<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Fidelity Financial of Ohio, Inc.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Fidelity Financial of Ohio, Inc.
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
(previously paid by wire transfer)
[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> 2
[FIDELITY FINANCIAL OF OHIO, INC. LETTERHEAD]
March 28, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Fidelity Financial of Ohio, Inc. (the "Company"). The meeting will be held at
the Quality Hotel Central located at 4747 Montgomery Road, Cincinnati, Ohio, on
Tuesday, April 29, 1997 at 2:00 p.m., Eastern Time. The matters to be considered
by stockholders at the Annual Meeting are described in the accompanying
materials.
The Board of Directors of Fidelity Financial of Ohio, Inc. has
determined that the matters to be considered at the Annual Meeting are in the
best interests of the Company and its shareholders. FOR THE REASONS SET FORTH IN
THE PROXY STATEMENT, THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" EACH
MATTER TO BE CONSIDERED.
It is very important that you be represented at the Annual Meeting
regardless of the number of shares you own or whether you are able to attend the
meeting in person. We urge you to mark, sign, and date your proxy card today and
return it in the envelope provided, even if you plan to attend the Annual
Meeting. This will not prevent you from voting in person, but will ensure that
your vote is counted if you are unable to attend.
Your continued support of and interest in Fidelity Financial of Ohio,
Inc. are sincerely appreciated.
Sincerely,
/s/ John R. Reusing
John R. Reusing
President and Chief Executive Officer
<PAGE> 3
FIDELITY FINANCIAL OF OHIO, INC.
4555 MONTGOMERY ROAD
CINCINNATI, OHIO 45212
(513) 351-6666
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 29, 1997
NOTICE IS HEREBY GIVEN that an Annual Meeting of Stockholders of
Fidelity Financial of Ohio, Inc. (the "Company") will be held at the Quality
Hotel Central located at 4747 Montgomery Road, Cincinnati, Ohio, on Tuesday,
April 29, 1997, at 2:00 p.m., Eastern Time, for the following purposes, all of
which are more completely set forth in the accompanying Proxy Statement:
1. To elect three (3) directors of the Company for a three-year term,
and until their successors are elected and qualified;
2. To consider and approve the adoption of the Company's 1997 Stock
Option Plan;
3. To consider and approve the adoption of the Company's 1997
Management Recognition Plan and Trust;
4. To ratify the appointment of Grant Thornton LLP as the Company's
independent auditors for the year ending December 31, 1997;
5. If necessary, to adjourn the Annual Meeting to solicit additional
proxies; and
6. To transact such other business as may properly come before the
meeting or any adjournment thereof. Except with respect to procedural matters
incident to the conduct of the Annual Meeting, management is not aware of any
other matters which could come before the Annual Meeting.
The Board of Directors of the Company has fixed March 19, 1997 as the
voting record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting. Only those stockholders of record as of the
close of business on that date will be entitled to vote at the Annual Meeting or
at any such adjournment.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Paul D. Staubach
Paul D. Staubach, Secretary
March 28, 1997
Cincinnati, Ohio
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT
THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU
PLAN TO BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THIS MEETING,
YOU MAY VOTE EITHER IN PERSON OR BY YOUR PROXY. ANY PROXY GIVEN MAY BE REVOKED
BY YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
<PAGE> 4
FIDELITY FINANCIAL OF OHIO, INC.
----------------------------
PROXY STATEMENT
----------------------------
ANNUAL MEETING OF STOCKHOLDERS
APRIL 29, 1997
GENERAL
This Proxy Statement is being furnished to the stockholders of Fidelity
Financial of Ohio, Inc. (the "Company"), the holding company of Fidelity Federal
Savings Bank (the "Savings Bank"). The Company acquired all of the outstanding
stock of the Savings Bank in connection with the conversion of Fidelity Federal
Mutual Holding Company and the reorganization of the Savings Bank to the stock
holding company form of organization (the "Conversion and Reorganization") which
was consummated on March 4, 1996. On October 11, 1996, following receipt of all
regulatory and stockholder approvals, the Company competed the acquisition of
Circle Financial Corporation ("CFC") pursuant to the merger of CFC with and into
Fidelity Acquisition Corporation ("FAC"), a wholly-owned subsidiary of the
Company, and the subsequent merger of People's Savings Association (the
"Association"), an Ohio-chartered savings association and a wholly owned
subsidiary of CFC, with and into the Savings Bank (collectively, the "Merger").
