the Plan
Administrator or any member of the Committee upon a form
approved by the Committee. In the event the Plan Administrator
is the claimant, all actions which are required to be taken by
the Plan Administrator pursuant to this Article shall be taken
instead by a member of the Committee as designated by the
Employer.
Section 11.2. Notification to Claimant of Decision. Notice of
a decision with respect to a claim shall be furnished to the
claimant within 90 days following the receipt of the claim by
the Plan Administrator or any member of the Committee unless
special circumstances require an extension of time for
processing the claim. If there is a need for such an extension,
written notice of the extension shall be furnished by the
Committee to the claimant prior to the expiration of the initial
90 day period. In no event shall such extension exceed a period
of 90 days from the end of the initial 90 day period. The
notice of extension shall indicate the special circumstances
requiring the extension and the date by which the notice of
decision with respect to the claim shall be furnished.
Commencement of benefit payments shall constitute notice of
approval of a claim to the extent of the amount of the approved
benefit. If such claim shall be wholly or partially denied,
such notice shall be in writing and worded in a manner
calculated to be understood by the claimant and shall set
forth: (a) the specific reason or reasons for the denial, (b)
specific reference to pertinent provisions of the Plan on which the
denial is based, (c) a description of any additional material or
information necessary for the claimant to perfect the claim and
an explanation of why such material or information is necessary
and (d) an explanation of the Plan's claims review procedure.
If the claimant is not notified of the decision regarding his
claim in accordance with this Article, the claim shall be deemed
denied and the claimant shall then be permitted to proceed with
the claims review procedure provided in Section 11.3.
Section 11.3. Claims Review Procedure. Within 60 days
following receipt by the claimant of notice of the claim denial
or within 60 days following the close of the 90 day period
referred to in Section 11.2, if the claimant is not notified of
the decision within such 90 day period, the claimant may appeal
denial of the claim. The claimant shall be given an opportunity
to review pertinent documents and to submit issues and comments
in writing. A request for review by the Committee shall be in
writing and shall contain all additional information which the
claimant wishes considered. Following such request for review,
the Committee shall fully and fairly review the decision denying
the claim.
Section 11.4. Decision on Review. The decision on review of a
denied claim shall be made in the following manner.
(a) The Committee shall make its decision regarding the merits
of the denied claim within 60 days following receipt by the
Committee of the request for review (or within 120 days after
such receipt in a case where there are special circumstances
requiring extension of time for reviewing the appealed claim).
It shall deliver the decision to the claimant in writing. If an
extension of time for reviewing the appealed claim is required
because of special circumstances, written notice of the
extension shall be furnished to the claimant prior to the
commencement of the extension. If the decision on review is not
furnished within the prescribed time, the claim shall be deemed
denied on review.
(b) The decision on review shall set forth specific reasons for
the decision, shall be written in a manner calculated to be
understood by the claimant and shall cite specific references to
the pertinent Plan provisions on which the decision is based.
Section 11.5. Action by Authorized Representative of Claimant.
All actions set forth in this Article to be taken by the
claimant may likewise be taken by a representative of the
claimant duly authorized by him to act in his behalf on such
matters. The Plan Administrator or the Committee may require
such evidence of the authority to act of any such representative
as either may deem reasonably necessary or advisable.
ARTICLE 12
TERMINATION OF PLAN AND TRUST
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Section 12.1. In the event of termination of the Plan, all
Employer contributions shall cease, and no additional
Participants shall enter the Plan. The net assets of the Trust,
after reduction for expenses of administration and liquidation,
shall be allocated to the Participants in the following order:
(a) First, to the benefits attributable to voluntary Employee
contributions, if any, which is the portion of an Accrued
Benefit of a Participant, Spouse or other Beneficiary due to
voluntary contributions, if any, rather than contributions, if
any, required for participation in the Plan or in any merged
plan.
(b) Second, to the benefits attributable to mandatory Employee
contributions, if any, which is the portion of an Accrued
Benefit, other than those specified in subsection (a) of a
Participant, Spouse, or other Beneficiary due to the
Participant's contributions, if any, which were required for
participation in the Plan or in any merged plan.
(c) Third, to the Actuarial Equivalent of the Accrued Benefit,
other than those specified in subsections (a) and (b), of each
Participant with respect to whom payments under the Plan
commenced at least three years preceding the date of termination
or with respect to whom payments under the Plan would have
commenced at least three years preceding the date of termination
if such Participant had retired as of the beginning of such
three year period, provided that there shall be excluded from
this subsection (c) any increase in benefits resulting from
amendments to the Plan at any time during the five years
preceding the date of termination.
(d) Fourth, the Actuarial Equivalent of all Accrued Benefits,
other than those specified in subsections (a) through (c),
payment of which are guaranteed by the Pension Benefit Guaranty
Corporation referred to in the Act, determined irrespective of
the limitation to a single $750 monthly benefit (as may be
further adjusted for cost of living expenses) where an Employee
is a Participant in more than one Plan of the Employer.
(e) Fifth, the Actuarial Equivalent of all Accrued Benefits,
other than those specified in subsections (a) through (d), which
are vested under the Plan. (Vested interests shall be
determined without taking the termination of the Plan into
account.) If, however, the assets under the Plan are not
sufficient to pay the Actuarial Equivalent of such vested
Accrued Benefits in full, first priority shall be given to such
benefits which would have been vested under the Plan as in
effect at the beginning of the five year period ending on the
date of Plan termination. (Any assets of the Plan in excess of
such amount shall be used to satisfy increases in benefits due
to any Plan amendments within the five year period). Second
priority shall be given to such amendment providing for the
smallest increase in benefits and third priority to such
amendment providing for the second smallest increase in benefits
and continuing until the first to occur of exhaustion of Plan
assets or payment of the Actuarial Equivalent of all increases
in Accrued Benefits due to amendments during such five year
period.
(f) Sixth, the Actuarial Equivalent of Accrued Benefits under
the Plan in addition to the Accrued Benefits described in
subsections (a) through (e).
If the net assets of the Trust available for allocation as
provided in the foregoing subsections (a) through (f) are
insufficient to satisfy in full all Accrued Benefits designated
in such subsections, such net assets shall be applied to
satisfaction in full of the Accrued Benefits designated in each
such subsection in the order set forth, and no part of such
assets shall be applied to satisfy Accrued Benefits designated
in any such subsection until all Accrued Benefits designated in
all preceding subsections have been satisfied in full. If such
net assets applied to satisfy the Accrued Benefits under one
subsection are insufficient to fully satisfy the Accrued
Benefits designated in that subsection, such net assets so
allocated pursuant to such subsection shall be apportioned in
satisfaction of such benefits on the basis of the present value,
as of the Plan termination date, of such Accrued Benefits.
Section 12.2. The amount allocated pursuant to Section 12.1
hereof shall be payable to such Employees, in the form of an
annuity or any other optional methods of payment under Section
5.6. Such distributions will insure that the provisions of
Sections 5.6 and 5.7 shall be complied with. If the value of a
married or single Participant's or Inactive Participant's
benefit is $3,500 or less, then the Committee shall distribute
the benefit in a single lump sum in any event. Any such lump
sum which is $200 or more shall include the right of the
Participant or Inactive Participant to make a direct rollover
under Code Section 401(a)(31), as provided in Article 16.
Each Participant eligible for retirement will be given at least
a reasonable period during which he can elect or revoke his form
of benefit payment.
Section 12.3. Upon complete termination of the Plan, each
Participant shall have a fully vested and nonforfeitable
interest in his Accrued Benefit to the extent funded. In
determining the funded Accrued Benefit of each such Participant,
the provisions of Sections 12.1 and 12.4 shall apply. If,
following a complete termination of the Plan, there are assets
in the Trust Fund resulting from variations in actual experience
and expected actuarial experience after all liabilities of the
Plan to the Participants have been satisfied, such remaining
assets shall be distributed to the Employer.
Section 12.4. For purposes of complying with the requirements
of Section 1.401-4(c) of the regulations of the United States
Treasury Department, the following provisions are hereby
incorporated in and made a part of this Plan.
(a) The following terms are defined for the purposes of this
Section 12.4:
(1) The term "Benefits" includes any periodic income, any
withdrawal values payable to a living Participant and the cost
of any death benefits which may be payable after retirement on
behalf of a Participant, but does not include the cost of any
death benefits with respect to a Participant before retirement
nor the amount of any death benefits actually payable after the
death of a Participant whether such death occurs before or after
retirement.
(2) The term "Full Current Costs" means the normal cost of the
Plan for all years since the effective date of the Plan, plus
interest on any unfunded liability during such period.
(3) The term "Annual Compensation" of a Participant means
either such Participant's average regular annual Compensation,
or such average Compensation for the last five years, or such
Participant's last annual Compensation if such Compensation is
reasonably similar to his average regular annual Compensation
for the preceding five years.
(4) The term "Substantial Owner" means an Employee or former
Employee who is presently or who at any time during the last 60
months was:
(A) in the case of a sole proprietorship, the sole owner of
an unincorporated trade or business,
(B) in the case of a partnership, a partner who directly or
indirectly owns more than ten percent of either the capital
interest or the profits interest in such partnership, or
(C) in the case of a corporation, a person who directly or
indirectly owns more than ten percent in value of the voting
stock of that corporation.
For purposes of this subsection (a)(4), the constructive
ownership rules of Section 1563(e) of the Code (without regard
to Section 1563(e)(3)(C)) shall apply.
(b) Upon the occurrence of any event described in subsection (c) of
this Section, the Employer contribution applied for the benefit
of a Participant who is among the twenty-five highest paid Employees
of the Employer at the effective date of the Plan and whose
anticipated annual normal retirement benefit under the Plan
exceeds $1,500 shall be restricted in accordance with subsection (d)
of this Section.
(c) The restrictions described in subsection (d) of this
Section shall become applicable if:
(1) the Plan is terminated within ten years after the original
effective date of the Plan;
(2) the Benefits of a Participant described in subsection (b)
above become payable within ten years after the effective date
of the Plan; or
(3) the Plan is not subject to the minimum funding requirements
of Code Section 412 and the Benefits of a Participant described
in (b) above become payable after the Plan has been in effect
for ten years and the Full Current Costs of the Plan for the
first ten years have not been funded.
(d) The restrictions required under subsection (b) of this
Section are that the Employer contributions which may be used for
the benefit of a Participant described in such subsection (b)
shall not exceed the greater of (1) or (2) where:
(1) is the greater of $20,000, or 20 percent of the first
$50,000 of the Annual Compensation of such Participant
multiplied by the number of years between the effective date of
the Plan and
(A) the date of termination of the Plan;
(B) in the case of a Participant described in subsection
(c)(2) of this Section, the date the Benefit of the
Participant becomes payable, if this date is before
the termination date of the Plan; or
(C) in the case of a Participant described in subsection (c)(3)
of this Section, the date of the failure to meet the Full
Current Costs of the Plan. However, if the Full Current
Costs of the Plan have not been met on the date described
in (A) or (B) of this subsection, whichever is applicable,
then the date of the failure to meet such Full Current
Costs shall be substituted for the date referred to
in (A) or (B) of this subsection. For purposes of
determining the contributions which may be used for the
Benefits of a Participant when (B) of this subsection
applies, the number of years taken into account may be
recomputed for each year if the Full Current Costs of the
Plan are met for such year.
(2) is a dollar amount equal to:
(A) in the case of a Participant described in (b) above who
is also a Substantial Owner, the present value of the benefit
guaranteed for such Participant under Section 4022 of the
Act if the Plan was terminated or the present value of the
benefit that would be guaranteed under Section 4022 of
the Act and applicable regulations thereunder had the Plan
terminated on the date Benefits commence; or
(B) in the case of a Participant described in (b) above who
is not a Substantial Owner, the present value of the maximum
benefit described in Section 4022(b)(3)(B) of the Act,
determined on the earlier of the date the Plan terminates
or the date Benefits commence, without regard to any
other limitations of Section 4022 of the Act.
(e) For the purposes of this Section, the Employer
contributions which, at a given time, may be used for the
Benefits of a Participant include any unallocated funds which
would be used for his Benefits if the Plan were then terminated
or the Participant were then to withdraw from the Plan, as well
as all contributions allocated up to that time exclusively for
his Benefits.
(f) The provisions of this Section apply to a former or retired
Participant of the Employer, as well as to a Participant still
in the service of the Employer.
(g) Notwithstanding the foregoing provisions of this Section,
if Benefits under the Plan (or the predecessor or any prior
Plan) shall be materially increased, the foregoing restrictions
of this Section shall apply with respect to such increase as of
the effective date thereof. The effective date of such increase
for the purpose of applying such restrictions will be treated as
if it were the effective date of the predecessor or prior Plan.
However, with respect to any Participant who is among the
twenty-five highest paid Employees of the Employer on such
effective date, there shall be substituted for the limit upon
the Benefit set forth in subdivision (d)(1) above a limit which
does not exceed the greatest of the following three amounts:
(1) The Employer contributions (or funds attributable thereto)
which would have been applied to provide the Benefits for the
Participant if the Plan (or the predecessor or prior plan, if
applicable) had been continued without change;
(2) The sum of $20,000; or
(3) The sum of (A) and (B) where (A) is the Employer
contributions (or funds attributable thereto) which would have
been applied to provide Benefits for the Participant under the
Plan (or the predecessor or prior Plan, if applicable) if it had
been terminated the day before the effective date of such
increase in Benefits, and (B) is an amount computed by
multiplying the number of years for which the current costs of
the Plan after that date are met by (i) 20% of his Annual
Compensation or (ii) $10,000, whichever is smaller.
(h) Notwithstanding anything above to the contrary, this
Section shall be applied in accordance with the rules of Section
1.401-4(c) of the regulations of the United States Treasury
Department which is incorporated herein by reference.
(i) In the event of Plan termination, the benefit of any highly
compensated active or former Employee is limited to a benefit
that is nondiscriminatory under Code Section 401(a)(4).
For Plan Years beginning on or after January 1, 1991, benefits
distributed to any of the 25 most highly compensated active and
former highly compensated Employees are restricted such that the
annual payments are no greater than an amount equal to the
payment that would be made on behalf of the Employee under a
single life annuity that is the Actuarial Equivalent of the sum
of the Employee's Accrued Benefit and the Employee's other
benefits under the Plan.
The preceding paragraph shall not apply if: (a) after payment
of the benefit to an Employee described in the preceding
paragraph, the value of Plan assets equals or exceeds 110% of
the value of current liabilities, as defined in Code Section
412(l)(7), or (b) the value of the benefits for an Employee
described above is less than 1% of the value of current
liabilities. For purposes of this Section, benefit includes loans
in excess of the amount set forth in Code Section 72(p)(2)(A), any
periodic income, any withdrawal values payable to a living
Employee, and any death benefits not provided for by insurance
on the Employee's life.
Section 12.5. The conditions of the preceding Section 12.4
shall not restrict the payment in one lump sum of the entire
amount to which a Participant may be entitled under the lump sum
option set forth in the Article 5 of this Plan while this Plan
is in full effect and its full current cost has been paid
provided the following conditions are met:
(a) The Participant must enter into a written agreement with
the Trustee, binding upon his estate, in which the Participant
agrees to repay to the Trustee a sum equal to the actuarially
equivalent value of the amount by which the Participant's
monthly retirement benefit would have been decreased during the
Participant's then remaining lifetime pursuant to the provisions
set forth in the preceding Section 12.4 of this Article 12 in
the event the Plan is terminated or the full current cost is not
met during the period specified in Section 12.4.
(b) The Participant must also guarantee payment of any amount
required by the agreement by depositing with the Trustee, or
with a depository acceptable to the Trustee, simultaneously with
the aforesaid lump sum payment, property having a fair market
value equal to one hundred twenty-five percent (125%) of the
amount repayable if the plan had been terminated on the date the
lump sum payment was made to the Participant. The property is
to be held by the depository until the receipt of a
certification by the Trustee that the Participant (or his
estate) is no longer obligated to repay any amount under the
agreement.
(c) The Participant must further agree that if the market value
of the property held by the depository falls below one hundred
twenty-five percent (125%) of the amount which would then be
repayable if the Plan were terminated, he will deposit
additional property in the amount necessary to bring the total
value of the property held by the depository up to the one
hundred twenty-five percent (125%) level.
Section 12.6. In the event of a partial termination of the
Plan, each affected Participant shall have a fully vested and
nonforfeitable interest in his Accrued Benefit to the extent
funded as of the date of partial termination after reduction for
expenses of administration and liquidation of the terminated
portion of the Trust. In determining the funded Accrued Benefit
of each such Participant and the method of distribution thereof,
the provisions in Sections 12.1 and 12.4 shall apply. For this
purpose the portion of the Trust constituting the funded Accrued
Benefits of such Participants will be treated as if it were the
entire Trust and the affected Participants will be treated as if
they were all of the Participants in the Plan.
ARTICLE 13
MISCELLANEOUS
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Section 13.1. Merger or Consolidation of Plan. In the event
of any merger or consolidation of the Plan with any other plan
or a transfer of assets or liabilities of the Plan to any other
plan (which merged, consolidated or transferee plan shall be
referred to in this Section as the "successor plan"), the
benefit which each Participant would receive if the successor
plan (and the instant Plan, if this Plan continues in existence
and he has any interest remaining therein) were terminated
immediately after the merger, consolidation or transfer, shall
be equal to or greater than the benefit he would have received
if the instant Plan (and the successor plan, if the successor
plan existed immediately prior to the merger, consolidation or
transfer and he had any interest therein) had been terminated
immediately preceding the merger, consolidation or transfer.
Section 13.2. Communication to Employees. In accordance with
the requirements of the Act, the Employer shall communicate to
the Participants the principal terms of the Plan and the
benefits available thereunder.
Section 13.3. Non-Assignability of Benefits. No portion of
the Accrued Benefit with respect to any Participant shall be
subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge except in
the case of a qualified domestic relations order as described in
Code Section 414(p). Any attempt to so anticipate, alienate,
sell, transfer, assign, pledge, encumber or charge the same
shall be void except in the case of a qualified domestic
relations order as described in Code Section 414(p). No portion
of such Accrued Benefit shall in any manner be payable to any
assignee, receiver or Trustee, or be liable for the
Participant's debts, contracts, liabilities, engagements or
torts, or be subject to any legal process of attachment except
in the case of a qualified domestic relations order as described
in Code Section 414(p).
Section 13.4. Facility of Payments. If a Participant shall be
physically, mentally or legally incapable of receiving or
acknowledging receipt of any payment under the Plan to which he
is entitled, the Committee, upon the receipt of satisfactory
evidence of his incapacity and satisfactory evidence that
another person or institution is maintaining him and that no
guardian or committee has been appointed for him, may cause any
payment otherwise payable to him to be made to such person or
institution so maintaining him.
Section 13.5. Amendment. No amendment to the Plan (including
a change in the actuarial basis for determining optional or
early retirement benefits) shall be effective to the extent that
it has the effect of decreasing a Participant's Accrued Benefit.
Notwithstanding the preceding sentence, a Participant's Accrued
Benefit may be reduced to the extent permitted under Section
412(c)(8) of the Code. For purposes of this paragraph, a plan
amendment which has the effect of (1) eliminating or reducing an
early retirement benefit or a retirement type subsidy, or (2)
eliminating an optional form of benefit, with respect to
benefits attributable to service before the amendment shall be
treated as reducing Accrued Benefits. In the case of a
retirement-type subsidy, the preceding sentence shall apply only
with respect to a Participant who satisfies (either before or
after the amendment) the preamendment conditions for the
subsidy. In general, a retirement-type subsidy is a subsidy
that continues after retirement, but does not include a
qualified disability benefit, a medical benefit, a social
security supplement, a death benefit (including life insurance),
or a plant shutdown benefit (that does not continue after
retirement age). Furthermore, if the vesting schedule of the
Plan is amended, in the case of an Employee who is a Participant
as of the later of the date such amendment is adopted or the
date it becomes effective, the nonforfeitable percentage
(determined as of such date) of such Employee's Employer-derived
Accrued Benefit will not be less than the percentage computed
under the Plan without regard to such amendment.
If the vesting schedule under the Plan is amended and the
vesting under the new schedule is at any point not as rapid as
under the prior schedule, each Participant with at least three
Years of Service may elect to have his nonforfeitable percentage
computed under the Plan according to the prior schedule.
For purposes of the above paragraph, a Participant shall be
considered to have completed three Years of Service if he has
completed 1,000 Hours of Service in each of three Plan Years,
whether or not consecutive, ending with or prior to the last day
of the election period described below.
The election period shall begin no later than the date the
amendment is adopted and shall end no earlier than the later of
the following dates:
(a) the date which is 60 days after the date the amendment is
adopted;
(b) the date which is 60 days after the amendment becomes
effective; or
(c) the date which is 60 days after the day the Participant is
issued written notice of the change by the Employer or the Plan
Administrator.
If the vesting schedule of this Plan is changed, the
nonforfeitable percentage of any Participant's Accrued Benefit
derived from Employer contributions determined as of the later
of the date the change is effective or the date the change is
adopted shall not be less than the nonforfeitable percentage
computed under the Plan without regard to such change.
Section 13.6. Designation of Beneficiary. In any event where
a Participant or Inactive Participant may name a Beneficiary to
receive any death benefits provided, pursuant to Article 5 or,
pursuant to Article 7, such Beneficiary shall be named on a form
provided by the Plan Administrator and delivered to the Plan
Administrator. Such designation may include more than one
person with one or more secondary or contingent Beneficiaries
and shall be subject to change upon written request of such
Participant or Inactive Participant in the same manner as the
original designation. If a Beneficiary is receiving or is
entitled to receive payments from the Plan and dies before
receiving all of the payments due him, any remaining payments
shall be made to the contingent Beneficiary, if any.
The provisions of this Section are subject to the spousal
consent provisions of Article 5 and, if applicable, Article 7.
In no event shall language in this Section be construed to allow
a Participant or Inactive Participant to name a Beneficiary
other than his Spouse when Article 7 only provides for payment
to the Spouse upon the death of a married Participant or married
Inactive Participant.
Section 13.7. Fiduciary Discretion. In discharging the duties
assigned to it under the Plan, the Trustee, Plan Administrator,
the Committee, and any other fiduciary shall have the discretion
to interpret the Plan; to adopt, amend, and rescind rules and
regulations pertaining to their duties under the Plan; and to
make all other determinations necessary or advisable for the
discharge of their duties under the Plan. Such discretionary
authority shall be absolute and exclusive if exercised in a
uniform and nondiscriminatory manner with respect to all
similarly situated individuals. The express grant in the Plan
of any specific power to a fiduciary with respect to any duty
assigned to it under the Plan shall not be construed as limiting
any power or authority of the fiduciary to discharge its duties.
ARTICLE 14
LIMITATIONS ON BENEFITS AND CONTRIBUTIONS UNDER THE PLAN
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Section 14.1. Definitions and Rules Applicable to this Article.
(a) "Annual Benefit" shall mean the total benefit payable from
this Plan calculated as a straight life annuity.
Except as provided below, an Annual Benefit payable in a form
other than a straight life annuity must be adjusted to an
actuarially equivalent straight life annuity before applying the
limitations of this Article. The interest rate assumption used
to determine actuarial equivalence will be the greater of the
interest rate specified in the definition of Actuarial
Equivalent in Article 2 of this Plan or five percent. The
Annual Benefit does not include any benefits attributable to
Employee contributions or rollover contributions, or the assets
transferred from a qualified plan that was not maintained by the
Employer. No actuarial adjustment to the benefit is required
for (a) the value of a qualified joint and survivor annuity, (b)
the value of benefits that are not directly related to
retirement benefits (such as the qualified disability benefit,
pre-retirement death benefits, and post-retirement medical
benefits), and (c) the value of post-retirement cost-of-living
increases made in accordance with the Federal Income Tax
Regulations.
(b) "Average Compensation" shall mean a Participant's highest
average Compensation from the Employer over a period of three
consecutive calendar years. If a Participant is employed for
less than three calendar years, his Average Compensation shall
be his average earnings over his calendar years of employment.
Average Compensation shall include bonus payments and other
taxable remuneration.
(c) "Compensation." A Participant's earned income, wages,
salaries, and fees for professional services, and other amounts
received for personal services actually rendered in the course
of employment with the Employer (including, but not limited to,
commissions paid salesmen, compensation for services on the
basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses), and excluding the following:
(1) Employer contributions to a plan of deferred compensation
which are not included in the Employee's gross income for the
taxable year in which contributed or Employer contributions
under a simplified employee pension plan to the extent such
contributions are deductible by the Employee, or any
distributions from a plan of deferred compensation;
(2) Amounts realized from the exercise of a nonqualified stock
option, or when restricted stock (or property) held by the
Employee either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(3) Amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option; and
(4) Other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under a
salary reduction agreement) towards the purchase of an annuity
described in Section 403(b) of the Code (whether or not the
amounts are actually excludable from the gross income of the
Employee).
Compensation for any Limitation Year is the compensation
actually paid or includable in gross income during such year.
(d) "Current Accrued Benefit" shall mean a Participant's
accrued benefit under the Plan, determined as if the Participant
had separated from service as of the close of the last
Limitation Year beginning before January 1, 1987, when expressed
as an Annual Benefit. In determining the amount of a
Participant's Current Accrued Benefit, the following shall be
disregarded:
(1) any change in the terms and conditions of the Plan after
May 5, 1986; and
(2) any cost of living adjustment occurring after May 5, 1986.
(e) This Article 14 shall be effective on the first day of the
Limitation Year beginning after December 31, 1986.
Section 14.2. Limitation on Annual Benefits. Subject to the
provisions of Section 14.4 below, this Plan when aggregated with
the benefits from any other defined benefit plan (whether or not
terminated) ever maintained by the Employer or Related Employer
shall not provide Annual Benefits which exceed the lesser of
$90,000 or 100% of a Participant's Average Compensation. This
limitation shall be hereinafter referred to as the "Maximum
Annual Benefit." The Maximum Annual Benefit shall be increased
by cost of living increases published in regulations by the
Secretary of the Treasury. Any adjustments made as a result of
this Section 14.2 shall not be effective prior to the first day
of the Limitation Year for which the increase is effective as
prescribed by the regulations. Such adjustments shall also be
made to the Annual Benefits of any Inactive Participant provided
that no adjustments shall be made following the Annuity Starting
Date of any Participant or Inactive Participant.
Section 14.3. No Adjustments to Annual Benefit of Less than
$10,000. Subject to the provisions of Section 14.4 below, if
the Annual Benefit payable from this Plan or from this Plan and
any other defined benefit plan maintained by the Employer to a
Participant does not exceed $10,000, the adjustment to the
Annual Benefit in Section 14.2 above shall not be required,
provided that the Participant has never been covered by a
defined contribution plan maintained by the Employer.
Section 14.4. Adjustment of Limitation for Years of Service or
Participation.
(a) Defined Benefit Dollar Limitation. If a Participant has
completed less than ten years of participation, the
Participant's Accrued Benefit shall not exceed the defined
benefit dollar limitation under Section 14.2 above as adjusted
by multiplying such amount by a fraction, the numerator of which
is the Participant's number of years (or part thereof) of
participation in the Plan, and the denominator of which is ten.
(b) Other Defined Benefit Limitations. If a Participant has
completed less than ten years of service with the Employer or
Related Employers, the percentage of Compensation limitation
described in Section 14.2 and the limitations described in
Section 14.3 shall be adjusted by multiplying such amounts by a
fraction, the numerator of which is the Participant's number of
years of service (or part thereof), and the denominator of which
is ten.
(c) Limitations on Reductions. In no event shall Sections
14.4(a) or 14.4(b) reduce the limitations provided under
Sections 415(b)(1) and (4) of the Code to an amount less than
one-tenth of the applicable limitation (as determined without
regard to this Section 14.4).
(d) Application to Changes in Benefit Structure. To the extent
provided by the Secretary of the Treasury, this Section 14.4
shall be applied separately with respect to each change in the
benefit structure of the Plan.
Section 14.5. Benefit Payable Prior to Social Security
Retirement Age. If the $90,000 Maximum Annual Benefit is
payable to a Participant prior to his attaining his Social
Security Retirement Age, such Annual Benefit shall be adjusted
on an actuarial basis as if such Annual Benefit is payable
beginning at his Social Security Retirement Age. The above
adjustment shall be made in such manner as the Secretary of the
Treasury may prescribe which is consistent with the reduction
for old-age insurance benefits commencing before the Social
Security Retirement Age under the Social Security Act. For the
purpose of adjusting the maximum for the commencement of
benefits prior to Age 62, the interest rate assumption shall not
be less than the greater of five percent (5%) or the rate
specified in the Plan for determining actuarial equivalence for
early retirement.
Section 14.6. Benefit Payable After Social Security Retirement
Age. If retirement benefits begin after a Participant reaches
his Social Security Retirement Age, the $90,000 Maximum Annual
Benefit shall be adjusted in accordance with regulations
prescribed by the Secretary so that the Maximum Annual Benefit
shall be equivalent to the benefit which would be payable at his
Social Security Retirement Age. For the purpose of adjusting
any such maximum, the interest rate assumption shall not be
greater than the lesser of five percent (5%) or the rate
specified in the Plan for determining actuarial equivalence for
delayed retirement.
Section 14.7. Application of Maximum Limitation to Separate
Plans. If the Employer maintains one or more defined benefit
plans in addition to this Plan, the Maximum Annual Benefit shall
be applied in the aggregate to this Plan and to all such other
defined benefit plans.
Section 14.8. Limitation for Participants in Defined Benefit
Plan and Defined Contribution Plan.
