PEOPLES-SIDNEY FINANCIAL CORPORATION
              AMENDED AND RESTATED 1998 MANAGEMENT RECOGNITION PLAN


        1. Plan  Purpose.  The purpose of the Plan is to promote  the  long-term
interests  of the  Corporation  and its  stockholders  by  providing a means for
attracting  and  retaining  directors,  executive  officers and employees of the
Corporation and its Affiliates.

        2.  Definitions.  The following definitions are applicable to the Plan:

        "Award" - means the grant of Restricted  Stock  pursuant to the terms of
Section 12 of the Plan or by the Committee, as provided in the Plan.

        "Affiliate" - means any "parent corporation" or "subsidiary corporation"
of the  Corporation,  as such  terms are  defined  in  Section  424(e)  and (f),
respectively, of the Code.

        "Association"  - means Peoples  Federal  Savings & Loan  Association  of
Sidney, a savings institution and its successors.

        "Beneficiary" - means the person or persons  designated by a Participant
to  receive  any  benefits   payable  under  the  Plan  in  the  event  of  such
Participant's  death.  Such person or persons  shall be designated in writing on
forms provided for this purpose by the Committee and may be changed from time to
time by similar  written  notice to the  Committee.  In the absence of a written
designation,  the Beneficiary  shall be the  Participant's  surviving spouse, if
any, or if none, his estate.

        "Code" - means the Internal Revenue Code of 1986, as amended.

        "Committee"  - means  the  Committee  of the Board of  Directors  of the
Corporation referred to in Section 6 hereof.

        "Continuous  Service"  -  means  the  absence  of  any  interruption  or
termination  of service as a director,  director  emeritus,  advisory  director,
executive officer or employee of the Corporation or any Affiliate. Service shall
not be considered  interrupted in the case of sick leave,  military leave or any
other leave of absence  approved by the  Corporation  or any Affiliate or in the
case of transfers  between  payroll  locations of the Corporation or between the
Corporation,  its  Affiliates  or its  successor.  With  respect to any director
emeritus or advisory director, Continuous Service shall mean the availability to
perform such functions as may be required of such individuals.

          "Corporation" - means Peoples-Sidney Financial Corporation, a Delaware
corporation.

        "Disability" - means any physical or mental  impairment  which qualifies
an employee,  director,  director  emeritus or advisor  director for  disability
benefits  under any  applicable  long-term  disability  plan  maintained  by the
Association  or an Affiliate,  or, if no such plan  applies,  which renders such
employee or director,  in the judgment of the  Committee,  unable to perform his
customary duties and responsibilities.

        "ERISA" - means the Employee  Retirement Income Security Act of 1974, as
amended.
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        "Participant"  -  means  any  director,   director  emeritus,   advisory
director,  executive officer or employee of the Corporation or any Affiliate who
is selected by the Committee to receive an Award or is granted an Award pursuant
to Section 12.

        "Non-Employee  Director" - means a director who (a) is not  currently an
officer or employee of the  Corporation  or any  Affiliate;  (b) is not a former
employee of the Corporation or any Affiliate who receives compensation for prior
services (other than from a tax-qualified  retirement plan); (c) has not been an
officer of the Corporation or any Affiliate;  (d) does not receive  renumeration
from the  Corporation or any Affiliate in any capacity other than as a director;
and (e)

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does not possess an interest  in any other  transactions  or is not engaged in a
business  relationship  for which disclosure would be required under Item 404(a)
or (b) of Regulation S-K.

        "Plan" - means the Amended and Restated 1998 Management Recognition Plan
of the Corporation.

        "Restricted Period" - means the period of time selected by the Committee
for the purpose of determining  when  restrictions are in effect under Section 3
hereof with respect to Restricted Stock awarded under the Plan.

        "Restricted  Stock" - means Shares which have been contingently  awarded
to a Participant  by the Committee  subject to the  restrictions  referred to in
Section 3 hereof, so long as such restrictions are in effect.

          "Shares" - means the common stock,  par value $0.01 per share,  of the
Corporation.

        3. Terms and Conditions of Restricted  Stock.  The Committee  shall have
full and complete  authority,  subject to the  limitations of the Plan, to grant
Awards and, in addition to the terms and conditions  contained in paragraphs (a)
through (f) of this Section 3, to provide such other terms and conditions (which
need not be identical  among  Participants)  in respect of such Awards,  and the
vesting thereof, as the Committee shall determine.

