SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
PEOPLES FINANCIAL CORPORATION
_______________________________________________________________________
(Name of Registrant as Specified In Its Charter)
PEOPLES FINANCIAL CORPORATION
_______________________________________________________________________
(Name of Person(s) Filing Proxy Statement if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined)
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
PEOPLES FINANCIAL CORPORATION
211 Lincoln Way East
Massillon, Ohio 44646
(330) 832-7441
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the 1997 Annual Meeting of Shareholders of
Peoples Financial Corporation ("PFC") will be held at the main office of Peoples
Federal Savings and Loan Association of Massillon, 211 Lincoln Way East,
Massillon, Ohio 44646, on March 19, 1997, at 2:00 p.m., Eastern Time (the
"Annual Meeting"), for the following purposes, all of which are more completely
set forth in the accompanying Proxy Statement:
1. To elect three directors of PFC for terms expiring in 1999;
2. To approve the Peoples Financial Corporation 1997 Stock Option and
Incentive Plan, a copy of which is attached hereto as Exhibit A;
3. To approve the Peoples Financial Corporation Recognition and Retention
Plan and Trust Agreement, a copy of which is attached hereto as
Exhibit B;
4. To ratify the selection of Grant Thornton LLP as the auditors of PFC
for the current fiscal year; and
5. To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
Only shareholders of PFC of record at the close of business on January 28,
1997, will be entitled to receive notice of and to vote at the Annual Meeting
and at any adjournments thereof. Whether or not you expect to attend the Annual
Meeting, we urge you to consider the accompanying Proxy Statement carefully and
to SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY SO THAT YOUR SHARES MAY BE
VOTED IN ACCORDANCE WITH YOUR WISHES AND THE PRESENCE OF A QUORUM AT THE ANNUAL
MEETING MAY BE ASSURED. The giving of a proxy does not affect your right to vote
in person in the event you attend the Annual Meeting.
By Order of the Board of Directors
Paul von Gunten, President
Massillon, Ohio
February 7, 1997
<PAGE>
Peoples Financial Corporation
211 Lincoln Way East
Massillon, Ohio 44646
(330) 832-7441
PROXY STATEMENT
PROXIES
The enclosed proxy is being solicited by the Board of Directors of Peoples
Financial Corporation, an Ohio corporation ("PFC"), for use at the 1997 Annual
Meeting of Shareholders of PFC to be held at the main office of Peoples Federal
Savings and Loan Association of Massillon ("Peoples Federal"), 211 Lincoln Way
East, Massillon, Ohio 44646, on March 19, 1997, at 2:00 p.m., Eastern Time, and
at any adjournments thereof (the "Annual Meeting"). Without affecting any vote
previously taken, the proxy may be revoked by a shareholder by execution of a
later dated proxy which is received by PFC before the proxy is exercised or by
giving notice of revocation to PFC in writing or in open meeting before the
proxy is exercised. Attendance at the Annual Meeting will not, of itself, revoke
a proxy.
Each properly executed proxy received prior to the Annual Meeting and not
revoked will be voted as specified thereon or, in the absence of specific
instructions to the contrary, will be voted:
FOR the election of Victor C. Baker, Vincent G. Matecheck and Paul von
Gunten as directors of PFC for terms expiring in 1999;
FOR the approval of the Peoples Financial Corporation 1997 Stock
Option and Incentive Plan (the "Stock Option Plan"), a copy of which
is attached hereto as Exhibit A;
FOR the approval of the Peoples Financial Corporation Recognition and
Retention Plan and Trust Agreement (the "RRP"), a copy of which is
attached hereto as Exhibit B; and
FOR the ratification of the selection of Grant Thornton LLP ("Grant
Thornton") as the auditors of PFC for the current fiscal year.
Proxies may be solicited by the directors, officers and other employees of PFC
and Peoples Federal Savings and Loan Association of Massillon ("Peoples
Federal"), in person or by telephone, telecopy, telegraph or mail, only for use
at the Annual Meeting. Such proxies will not be used for any other meeting. The
cost of soliciting proxies will be borne by PFC.
Only shareholders of record as of the close of business on January 28, 1997
(the "Voting Record Date"), are entitled to vote at the Annual Meeting. Each
such shareholder will be entitled to cast one vote for each share owned. PFC's
records disclose that, as of the Voting Record Date, there were 1,491,012 votes
entitled to be cast at the Annual Meeting.
This Proxy Statement is first being mailed to the shareholders of PFC on or
about February 7, 1997.
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<PAGE>
VOTE REQUIRED
Election of Directors
Under Ohio law and PFC's Code of Regulations (the "Regulations"), the three
nominees receiving the greatest number of votes will be elected as directors.
Each shareholder will be entitled to cast one vote for each share owned. Shares
as to which the authority to vote is withheld are not counted toward the
election of directors or toward the election of the individual nominees
specified in the enclosed Proxy. If the enclosed Proxy is signed and dated by
the shareholder but no vote is specified thereon, the shares held by such
shareholder will be voted FOR the re-election of the three nominees.
Approval of the Stock Option Plan and the RRP
The affirmative vote of the holders of at least a majority of the
outstanding shares of PFC is necessary to approve the Stock Option Plan and the
RRP. Generally, shares which are held by a nominee for a beneficial owner and
which are represented in person or by proxy at the Annual Meeting but not voted
with respect to such proposals ("Non-votes") will have the same effect as a vote
against the approval of the Stock Option Plan and the RRP. If, however, a
shareholder has signed and dated a proxy in the form of the enclosed Proxy but
has not voted on the approval of the Stock Option Plan or the RRP by checking
the appropriate block on the Proxy, such person's shares will be voted FOR the
adoption of the Stock Option Plan or the RRP and will not be considered
Non-votes.
Ratification of Selection of Auditors
The affirmative vote of the holders of a majority of the shares of PFC
represented in person or by proxy at the Annual Meeting is necessary to ratify
the selection of Grant Thornton as the auditors of PFC for the current fiscal
year. Non-votes will have the same effect as a vote against the approval of such
ratification, as will abstentions. If, however, a shareholder has signed and
dated a proxy in the form of the enclosed Proxy but has not voted on the
ratification of the selection of Grant Thornton by checking an appropriate block
on the Proxy, such person's shares will be voted FOR the ratification of the
selection of Grant Thornton and will not be considered Non-votes.
VOTING SECURITIES AND OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the only
person known to PFC to own beneficially more than five percent of the
outstanding common shares of PFC as of January 15, 1997:
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP SHARES OUTSTANDING
- ---------------- -------------------- ------------------
Jeffrey S. Hallis 132,384 8.9%
500 Park Avenue
Fifth Floor
New York, New York 10022
- --------------------------
(1) According to a Schedule 13D provided to PFC by Mr. Hallis, Mr. Hallis
possesses sole voting and investment control over (1) 115,192 common shares
pursuant to the Agreements of Limited Partnership of Tyndall Partners,
L.P., and Madison Avenue Partners, L.P., and (2) 17,192 common shares owned
jointly with his spouse.
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<PAGE>
The following table sets forth certain information with respect to the
number of common shares of PFC beneficially owned by each director of PFC and by
all directors and executive officers of PFC as a group as of January 15, 1997:
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
-----------------------------------
SOLE VOTING AND SHARED VOTING AND PERCENT OF
NAME AND ADDRESS (1) INVESTMENT POWER INVESTMENT POWER SHARES
- -------------------- ---------------- ---------------- OUTSTANDING
-----------
Victor C. Baker 8,000 - .54%
James P. Bordner 2,000 3,000 .34
Vincent G. Matecheck 8,300 100 .56
Thomas E. Shelt 16,000 4,500 1.37
Vince E. Stephan 10,000 - .67
Paul von Gunten 38,192 13,000 3.43
All directors and executive
officers of PFC as a group 82,492 21,600 6.98%
(7 people)
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(1) Each of the persons listed in this table may be contacted at the address of
PFC.
PROPOSAL ONE - ELECTION OF DIRECTORS
Election of Directors
The Regulations provide for a Board of Directors consisting of six persons
divided into two classes. In accordance with Section 2.02 of the Regulations,
nominees for election as directors may be proposed only by the directors or by a
shareholder entitled to vote for directors if such shareholder has submitted a
written nomination to the Secretary of PFC by the later of the November 30th
immediately preceding the annual meeting of shareholders or the sixtieth day
before the first anniversary of the most recent annual meeting of shareholders
held for the election of directors. Each such written nomination must state the
name, age, business or residence address of the nominee, the principal
occupation or employment of the nominee, the number of common shares of PFC
owned either beneficially or of record by each such nominee and the length of
time such shares have been so owned.
The Board of Directors proposes the re-election of the following persons to
serve until the Annual Meeting of Shareholders in 1999 and until their
successors are duly elected and qualified or until their earlier resignation,
removal from office or death:
DIRECTOR DIRECTOR
OF PFC OF PEOPLES
NAME AGE (1) POSITION(S) HELD SINCE (2) FEDERAL SINCE
---- ------- ---------------- --------- -------------
Victor C. Baker 73 Director 1995 1984
Vincent G. Matecheck 52 Director, Secretary 1995 1987
and Attorney
Paul von Gunten 70 Director, President 1995 1968
and CEO
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(1) As of January 31, 1997.
(2) Messrs. Baker, Matecheck and von Gunten became directors of PFC in
connection with the conversion of Peoples Federal from mutual to stock form
(the "Conversion") and the formation of PFC as the holding company for
Peoples Federal.
If any nominee is unable to stand for election, any proxies granting
authority to vote for such nominee will be voted for such substitute as the
Board of Directors recommends.