(a) If an Employee is or was a Participant in one or more
defined benefit plans and one or more defined contribution plans
ever maintained by the Employer or Related Employer (whether or
not terminated), the sum of the defined benefit plan fraction
and the defined contribution plan fraction for that Participant
shall not exceed 1.0 for any Limitation Year. If the sum of the
defined benefit plan fraction and the defined contribution plan
fraction shall exceed 1.0 in any year for any Participant in
this Plan, the Employer shall adjust the numerator of the
defined benefit plan fraction so that the sum of the defined
benefit plan fraction and the defined contribution plan fraction
shall not be in excess of 1.0 in any Limitation Year for such
Participant.
(b) For the purpose of this Article, the term defined benefit
plan fraction for any Limitation Year shall mean a fraction the
numerator of which is the projected Annual Benefit payable to a
Participant as of the close of the then current Limitation Year
under all defined benefit plans maintained by the Employer or
Related Employer and the denominator of which is the lesser of:
(1) the product of 1.25 multiplied by the maximum dollar
limitation for the Limitation Year concerned as provided under
Code Section 415, or
(2) the product of 1.4 multiplied by the applicable amount to
be taken into account according to the percentage of
compensation limit as defined for this purpose under Code
Section 415.
(c) The term defined contribution plan fraction for any
Limitation Year shall mean a fraction the numerator of which is
the aggregate amount of annual additions made to a Participant's
accounts under all defined contribution plans, whether or not
terminated, maintained by this Employer or Related Employer
(including the annual additions attributable to the
Participant's nondeductible contributions to this and all other
defined benefit plans maintained by this Employer or Related
Employer) as of the close of the then current Limitation Year
and the denominator of which as of the end of any Limitation
Year, is the sum of the defined contribution denominator
increments for that Limitation Year and all prior Limitation
Years of the Participant's service with the Employer or Related
Employer (regardless of whether the Plan was in existence during
those years.)
For each Limitation Year, the defined contribution denominator
increment is the lesser of the following amounts:
(1) the product of 1.25 multiplied by the maximum dollar
limitation for the Limitation Year concerned, as provided under
Code Section 415, or
(2) the product of 1.4 multiplied by the applicable amount to
be taken into account according to the percentage of
compensation limit as defined for this purpose under Code
Section 415.
For purposes of this Section 14.8(c), amounts allocated, after
March 31, 1984, to an individual medical account, as defined in
Code Section 415(l), which is part of a pension or annuity plan
maintained by the Employer are treated as annual additions to a
defined contribution plan. Also, amounts derived from
contributions paid or accrued after December 31, 1985, which are
attributable to post-retirement medical benefits allocated to
the separate account of a Key Employee, as defined in Section
8.4, under a welfare benefit fund, as defined in Code Section
419(e), maintained by the Employer, are treated as annual
additions to a defined contribution plan. In no event shall
this be construed as applying the limitations of Code Section
415(c)(1)(B) to individual medical accounts or post-retirement
medical benefits.
(d) With respect to any year ending after December 31, 1982,
and at the election of the Plan Administrator, the amount taken
into account in determining the denominator of the defined
contribution plan fraction with respect to each Participant for
all years ending before January 1, 1983, shall be an amount
equal to the product of (1) and (2), where
(1) is the denominator of the defined contribution plan fraction
as calculated for the Limitation Year ending in 1982, and
(2) is the Transition Fraction.
Transition Fraction means a fraction the numerator of which is
the lesser of $51,875 or 1.4 multiplied by 25% of the
Compensation of the Participant for the Limitation Year ending
in 1981 and the denominator of which is the lesser of $41,500 or
25% of the Participant's Compensation for the Limitation Year
ending in 1981.
(e) For purposes of computing the defined contribution plan
fraction, "Annual Addition" shall mean the amount allocated to a
Participant's account during the Limitation Year as a result of:
(1) Employer contributions,
(2) Employee contributions,
(3) Forfeitures, and
(4) Amounts described in Code Sections 415(l)(2) and
419A(d)(2).
The Annual Addition for any Limitation Year beginning before
January 1, 1987, shall not be recomputed to treat all employee
contributions as an Annual Addition.
If the Plan satisfied the applicable requirements of Section
415 of the Code as in effect for all Limitation Years beginning
before January 1, 1987, an amount shall be subtracted from the
numerator of the defined contribution plan fraction (not
exceeding such numerator) as prescribed by the Secretary of the
Treasury so that the sum of the defined benefit plan fraction
and defined contribution plan fraction computed under Section
415(e)(1) of the Code does not exceed 1.0 for such Limitation
Year.
Section 14.9. Preservation of Accrued Benefit Under the Tax
Equity and Fiscal Responsibility Act of 1982. Notwithstanding
the above provisions of this Article 14, if a Participant was a
Participant in this Plan before January 1, 1983, the Maximum
Annual Benefit shall not be less than the Participant's Accrued
Benefit at the close of the 1982 Limitation Year.
Section 14.10. Preservation of Accrued Benefit Under the Tax
Reform Act of 1986.
(a) This Section 14.10 shall apply to defined benefit plans
that were in existence on May 6, 1986, and that met the
applicable requirements of Section 415 of the Code as in effect
for all Limitation Years.
(b) If the Current Accrued Benefit of an individual who is a
Participant as of the first day of the Limitation Year beginning
on or after January 1, 1987, exceeds the benefit limitations
under Section 415(b) of the Code (as modified by changes made by
the Tax Reform Act of 1986) referred to above in Sections 14.4,
14.5 and 14.6, then, for purposes of Code Sections 415(b) and
(e), the defined benefit dollar limitation with respect to such
individual shall be equal to such Current Accrued Benefit.
ARTICLE 15
DISTRIBUTION REQUIREMENTS
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Section 15.1. General Rules.
(a) Except as otherwise provided in Article 5, regarding the
joint and survivor annuity requirements, the requirements of
this Article shall apply to any distribution of a Participant's
interest and will take precedence over any inconsistent
provisions of this Plan. Unless otherwise specified, the
provisions of this Article apply to calendar years beginning
after December 31, 1984.
(b) All distributions required under this Article shall be
determined and made in accordance with the Income Tax
Regulations under Section 401(a)(9) of the Code, including the
minimum distribution incidental benefit requirement of Section
1.401(a)(9)-2 of the Income Tax Regulations.
Section 15.2. Required Beginning Date. The entire interest of
a Participant must be distributed or begin to be distributed no
later than the Participant's required beginning date.
Section 15.3. Limits on Distribution Periods. As of the first
distribution calendar year, distributions, if not made in a
single-sum, may only be made over one of the following periods
(or a combination thereof):
(a) the life of the Participant,
(b) the life of the Participant and a designated Beneficiary,
(c) a period certain not extending beyond the life expectancy
of the Participant, or
(d) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a designated
Beneficiary.
Section 15.4. Determination of Amount to be Distributed Each Year.
(a) If the Participant's interest is to be paid in the form of
annuity distributions under the Plan, payments under the annuity
shall satisfy the following requirements:
(1) the annuity distributions must be paid in periodic
payments made at intervals not longer than one year;
(2) the distribution period must be over a life (or lives) or
over a period certain not longer than a life expectancy (or
joint life and last survivor expectancy) described in Section
401(a)(9)(A)(ii) or Section 401(a)(9)(B)(iii) of the Code,
whichever is applicable;
(3) the life expectancy (or joint life and last survivor
expectancy) for purposes of determining the period certain
shall be determined without recalculation of life expectancy;
(4) once payments have begun over a period certain, the period
certain may not be lengthened even if the period certain is
shorter than the maximum permitted;
(5) payments must either be nonincreasing or increase only as
follows:
(i) with any percentage increase in a specified and generally
recognized cost-of-living index;
(ii) to the extent of the reduction to the amount of the
Participant's payments to provide for a survivor benefit
upon death, but only if the Beneficiary whose life was
being used to determine the distribution period described
in Section 15.3 above dies and the payments continue
otherwise in accordance with that Section over the life
of the Participant;
(iii) to provide cash refunds of Employee contributions upon
the Participant's death; or
(iv) because of an increase in benefits under the Plan.
(6) If the annuity is a life annuity (or a life annuity with a
period certain not exceeding 20 years), the amount which must be
distributed on or before the Participant's required beginning
date (or, in the case of distributions after the death of the
Participant, the date distributions are required to begin
pursuant to Section 15.5 below) shall be the payment which is
required for one payment interval. The second payment need not
be made until the end of the next payment interval even if that
payment interval ends in the next calendar year. Payment
intervals are the periods for which payments are received, e.g.,
bimonthly, monthly, semi-annually, or annually.
If the annuity is a period certain annuity without a life
contingency (or is a life annuity with a period certain
exceeding 20 years) periodic payments for each distribution
calendar year shall be combined and treated as an annual amount.
The amount which must be distributed by the Participant's
required beginning date (or, in the case of distributions after
the death of the Participant, the date distributions are
required to begin pursuant to Section 15.4(a)(5) above) is the
annual amount for the first distribution calendar year. The
annual amount for other distribution calendar years, including
the annual amount for the calendar year in which the
Participant's required beginning date (or the date distributions
are required to begin pursuant to Section 15.5 below) occurs,
must be distributed on or before December 31 of the calendar
year for which the distribution is required.
(b) Annuities purchased after December 31, 1988, are subject to
the following additional conditions:
(1) Unless the Participant's Spouse is the designated
Beneficiary, if the Participant's interest is being distributed
in the form of a period certain annuity without a life
contingency, the period certain as of the beginning of the first
distribution calendar year may not exceed the applicable period
determined using the table set forth in Q and A A-5 of Section
1.401(a)(9)-2 of the Income Tax Regulations.
(2) If the Participant's interest is being distributed in the
form of a joint and survivor annuity for the joint lives of the
Participant and a nonspouse Beneficiary, annuity payments to be
made on or after the Participant's required beginning date to
the designated Beneficiary after the Participant's death must
not at any time exceed the applicable percentage of the annuity
payment for such period that would have been payable to the
Participant using the table set forth in Q and A A-6 of Section
1.401(a)(9)-2 of the Income Tax Regulations.
(c) Transitional rule. If payments under an annuity which
complies with Section (a) above begin prior to January 1, 1989,
the minimum distribution requirements in effect as of July 27,
1987, shall apply to distributions from this plan, regardless of
whether the annuity form of payment is irrevocable. This
transitional rule also applies to deferred annuity contracts
distributed to or owned by the Employee prior to January 1,
1989, unless additional contributions are made under the Plan by
the Employer with respect to such contract.
(d) If the form of distribution is an annuity made in
accordance with this Section 15.4, any additional benefits
accruing to the Participant after his or her required beginning
date shall be distributed as a separate and identifiable
component of the annuity beginning with the first payment
interval ending in the calendar year immediately following the
calendar year in which such amount accrues.
(e) Any part of the Participant's interest which is in the form
of an individual account shall be distributed in a manner
satisfying the requirements of Section 401(a)(9) of the Code and
the regulations thereunder.
Section 15.5. Death Distribution Provisions.
(a) Distribution beginning before death. If the Participant
dies after distribution of his or her interest has begun, the
remaining portion of such interest will continue to be
distributed at least as rapidly as under the method of
distribution being used prior to the Participant's death.
(b) Distribution beginning after death. If the Participant
dies before distribution of his or her interest begins,
distribution of the Participant's entire interest shall be
completed by December 31 of the calendar year containing the
fifth anniversary of the Participant's death except to the
extent that an election is made to receive distributions in
accordance with (1) or (2) below:
(1) if any portion of the Participant's interest is payable to
a designated Beneficiary, distributions may be made over the
life or over a period certain not greater than the life
expectancy of the designated Beneficiary commencing on or before
December 31 of the calendar year immediately following the
calendar year in which the Participant died;
(2) if the designated Beneficiary is the Participant's
surviving Spouse, the date distributions are required to begin
in accordance with (1) above shall not be earlier than the later
of (1) December 31 of the calendar year immediately following
the calendar year in which the Participant died and (2) December
31 of the calendar year in which the Participant would have
attained Age 70 1/2.
The Participant's designated Beneficiary must elect the
method of distribution no later than the earlier of (1) December
31 of the calendar year in which distributions would be required
to begin under this Section, or (2) December 31 of the calendar
year which contains the fifth anniversary of the date of death
of the Participant. If the Participant has no designated
Beneficiary, or if the designated Beneficiary does not elect a
method of distribution, distribution of the Participant's entire
interest must be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death.
(c) For purposes of Section 15.5(b) above, if the surviving
Spouse dies after the Participant, but before payments to such
Spouse begin, the provisions of Section 15.5(b), with the
exception of paragraph (2) therein, shall be applied as if the
surviving Spouse were the Participant.
(d) For purposes of this Section 15.5, any amount paid to a
child of the Participant will be treated as if it had been paid
to the surviving Spouse if the amount becomes payable to the
surviving Spouse when the child reaches the age of majority.
(e) For the purpose of this Section 15.5, distribution of a
Participant's interest is considered to begin on the
Participant's required beginning date (or, if Section 15.5(c)
above is applicable, the date distribution is required to begin
to the surviving Spouse pursuant to Section 15.5(b) above). If
distribution in the form of an annuity described in Section 15.4
above irrevocably commences to the Participant before the
required beginning date, the date distribution is considered to
begin is the date distribution actually commences.
Section 15.6. Definitions
(a) Applicable life expectancy. The life expectancy (or joint
and last survivor expectancy) calculated using the attained Age
of the Participant (or designated Beneficiary) as of the
Participant's (or designated Beneficiary's) birthday in the
applicable calendar year reduced by one for each calendar year
which has elapsed since the date life expectancy was first
calculated. If life expectancy is being recalculated, the
applicable life expectancy shall be the life expectancy as so
recalculated. The applicable calendar year shall be the first
distribution calendar year, and if life expectancy is being
recalculated such succeeding calendar year. If annuity payments
commence before the required beginning date, the applicable
calendar year is the year such payments commence. If
distribution is in the form of an immediate annuity purchased
after the Participant's death with the Participant's remaining
interest, the applicable calendar year is the year of purchase.
(b) Designated Beneficiary. The individual who is designated
as the Beneficiary under the plan in accordance with Section
401(a)(9) of the Code and the regulations thereunder.
(c) Distribution calendar year. A calendar year for which a
minimum distribution is required. For distributions beginning
before the Participant's death, the first distribution calendar
year is the calendar year immediately preceding the calendar
year which contains the Participant's required beginning date.
For distributions beginning after the Participant's death, the
first distribution calendar year is the calendar year in which
distributions are required to begin pursuant to Section 15.5
above.
(d) Life expectancy. Life expectancy and joint and last
survivor expectancy are computed by use of the expected return
multiples in Tables V and VI of Section 1.72-9 of the Income Tax
Regulations.
Unless otherwise elected by the Participant (or Spouse in the
case of distributions described in Section 15.5(b)(2) above) by
the time distributions are required to begin, life expectancies
shall be recalculated annually. Such election shall be
irrevocable as to the Participant (or Spouse) and shall apply to
all subsequent years. The life expectancy of a nonspouse
Beneficiary may not be recalculated.
(e) Required beginning date.
(1) General rule. The required beginning date of a Participant
is the first day of April of the calendar year following the
calendar year in which the Participant attains Age 70 1/2.
(2) Transitional rule. The required beginning date of a
Participant who attains Age 70 1/2 before January 1, 1988, shall
be determined in accordance with (A) or (B) below:
(A) Non-5-percent owners. The required beginning date of a
Participant who is not a "5-percent owner" (as defined in
(3) below) is the first day of April of the calendar year
following the calendar year in which the later of
retirement or attainment of Age 70 1/2 occurs.
(B) 5-percent owners. The required beginning date of a
Participant who is a 5-percent owner during any year
beginning after December 31, 1979, is the first day of
April following the later of:
(i) the calendar year in which the Participant attains Age
70 1/2, or
(ii) the earlier of the calendar year with or within which
ends the Plan Year in which the Participant becomes a
5-percent owner, or the calendar year in which the
Participant retires.
The required beginning date of a Participant who is not a
5-percent owner who attains Age 70 1/2 during 1988 and
who has not retired as of January 1, 1989, is April 1, 1990.
(3) 5-percent owner. A Participant is treated as a 5-percent
owner for purposes of this Section if such Participant is a
5-percent owner as defined in Section 416(i) of the Code
(determined in accordance with Section 416 but without
regard to whether the plan is top-heavy) at any time during
the plan year ending with or within the calendar year in which
such owner attains Age 66 1/2 or any subsequent Plan Year.
(4) Once distributions have begun to a 5-percent owner under
this Section, they must continue to be distributed, even if the
Participant ceases to be a 5-percent owner in a subsequent year.
(5) Plans maintained by governments and churches. In the case
of a governmental plan (as defined in Section 414(d) of the
Code) or plans maintained by a church (as defined in Sections
3121(w)(3)(A) or 3121(w)(3)(B) of the Code), the required
beginning date shall be the later of the date determined under
the preceding provisions of Section 15.6(e) or April 1 of the
calendar year following the calendar year in which the Employee
retires.
(f) Participant. Participant shall be as defined in Article 2
and shall for the purposes of this Article 15 also include the
term Inactive Participant, where appropriate.
Section 15.7. Transitional Rule.
(a) Notwithstanding the other requirements of this Article and
subject to the requirements of Article 5 regarding joint and
survivor annuity requirements, distribution on behalf of any
Employee, including a 5-percent owner, may be made in accordance
with all of the following requirements (regardless of when such
distribution commences):
(1) The distribution by the Trust is one which would not have
disqualified such Trust under Section 401(a)(9) of the Internal
Revenue Code as in effect prior to amendment by the Deficit
Reduction Act of 1984.
(2) The distribution is in accordance with a method of
distribution designated by the Employee whose interest in the
Trust is being distributed or, if the Employee is deceased, by a
Beneficiary of such Employee.
(3) Such designation was in writing, was signed by the
Employee or the Beneficiary, and was made before January 1, 1984.
(4) The Employee had accrued a benefit under the Plan as of
December 31, 1983.
(5) The method of distribution designated by the Employee or
the Beneficiary specifies the time at which distribution will
commence, the period over which distributions will be made, and
in the case of any distribution upon the Employee's death, the
Beneficiaries of the Employee listed in order of priority.
(b) A distribution upon death will not be covered by this
transitional rule unless the information in the designation
contains the required information described above with respect
to the distributions to be made upon the death of the Employee.
(c) For any distribution which commences before January 1,
1984, but continues after December 31, 1983, the Employee, or
the Beneficiary, to whom such distribution is being made, will
be presumed to have designated the method of distribution under
which the distribution is being made if the method of
distribution was specified in writing and the distribution
satisfies the requirements in subsections 15.7(a)(1) and (5).
(d) If a designation is revoked any subsequent distribution
must satisfy the requirements of Section 401(a)(9) of the Code
and the regulations thereunder. If a designation is revoked
subsequent to the date distributions are required to begin, the
Trust must distribute by the end of the calendar year following
the calendar year in which the revocation occurs the total
amount not yet distributed which would have been required to
have been distributed to satisfy Section 401(a)(9) of the Code
and the regulations thereunder, but for the Section 242(b)(2)
election. For calendar years beginning after December 31, 1988,
such distributions must meet the minimum distribution incidental
benefit requirements in Section 1.401(a)(9)-2 of the Income Tax
Regulations. Any changes in the designation will be considered
to be a revocation of the designation. However, the mere
substitution or addition of another Beneficiary (one not named
in the designation) under the designation will not be considered
to be a revocation of the designation, so long as such
substitution or addition does not alter the period over which
distributions are to be made under the designation, directly or
indirectly (for example, by altering the relevant measuring
life). In the case in which an amount is transferred or rolled
over from one plan to another plan, the rules in Q and A J-2 and
Q and A J-3 of Section 1.401(a)(9)-1 of the Income Tax
Regulations shall apply.
Section 15.8. Compliance with Section 401(a)(14) of the Code.
Benefits under this Plan must begin, unless the Participant
elects otherwise, no later than the 60th day after the close of
the Plan Year in which the latest of the following events occurs:
(1) the Participant attains Normal Retirement Age,
(2) the Participant terminates his Service with the Employer, or
(3) the tenth anniversary of the year in which the Participant
commences participation in the Plan.
ARTICLE 16
DIRECT ROLLOVER ELECTIONS
- -------------------------
Section 16.1. This Article applies to distributions made on or
after January 1, 1993. Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a distributee's
election under this Article, a distributee may elect, at the
time and in the manner prescribed by the Plan Administrator, to
have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the
distributee in a direct rollover.
Section 16.2. Definitions.
(a) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the
balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the joint
lives (or joint life expectancy) of the distributee and the
distributee's designated beneficiary, or for a specified period
of ten years or more; any distribution to the extent such
distribution is required under Section 401(a)(9) of the Code;
and the portion of any distribution that is not includable in
gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
(b) Eligible retirement plan: An eligible retirement plan is
an individual retirement account described in Section 408(a) of
the Code, an individual retirement annuity described in Section
408(b) of the Code, an annuity plan described in Section 403(a)
of the Code, or a qualified trust described in Section 401(a) of
the Code, that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement
plan is an individual retirement account or individual
retirement annuity.
(c) Distributee: A distributee includes an employee or former
employee. In addition, the employee's or former employee's
surviving spouse and the employee's or former employee's spouse
or former spouse who is the alternate payee under a qualified
domestic relations order, as defined in Section 414(p) of the
Code; are distributees with regard to the interest of the spouse
or former spouse.
(d) Direct rollover: A direct rollover is a payment by the
Plan to the eligible retirement plan specified by the
distributee.
Section 16.3. Additional Direct Rollover Rules. The following
additional rules apply to the Plan in addition to the model
language provided above.
(a) A distributee may elect a complete direct rollover with
respect to all of the distribution or a partial direct rollover
with respect to a portion of the distribution and the remainder
will be paid directly to the distributee. The amount of a
partial direct rollover must be at least $500.
(b) A distributee who is entitled to elect a direct rollover
with respect to any or any portion of a distribution but who
does not make any election shall be deemed to have rejected the
direct rollover option.
(c) A distribution of less than $200 that would otherwise be an
eligible rollover distribution shall not be an eligible rollover
distribution if it is reasonable to expect that all such
distributions to the distributee from the Plan during the same
calendar year will total $200 or less.
(d) This rules of this Article shall be administered in
compliance with regulations issued by the Internal Revenue
Service under Sections 401(a)(31), 402(c)402(f) and 3405(c) of
the Code, and such regulations are hereby specifically
incorporated by reference.
IN WITNESS WHEREOF, the Peoples Bancorp Inc. Retirement Plan
is, by the authority of the Board of Directors of the Employer,
executed on behalf of the Employer, the 26th day of December,
1995.
PEOPLES BANCORP, INC.
/s/ ROBERT E. EVANS
Robert E. Evans
Authorized Officer
ATTEST:
/s/ CHARLES R. HUNSAKER
Charles R. Hunsaker
General Counsel
EXHIBIT 10(g)
- -------------
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1995
STOCK OPTION AGREEMENT
1993 Peoples Bancorp Inc. Stock Option Plan
(Non-qualified Stock Options)
THIS AGREEMENT is made to be effective as of April 6, 1993, by
and between Peoples Bancorp Inc., a Delaware corporation (the
"COMPANY"), and __________________________ ("OPTIONEE").
WITNESSETH:
- -----------
WHEREAS, the Board of Directors of the COMPANY adopted the
Peoples Bancorp Inc. 1993 Stock Option Plan (the "PLAN") on
January 21, 1993; and
WHEREAS, the stockholders of the COMPANY, upon the
recommendation of the COMPANY's Board of Directors, approved the
PLAN at the Annual Meeting of Stockholders held on April 6,
1993; and
WHEREAS, pursuant to the provisions of the PLAN, directors of
the COMPANY who are not also employees of the COMPANY (the
"NON-EMPLOYEE DIRECTORS") are to be granted options to acquire
common shares (the "COMMON SHARES") of the COMPANY in accordance
with the provisions of the PLAN; and
WHEREAS, pursuant to the provisions of the PLAN, the OPTIONEE,
who is a NON-EMPLOYEE DIRECTOR is to be granted an option to
acquire ________________ COMMON SHARES of the COMPANY effective
on April 6, 1993, upon the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the premises, the parties
hereto make the following agreements, intending to be legally
bound thereby:
1) Grant of Option. The COMPANY hereby grants to the OPTIONEE
an option (the "OPTION") to purchase __________________________
COMMON SHARES of the COMPANY. The OPTION is not intended to
qualify as an incentive stock option under Section 422 of the
Internal Revenue Code of 1986, as amended (the "CODE").
2) Terms and Conditions of the OPTION.
(A) OPTION Price. The purchase price (the "OPTION PRICE") to
be paid by the OPTIONEE to the COMPANY upon the exercise of the
OPTION shall be $41.00 per share, subject to adjustment as
provided herein.
(B) Exercise of the OPTION. The OPTION may be exercised as follows:
(i) At any time on or after that date which is six months
after the date of this Agreement as to twenty percent (20%)
of the COMMON SHARES subject to the OPTION.
(ii) At any time on or after the first anniversary of the
date of this Agreement as to an additional twenty percent
(20%) of the COMMON SHARES subject to the OPTION;
(iii) At any time on or after the second anniversary of the
date of this Agreement as to an additional twenty percent
(20%) of the COMMON SHARES subject to the OPTION;
(iv) At any time on or after the third anniversary of the date
of this Agreement as to an additional twenty percent
(20%) of the COMMON SHARES subject to the OPTION; and
(v) At any time on or after the fourth anniversary of the date
of this Agreement as to the remaining twenty percent
(20%) of the COMMON SHARES subject to the OPTION.
Subject to the other provisions of this Agreement, if the
OPTION becomes exercisable as to certain COMMON SHARES, it shall
remain exercisable as to those COMMON SHARES until the date of
expiration of the OPTION term.
The grant of this OPTION shall not confer upon the OPTIONEE any
right to continue as a director of the COMPANY nor limit in any
way the right of the COMPANY or the stockholders of the COMPANY
to terminate his status as a director in accordance with law or
the COMPANY'S governing corporate documents.
(C) OPTION Term. The OPTION shall in no event be exercisable
after the expiration of ten (10) years from the date of this
Agreement.
(D) Method of Exercise. To the extent that it is exercisable,
the OPTION may be exercised by mailing or delivering to the
Stock Option Committee of the Board of Directors of the COMPANY
(the "COMMITTEE") a written notice of exercise, signed by the
OPTIONEE, or in the event of the death of the OPTIONEE, by such
other person as is entitled to exercise the OPTION. The notice
of exercise shall state the number of COMMON SHARES in respect
of which the OPTION is being exercised, and shall either be
accompanied by the payment of the full OPTION PRICE of such
COMMON SHARES, or shall fix a date (not more than 10 business
days from the date of the notice) for the payment of the full
OPTION PRICE of the COMMON SHARES being purchased. The OPTION
PRICE may be paid in cash, or by the transfer by the OPTIONEE to
the COMPANY of free and clear COMMON SHARES already owned by the
OPTIONEE having a Fair Market Value (as that term is defined in
the PLAN) on the exercise date equal to the OPTION PRICE, or by
a combination of cash and COMMON SHARES already owned by the
OPTIONEE equal in the aggregate to the OPTION PRICE for the
COMMON SHARES being purchased.
3) Adjustments and Changes in the COMMON SHARES subject to the
OPTION. In the event there is any change in the COMMON SHARES
resulting from stock splits, stock dividends, combinations or
exchanges of shares, or other similar capital adjustments, the
number of COMMON SHARES subject to the OPTION and the OPTION
PRICE of the optioned COMMON SHARES shall be appropriately
adjusted to reflect such change.
4) Non-Assignability of the OPTION. The OPTION shall not be
assignable or transferable except, in the event of the death of
the OPTIONEE, by the will of the OPTIONEE, or by the laws of
descent and distribution. The OPTION shall be exercisable,
during the OPTIONEE'S lifetime, only by the OPTIONEE.
5) Exercise After OPTIONEE Ceases to be a Director.
(A) Except as otherwise provided in this Section 5, the OPTION
(i) is exercisable only by the OPTIONEE, (ii) is exercisable
only while the OPTIONEE is a director of the COMPANY and then
only to the extent the OPTION has become exercisable by its
terms, and (iii) if not exercisable by its terms at the time the
OPTIONEE ceases to be a director of the COMPANY, shall
immediately expire on the date the OPTIONEE ceases to be a
director of the COMPANY.
(B) If any portion of the OPTION is exercisable by its terms
at the time the OPTIONEE ceases to be a director of the COMPANY
other than by reason of the death of the OPTIONEE, the portion
of the OPTION which is exercisable at the time the OPTIONEE
ceases to be a director must be exercised on or before the
earlier of the expiration of the OPTION term or three (3) months
following the date the OPTIONEE ceases to be a director.
(C) If the OPTIONEE ceases to be a director of the COMPANY by
reason of the death of the OPTIONEE, the portion of the OPTION
which is exercisable at the time of the OPTIONEE'S death must be
exercised by the representative or representatives of the
OPTIONEE'S estate, or the person or persons who acquired (by
bequest or inheritance) the rights to exercise the OPTION, on or
before the earlier of the expiration of the OPTION term or one
year following the date of death.
6) Restrictions on Exercise. Anything contained in this
Agreement or elsewhere to the contrary notwithstanding:
(A) The OPTION shall not be exercisable for the purchase of
any COMMON SHARES subject thereto except for:
(i) COMMON SHARES subject thereto which at the time of such
exercise and purchase are registered under the Securities
Act of 1933, as amended (the "ACT"); and
(ii) COMMON SHARES subject thereto which at the time of such
exercise and purchase are exempt or are the subject matter
of an exempt transaction or are registered by description,
by coordination or by qualification, or at such time are the
subject matter of a transaction which has been registered by
description, all in accordance with Chapter 1707 of the Ohio
Revised Code, as amended; and
(iii) COMMON SHARES subject thereto in respect of which the
laws of any state applicable to such exercise and
purchase have been satisfied.