Proxies are being solicited on behalf of the Board of Directors of the Company
to be used at the Annual Meeting of Stockholders ("Annual Meeting") to be held
at the Quality Hotel Central located at 4747 Montgomery Road, Cincinnati, Ohio,
on Tuesday, April 29, 1997, at 2:00 p.m., Eastern Time, and at any adjournment
thereof, for the purposes set forth in the Notice of Annual Meeting of
Stockholders. This Proxy Statement is first being mailed to stockholders on or
about March 28, 1997.
VOTING RIGHTS
Only the holders of record of the outstanding shares of the common
stock, $0.10 par value per share, of the Company ("Common Stock") at the close
of business on March 19, 1997 ("Voting Record Date") will be entitled to notice
of and to vote at the Annual Meeting. At such date, there were 5,593,969 shares
of Common Stock issued and outstanding.
Holders of record of Common Stock at the close of business on March 19,
1997 will be entitled to one vote per share on all matters that may properly
come before the Annual Meeting. Stockholders of the Company are not permitted to
cumulate their votes for the election of directors. A plurality of the total
votes cast at the Annual Meeting is required
<PAGE> 5
2
to elect each director. Abstentions are considered in determining the presence
of a quorum but will not affect the vote required for the election of directors.
The affirmative vote of the holders of a majority of the total votes present, in
person or by proxy, at the Annual Meeting is required to approve the
ratification of the independent auditors. Abstentions will not be counted as
votes cast, and accordingly will have no effect on the voting of this proposal.
The affirmative vote of the holders of a majority of the total votes present, in
person and by proxy, at the Annual Meeting is required for approval of the
proposals to adopt the Company's 1997 Stock Option Plan ("Stock Option Plan")
and the Company's 1997 Management Recognition Plan and Trust ("Recognition
Plan"). A majority of the total votes present, in person and by proxy, will be
required to adjourn the Annual Meeting, if such action is required to be voted
on. Abstentions will not be counted as votes cast, and accordingly will have no
effect on the voting of these proposals. Under rules of the New York Stock
Exchange, the proposals for election of directors, ratification of independent
auditors and adjournment, if necessary, are considered "discretionary" items
upon which brokerage firms may vote in their discretion on behalf of their
clients if such clients have not furnished voting instructions and for which
there will not be "broker non-votes." The proposals to approve the Stock Option
Plan and the Recognition Plan, however, are considered "non-discretionary" and
for which there may be "broker non-votes." A "broker non-vote" will have the
same effect as a vote against the proposals to approve the Stock Option Plan and
the Recognition Plan. The presence, either in person or by proxy, of the holders
of a majority of the shares of Common Stock outstanding on March 19, 1997 is
necessary to constitute a quorum at the Annual Meeting.
PROXIES
Shares of Common Stock represented by properly executed proxies, if
such proxies are received in time and not revoked, will be voted in accordance
with the instructions indicated on the proxies. IF NO INSTRUCTIONS ARE
INDICATED, SUCH PROXIES WILL BE VOTED FOR THE NOMINEES FOR DIRECTOR DESCRIBED
HEREIN, FOR APPROVAL OF THE COMPANY'S 1997 STOCK OPTION PLAN, FOR APPROVAL OF
THE COMPANY'S 1997 MANAGEMENT RECOGNITION PLAN AND TRUST, FOR THE RATIFICATION
OF GRANT THORNTON LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE YEAR ENDING
DECEMBER 31, 1997, FOR ADJOURNMENT AS TO ANY MATTER, IF REQUIRED, AND, IN THE
DISCRETION OF THE PROXY HOLDER, AS TO ANY OTHER MATTER WHICH MAY PROPERLY COME
BEFORE THE ANNUAL MEETING. ANY HOLDER OF COMMON STOCK WHO RETURNS A SIGNED PROXY
BUT FAILS TO PROVIDE INSTRUCTIONS AS TO THE MANNER IN WHICH SUCH SHARES ARE TO
BE VOTED WILL BE DEEMED TO HAVE VOTED FOR THE MATTERS SET FORTH IN THE PRECEDING
SENTENCE IN THE MANNER DESCRIBED ABOVE.