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<PAGE>
The following directors will continue to serve as directors of PFC after
the Annual Meeting for the terms indicated:
<TABLE>
DIRECTOR OF DIRECTOR OF
NAME AGE (1) POSITIONS HELD PFC SINCE (2) TERM EXPIRES PEOPLES FEDERAL
- ---- ------- -------------- --------------------------- SINCE
---------------
<S> <C> <C> <C> <C>
James P. Bordner 54 Director 1995 1998 1992
Thomas E. Shelt 63 Director 1995 1998 1978
Vince E. Stephan 80 Director and 1995 1998 1970
Chairman of
the Board
</TABLE>
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(1) As of January 31, 1997.
(2) Each director became a director of PFC in connection with the Conversion.
Mr. Baker retired in 1982 after owning and operating Sunny Slope Orchard, a
family operated, wholesale and retail fruit market, bakery and sweet shop
located in Massillon, Ohio, for 40 years.
Mr. Matecheck has served as legal counsel to Peoples Federal since 1992 and
as Vice President from February 1995 to January 1996. Mr. Matecheck has been a
sole practitioner since 1971. He is also the Secretary and a director of P. J.
Bordner and Company, Inc., and Polymer Packaging, Inc., of Canton, Ohio; a
partner of Federal Avenue Office Building Company; a director of Gordy Graybill,
Inc.; and the President and a member of the Board of Trustees of the United Way
of Western Stark County.
Mr. von Gunten has been employed by Peoples Federal since 1948 and has
served as President and Chief Executive Officer since 1979. Mr. von Gunten has
served as President of PFC since 1995.
Mr. Bordner has been the President of P. J. Bordner and Company, Inc., a
grocery store chain in Massillon, Ohio, since 1980.
Mr. Shelt was employed by Peoples Federal from 1961 until his retirement in
December 1994. For the last fifteen years of his employment, he served as Vice
President. He is currently engaged in farming and real estate investment.
Mr. Stephan has been Chairman of the Board of Peoples Federal since 1989.
He is Vice President of Manchester Hardware, Inc., a hardware store located in
Manchester, Ohio, and retired in 1980 after serving for 25 years as an insurance
agent for Nationwide Company in Canal Fulton, Ohio. He currently operates a
family farm.
Meetings of Directors
PFC was incorporated in November 1995. The Board of Directors of PFC met
five times for regularly scheduled and special meetings during the fiscal year
ended September 30, 1996. Each director attended at least 75% of the aggregate
of such meetings. No PFC Board of Directors committee meetings were held during
fiscal year 1996.
Each director of PFC is also a director of Peoples Federal. The Board of
Directors of Peoples Federal met 18 times for regularly scheduled and special
meetings during the fiscal year ended September 30, 1996. Each director attended
at least 75% of the aggregate of such meetings.
Committees of Directors
The Board of Directors of PFC does not have a nominating committee or a
compensation committee. Nominees for election to the Board of Directors are
selected by the entire Board of Directors. The Board of Directors of PFC has an
Audit Committee. The Audit Committee recommends audit firms to the full Board of
Directors and reviews and approves the annual independent audit report. The
members of the Audit Committee are Messrs. Baker, Bordner and Shelt. The Audit
Committee did not meet during the fiscal year ended September 30, 1996.
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<PAGE>
The Board of Directors of Peoples Federal has no committees.
Executive Officers
In addition to Mr. von Gunten, the President of both PFC and Peoples
Federal, and Mr. Matecheck, the Secretary of PFC, the following persons are
executive officers of PFC and Peoples Federal and hold the designated positions:
NAME AGE (1) POSITION(S) HELD
- ---- --------- ----------------
William P. Hart 58 Vice President of Peoples Federal
Linda L. Fowler 52 Secretary of Peoples Federal
James R. Rinehart 53 Treasurer of PFC and Peoples Federal
Cindy A. Wagner 44 Assistant Treasurer of Peoples Federal
- -----------------------------
(1) As of January 31, 1997.
Mr. Hart joined Peoples Federal in January 1996. Prior to joining Peoples
Federal, Mr. Hart was employed by Citizens Savings Bank in Canton, Ohio, serving
as Vice President of Loan Originations since 1978. Mr. Hart has also taught real
estate finance in the Continuing Adult Education Programs at Malone College
since 1983 and at Kent State University since 1979.
Ms. Fowler has been employed by Peoples Federal since 1962. She served as
Treasurer from 1986 to 1991 and has served as Secretary since 1991.
Mr. Rinehart has served as Treasurer of PFC since 1995. Mr. Rinehart has
also been employed by Peoples Federal since May 1994, first serving as
Accountant and then as Assistant Treasurer from January 1995 to March 1996, when
he became Treasurer. Prior to joining Peoples Federal, Mr. Rinehart was an
accountant with Hall, Kistler & Company P.L.L. ("Hall, Kistler") from 1963 to
1994, with a two-year interruption for military service.
Ms. Wagner has been employed by Peoples Federal since 1986. She served as
Treasurer from 1991 until March 1996, when she became Assistant Treasurer.
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<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Executive Compensation
The following table presents certain information regarding the cash
compensation received by the President and Chief Executive Officer of PFC and
Peoples Federal. No other executive officer of PFC or Peoples Federal received
compensation in excess of $100,000 during the fiscal years ended September 30,
1996 and 1995:
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------
Annual Compensation All Other
Compensation
------------------------
Name and Year Salary ($) Bonus ($)
Principal
Position
- --------------------------------------------------------------------------
Paul von Gunten 1996 $113,648(1) $12,500 $17,556(2)
President and 1995 $105,796(3) $11,000 $21,812(4)
Chief Executive
Officer
- -----------------------------
(1) Includes salary of $103,148 and directors' fees of $10,500. Does not
include amounts attributable to other miscellaneous benefits received by
executive officers. The cost to PFC or Peoples Federal of providing such
benefits to Mr. von Gunten was less than 10% of his cash compensation.
(2) Consists of Peoples Federal's contribution to Mr. von Gunten's 401(k)
defined contribution plan account in the amount of $17,347 and the premium
of $209 paid by Peoples Federal for insurance on the life of Mr. von Gunten
payable to a beneficiary designated by Mr. von Gunten.
(3) Includes salary of $97,496 and directors' fees of $8,300. Does not include
amounts attributable to other miscellaneous benefits received by executive
officers. The cost to Peoples Federal of providing such benefits to Mr. von
Gunten was less than 10% of his cash compensation.
(4) Consists of Peoples Federal's contribution to Mr. von Gunten's 401(k)
defined contribution plan account in the amount of $21,711 and the premium
of $101 paid by Peoples Federal for insurance on the life of Mr. von Gunten
payable to a beneficiary designated by Mr. von Gunten.
PFC currently pays no directors' fees. Each director of Peoples Federal
receives a retainer fee of $2,400 for service as a director, plus $500 for each
monthly meeting attended. The Chairman of the Board and the Vice Chairman of the
Board also receive additional monthly fees of $600 and $350, respectively.
During the fiscal year ended September 30, 1996, a total of $75,400 was paid in
directors' fees.
Employment Agreements
On November 15, 1996, Peoples Federal entered into an employment agreement
with Mr. von Gunten (the "Employment Agreement").
The Employment Agreement provides for a term of three years, a salary of
not less than $102,408 and a performance review by the Board of Directors not
less often than annually. The Employment Agreement also provides for the
inclusion of Mr. von Gunten in any formally established employee benefit, bonus,
pension and profit-sharing plans for which senior management personnel are
eligible.
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<PAGE>
The Employment Agreement is terminable by Peoples Federal at any time. In
the event of termination by Peoples Federal for "just cause," as defined in the
Employment Agreement, Mr. von Gunten will have no right to receive any
compensation or other benefits for any period after such termination. In the
event of termination by Peoples Federal other than for just cause, at the end of
the term of the Employment Agreement or in connection with a "change of
control," as defined in the Employment Agreement, Mr. von Gunten will be
entitled to a continuation of salary payments for a period of time equal to the
term of the Employment Agreement and a continuation of benefits substantially
equal to those being provided at the date of termination of employment until the
earliest to occur of the end of the term of the Employment Agreement or the date
on which Mr. von Gunten becomes employed full-time by another employer.
The Employment Agreement also contains provisions with respect to the
occurrence of the following within one year of a "change of control": (1) the
termination of employment of Mr. von Gunten for any reason other than just
cause, retirement or termination at the end of the term of the Employment
Agreement; (2) a material change in the capacity or circumstances in which Mr.
von Gunten is employed; or (3) a material reduction in his responsibilities,
authority, compensation or other benefits provided under the Employment
Agreement. In the event of any such occurrence, Mr. von Gunten will be entitled
to receive an amount equal to three times his average annual compensation for
the three taxable years immediately preceding the termination of employment. In
addition, Mr. von Gunten will be entitled to continued coverage under all
benefit plans until the earliest of the end of the term of the Employment
Agreement or the date on which he is included in another employer's benefit
plans as a full-time employee. The maximum which Mr. von Gunten may receive
under such provisions, however, is limited to an amount that will not result in
the imposition of a penalty tax pursuant to Section 280G(b)(3) of the Internal
Revenue Code of 1986, as amended (the "Code"), and an amount that will not
violate applicable restrictions of the Office of Thrift Supervision (the "OTS").
A "change of control," as defined in the Employment Agreement, generally refers
to the acquisition by any person or entity of the ownership or power to vote 10%
or more of the voting stock of Peoples Federal or PFC, the control of the
election of a majority of the directors of Peoples or PFC or the exercise of a
controlling influence over the management or policies of Peoples Federal or PFC.
Certain Transactions
In accordance with OTS regulations, Peoples Federal makes loans to
executive officers and directors of Peoples Federal and PFC in the ordinary
course of business and on the same terms and conditions, including interest
rates and collateral, as those of comparable loans to other persons. All loans
outstanding to executive officers and directors during the last two fiscal years
were made pursuant to such policy, do not involve more than the normal risk of
collectibility or present other unfavorable features and are current in their
payments.