(B) If any COMMON SHARES subject to the OPTION are sold or
issued upon the exercise thereof to a person who (at the time of
such exercise or thereafter) is an affiliate of the COMPANY for
purposes of Rule 144 promulgated under the ACT, or are sold and
issued in reliance upon exemptions under the securities laws of
any state, then upon such sale and issuance:
(i) Such COMMON SHARES shall not be transferable by the holder
thereof, and neither the COMPANY nor its transfer agent or
registrar, if any, shall be required to register or
otherwise to give effect to any transfer thereof and may
prevent any such transfer, unless the COMPANY shall have
received an opinion from its counsel to the effect that
any such transfer would not violate the ACT or the
applicable laws of any state; and
(ii) The COMPANY may cause each share certificate evidencing
such COMMON SHARES to bear a legend reflecting the applicable
restrictions on the transfer thereof.
(C) Any share certificate issued to evidence COMMON SHARES as
to which the OPTION has been exercised may bear such legends and
statements as the COMPANY shall deem advisable to insure
compliance with applicable federal and state laws and
regulations.
(D) Nothing contained in this Agreement or elsewhere shall be
construed to require the COMPANY to take any action whatsoever
to make the OPTION exercisable or to make transferable any
COMMON SHARES purchased and issued upon the exercise of the
OPTION.
7) Rights of the OPTIONEE as a Shareholder. The OPTIONEE shall
have no rights or privileges as a shareholder of the COMPANY
with respect to any COMMON SHARES of the COMPANY covered by the
OPTION until the date of issuance and delivery of a certificate
to the OPTIONEE evidencing such COMMON SHARES.
8) PLAN as Controlling. All terms and conditions of the PLAN
applicable to the OPTION which are not set forth in this
Agreement shall be deemed incorporated herein by reference. In
the event that any term or condition of this Agreement is
inconsistent with the terms and conditions of the PLAN, the PLAN
shall be deemed controlling.
9) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Ohio.
10) Rights and Remedies Cumulative. All rights and remedies of
the COMPANY and of the OPTIONEE enumerated in this Agreement
shall be cumulative and, except as expressly provided otherwise
in this Agreement, none shall exclude any other rights or
remedies allowed by law or in equity, and each of said rights or
remedies may be exercised and enforced concurrently.
11) Captions. The captions contained in this Agreement are
included only for convenience of reference and do not define,
limit, explain or modify this Agreement or its interpretation,
construction or meaning and are no way to be construed as a part
of this Agreement.
12) Notices and Payments. All payments required or permitted
to be made under the provisions of this Agreement, and all
notices and communications required or permitted to be given or
delivered under this Agreement to the COMPANY or to the
OPTIONEE, which notices or communications must be in writing,
shall be deemed to have been given if delivered by hand, or
mailed by first-class mail (postage prepaid), addressed as
follows:
(A) If to the COMPANY, to:
Peoples Bancorp Inc.
Attn: Stock Option Committee
138 Putnam Street
P. O. Box 738
Marietta, Ohio 45750
(B) If to the OPTIONEE, to the address of the OPTIONEE set
forth at the conclusion of this Agreement.
The COMPANY or the OPTIONEE may, by notice given to the other
in accordance with this Agreement, designate a different address
for making payments required or permitted to be made, and for
the giving of notices or other communications, to the party
designating such new address. Any payment, notice or other
communication required or permitted to be given in accordance
with this Agreement shall be deemed to have been given on the
date of the postmark stamped on the envelope by the U.S. Postal
Service, metered dates not being acceptable, when placed in the
U.S. Mail, addressed and mailed as provided in this Agreement.
13) Severability. If any provision of this Agreement, or the
application of any provision hereof to any person or any
circumstance shall be determined to be invalid or unenforceable,
then such determination shall not affect any other provision of
this Agreement or the application of said provision to any other
person or circumstance, all of which other provisions shall
remain in full force and effect, and it is the intention of each
party to this Agreement that if any provision of this Agreement
is susceptible of two or more constructions, one of which would
render the provision enforceable and the other or others of
which would render the provision unenforceable, then the
provision shall have the meaning which renders it enforceable.
14) Number and Gender. When used in this Agreement, the number
and gender of each pronoun shall be construed to be such number
and gender as the context, circumstances or its antecedent may
require.
15) Entire Agreement. This Agreement constitutes the entire
agreement between the COMPANY and the OPTIONEE in respect of the
subject matter of this Agreement, and this Agreement supersedes
all prior and contemporaneous agreements between the parties
hereto in connection with the subject matter of this Agreement.
No change, termination or attempted waiver of any of the
provisions of this Agreement shall be binding upon any party
hereto unless contained in a writing signed by the party to be
charged.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed to be effective as of the date first
written above.
COMPANY:
PEOPLES BANCORP INC.
a Delaware corporation
By: __________________________________
Its:___________________________________
OPTIONEE:
______________________________________
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Pursuant to Section 2.04(a) of the Agreement of Merger, dated
as of March 4, 1993, between Peoples Bancorp Inc., a Delaware
corporation ("Peoples Delaware"), and Peoples Bancorp Inc., an
Ohio corporation ("Peoples Ohio"), Peoples Ohio hereby
assumes all of the obligations of Peoples Delaware under the
foregoing Stock Option Agreement effective as of May 3, 1993,
the effective date of the merger of Peoples Delaware with and
into Peoples Ohio.
PEOPLES BANCORP INC.
an Ohio corporation
By: ________________________________________
Its:_________________________________________
EXHIBIT 10(h)
- -------------
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1995
STOCK OPTION AGREEMENT
1993 Peoples Bancorp Inc. Stock Option Plan
(Incentive Stock Options)
THIS AGREEMENT is made to be effective as of May 20, 1993, by
and between Peoples Bancorp Inc., an Ohio corporation (the
"COMPANY"), and _____________________ (the "OPTIONEE").
WITNESSETH:
- -----------
WHEREAS, the Board of Directors of Peoples Bancorp Inc., a
Delaware corporation ("PEOPLES DELAWARE"), adopted the Peoples
Bancorp Inc. 1993 Stock Option Plan (the "PLAN") on January 21,
1993; and
WHEREAS, the stockholders of PEOPLES DELAWARE, upon the
recommendation of the Board of Directors of PEOPLES DELAWARE,
approved the PLAN at the Annual Meeting of Stockholders of
PEOPLES DELAWARE held on April 6, 1993; and
WHEREAS, pursuant to Section 2.04(a) of the Agreement of
Merger, dated as of March 4, 1993, between PEOPLES DELAWARE and
the COMPANY, the COMPANY assumed the PLAN and all of the
obligations of PEOPLES DELAWARE thereunder effective as of May
3, 1993, the effective date of the merger of PEOPLES DELAWARE
with and into the COMPANY; and
WHEREAS, pursuant to the provisions of the PLAN, the Board of
Directors of the COMPANY has appointed a Stock Option Committee
(the "COMMITTEE") to administer the PLAN and the COMMITTEE has
determined that an option to acquire common shares, without par
value (the "COMMON SHARES"), of the COMPANY should be granted to
the OPTIONEE under the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the premises, the parties
hereto make the following agreements, intending to be legally
bound thereby:
1) Grant of Option. The COMPANY hereby grants to the OPTIONEE
an option (the "OPTION") to purchase ____________ (___) COMMON
SHARES of the COMPANY. The OPTION is intended to qualify as an
incentive stock option under Section 422 of the Internal Revenue
Code of 1986, as amended (the "CODE").
2) Terms and Conditions of the OPTION.
(A) OPTION Price. The purchase price (the "OPTION PRICE") to
be paid by the OPTIONEE to the COMPANY upon the exercise of the
OPTION shall be $35.00 per share (being 100% of the Fair Market
Value (as that term is defined in the PLAN) for the COMMON
SHARES of the COMPANY on the date of this Agreement), subject to
adjustment as provided herein.
(B) Exercise of the OPTION. The OPTION may be exercised at
any time on or after that date which is six months after the
date of this Agreement as to all (100%) of the COMMON SHARES
subject to the OPTION. Subject to the other provisions of this
Agreement, if the OPTION becomes exercisable as to certain
COMMON SHARES, it shall remain exercisable as to those COMMON
SHARES until the date of expiration of the OPTION term.
The grant of this OPTION shall not confer upon the OPTIONEE
any right to continue as an employee of the COMPANY or of any
subsidiary of the COMPANY nor limit in any way the right of the
COMPANY or of any such subsidiary to terminate the status of the
OPTIONEE as an employee in accordance with law or the COMPANY'S
or the subsidiary's, as appropriate, governing corporate
documents.
(C) OPTION Term. The OPTION shall in no event be exercisable
after the expiration of ten (10) years from the date of this
Agreement.
(D) Method of Exercise. To the extent that it is exercisable,
the OPTION may be exercised by mailing or delivering to the
COMMITTEE a written notice of exercise, signed by the OPTIONEE,
or in the event of the death of the OPTIONEE, by such other
person as is entitled to exercise the OPTION. The notice of
exercise shall state the number of COMMON SHARES in respect of
which the OPTION is being exercised, and shall either be
accompanied by the payment of the full OPTION PRICE of such
COMMON SHARES, or shall fix a date (not more than 10 business
days from the date of the notice) for the payment of the full
OPTION PRICE of the COMMON SHARES being purchased. The OPTION
PRICE may be paid in cash, or by the transfer by the OPTIONEE to
the COMPANY of free and clear COMMON SHARES already owned by the
OPTIONEE having a Fair Market Value (as that term is defined in
the PLAN) on the exercise date equal to the OPTION PRICE, or by
a combination of cash and COMMON SHARES already owned by the
OPTIONEE equal in the aggregate to the OPTION PRICE for the
COMMON SHARES being purchased.
3) Adjustments and Changes in the COMMON SHARES subject to the
OPTION. In the event there is any change in the COMMON SHARES
resulting from stock splits, stock dividends, combinations or
exchanges of shares, or other similar capital adjustments, the
number of COMMON SHARES subject to the OPTION and the OPTION
PRICE of the optioned COMMON SHARES shall be appropriately
adjusted to reflect such change.
4) Non-Assignability of the OPTION. The OPTION shall not be
assignable or transferable except, in the event of the death of
the OPTIONEE, by the will of the OPTIONEE, or by the laws of
descent and distribution. The OPTION shall be exercisable,
during the OPTIONEE'S lifetime, only by the OPTIONEE.
5) Exercise After OPTIONEE Ceases to be an Employee. If the
OPTIONEE'S employment with the COMPANY and its subsidiaries
terminates, the unexercisable portion of the OPTION shall
immediately terminate. The exercisable portion of the OPTION
shall also terminate effective immediately upon termination of
employment except in the following circumstances:
(A) If the termination was due to retirement under the
provisions of any retirement plan of the COMPANY or any
subsidiary of the COMPANY or was because of permanent
disability, the OPTION may be exercised on or before the earlier
of the expiration of the OPTION or three months following such
termination.
(B) If the termination was due to the death of the OPTIONEE
and the OPTIONEE was an employee of the COMPANY and/or any
subsidiary of the COMPANY at the time of the OPTIONEE'S death,
the OPTION may be exercised on or before the earlier of the
expiration of the OPTION or one year following the date of death.
6) Restrictions on Exercise. Anything contained in this
Agreement or elsewhere to the contrary notwithstanding:
(A) The OPTION shall not be exercisable for the purchase of
any COMMON SHARES subject thereto except for:
(i) COMMON SHARES subject thereto which at the time of such
exercise and purchase are registered under the
Securities Act of 1933, as amended (the "ACT"); and
(ii) COMMON SHARES subject thereto which at the time of such
exercise and purchase are exempt or are the subject
matter of an exempt transaction or are registered by
description, by coordination or by qualification, or
at such time are the subject matter of a transaction
which has been registered by description, all in
accordance with Chapter 1707 of the Ohio Revised Code,
as amended; and
(iii) COMMON SHARES subject thereto in respect of which the
laws of any state applicable to such exercise and
purchase have been satisfied.
(B) If any COMMON SHARES subject to the OPTION are sold or
issued upon the exercise thereof to a person who (at the time of
such exercise or thereafter) is an affiliate of the COMPANY for
purposes of Rule 144 promulgated under the ACT, or are sold and
issued in reliance upon exemptions under the securities laws of
any state, then upon such sale and issuance:
(i) Such COMMON SHARES shall not be transferable by the
holder thereof, and neither the COMPANY nor its
transfer agent or registrar, if any, shall be required
to register or otherwise to give effect to any transfer
thereof and may prevent any such transfer, unless the
COMPANY shall have received an opinion from its counsel
to the effect that any such transfer would not violate
the ACT or the applicable laws of any state; and
(ii) The COMPANY may cause each share certificate evidencing
such COMMON SHARES to bear a legend reflecting the
applicable restrictions on the transfer thereof.
(C) Any share certificate issued to evidence COMMON SHARES as
to which the OPTION has been exercised may bear such legends and
statements as the COMPANY shall deem advisable to insure
compliance with applicable federal and state laws and
regulations.
(D) Nothing contained in this Agreement or elsewhere shall be
construed to require the COMPANY to take any action whatsoever
to make the OPTION exercisable or to make transferable any
COMMON SHARES purchased and issued upon the exercise of the
OPTION.
7) Rights of the OPTIONEE as a Shareholder. The OPTIONEE shall
have no rights or privileges as a shareholder of the COMPANY
with respect to any COMMON SHARES of the COMPANY covered by the
OPTION until the date of issuance and delivery of a certificate
to the OPTIONEE evidencing such COMMON SHARES.
8) PLAN as Controlling. All terms and conditions of the PLAN
applicable to the OPTION which are not set forth in this
Agreement shall be deemed incorporated herein by reference. In
the event that any term or condition of this Agreement is
inconsistent with the terms and conditions of the PLAN, the PLAN
shall be deemed controlling.
9) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Ohio.
10) Rights and Remedies Cumulative. All rights and remedies of
the COMPANY and of the OPTIONEE enumerated in this Agreement
shall be cumulative and, except as expressly provided otherwise
in this Agreement, none shall exclude any other rights or
remedies allowed by law or in equity, and each of said rights or
remedies may be exercised and enforced concurrently.
11) Captions. The captions contained in this Agreement are
included only for convenience of reference and do not define,
limit, explain or modify this Agreement or its interpretation,
construction or meaning and are no way to be construed as a part
of this Agreement.
12) Notices and Payments. All payments required or permitted
to be made under the provisions of this Agreement, and all
notices and communications required or permitted to be given or
delivered under this Agreement to the COMPANY or to the
OPTIONEE, which notices or communications must be in writing,
shall be deemed to have been given if delivered by hand, or
mailed by first-class mail (postage prepaid), addressed as
follows:
(A) If to the COMPANY, to:
Peoples Bancorp Inc.
Attn: Stock Option Committee
138 Putnam Street
P. O. Box 738
Marietta, Ohio 45750-0738
(B) If to the OPTIONEE, to the address of the OPTIONEE set
forth at the conclusion of this Agreement.
The COMPANY or the OPTIONEE may, by notice given to the other
in accordance with this Agreement, designate a different address
for making payments required or permitted to be made, and for
the giving of notices or other communications, to the party
designating such new address. Any payment, notice or other
communication required or permitted to be given in accordance
with this Agreement shall be deemed to have been given on the
date of the postmark stamped on the envelope by the U.S. Postal
Service, metered dates not being acceptable, when placed in the
U.S. Mail, addressed and mailed as provided in this Agreement.
13) Severability. If any provision of this Agreement, or the
application of any provision hereof to any person or any
circumstance shall be determined to be invalid or unenforceable,
then such determination shall not affect any other provision of
this Agreement or the application of said provision to any other
person or circumstance, all of which other provisions shall
remain in full force and effect, and it is the intention of each
party to this Agreement that if any provision of this Agreement
is susceptible of two or more constructions, one of which would
render the provision enforceable and the other or others of
which would render the provision unenforceable, then the
provision shall have the meaning which renders it enforceable.
14) Number and Gender. When used in this Agreement, the number
and gender of each pronoun shall be construed to be such number
and gender as the context, circumstances or its antecedent may
require.
15) Entire Agreement. This Agreement constitutes the entire
agreement between the COMPANY and the OPTIONEE in respect of the
subject matter of this Agreement, and this Agreement supersedes
all prior and contemporaneous agreements between the parties
hereto in connection with the subject matter of this Agreement.
No change, termination or attempted waiver of any of the
provisions of this Agreement shall be binding upon any party
hereto unless contained in a writing signed by the party to be
charged.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed to be effective as of the date first
written above.
COMPANY
PEOPLES BANCORP INC.,
an Ohio corporation
By:________________________________
Its:_________________________________
OPTIONEE
___________________________________
___________________________________
Street Address
___________________________________
City, State and Zip Code
___________________________________
Social Security Number
EXHIBIT 10(j)
- -------------
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1995
STOCK OPTION AGREEMENT
1993 Peoples Bancorp Inc. Stock Option Plan
(Incentive Stock Options)
THIS AGREEMENT is made to be effective as of November 10,
1994, by and between Peoples Bancorp Inc., an Ohio corporation
(the "COMPANY"), and _______________ (the "OPTIONEE").
WITNESSETH:
- -----------
WHEREAS, the Board of Directors of Peoples Bancorp Inc., a
Delaware corporation ("PEOPLES DELAWARE"), adopted the Peoples
Bancorp Inc. 1993 Stock Option Plan (the "PLAN") on January 21,
1993; and
WHEREAS, the stockholders of PEOPLES DELAWARE, upon the
recommendation of the Board of Directors of PEOPLES DELAWARE,
approved the PLAN at the Annual Meeting of Stockholders of
PEOPLES DELAWARE held on April 6, 1993; and
WHEREAS, pursuant to Section 2.04(a) of the Agreement of
Merger, dated as of March 4, 1993, between PEOPLES DELAWARE and
the COMPANY, the COMPANY assumed the PLAN and all of the
obligations of PEOPLES DELAWARE thereunder effective as of May
3, 1993, the effective date of the merger of PEOPLES DELAWARE
with and into the COMPANY; and
WHEREAS, pursuant to the provisions of the PLAN, the Board of
Directors of the COMPANY has appointed a Stock Option Committee
(the "COMMITTEE") to administer the PLAN and the COMMITTEE has
determined that an option to acquire common shares, without par
value (the "COMMON SHARES"), of the COMPANY should be granted to
the OPTIONEE under the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the premises, the parties
hereto make the following agreements, intending to be legally
bound thereby:
1. Grant of OPTION. The COMPANY hereby grants to the OPTIONEE
an option (the "OPTION") to purchase ____________ (___) COMMON
SHARES of the COMPANY. The OPTION is intended to qualify as an
incentive stock option under Section 422 of the Internal Revenue
Code of 1986, as amended (the "CODE").
2. Terms and Conditions of the OPTION.
(A) OPTION PRICE. The purchase price (the "OPTION PRICE") to
be paid by the OPTIONEE to the COMPANY upon the exercise of the
OPTION shall be $23.375 per share (being 100% of the Fair Market
Value (as that term is defined in the PLAN) for the COMMON
SHARES of the COMPANY on the date of this Agreement), subject to
adjustment as provided herein.
(B) Exercise of the OPTION. The OPTION may not be exercised
until the OPTIONEE shall have completed twenty-four months of
continuous employment with the COMPANY and/or its subsidiaries
immediately following the date hereof. Thereafter, the OPTION
may be exercised as follows:
i) at any time after such twenty-four-month period, as to
twenty-five percent (25%) of the COMMON SHARES subject
to the OPTION;
ii) at any time after thirty-six months from the date of this
Agreement, as to an additional twenty-five percent
(25%) of the COMMON SHARES subject to the OPTION;
iii) at any time after forty-eight months from the date of
this Agreement, as to an additional twenty-five percent
(25%) of the COMMON SHARES subject to the OPTION; and
iv) at any time after sixty months from the date of this
Agreement, as to an additional twenty-five percent
(25%) of the COMMON SHARES subject to the OPTION.
Subject to the other provisions of this Agreement, if the
OPTION becomes exercisable as to certain COMMON SHARES, it shall
remain exercisable as to those COMMON SHARES until the date of
expiration of the OPTION term. The COMMITTEE may, but shall not
be required to (unless otherwise provided in this Agreement),
accelerate the schedule of the time or times when the OPTION may
be exercised.
The grant of this OPTION shall not confer upon the OPTIONEE
any right to continue as an employee of the COMPANY or of any
subsidiary of the COMPANY nor limit in any way the right of the
COMPANY or of any such subsidiary to terminate the status of the
OPTIONEE as an employee in accordance with law or the COMPANY's
or the subsidiary's, as appropriate, governing corporate
documents.
(C) OPTION Term. The OPTION shall in no event be exercisable
after the expiration of ten (10) years from the date of this
Agreement.
(D) Method of Exercise. To the extent that it is exercisable,
the OPTION may be exercised by mailing or delivering to the
COMMITTEE a written notice of exercise, signed by the OPTIONEE,
or in the event of the death of the OPTIONEE, by such other
person as is entitled to exercise the OPTION. The notice of
exercise shall state the number of COMMON SHARES in respect of
which the OPTION is being exercised, and shall either be
accompanied by the payment of the full OPTION PRICE of such
COMMON SHARES, or shall fix a date (not more than ten business
days from the date of the notice) for the payment of the full
OPTION PRICE of the COMMON SHARES being purchased. The OPTION
PRICE may be paid in cash, or by the transfer by the OPTIONEE to
the COMPANY of free and clear COMMON SHARES already owned by the
OPTIONEE having a Fair Market Value (as that term is defined in
the PLAN) on the exercise date equal to the OPTION PRICE, or by
a combination of cash and COMMON SHARES already owned by the
OPTIONEE equal in the aggregate to the OPTION PRICE for the
COMMON SHARES being purchased.
3. Adjustments and Changes in the COMMON SHARES subject to the
OPTION. In the event there is any change in the COMMON SHARES
resulting from stock splits, stock dividends, combinations or
exchanges of shares, or other similar capital adjustments, the
number of COMMON SHARES subject to the OPTION and the OPTION
PRICE of the optioned COMMON SHARES shall be appropriately
adjusted to reflect such change.
4. Acceleration of OPTIONS.
(A) In the event that the COMPANY shall enter into an
agreement to consolidate with, merge into, or transfer all or
substantially all of the COMPANY's assets to, another
corporation or corporations (each, an "ACCELERATION EVENT"),
then the OPTION shall become exercisable during the twenty (20)
days immediately prior to the scheduled consummation of the
ACCELERATION EVENT with respect to the full number of the COMMON
SHARES subject to the OPTION. Upon consummation of the
ACCELERATION EVENT, the OPTION, whether or not then fully
exercised, shall terminate and cease to be exercisable, unless
assumed by the successor corporation.
(B) The grant of the OPTION shall not affect in any way the
right of the COMPANY to consolidate with, merge into, or
transfer all or substantially all of its assets to, another
corporation or corporations.
5. Non-Assignability of the OPTION. The OPTION shall not be
assignable or transferable except, in the event of the death of
the OPTIONEE, by the will of the OPTIONEE, or by the laws of
descent and distribution. The OPTION shall be exercisable,
during the OPTIONEE's lifetime, only by the OPTIONEE.
6. Exercise After OPTIONEE Ceases to be an Employee.
(A) If the OPTIONEE's employment with the COMPANY and its
subsidiaries terminates for any reason other than the death,
retirement (as defined under the provisions of any retirement
plan of the COMPANY or any subsidiary of the COMPANY) or
permanent disability of the OPTIONEE, the portion of the OPTION
which has not yet become exercisable in accordance with Section
2(B), shall immediately terminate. If the OPTIONEE's employment
with the COMPANY and its subsidiaries terminates by reason of
the death, retirement or permanent disability of the OPTIONEE,
the OPTION shall become exercisable with respect to the full
number of COMMON SHARES subject to the OPTION.
(B) The exercisable portion of the OPTION shall also terminate
effective immediately upon termination of employment except in
the following circumstances:
i) If the termination was due to retirement under the
provisions of any retirement plan of the COMPANY or any
subsidiary of the COMPANY or was because of permanent
disability, the OPTION may be exercised on or before
the earlier of the expiration of the OPTION or three
months following such termination.
ii) If the termination was due to the death of the OPTIONEE
and the OPTIONEE was an employee of the COMPANY and/or any
subsidiary of the COMPANY at the time of the OPTIONEE's
death, the OPTION may be exercised on or before the
earlier of the expiration of the OPTION or one year
following the date of death.
7. Restrictions on Exercise. Anything contained in this
Agreement or elsewhere to the contrary notwithstanding:
(A) The OPTION shall not be exercisable for the purchase of
any COMMON SHARES subject thereto except for:
i) COMMON SHARES subject thereto which at the time of such
exercise and purchase are registered under the Securities
Act of 1933, as amended (the "ACT"); and
ii) COMMON SHARES subject thereto which at the time of such
exercise and purchase are exempt or are the subject
matter of an exempt transaction or are registered by
description, by coordination or by qualification, or
at such time are the subject matter of a transaction
which has been registered by description, all in
accordance with Chapter 1707 of the Ohio Revised Code,
as amended; and
iii) COMMON SHARES subject thereto in respect of which the
laws of any state applicable to such exercise and
purchase have been satisfied.
(B) If any COMMON SHARES subject to the OPTION are sold or
issued upon the exercise thereof to a person who (at the time of
such exercise or thereafter) is an affiliate of the COMPANY for
purposes of Rule 144 promulgated under the ACT, or are sold and
issued in reliance upon exemptions under the securities laws of
any state, then upon such sale and issuance:
i) Such COMMON SHARES shall not be transferable by the holder
thereof, and neither the COMPANY nor its transfer agent or
registrar, if any, shall be required to register or
otherwise to give effect to any transfer thereof and
may prevent any such transfer, unless the COMPANY shall
have received an opinion from its counsel to the effect
that any such transfer would not violate the ACT or the
applicable laws of any state; and
ii) The COMPANY may cause each share certificate evidencing
such COMMON SHARES to bear a legend reflecting the applicable
restrictions on the transfer thereof.
(C) Any share certificate issued to evidence COMMON SHARES as
to which the OPTION has been exercised may bear such legends and
statements as the COMPANY shall deem advisable to insure
compliance with applicable federal and state laws and
regulations.
(D) Nothing contained in this Agreement or elsewhere shall be
construed to require the COMPANY to take any action whatsoever
to make the OPTION exercisable or to make transferable any
COMMON SHARES purchased and issued upon the exercise of the
OPTION.
8. Rights of the OPTIONEE as a Shareholder. The OPTIONEE
shall have no rights or privileges as a shareholder of the
COMPANY with respect to any COMMON SHARES of the COMPANY covered
by the OPTION until the date of issuance and delivery of a
certificate to the OPTIONEE evidencing such COMMON SHARES.
9. PLAN as Controlling. All terms and conditions of the PLAN
applicable to the OPTION which are not set forth in this
Agreement shall be deemed incorporated herein by reference. In
the event that any term or condition of this Agreement is
inconsistent with the terms and conditions of the PLAN, the PLAN
shall be deemed controlling.
10. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Ohio.
11. Rights and Remedies Cumulative. All rights and remedies
of the COMPANY and of the OPTIONEE enumerated in this Agreement
shall be cumulative and, except as expressly provided otherwise
in this Agreement, none shall exclude any other rights or
remedies allowed by law or in equity, and each of said rights or
remedies may be exercised and enforced concurrently.
12. Captions. The captions contained in this Agreement are
included only for convenience of reference and do not define,
limit, explain or modify this Agreement or its interpretation,
construction or meaning and are no way to be construed as a part
of this Agreement.
13. Notices and Payments. All payments required or permitted
to be made under the provisions of this Agreement, and all
notices and communications required or permitted to be given or
delivered under this Agreement to the COMPANY or to the
OPTIONEE, which notices or communications must be in writing,
shall be deemed to have been given if delivered by hand, or
mailed by first-class mail (postage prepaid), addressed as
follows:
(A) If to the COMPANY, to:
Peoples Bancorp Inc.
Attn: Stock Option Committee
138 Putnam Street
P. O. Box 738
Marietta, Ohio 45750-0738
(B) If to the OPTIONEE, to the address of the OPTIONEE set
forth at the conclusion of this Agreement.
The COMPANY or the OPTIONEE may, by notice given to the other in
accordance with this Agreement, designate a different address
for making payments required or permitted to be made, and for
the giving of notices or other communications, to the party
designating such new address. Any payment, notice or other
communication required or permitted to be given in accordance
with this Agreement shall be deemed to have been given on the
date of the postmark stamped on the envelope by the U.S. Postal
Service, metered dates not being acceptable, when placed in the
U.S. Mail, addressed and mailed as provided in this Agreement.
14. Severability. If any provision of this Agreement, or the
application of any provision hereof to any person or any
circumstance shall be determined to be invalid or unenforceable,
then such determination shall not affect any other provision of
this Agreement or the application of said provision to any other
person or circumstance, all of which other provisions shall
remain in full force and effect, and it is the intention of each
party to this Agreement that if any provision of this Agreement
is susceptible of two or more constructions, one of which would
render the provision enforceable and the other or others of
which would render the provision unenforceable, then the
provision shall have the meaning which renders it enforceable.