A Company stockholder who has given a proxy may revoke it at any time
prior to its exercise at the Annual Meeting by (i) giving written notice of
revocation to the Secretary of the Company, (ii) properly submitting to the
Company a duly-executed proxy bearing a later date, or (iii) attending the
Annual Meeting and voting in person. All written notices of revocation and other
communications with respect to revocation of proxies should be
<PAGE> 6
3
addressed as follows: Fidelity Financial of Ohio, Inc., 4555 Montgomery Road,
Cincinnati, Ohio 45212, Attention: Secretary.
BENEFICIAL OWNERSHIP
The following table sets forth information as to the Common Stock
beneficially owned, as of March 19, 1997, by (i) the only persons or entities,
including any "group" as that term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), who or which was known to the
Company to be the beneficial owner of more than 5% of the issued and outstanding
Common Stock and (ii) all directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
Amount and
Nature Percent
of Beneficial of
Name and Address of Beneficial Owner Ownership(1) Class
- ------------------------------------ ------------ -----
<S> <C> <C>
Fidelity Financial of Ohio, Inc.
Employee Stock Ownership Plan Trust
4555 Montgomery Road
Cincinnati, Ohio 45212 329,854(2) 5.9%
All directors and executive officers
of the Company as a group
(8 persons) 274,446(3) 4.9
</TABLE>
- ----------
(1) Pursuant to rules promulgated by the Securities and Exchange Commission
("SEC") under the Exchange Act, a person or entity is considered to
beneficially own shares of Common Stock if the person or entity has or
shares (i) voting power, which includes the power to vote or to direct the
voting of the shares, or (ii) investment power, which includes the power to
dispose or direct the disposition of the shares. Unless otherwise
indicated, a person or entity has sole voting and sole investment power
with respect to the indicated shares. Shares which are subject to stock
options and which may be exercised within 60 days of March 19, 1997 are
deemed to be outstanding for the purpose of computing the percentage of
Common Stock beneficially owned by such person.
(Footnotes continued on following page)
<PAGE> 7
4
- ----------
(2) The Fidelity Financial of Ohio, Inc. Employee Stock Ownership Plan Trust
("Trust") was established pursuant to the Fidelity Financial of Ohio, Inc.
ESOP by an agreement between the Company and six directors of the Company,
who act as trustees of the ESOP ("Trustees"). As of March 19, 1997, 199,504
shares held in the Trust were unallocated and 130,350 shares held in the
Trust had been allocated to the accounts of participating employees. Under
the terms of the ESOP, the Trustees must vote all allocated shares held in
the ESOP in accordance with the instructions of the participating
employees, and unallocated shares and allocated shares for which employees
do not give instructions will be voted in the same ratio on any matter as
to those shares for which instructions are given.
(3) Includes in the case of all directors and executive officers of the Company
as a group, options to purchase 34,875 shares granted pursuant to the
Company's 1992 Stock Incentive Plan, 4,121 shares of Common Stock which
were awarded to certain officers of the Company pursuant to the Company's
Management Recognition Plan ("MRP"), 11,439 shares of Common Stock held for
the account of participating executive officers in the Company's 401(k)
Retirement Plan and 26,281 shares of Common Stock which are held by the
trust established pursuant to the Company's ESOP, which have been allocated
to the accounts of participating officers and consequently will be voted at
the Annual Meeting by such participating officers.
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR,
DIRECTORS WHOSE TERM CONTINUES AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Articles of Incorporation of the Company provide that the Board of
Directors shall be divided into three classes, each of which contains
approximately one-third of the Board, and that the members of each class shall
be elected for staggered three-year terms, and until their successors are
elected and qualified. The Articles of Incorporation of the Company currently
authorize nine directors.