During the fiscal year ended September 30, 1996, Peoples Federal retained
the services of Vincent G. Matecheck, an attorney engaged in private practice in
the Massillon area. Mr. Matecheck is a director of Peoples Federal and PFC and
serves as general counsel to Peoples Federal. During fiscal years 1995 and 1996,
Mr. Matecheck was paid $13,549 and $16,199, respectively, for services rendered
as general counsel to Peoples Federal.
PROPOSAL TWO - APPROVAL OF THE PEOPLES FINANCIAL CORPORATION
1997 STOCK OPTION AND INCENTIVE PLAN
General
On January 22, 1997, the Board of Directors of PFC adopted the Stock Option
Plan. In accordance with the terms of the Stock Option Plan and regulations of
the OTS, the Stock Option Plan must be approved by the holders of a majority of
the outstanding shares of PFC. The provisions of the Stock Option Plan comply
with OTS regulations. The OTS in no way endorses or approves the Stock Option
Plan. The Board of Directors of PFC recommends that the shareholders of PFC
approve the Stock Option Plan.
The following is a summary of the terms of the Stock Option Plan and is
qualified in its entirety by reference to the full text of the Stock Option
Plan, a copy of which is attached hereto as Exhibit A.
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<PAGE>
Purpose, Administration and Eligibility
The purposes of the Stock Option Plan include retaining and providing
incentives to the directors, officers and employees of PFC and its subsidiaries
by facilitating their purchase of a stock interest in PFC. Pursuant to the Stock
Option Plan, 149,101 common shares have been reserved for issuance by PFC upon
the exercise of options to be granted to certain directors, officers and
employees of Peoples Federal and PFC from time to time under the Stock Option
Plan. At January 22, 1997, approximately 27 persons were eligible to receive
options granted under the Stock Option Plan. If all shares reserved for issuance
pursuant to the exercise of options granted under the Stock Option Plan are
issued, the voting power of existing shareholders will be diluted by
approximately 9.1% and the influence of directors and officers of PFC over the
outcome of the vote on any matters submitted to PFC shareholders, including
changes of control, will increase.
The Stock Option Plan will be administered by a committee of directors
composed of at least three directors of PFC who are not employees of PFC (the
"Stock Option Committee"). The Stock Option Committee may grant options under
the Stock Option Plan at such times as they deem most beneficial to Peoples
Federal and PFC on the basis of the individual participant's position and duties
and the value of the individual's services and responsibilities to Peoples
Federal and PFC. Grants must be made in accordance with OTS regulations which
provide that no individual may receive options to purchase more than 25% of the
shares which are reserved for issuance under the Stock Option Plan and that no
director who is not an employee of PFC or Peoples Federal may receive options to
purchase more than 5% of such shares individually or 30% in the aggregate.
Without further approval of the shareholders, the Board of Directors may at
any time terminate the Stock Option Plan or may amend it from time to time in
such respects as the Board of Directors may deem advisable, except that the
Board of Directors may not, without the approval of the shareholders, make any
amendment which would (a) increase the aggregate number of common shares which
may be issued under the Stock Option Plan (except for adjustments to reflect
certain changes in the capitalization of PFC), (b) materially modify the
requirements as to eligibility for participation in the Stock Option Plan, or
(c) materially increase the benefits accruing to participants under the Stock
Option Plan. Notwithstanding the foregoing, the Board of Directors may amend the
Stock Option Plan to take into account changes in applicable securities, federal
income tax and other applicable laws.
Option Terms
Options granted under the Stock Option Plan may be "incentive stock
options" within the meaning of Section 422 of the Code ("ISOs") or may not be
ISOs ("Non-qualified Options"). The option exercise price for ISOs and
Non-qualified Options will be determined by the Stock Option Committee at the
time of grant, but must not be less than 100% of the fair market value of the
shares on the date of the grant. No stock option will be exercisable after the
expiration of ten years from the date of grant. In the case of an ISO granted to
an employee who owns more than 10% of PFC's outstanding common shares at the
time an ISO is granted under the Stock Option Plan, however, the exercise price
of the ISO may not be less than 110% of the fair market value of the shares on
the date of the grant and the ISO may not be exercisable after the expiration of
five years from the date of grant.
An option recipient will not be permitted to transfer or assign an option
other than by will or in accordance with the laws of descent and distribution.
If an officer or director is "terminated for cause," as defined in the Stock
Option Plan, any option which has not been exercised shall terminate as of the
date of such termination for cause.
PFC will receive no monetary consideration for the granting of options
under the Stock Option Plan. Upon the exercise of options, PFC will receive
payment of cash or, if acceptable to the Stock Option Committee, common shares
of PFC or surrendered outstanding stock options. The market value of the common
shares underlying the options reserved for the Stock Option Plan is $2,050,139,
based upon the number of shares reserved, multiplied by the $13.75 per share
closing bid price quoted by The Nasdaq SmallCap Market ("Nasdaq") on January 22,
1997.
Tax Treatment of Incentive Stock Options
An optionee who is granted an ISO will not recognize taxable income either
on the date of grant or on the date of exercise, although the alternative
minimum tax may apply. Upon disposition of shares acquired from the exercise of
an ISO, long-term capital gain or loss is generally recognized in an amount
equal to the difference between the amount realized on the sale or disposition
and the exercise price. If the optionee disposes of the shares within two years
of the date of grant or within one year from the date of the transfer of the
shares to the optionee (a "Disqualifying Disposition"), however, then the
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<PAGE>
optionee will recognize ordinary income, as opposed to capital gain, at the time
of disposition in an amount generally equal to the lesser of (i) the amount of
gain realized on the disposition, or (ii) the difference between the fair market
value of the shares received on the date of exercise and the exercise price. Any
remaining gain or loss is treated as a short-term or long-term capital gain or
loss, depending upon the period of time the shares have been held.
PFC is not entitled to a tax deduction upon either the exercise of an ISO
or the disposition of shares acquired pursuant to such exercise, except to the
extent that the optionee recognizes ordinary income in a Disqualifying
Disposition. Ordinary income from a Disqualifying Disposition will constitute
compensation but will not be subject to tax withholding, nor will it be
considered wages for payroll tax purposes.
If the holder of an ISO pays the exercise price, in whole or in part, with
previously acquired shares, the exchange should not affect the ISO tax treatment
of the exercise. Upon such exchange, and except as otherwise described herein,
no gain or loss is recognized by the optionee upon delivering previously
acquired shares to PFC, and shares received by the optionee equal in number to
previously acquired common shares exchanged therefor will have the same basis
and holding period for long-term capital gain purposes as the previously
acquired shares. (The optionee, however, will not be able to utilize the prior
holding period for the purpose of satisfying the ISO statutory holding period
requirements for avoidance of a Disqualifying Disposition.) Shares received by
the optionee in excess of the number of shares previously acquired will have a
basis of zero and a holding period which commences as of the date the shares are
transferred to the optionee upon exercise of the ISO. If the exercise of an ISO
is effected using shares previously acquired through the exercise of an ISO, the
exchange of such previously acquired shares will be considered a disposition of
such shares for the purpose of determining whether a Disqualifying Disposition
has occurred.
Tax Treatment of Non-qualified Options
An optionee receiving a Non-qualified Option does not recognize taxable
income on the date of grant of the option, provided that the option does not
have a readily ascertainable fair market value at the time it is granted. The
optionee must recognize ordinary income generally at the time of exercise of a
Non-qualified Option in the amount of the difference between the fair market
value of the shares on the date of exercise and the option price. The ordinary
income received will constitute compensation for which tax withholding by PFC
generally will be required. The amount of ordinary income recognized by an
optionee will be deductible by PFC in the year that the optionee recognizes the
income if PFC complies with the applicable withholding requirement.
If, at the time of exercise, the sale of the shares could subject the
optionee to short-swing profit liability under Section 16(b) of the Securities
Exchange Act of 1934, such person generally will not recognize ordinary income
until the date that the optionee is no longer subject to such Section 16(b)
liability. Upon such date, the optionee will recognize ordinary income in an
amount equal to the fair market value of the shares on such date less the option
exercise price. Nevertheless, the optionee may elect under Section 83(b) of the
Code within 30 days of the date of exercise to recognize ordinary income as of
the date of exercise, without regard to the restriction of Section 16(b).
Shares acquired upon the exercise of a Non-qualified Option will have a tax
basis equal to their fair market value on the exercise date or other relevant
date on which ordinary income is recognized, and the holding period for the
shares generally will begin on the date of exercise or such other relevant date.
Upon subsequent disposition of the shares, the optionee will recognize long-term
capital gain or loss if the optionee has held the shares for more than one year
prior to disposition, or short-term capital gain or loss if the optionee has
held the shares for one year or less.
If a holder of a Non-qualified Option pays the exercise price, in whole or
in part, with previously acquired shares, the optionee will recognize ordinary
income in the amount by which the fair market value of the shares received
exceeds the exercise price. The optionee will not recognize gain or loss upon
delivering such previously acquired shares to PFC. Shares received by an
optionee equal in number to the previously acquired shares exchanged therefor
will have the same basis and holding period as such previously acquired shares.
Shares received by an optionee in excess of the number of such previously
acquired shares will have a basis equal to the fair market value of such
additional shares as of the date ordinary income is recognized. The holding
period for such additional shares will commence as of the date of exercise or
such other relevant date.
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Proposed Awards
The Board of Directors of PFC adopted the Stock Option Plan on January 22,
1997. If the shareholders approve the Stock Option Plan, the Stock Option
Committee expects to grant an option to purchase 7,455 common shares of PFC to
each non-employee director and the following options to the executive officers:
NAME OF RECIPIENT SHARES SUBJECT TO OPTIONS
----------------- -------------------------
Paul von Gunten 22,365
William P. Hart 6,710
Linda L. Fowler 6,710
James R. Rinehart 6,709
Cindy A. Wagner 6,709
Options to purchase 17,893 common shares will also be granted to the employees
of PFC and Peoples Federal who are not executive officers. No determination has
yet been made with respect to the extent to which the options granted to
employees will be ISOs.