15. Number and Gender. When used in this Agreement, the
number and gender of each pronoun shall be construed to be such
number and gender as the context, circumstances or its
antecedent may require.
16. Entire Agreement. This Agreement constitutes the entire
agreement between the COMPANY and the OPTIONEE in respect of the
subject matter of this Agreement, and this Agreement supersedes
all prior and contemporaneous agreements between the parties
hereto in connection with the subject matter of this Agreement.
No change, termination or attempted waiver of any of the
provisions of this Agreement shall be binding upon any party
hereto unless contained in a writing signed by the party to be
charged.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed to be effective as of the date first
written above.
COMPANY:
Peoples Bancorp Inc.,
an Ohio corporation
By: ___________________________________
Its: ___________________________________
OPTIONEE:
_______________________________________
Name
_______________________________________
Street Address
_______________________________________
City, State and Zip Code
_______________________________________
Social Security Number
EXHIBIT 10(k)
- -------------
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1995
STOCK OPTION AGREEMENT
PEOPLES BANCORP INC. NON-EMPLOYEE DIRECTOR
1995 Peoples Bancorp Inc. Stock Option Plan
(Non-Qualified Stock Options)
THIS AGREEMENT is made to be effective as of April 4, 1995, by
and between Peoples Bancorp Inc., an Ohio corporation (the
"COMPANY"), and ___________________________ (the "OPTIONEE").
WITNESSETH:
- -----------
WHEREAS, the Board of Directors of the COMPANY adopted the
Peoples Bancorp Inc. 1995 Stock Option Plan (the "PLAN") on
January 19, 1995; and
WHEREAS, the shareholders of the COMPANY, upon the
recommendation of the COMPANY's Board of Directors, approved the
PLAN at the Annual Meeting of Shareholders held on April 4,
1995; and
WHEREAS, pursuant to the provisions of the PLAN, directors of
the COMPANY who are not also employees of the COMPANY (the
"NON-EMPLOYEE DIRECTORS") are to be granted options to acquire
common shares (the "COMMON SHARES") of the COMPANY in accordance
with the provisions of the PLAN; and
WHEREAS, pursuant to the provisions of the PLAN, the OPTIONEE,
who is a NON-EMPLOYEE DIRECTOR, is to be granted an option to
acquire _______________ COMMON SHARES of the COMPANY, effective
on April 4, 1995, upon the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the premises, the parties
hereto make the following agreements, intending to be legally
bound thereby:
SECTION 1 Grant of Option.
The COMPANY hereby grants to the OPTIONEE an option (the
"OPTION") to purchase ____________________ COMMON SHARES of the
COMPANY. The OPTION is not intended to qualify as an incentive
stock option under Section 422 of the Internal Revenue Code of
1986, as amended (the "CODE").
SECTION 2 Terms and Conditions of the OPTION.
(A) OPTION Price. The purchase price (the "OPTION PRICE") to
be paid by the OPTIONEE to the COMPANY upon the exercise of the
OPTION shall be $22.50 per share subject to further adjustment
as provided herein.
(B) Exercise of the OPTION. The OPTION may be exercised no
earlier than six months from the date of this Agreement.
In the event the COMPANY shall consolidate with, merge into, or
transfer all or substantially all of its assets (an "ACQUISITION
TRANSACTION") to another corporation or corporations, then the
OPTION shall become exercisable in full, whether or not then
exercisable by its terms, immediately upon consummation of the
ACQUISITION TRANSACTION.
Subject to the other provisions of this Agreement, if the
OPTION becomes exercisable as to certain COMMON SHARES, it shall
remain exercisable as to those COMMON SHARES until the date of
expiration of the OPTION term.
The grant of this OPTION shall not confer upon the OPTIONEE any
right to continue as a director of any subsidiary of the COMPANY
nor limit in any way the right of the COMPANY or the
shareholders of the COMPANY to terminate his status as a
director in accordance with law or the COMPANY's governing
corporate documents.
(C) OPTION Term. The OPTION shall in no event be exercisable
after the expiration of ten (10) years from the date of this
Agreement.
(D) Method of Exercise. To the extent that it is exercisable,
the OPTION may be exercised by mailing or delivering to the
Stock Option Committee of the Board of Directors of the COMPANY
(the "COMMITTEE") a written notice of exercise, signed by the
OPTIONEE, or in the event of the death of the OPTIONEE, by such
other person as is entitled to exercise the OPTION. The notice
of exercise shall state the number of COMMON SHARES in respect
of which the OPTION is being exercised, and shall either be
accompanied by the payment of the full OPTION PRICE of such
COMMON SHARES, or shall fix a date (not more than 10 business
days from the date of the notice) for the payment of the full
OPTION PRICE of the COMMON SHARES being purchased. The OPTION
PRICE may be paid in cash, or by the transfer by the OPTIONEE to
the COMPANY of free and clear COMMON SHARES already owned by the
OPTIONEE having a Fair Market Value (as that term is defined in
the PLAN) on the exercise date equal to the OPTION PRICE, or by
a combination of cash and COMMON SHARES already owned by the
OPTIONEE equal in the aggregate to the OPTION PRICE for the
COMMON SHARES being purchased.
SECTION 3 Adjustments and Changes in the COMMON SHARES subject
to the OPTION.
In the event there is any change in the COMMON SHARES resulting
from stock splits, stock dividends, combinations or exchanges of
shares, or other similar capital adjustments, the number of
COMMON SHARES subject to the OPTION and the OPTION PRICE of the
optioned COMMON SHARES shall be appropriately adjusted to
reflect such change.
SECTION 4 Non-Assignability of the OPTION.
The OPTION shall not be assignable or transferable except, in
the event of the death of the OPTIONEE, by the will of the
OPTIONEE, or by the laws of descent and distribution. The
OPTION shall be exercisable, during the OPTIONEE's lifetime,
only by the OPTIONEE.
SECTION 5 Exercise After OPTIONEE Ceases to be a Director.
Except as otherwise provided in this Section 5, if the OPTIONEE
ceases to be a director of the COMPANY for any reason other than
the OPTIONEE's death or due to an act of (i) fraud or
intentional misrepresentation, or (ii) embezzlement,
misappropriation or conversion of assets or opportunities of the
COMPANY or any subsidiary ("Cause"), the OPTION granted to the
OPTIONEE under this Agreement may be exercised in full, whether
or not then exercisable by its terms, on or before the
expiration of the term of the OPTION; provided, however, that if
the OPTIONEE shall die prior to the expiration of the term of
the OPTION, the OPTION may only be exercised on or before the
earlier of the expiration of the OPTION term or two years
following the date of death. If the OPTIONEE ceases to be a
director of the COMPANY because of death, the OPTION may be
exercised in full, whether or not then exercisable by its terms,
by the representative or representatives of the OPTIONEE's
estate, or the person or persons who acquired (by bequest or
inheritance) the rights to exercise the OPTION, only on or
before the earlier of the expiration of the term of the OPTION
or two years following the date of death. If the OPTIONEE
ceases to be a director of the COMPANY and/or any subsidiary of
the COMPANY due to Cause, all of then unexercised OPTIONS shall
immediately terminate.
SECTION 6 Restrictions on Exercise.
Anything contained in this Agreement or elsewhere to the
contrary notwithstanding:
(A) The OPTION shall not be exercisable for the purchase of any
COMMON SHARES subject thereto except for:
(i) COMMON SHARES subject thereto which at the time of such
exercise and purchase are registered under the
Securities Act of 1933, as amended (the "ACT"); and
(ii) COMMON SHARES subject thereto which at the time of such
exercise and purchase are exempt or are the subject
matter of an exempt transaction or are registered by
description, by coordination or by qualification, or at
such time are the subject matter of a transaction which
has been registered by description, all in accordance
with Chapter 1707 of the Ohio Revised Code, as amended; and
(iii) COMMON SHARES subject thereto in respect of which the
laws of any state applicable to such exercise and purchase
have been satisfied.
(B) If any COMMON SHARES subject to the OPTION are sold or
issued upon the exercise thereof to a person who (at the time of
such exercise or thereafter) is an affiliate of the COMPANY for
purposes of Rule 144 promulgated under the ACT, or are sold and
issued in reliance upon exemptions under the securities laws of
any state, then upon such sale and issuance:
(i) Such COMMON SHARES shall not be transferable by the
holder thereof, and neither the COMPANY nor its transfer agent
or registrar, if any, shall be required to register or
otherwise to give effect to any transfer thereof and may
prevent any such transfer, unless the COMPANY shall have
received an opinion from its counsel to the effect that
any such transfer would not violate the ACT or the
applicable laws of any state; and
(ii) The COMPANY may cause each share certificate evidencing
such COMMON SHARES to bear a legend reflecting the applicable
restrictions on the transfer thereof.
(C) Any share certificate issued to evidence COMMON SHARES as
to which the OPTION has been exercised may bear such legends and
statements as the COMPANY shall deem advisable to insure
compliance with applicable federal and state laws and
regulations.
(D) Nothing contained in this Agreement or elsewhere shall be
construed to require the COMPANY to take any action whatsoever
to make the OPTION exercisable or to make transferable any
COMMON SHARES purchased and issued upon the exercise of the
OPTION.
SECTION 7 Rights of the OPTIONEE as a Shareholder.
The OPTIONEE shall have no rights or privileges as a
shareholder of the COMPANY with respect to any COMMON SHARES of
the COMPANY covered by the OPTION until the date of issuance and
delivery of a certificate to the OPTIONEE evidencing such COMMON
SHARES.
SECTION 8 PLAN as Controlling.
All terms and conditions of the PLAN applicable to the OPTION
which are not set forth in this Agreement shall be deemed
incorporated herein by reference. In the event that any term or
condition of this Agreement is inconsistent with the terms and
conditions of the PLAN, the PLAN shall be deemed controlling.
SECTION 9 Governing Law.
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Ohio.
SECTION 10 Rights and Remedies Cumulative.
All rights and remedies of the COMPANY and of the OPTIONEE
enumerated in this Agreement shall be cumulative and, except as
expressly provided otherwise in this Agreement, none shall
exclude any other rights or remedies allowed by law or in
equity, and each of said rights or remedies may be exercised and
enforced concurrently.
SECTION 11 Captions.
The captions contained in this Agreement are included only for
convenience of reference and do not define, limit, explain or
modify this Agreement or its interpretation, construction or
meaning and are no way to be construed as a part of this
Agreement.
SECTION 12 Notices and Payments.
All payments required or permitted to be made under the
provisions of this Agreement, and all notices and communications
required or permitted to be given or delivered under this
Agreement to the COMPANY or to the OPTIONEE, which notices or
communications must be in writing, shall be deemed to have been
given if delivered by hand, or mailed by first-class mail
(postage prepaid), addressed as follows:
(A) If to the COMPANY, to:
Peoples Bancorp Inc.
Attn.: Stock Option Committee
138 Putnam Street
P. O. Box 738
Marietta, Ohio 45750-0738
(B) If to the OPTIONEE, to the address of the OPTIONEE set
forth at the conclusion of this Agreement.
The COMPANY or the OPTIONEE may, by notice given to the other
in accordance with this Agreement, designate a different address
for making payments required or permitted to be made, and for
the giving of notices or other communications, to the party
designating such new address. Any payment, notice or other
communication required or permitted to be given in accordance
with this Agreement shall be deemed to have been given on the
date of the postmark stamped on the envelope by the U.S. Postal
Service, metered dates not being acceptable, when placed in the
U.S. Mail, addressed and mailed as provided in this Agreement.
SECTION 13 Severability.
If any provision of this Agreement, or the application of any
provision hereof to any person or any circumstance shall be
determined to be invalid or unenforceable, then such
determination shall not affect any other provision of this
Agreement or the application of said provision to any other
person or circumstance, all of which other provisions shall
remain in full force and effect, and it is the intention of each
party to this Agreement that if any provision of this Agreement
is susceptible of two or more constructions, one of which would
render the provision enforceable and the other or others of
which would render the provision unenforceable, then the
provision shall have the meaning which renders it enforceable.
SECTION 14 Number and Gender.
When used in this Agreement, the number and gender of each
pronoun shall be construed to be such number and gender as the
context, circumstances or its antecedent may require.
SECTION 15 Entire Agreement.
This Agreement constitutes the entire agreement between the
COMPANY and the OPTIONEE in respect of the subject matter of
this Agreement, and this Agreement supersedes all prior and
contemporaneous agreements between the parties hereto in
connection with the subject matter of this Agreement. No
change, termination or attempted waiver of any of the provisions
of this Agreement shall be binding upon any party hereto unless
contained in a writing signed by the party to be charged.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed to be effective as of the date first
written above.
COMPANY:
PEOPLES BANCORP INC.,
an Ohio corporation
By:__________________________________
Its:__________________________________
OPTIONEE:
_____________________________________
Mr. PBI Director
Address
City, State Zip Code
SSN: XXX-XX-XXXX
EXHIBIT 10(l)
- -------------
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1995
STOCK OPTION AGREEMENT
SUBSIDIARY DIRECTOR
1995 Peoples Bancorp Inc. Stock Option Plan
(Non-Qualified Stock Options)
THIS AGREEMENT is made to be effective as of April 4, 1995, by
and between Peoples Bancorp Inc., an Ohio corporation (the
"COMPANY"), and ___________________________ (the "OPTIONEE").
WITNESSETH:
- -----------
WHEREAS, the Board of Directors of the COMPANY adopted the
Peoples Bancorp Inc. 1995 Stock Option Plan (the "PLAN") on
January 19, 1995; and
WHEREAS, the shareholders of the COMPANY, upon the
recommendation of the COMPANY's Board of Directors, approved the
PLAN at the Annual Meeting of Shareholders held on April 4,
1995; and
WHEREAS, pursuant to the provisions of the PLAN, directors of
subsidiaries of the COMPANY nor employees of the COMPANY or any
of its subsidiaries ("SUBSIDIARY DIRECTORS") are to be granted
options to acquire common shares (the "COMMON SHARES") of the
COMPANY in accordance with the provision of the PLAN; and
WHEREAS, pursuant to the provisions of the PLAN, the OPTIONEE,
who is a SUBSIDIARY DIRECTOR, is to be granted an option to
acquire _______________________ COMMON SHARES of the COMPANY,
effective on April 4, 1995, upon the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the parties
hereto make the following agreements, intending to be legally
bound thereby:
SECTION 1 Grant of Option.
The COMPANY hereby grants to the OPTIONEE an option (the
"OPTION") to purchase __________________ COMMON SHARES of the
COMPANY. The OPTION is not intended to qualify as an incentive
stock option under Section 422 of the Internal Revenue Code of
1986, as amended (the "CODE").
SECTION 2 Terms and Conditions of the OPTION.
(A) OPTION Price. The purchase price (the "OPTION PRICE") to
be paid by the OPTIONEE to the COMPANY upon the exercise of the
OPTION shall be $22.50 per share subject to further adjustment
as provided herein.
(B) Exercise of the OPTION. The OPTION may be exercised no
earlier than six months from the date of this Agreement.
In the event the COMPANY shall consolidate with, merge into, or
transfer all or substantially all of its assets (an "ACQUISITION
TRANSACTION") to another corporation or corporations, then the
OPTION shall become exercisable in full, whether or not then
exercisable by its terms, immediately upon consummation of the
ACQUISITION TRANSACTION.
Subject to the other provisions of this Agreement, if the
OPTION becomes exercisable as to certain COMMON SHARES, it shall
remain exercisable as to those COMMON SHARES until the date of
expiration of the OPTION term.
The grant of this OPTION shall not confer upon the OPTIONEE any
right to continue as a director of any subsidiary of the COMPANY
nor limit in any way the right of any subsidiary of the COMPANY
or the COMPANY to terminate his status as a director of such
subsidiary in accordance with law or the subsidiary's governing
corporate documents.
(C) OPTION Term. The OPTION shall in no event be exercisable
after the expiration of ten (10) years from the date of this
Agreement.
(D) Method of Exercise. To the extent that it is exercisable,
the OPTION may be exercised by mailing or delivering to the
Stock Option Committee of the Board of Directors of the COMPANY
(the "COMMITTEE") a written notice of exercise, signed by the
OPTIONEE, or in the event of the death of the OPTIONEE, by such
other person as is entitled to exercise the OPTION. The notice
of exercise shall state the number of COMMON SHARES in respect
of which the OPTION is being exercised, and shall either be
accompanied by the payment of the full OPTION PRICE of such
COMMON SHARES, or shall fix a date (not more than 10 business
days from the date of the notice) for the payment of the full
OPTION PRICE of the COMMON SHARES being purchased. The OPTION
PRICE may be paid in cash, or by the transfer by the OPTIONEE to
the COMPANY of free and clear COMMON SHARES already owned by the
OPTIONEE having a Fair Market Value (as that term is defined in
the PLAN) on the exercise date equal to the OPTION PRICE, or by
a combination of cash and COMMON SHARES already owned by the
OPTIONEE equal in the aggregate to the OPTION PRICE for the
COMMON SHARES being purchased.
SECTION 3 Adjustments and Changes in the COMMON SHARES subject
to the OPTION.
In the event there is any change in the COMMON SHARES resulting
from stock splits, stock dividends, combinations or exchanges of
shares, or other similar capital adjustments, the number of
COMMON SHARES subject to the OPTION and the OPTION PRICE of the
optioned COMMON SHARES shall be appropriately adjusted to
reflect such change.
SECTION 4 Non-Assignability of the OPTION.
The OPTION shall not be assignable or transferable except, in
the event of the death of the OPTIONEE, by the will of the
OPTIONEE, or by the laws of descent and distribution. The
OPTION shall be exercisable, during the OPTIONEE's lifetime,
only by the OPTIONEE.
SECTION 5 Exercise After OPTIONEE Ceases to be a Director.
Except as otherwise provided in this Section 5, if the OPTIONEE
ceases to be a director of a subsidiary of the COMPANY and/or
the COMPANY for any reason other than the OPTIONEE's death or
due to an act of (i) fraud or intentional misrepresentation, or
(ii) embezzlement, misappropriation or conversion of assets or
opportunities of the COMPANY or any subsidiary ("Cause"), the
OPTION granted to the OPTIONEE under this Agreement may be
exercised in full, whether or not then exercisable by its terms,
on or before the expiration of the term of the OPTION; provided,
however, that if the OPTIONEE shall die prior to the expiration
of the term of the OPTION, the OPTION may only be exercised on
or before the earlier of the expiration of the OPTION term or
two years following the date of death. If the OPTIONEE ceases
to be a director of a subsidiary because of death, the OPTION
may be exercised in full, whether or not then exercisable by its
terms, by the representative or representatives of the
OPTIONEE's estate, or the person or persons who acquired (by
bequest or inheritance) the rights to exercise the OPTION, only
on or before the earlier of the expiration of the term of the
OPTION or two years following the date of death. If the
OPTIONEE ceases to be a director of a subsidiary of the COMPANY
and/or the COMPANY due to Cause, all of his then unexercised
OPTIONS shall immediately terminate.
SECTION 6 Restrictions on Exercise.
Anything contained in this Agreement or elsewhere to the
contrary notwithstanding:
(A) The OPTION shall not be exercisable for the purchase of any
COMMON SHARES subject thereto except for:
(i) COMMON SHARES subject thereto which at the time of such
exercise and purchase are registered under the
Securities Act of 1933, as amended (the "ACT"); and
(ii) COMMON SHARES subject thereto which at the time of such
exercise and purchase are exempt or are the subject
matter of an exempt transaction or are registered by
description, by coordination or by qualification, or at
such time are the subject matter of a transaction which
has been registered by description, all in accordance
with Chapter 1707 of the Ohio Revised Code, as amended; and
(iii) COMMON SHARES subject thereto in respect of which the
laws of any state applicable to such exercise and purchase
have been satisfied.
(B) If any COMMON SHARES subject to the OPTION are sold or
issued upon the exercise thereof to a person who (at the time of
such exercise or thereafter) is an affiliate of the COMPANY for
purposes of Rule 144 promulgated under the ACT, or are sold and
issued in reliance upon exemptions under the securities laws of
any state, then upon such sale and issuance:
(i) Such COMMON SHARES shall not be transferable by the
holder thereof, and neither the COMPANY nor its transfer agent
or registrar, if any, shall be required to register or otherwise
to give effect to any transfer thereof and may prevent any such
transfer, unless the COMPANY shall have received an opinion from
its counsel to the effect that any such transfer would not
violate the ACT or the applicable laws of any state; and
(ii) The COMPANY may cause each share certificate evidencing
such COMMON SHARES to bear a legend reflecting the applicable
restrictions on the transfer thereof.
(C) Any share certificate issued to evidence COMMON SHARES as
to which the OPTION has been exercised may bear such legends and
statements as the COMPANY shall deem advisable to insure
compliance with applicable federal and state laws and
regulations.
(D) Nothing contained in this Agreement or elsewhere shall be
construed to require the COMPANY to take any action whatsoever
to make the OPTION exercisable or to make transferable any
COMMON SHARES purchased and issued upon the exercise of the
OPTION.
SECTION 7 Rights of the OPTIONEE as a Shareholder.
The OPTIONEE shall have no rights or privileges as a
shareholder of the COMPANY with respect to any COMMON SHARES of
the COMPANY covered by the OPTION until the date of issuance and
delivery of a certificate to the OPTIONEE evidencing such COMMON
SHARES.
SECTION 8 PLAN as Controlling.
All terms and conditions of the PLAN applicable to the OPTION
which are not set forth in this Agreement shall be deemed
incorporated herein by reference. In the event that any term or
condition of this Agreement is inconsistent with the terms and
conditions of the PLAN, the PLAN shall be deemed controlling.
SECTION 9 Governing Law.
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Ohio.
SECTION 10 Rights and Remedies Cumulative.
All rights and remedies of the COMPANY and of the OPTIONEE
enumerated in this Agreement shall be cumulative and, except as
expressly provided otherwise in this Agreement, none shall
exclude any other rights or remedies allowed by law or in
equity, and each of said rights or remedies may be exercised and
enforced concurrently.
SECTION 11 Captions.
The captions contained in this Agreement are included only for
convenience of reference and do not define, limit, explain or
modify this Agreement or its interpretation, construction or
meaning and are no way to be construed as a part of this
Agreement.
SECTION 12 Notices and Payments.
All payments required or permitted to be made under the
provisions of this Agreement, and all notices and communications
required or permitted to be given or delivered under this
Agreement to the COMPANY or to the OPTIONEE, which notices or
communications must be in writing, shall be deemed to have been
given if delivered by hand, or mailed by first-class mail
(postage prepaid), addressed as follows:
(A) If to the COMPANY, to:
Peoples Bancorp Inc.
Attn.: Stock Option Committee
138 Putnam Street
P. O. Box 738
Marietta, Ohio 45750-0738
(B) If to the OPTIONEE, to the address of the OPTIONEE set
forth at the conclusion of this Agreement.
The COMPANY or the OPTIONEE may, by notice given to the other
in accordance with this Agreement, designate a different address
for making payments required or permitted to be made, and for
the giving of notices or other communications, to the party
designating such new address. Any payment, notice or other
communication required or permitted to be given in accordance
with this Agreement shall be deemed to have been given on the
date of the postmark stamped on the envelope by the U.S. Postal
Service, metered dates not being acceptable, when placed in the
U.S. Mail, addressed and mailed as provided in this Agreement.
SECTION 13 Severability.
If any provision of this Agreement, or the application of any
provision hereof to any person or any circumstance shall be
determined to be invalid or unenforceable, then such
determination shall not affect any other provision of this
Agreement or the application of said provision to any other
person or circumstance, all of which other provisions shall
remain in full force and effect, and it is the intention of each
party to this Agreement that if any provision of this Agreement
is susceptible of two or more constructions, one of which would
render the provision enforceable and the other or others of
which would render the provision unenforceable, then the
provision shall have the meaning which renders it enforceable.
SECTION 14 Number and Gender.
When used in this Agreement, the number and gender of each
pronoun shall be construed to be such number and gender as the
context, circumstances or its antecedent may require.
SECTION 15 Entire Agreement.
This Agreement constitutes the entire agreement between the
COMPANY and the OPTIONEE in respect of the subject matter of
this Agreement, and this Agreement supersedes all prior and
contemporaneous agreements between the parties hereto in
connection with the subject matter of this Agreement. No
change, termination or attempted waiver of any of the provisions
of this Agreement shall be binding upon any party hereto unless
contained in a writing signed by the party to be charged.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed to be effective as of the date first
written above.
COMPANY:
PEOPLES BANCORP INC.,
an Ohio corporation
By:__________________________________
Its:__________________________________
OPTIONEE:
_____________________________________
Mr. PBT Director
Address
City, State Zip Code
SSN: XXX-XX-XXXX
EXHIBIT 11
- ----------
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1995
COMPUTATION OF EARNINGS PER SHARE
- ---------------------------------
Year Ended December 31,
-----------------------------------------------
Before After
Cumulative Cumulative
Effect of Effect of
Accounting Accounting
Changes Changes
1995 1994 1993* 1993*
----------- ----------- ----------- -----------
PRIMARY EARNINGS PER SHARE
- --------------------------
EARNINGS:
Net income $6,050,000 $5,748,000 $5,385,000 $5,071,000
COMMON SHARES OUTSTANDING:
Weighted average Common
Shares outstanding 3,164,705 3,189,946 3,073,358 3,073,358
Net effect of the assumed
exercise of stock options
based on the treasury
stock method 16,163 10,360 3,729 3,729
Total weighted average
Common Shares outstanding 3,180,868 3,200,306 3,077,087 3,077,087
---------- --------- --------- ---------
PRIMARY EARNINGS PER SHARE $1.90 $1.80 $1.75 $1.65
========== ========= ========= =========
FULLY DILUTED EARNINGS PER SHARE
- --------------------------------
EARNINGS:
Net income $6,050,000 $5,748,000 $5,385,000 $5,071,000
Add: Effect of not having
Convertible Subordinated
Debenture outstanding net
of tax effect 21,000 21,000
---------- ---------- ---------- ----------
$6,050,000 $5,748,000 $5,406,000 $5,092,000
COMMON SHARES OUTSTANDING:
Weighted average Common
Shares outstanding 3,164,705 3,189,946 3,073,358 3,073,358
Add: Shares issued
assuming conversion of
Convertible Debentures
at beginning of period 49,102 49,102
Net effect of the assumed
exercise of stock options
based on the treasury
stock method 34,498 13,519 3,729 3,729
---------- ---------- ---------- ----------
Total weighted average
Common Shares outstanding 3,199,203 3,203,465 3,126,189 3,126,189
---------- ---------- ---------- ----------
FULLY DILUTED EARNINGS
PER SHARE $1.89 $1.79 $1.73 $1.63
========== ========== ========== ==========
* Prior years weighted average shares outstanding adjusted for
10% stock dividend issued October 25, 1995, a two-for-one stock
split issued April 29, 1994, and a 10% stock dividend issued
April 15, 1993.
EXHIBIT 12
- ----------
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1995
COMPUTATION OF RATIOS
- ---------------------
NET INCOME PER SHARE Net income/Weighted average
common shares outstanding
CASH DIVIDENDS PER SHARE Dividends paid/Weighted average
common shares outstanding
BOOK VALUE PER SHARE Total shareholders' equity/Weighted
average common shares outstanding
RETURN ON AVERAGE ASSETS Net income/Average assets
RETURN ON AVERAGE
SHAREHOLDERS' EQUITY Net income/Average shareholders' equity
NET INTEREST MARGIN Fully-tax equivalent net interest
income/Average earning assets
NON-INTEREST EXPENSE TO
AVERAGE ASSETS Non-interest expense/Average assets
EFFICIENCY RATIO Total expenses/(Net interest income plus
non-interest income)
AVERAGE LOANS TO AVERAGE DEPOSITS Average gross loans/Average deposits
outstanding
DIVIDEND PAYOUT RATIO Dividends declared/Net income
AVERAGE STOCKHOLDERS' EQUITY TO
AVERAGE ASSETS Average stockholders' equity/
Average assets
PRIMARY CAPITAL TO PERIOD END
TOTAL ASSETS (Stockholders' equity plus allowance
for loan losses less intangible
assets)/(Period end total assets plus
allowance for loan losses less
intangible assets)
TIER 1 CAPITAL RATIO Shareholders' equity less intangible
assets less securities mark-to-market
capital reserve ("Tier 1 Capital")/
Risk adjusted assets
TOTAL CAPITAL RATIO Tier 1 Capital plus allowance for loan
blosses/Risk adjusted assets
TIER 1 LEVERAGE RATIO Tier 1 Capital/Total assets
NET CHARGE-OFFS TO AVERAGE LOANS (Gross chargeoffs less recoveries)/
Average net loans
NONPERFORMING LOANS AS A
PERCENTAGE OF PERIOD END LOANS (Nonaccrual loans plus loans past
due 90 days or greater plus other
real estate owned)/(Gross loans
net of unearned interest)
ALLOWANCE FOR LOAN LOSSES TO
PERIOD END TOTAL LOANS Loan loss reserve/(Gross loans
net of unearned interest)
SELECTED FINANCIAL DATA
The information below under the captions "Operating Data",
"Balance Sheet Data" and "Per Share Data" for each of the five
years in the period ended December 31, 1995 has been derived
from the Consolidated Financial Statements of the Company.