(a)       At the  time of an  Award,  the  Committee  shall  establish  for each
          Participant  a  Restricted  Period  which  shall not be less than five
          years,  during which or at the  expiration of which,  as the Committee
          shall determine and provide in the agreement  referred to in paragraph
          (d) of this Section 3, the Shares  awarded as  Restricted  Stock shall
          vest,  and  subject  to any such  other  terms and  conditions  as the
          Committee shall provide,  Shares of Restricted  Stock may not be sold,
          assigned,  transferred,  pledged, voted or otherwise encumbered by the
          Participant,  except as  hereinafter  provided,  during the Restricted
          Period.  During the  restricted  period,  Shares awarded as Restricted
          Stock  will be  voted  by an  independent  trustee  (which  may be the
          Trustee  identified in paragraph (c) of this Section 3) and not by the
          Participant.  Except for such restrictions,  and subject to paragraphs
          (c) and (e) of this Section 3 and Section 4 hereof, the Participant as
          owner of such shares shall have all the rights of a  stockholder.  The
          Committee shall have the authority,  in its discretion,  to accelerate
          the time at which  any or all of the  restrictions  shall  lapse  with
          respect  to an Award,  or to remove  any or all of such  restrictions,
          whenever it may determine that such action is appropriate by reason of
          changes  in  applicable   tax  or  other  laws  or  other  changes  in
          circumstances  occurring  after the  commencement  of such  Restricted
          Period.

(b)       Except as provided  in Section 5 hereof,  if a  Participant  ceases to
          maintain  Continuous  Service  for any  reason  (other  than  death or
          disability),  unless the  Committee  shall  otherwise  determine,  all
          Shares of Restricted Stock theretofore awarded to such Participant and
          which  at the  time of such  termination  of  Continuous  Service  are
          subject to the restrictions imposed by paragraph (a) of this Section 3
          shall upon such  termination  of  Continuous  Service be forfeited and
          returned  to the  Corporation.  If a  Participant  ceases to  maintain
          Continuous Service by reason of death or disability,  Restricted Stock
          then still  subject to  restrictions  imposed by paragraph (a) of this
          Section 3 will be free of those restrictions.
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(c)       (i) Unless the alternative procedure set forth in subparagraph (ii) of
          this paragraph (c) is followed,  each certificate in respect of Shares
          of Restricted  Stock awarded under the Plan shall be registered in the
          name of the  Participant  and deposited by the  Participant,  together
          with a stock power endorsed in blank,  with the  Corporation and shall
          bear the following (or a similar) legend:

                  The  transferability  of this  certificate  and the  shares of
            stock  represented  hereby are  subject to the terms and  conditions
            (including  forfeiture)  contained in the Amended and Restated  1998
            Management Recognition Plan of Peoples-Sidney Financial Corporation.
            Copies of such Plan are on file in the offices of the  Secretary  of
            Peoples-Sidney Financial Corporation, 101 East Court Street, Sidney,
            Ohio 45365.


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        (ii) In lieu of issuing  certificates  for Shares of Restricted Stock to
        and in the name of the  Participant  at the time of an Award pursuant to
        subparagraph  (i) of this  paragraph  (c), the  Corporation  may instead
        issue such Shares on the Award date to and in the name of First  Bankers
        Trust  Company,  N.A.,  or any  successor,  as  trustee  under the Trust
        Agreement for the Peoples-Sidney  Financial  Corporation 1998 Management
        Recognition  Plan (the  "Trustee"),  to be held for the  benefit  of the
        Participant prior to vesting.

(d)       At the time of the granting of any Award, the Participant  shall enter
          into an  Agreement  with the  Corporation  in a form  specified by the
          Committee,  agreeing to the terms and conditions of the Award and such
          other  matters  as  the  Committee,  in  its  sole  discretion,  shall
          determine (the "Restricted Stock Agreement").