The Stock Option Committee may grant options under the Stock Option Plan to
the directors, officers and employees of PFC and Peoples Federal in the future
at such times as they deem most beneficial to PFC and Peoples Federal on the
basis of the individual participant's responsibility, tenure and future
potential.
The Board of Directors of PFC recommends that the shareholders of PFC
approve the Stock Option Plan.
Accordingly, the shareholders of PFC will be asked to approve the following
resolution at the Annual Meeting:
RESOLVED, that the Peoples Financial Corporation 1997 Stock Option
and Incentive Plan be, and it hereby is, approved.
PROPOSAL THREE - APPROVAL OF THE PEOPLES FINANCIAL CORPORATION
RECOGNITION AND RETENTION PLAN AND TRUST AGREEMENT
General
On January 22, 1997, the Board of Directors of PFC adopted the RRP. In
accordance with the terms of the RRP and regulations of the OTS, the RRP must
also be approved by the holders of a majority of the outstanding shares of PFC.
The provisions of the RRP comply with OTS regulations. The OTS in no way
endorses or approves the RRP. The Board of Directors of PFC recommends that the
shareholders of PFC approve the RRP.
The following is a summary of the terms of the RRP and is qualified in its
entirety by reference to the full text of the RRP, a copy of which is attached
hereto as Exhibit B.
Purpose, Administration and Eligibility
The purpose of the RRP is to reward and retain directors, officers and
certain key employees of PFC and Peoples Federal by providing them with an
ownership interest in PFC. If the shareholders approve the RRP at the Annual
Meeting, PFC expects to contribute sufficient funds to enable the RRP to
purchase up to 59,640 common shares of PFC at the market price at the time of
such purchase. At January 22, 1997, approximately 20 persons were eligible to
receive awards granted under the RRP.
The RRP will be administered by a committee of directors composed of at
least three directors of PFC who are not employees of Peoples Federal or PFC
(the "RRP Committee") and who will determine the number of shares to be awarded
to eligible participants. The RRP Committee may make awards under the RRP to the
officers and employees of PFC and Peoples Federal at such times as they deem
most beneficial to PFC on the basis of the individual participant's position,
duties and responsibilities, the value of the participant's services to PFC and
other factors the RRP Committee deems relevant. Grants must be made in
accordance with OTS regulations, which provide that no individual may be awarded
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more than 25% of the shares that are reserved for issuance under the RRP, and
directors who are not employees of PFC or Peoples Federal may not receive more
than 5% of such shares individually or 30% in the aggregate. The RRP will
purchase the 59,640 common shares of PFC in the open market or from the
authorized but unissued shares of PFC.
In the event that the RRP purchases all 59,640 shares from authorized but
unissued shares of PFC, the interests of current shareholders will be diluted by
approximately 3.85%.
Terms
Unless the RRP Committee specifies a longer period of time, one-fifth of
the number of shares awarded to an individual will become earned and
non-forfeitable on each of the first five anniversaries of the date of such
award. Compensation expense in the amount of the fair market value of the RRP
shares will be recognized as the shares are earned. Until shares awarded are
earned by the participant, such shares will be forfeited in the event that the
participant ceases to be either a director of both PFC and Peoples Federal or an
employee of Peoples Federal or PFC, except that in the event of the death or
disability of a participant, the participant's shares will be deemed to be
earned and non-forfeitable.
The shares, together with any cash dividends or distributions paid thereon,
will be distributed as soon as practicable after they are earned. A participant
may direct the voting of all shares awarded to him or her which have been earned
but have not yet been distributed to him or her. Shares that have been awarded
but not earned will be voted in the discretion of the RRP Trustee to be
appointed by the RRP Committee. Shares that have been awarded but not earned may
not be transferred.
The Board of Directors of PFC may, by resolution, amend or terminate the
RRP.
Tax Treatment of Shares Awarded Under the RRP
Persons receiving shares under the RRP generally will not recognize income
upon the award of such shares but will recognize ordinary income when and to the
extent such shares become earned and non-forfeitable, in an amount equal to the
fair market value of the shares at the time such shares become earned and
non-forfeitable plus the amount of any earnings distributed to the participant
with respect to such shares. If applicable withholding requirements are
satisfied, PFC will be entitled to a deduction each year in an amount equal to
the income, if any, recognized by participants for such year.
Proposed Awards
The Board of Directors of PFC adopted the RRP on January 22, 1997. If the
shareholders approve the RRP, PFC expects to contribute sufficient funds to the
RRP Trust to enable the RRP Trust to purchase up to 59,640 common shares of PFC
at the market price at the time of such purchase. After such purchase, the RRP
Committee expects to award 2,982 common shares of PFC to each non-employee
director and the following awards to the executive officers of Peoples Federal:
NAME OF RECIPIENT SHARES TO BE AWARDED
----------------- --------------------
Paul von Gunten 11,928
William P. Hart 3,000
Linda L. Fowler 7,000
James R. Rinehart 5,000
Cindy A. Wagner 4,000
The RRP Committee also intends to award 1,874 common shares to the employees of
Peoples Federal who are not executive officers. The RRP Committee may award
shares under the RRP to the directors, officers and key employees of PFC and
Peoples Federal in the future at such times as they deem most beneficial to PFC
and Peoples Federal on the basis of the individual participant's responsibility,
tenure and future potential.
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The Board of Directors of PFC recommends that the shareholders of PFC
approve the RRP.
Accordingly, the shareholders of PFC will be asked to approve the following
resolution at the Annual Meeting:
RESOLVED, that the Peoples Financial Corporation Recognition and
Retention Plan and Trust Agreement be, and it hereby is, approved.
NEW PLAN BENEFITS
The following table sets forth certain information with respect to the
options expected to be granted pursuant to the Stock Option Plan and the awards
expected to be made pursuant to the RRP to the directors, executive officers and
employees of Peoples Federal. PFC does not currently have any employees, and all
of the directors and executive officers of PFC are also directors and executive
officers of Peoples Federal.
STOCK OPTION PLAN RRP
------------------ -------------------------------
NAME AND POSITION SHARES SUBJECT TO DOLLAR VALUE ($)(1) SHARES (#)
- ----------------- OPTIONS ----------------- ----------
-----------------
Paul von Gunten, President 22,365 $164,010 11,928
All executive officers, as a
group (5 persons) 49,203 425,260 30,928
All directors who are not
executive officers, as a 37,275 205,013 14,910
group (5 persons)
All employees who are not
executive officers, as a 17,893 25,768 1,874
group (10 persons)
- -------------------------------
(1) Based upon the number of shares awarded multiplied by the $13.75 per share
closing bid price quoted by The Nasdaq Stock Market on January 22, 1997.
PROPOSAL FOUR - SELECTION OF AUDITORS
On September 16, 1996, PFC, with the approval of its Board of Directors,
released Hall, Kistler as PFC's independent auditor and engaged Grant Thornton
to act in such capacity. The reports of Hall, Kistler on the financial
statements of Peoples Federal for the fiscal years ended September 30, 1994 and
1995, did not contain any adverse opinion or disclaimer of opinion, nor were
they qualified or modified as to uncertainty, audit scope or accounting
principles. During the fiscal years ended September 30, 1994 and 1995, and the
interim period through September 16, 1996, there were no disagreements between
PFC or Peoples Federal and Hall, Kistler on any matter of accounting principles
or practices, consolidated financial statement disclosure or audit scope or
procedure.
The Board of Directors has selected Grant Thornton as the auditors of PFC
and Peoples Federal for the current fiscal year and recommends that the
shareholders ratify such selection. Management expects that a representative of
Grant Thornton will be present at the Annual Meeting, will have the opportunity
to make a statement if he or she so desires and will be available to respond to
appropriate questions.
PROPOSALS OF SHAREHOLDERS AND OTHER MATTERS
Any proposals of shareholders intended to be included in the proxy
statement for the 1998 Annual Meeting of Shareholders of PFC should be sent to
PFC by certified mail and must be received by PFC not later than August 17,
1997.
Management knows of no other business which may be brought before the
Annual Meeting. It is the intention of the persons named in the enclosed Proxy
to vote such Proxy in accordance with their best judgment on any other matters
which may be brought before the Annual Meeting.
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IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO FILL IN, SIGN AND
RETURN THE PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.
By Order of the Board of Directors
Paul von Gunten, President
Massillon, Ohio
February 7, 1997
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EXHIBIT A
PEOPLES FINANCIAL CORPORATION
1997 STOCK OPTION AND INCENTIVE PLAN
1. Purpose. The purpose of the Peoples Financial Corporation 1997 Stock
Option and Incentive Plan (this "Plan") is to promote and advance the interests
of Peoples Financial Corporation (the "Company"), and its shareholders by
enabling the Company to attract, retain and reward directors, managerial and
other key employees of the Company and any Subsidiary (hereinafter defined), and
to strengthen the mutuality of interests between such directors and employees
and the Company's shareholders by providing such persons with a proprietary
interest in pursuing the long-term growth, profitability and financial success
of the Company.
2. Definitions. For purposes of this Plan, the following terms shall have
the meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended, or any
successor thereto, together with rules, regulations and interpretations
promulgated thereunder.
(c) "Committee" means the Committee of the Board constituted as
provided in Section 3 of this Plan.
(d) "Common Shares" means the common shares, without par value, of the
Company or any security of the Company issued in substitution, in exchange
or in lieu thereof.
(e) "Company" means Peoples Financial Corporation, an Ohio
corporation, or any successor corporation.
(f) "Employment" means regular employment with the Company or a
Subsidiary and does not include service as a director only.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute.