(Dollars in thousands, except ratios and per share data)
1995 1994 1993 1992 1991
OPERATING DATA <1>
FOR THE YEAR ENDED:
Total interest income $ 43,392 $ 36,104 $ 35,311 $ 37,707 $ 39,151
Total interest expense 20,777 15,424 15,263 17,887 22,172
Net interest income 22,615 20,680 20,048 19,820 16,979
Provision for loan losses 1,315 765 1,592 2,387 1,748
Other income 4,157 3,838 3,952 3,514 2,924
Other expenses 16,818 15,672 15,124 14,945 13,547
Net income 6,050 5,748 5,071 4,550 3,615
- --------------------------------------------------------------------------
BALANCE SHEET DATA
AT YEAR END:
Total assets $543,430 $498,006 $465,373 $468,562 $424,449
Investment securities 131,762 99,419 103,349 112,556 99,963
Net loans 372,800 354,570 315,305 285,448 273,980
Total deposits 429,077 403,819 385,639 401,623 375,027
Long-term borrowings 23,142 23,787 20,331 15,506 6,836
Stockholders' equity 51,474 45,635 42,778 38,497 32,414
- --------------------------------------------------------------------------
SIGNIFICANT RATIOS <1>,<2>
Net income to:
Average total assets 1.15% 1.20% 1.09% 1.01% 0.85%
Average stockholders'
equity 12.3 12.9 11.9 11.8 11.7
Average stockholders'
equity to average
total assets 9.3 9.3 8.8 7.5 7.3
Average loans to
average deposits 85.2 85.5 78.4 70.2 71.4
Primary capital to period
end total assets 10.4 10.1 10.1 8.9 8.6
Dividend payout ratio 32.2 29.3 29.8 28.0 29.2
- -------------------------------------------------------------------------
PER SHARE DATA <1>,<2>,<3>
Net income:
Primary $ 1.90 $ 1.80 $ 1.65 $ 1.55 $ 1.36
Fully diluted 4 1.89 1.79 1.63 1.45 1.18
Cash dividends paid 0.62 0.53 0.47 0.44 0.40
Book value at end
of period 16.54 14.31 13.37 12.56 12.08
- -------------------------------------------------------------------------
Notes:
- ------
<1> 1993 net income and per share information based upon net
income after adjustment for cumulative effect of accounting
changes of $314,000 or $0.10 per share.
<2> Adjusted to reflect a 10% stock dividend issued October 25,
1995, a two-for-one stock split issued April 29, 1994, and a 10%
stock dividend issued April 15, 1993.
1995 1994 1993 1992 1991
<3> Primary shares
outstanding 3,180,868 3,200,306 3,077,087 2,930,072 2,659,041
Fully diluted shares
outstanding 3,199,203 3,203,465 3,126,189 3,233,804 3,250,674
<4> Fully diluted net income per share for 1993, 1992 and 1991 is
calculated as if the Subordinated Convertible Debenture were
converted as of the issue date, with a corresponding increase
from the after-tax reduction in interest expense.
COMMON STOCK
Return to Investors
- -------------------
Management has a vision for Peoples Bancorp. Our goal is to
become the financial services leader in all the communities we
serve. Achieving this objective will lead to increases in
shareholder value. Shareholder return continues to be the most
important measure of our financial success. Peoples Bancorp's
strong capital base ensures the Company's safety and allows
opportunity for growth and expansion. Shareholder return on
this investment continues to be a top priority, through both
dividends and growth in the market value of the Company's stock.
As a result, the Company continues to focus attention on
enhancement of net income and earnings per share. Under normal
circumstances, as earnings per share increase, the dividends
paid per share should follow with a similar increase and have a
positive effect on the market value of the Company's common
stock. The following graph presents the last six year's annual
performance for both earnings per share and dividends per share
(data has been restated for stock splits and stock dividends):
Dividends per share Earnings per share
1990 $0.37 $1.12
1991 0.40 1.18
1992 0.44 1.45
1993 0.47 1.63
1994 0.53 1.79
1995 0.62 1.89
The Company and its predecessor have paid cash dividends on
their Common Stock for over 39 consecutive years and have
increased the annual dividend in each of the last 30 years. The
Company plans to continue to pay quarterly cash dividends,
subject to certain restrictions as described in Note 10 to the
audited financial statements.
Prior to 1993, the Company's Common Stock was traded on a
limited basis in the over-the-counter market. On February 9,
1993, the Company began trading on the Nasdaq National Stock
Market (National Association of Securities Dealers Automated
Quotation). Nasdaq provides brokers and others with immediate
access to the best stock price for the Company and thousands of
other companies across the world. The Company can be found
under the symbol PEBO.
In 1995, there were 567,128 shares traded through the Nasdaq
system, an average daily volume of 2,251 shares. The table
below sets forth the high and low bid quotations for the
indicated periods, and the cash dividends declared, with respect
to the Company's Common Stock.
Currently eight companies serve as market makers on the Nasdaq
National Stock Market on behalf of the Company. Market prices
since February 9, 1993, have been obtained directly from the
Nasdaq quotation system. The bid quotations and per share
dividends have been retroactively adjusted for a 10% stock
dividend issued on October 25, 1995, a two-for-one stock split
issued on April 29, 1994, and a 10% stock dividend issued April
15, 1993. Peoples Bancorp had 1,024 stockholders of record on
December 31, 1995.
COMMON STOCK
Quarterly Market and Dividend Information
- -----------------------------------------
PER SHARE
High Bid Low Bid Dividend
1995
Fourth Quarter $ 23.63 $ 22.25 $ 0.17
Third Quarter 22.73 20.00 0.15
Second Quarter 22.05 20.00 0.15
First Quarter 22.73 20.45 0.15
- -----------------------------------------------------------
1994
Fourth Quarter $ 23.18 $ 21.14 $ 0.14
Third Quarter 22.27 20.00 0.14
Second Quarter 21.82 18.18 0.13
First Quarter 20.45 17.27 0.13
- -----------------------------------------------------------
1993
Fourth Quarter $ 20.00 $ 17.73 $ 0.13
Third Quarter 21.14 17.27 0.12
Second Quarter 21.36 15.91 0.12
First Quarter 22.32 15.71 0.11
- -----------------------------------------------------------
The following graph represents the closing stock price of the
Company's common stock for each of the last six years (adjusted
for stock splits and stock dividends):
Closing Stock Price
------------------------------
1990 $ 9.61
1991 11.16
1992 16.12
1993 18.98
1994 21.82
1995 23.625
Stockholders are cordially invited to attend the Annual Meeting
of Stockholders of Peoples Bancorp Inc. to be held Tuesday,
April 9, 1996 at 10:00 A.M. in the Peoples Bank Conference Room,
138 Putnam Street, Marietta, Ohio.
On written request, a copy of our Annual Report to the
Securities and Exchange Commission on Form 10-K is available to
interested Stockholders. Requests should be addressed to Ruth
Otto, Corporate Secretary, Peoples Bancorp Inc., P.O. Box 738,
Marietta, Ohio 45750.
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
1995 1994
ASSETS
- ------
Cash and cash equivalents:
Cash and due from banks $ 17,251,000 $ 19,551,000
Interest-bearing deposits in other banks 243,000 650,000
Federal funds sold 3,500,000 4,500,000
------------ ------------
Total cash and cash equivalents 20,994,000 24,701,000
------------ ------------
Investment securities:
Available-for-sale, at estimated fair
value (amortized cost of $128,021,000
in 1995 and $91,783,000 in 1994) 131,762,000 90,172,000
Held-to-maturity, at amortized cost
(fair value of $9,089,000 in 1994) 9,247,000
------------ ------------
Total securities 131,762,000 99,419,000
------------ ------------
Loans, net of unearned interest 379,526,000 361,353,000
Allowance for loan losses (6,726,000) (6,783,000)
------------ ------------
Net loans 372,800,000 354,570,000
------------ ------------
Bank premises and equipment, net 10,575,000 10,807,000
Other assets 7,299,000 8,509,000
------------ ------------
Total assets $543,430,000 $498,006,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Deposits:
Non-interest bearing $ 50,067,000 $ 48,121,000
Interest bearing 379,010,000 355,698,000
------------ ------------
Total deposits 429,077,000 403,819,000
------------ ------------
Short-term borrowings:
Federal funds purchased and securities
sold under repurchase agreements 12,060,000 9,267,000
Federal Home Loan Bank advances 21,216,000 10,500,000
------------ ------------
Total short-term borrowings 33,276,000 19,767,000
------------ ------------
Long-term borrowings 23,142,000 23,787,000
Accrued expenses and other liabilities 6,461,000 4,998,000
------------ ------------
Total liabilities 491,956,000 452,371,000
------------ ------------
STOCKHOLDERS' EQUITY
- --------------------
Common stock, no par value, 6,000,000
shares authorized - 3,332,598 shares
issued in 1995 and 3,020,908 issued in
1994, including shares in treasury 30,898,000 24,326,000
Net unrealized holding gain (loss) on
available-for-sale securities, net of
deferred taxes 2,469,000 (1,030,000)
Retained earnings 21,786,000 24,078,000
------------ ------------
55,153,000 47,374,000
Treasury stock, at cost, 220,406 shares
in 1995 and 120,970 shares in 1994 (3,679,000) (1,739,000)
------------ ------------
Total stockholders' equity 51,474,000 45,635,000
------------ ------------
Total liabilities and
stockholders' equity $543,430,000 $498,006,000
============ ============
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME
Year ended December 31,
1995 1994 1993
INTEREST INCOME:
- ----------------
Interest and fees on loans $34,501,000 $28,848,000 $26,645,000
Interest and dividends on:
Obligations of U.S.
Government and its agencies 5,338,000 4,266,000 5,050,000
Obligations of states and
political subdivisions 1,543,000 1,613,000 2,022,000
Other interest income 2,010,000 1,377,000 1,594,000
----------- ----------- -----------
Total interest income 43,392,000 36,104,000 35,311,000
----------- ----------- -----------
INTEREST EXPENSE:
- -----------------
Interest on deposits 18,384,000 13,616,000 13,855,000
Interest on short-term
borrowings 1,010,000 337,000 203,000
Interest on long-term
borrowings 1,383,000 1,471,000 1,205,000
----------- ----------- -----------
Total interest expense 20,777,000 15,424,000 15,263,000
----------- ----------- -----------
Net interest income 22,615,000 20,680,000 20,048,000
Provision for loan losses 1,315,000 765,000 1,592,000
----------- ----------- -----------
Net interest income after
provision for loan losses 21,300,000 19,915,000 18,456,000
----------- ----------- -----------
OTHER INCOME:
- -------------
Income from fiduciary activities 1,751,000 1,607,000 1,475,000
Service charges on deposit
accounts 1,565,000 1,456,000 1,295,000
Gain (loss) on sales of
securities 24,000 (237,000) 45,000
Other 817,000 1,012,000 1,137,000
----------- ----------- -----------
Total other income 4,157,000 3,838,000 3,952,000
----------- ----------- -----------
OTHER EXPENSES:
- ---------------
Salaries and employee benefits 7,836,000 6,779,000 6,840,000
Net occupancy 1,126,000 1,040,000 924,000
Equipment 1,241,000 1,205,000 1,091,000
Insurance 656,000 1,038,000 1,057,000
Stationery and other supplies 572,000 619,000 543,000
Taxes other than income taxes 588,000 575,000 565,000
Amortization of excess cost
over net assets acquired 159,000 159,000 159,000
Other 4,640,000 4,257,000 3,945,000
----------- ----------- -----------
Total other expenses 16,818,000 15,672,000 15,124,000
----------- ----------- -----------
Income before federal income
taxes and cumulative effect of
accounting changes 8,639,000 8,081,000 7,284,000
----------- ----------- -----------
FEDERAL INCOME TAXES:
- ---------------------
Current 2,792,000 2,330,000 2,168,000
Deferred (203,000) 3,000 (269,000)
----------- ----------- -----------
Total federal income taxes 2,589,000 2,333,000 1,899,000
----------- ----------- -----------
Income before cumulative effect
of accounting changes 6,050,000 5,748,000 5,385,000
Cumulative effect of accounting
changes, net of applicable taxes (314,000)
----------- ----------- -----------
NET INCOME $ 6,050,000 $ 5,748,000 $ 5,071,000
=========== =========== ===========
EARNINGS PER SHARE:
- -------------------
Income before cumulative effect of accounting changes:
Primary $1.90 $1.80 $1.75
Assuming full dilution $1.89 $1.79 $1.73
Cumulative effect of accounting changes:
Primary $0.10
Assuming full dilution $0.10
Net income per share:
Primary $1.90 $1.80 $1.65
Assuming full dilution $1.89 $1.79 $1.63
Weighted average number of shares outstanding:
Primary 3,180,868 3,200,306 3,077,087
Assuming full dilution 3,199,203 3,203,465 3,126,189
See notes to consolidated financial statements.
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
Net
Unrealized
Holding
Gain (Loss)
on
Capital Available-
Common Stock in Excess Retained for-Sale Treasury
Shares Amount of Par Earnings Securities Stock Total
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
Balance, January 1, 1993 1,309,491 $ 1,309,000 $16,575,000 $21,639,000 $(1,026,000) $38,497,000
- -----------------------------------------------------------------------------------------------------------------------------
Net income 5,071,000 5,071,000
Purchase of treasury stock,
12,316 shares (498,000) (498,000)
Conversion of subordinated
debentures to common stock 73,532 74,000 1,144,000 1,218,000
10% stock dividend 126,517 126,000 5,062,000 (5,188,000)
Conversion from $1.00 par
value to no par value 22,781,000 (22,781,000)
Cash dividends declared
of $0.47 per share (1,510,000) (1,510,000)
- -----------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1993 1,509,540 24,290,000 0 20,012,000 (1,524,000) 42,778,000
- -----------------------------------------------------------------------------------------------------------------------------
Adjustment for change in
method of accounting, net
of taxes $ 3,048,000 3,048,000
Net income 5,748,000 5,748,000
Purchase of treasury stock,
10,488 shares (215,000) (215,000)
Two-for-one stock split 1,509,540
Exercise of common
stock options 520 5,000 5,000
Issuance of common stock
under dividend
reinvestment plan 1,308 31,000 31,000
Net change in unrealized gain
(loss) on available-for-sale
securities (4,078,000) (4,078,000)
Cash dividends declared
of $0.53 per share (1,682,000) (1,682,000)
- -----------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 3,020,908 24,326,000 0 24,078,000 (1,030,000) (1,739,000) 45,635,000
- -----------------------------------------------------------------------------------------------------------------------------
Net income 6,050,000 6,050,000
Purchase of treasury stock,
87,340 shares (1,940,000) (1,940,000)
10% stock dividend 302,470 6,394,000 (6,394,000)
Exercise of common stock
options 2,722 26,000 26,000
Issuance of common stock
under dividend
reinvestment plan 6,498 152,000 152,000
Net change in unrealized gain
(loss) on available-for-sale
securities 3,499,000 3,499,000
Cash dividends declared
of $0.62 per share (1,948,000) (1,948,000)
- -----------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 3,332,598 $30,898,000 $ 0 $21,786,000 $ 2,469,000 $(3,679,000) $51,474,000
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31,
1995 1994 1993
Cash flows from operating activities:
- -------------------------------------
Net income $ 6,050,000 $ 5,748,000 $ 5,071,000
Adjustments to reconcile net
income to net cash provided
by operating activities:
Provision for loan losses 1,315,000 765,000 1,592,000
(Gain) loss on sale of
investment securities (24,000) 237,000 (45,000)
Depreciation, amortization,
and accretion 1,564,000 1,884,000 1,584,000
(Increase) decrease in
interest receivable (480,000) 466,000
Increase (decrease) in
interest payable 238,000 185,000 (275,000)
Deferred income tax
(benefit) expense (203,000) 3,000 (565,000)
Deferral of loan origination
fees and costs 17,000 410,000 (221,000)
Accrual for postretirement
benefits 867,000
Other, net 896,000 (91,000) (698,000)
- --------------------------------------------------------------------------
Net cash provided by
operating activities 9,373,000 9,141,000 7,776,000
- --------------------------------------------------------------------------
Cash flows from investing activities:
- -------------------------------------
Net decrease in term interest
bearing deposits with banks
and federal funds sold 7,468,000
Purchases of available-for-sale
securities (52,955,000) (35,659,000)
Purchases of held-to-maturity
securities (1,230,000) (4,409,000) (29,260,000)
Proceeds from sales of
available-for-sale securities 1,066,000 23,072,000
Proceeds from maturities of
available-for-sale securities 25,337,000 16,479,000
Proceeds from maturities of
held-to-maturity securities 803,000 2,025,000
Proceeds from sales of
securities held for investment 4,558,000
Proceeds from maturities of
securities held for investment 33,402,000
Net increase in loans (19,562,000) (40,576,000) (31,166,000)
Expenditures for premises
and equipment (1,122,000) (1,142,000) (3,566,000)
Proceeds from sales of other
real estate owned 77,000 137,000 56,000
- --------------------------------------------------------------------------
Net cash used in
investing activities (47,586,000) (40,073,000) (18,508,000)
- --------------------------------------------------------------------------
Cash flows from financing activities:
- -------------------------------------
Net increase (decrease) in
non-interest bearing deposits 1,946,000 3,016,000 (608,000)
Net increase (decrease) in
interest bearing deposits 23,312,000 15,164,000 (15,376,000)
Net increase in short-term
borrowings 13,509,000 7,507,000 2,559,000
Proceeds from long-term
borrowings 2,500,000 7,700,000 8,000,000
Payments on long-term
borrowings (3,145,000) (4,244,000) (1,956,000)
Cash dividends paid (1,702,000) (1,623,000) (1,510,000)
Purchase of treasury stock (1,940,000) (215,000) (498,000)
Proceeds from issuance of
common stock 26,000 5,000
- --------------------------------------------------------------------------
Net cash provided by (used
in) financing activities 34,506,000 27,310,000 (9,389,000)
- --------------------------------------------------------------------------
Net decrease in cash and
cash equivalents (3,707,000) (3,622,000) (20,121,000)
Cash and cash equivalents
at beginning of year 24,701,000 28,323,000 48,444,000
- --------------------------------------------------------------------------
Cash and cash equivalents
at end of year $20,994,000 $24,701,000 $28,323,000
- --------------------------------------------------------------------------
Supplemental cash flow information:
Interest paid $20,540,000 $15,239,000 $15,538,000
Income taxes paid $ 2,364,000 $ 2,383,000 $ 2,754,000
See notes to consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- ----------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The accounting and reporting policies of Peoples Bancorp Inc.
and Subsidiaries (the "Company") conform to generally accepted
accounting principles and to general practices within the
banking industry. The Company considers all of its principal
activities to be banking related. The preparation of the
financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ
from those estimates. The following is a summary of significant
accounting policies followed in the preparation of the financial
statements. Certain amounts in the 1994 and 1993 financial
statements have been reclassified to conform to the 1995
presentation.
Principles of Consolidation:
- ----------------------------
The consolidated financial statements include the accounts of
Peoples Bancorp Inc. and its wholly-owned subsidiaries. All
significant intercompany accounts and transactions have been
eliminated.
Cash and Cash Equivalents:
- --------------------------
Cash and cash equivalents include cash and due from banks,
interest bearing deposits with banks, and federal funds sold,
all with original maturities of ninety days or less.
Income Recognition:
- -------------------
Interest income is recognized by methods which result in level
rates of return on principal amounts outstanding. Amortization
of premiums has been deducted from and accretion of discounts
has been added to the related interest income. Nonrefundable
loan fees are deferred and recognized as income over the life of
the loan as an adjustment of the yield. Subsidiary banks
discontinue the accrual of interest when, in management's
opinion, collection of all or a portion of contractual interest
has become doubtful, which generally occurs when a loan is 90
days past due. When deemed uncollectible, previously accrued
interest recognized in income in the current year is reversed
and interest accrued in prior years is charged against the
allowance for loan losses. Interest received on non-accrual
loans is included in income only if principal recovery is
reasonably assured. A non-accrual loan is restored to accrual
status when it is brought current, has performed in accordance
with contractual terms for a reasonable period of time, and the
collectibility of the total contractual principal and interest
is no longer in doubt.
Investment Securities:
- ----------------------
Management determines the appropriate classification of
investment securities at the time of purchase. Held-to-maturity
securities are those securities that the Company has the
positive intent and ability to hold to maturity and are recorded
at amortized cost. Available-for-sale securities are those
securities that would be available to be sold in the future in
response to the Company's liquidity needs, changes in market
interest rates, and asset-liability management strategies, among
others. Available-for-sale securities are reported at fair
value, with unrealized holding gains and losses reported in a
separate component of stockholders' equity, net of applicable
deferred income taxes. The cost of securities sold is based on
the specific identification method.
In late 1995, the Financial Accounting Standards Board ("FASB")
issued a Special Report, "A Guide to Implementation of Statement
of Financial Accounting Standards ("SFAS") No. 115 on Accounting
for Certain Investments in Debt and Equity Securities". In
accordance with provisions in that Special Report, the Company
chose to reclassify all held-to-maturity securities to
available-for-sale. At the date of transfer the amortized cost
of those securities was $9,644,000 and the unrealized holding
gain, net of deferred income taxes, on those securities was
$271,000, which is included in stockholders' equity.
Allowance for Loan Losses:
- --------------------------
The allowance for loan losses is maintained at a level believed
adequate by management to absorb potential losses in the loan
portfolio. Management's determination of the adequacy of the
allowance for loan losses is based on a quarterly evaluation of
the portfolio, historical loan loss experience, current national
and local economic conditions, volume, growth and composition of
the portfolio, and other relevant factors.
On January 1, 1995, the Company adopted SFAS No. 114
"Accounting by Creditors for Impairment of a Loan", as amended
by SFAS No. 118. The allowance for loan losses related to loans
that are identified for evaluation in accordance with SFAS No.
114 is based on discounted cash flows using the loan's initial
effective interest rate or the fair value of the collateral for
certain collateral dependent loans. Prior to the adoption of
SFAS No. 114, the allowance for loan losses related to these
loans was based on undiscounted cash flows or the fair value of
the collateral on collateral dependent loans. The adoption of
this standard did not have a material effect on the Company's
financial position, results of operations, accounting policies,
or the determination of the adequacy of the allowance for
loan losses. Impaired loans at December 31, 1995 and the
average investment in impaired loans for the year then ended
were immaterial to the financial statements.
Bank Premises and Equipment:
- ----------------------------
Bank premises and equipment are stated at cost less accumulated
depreciation. Depreciation is computed on the straight-line
method over the estimated useful lives of the related assets.
Other Real Estate:
- ------------------
Other real estate owned, included in other assets on the
consolidated balance sheet, represents properties acquired by
the Company's subsidiary banks in satisfaction of a loan. Real
estate is recorded at the lower of cost or fair value based on
appraised value at the date actually or constructively received,
less estimated costs to sell the property.
Excess of Cost Over Net Assets Acquired:
- ----------------------------------------
The excess of cost over the fair value of net assets of
subsidiary banks acquired is being amortized on a straight-line
basis over a ten-year period.
Income Taxes:
- -------------
Deferred income taxes (included in other assets) are provided
for temporary differences between the tax basis of an asset or
liability and its reported amount in the financial statements at
the statutory tax rate. The Company and its banking
subsidiaries file a consolidated federal income tax return and
income tax expense is allocated among all companies on a
separate return basis.
Earnings Per Share:
- -------------------
Primary and fully diluted earnings per share are computed by
dividing net income by average common shares outstanding during
the year plus the dilutive effect of common stock equivalents.
Options granted under the Company's stock option plans are
considered common stock equivalents for the purpose of computing
earnings per share. Fully diluted earnings per share is
computed for 1993 and prior years assuming the Subordinated
Debentures were converted as of the issue date with a
corresponding increase in net income from the after-tax
reduction in interest expense.
2. FAIR VALUES OF FINANCIAL INSTRUMENTS:
The following methods and assumptions were used by the Company
in estimating its fair value disclosures for financial
instruments in accordance with SFAS No. 107:
Cash and due from banks, interest bearing deposits with banks,
and federal funds sold:
- --------------------------------------------------------------
The carrying amounts reported in the balance sheet for these
captions approximate their fair values.
Investment securities:
- ----------------------
Fair values for investment securities are based on quoted market
prices, where available. If quoted market prices are not
available, fair values are estimated using quoted market prices
of comparable securities.
Loans:
- ------
For performing variable rate loans that reprice frequently and
performing demand loans, with no significant change in credit
risk, fair values are based on carrying values. The fair values
for certain mortgage loans are based on quoted market prices of
similar loans sold in conjunction with securitization
transactions, adjusted for differences in loan characteristics.
The fair value of other performing loans (e.g., commercial real
estate, commercial and consumer loans) are estimated using
discounted cash flow analyses, using interest rates currently
being offered for loans with similar terms to borrowers of
similar credit quality.
Fair value for significant nonperforming loans is based on
either the estimated fair value of underlying collateral or
estimated cash flows discounted at a rate commensurate with the
risk. Assumptions regarding credit risk, cash flows, and
discount rates are determined using available market information
and specific borrower information.
Deposits:
- ---------
The carrying amounts of demand deposits, savings accounts and
certain money market deposits approximate their fair values.
The fair value of fixed maturity certificates of deposit is
estimated using a discounted cash flow calculation that applies
current rates offered for deposits of similar remaining
maturities.
Short-term borrowings:
- ----------------------
The carrying amounts of federal funds purchased, Federal Home
Loan Bank advances, and securities sold under repurchase
agreements approximate their fair values.
Long-term borrowings:
- ---------------------
The fair value of long-term borrowings is estimated using
discounted cash flow analysis based on rates currently available
to the Company for borrowings with similar terms.
Financial instruments:
- ----------------------
The fair value of loan commitments and standby letters of credit
is estimated using the fees currently charged to enter into
similar agreements taking into account the remaining terms of
the agreements and the counterparties' credit standing. The
estimated fair value of these commitments approximates their
carrying value. The fair value of the interest rate floor is
based on quotes from other financial institutions.
The estimated fair values of the Company's financial instruments
are as follows:
1995 1994
Carrying Fair Carrying Fair
Amount Value Amount Value
FINANCIAL ASSETS:
Cash and due from banks,
interest bearing deposits
with other banks, and
federal funds sold $20,994,000 $20,994,000 $24,701,000 $24,701,000
Investment securities 131,762,000 131,762,000 99,419,000 99,261,000
Loans, net 372,800,000 378,612,000 354,570,000 350,817,000
FINANCIAL LIABILITIES:
Deposits 429,077,000 430,184,000 403,819,000 402,949,000
Short-term borrowings 33,276,000 33,276,000 19,767,000 19,767,000
Long-term borrowings 23,142,000 23,255,000 23,787,000 22,098,000
OFF-BALANCE SHEET INSTRUMENTS:
Interest rate floors $116,000 $751,000
3. INVESTMENT SECURITIES:
Effective January 1, 1994, the Company adopted the provisions of
SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities". The effect of this change in accounting
principle resulted in an unrealized holding gain of $3,048,000
(net of $1,570,000 in deferred income taxes), for securities
classified as available-for-sale effective January 1, 1994, and
has been reflected in a separate component of stockholders'equity.
The expected maturities presented in the tables below may differ
from the contractual maturities because borrowers may have the
right to call or prepay obligations without call or prepayment
penalties. Rates are calculated on a taxable equivalent basis
using a 34% federal income tax rate. The portfolio contains no
single issue (excluding U.S. Government and U.S. Agency
securities) which exceeds 10% of stockholders' equity.
Securities classified as available-for-sale
At December 31, 1995:
- -------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
U.S. Treasury securities $ 32,295,000 $1,057,000 $ (28,000) $ 33,324,000
U.S. Agency mortgage-
backed securities 33,195,000 531,000 (15,000) 33,711,000
Other U.S. Agency
securities 6,947,000 262,000 0 7,209,000
------------ ---------- --------- ------------
Total U.S. Treasury
and Agency securities 72,437,000 1,850,000 (43,000) 74,244,000
------------ ---------- --------- ------------
Obligations of states and
political subdivisions 24,879,000 997,000 (16,000) 25,860,000
Other mortgage-backed
securities 12,270,000 88,000 (53,000) 12,305,000
Other securities 18,435,000 920,000 (2,000) 19,353,000
------------ ---------- --------- ------------
Total securities
available-for-sale $128,021,000 $3,855,000 $(114,000) $131,762,000
============ ========== ========== ============
<TABLE>
MATURITY DISTRIBUTION OF SECURITIES AVAILABLE-FOR-SALE
Contractual maturities at December 31, 1995
<CAPTION>
Obliga-
U.S. tions of
Agency Total U.S. states and Other Total
mortgage- Other Treasury political mortgage- securities
U.S. backed U.S. and sub- backed Other available-
Treasury securities Agency Agency divisions securities securities for-sale
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Within one year
- ---------------
Amortized cost $ 7,144,000 $ 7,144,000 $ 2,191,000 $ 500,000 $ 9,835,000
Fair Value $ 7,238,000 $ 7,238,000 $ 2,218,000 $ 512,000 $ 9,968,000
Yield 7.47% 7.47% 9.76% 8.45% 8.03%
1 to 5 years
- ------------
Amortized cost 23,941,000 $ 600,000 $ 3,703,000 28,244,000 8,989,000 $ 1,018,000 9,783,000 48,034,000
Fair value 24,643,000 $ 610,000 $ 3,809,000 29,062,000 9,406,000 $ 1,015,000 10,072,000 49,555,000
Yield 6.56% 6.74% 7.83% 6.79% 8.95% 5.82% 6.95% 7.17%
5 to 10 years
- -------------
Amortized cost 1,210,000 368,000 3,244,000 4,822,000 3,035,000 3,007,000 2,009,000 12,873,000
Fair value 1,443,000 370,000 3,400,000 5,213,000 3,164,000 3,025,000 2,088,000 13,490,000
Yield 7.88% 7.91% 8.02% 7.98% 8.45% 6.26% 6.87% 7.55%
Over 10 years
- -------------
Amortized cost 32,227,000 32,227,000 10,664,000 8,245,000 6,143,000 57,279,000
Fair value 32,731,000 32,731,000 11,072,000 8,265,000 6,681,000 58,749,000
Yield 7.36% 7.36% 8.11% 6.35% 6.07% 7.22%
Total amortized
cost $32,295,000 $33,195,000 $ 6,947,000 $72,437,000 $24,879,000 $12,270,000 $18,435,000 $128,021,000
Total fair value $33,324,000 $33,711,000 $ 7,209,000 $74,244,000 $25,860,000 $12,305,000 $19,353,000 $131,762,000
Total yield 6.81% 7.36% 7.92% 7.11% 8.61% 6.32% 6.69% 7.30%
</TABLE>
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
At December 31, 1994:
SECURITIES CLASSIFIED AS AVAILABLE-FOR-SALE:
- --------------------------------------------
U.S. Treasury securities $ 30,138,000 $ 157,000 $ (577,000) $ 29,718,000
U.S. Agency mortgage-
backed securities 10,873,000 16,000 (391,000) 10,498,000
Other U.S. Agency
securities 2,223,000 24,000 (8,000) 2,239,000
Obligations of states and
political subdivisions 21,624,000 312,000 (233,000) 21,703,000
Other mortgage-backed
securities 12,557,000 0 (1,144,000) 11,413,000
Other securities 14,368,000 554,000 (321,000) 14,601,000
------------ ---------- ----------- ------------
Total securities
available-for-sale $ 91,783,000 $1,063,000 $(2,674,000) $ 90,172,000
------------ ---------- ----------- ------------
SECURITIES CLASSIFIED AS HELD-TO MATURITY:
- ------------------------------------------
U.S. Agency mortgage-
backed securities $ 992,000 $ 0 $ (38,000) $ 954,000
Other U.S. Agency
securities 4,683,000 5,000 (35,000) 4,653,000
Obligations of states and
political subdivisions 3,414,000 40,000 (123,000) 3,331,000
Other securities 158,000 0 (7,000) 151,000
------------ ---------- ----------- ------------
Total securities
held-to-maturity $ 9,247,000 $ 45,000 $ (203,000) $ 9,089,000
============ ========== =========== ============
At December 31, 1993:
SECURITIES CLASSIFIED AS HELD FOR INVESTMENT:
- ---------------------------------------------
Obligations of U.S.