At the Annual Meeting, stockholders of the Company will be asked to
elect three (3) directors of the Company for a three-year term, and until their
successors are elected and qualified. The three nominees for election as
directors were selected by the full Board of Directors, performing the functions
of a Nominating Committee. All nominees currently serve as directors of the
Company. There are no arrangements or understandings between the persons named
and any other person pursuant to which such person was selected as a nominee for
election as a director at the Annual Meeting. No director or nominee for
director is related to any other director or executive officer of the Company by
blood, marriage or adoption.
<PAGE> 8
5
If any person named as nominee should be unable or unwilling to stand
for election at the time of the Annual Meeting, the proxies will nominate and
vote for any replacement nominee or nominees recommended by the Board of
Directors of the Company. At this time, the Board of Directors knows of no
reason why any of the nominees may not be able to serve as a director if
elected.
The Articles of Incorporation of the Company provide that stockholders
of the Company may nominate persons for director in addition to nominees
selected by the Board of Directors, provided that such nominations are in
writing, delivered or mailed by first class United States mail, postage prepaid,
to the Secretary of the Company, 4555 Montgomery Road, Cincinnati, Ohio 45212,
not less than 60 days prior to the anniversary date of the immediately preceding
annual meeting of stockholders. Each written notice of a stockholder nomination
shall set forth: (a) as to each person whom the stockholder proposes to nominate
for election or re-election as a director (i) the name, age, business address
and, if known, residence address of such person, (ii) the principal occupation
or employment of such person, (iii) the number of shares of Company Common Stock
which are beneficially owned by such person on the date of such stockholder
notice, and (iv) any other information reasonably requested by the Company.
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR AND CONTINUING DIRECTORS
The following tables present information concerning each nominee for
director of the Company and each director whose term continues, including tenure
as a director of the Savings Bank, his or her principal occupation during the
past five years as well as the number of shares of Common Stock beneficially
owned by each such person as of March 19, 1997. Each of the nominees is also a
director of the Savings Bank.
<PAGE> 9
6
NOMINEES FOR DIRECTOR FOR THREE-YEAR TERM EXPIRING IN 2000
<TABLE>
<CAPTION>
Common Stock
Position with Beneficially
the Company and Owned as of
Principal Occupation March 19, 1997(2)
During the Director --------------------
Name Age Past Five Years Since(1) No. %
- ---- --- -------------------- --------- --- ---
<S> <C> <C> <C> <C> <C>
David A. Luecke 48 Director; President and Chief 1994 12,187(3) *
Executive Officer of Riemeier
Lumber Company, Cincinnati,
Ohio, since 1991; employed by
Riemeier Lumber Company in
various capacities since 1972.
John R. Reusing 45 Director; President and Chief 1989 95,721(4) 1.7%
Executive Officer of the Company
since October 1995; President and
Chief Executive Officer of the Savings
Bank since January 1989.
Robert W. Zumbiel 64 Director; President of C.W. Zumbiel 1993 26,875(5) *
Company, Norwood, Ohio, since 1974.
</TABLE>
<TABLE>
<CAPTION>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE
NOMINEES BE ELECTED AS DIRECTORS
DIRECTORS WITH TERMS EXPIRING IN 1998
Common Stock
Position with Beneficially
the Company and Owned as of
Principal Occupation March 19, 1997(2)
During the Director -------------------
Name Age Past Five Years Since(1) No. %
- ---- --- --------------------- --------- -- ---
<S> <C> <C> <C> <C> <C>
Michael W. Jordan 34 Director; Broker/General Manager of 1995 12,925(6) *
Jordan Realtors, Cincinnati, Ohio,
since 1992; associated with Jordan
Realtors since 1984.
Constantine N. Papadakis 51 Director; President of Drexel 1995 10,000 *
University, Philadelphia, Pennsylvania,
since August 1995; Dean of the College
of Engineering, University of
Cincinnati, Cincinnati, Ohio, from
February 1986 to July 1995.