(h) "Fair Market Value" shall be determined as follows:
(i) If the Common Shares are traded on a national securities
exchange at the time of grant of the Stock Option, then the Fair
Market Value shall be the average of the highest and the lowest
selling price on such exchange on the date such Stock Option is
granted or, if there were no sales on such date, then on the next
prior business day on which there was a sale.
(ii) If the Common Shares are quoted on The Nasdaq Stock Market
at the time of the grant of the Stock Option, then the Fair Market
Value shall be the mean between the closing high bid and low asked
quotation with respect to a Common Share on such date on The Nasdaq
Stock Market.
(iii)If the Common Shares are not traded on a national securities
exchange or quoted on The Nasdaq Stock Market, then the Fair Market
Value shall be as determined by the Committee.
(i) "Incentive Stock Option" means any Stock Option granted pursuant
to the provisions of Section 6 of this Plan that is intended to be and is
specifically designated as an "incentive stock option" within the meaning
of Section 422 of the Code.
(j) "Non-Qualified Stock Option" means any Stock Option granted
pursuant to the provisions of Section 6 of this Plan that is not an
Incentive Stock Option.
(k) "OTS" means the Office of Thrift Supervision, Department of the
Treasury.
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(l) "Participant" means an employee or director of the Company or a
Subsidiary who is granted an Award under this Plan. Notwithstanding the
foregoing, for the purposes of the granting of any Incentive Stock Option
under this Plan, the term "Participant" shall include only employees of the
Company or a Subsidiary.
(m) "Plan" means the Peoples Financial Corporation 1997 Stock Option
and Incentive Plan, as set forth herein and as it may be hereafter amended
from time to time.
(n) "Stock Option" means an award to purchase Common Shares granted
pursuant to the provisions of Section 6 of this Plan.
(o) "Subsidiary" means any corporation or entity in which the Company
directly or indirectly controls 50% or more of the total voting power of
all classes of its stock having voting power and includes, without
limitation, Peoples Federal Savings and Loan Association of Massillon.
(p) "Terminated for Cause" means any removal of a director or
discharge of an employee for the personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of a material provision
of any law, rule or regulation (other than traffic violations or similar
offenses), a material violation of a final cease-and-desist order or any
other action of a director or employee which results in a substantial
financial loss to the Company or a Subsidiary.
3. Administration.
(a) This Plan shall be administered by the Committee to be comprised
of not less than three of the members of the Board who are not employees of
the Company. The members of the Committee shall be appointed from time to
time by the Board. Members of the Committee shall serve at the pleasure of
the Board, and the Board may from time to time remove members from, or add
members to, the Committee. A majority of the members of the Committee shall
constitute a quorum for the transaction of business. An action approved in
writing by a majority of the members of the Committee then serving shall be
fully as effective as if the action had been taken by unanimous vote at a
meeting duly called and held.
(b) The Committee is authorized to construe and interpret this Plan
and to make all other determinations necessary or advisable for the
administration of this Plan. The Committee may designate persons other than
members of the Committee to carry out its responsibilities under such
conditions and limitations as it may prescribe. Any determination, decision
or action of the Committee in connection with the construction,
interpretation, administration, or application of this Plan shall be final,
conclusive and binding upon all persons participating in this Plan and any
person validly claiming under or through persons participating in this
Plan. The Company shall effect the granting of Stock Options under this
Plan in accordance with the determinations made by the Committee, by
execution of instruments in writing in such form as approved by the
Committee.
4. Duration of, and Common Shares Subject to, this Plan.
(a) TERM. This Plan shall terminate on the date which is ten (10)
years from the date on which this Plan is adopted by the Board, except with
respect to Stock Options then outstanding. Notwithstanding the foregoing,
no Incentive Stock Option may be granted under this Plan after the date
which is ten (10) years from the date on which this Plan is adopted by the
Board or the date on which this Plan is approved by the shareholders of the
Company, whichever is earlier.
(b) COMMON SHARES SUBJECT TO PLAN. The maximum number of Common Shares
in respect of which Stock Options may be granted under this Plan, subject
to adjustment as provided in Section 9 of this Plan, shall be ten percent
of the total Common Shares sold in connection with the conversion of
Peoples Federal Savings and Loan Association of Massillon from mutual to
stock form.
For the purpose of computing the total number of Common Shares available
for Stock Options under this Plan, there shall be counted against the foregoing
limitations the number of Common Shares subject to issuance upon exercise or
settlement of Stock Options as of the dates on which such Stock Options are
granted. If any Stock Options are forfeited, terminated or exchanged for other
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Stock Options, or expire unexercised, the Common Shares which were theretofore
subject to such Stock Options shall again be available for Stock Options under
this Plan to the extent of such forfeiture, termination or expiration of such
Stock Options.
Common Shares which may be issued under this Plan may be either authorized
and unissued shares or issued shares which have been reacquired by the Company.
No fractional shares shall be issued under this Plan.
5. Eligibility and Grants. Persons eligible for Stock Options under this
Plan shall consist of directors and managerial and other key employees of the
Company or a Subsidiary who hold positions with significant responsibilities or
whose performance or potential contribution, in the judgment of the Committee,
will benefit the future success of the Company or a Subsidiary. In selecting the
directors and employees to whom Stock Options will be awarded and the number of
shares subject to such Stock Options, the Committee shall consider the position,
duties and responsibilities of the eligible directors and employees, the value
of their services to the Company and the Subsidiaries and any other factors the
Committee may deem relevant.
6. Stock Options. Stock Options granted under this Plan may be in the form
of Incentive Stock Options or Non-Qualified Stock Options, and such Stock
Options shall be subject to the following terms and conditions as the Committee
shall deem desirable:
(a) GRANT. Stock Options may be granted under this Plan on terms and
conditions not inconsistent with the provisions of this Plan and in such
form as the Committee may from time to time approve and shall contain such
additional terms and conditions, not inconsistent with the express
provisions of this Plan; provided, however, that no more than 25% of the
shares subject to Stock Options may be awarded to any individual who is an
employee of the Company or a Subsidiary, no more than 5% of such shares may
be awarded to any director who is not an employee of the Company or a
Subsidiary and no more than 30% of such shares may be awarded to
non-employee directors in the aggregate.
(b) STOCK OPTION PRICE. The option exercise price per Common Share
purchasable under a Stock Option shall be determined by the Committee at
the time of grant; provided, however, that in no event shall the exercise
price of a Stock Option be less than 100% of the Fair Market Value of the
Common Shares on the date of the grant of such Stock Option.
Notwithstanding the foregoing, in the case of a Participant who owns Common
Shares representing more than 10% of the outstanding Common Shares at the
time the Incentive Stock Option is granted, the option exercise price shall
in no event be less than 110% of the Fair Market Value of the Common Shares
at the time the Incentive Stock Option is granted.
(c) STOCK OPTION TERMS. Subject to the right of the Company to provide
for earlier termination in the event of any merger, acquisition or
consolidation involving the Company, the term of each Stock Option shall be
fixed by the Committee; except that the term of Incentive Stock Options
will not exceed ten years after the date the Incentive Stock Option is
granted; provided, however, that in the case of a Participant who owns a
number of Common Shares representing more than 10% of the Common Shares
outstanding at the time the Incentive Stock Option is granted, the term of
the Incentive Stock Option shall not exceed five years.
(d) EXERCISABILITY. Except as set forth in Section 6(f) and Section 7
of this Plan, Stock Options awarded under this Plan shall become
exercisable at the rate of one-fifth per year commencing on the date that
is one year after the date of the grant of the Stock Option and shall be
subject to such other terms and conditions as shall be determined by the
Committee at the date of grant.
(e) METHOD OF EXERCISE. A Stock Option may be exercised, in whole or
in part, by giving written notice of exercise to the Company specifying the
number of Common Shares to be purchased. Such notice shall be accompanied
by payment in full of the purchase price in cash or, if acceptable to the
Committee in its sole discretion, in Common Shares already owned by the
Participant, or by surrendering outstanding Stock Options. The Committee
may also permit Participants, either on a selective or aggregate basis, to
simultaneously exercise Options and sell Common Shares thereby acquired,
pursuant to a brokerage or similar arrangement, approved in advance by the
Committee, and use the proceeds from such sale as payment of the purchase
price of such shares.
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(f) SPECIAL RULE FOR INCENTIVE STOCK OPTIONS. With respect to
Incentive Stock Options granted under this Plan, to the extent the
aggregate Fair Market Value (determined as of the date the Incentive Stock
Option is granted) of the number of shares with respect to which Incentive
Stock Options are exercisable under all plans of the Company or a
Subsidiary for the first time by a Participant during any calendar year
exceeds $100,000, or such other limit as may be required by the Code, such
Stock Options shall be Non-Qualified Stock Options to the extent of such
excess.
7. Termination of Employment or Directorship.
(a) Except in the event of the death or disability of a Participant,
upon the resignation, removal or retirement from the board of directors of
any Participant who is a director of the Company or a Subsidiary or upon
the termination of Employment of a Participant who is not a director of the
Company or a Subsidiary, any Stock Option which has not yet become
exercisable shall thereupon terminate and be of no further force or effect,
and, subject to extension by the Committee, any Stock Option which has
become exercisable shall terminate if it is not exercised within 12 months
of such resignation, removal or retirement.
(b) Unless the Committee shall specifically state otherwise at the
time an Option is granted, all Options granted under this Plan shall become
exercisable in full on the date of termination of a Participant's
employment or directorship with the Company or a Subsidiary because of his
death or disability, and, subject to extension by the Committee, all
Options shall terminate if not exercised within 12 months of the
Participant's death or disability.
(c) In the event the Employment or the directorship of a Participant
is Terminated for Cause (hereinafter defined), any Option which has not
been exercised shall terminate as of the date of such termination for
cause.