Government $ 48,790,000 $2,244,000 $ (12,000) $ 51,022,000
Obligations of U.S.
Government agencies 4,809,000 56,000 (3,000) 4,862,000
Government mortgage-
backed securities 13,589,000 149,000 (17,000) 13,721,000
Obligations of states and
political subdivisions 26,183,000 1,648,000 27,831,000
Other bonds and securities 9,978,000 701,000 (10,000) 10,669,000
------------ ---------- ----------- ------------
Total securities held
for investment $103,349,000 $4,798,000 $ (42,000) $108,105,000
============ ========== =========== ============
Gross realized gains were $24,000 in 1995. Gross realized gains
and realized losses were $126,000 and $363,000, respectively, in
1994. Gross gains on sales of investments of $45,000 were
realized in 1993. At December 31, 1995 and 1994, investment
securities having a par value of $68,501,000 and $55,570,000,
respectively, were pledged to collateralize government and trust
department deposits in accordance with federal and state
requirements.
4. LOANS:
Loans are comprised of the following at December 31:
1995 1994
Commercial, financial, and agricultural $ 117,306,000 $ 117,015,000
Real estate, construction 5,919,000 2,528,000
Real estate, mortgage 154,469,000 150,289,000
Consumer 101,832,000 91,521,000
------------- -------------
Total loans $ 379,526,000 $ 361,353,000
============= =============
Changes in the allowance for loan losses for each of the three
years in the period ended December 31, 1995, were as follows:
1995 1994 1993
Balance, beginning of year $6,783,000 $6,370,000 $5,687,000
Charge-offs (1,803,000) (1,124,000) (1,203,000)
Recoveries 431,000 772,000 294,000
---------- ---------- ----------
Net charge-offs (1,372,000) (352,000) (909,000)
Provision for loan losses 1,315,000 765,000 1,592,000
---------- ---------- ----------
Balance, end of year $6,726,000 $6,783,000 $6,370,000
========== ========== ==========
The Company's lending is primarily focused in the local
southeastern Ohio market and consists principally of retail
lending, which includes single-family residential mortgages and
other consumer lending. The Company's largest group of business
loans consists of automobile dealer floor plans, which totaled
$16,455,000 and $19,238,000 at December 31, 1995 and 1994,
respectively. It is the Company's policy to obtain the
underlying inventory as collateral on these loans. The Company
does not extend credit to any single borrower or group of
related borrowers in excess of the combined legal lending limits
of its subsidiary banks.
In the normal course of its business, the subsidiary banks have
granted loans to executive officers and directors of the Company
and to their associates. Related party loans were made on
substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable loans
with unrelated persons and did not involve more than normal risk
of collectibility. The following is an analysis of activity of
related party loans for the year ended December 31, 1995:
Balance, January 1, 1995 $11,374,000
New loans 3,747,000
Repayments 2,866,000
-----------
Balance, December 31, 1995 $12,255,000
===========
The balance at December 31, 1995, includes $2,041,000 of loans
to one of the Company's directors which are considered by
management to be potential problem loans. The credit risk
associated with these loans has been considered by management in
the Company's determination of the overall adequacy of the
allowance for loan losses.
5. BANK PREMISES AND EQUIPMENT:
The major categories of bank premises and equipment and
accumulated depreciation are summarized as follows at December 31:
1995 1994
Land $ 1,607,000 $ 1,592,000
Building and premises 10,341,000 10,078,000
Furniture, fixtures and equipment 7,274,000 6,856,000
------------ ------------
19,222,000 18,526,000
Accumulated depreciation 8,647,000 7,719,000
------------ ------------
Net book value $ 10,575,000 $ 10,807,000
============ ============
Depreciation expense was $1,230,000, $1,110,000 and $906,000 for
the years ended December 31, 1995, 1994 and 1993, respectively.
The Company leases a banking facility and equipment under
various agreements with original terms providing for fixed
monthly payments over periods ranging from two to ten years.
The future minimum payments, by year and in the aggregate, under
noncancelable operating leases with initial or remaining terms
of one year or more consisted of the following at December 31, 1995:
Year Ending December 31, Operating Leases
1996 $ 120,000
1997 120,000
1998 113,000
1999 64,000
2000 6,000
Thereafter 3,000
---------
Total minimum lease payments $ 426,000
=========
Rent expense was $170,000, $181,000 and $149,000 in 1995, 1994
and 1993, respectively.
6. LONG-TERM BORROWINGS:
Long-term borrowings consisted of the following at December 31:
1995 1994
Term note payable, at prime
(8.5% at December 31, 1995) $ 1,560,000 $ 1,820,000
Federal Home Loan Bank advances,
bearing interest at rates
ranging from 4.15% to 7.00% 21,582,000 21,967,000
------------ ------------
Total long-term borrowings $ 23,142,000 $ 23,787,000
============ ============
The term note payable is due on December 31, 1996, with interest
payable quarterly. The Note Agreement is collateralized by all
of the common stock of a wholly-owned subsidiary and places
certain restrictive covenants on the Company, including the
maintenance of tangible net worth and the incurrence of
additional indebtedness.
The Federal Home Loan Bank ("FHLB") advances consist of various
borrowings with maturities ranging from 10 to 15 years. The
advances are collateralized by the Company's real estate
mortgage portfolio and all of the FHLB common stock owned by the
banking subsidiaries. The most restrictive requirement of the
debt agreement requires the Company to provide real estate
mortgage loans as collateral in an amount not less than 150% of
advances outstanding.
The aggregate minimum annual retirements of long-term borrowings
in the next five years and thereafter are as follows:
1996 $ 4,611,000
1997 2,372,000
1998 4,521,000
1999 2,145,000
2000 2,276,000
Thereafter 7,217,000
------------
Total long-term borrowings $ 23,142,000
============
7. EMPLOYEE BENEFIT PLANS:
The Company has a noncontributory defined benefit pension plan
which covers substantially all employees. The plan provides
benefits based on an employee's years of service and
compensation. The Company's funding policy is to contribute
annually an amount that can be deducted for federal income tax
purposes.
Net pension cost included the following components:
1995 1994 1993
Service cost-benefits earned
during the year $ 254,000 $ 260,000 $ 243,000
Interest cost on projected
benefit obligations 444,000 401,000 388,000
Actual return on plan assets (831,000) (414,000) (411,000)
Early retirement benefits 777,000
Net amortization and deferral 381,000 (13,000) (11,000)
---------- --------- ---------
Net pension cost $1,025,000 $ 234,000 $ 209,000
========== ========= =========
The following table sets forth the funded status and amounts
recognized for the defined benefit pension plan in the
consolidated balance sheets at December 31:
1995 1994
Actuarial present value of accumulated
benefit obligations:
Vested benefits $ 5,555,000 $ 3,958,000
Nonvested benefits 186,000 142,000
----------- -----------
Accumulated benefit obligation 5,741,000 4,100,000
Impact of future salary increases 1,164,000 1,105,000
----------- -----------
Actuarial present value of projected
benefit obligation for service
rendered to date 6,905,000 5,205,000
Plan assets at fair value, primarily
U.S. Government obligations and
collective investment stock and
bond funds 5,460,000 4,693,000
----------- -----------
Projected benefit obligations in
excess of plan assets (1,445,000) (512,000)
Unrecognized prior service cost (82,000) (92,000)
Unrecognized net gain from past
experience different from that
assumed and effects of changes
in assumptions (171,000) (404,000)
Unrecognized net transition asset (59,000) (62,000)
----------- -----------
Accrued pension cost included
in other liabilities $(1,757,000) $(1,070,000)
=========== ===========
The rates used in determining the actuarial present value of the
projected benefit obligation were as follows:
1995 1994 1993
Discount rate 7.50% 8.50% 7.25%
Rate of increase in compensations levels 4.00% 5.00% 4.50%
Long-term rate of return on assets 9.00% 8.50% 8.50%
The unrecognized net gain decreased in 1995 due to the change in
the discount rate. In late 1995, the Company offered a
voluntary early retirement program to a select group of
employees who met certain qualifications. All employees
eligible for the early retirement program accepted the offer and
the Company incurred $777,000 in additional expense.
The Company has a contributory defined benefit postretirement
plan for former employees who were retired as of December 31,
1992. The plan provides for health and life insurance benefits.
The Company's policy is to fund the cost of the benefits as
they are incurred.
On January 1, 1993, the Company adopted SFAS No. 106 "Employers'
Accounting for Postretirement Benefits Other Than Pensions"
which requires the accrual of the expected costs of providing
postretirement benefits during the period of employee service.
The Company recognized the cumulative effect of its transition
obligation of $583,000, net of taxes, as a decrease in income in
1993. The net periodic postretirement benefit cost, which
relates primarily to interest cost, was $65,000, $68,000, and
$74,000 for 1995, 1994, and 1993, respectively.
The following table sets forth the funded status and amounts
recognized in the consolidated balance sheets at December 31:
1995 1994
Accumulated postretirement benefit obligation $ (857,000) $ (875,000)
Unrecognized net gain 1,000 9,000
Accrued postretirement benefit cost
included in other liabilities $ (856,000) $ (866,000)
The weighted average discount rate used in determining the
accumulated postretirement benefit obligation was 7.50% at
December 31, 1995 and 8.50% at December 31, 1994.
The weighted average annual assumed rate of increase in the per
capita cost of covered benefits (i.e. health care cost trend
rate) is 9% for 1996, grading down 1% per year to an ultimate
rate of 5%. The health care cost trend rate assumption has a
significant effect on the amounts reported. For example,
increasing the assumed health care cost trend rates by one
percentage point each year would increase the accumulated
benefit obligation for the plan at December 31, 1995, by
$103,000 and the net periodic postretirement benefit cost in
1995 by $8,000.
8. FEDERAL INCOME TAXES:
The effective federal income tax rate in the consolidated
statement of income is less than the statutory corporate tax
rate due to the following:
Year ended December 31
1995 1994 1993
Statutory corporate tax rate 34.0% 34.0% 34.0%
Differences in rate resulting from:
Interest on obligations of state
and political subdivisions (5.0) (5.8) (7.9)
Other, net 1.0 0.7
------ ------ ------
30.0% 28.9% 26.1%
====== ====== ======
The significant components of the Company's deferred tax assets
and liabilities consisted of the following at December 31:
1995 1994
Deferred tax assets:
- --------------------
Allowance for loan losses $ 1,709,000 $ 1,784,000
Accrued employee benefits 991,000 659,000
Available-for-sale securities 531,000
Deferred loan fees and costs 333,000 328,000
Other 211,000 257,000
----------- -----------
Total deferred tax assets 3,244,000 3,559,000
Deferred tax liabilities:
- -------------------------
Available-for-sale securities 1,272,000
Bank premises and equipment 546,000 468,000
Other 446,000 511,000
----------- -----------
Total deferred tax liabilities 2,264,000 979,000
----------- -----------
Net deferred tax assets $ 980,000 $ 2,580,000
=========== ===========
The related federal income tax expense (benefit) on securities
transactions approximated $8,000 in 1995, $(81,000) in 1994, and
$15,000 in 1993.
On January 1, 1993, the Company adopted SFAS No. 109,
"Accounting for Income Taxes", which requires the recognition of
deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial
statements or tax returns. The Company recognized the
cumulative effect of this change in accounting of $269,000 as an
increase in income in 1993.
9. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK:
In the normal course of business, the Company is party to
financial instruments with off-balance sheet risk necessary to
meet the financing needs of customers and to manage its own
exposure to fluctuations in interest rates. These financial
instruments include commitments to extend credit, standby
letters of credit, and interest rate floors. The instruments
involve, to varying degrees, elements of credit and interest
rate risk in excess of the amount recognized in the balance
sheets. The contract or notional amounts of these instruments
express the extent of involvement the Company has in these
financial instruments.
Loan Commitments and Standby Letters of Credit:
- -----------------------------------------------
Loan commitments are made to accommodate the financial needs of
the Company's customers. Standby letters of credit commit the
Company to make payments on behalf of customers when certain
specified future events occur. Historically, most loan
commitments and standby letters of credit expire unused. The
Company's exposure to credit loss in the event of nonperformance
by the counter-party to the financial instrument for loan
commitments and standby letters of credit is represented by the
contractual amount of those instruments. The Company uses the
same credit policies in making commitments and conditional
obligations as it does for on-balance sheet instruments. The
amount of collateral obtained is based on management's credit
evaluation of the customer. Collateral held varies, but may
include accounts receivable, inventory, property, plant, and
equipment, and income-producing commercial properties. The
total amounts of loan commitments and standby letters of credit
are summarized as follows at December 31:
Contract Amount
1995 1994
Loan commitments $36,106,000 $ 30,966,000
Standby letters of credit 2,116,000 2,083,000
Unused credit card limits 14,582,000 13,408,000
Interest Rate Floors:
- ---------------------
In February, 1995, the Company entered into several interest
rate floor contracts with two unaffiliated financial
institutions as a means of managing the risks of changing
interest rates. Interest rate floors are agreements to receive
payments for interest rate differentials between an index rate
and a specified floor rate, computed on notional amounts. The
Company is subject to the risk that the effect of changes in
interest rates will cause the Company to earn less than the then
current market rates on its assets. These interest rate floors
subject the Company to the risk that the counter-parties may
fail to perform. In order to minimize such risk, the Company
deals only with high-quality, financially secure financial
institutions. The exposure to credit risk is significantly less
than the notional amounts of $20,000,000 since the Company will
only receive the interest rate differential. These interest
rate contracts expire in February, 1998.
10. REGULATORY MATTERS:
The primary source of funds for the dividends paid by the
Company is dividends received from its banking subsidiaries.
The payment of dividends by banking subsidiaries is subject to
various banking regulations. The most restrictive provision
requires regulatory approval if dividends declared in any
calendar year exceed the total net profits of that year plus the
retained net profits of the preceding two years. At December
31, 1995, approximately $6,780,000 of retained net profits of
the banking subsidiaries were available for the payment of
dividends to Peoples Bancorp Inc. without regulatory approval.
The Company's banking subsidiaries are required to maintain
minimum amounts of capital to total "risk weighted" assets, as
defined by the banking regulations. At December 31, 1995 the
banking subsidiaries are required to have minimum Tier 1 and
total capital ratios of 4% and 8%, respectively. The banking
subsidiaries' actual ratios at that date were in excess of these
stated minimums.
11. FEDERAL RESERVE REQUIREMENTS:
The subsidiary banks are required to maintain average reserve
balances with the Federal Reserve Bank. The Reserve requirement
is calculated on a percentage of total deposit liabilities and
averaged $6,371,000 for the year ended December 31, 1995.
12. BRANCH ACQUISITIONS:
In December 1995, the Company entered into a definitive
agreement to assume approximately $75 million in deposit
liabilities from an unaffiliated institution. In the agreement,
the Company will also acquire three full-service banking offices
in the cities of Pomeroy, Gallipolis, and Rutland, Ohio.
Pending regulatory approval, the acquisition is expected to
close during the first half of 1996 and is expected to be
accounted for under the purchase method.
13. CHANGES IN CAPITAL STRUCTURE:
On August 22, 1995, the Company declared a 10% stock dividend
issued on October 25, 1995 to shareholders of record as of
October 10, 1995. On March 24, 1994, the Company declared a
two-for-one stock split issued on April 29, 1994 to shareholders
of record as of April 15, 1994. On January 25, 1993, the
Company declared a ten percent stock dividend issued on April
15, 1993 to shareholders of record as of April 1, 1993. All per
share information in the accompanying consolidated financial
statements has been adjusted to give retroactive effect to these
stock transactions.
14. STOCK OPTIONS:
The Company's stock option plans provide for the granting of
both incentive stock options and non-qualified stock options of
up to 352,000 shares of common stock. Under the provisions of
the plans, the option price per share shall not be less than the
fair market value of the common stock on the date of grant of
such option. All granted options vest in periods ranging from
six months to six years and expire 10 years from the date of
grant.
Activity in the plans is summarized as follows:
1995 1994
Number Option Number Option
of shares price of shares price
Non-qualified stock options
- ---------------------------
Outstanding at beginning
of year 18,150 $17.73-20.00 17,710 $ 18.64
Granted 27,402 20.45-21.36 2,860 17.73-20.00
Exercised 242 18.64
Canceled 2,178 18.64
------- ------------ ------- ------------
Outstanding at end of year 45,552 17.73-21.36 18,150 17.73-20.00
======= ============ ======= ============
Exercisable at end of year 24,798 $17.73-21.36 6,908 $17.73-20.00
======= ============ ======= ============
Incentive stock options
- -----------------------
Outstanding at beginning
of year 188,650 $15.91-21.25 41,800 $ 15.91
Granted 150,150 21.25
Exercised 4,956 15.91 1,100 15.91
Canceled 2,200 15.91
------- ------------ ------- ------------
Outstanding at end of year 183,694 15.91-21.25 188,650 15.91-21.25
======= ============ ======= ============
Exercisable at end of year 45,094 $15.91-21.25 38,500 $ 15.91
======= ============ ======= ============
In November, 1995, the FASB issued SFAS No. 123, "Accounting for
Stock Based Compensation", which is effective for fiscal years
beginning after December 15, 1995. SFAS No. 123 requires
companies to estimate a fair value for stock options at the date
of grant and recognize the related expense over the applicable
service period. SFAS No. 123 provides companies with the option
of continuing to account for stock based compensation under APB
Opinion No. 25, "Accounting for Stock Issued to Employees", or
applying the provisions of SFAS No. 123. The Company has
decided to continue to apply the provisions of APB No. 25 to
account for stock based compensation.
15. PARENT COMPANY ONLY FINANCIAL INFORMATION:
December 31,
1995 1994
CONDENSED BALANCE SHEETS
Assets:
- -------
Cash $ 20,000 $ 20,000
Interest bearing deposits in subsidiary bank 533,000 636,000
Receivable from subsidiary bank 969,000 2,012,000
Investment securities: Available-for-sale
(amortized cost of $1,098,000 and $757,000
at December 31, 1995 and 1994, respectively) 1,636,000 1,261,000
Capital note receivable from subsidiary bank 3,000,000 3,000,000
Investments in subsidiaries:
Banks 46,299,000 39,651,000
Non-banks 1,065,000 976,000
Excess cost over net assets acquired 967,000 1,104,000
Other 906,000 709,000
----------- -----------
Total assets $55,395,000 $49,369,000
=========== ===========
Liabilities:
- ------------
Accrued pension $ 1,757,000 $ 1,070,000
Accrued interest payable and other
accrued expenses 75,000 409,000
Dividends payable 529,000 435,000
Long-term borrowings 1,560,000 1,820,000
----------- -----------
Total liabilities 3,921,000 3,734,000
----------- -----------
Stockholders' equity 51,474,000 45,635,000
----------- -----------
Total liabilities and
stockholders' equity $55,395,000 $49,369,000
=========== ===========
Year ended December 31,
1995 1994 1993
CONSOLIDATED STATEMENTS OF INCOME
Income:
- -------
Dividends from subsidiary banks $3,415,000 $2,280,000 $5,080,000
Dividends from other subsidiaries 50,000 40,000 50,000
Interest 393,000 301,000 58,000
Management fees from subsidiaries 907,000 818,000 770,000
Other 69,000 123,000 110,000
---------- ---------- ----------
Total income 4,834,000 3,562,000 6,068,000
Expenses:
- ---------
Salaries and benefits 1,183,000 948,000 848,000
Interest 148,000 141,000 169,000
Other 764,000 549,000 709,000
---------- ---------- ----------
Total expenses 2,095,000 1,638,000 1,726,000
Income before federal income taxes
and equity in undistributed
earnings of subsidiaries 2,739,000 1,924,000 4,342,000
Applicable income tax benefit (200,000) (100,000) (231,000)
Equity in undistributed earnings
of subsidiaries 3,111,000 3,724,000 498,000
---------- ---------- ----------
Net income $6,050,000 $5,748,000 $5,071,000
========== ========== ==========
Year ended December 31,
1995 1994 1993
STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
- -------------------------------------
Net income $6,050,000 $5,748,000 $5,071,000
Adjustment to reconcile net income
to cash provided by operations:
Amortization and depreciation 179,000 134,000 265,000
Equity in undistributed earnings
of subsidiaries (3,111,000) (3,724,000) (498,000)
Other, net. 189,000 1,103,000 115,000
- --------------------------------------------------------------------------
Net cash provided by
operating activities 3,307,000 3,261,000 4,953,000
- --------------------------------------------------------------------------
Cash flows from investing activities:
- -------------------------------------
Purchase of investment securities (340,000) (188,000)
Expenditures for premises and
equipment (87,000) (46,000) (20,000)
Investment in subsidiaries (150,000)
Capital note receivable from
subsidiary bank (3,000,000)
- --------------------------------------------------------------------------
Net cash used in
investing activities (577,000) (234,000) (3,020,000)
- --------------------------------------------------------------------------
Cash flows from financing activities:
- -------------------------------------
Payments on long-term borrowings (260,000) (260,000) (276,000)
Purchase of treasury stock (1,940,000) (215,000) (498,000)
Change in receivable from
subsidiary 1,043,000 (406,000) 159,000
Proceeds from issuance of
common stock 26,000 5,000
Cash dividends paid (1,702,000) (1,623,000) (1,510,000)
- --------------------------------------------------------------------------
Net cash used in
financing activities (2,833,000) (2,499,000) (2,125,000)
- --------------------------------------------------------------------------
Net (decrease) increase in cash (103,000) 528,000 (192,000)
Cash and cash equivalents at the
beginning of the year 656,000 128,000 320,000
- --------------------------------------------------------------------------
Cash and cash equivalents at the
end of the year $ 553,000 $ 656,000 $ 128,000
==========================================================================
The parent company paid interest totaling $148,000, $141,000
and $185,000 during the years ended December 31, 1995, 1994 and
1993, respectively.
16. SUMMARIZED QUARTERLY INFORMATION (UNAUDITED):
A summary of selected quarterly financial information
for 1995 and 1994 follows:
1995
----------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
Interest income $10,099,000 $10,780,000 $11,086,000 $11,427,000
Interest expense 4,616,000 5,228,000 5,476,000 5,457,000
Net interest income 5,483,000 5,552,000 5,610,000 5,970,000
Provision for
possible loan losses 285,000 310,000 360,000 360,000
Investment
securities gains 0 0 17,000 7,000
Other income 1,006,000 1,028,000 1,103,000 996,000
Other expenses 4,067,000 4,082,000 4,038,000 4,631,000
Income taxes 651,000 654,000 722,000 562,000
Net income 1,486,000 1,534,000 1,610,000 1,420,000
Earnings per share
assuming full dilution $0.46 $0.48 $0.51 $0.45
1994
---------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
Interest income $ 8,497,000 $ 8,645,000 $ 9,146,000 $ 9,816,000
Interest expense 3,620,000 3,654,000 3,930,000 4,220,000
Net interest income 4,877,000 4,991,000 5,216,000 5,596,000
Provision for possible
loan losses 192,000 248,000 167,000 158,000
Investment securities
gains (losses) 81,000 45,000 0 (363,000)
Other income 1,029,000 951,000 970,000 1,125,000
Other expenses 3,911,000 3,871,000 3,919,000 3,971,000
Income taxes 578,000 556,000 628,000 571,000
Net income 1,306,000 1,312,000 1,472,000 1,658,000
Earnings per share
assuming full dilution $0.41 $0.41 $0.46 $0.51
REPORT OF INDEPENDENT AUDITORS
- ------------------------------
To the Stockholders and Board of Directors:
We have audited the accompanying consolidated balance sheet of
Peoples Bancorp Inc. and Subsidiaries as of December 31, 1995,
and the related consolidated statements of income, stockholders'
equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audit. The financial statements of
Peoples Bancorp Inc. and Subsidiaries for the years ended
December 31, 1994 and 1993, were audited by other auditors whose
report dated January 26, 1995, expressed an unqualified opinion
on those statements.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Peoples Bancorp Inc. and Subsidiaries at
December 31, 1995 and the consolidated results of their
operations and their cash flows for the year then ended in
conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Ernst & Young LLP
Charleston, West Virginia
January 25, 1996
<TABLE>
<CAPTION>
AVERAGE BALANCES AND ANALYSIS OF NET INTEREST INCOME
(Dollars in Thousands)
1995 1994 1993
Average Average Average
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate Balance Expense Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Securities <F1> <F2>:
- ---------------------
Taxable $ 95,056 $ 6,633 7.0% $ 77,811 $ 5,229 6.7% $ 79,086 $ 5,959 7.5%
Nontaxable (2) 23,761 2,117 8.9% 23,647 2,278 9.6% 26,895 2,608 9.7%
-------- ------- ----- -------- ------- ----- -------- ------- -----
Total 118,817 8,750 7.4% 101,458 7,507 7.4% 105,981 8,567 8.1%
-------- ------- ----- -------- ------- ----- -------- ------- -----
Loans (3) (4):
- --------------
Commercial 113,782 11,254 9.9% 105,290 8,896 8.5% 96,262 7,962 8.3%
Real estate 156,598 13,657 8.7% 146,966 12,311 8.4% 135,612 11,492 8.5%
Consumer 96,604 9,618 10.0% 85,219 7,645 9.0% 74,408 7,191 9.7%
Valuation reserve (6,719) (6,680) (6,095)
-------- ------- ----- -------- ------- ----- -------- ------- -----
Total 360,265 34,529 9.6% 330,795 28,852 8.7% 300,187 26,645 8.9%
-------- ------- ----- -------- ------- ----- -------- ------- -----
Money Market:
- -------------
Interest-bearin deposits 526 22 4.2% 1,734 66 3.8% 8,562 209 2.4%
Federal funds sold 13,464 796 5.9% 10,615 422 4.0% 17,706 623 3.5%
-------- ------- ----- -------- ------- ----- -------- ------- -----
Total 13,990 818 5.8% 12,349 488 4.0% 26,268 832 3.2%
-------- ------- ----- -------- ------- ----- -------- ------- -----
Total earning assets 493,072 44,097 8.9% 444,602 36,847 8.3% 432,436 36,044 8.3%
-------- ------- ----- -------- ------- ----- -------- ------- -----
Other assets 34,910 35,422 32,580
-------- -------- --------
Total assets $527,982 $480,024 $465,016
-------- -------- --------
Deposits:
- ---------
Savings $ 68,867 2,307 3.4% $ 75,422 2,106 2.8% $ 72,999 2,107 2.9%
Interest-bearing
demand 92,280 3,228 3.5% 85,326 2,212 2.6% 80,100 1,998 2.5%
Time 222,898 12,849 5.8% 187,842 9,298 4.9% 196,374 9,750 5.0%
-------- ------- ----- -------- ------- ----- -------- ------- -----
Total 384,045 18,384 4.8% 348,590 13,616 3.9% 349,473 13,855 4.0%
Borrowed Funds:
- ---------------
Short-term 19,993 1,010 5.1% 10,953 337 3.1% 9,186 203 2.2%
Long-term 22,612 1,383 6.1% 24,614 1,471 6.0% 19,611 1,205 6.1%
-------- ------- ----- -------- ------- ----- -------- ------- -----
Total 42,605 2,393 5.6% 35,567 1,808 5.1% 28,797 1,408 4.9%
-------- ------- ----- -------- ------- ----- -------- ------- -----
Total interest-
bearing liabilities 426,650 20,777 4.9% 384,157 15,424 4.0% 378,270 15,263 4.0%
-------- ------- ----- -------- ------- ----- -------- ------- -----
Noninterest-bearing
demand deposits 46,876 46,224 41,621
Other liabilities 5,396 5,029 4,320
-------- -------- --------
Total liabilities 478,922 435,410 424,211
Stockholders' equity 49,060 44,614 40,805
Total liabilities -------- -------- --------
and stockholders'
equity $527,982 $480,024 $465,016
======== ======== ========
Interest rate spread $23,320 4.0% $21,423 4.3% $20,781 4.3%
------- ----- ------- ----- ------- -----
Interest revenue/earning assets 8.9% 8.3% 8.3%
Interest expense/earning assets 4.2% 3.5% 3.5%
Net yield on earning ----- ----- -----
assets (net interest margin) 4.7% 4.8% 4.8%
===== ===== =====
<FN>
<F1> Average balances of investment securities based on historical cost.