(e)       The payment to the  Participant  of any dividends  declared or paid by
          the Corporation on any Restricted  Stock shall be deferred and held by
          the Corporation (or by the Trustee,  if the Shares of Restricted Stock
          are issued in the name of the Trustee pursuant to subparagraph (ii) of
          paragraph  (c) of this  Section 3) for the account of the  Participant
          until the  earlier  to occur of (i) the  lapsing  of the  restrictions
          imposed under  paragraph (a) of this Section 3 or (ii) the  forfeiture
          of such shares under  paragraph  (b) of this Section 3. There shall be
          credited at the end of each year (or portion thereof)  interest on the
          amount  of the  Participant's  account  at a  rate  per  annum  as the
          Committee,  in its  discretion,  may  determine.  Payment of  deferred
          dividends to the Participant,  together with interest accrued thereon,
          shall be made  upon the  lapsing  of the  restrictions  imposed  under
          paragraph (a) of this Section 3. Shares of Restricted  Stock shall not
          be voted by the Participant  during the Restricted  Period.  Shares of
          Restricted  Stock still  subject to  restriction  shall be voted by an
          independent party to be named by the Committee.

(f)       At the lapsing of the  restrictions  imposed by paragraph  (a) of this
          Section 3, the  Corporation  shall,  (i) if the procedure set forth in
          subparagraph  (i) of  paragraph  (c) of this  Section  3 is  followed,
          deliver  to the  Participant  (or  where  the  relevant  provision  of
          paragraph  (b) of this  Section  3 applies  in the case of a  deceased
          Participant,  to his legal  representative,  beneficiary  or heir) the
          certificate(s)   and  stock  power   deposited  with  it  pursuant  to
          subparagraph  (i) of  paragraph  (c) of this  Section 3 and the Shares
          represented by such  certificate(s)  shall be free of the restrictions
          referred  to in  paragraph  (a)  of  this  Section  3 or  (ii)  if the
          procedure  set forth in  subparagraph  (ii) of  paragraph  (c) of this
          Section 3 is followed,  cause a certificate representing the number of
          Shares then vesting to be issued in the name of the Participant,  free
          of all  restrictions  initially  placed on such Shares.  Any remaining
          unvested  Shares  shall  continue to be held by and in the name of the
          Trustee for the benefit of the Participant until such Shares vest.

      4. Adjustments Upon Changes in Capitalization.  In the event of any change
in the outstanding Shares subsequent to the effective date of the Plan by reason
of  any   reorganization,   recapitalization,   stock  split,   stock  dividend,
combination or exchange of shares,  merger,  consolidation  or any change in the
corporate  structure or Shares of the Corporation,  the maximum aggregate number
and class of shares as to which  Awards  may be  granted  under the Plan and the
number and class of shares with  respect to which Awards  theretofore  have been
<PAGE>
granted under the Plan shall be appropriately  adjusted by the Committee,  whose
determination  shall be  conclusive.  Any  shares  of stock or other  securities
received, as a result of any of the foregoing,  by a Participant with respect to
Restricted   Stock   shall  be  subject  to  the  same   restrictions   and  the
certificate(s)  or other  instruments  representing or evidencing such shares or
securities shall be issued in the manner provided in Section 3 hereof.

      5. Assignments and Transfers.  During the Restricted  Period, no Award nor
any  right  or  interest  of a  Participant  under  the  Plan in any  instrument
evidencing  any Award under the Plan may be assigned,  encumbered or transferred
except  (i) in the event of the  death of a  Participant,  to the  Participant's
Beneficiary, or (ii) pursuant to a qualified domestic relations order as defined
in the Code or Title I of ERISA or the rules thereunder.

      6.  Administration.   The  Plan  shall  be  administered  by  a  Committee
consisting  of two or  more  members,  each  of  whom  shall  be a  Non-Employee
Director.  The  members  of the  Committee  shall be  appointed  by the Board of
Directors of the Corporation. Except as limited by the express provisions of the
Plan, the Committee shall have sole

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and complete  authority and  discretion  to: (i) select  Participants  and grant
Awards;  (ii)  determine  the  number of Shares to be subject to types of Awards
generally,  as well as individual Awards granted under the Plan; (iii) determine
the terms and conditions upon which Awards shall be granted under the Plan; (iv)
prescribe  the form and terms of  instruments  evidencing  such grants;  and (v)
establish  from time to time  regulations  for the  administration  of the Plan,
interpret the Plan, and make all  determinations  deemed  necessary or advisable
for the administration of the Plan.

      A majority of the Committee shall  constitute a quorum,  and the acts of a
majority of the members present at any meeting at which a quorum is present,  or
acts approved in writing by a majority of the Committee without a meeting, shall
be acts of the Committee.