8. Non-transferability of Stock Options. No Stock Option under this Plan,
and no rights or interests therein, shall be assignable or transferable by a
Participant except by will or the laws of descent and distribution. During the
lifetime of a Participant, Stock Options are exercisable only by, and payments
in settlement of Stock Options will be payable only to, the Participant or his
or her legal representative.
9. Adjustments Upon Changes in Capitalization.
(a) The existence of this Plan and the Stock Options granted hereunder
shall not affect or restrict in any way the right or power of the Board or
the shareholders of the Company to make or authorize the following: any
adjustment, recapitalization, reorganization or other change in the
Company's capital structure or its business; any merger, acquisition or
consolidation of the Company; any issuance of bonds, debentures, preferred
or prior preference stocks ahead of or affecting the Company's capital
stock or the rights thereof; the dissolution or liquidation of the Company
or any sale or transfer of all or any part of its assets or business; or
any other corporate act or proceeding, including any merger or acquisition
which would result in the exchange of cash, stock of another company or
options to purchase the stock of another company for any Stock Option
outstanding at the time of such corporate transaction or which would
involve the termination of all Stock Options outstanding at the time of
such corporate transaction.
(b) In the event of any change in capitalization affecting the Common
Shares of the Company, such as a stock dividend, stock split,
recapitalization, merger, consolidation, split-up, combination or exchange
of shares or other form of reorganization, or any other change affecting
the Common Shares, such proportionate adjustments, if any, as the Board in
its discretion may deem appropriate to reflect such change shall be made
with respect to the aggregate number of Common Shares for which Stock
Options in respect thereof may be granted under this Plan, the maximum
number of Common Shares which may be sold or awarded to any Participant,
the number of Common Shares covered by each outstanding Stock Option, and
the exercise price per share in respect of outstanding Stock Options.
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(c) The Committee may also make such adjustments in the number of
shares covered by, and the exercise price or other value of, any
outstanding Stock Options in the event of a spin-off or other distribution
(other than normal cash dividends) of Company assets to shareholders. In
the event of a distribution of cash by the Company to its shareholders that
is deemed a tax-free distribution of capital, the exercise price of each
Stock Option awarded prior to the declaration of such distribution shall be
reduced by the per share amount of such distribution. In the event that
another corporation or business entity is being acquired by the Company,
and the Company agrees to assume outstanding employee stock options and/or
the obligation to make future grants of options or rights to employees of
the acquired entity, the aggregate number of Common Shares available for
Stock Options under Section 4 of this Plan may be increased accordingly.
10. Amendment and Termination of this Plan. Without further approval of the
shareholders, the Board may at any time terminate this Plan, or may amend it
from time to time in such respects as the Board may deem advisable, except that
the Board may not, without approval of the shareholders, make any amendment
which would (a) increase the aggregate number of Common Shares which may be
issued under this Plan (except for adjustments pursuant to Section 9 of this
Plan), (b) materially modify the requirements as to eligibility for
participation in this Plan, or (c) materially increase the benefits accruing to
Participants under this Plan. The above notwithstanding, the Board may amend
this Plan to take into account changes in applicable securities, federal income
tax and other applicable laws.
11. Modification of Options. The Board may authorize the Committee to
direct the execution of an instrument providing for the modification of any
outstanding Stock Option which the Board believes to be in the best interests of
the Company; provided, however, that no such modification, extension or renewal
shall reduce the exercise price or confer on the holder of such Stock Option any
right or benefit which could not be conferred on him by the grant of a new Stock
Option at such time and shall not materially decrease the Participant's benefits
under the Stock Option without the consent of the holder of the Stock Option,
except as otherwise permitted under this Plan.
12. Miscellaneous.
(a) TAX WITHHOLDING. The Company shall have the right to deduct from
any settlement, including the delivery or vesting of Common Shares, made
under this Plan any federal, state or local taxes of any kind required by
law to be withheld with respect to such payments or to take such other
action as may be necessary in the opinion of the Company to satisfy all
obligation for the payment of such taxes. If Common Shares are used to
satisfy tax withholding, such shares shall be valued based on the Fair
Market Value when the tax withholding is required to be made.
(b) NO RIGHT TO EMPLOYMENT. Neither the adoption of this Plan nor the
granting of any Stock Option shall confer upon any employee of the Company
or a Subsidiary any right to continued Employment with the Company or a
Subsidiary, as the case may be, nor shall it interfere in any way with the
right of the Company or a Subsidiary to terminate the Employment of any of
its employees at any time, with or without cause.
(c) ANNULMENT OF STOCK OPTIONS. The grant of any Stock Option under
this Plan payable in cash is provisional until cash is paid in settlement
thereof. The grant of any Stock Option payable in Common Shares is
provisional until the Participant becomes entitled to the certificate in
settlement thereof. In the event the Employment or the directorship of a
Participant is Terminated for Cause, any Stock Option which is provisional
shall be annulled as of the date of such termination.
(d) OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS. Payments and
other benefits received by a Participant under a Stock Option made pursuant
to this Plan shall not be deemed a part of a Participant's regular,
recurring compensation for purposes of the termination indemnity or
severance pay law of any country and shall not be included in, nor have any
effect on, the determination of benefits under any other employee benefit
plan or similar arrangement provided by the Company or a Subsidiary unless
expressly so provided by such other plan or arrangement, or except where
the Committee expressly determines that a Stock Option or portion of a
Stock Option should be included to accurately reflect competitive
compensation practices or to recognize that a Stock Option has been made in
lieu of a portion of competitive annual cash compensation. Stock Options
under this Plan may be made in combination with or in tandem with, or as
alternatives to, grants, stock options or payments under any other plans of
the Company or a Subsidiary. This Plan notwithstanding, the Company or any
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Subsidiary may adopt such other compensation programs and additional
compensation arrangements as it deems necessary to attract, retain and
reward directors and employees for their service with the Company and its
Subsidiaries.
(e) SECURITIES LAW RESTRICTIONS. No Common Shares shall be issued
under this Plan unless counsel for the Company shall be satisfied that such
issuance will be in compliance with applicable federal and state securities
laws. Certificates for Common Shares delivered under this Plan may be
subject to such stock-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange
upon which the Common Shares are then listed, and any applicable federal or
state securities law. The Committee may cause a legend or legends to be put
on any such certificates to make appropriate reference to such
restrictions.
(f) STOCK OPTION AGREEMENT. Each Participant receiving a Stock Option
under this Plan shall enter into an agreement with the Company in a form
specified by the Committee agreeing to the terms and conditions of the
Stock Option and such related matters as the Committee shall, in its sole
discretion, determine.
(g) COST OF PLAN. The costs and expenses of administering this Plan
shall be borne by the Company.
(h) GOVERNING LAW. This Plan and all actions taken hereunder shall be
governed by and construed in accordance with the laws of the State of Ohio,
except to the extent that federal law shall be deemed applicable.
(i) EFFECTIVE DATE. This Plan shall be effective upon the later of
adoption by the Board and approval by the Company's shareholders. This Plan
shall be submitted to the shareholders of the Company for approval at an
annual or special meeting of shareholders to be held no sooner than six
months after the effective date of the Conversion.
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EXHIBIT B
PEOPLES FINANCIAL CORPORATION
RECOGNITION AND RETENTION PLAN
AND TRUST AGREEMENT
ARTICLE I
DEFINITIONS
The following words and phrases when used in this Agreement with an initial
capital letter shall have the meanings set forth below, unless the context
clearly indicates otherwise. Wherever appropriate, the masculine pronoun shall
include the feminine pronoun and the singular shall include the plural:
1.01 "Agreement" means the Peoples Financial Corporation Recognition and
Retention Plan and Trust Agreement.
1.02 "Association" means Peoples Federal Savings and Loan Association of
Massillon, a savings and loan association incorporated under the laws of the
United States.
1.03 "Award" means a right granted to a Director or an Employee under this
Plan to receive Plan Shares.
1.04 "Beneficiary" means the person or persons designated by a Recipient to
receive any benefits payable under this Plan in the event of such Recipient's
death. Such person or persons shall be designated in writing on forms provided
for this purpose by the Committee and may be changed from time to time by
similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Recipient's estate.
1.05 "Board" means the Board of Directors of the Corporation.
1.06 "Committee" means the Recognition and Retention Plan Committee
appointed by the Board pursuant to Article IV hereof.
1.07 "Common Shares" means common shares of the Corporation.
1.08 "Conversion" means the conversion of the Association from mutual to
stock form.
1.09 "Corporation" means Peoples Financial Corporation, a savings and loan
holding company incorporated under the laws of the State of Ohio for the purpose
of holding all of the common shares of the Association issued in connection with
the Conversion.
1.10 "Director" means any person who is a member of the Board of Directors
of the Corporation, the Association or a Subsidiary.
1.11 "Employee" means any person who is employed by the Corporation, the
Association or a Subsidiary.
1.12 "Person" means an individual, corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein.
1.13 "Plan" means the Recognition and Retention Plan established by this
Agreement.
1.14 "Plan Shares" means the Common Shares held pursuant to the Trust and
which are awarded or issuable to a Recipient pursuant to the Plan.
1.15 "Plan Share Reserve" means the Common Shares held by the Trustee
pursuant to Sections 5.02 and 5.03 of this Agreement.
1.16 "Recipient" means any Director or Employee who receives an Award under
the Plan.
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1.17 "Subsidiaries" means subsidiaries of the Corporation or the
Association which, with the consent of the Board, agree to participate in the
Plan.
1.18 "Trust" means the trust established by this Agreement.
1.19 "Trustee(s)" means the person(s) or entity approved by the Board
pursuant to Sections 4.01 and 4.02 to hold legal title to the Plan assets for
the purposes set forth herein.