<F2> Computed on a fully tax equivalent basis using a tax rate
of 34%. Interest income was increased by $705,000, $743,000 and
$733,000 for 1995, 1994 and 1993, respectively.
<F3> Nonaccrual and impaired loans are included in the average
balances listed. Related interest income on nonaccrual loans
prior to the loan being put on nonaccrual status is included in
loan interest income. At December 31, 1995, 1994 and 1993,
nonaccrual loans outstanding were $482,000, $902,000 and
$1,416,000, respectively.
<F4> Loan fees included in interest income for 1995, 1994 and
1993 were $741,000, $659,000 and $558,000, respectively.
</FN>
</TABLE>
<TABLE>
RATE VOLUME ANALYSIS/MATURITIES TABLES
Rate Volume Analysis
- --------------------
(Dollars in Thousands)
Change in Income/Expense <F1> Rate Effect Volume Effect
1995 1994 1993 1995 1994 1993 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
- ------------------
Taxable $ 1,404 $ (730) $ (419) $ 207 $ (635) $ (225) $ 1,197 $ (95) $ (194)
Nontaxable (161) (330) (266) (172) (17) (26) 11 (313) (240)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total 1,243 (1,060) (685) 35 (652) (251) 1,208 (408) (434)
Loan income:
- ------------
Commercial 2,358 934 (80) 1,601 174 (1,200) 757 760 1,120
Real estate 1,346 819 (824) 519 (133) (645) 827 952 (179)
Consumer 1,973 454 (239) 890 (541) (721) 1,083 995 482
------- ------- ------- ------- ------- ------- ------- ------- -------
Total 5,677 2,207 (1,143) 3,010 (500) (2,566) 2,667 2,707 1,423
------- ------- ------- ------- ------- ------- ------- ------- -------
Money market funds 330 (344) (655) 247 151 (583) 83 (495) (72)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total interest income 7,250 803 (2,483) 3,292 (1,001) (3,400) 3,958 1,804 917
======= ======= ======= ======= ======= ======== ======= ======== ========
Interest expense:
- -----------------
Savings 201 (1) (88) 395 (70) (454) (194) 69 366
Interest-bearing
demand deposits 1,016 214 (312) 824 80 (496) 192 134 184
Time 3,551 (452) (2,931) 1,665 (30) (1,422) 1,886 (422) (1,509)
Short-term borrowings 673 134 (59) 294 90 (53) 379 44 (6)
Long-term borrowings (88) 266 766 33 (34) (40) (121) 300 806
------- ------- ------- ------- ------- ------- ------- ------- -------
Total interest expense 5,353 161 (2,624) 3,211 36 (2,465) 2,142 125 (159)
======= ======= ======== ======= ======= ======== ======= ======= =======
$ 1,897 $ 642 $ 141 $ 81 $(1,037) $ (935) $ 1,816 $ 1,679 $ 1,076
======= ======= ======= ======= ======= ======= ======= ======= =======
<FN>
<F1> The change in interest due to both rate and volume has been
allocated to volume and rate changes in proportion to the
relationship of the dollar amounts of the change in each.
</FN>
</TABLE>
LOAN MATURITIES AT DECEMBER 31, 1995
- ------------------------------------
Due in
Due in One Year Due
One Year Through After
or Less Five Years Five Years Total
LOAN TYPE
Commercial loans:
- -----------------
Fixed $ 3,617 $ 6,927 $ 6,026 $ 16,570
Variable 27,870 13,025 59,841 100,736
-------- -------- -------- --------
31,487 19,952 65,867 117,306
Real estate loans:
- ------------------
Fixed 1,280 4,145 32,716 38,141
Variable 1,173 13,351 107,723 122,247
-------- -------- -------- --------
2,453 17,496 140,439 160,388
Consumer loans:
- ---------------
Fixed 4,059 77,665 10,567 92,291
Variable 272 8,068 1,201 9,541
-------- -------- -------- --------
4,331 85,733 11,768 101,832
-------- -------- -------- --------
Total $ 38,271 $123,181 $218,074 $379,526
======== ======== ======== ========
MATURITIES OF CERTIFICATES OF DEPOSIT OVER $100,000 AT DECEMBER 31:
- -------------------------------------------------------------------
1995 1994 1993 1992
Under 3 months $18,662 $5,657 $5,761 $7,810
3 to 6 months 9,319 2,149 2,241 5,957
6 to 12 months 5,140 5,868 2,859 2,109
Over 12 months 8,266 12,695 6,939 7,291
-------- -------- -------- --------
Total $41,387 $26,369 $17,800 $23,167
======== ======== ======== ========
LOAN PORTFOLIO ANALYSIS
(Dollars in thousands)
1995 1994 1993 1992 1991
Year-end balances:
- ------------------
Commercial, financial
and agricultural $117,306 $117,015 $101,633 $91,138 $61,594
Real estate 154,469 150,289 135,704 125,586 140,600
Real estate
construction 5,919 2,528 5,421 4,514 6,560
Consumer 95,464 86,098 74,775 66,129 65,714
Credit card 6,368 5,423 4,142 3,768 3,785
-------- -------- -------- -------- --------
Total $379,526 $361,353 $321,675 $291,135 $278,253
======== ======== ======== ======== ========
Average total loans $366,984 $337,475 $306,282 $291,033 $270,213
Average allowance
for loan losses (6,719) (6,680) (6,095) (5,298) (3,945)
Average loans, -------- -------- -------- -------- --------
net of allowance $360,265 $330,795 $300,187 $285,735 $266,268
======== ======== ======== ======== ========
Allowance for loan
losses, January 1 $6,783 $6,370 $5,687 $4,273 $4,086
Allowance for loan
losses of acquired branch 721
Loans charged off:
- ------------------
Commercial, financial
and agricultural 256 39 193 1,163 572
Real estate 82 189 143 295 401
Consumer 1,352 842 816 826 1,002
Credit card 113 54 51 33 62
------- ------ ------ ------ ------
Total 1,803 1,124 1,203 2,317 2,037
------- ------ ------ ------ ------
Recoveries:
- -----------
Commercial, financial
and agricultural 111 392 60 241 91
Real estate 60 61 65 110 25
Consumer 251 304 157 267 354
Credit card 9 15 12 5 6
------- ------ ------ ------ ------
Total 431 772 294 623 476
------- ------ ------ ------ ------
Net chargeoffs:
- ---------------
Commercial, financial
and agricultural 145 (353) 133 922 481
Real estate 22 128 78 185 376
Consumer 1,101 538 659 559 648
Credit card 104 39 39 28 56
------ ----- ------ ------ ------
Total 1,372 352 909 1,694 1,561
------ ----- ------ ------ ------
Provision for
loan losses 1,315 765 1,592 2,387 1,748
------ ----- ------ ------ ------
Allowance for loan
losses, December 31 $6,726 $6,783 $6,370 $5,687 $4,273
====== ====== ====== ====== ======
Allocation of allowance for loan losses at December 31:
- -------------------------------------------------------
Commercial $3,440 $3,281 $3,185 $2,651 $1,797
Real estate 1,517 1,828 2,000 1,189 1,108
Consumer 1,519 1,096 987 602 454
Credit card 100 89 166 45 45
Unallocated 150 489 32 1,200 869
-------- ------- ------- -------- --------
Total $6,726 $6,783 $6,370 $5,687 $4,273
======== ======= ======= ======== ========
Percent of loans to total loans at December 31:
- -----------------------------------------------
Commercial 30.9% 32.4% 31.6% 31.3% 22.1%
Real estate 40.7 41.6 42.2 43.1 50.5
Real estate, construction 1.5 0.7 1.7 1.6 2.4
Consumer 25.2 23.8 23.2 22.7 23.6
Credit card 1.7 1.5 1.3 1.3 1.4
-------- ------- -------- -------- --------
Total 100.0% 100.0% 100.0% 100.0% 100.0%
======== ======= ======== ======== ========
Ratio of net chargeoffs to average total loans:
- -----------------------------------------------
Commercial 0.04% (0.11)% 0.04% 0.32% 0.18%
Real estate 0.01 0.04 0.03 0.06 0.14
Consumer 0.30 0.16 0.22 0.19 0.24
Credit card 0.03 0.01 0.01 0.01 0.02
------- -------- ------- ------- --------
Total 0.38% 0.10% 0.30% 0.58% 0.58%
======= ======== ======= ======= ========
Nonperforming loans:
- --------------------
Nonaccrual loans $482 $902 $1,416 $1,279 $1,301
Loans 90+ days past due 1,236 1,082 896 1,284 1,706
Other real estate owned 45 97 38 49 779
------ ------ ------- ------- -------
Total $1,763 $2,081 $2,350 $2,612 $3,786
====== ====== ======= ======= =======
Nonperforming loans
as a percent of
total loans 0.46% 0.58% 0.73% 0.90% 1.36%
======= ====== ======= ======= =======
Interest income on nonaccrual loans which would have been
recorded under the original terms of the loans for 1995, 1994
and 1993 was $19,000 (of which $10,000 was actually recorded),
$48,000 (of which $36,000 was actually recorded) and $149,000
(of which $41,000 was actually recorded), respectively.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Introduction
- ------------
The following discussion and analysis of the consolidated
financial statements of Peoples Bancorp Inc. (the "Company") is
presented to give the reader insight into management's
assessment of the financial results. It also recaps the
significant events that led to the results. The Company's
subsidiaries, The Peoples Banking and Trust Company ("Peoples
Bank"), The First National Bank of Southeastern Ohio ("First
National") and The Northwest Territory Life Insurance Company,
provide financial services to individuals and businesses within
our market area. Peoples Bank is chartered by the State of Ohio
and subject to regulation, supervision, and examination by the
Federal Deposit Insurance Corporation ("FDIC") and the Ohio
Division of Banks. First National is a member of the Federal
Reserve System and subject to regulation, supervision, and
examination by the Office of the Comptroller of the Currency.
This discussion and analysis should be read in conjunction with
the audited financial statements and footnotes and the ratios,
statistics, and discussions contained elsewhere in the Annual
Report.
Overview of the Income Statement
- --------------------------------
The Company recognized an increase in net income of $302,000, or
5.3%, to $6,050,000 in 1995 from $5,748,000 in 1994. Fully tax
equivalent net interest income increased $1,897,000 in 1995
compared to 1994, an increase of 8.9%. The yield on
interest-earning assets increased from 8.29% in 1994 to 8.94% in
1995, while the interest rate paid on interest-bearing
liabilities increased from 4.02% in 1994 to 4.87% in 1995. The
increase in net interest income can be attributed primarily to
the growth in interest-earning assets outpacing interest-bearing
liabilities with interest rates earned and paid, increasing at a
consistent spread from 1994 to 1995. The provision for loan
losses in 1995 totaled $1,315,000, up from $766,000 in 1994, in
response to continued retail loan growth. Non-interest income
(excluding gains or losses on sales of investment securities)
increased 1.4% to $4,133,000 in 1995, compared to $4,075,000 in
1994. Gains on sales of investment securities totaled $24,000
in 1995, compared to 1994's loss of $237,000. Non-interest
expense increased 7.3% in 1995 to $16,818,000, due primarily to
the effect of the voluntary early retirement plan offered to
qualified employees.
Interest Income and Expense
- ---------------------------
Net interest income represents the amount by which interest
income on earning assets exceeds interest paid on
interest-bearing liabilities. Interest earning assets include
loans and investment securities. Interest-bearing liabilities
include interest-bearing deposits and borrowed funds such as
Federal Home Loan Bank borrowings. Net interest income remains
the primary source of income for the Company. Market changes in
interest rates, as well as adjustments in the mix of
interest-earning assets and interest-bearing liabilities,
continue to impact net interest income.
Market rates fluctuated in 1995, as the monetary policies of the
Federal Reserve Board resulted in decreases in short-term
interest rates. The national prime rate increased early in 1995
to 9.00%, but had decreased to 8.50% by December 31, 1995. The
Company's Asset Liability Committee ("ALCO") meets on a regular
basis and monitors adjustments in interest rates and sets
pricing guidelines for the Company.
In 1995, the Company recorded net interest income of
$22,615,000, an increase of 9.4% from 1994. Total interest
income reached $43,392,000 while interest expense totaled
$20,777,000. Included in interest income is $705,000 of
tax-exempt income from investments in states and political
subdivisions. Since these revenues are not taxed , it is more
meaningful to analyze net interest income on a fully-tax
equivalent ("FTE") basis.
Net interest margin is calculated by dividing FTE net interest
income by average interest-earning assets. In 1995, the net
interest margin was 4.73%, a decrease of 9 basis points compared
to 1994's 4.82%. This decrease is primarily the result of
management strategically maintaining interest rates paid on
certain deposits, even though market rates had declined in the
latter part of 1995, to continue the deposit growth. Management
expects interest rate pressures to intensify in the future as
they have in recent periods. As a result of increased interest
rate pressure, the Company has utilized several balance sheet
growth strategies to increase the volume of both
interest-earning assets and interest-bearing liabilities, and as
a result, the volume of net interest income to overall
operations.
More detailed analysis of several categories within
interest-earning assets and interest-bearing liabilities reveals
changes in mix and shifts in interest rates. In 1995, average
balances in commercial loans increased $8,492,000 or 8.1% while
the average yield on those loans increased from 8.5% in 1994 to
9.9% in 1995. Average real estate loan balances grew $9,632,000
or 6.6% to $156,598,000. Net interest income earned on real
estate loans grew $1,346,000 to $13,657,000, an increase of
10.9%, while the average yield grew 34 basis points to 8.72%.
Consumer loans continued to grow in the markets we serve,
increasing $11,385,000 or 13.4% to an average of $96,604,000 in
1995. Average yield on consumer loans reached 9.96%, an
increase of 99 basis points over the previous year's average
yield of 8.97%. The Company has been able to meet its operating
goals through the growth of the loan portfolio at competitive
but profitable yields.
The Company experienced increases in interest costs of funding
sources as well. The Company priced its deposit products
aggressively in 1995, which resulted in the growth of certain
interest-bearing liabilities. Interest costs on traditional
deposit products increased 88 basis points compared to 1994.
The most significant component of interest expense in 1995
related to interest paid on time deposits (i.e., certificates of
deposits). In 1995, the Company paid interest of $12,849,000,
or 5.76%, on average time deposit balances of $222,898,000. In
1994, the average rate paid on time deposits totaled 4.95% on
average balances of $187,842,000. Average interest-bearing
demand deposit balances grew 8.1% to $92,280,000 in 1995, which
can be attributed to aggressive pricing on money market
accounts. Interest costs increased on these accounts due to the
growth in average balances as well as the Company's arrangement
of a high volume, fixed-rate pricing contract with a major
customer.
In 1995, the Company increased its utilization of short-term
borrowed funds. Historically the Company's cash management
services offered to a variety of business customers have
provided short-term funding, specifically overnight repurchase
agreements. In 1995, the Company's average balances of
overnight repurchase agreements increased 9.1% to $9,908,000.
The average rate paid in 1995 on overnight repurchase agreements
totaled 4.01%, up from 1994's average rate of 2.67%. These
rates are based on selected indices which rose proportionately
in 1995.
The most significant change in short-term borrowings interest
expense was incurred through Federal Home Loan Bank ("FHLB")
advances, which totaled $21,216,000 at December 31, 1995.
Average short-term FHLB balances totaled $8,110,000 in 1995 at
an average cost of 6.13%. Management plans to maintain access
to FHLB borrowings as an appropriate funding source.
Interest expense on long-term borrowings did not change
significantly. The rate paid on average long-term borrowings
totaled 6.11% in 1995, an increase of 13 basis points compared
to 1994's average rate of 5.98%. The majority of the Company's
long-term borrowings are fixed rate FHLB borrowings.
Non-Interest Income
- -------------------
Several categories of non-interest income had increases in 1995
compared to 1994. The Company's Investment and Trust Division,
with a strong boost to non-interest income, continued its
earnings trend. The fee structure for fiduciary activities is
based primarily on the fair value of assets being managed, which
totaled approximately $390 million at December 31, 1995, an
increase of nearly $60 million from the previous year-end. As a
result of the increases in market values and increases in the
number of accounts served, income from fiduciary activities
totaled $1,751,000, an increase of 9.0% compared to 1994.
In 1995, account service charge income increased $109,000 or
7.5% to $1,565,000. Several factors contributed to this growth,
but is primarily due to increased revenues from electronic
banking fees and other cost-recovery based fees and charges.
The Company will continue to explore new methods of enhancing
non-interest income in the future. Both traditional and
non-traditional financial service products are being analyzed
for future inclusion in the array of products currently being
offered by the Company.
Non-Interest Expense
- --------------------
Maintaining acceptable levels of non-interest expense is one of
the many performance goals for the Company. In 1995,
non-interest expense totaled $16,818,000, an increase of 7.3%
over 1994. Two significant occurrences impacted non-interest
expense in 1995: increased expense incurred as a result of a
voluntary early retirement program and a reduction in FDIC
insurance premiums.
On September 29, 1995, the Company announced a voluntary early
retirement program to certain qualifying employees representing
approximately seven percent of the Company's employee base. In
addition to rewarding long-time employees for their valuable
years of service, the program was designed to position the
Company to manage the future challenges facing the banking
industry. All employees eligible for the program accepted the
offer and as a result, the Company recognized a charge to
salaries and employee benefits of $777,000. The Company
anticipates future benefits in terms of reduced non-interest
expense and increased efficiencies. Management expects a
payback of this expense within the next three years.
Non-interest expense was decreased in 1995 by the long-awaited
reduction in insurance premiums paid on Bank Insurance Fund
("BIF") deposits. In the third quarter, the Company received a
$260,000 refund on previously paid insurance premiums to the
BIF. In connection with the refund, the Company's annual
premium rate charged per $100 of BIF deposits has been decreased
from $0.23 to $0.04. In 1995, the Company incurred BIF
insurance expense of $481,000, a decrease of $391,000, or 44.8%
compared to 1994. Lower BIF premiums in the future should
improve the Company's efficiency ratios.
Other categories within non-interest expense remained at levels
comparable to 1994. Depreciation expense on furniture and
fixtures increased 14.7% to 794,000 in 1995, due mostly to
increased investment in technology and other customer-service
enhancements. Management feels that, in the future,
non-interest expense can be leveraged to enhance customer
service and improve market share.
In October 1995, the FASB approved SFAS No. 123, "Accounting for
Stock-Based Compensation". SFAS No. 123 defines a fair value
based method of accounting for an employee stock option or
similar equity instrument or allows an entity to continue to
measure compensation cost for those plans using the intrinsic
value based method prescribed by APB Opinion No. 25, "Accounting
for Stock Issued to Employees" ("Opinion No. 25"). SFAS No. 123
is effective for transactions entered into in fiscal years that
begin after December 15, 1995.
Under the fair value based method, compensation cost is measured
at the grant date based on the value of the award and is
recognized over the service period, which is usually the vesting
period. Under the intrinsic value based method, compensation
cost is the excess, if any, of the quoted market price of the
stock at grant date or other measurement date over the amount an
employee must pay to acquire the stock. The Company maintains
fixed price stock option plans which have no intrinsic value at
the grant date, and under Opinion No. 25, compensation expense
is recognized for them.
As permitted by SFAS No. 123, the Company will continue to
account for stock-based compensation under Opinion No. 25, and
accordingly, will disclose in the future pro forma net income
and earnings per share as if the fair value based method of
accounting, as defined in SFAS No. 123, had been applied.
Return on Assets
- ----------------
For the year ended December 31, 1995, return on average assets
("ROA") was 1.15%, down five basis points from 1994's ratio of
1.20%. This decline in ROA was primarily due to the decrease in
the net yield on earning assets and the expense related to the
early retirement program. With the reduction of BIF premium
rates and the continual review for opportunities to improve the
efficiency of its operations, management expects ROA to increase
in 1996.
Return on Equity
- ----------------
Over the past five years, the Company's return on average
stockholders' equity ("ROE") has remained relatively constant.
This ratio was 12.33% in 1995, down 55 basis points from 1994.
This decrease is primarily the result of the impact on net
income of the early retirement program and the decline in the
net yield on earning assets.
Several other factors affected stockholders' equity in 1995, but
they partially offset each other. Stockholders' equity
increased due to the adjustment in the net unrealized holding
gain, net of deferred income taxes, on available-for-sale
securities, which totaled $2,469,000 at December 31, 1995,
compared to prior year's net unrealized holding loss of
$1,030,000, or an increase of $3,499,000. As the fair value of
the Company's investment portfolio increased throughout 1995,
the adjustment caused average stockholders' equity to increase
over $800,000. This increase in equity was offset by the
purchase of 87,340 of the Company's common shares for its
treasury. The Company paid $1,940,000 for these treasury shares
in 1995, increasing its total investment in treasury shares to
$3,670,000 at December 31, 1995. The acquisition of any
treasury shares in the future will depend on market conditions.
Management believes ROE is an important measure of an
organization's strength and will continue to monitor the
performance of the Company in relation to stockholders' equity,
and expects ROE to increase in 1996.
Federal Income Tax Expense
- --------------------------
Although federal income taxes totaled $2,589,000 in 1995, an
increase of $256,000 compared to 1994's total of $2,333,000, the
Company's effective tax rate remained relatively constant at 30%
in 1995 and 1994.
Overview of Balance Sheet
- -------------------------
In 1995, the Company continued its recent growth trend, as total
assets increased 9.1% to $543,430,000 at year-end 1995. Since
December 31, 1994, the Company's asset growth has occurred
primarily in the area of investment securities, which increased
$32,343,000, or 32.5% to $131,762,000 at year-end 1995, and
total loans, which increased $18,173,000, or 5.0%, to nearly
$380 million.
These increases in assets were funded by the growth of deposits
and short-term borrowings. Total deposits increased 6.3% to
$429,077,000. In 1995, the Company utilized additional
borrowings from the FHLB, as short-term borrowings increased 68.3%
to $33,276,000 at December 31, 1995. Long-term borrowings, comprised
mostly of FHLB borrowings with maturities greater than one year,
remained relatively constant, totaling $23,142,000 at December 31, 1995.
Stockholders' equity increased $5,839,000, or 12.8%, to
$51,474,000 at December 31, 1995. Certain components of
stockholders' equity and all per share information have been
adjusted for the 10% stock dividend issued to shareholders of
record as of October 10, 1995. The Company also purchased
$1,940,000 of treasury shares in 1995, bringing the total
balance of treasury shares to $3,679,000. Please see the
Consolidated Statements of Stockholders' Equity found on page 16
in this Report for additional information regarding the changes
in stockholders' equity.
Cash and Cash Equivalents
- -------------------------
The Company's cash and cash equivalents totaled $20,994,000 at
December 31, 1995, a decrease of $3,707,000 compared to year-end
1994. Management directed liquid funds into higher
interest-earning assets such as investment securities and loans.
Management feels the liquidity needs of the Company are
satisfied by the current balance of cash and cash equivalents,
readily available access to traditional and non-traditional
funding sources, and the portion of the investment and loan
portfolios that mature within one year. These sources of funds
should enable the Company to meet cash obligations and
off-balance sheet commitments as they come due.
Investment Securities
- ---------------------
The most significant area of asset growth in 1995 occurred in
investment securities, which increased $32,343,000, or 32.5%, to
$131,762,000. At December 31, 1995, all investment securities
were classified as available-for-sale. At December 31, 1994,
the Company had total available-for-sale securities of
$90,172,000 and held-to-maturity securities of $9,247,000.
In October 1995, FASB approved a one-time holiday from SFAS No.
115, "Accounting for Certain Investments in Debt and Equity
Securities", which placed restrictions on held-to-maturity
securities. Entities had a one-time opportunity to restructure
their portfolios from approximately November 15 to December 31,
1995. Specifically, the FASB decided that entities could sell
or transfer securities from their held-to-maturity portfolio
without calling into question either their intent to hold other
debt securities to maturity in the future or their past
financial reporting. Upon analysis of the Company's investment
portfolio, management decided to take advantage of the one-time
holiday from SFAS No. 115 and transfer all held-to-maturity
securities to the available-for-sale category. Management
believes this action will favorably impact the overall
flexibility of the Company and interest rate risk management
opportunities of the Company.
A closer look at the specific components of the Company's
investment portfolio reveals a significant increase in
investments in U.S. Agency mortgage-backed securities. At
December 31, 1995, the Company had a fair value investment of
$33,711,000 in these securities, up from year-end 1994's total
of $11,452,000. These acquisitions reflect a portion of the
strategy implemented by the Company in 1995 to increase
incremental amounts of net interest income by investing in
higher-yield instruments. Investments in U.S. Treasury
securities increased $3,606,000, a result of additional
investments as well as the adjustment in interest rates, which
caused the fair value of these instruments to increase
throughout 1995. The other major categories of the investment
portfolio did not significantly change.
Management monitors the earnings performance and liquidity of
the investment portfolio on a regular basis through the ALCO
meetings. The group also monitors net interest income, sets
pricing guidelines, and manages interest rate risk for the
Company. Through active balance sheet management and analysis
of the investment securities portfolio, the Company maintains
sufficient liquidity to satisfy depositor requirements and the
various credit needs of its customers.
Loans
- -----
Loan volume continues to grow, reflecting the additional credit
opportunities provided within the markets served. Total loans
increased by $18,173,000 or 5.0% to $379,526,000. During 1995,
the Company refined its procedures for classifying loans.
Accordingly, prior period loan amounts have been reclassified to
conform to the 1995 presentation.
At December 31, 1995, commercial loans remained relatively
unchanged at $117,306,000, compared to $117,015,000 at December
31, 1994. Commercial loan demand continues to be strong in
several of our markets, particularly in the Licking County loan
production office located in central Ohio. Established in 1993,
this office has initiated increases in both the number of
customers served as well as loan balances in this market, one of
the leading growth markets in the State of Ohio. The Company is
proud of the customer relationships we have developed in the
Licking County office. Real estate loans to our retail
customers continue to be the most significant portion of the
loan portfolio. Total real estate loans reached $154,469,000
at December 31, 1995, an increase of 2.8% compared to year-end
1994. Management believes mortgage lending will remain a vital
part of the lending operation of the Company as individuals
continue to aggressively seek refinancing of their current
mortgages. In addition, in early 1996, the Company initiated
a fixed-rate equiline program designed to capture a significant
share of the home equiline market in the areas we serve.
The financial services industry has experienced recent increases
in consumer debt and the Company is no exception as its consumer
lending has grown to meet the customers' demands. The Company's
credit card balances at December 31, 1995, were $6,368,000, up
17.4% from year-end 1994's balance of $5,423,000. In an effort
to spur additional credit card activity and better serve the
credit needs of our customers, the Company offered several new
products, including a no-fee credit card, increased credit
limits to qualified customers, and specialty credit cards issued
to specific organizational groups. Management is pleased with
the performance of the credit card portfolio and continues to
evaluate new opportunities. Although credit card loans
contributed to the overall growth in consumer lending, the
largest contribution to personal loans has been through the
Company's indirect lending area. At December 31, 1995, the
Company had indirect loan balances of $62,647,000, up 13.5% from
year-end 1994's balance of $55,180,000. This growth can be
attributed to the Company's commitment to quality customer
service and the continued strong demand for indirect loans in
the markets served by the Company.
In May 1995, the FASB issued SFAS No. 122, "Accounting for
Mortgage Servicing Rights" ("SFAS No. 122"). SFAS No. 122
amends SFAS No. 65 and requires financial institutions to
recognize as separate assets rights to service mortgage loans
for others, whether those rights were acquired through purchase
or through the origination and subsequent sale of loans with
servicing rights retained. SFAS No. 122 is to be applied
prospectively for years beginning after December 15, 1995, with
earlier application encouraged. Historically, the Company has
not engaged in significant secondary market activity, therefore,
management anticipates this adoption will be immaterial to the
Company's financial statements.
Loan Concentration
- ------------------
The Company does not have a concentration of its loan portfolio
in any one industry. At December 31, 1995, real estate lending
continued to be the most significant part of our loan portfolio
representing 42.2% of total loans, while commercial, financial,
and agricultural loans totaled 30.9%.
Allowance for Loan Losses
- -------------------------
The allowance for loan losses as a percentage of total loans
decreased from 1.88% at year-end 1994 to 1.77% at December 31,
1995. The total dollar amount of the reserve decreased $57,000
over the same period. The Company's 1995 provision for loan
losses totaled $1,315,000, while gross chargeoffs were
$1,803,000 and recoveries amounted to $431,000. In 1994, the
Company had gross chargeoffs of $1,124,000 and recoveries of
$772,000.