      7. Shares  Subject to Plan.  Subject to  adjustment  by the  operation  of
Section 4 hereof,  the maximum number of Shares with respect to which Awards may
be made under the Plan is 71,415 Shares. The Shares with respect to which Awards
may be made  under  the Plan may be either  authorized  and  unissued  Shares or
issued Shares heretofore or hereafter reacquired and held as treasury Shares. An
Award shall not be  considered  to have been made under the Plan with respect to
Restricted Stock which is forfeited and new Awards may be granted under the Plan
with respect to the number of Shares as to which such forfeiture has occurred.

      The  Corporation's  obligation to deliver  Shares with respect to an Award
shall,  if the  Committee  so  requests,  be  conditioned  upon the receipt of a
representation  as to the investment  intention of the  Participant or any other
person to whom such Shares are to be  delivered,  in such form as the  Committee
shall  determine to be necessary or advisable to comply with the  provisions  of
the  Securities  Act of 1933 or any  other  Federal,  state or local  securities
legislation  or  regulation.   It  may  be  provided  that  any   representation
requirement shall become  inoperative upon a registration of the Shares or other
action  eliminating the necessity of such  representation  under such Securities
Act or other securities  legislation.  The Corporation  shall not be required to
deliver any Shares  under the Plan prior to (i) the  admission of such shares to
listing on any stock  exchange on which Shares may then be listed,  and (ii) the
completion of such registration or other  qualification of such Shares under any
state or Federal law, rule or regulation, as the Committee shall determine to be
necessary or advisable.

      8.  Employee  Rights  Under  the Plan.  No  director,  director  emeritus,
advisory  director,  officer or employee  shall have a right to be selected as a
Participant nor, having been so selected,  to be selected again as a Participant
and no director, officer, employee or other person shall have any claim or right
to be granted an Award  under the Plan or under any other  incentive  or similar
plan of the Corporation or any Affiliate.  Neither the Plan nor any action taken
thereunder  shall be construed as giving any officer or employee any right to be
retained in the employ of the Corporation, the Association or any Affiliate.

      9.  Withholding  Tax. Upon the  termination of the Restricted  Period with
respect to any shares of Restricted Stock (or at such earlier time, if any, that
an election is made by the  Participant  under Section 83(b) of the Code, or any
successor  provision  thereto,  to include  the value of such  shares in taxable
income), the Corporation may, in its sole discretion,  withhold from any payment
or distribution  made under this Plan sufficient  Shares or withhold  sufficient
cash to cover any applicable  withholding and employment  taxes. The Corporation
<PAGE>
shall have the right to deduct from all dividends paid with respect to shares of
Restricted  Stock the amount of any taxes which the  Corporation  is required to
withhold with respect to such dividend  payments.  No discretion or choice shall
be conferred upon any Participant with respect to the form,  timing or method of
any such tax withholding.

      10.  Amendment or  Termination.  The Board of Directors of the Corporation
may amend,  suspend or  terminate  the Plan or any portion  thereof at any time;
provided,  however,  that no such  amendment,  suspension or  termination  shall
impair  the  rights  of any  Participant,  without  his  consent,  in any  Award
theretofore made pursuant to the Plan.

      11. Term of Plan. The Plan shall become effective upon its ratification by
the stockholders of the  Corporation.  It shall continue in effect for a term of
ten years unless sooner terminated under Section 11 hereof.


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      12. Director Awards. By, and simultaneously with, the ratification of this
Plan by the stockholders of the  Corporation,  each  non-employee  member of the
Board of Directors of the  Corporation is hereby granted an Award equal to 3,570
Shares.  Each such Award shall be evidenced by a Restricted Stock Agreement in a
form  approved by the  Corporation  and shall be subject in all  respects to the
terms and conditions of this Plan,  which are  controlling.  Except as otherwise
provided  herein or in the applicable  Restricted  Stock  Agreement,  all Awards
granted  pursuant  to this  Section  12 shall be  earned  in five  equal  annual
installments,  with the first installment vesting on the one-year anniversary of
the date of grant, as long as the director maintains Continuous Service with the
Corporation or its Affiliates,  provided,  however,  no Award shall be earned in
any fiscal year in which the Association fails to meet its capital requirements.



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