ARTICLE II
ESTABLISHMENT OF THE PLAN AND TRUST
2.01 The Corporation hereby establishes a Recognition and Retention Plan
and Trust upon the terms and subject to the conditions set forth in this
Agreement.
2.02 The Trustee hereby accepts the Trust and agrees to hold the Trust
assets existing on the date of this Agreement and all additions and accretions
thereto upon the terms and conditions of this Agreement.
ARTICLE III
PURPOSE OF THE PLAN
3.01 The purpose of the Plan is to reward and retain the Directors and
Employees of the Corporation, the Association and the Subsidiaries who are in
key positions of responsibility by providing such Directors and Employees with
an equity interest in the Corporation as reasonable compensation for their
contributions to the Corporation, the Association and the Subsidiaries.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 Role of the Committee. The Plan shall be administered and interpreted
by the Committee, which shall consist of not less than three members of the
Board who are not employees of the Corporation or the Association. The Committee
shall have all of the powers set forth in this Plan. The interpretation and
construction by the Committee of any provisions of this Agreement or of any
Award granted hereunder shall be final, conclusive and binding. The Committee
shall act by the vote, or the written consent, of a majority of its members. The
Committee shall report actions and decisions with respect to the Plan to the
Board upon request by the Board.
4.02 Role of the Board. The members of the Committee and the Trustee(s)
shall be appointed or approved by and will serve at the pleasure of the Board.
The Board may in its discretion from time to time remove members from or add
members to the Committee and may remove, replace or add Trustee(s). The Board,
in its absolute discretion, may take any action under or with respect to the
Plan which the Committee is authorized to take and may reverse or override any
action taken or decision made by the Committee under or with respect to the Plan
or take any other action reserved to the Board under this Agreement; provided,
however, that the Board may not revoke any Award already granted under this
Agreement. All decisions, determinations and interpretations of the Board shall
be final, conclusive and binding upon all parties having an interest in the
Plan.
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4.03 Limitation on Liability. No member of the Board or the Committee, nor
any Trustee, shall be liable for any determination made in good faith with
respect to the Plan or any Plan Shares or Awards granted under the Plan. If a
member of the Board or of the Committee or any Trustee is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of anything done or not done by such member in such capacity under or
with respect to this Plan, the Corporation shall indemnify such member against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such member in connection with
such action, suit or proceeding if such member acted in good faith and in a
manner such member reasonably believed to be in or not opposed to the best
interests of the Corporation, the Association and the Subsidiaries and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
such member's conduct was unlawful.
ARTICLE V
CONTRIBUTIONS; PLAN SHARE RESERVE
5.01 Amount and Timing of Contributions. The Board shall determine the
amounts (or the method of computing the amounts) to be contributed by the
Corporation to the Trust. Such amounts shall be paid to the Trustee at the time
of contribution. No contributions to the Trust by Directors or Employees shall
be permitted.
5.02 Investment of Trust Assets. Except as otherwise permitted by Section
8.02 of this Agreement, the Trustee shall invest all of the Trust's assets,
after providing for any required withholding as needed for tax purposes,
exclusively in Common Shares; provided, however, that the Trust shall not
purchase a number of Common Shares equal to more than 3% of the number of Common
Shares issued in connection with the Conversion, except that if the
Association's tangible capital exceeds 10%, the Trust may purchase a number of
Common Shares equal to up to 4% of the Common Shares issued in connection with
the Conversion. After such investment, the Common Shares shall be held by the
Trustee in the Plan Share Reserve until such Common Shares are subject to one or
more Awards. Any funds held by the Trust before purchasing Common Shares shall
be invested by the Trustee in such interest-bearing account or accounts at the
Association as the Trustee shall determine to be appropriate.
5.03 Effect of Allocations, Returns and Forfeitures Upon Plan Share
Reserves. Upon the allocation of Awards under Section 6.02 of this Agreement, or
the decision of the Committee to return Plan Shares to the Corporation, the Plan
Share Reserve shall be reduced by the number of Plan Shares so allocated or
returned. Any Plan Shares subject to an Award which is subject to forfeiture by
the Recipient pursuant to Section 7.01 of this Agreement shall be retained in
the Plan Share Reserve.
ARTICLE VI
ELIGIBILITY; ALLOCATIONS
6.01 Eligibility. Directors and Employees are eligible to receive Awards
within the sole discretion of the Committee, subject to review and approval or
rejection by the Board.
6.02 Allocations. The Committee will determine which of the Directors and
Employees will be granted Awards and the number of Plan Shares covered by each
Award; provided, however, that: (a) the aggregate number of Plan Shares covered
by Awards to any one Employee shall not exceed 25% of the total number of Plan
Shares, (b) no more than 5% of the Plan Shares shall be awarded to any Director
who is not an Employee, and (c) no more than 30% of the Plan Shares shall be
awarded in the aggregate to Directors who are not Employees. In the event Plan
Shares are forfeited for any reason or additional Plan Shares are purchased by
the Trustee, the Committee may, from time to time, determine which of the
Employees will be granted additional Awards to be awarded from forfeited or
additional Plan Shares.
In selecting the Directors and Employees to whom Awards will be granted and
the number of shares covered by such Awards, the Committee shall consider the
position, duties and responsibilities of the eligible Directors and Employees,
the value of their services to the Corporation, the Association and the
Subsidiaries and any other factors the Committee may deem relevant. All
allocations by the Committee shall be subject to review and approval or
rejection by the Board.
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6.03 Form of Allocation. As promptly as practicable after a determination
is made pursuant to Section 6.02 of this Agreement that an Award is to be made,
the Committee shall notify the Recipient in writing of the grant of the Award,
the number of Plan Shares covered by the Award and the terms upon which the Plan
Shares subject to the Award may be earned. The date on which the Committee
determines that an Award is to be made or a later date designated by the
Committee shall be considered the date of grant of the Awards. The Committee
shall maintain records as to all grants of Awards under the Plan.
6.04 Allocations Not Required. None of the Directors or Employees, either
individually or as a group, shall have any right or entitlement to receive an
Award under the Plan. The Committee may, with the approval of the Board, and
shall, if so directed by the Board, return all Common Shares and other assets in
the Plan Share Reserve to the Corporation at any time and thereafter cease
issuing Awards.
6.05 Shareholder Approval. This Agreement shall be submitted to the
shareholders of the Corporation at an annual or special meeting to be held no
sooner than six months after the effective date of the Conversion.
Notwithstanding anything to the contrary in this Agreement, no Awards shall be
granted hereunder until the shareholders of the Corporation approve this
Agreement.
ARTICLE VII
EARNING AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 Earning Plan Shares; Forfeitures.
(a) General Rules. Unless the Committee shall specifically state a longer
period of time over which Awards shall be earned and non-forfeitable at the time
an Award is granted, Plan Shares shall be earned and non-forfeitable by a
Recipient over a period of five years at the rate of one-fifth per year
commencing on the date which is one year after the date of the grant of such
Award. As Plan Shares become earned and non-forfeitable, any cash dividends,
returned capital and earnings thereon shall also be earned and non-forfeitable.
(b) Revocation. Unless otherwise permitted by applicable laws and
regulations, any Plan Shares and any cash dividends, returned capital and
earnings thereon that have not been earned and are not non-forfeitable in
accordance with Section 7.01(a) of this Agreement shall be forfeited in the
event that (i) a Recipient who is a Director ceases to serve on the Board of
Directors of both the Corporation and the Association or (ii) a Recipient who is
not a Director of the Corporation or the Association ceases to be an Employee of
the Corporation or the Association, except as otherwise provided in subsection
(c) of this Section 7.01.
(c) Exception for Terminations Due to Death or Disability. All Plan Shares
and cash dividends, returned capital and earnings thereon subject to an Award
held by a Recipient whose service as a Director or Employee of the Corporation,
the Association or a Subsidiary terminates due to (i) death or (ii) disability
(as determined by the Committee) shall be deemed fully earned and
non-forfeitable as of the later of the Recipient's last day of service as a
Director or as an Employee and shall be distributed as soon as practicable
thereafter.
7.02 Distribution of Plan Shares.
(a) Timing of Distributions: General Rule. Except as otherwise provided in
this Agreement, Plan Shares shall be distributed to the Recipient or his
Beneficiary, as the case may be, as soon as practicable after they have been
earned, together with any cash dividends, returned capital and earnings thereon
with respect to Plan Shares that have been earned.
(b) Form of Distribution. All distributions of Plan Shares, together with
any shares representing stock dividends, shall be distributed in the form of
Common Shares. No fractional shares shall be distributed. Payments representing
cash dividends, returned capital and earnings thereon shall be made in cash.
(c) Withholding. The Trustee may withhold from any cash payment made under
this Plan sufficient amounts to cover any applicable withholding and employment
taxes and, if the amount of such cash payment is not sufficient, the Trustee may
require the Recipient or Beneficiary to pay to the Trustee the amount required
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to be withheld as a condition of delivering the Plan Shares. The Trustee shall
pay over to the Corporation, the Association or the Subsidiary which employs or
employed such Recipient or which the Recipient serves or served as a Director,
any such amount withheld from or paid by the Recipient or Beneficiary.
(d) Regulatory Exceptions. Notwithstanding anything to the contrary in this
Agreement, no Plan Shares, upon becoming fully earned and non-forfeitable, shall
be distributed unless and until all of the requirements of all applicable laws
and regulations shall have been met.
7.03 Voting of Plan Shares. All Common Shares held by the Trustee in the
Plan Share Reserve which have not yet been earned by a Recipient pursuant to
Section 7.01 of this Agreement shall be voted by the Trustee. A Recipient shall
be entitled to direct the voting of Plan Shares which have been earned pursuant
to Section 7.01 of this Agreement but have not yet been distributed to him.
ARTICLE VIII
TRUST
8.01 Trust. The Trustee shall receive, hold, administer, invest and make
distributions and disbursements from the Trust in accordance with the provisions
of the Plan and the Trust and the applicable directions, rules, regulations,
procedures and policies established by the Committee pursuant to this Agreement.