A significant portion of the Company's chargeoffs in 1995
occurred in consumer lending. Increased loan activity,
especially in the indirect lending area, resulted in gross
chargeoffs of $1,465,000 in 1995, up 63.5% compared to 1994. As
a result, management has increased its allocation of the
allowance to consumer loans to address this exposure, but
expects the rate of chargeoffs to remain steady or decrease in
this area. Commercial loan chargeoffs totaled $256,000 while
recoveries were $111,000. Real estate loan chargeoffs and
recoveries were insignificant. Management continually monitors
the loan portfolio through its credit review department and loan
loss committee to determine the adequacy of the allowance for
loan losses and considers it to be adequate at December 31, 1995.
Nonaccrual loans and those loans 90 days past due totaled
$482,000 and $1,236,000, respectively, at December 31, 1995.
Nonperforming loans as a percentage of outstanding loans was
0.46% at year-end 1995, compared to 0.57% at December 31, 1994.
On January 1, 1995, the Company adopted SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan", which
established new accounting and reporting criteria for all loans
determined to be impaired. SFAS No. 114 requires that impaired
loans be measured based on the present value of expected future
cash flows, discounted at the effective interest rate of the
loan, or, as a practical expedient, the loan may be valued at
the fair value of the collateral if the loan is collateral
dependent. SFAS No. 114 does not apply to large groups of
smaller-balance homogeneous loans, such as mortgage and consumer
loans, which are evaluated collectively for impairment.
Management considers such factors as past payment history,
recent economic developments, current and projected financial
condition and other relevant information to determine whether a
loan is impaired. Impairment is determined on a loan-by-loan
basis and generally consists of non-homogeneous (large
commercial) loans that have been placed on non-accrual status.
However, a loan will be identified and reported as impaired when
it is probable that a creditor will be unable to pay all
principal and interest amounts due according to the contractual
terms of the loan agreement. The adoption of SFAS No. 114 did
not have a material effect on the Company's financial position,
results of operations, accounting policies, or the determination
of the adequacy of the allowance for loan losses. Impaired
loans at December 31, 1995, the average investment in impaired
loans during 1995, and the interest income recognized on
impaired loans for the year then ended were immaterial to the
Company's financial statements.
As of December 31, 1995, management has identified performing
loans totaling $2,041,000 to one of the Company's directors
which are considered to be potential problem loans. The
borrower has encountered financial difficulties during the past
few years with some improvement in 1995. Management does not
anticipate any losses resulting from this relationship.
Funding Sources
- ---------------
The Company considers deposits and short-term and long-term
borrowings when evaluating funding sources. Traditional
deposits continue to be the most significant source of funds for
the Company and the expansion of the deposit base bolstered the
asset growth of the Company. In 1995, total deposits grew 6.3%,
with the majority of the growth occurring in time deposits.
The most significant change to the Company's funding sources in
1995 occurred through increased balances in short-term
borrowings, which primarily consist of FHLB borrowings. In the
third quarter, the Company implemented a growth strategy
designed to enhance net interest income and other performance
ratios. Short-term borrowings were used to fund the balance
sheet growth and, as a result, short-term borrowings increased
$13,509,000 in 1995 to $33,276,000. Management plans to
maintain access to FHLB borrowings as an appropriate funding
source.
In addition to increased use of short-term borrowings with the
FHLB, the Company's balances in federal funds purchased and
securities sold under agreements to repurchase also grew. The
balances of these funds were $12,060,000 at year-end 1995, an
increase of 30.1% compared to 1994, reflecting the Company's
intentions to grow its cash management services program for both
new and existing commercial customers. The Company continues to
explore improved methods of providing cash management services
to these customers through enhanced systems and products.
In addition to the FHLB short-term borrowings, the Company also
continues to access long-term FHLB borrowings. This allows the
Company to obtain reliable funds at fixed and indexed rates for
longer periods of time than other traditional deposit products,
creating the opportunity to match longer term fixed rate
mortgages and other extended-maturity asset commitments against
a similar funding source. The net decrease of 1.8% in 1995 in
long-term FHLB borrowings is a result of an additional
$2,500,000 in borrowings and principal paydowns of $3,015,000.
Total long-term FHLB borrowings totaled $21,582,000 at December
31, 1995.
The acquisition of approximately $75 million in deposits from an
unaffiliated financial institution is expected to provide
additional funding sources. The majority of the deposits to be
assumed by the Company are time deposits. This acquisition is
expected to close during the first half of 1996.
Capital/Stockholders' Equity
- ----------------------------
The capital position of the Company remains strong. Total
stockholders' equity increased 12.8% to $51,474,000 at December
31, 1995. Stockholders' equity increased in 1995 for several
reasons, including the retention of net income. The Company
paid dividends of $1,948,000 in 1995, a dividend payout ratio of
32.20%, up from 1994's payout ratio of 29.26%. Management feels
this is an acceptable payout ratio for the Company and
anticipates similar payout ratios in future periods.
The Company's capital strength is apparent when measured to
standards of capital adequacy mandated by the banking industry.
Bank regulators have established "risk-based" capital
requirements designed to measure capital adequacy. Risk-based
capital ratios reflect the relative risks of various assets
banks hold in their portfolios. A weight category of either 0%
(lowest risk assets), 20%, 50%, or 100% (highest risk assets) is
assigned to each asset on the balance sheet. The Company's
risk-based capital ratio of 13.85% at December 31, 1995 is well
above the minimum standard of 8%. The Company's Tier 1 capital
ratio of 12.60% also exceeded the regulatory minimum of 4%. The
leverage ratio at December 31, 1995 was 8.81%, also above the
minimum standard of 3%. These ratios provide quantitative data
demonstrating the strength and future opportunities for use of
the Company's capital base. Management continues to evaluate
risk-based capital ratios and the capital position of the
Company as part of its strategic planning process.
Equity was affected in 1995 by SFAS No. 115, which requires an
equity adjustment for unrealized holding gains or losses for the
fair value of available-for-sale securities, net of deferred
income taxes. Since all of the investment securities in the
Company's portfolio are classified as available-for-sale, both
the investment and equity sections of the Company's balance
sheet are more sensitive to the changing fair values of
investments experienced during 1995. At December 31, 1994, the
Company had a net unrealized holding loss on available-for-sale
securities of $1,030,000. At December 31, 1995, the Company had
a net unrealized holding gain of $2,469,000, an increase of
$3,499,000 during the year. Management feels the status of the
investment markets do not substantially affect the Company's
equity, as it continues to provide a strong base for expansion
of operations as well as potential for growth in both new and
existing markets. The level of stockholders' equity will be
impacted in the future by changes in the volume and market
values of available-for-sale securities.
Liquidity
- ---------
Liquidity measures an organization's ability to meet cash
obligations as they come due. During the year ended December
31, 1995, the Company generated cash flows from operations of
$9,373,000, used net cash flows of $26,979,000 (net of cash flow
proceeds from maturities and sales of investment securities) to
acquire investment securities, and generated cash flows from
financing activities of $34,506,000. The Consolidated
Statements of Cash Flows presented on page 17 of the
consolidated financial statements provides analysis of the
Company's cash flow activity. Additionally, management
considers that portion of the investment securities and loan
portfolios that mature within one year as part of our liquid
assets. The Company's liquidity is monitored by the ALCO, which
establishes ranges of acceptable liquidity. The current
liquidity position is adequate to fund off-balance sheet
commitments and liabilities as they come due. Please see
additional discussion of off-balance sheet commitments in Note 9
of the Notes to the Consolidated Financial Statements.
Effects of Inflation on Financial Statements
- --------------------------------------------
Substantially all of the Company's assets relate to banking and
are monetary in nature. Therefore, they are not impacted by
inflation in the same manner as companies in capital intensive
industries. During a period of rising prices, a net monetary
asset position results in loss in purchasing power and
conversely a net monetary liability position results in an
increase in purchasing power. In banks, monetary assets exceed
monetary liabilities and therefore, as prices have increased
over the past year, financial institutions experienced a modest
decline in the purchasing power of their assets.
Interest Rate Sensitivity
- -------------------------
The following table presents the Company's interest rate
sensitivity position at December 31, 1995 (dollars in thousands):
0 - 3 4 - 12 1 - 5 Over 5
Months Months Years Years Total
--------- -------- --------- --------- ---------
Interest earning assets:
- ------------------------
Investment securities (all
securities classified as
available-for-sale):
Taxable $4,391 $3,479 $40,276 $59,842 $107,988
Tax-exempt 554 1,544 9,279 12,397 23,774
------- ------- -------- -------- ---------
Total 4,945 5,023 49,555 72,239 131,762
Federal funds sold 3,500 3,500
Loans 132,287 125,060 95,679 26,500 379,526
Interest-bearing
deposits with banks 243 243
------- ------- -------- -------- ---------
Total 140,975 130,083 145,234 98,739 515,031
------- ------- -------- -------- ---------
Interest-bearing liabilities:
- -----------------------------
Deposits 217,271 73,636 88,103 379,010
Federal funds
purchased 1,133 1,133
Securities sold under
agreements to
repurchase 10,927 10,927
Short-term Federal
Home Loan Bank
borrowings 21,216 21,216
Long-term Federal
Home Loan Bank
borrowings 744 2,307 11,314 7,217 21,582
Other long-term
borrowings 1,560 1,560
-------- ------- ------- ------ --------
Total 252,851 75,943 99,417 7,217 435,428
-------- ------- ------- ------ --------
Interest
sensitivity $(111,876) $54,140 $45,817 $91,522 $79,603
========== ======= ======= ======= =======
The Interest Rate Sensitivity table above shows that the Company
is in a net asset sensitivity position. In theory, this means
that if interest rates increase, the Company's net income will
increase over time. Conversely, if interest rates decline,
so too will net income. The above table allocates interest
rate sensitivity within various time frames. Within zero to
three months, the Company is liability sensitive and all
other categories are asset sensitive. Management monitors
the asset and liability sensitivity through the ALCO and
uses this data to make appropriate strategic decisions.
In addition to the interest rate sensitivity schedule and
asset/liability repricing schedules, management has recently
added simulation modeling to its analysis of interest rate risk.
This combination provides dynamic information concerning the
Company's balance sheet structure in different interest rate
environments. When using simulation modeling, assumptions based
on anticipated market pricing are made to interest-earning
assets and interest-bearing liabilities. These adjustments
more accurately determine the interest rate risk of the Company.
In 1996, the Company expects in-house technology to provide
more flexible simulation modeling to assist the ALCO in terms
of balance sheet structure and interest rate risk management.
As part of its asset/liability strategies, the Company may use
certain off-balance sheet derivatives to manage interest rate
risks. In February 1995, the Company paid a $195,000 premium
for interest rate floors with a total notional value of $20
million. The interest rate floors require the counter-party to
pay the difference between the specified floor rate and an index
rate. The Company receives nothing if the index rate exceeds
the specified floor rate. The Company is subject to the risk
that the effect of changes in interest rates will cause the
Company to earn less than the current market rates on the
commercial loans associated with these floors. These interest
rate floors also subject the Company to the risk that the
counter-parties may fail to perform. To minimize this credit
risk, the Company only enters into these types of transactions
with high-quality, financially secure financial institutions.
The exposure to credit risk is substantially less than the
notional principal amounts since only the interest rate
differential is received and the premium was paid at the
inception. These agreements expire in February 1998 and they
did not materially affect net income for 1995.
Outlook for 1996
- ----------------
1996 should be an exciting year for the Company. Many goals
have been established for future operations, most of which focus
on customer service enhancement. In addition to providing
superior customer service, management feels growth into new
markets, as well as further penetration into existing markets,
is a priority of the Company.
In the first half of the year, three full-service offices will
be added in Pomeroy, Gallipolis, and Rutland, Ohio, extending
the markets served by the Company into southern Ohio and
contiguous areas of West Virginia. These offices, along with
approximately $75 million in deposits, will be acquired from an
unaffiliated financial institution. The transaction is subject
to regulatory approval. The new offices reflect the continuing
commitment to expansion of the Company's markets in southeastern
Ohio and beyond.
In late 1995, one of the Company's banking subsidiaries was
awarded insurance agency powers in the State of Ohio. Northwest
Territory Life Insurance Agency, Inc. and Northwest Territory
Property and Casualty Insurance Agency, Inc. (the "Agencies"),
subsidiaries of The First National Bank of Southeastern Ohio,
received Certificates of Qualification to provide full life and
property product lines to consumers in Ohio. These Agencies are
the first in Ohio to be affiliated with a financial institution.
Although management does not expect a material impact on the
results of 1996 operations, the Agencies are poised to produce
significant income growth and long-term value to the Company.
Internal development as well as external affiliation and
acquisition will be used to achieve these goals.
The operating plan for 1996 anticipates net interest income to
remain at levels similar to December 31, 1995. The acquisition
of $75 million in deposits could enhance net interest income
depending on how quickly the Company can invest the acquired
deposits in interest-earning assets with acceptable yields.
Movements in interest rates continue to impact the performance
of financial institutions. However, the Company does not manage
its balance sheet based upon interest rate forecasts. Through
its ALCO, management evaluates the balance sheet and monitors
earnings performance, as well as effectiveness of its liquidity
policy. The group also monitors net interest income, sets
pricing guidelines, and manages interest rate risk for the
Company.
Although net interest income remains a vital portion of the
earnings of the Company, management expects other operational
areas to provide additional revenues or cost savings to enhance
net income. The Company's recent investments in technology will
be complemented in 1996 with the purchase of a broad, PC-based
customer service representative ("CSR") system, which will
connect our CSR's to the Company-wide electronic network and
provide virtually all employees access to this electronic
environment. The CSR project, expected to be fully implemented
in mid-1996, is another phase in the integration of the
Company's financial information. When finished, the system will
enhance customer service as product information will be more
readily available to all CSR's. Electronic communication is the
future of a competitive business, and through increased
investment in technology, the Company anticipates a virtual
electronic financial institution in the future. Costs will be
reduced via decreased paper usage and other efficiencies.
Non-interest income continues to be a priority for enhancement
of earnings. As the Company expands into new products and
markets and increases existing market penetration, it is vital
to determine the appropriate cost-recovery for the services the
Company provides. With the potential earnings from the addition
of the Agencies to the Company's operations, future non-interest
income should increase. The fee income generated by the
Investment and Trust Division as well as other fee income from
electronic banking, service charges, etc., helps offset the
expense incurred to deliver that particular service or product.
In addition to the employees of the Agencies, the Company has
over 50 employees licensed to sell annuities. An outside firm
has been engaged to provide additional products to meet our
customers' financial needs. This program has been successful
for the Company in the past and management expects earnings
streams to be level or improve from this program in the future.
The rapid changes in banking coupled with increased competition
from all arenas have caused our organization to reevaluate the
way in which we do business. A strong customer focus has been
identified as a key to the continued future growth of the
Company. Out of this evaluation process the "Customer First"
concept was born. The basic premise of Customer First is that a
customer's total financial needs can best be met through one
financial consultant with whom they have built a relationship.
The goal is to create a staff of associates well trained in
multiple product lines to serve the changing needs of our
customers over their lifetimes. The Company benefits by
increased sales to a core of loyal, well-satisfied customers who
seek our counsel for all their financial needs. The customer
benefits by having a "Personal Banker" they know and trust to
facilitate their one-stop banking, whatever the need may be.
Recently our associates have begun the Customer First program
and will continue this program in the future.
Comparison of 1994 to 1993
- --------------------------
The Company achieved an increase in net income of $677,000 or
13.4% in 1994. Net income totaled $5,748,000, which provided
primary and fully diluted earnings per share of $1.80 and $1.79,
respectively, for the year ended December 31, 1994. Assets grew
7.0% in 1994 to over $498 million, providing a return on average
assets of 1.20%.
Net income to average stockholders' equity totaled 12.88% in
1994, compared to 12.43% the prior year. Total stockholders'
equity increased 6.7% to $45,635,000 at December 31, 1994. In
1994, the Company adopted SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities", which requires that
debt and equity securities be classified into three different
categories: held-to-maturity, available-for-sale, and trading
securities. The Company adopted SFAS No. 115 on January 1,
1994, and classified the majority of its investment portfolio in
the available-for-sale classification, with unrealized holding
gains and losses excluded from earnings and reported as a
separate component of stockholders' equity. As a direct result
of SFAS No. 115, as market values of investment securities
dropped in 1994, the Company's equity decreased. At December
31, 1994, the Company had a net unrealized holding loss on
available-for-sale securities (net of deferred income taxes) of
$1,030,000.
The year ended December 31, 1994, offered strong loan growth, as
total loans outstanding grew nearly $40 million (or 12.3%) to
$361,353,000. Several factors contributed to overall loan
growth in 1994. The first full year of operation for the
Company's Licking County loan production office opened new
markets for business and real estate loans. Also, many
individuals actively looked to refinance home mortgages in 1994
and the Company was successful in capturing many of these loans.
Increased loan demand resulted in growth in interest-bearing
assets and a corresponding increase in interest-bearing
liabilities. Average interest-earning assets increased
$12,166,000 in 1994, or 2.8%, while interest-bearing liabilities
increased $5,887,000, or 1.6%, resulting in an increase in net
interest-earning assets. The Company also changed its mix in
interest-earning assets, as average loan balances grew
$31,193,000 to $337,475,000. Average balances in lower-yielding
assets such as interest-bearing deposits with other banks and
federal funds sold decreased nearly $14 million to $12,349,000.
This shift allowed the Company to sustain net interest margin.
Non-interest income (excluding gains on sales of investment
securities) increased $168,000 (or 4.3%) to $4,075,000, due
primarily to revenue generated from fiduciary activities and
service charges on deposit accounts. Non-interest expense
increased $548,000 (or 3.6%) to $15,672,000. December 31, 1994,
marked the first full-year of depreciation for bank premises,
furniture, and equipment acquired in relation to the five-story
addition to the downtown Marietta banking facility and the
seven-lane motor banking facility located at Second and Scammel
Streets in downtown Marietta. Other categories of non-interest
expense did not experience dramatic changes in 1994.
In 1994, the Company recorded net losses of $237,000 resulting
from the sales of investment securities. Management elected to
sell some of the lower yielding investments in its
available-for-sale portion of the portfolio and replace those
securities with higher-yielding investments. This opportunity
to improve the overall yield of the portfolio was available due
to dramatic increases in market interest rates during 1994. In
1993, the Company recorded gains of $45,000 on the sales of
investment securities.
DIRECTORS
- ---------
Peoples Bancorp Inc.
- --------------------
Jewell Baker
Co-Owner, B & N Coal Company
Dennis D. Blauser
President, Blauser Energy Corp.
George W. Broughton
Executive Vice President
and Director of Sales and Marketing
Broughton Foods Company
Wilford D. Dimit
Owner, First Settlement Square
Robert E. Evans
President and Chief Executive Officer
Barton S. Holl
Chairman of the Board
Logan Clay Products
Norman J. Murray
Retired, The Airolite Company
James B. Stowe
Chairman of the Board
Stowe Truck and Equipment Company
Paul T. Theisen
Attorney, Theisen, Brock, Frye, Erb, & Leeper Co., L.P.A.
Thomas C. Vadakin
President, Vadakin, Inc.
Joseph H. Wesel, Chairman
President
Marietta Automotive Warehouse, Inc.
DIRECTORS EMERITUS
Carl L. Broughton
R. Neil Christy
William K. Hamer
William E. McKinney
Fred R. Price
The Peoples Banking and Trust Company
- -------------------------------------
Dave M. Archer
President, Pioneer Pipe, Inc.
Dennis D. Blauser
President, Blauser Energy Corp.
George W. Broughton
Executive Vice President
and Director of Sales and Marketing
Broughton Foods Company
Wilford D. Dimit
Owner, First Settlement Square
Robert E. Evans
President and Chief Executive Officer
Brenda F. Jones, M.D.
Medical Director
Marietta Opthamology Associates, Inc.
Harold D. Laughlin
Owner, Laughlin Music and Vending Service
Rex E. Maiden
President, Maiden & Jenkins Construction Co.
Norman J. Murray, Chairman
Retired, The Airolite Company
T. Pat Sauber
Owner, McDonald's Restaurants
James B. Stowe
Chairman of the Board
Stowe Truck and Equipment Company
Paul T. Theisen
Attorney, Theisen, Brock, Frye, Erb, & Leeper Co., L.P.A.
Thomas C. Vadakin
President, Vadakin, Inc.
Joseph H. Wesel
President
Marietta Automotive Warehouse, Inc.
DIRECTORS EMERITUS
Carl L. Broughton
R. Neil Christy
William K. Hamer
William E. McKinney
The First National Bank of Southeastern Ohio
- --------------------------------------------
Larry J. Armstrong
Armstrong and Smith
Carl Baker, Jr.
Co-Owner, B & N Coal Company
Robert E. Evans
President and Chief Executive Officer
Peoples Bancorp Inc.
Wilfred O. Hill
Retired, Oil and Gas
Charles R. Hunsaker
General Counsel
0H. Clayton John
Vice Chairperson
James D. McKinney
Retired Superintendent
Morgan County Schools
Carol A. Schneeberger, Chairperson
Vice President, Operations
Peoples Bancorp Inc.
Paul T. Theisen
Attorney, Theisen, Brock, Frye, Erb, & Leeper Co., L.P.A.
Rick D. Turner
President and Chief Executive Officer
DIRECTORS EMERITUS
Marcus Gant
Arthur W. Gilchrist
OFFICERS
- --------
Peoples Bancorp Inc.
- --------------------
OFFICERS
Robert E. Evans
President and Chief Executive Officer
Carol A. Schneeberger
Vice President
Operations
Rolland B. Swart
Vice President
Business Development
Charles R. Hunsaker
General Counsel
John W. Conlon
Chief Financial Officer
Jeffrey D. Welch
Treasurer
RobRoy Walters
Controller
Ruth I. Otto
Corporate Secretary
Karen V. Clark
Auditor
Johanna Burke
Assistant Auditor
Teresa A. Pyles
Security Officer
Mark F. Bradley
Manager of Accounting and External Reporting
The Peoples Banking and Trust Company
- -------------------------------------
EXECUTIVE OFFICERS
Robert E. Evans
President and Chief Executive Officer
David B. Baker
President, Investment and Trust Division
John W. Conlon
Chief Financial Officer and Treasurer
Larry E. Holdren
Executive Vice President
Director of Human Resources
Robert A. McKnight
Executive Vice President
Lending
Robert W. Mingus
Executive Vice President
President, Athens/Meigs Division
Joseph S. Yazombek
Executive Vice President
Mortgage Lending
BANKING AND LENDING
John A. King
Vice President and
Executive Officer
Nelsonville Office
William L. Malster
Vice President
David M. Redrow
Vice President/Licking Co.
Jerald L. Post
Vice President
RobRoy Walters
Controller
David L. Batten
Assistant Vice President
Susan L. Corcoran
Assistant Vice President
Operations
Joseph P. Flinn
Assistant Vice President
Personal Loan Manager
Sondra K. Herlan
Loan Officer
Paul A. Huffman
Assistant Vice President
Operations
Mary Ann Mitchell
Assistant Vice President
Betty L. Reynolds
Assistant Vice President
Larry P. Smith
Assistant Vice President
Ruth I. Otto
Assistant Secretary
Julie I. Giffin
Manager, Account Services
Cathleen S. Knox
Loan Officer/Loan Analyst
Cathy J. Linscott
Loan Officer
Beverly C. Mellinger
Loan Officer
Charles V. Robinson, Jr.
Loan Officer/Credit Administration
Jonathan T. Schenz
Loan Officer
Jeffrey F. Crabill
Vice President/Licking Co.
Loan Officer
Mark F. Bradley
Manager of Accounting and External Reporting
INFORMATION SYSTEMS
R. Joe Cowdery
Vice President/Manager
Information Systems
Michael E. Weaver
Manager/Computer Systems
LEGAL AND COMPLIANCE
Charles R. Hunsaker
Vice President and General Counsel
Charles Snodgrass
Assistant Vice President
Teresa A. Pyles
Assistant Compliance
Officer and Security Officer
INVESTMENT AND TRUST DIVISION
David B. Baker
President, Investment and Trust Division
Rose N. Haas
Vice President and Investment Officer
Jeffrey D. Welch, CPA
Vice President and Trust Officer
Beth Ann Worthington
Vice President
Personal Trust Officer
Ronald L. Close
Financial Planning Officer
The First National Bank of Southeastern Ohio
- --------------------------------------------
OFFICERS
Rick D. Turner
President and Chief Executive Officer
Kenneth E. Shafer
Executive Vice President and Cashier
Catherine R. Ogle
Vice President/Lending
Thomas D. Hesson
Assistant Vice President/Operations
Kristi A. Schafer
Assistant Vice President
Marketing and Business Development
Michael J. Schramm
Assistant Vice President
Manager, McConnelsville
Office and Security Officer
Cheryl Hanson
Loan Officer
Manager, Chesterhill Office
Ruth I. Otto
Secretary
Karen Mills
Assistant Secretary
Charles R. Hunsaker
General Counsel
EXHIBIT 21
- ----------
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1995
Subsidiaries of Peoples Bancorp Inc.
- ------------------------------------
The following are the only subsidiaries of Peoples Bancorp Inc.:
Jurisdiction of
Name of Subsidiary Incorporation
- ---------------------------------------------------- ------------------
The Peoples Banking and Trust Company Ohio
The First National Bank of Southeastern Ohio
("First National Bank") United States
Northwest Territory Life Insurance Agency, Inc.
(Subsidiary of First National Bank) Ohio
Northwest Territory Property & Casualty Life
Insurance Agency, Inc. (Subsidiary of
First National Bank) Ohio
The Northwest Territory Life Insurance Company Arizona
EXHIBIT 23(a)
- -------------
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1995
CONSENT OF INDEPENDENT AUDITORS
- -------------------------------
We consent to the incorporation by reference in this Annual
Report (Form 10-K) of Peoples Bancorp Inc. of our report dated
January 25, 1996, included in the 1995 Annual Report to
Shareholders of Peoples Bancorp Inc.
We also consent to the incorporation by reference in the
Registration Statements pertaining to the Amended and Restated
Stock Option Plan (Form S-8, No. 33-67878) and the 1995 Stock
Option Plan (Form S-8, No. 33-59569) of Peoples Bancorp Inc. of
our report dated January 25, 1996, with respect to the
consolidated financial statements of Peoples Bancorp Inc. and
Subsidiaries incorporated by reference in the Annual Report on
Form 10-K for the year ended December 31, 1995.
/s/ ERNST & YOUNG LLP
Ernst & Young LLP
Charleston, West Virginia
March 25, 1996
EXHIBIT 23(b)
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1995
CONSENT OF INDEPENDENT ACCOUNTANTS
- ----------------------------------
We consent to the incorporation by reference in the registration
statement of Peoples Bancorp Inc. on Form S-8 of our report
dated January 26, 1995, on our audits of the consolidated
financial statements of Peoples Bancorp Inc. as of December 31,
1994, and for the years ended December 31, 1994 and 1993, which
report is included in this Annual Report on Form 10-K.
/s/ COOPERS & LYBRAND L.L.P.
Coopers & Lybrand L.L.P.
Columbus, Ohio
March 25, 1996
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the Form
10-K filed as of December 31, 1995.
</LEGEND>
<CIK> 0000318300
<NAME> PEOPLES BANCORP INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 17,251
<INT-BEARING-DEPOSITS> 243
<FED-FUNDS-SOLD> 3,500
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 131,762
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 379,526
<ALLOWANCE> 6,726
<TOTAL-ASSETS> 543,430
<DEPOSITS> 429,077
<SHORT-TERM> 33,276
<LIABILITIES-OTHER> 6,461
<LONG-TERM> 23,142
0
0
<COMMON> 30,898
<OTHER-SE> 20,576
<TOTAL-LIABILITIES-AND-EQUITY> 543,430
<INTEREST-LOAN> 34,501
<INTEREST-INVEST> 6,881
<INTEREST-OTHER> 2,010
<INTEREST-TOTAL> 43,392
<INTEREST-DEPOSIT> 18,384
<INTEREST-EXPENSE> 20,777
<INTEREST-INCOME-NET> 22,615
<LOAN-LOSSES> 1,315
<SECURITIES-GAINS> 24
<EXPENSE-OTHER> 16,818
<INCOME-PRETAX> 8,639
<INCOME-PRE-EXTRAORDINARY> 6,050
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,050
<EPS-PRIMARY> 1.90
<EPS-DILUTED> 1.89
<YIELD-ACTUAL> 4.73
<LOANS-NON> 482
<LOANS-PAST> 1,236
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 2,041
<ALLOWANCE-OPEN> 6,783
<CHARGE-OFFS> 1,803
<RECOVERIES> 431
<ALLOWANCE-CLOSE> 6,726
<ALLOWANCE-DOMESTIC> 6,726
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 150
</TABLE>
EXHIBIT 99
- ----------
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1995
To the Stockholders and Board of Directors of Peoples Bancorp Inc.
We have audited the accompanying consolidated balance sheet of
Peoples Bancorp Inc. and Subsidiaries as of December 31, 1994
and the consolidated statements of income, stockholders' equity,
and cash flows for the years ended December 31, 1994 and 1993.
These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Peoples Bancorp Inc. and Subsidiaries as
of December 31, 1994 and the consolidated results of their
operations and their cash flows for the years ended December 31,
1994 and 1993 in conformity with generally accepted accounting
principles.
As discussed in Note 3 to the consolidated financial statements,
the Corporation changed its method of accounting for investment
securities in 1994. As discussed in Notes 10 and 11, the
Corporation changed its methods of accounting for postretirement
benefits other than pensions and income taxes in 1993.
/s/ COOPERS & LYBRAND L.L.P.
Coopers & Lybrand L.L.P.
Columbus, Ohio
January 26, 1996