8.02 Management of Trust. The Trustee shall have complete authority and
discretion with respect to the management, control and investment of the Trust,
and the Trustee shall invest all assets of the Trust, except those attributable
to cash dividends paid with respect to Plan Shares not held in the Plan Share
Reserve, in Common Shares to the fullest extent practicable, and except to the
extent that the Trustee determines that the holding of monies in cash or cash
equivalents is necessary to meet the obligations of the Trust. The Trustee shall
have the power to do all things and execute such instruments as may be deemed
necessary or proper, including the following powers:
(a) To invest up to 100% of all Trust assets in Common Shares without
regard to any law now or hereafter in force limiting investments for
Trustees or other fiduciaries. The investment authorized herein may
constitute the only investment of the Trust, and, in making such
investment, the Trustee is authorized to purchase Common Shares from the
Corporation or from any other source. Such Common Shares so purchased may
be outstanding, newly issued or treasury shares;
(b) To invest any Trust assets not otherwise invested in accordance
with Section 8.02(a) of this Agreement in such deposit accounts and
certificates of deposit (including those issued by the Association),
obligations of the United States government or its agencies or such other
investments as shall be considered the equivalent of cash;
(c) To sell, exchange or otherwise dispose of any property at any time
held or acquired by the Trust;
(d) To cause stocks, bonds or other securities to be registered in the
name of a nominee, without the addition of words indicating that such
security is an asset of the Trust (but accurate records shall be maintained
showing that such security is an asset of the Trust);
(e) To hold cash without interest in such amounts as may be
reasonable, in the opinion of the Trustee, for the proper operation of the
Plan and the Trust;
(f) To employ brokers, agents, custodians, consultants and
accountants;
(g) To hire counsel to render advice with respect to the Trustee's
rights, duties and obligations hereunder, and such other legal services or
representation as the Trustee may deem desirable; and
(h) To hold funds and securities representing the amounts to be
distributed to a Recipient or his Beneficiary as a consequence of a dispute
as to the disposition thereof, whether in a segregated account or held in
common with other assets of the Trust.
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Notwithstanding anything herein contained to the contrary, the Trustee shall not
be required to make any inventory, appraisal or settlement or report to any
court, or to secure any order of court for the exercise of any power herein
contained, or to give bond.
8.03 Records and Accounts. The Trustee shall maintain accurate and detailed
records and accounts of all transactions of the Trust, which shall be available
at all reasonable times for inspection by any legally entitled person or entity
to the extent required by applicable law, or any other person determined by the
Committee.
8.04 Earnings. All earnings, gains and losses with respect to Trust assets
shall be allocated, in accordance with a reasonable procedure adopted by the
Committee, to bookkeeping accounts for Recipients or to the general account of
the Trust, depending on the nature and allocation of the assets generating such
earnings, gains and losses. Without limiting the generality of the foregoing,
any earnings on cash dividends or returned capital received with respect to
Common Shares shall be allocated (a) to accounts for Recipients, if such shares
are the subject of outstanding Awards, and shall become earned and be
distributed as specified in Article VII of this Agreement, or (b) or otherwise
to the Plan Share Reserve if such Plan Shares are not the subject of outstanding
awards.
8.05 Expenses. All costs and expenses incurred in the operation and
administration of the Plan shall be paid by the Association.
ARTICLE IX
MISCELLANEOUS
9.01 Adjustments for Capital Changes. The aggregate number of Plan Shares
available for issuance pursuant to the Awards and the number of Plan Shares to
which any Award relates shall be proportionately adjusted for any increase or
decrease in the total number of outstanding Common Shares issued subsequent to
the effective date of the Plan if such increase or decrease resulted from any
split, subdivision or consolidation of shares or other capital adjustment, or
other increase or decrease in such shares effected without receipt or payment of
consideration by the Corporation.
9.02 Amendment and Termination of Plan. The Board may, by resolution, at
any time amend or terminate the Plan. The power to amend or terminate the Plan
shall include the power to direct the Trustee to return to the Corporation or
the Association all or any part of the assets of the Trust, including Common
Shares held in the Plan Share Reserve, as well as Common Shares and other assets
subject to Awards which are not yet earned by the Directors or Employees to whom
they are allocated; provided, however, that the termination of the Trust shall
not affect a Recipient's right to earn Awards and to the distribution of Common
Shares relating thereto, including earnings thereon, in accordance with the
terms of this Agreement and the grant by the Committee or the Board.
9.03 Nontransferable. Awards shall not be transferable by a Recipient.
During the lifetime of the Recipient, an Award may only be earned by and paid to
the Recipient who was notified in writing of the Award by the Committee pursuant
to Section 6.03 of this Agreement. No Recipient or Beneficiary shall have any
right in or claim to any assets of the Plan or the Trust, nor shall the
Corporation, the Association or any Subsidiary be subject to any claim for
benefits hereunder.
9.04 Directorship Rights. Neither this Agreement nor any grant of an Award
hereunder nor any action taken by the Trustee, the Committee or the Board in
connection with the Plan shall create any right, either express or implied, on
the part of any Director to continue to serve as a Director of the Association
or a Subsidiary.
9.05 Employment Rights. Neither this Agreement nor any grant of an Award
hereunder nor any action taken by the Trustee, the Committee or the Board in
connection with the Plan shall create any right, either express or implied, on
the part of any Employee to continue in the employ of the Corporation, the
Association or a Subsidiary.
9.06 Voting and Dividend Rights. No Recipient shall have any voting or
dividend rights or other rights of a shareholder in respect of any Plan Shares
covered by an Award, except as expressly provided in Sections 7.01, 7.02 and
7.03 of this Agreement, prior to the time such Plan Shares are actually
distributed to such Recipient.
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9.07 Governing Law. This Agreement shall be governed by and construed under
the laws of the State of Ohio, except to the extent that federal law shall be
deemed applicable.
9.08 Effective Date. Subject to Section 6.05 of this Agreement, this
Agreement shall be effective as of the ___ day of ____________, 1997.
9.09 Term of Plan. The Plan shall remain in effect until the earlier of (a)
the termination of the Plan by the Board or (b) the distribution of all assets
from the Trust. The termination of the Plan shall not affect any Awards
previously granted and such Awards shall remain valid and in effect until they
have been earned and paid or by their terms expire or are forfeited.
9.10 Tax Status of Trust. It is intended that the trust established hereby
be treated as a grantor trust of the Association under the provisions of Section
671, ET SEQ., of the Internal Revenue Code of 1986, as amended (26 U.S.C. ss.
671 ET SEQ.).
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IN WITNESS WHEREOF, the following Trustees execute this Agreement,
accepting and binding themselves to undertake and perform the obligations and
duties of the Trustee hereunder and consenting to the foregoing Agreement
effective the ___ day of ____________, 1997.
UNITED NATIONAL BANK AND TRUST COMPANY,
TRUSTEE
By: ____________________________________ (Trustee)
Samuel M. Lincoln
Vice President and Trust Officer
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officer and duly attested, all as of the ___ day
of ____________, 1997.
PEOPLES FINANCIAL CORPORATION
By: ______________________________________________
Paul von Gunten
its President
ATTEST:
_____________________________________
_____________________________________
its Secretary
<PAGE>
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
PEOPLES FINANCIAL CORPORATION
PEOPLES FINANCIAL CORPORATION 1997 ANNUAL MEETING Of SHAREHOLDERS
March 19, 1997
The undersigned shareholder of Peoples Financial Corporation ("PFC") hereby
constitutes and appoints James P. Bordner, Thomas E. Shelt and Vince E. Stephan,
or any one of them, as the Proxy or Proxies of the undersigned with full power
of substitution and resubstitution, to vote at the Annual Meeting of
Shareholders of PFC to be held at 211 Lincoln Way East, Massillon, Ohio 44646,
on March 19, 1997, at 2:00 p.m. local time (the "Annual Meeting"), all of the
shares of PFC which the undersigned is entitled to vote at the Annual Meeting,
or at any adjournment thereof, on each of the following proposals, all of which
are described in the accompanying Proxy Statement:
1. The election of three directors:
______ FOR all nominees ______ WITHHOLD authority to
listed below vote for all nominees
(except as marked to the listed below:
contrary below):
Victor C. Baker
Vincent G. Matecheck
Paul von Gunten
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below).
________________________________________________________________________________
2. The approval of the Peoples Financial Corporation 1997 Stock Option and
Incentive Plan.
______ FOR ______ AGAINST ______ ABSTAIN
3. The approval of the Peoples Financial Corporation Recognition and Retention
Plan and Trust Agreement.
______ FOR ______ AGAINST ______ ABSTAIN
IMPORTANT: Please sign and date this Proxy on the reverse side.
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4. The ratification of the selection of Grant Thornton LLP, certified public
accountants, as the auditors of PFC for the current fiscal year.
______ FOR ______ AGAINST ______ ABSTAIN
5. In their discretion, upon such other business as may properly come before
the Annual Meeting or any adjournments thereof.
The Board of Directors recommends a vote "FOR" the nominees and the
proposals listed above.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. Unless otherwise specified, the shares
will be voted FOR proposals 1, 2, 3 and 4.
All Proxies previously given by the undersigned are hereby revoked. Receipt
of the Notice of the 1997 Annual Meeting of Shareholders of PFC and of the
accompanying Proxy Statement is hereby acknowledged.
Please sign exactly as your name appears on your Stock Certificate(s).
Executors, Administrators, Trustees, Guardians, Attorneys and Agents should give
their full titles.
____________________________ ______________________________
Signature Signature
____________________________ ______________________________
Print or Type Name Print or Type Name
Dated: _____________________ Dated: _______________________
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED FOR MAILING IN THE U.S.A.