Paul D. Staubach 36 Director; Senior Vice President, Chief 1994 64,330(7) 1.1%
Financial Officer and Secretary of the
Company since October 1995; Senior
Vice President, Chief Financial Officer
and Secretary of the Savings Bank
since May 1995; Vice President and
Chief Financial Officer of the Savings
Bank from December 1990 to May
1995.
</TABLE>
(Footnotes on following page)
<PAGE> 10
7
DIRECTORS WITH TERMS EXPIRING IN 1999
<TABLE>
<CAPTION>
Position with Common Stock
the Company and Beneficially
Principal Occupation Owned as of
During the Director March 19, 1997(2)
Name Age Past Five Years Since No. %
- ---- --- --------------------- -------- -- -
<S> <C> <C> <C> <C> <C>
Joseph D. Hughes 45 Director; Executive Vice President of the 1996 44,155(8) *
Company and Executive Vice President
and Chief Lending Officer of the
Savings Bank since October 1996;
Senior Vice President of CFC from
September 1994 to October 1996;
President of the Association from
September 1994 to October 1996; Vice
President of the Savings Bank from
January 1994 to August 1994;
President of First Financial Savings
Association from April 1989 to
December 1993.
Thomas N. Spaeth 59 Director; Partner, Spaeth & Batterberry, 1996 8,253(9) *
Ltd. since 1983; Certified Public
Accountant.
</TABLE>
* Represents less than 1.0% of the issued and outstanding Common Stock.
(1) Includes service with the Savings Bank.
(2) Based on information furnished by the respective individuals. Pursuant to
rules promulgated by the SEC under the Exchange Act, a person or entity is
considered to beneficially own shares of Common Stock if the person or
entity has or shares (i) voting power, which includes the power to vote or
to direct the voting of the shares, or (ii) investment power, which
includes the power to dispose or direct the disposition of the shares.
Unless otherwise indicated, a person or entity has sole voting and sole
investment power with respect to the indicated shares. Shares which are
subject to stock options and which may be exercised within 60 days of March
19, 1997 are deemed to be outstanding for the purpose of computing the
percentage of Common Stock beneficially owned by such person.
(3) Includes 11,687 shares owned jointly with Mr. Luecke's wife and 500 shares
for Mr. Luecke's daughter for which Mr. Luecke is custodian.
(Footnotes continued on following page)
<PAGE> 11
8
- ----------
(4) Includes 46,352 shares owned jointly with Mr. Reusing's wife, 337 shares
owned by Mr. Reusing's wife, which shares may be deemed to be owned by Mr.
Reusing, 337 shares held as custodian for Mr. Reusing's son, 2,576 shares
which were awarded to Mr. Reusing pursuant to the Company's MRP (and which
vest at the rate of 20% per year), options to purchase 21,375 shares
pursuant to the Company's 1992 Stock Incentive Plan, 17,044 shares held by
the Company's ESOP for the account of Mr. Reusing and 7,700 shares held by
the Company's 401(k) Retirement Plan.
(5) All of such shares are owned jointly with Mr. Zumbiel's wife.
(6) Includes 8,925 shares owned jointly with Mr. Jordan's wife and 4,000 shares
held in Mr. Jordan's Individual Retirement Account ("IRA").
(7) Includes 36,307 shares owned jointly with Mr. Staubach's wife, 1,546 shares
which were awarded to Mr. Staubach pursuant to the Company's MRP (and which
vest at the rate of 20% per year), options to purchase 13,500 shares
pursuant to the Company's 1992 Stock Incentive Plan, 9,237 shares held by
the Company's ESOP for the account of Mr. Staubach, 3,090 shares held by
the Company's 401(k) Retirement Plan, and 650 shares held in trust for Mr.
Staubach's children, for which Mr. Staubach is custodian.
(8) Includes 43,506 shares held in Mr. Hughes' IRA and 649 shares held in the
Company's 401(k) Retirement Plan.
(9) Includes 4,364 shares held in Mr. Spaeth's IRA and 3,889 shares held in the
Spaeth & Batterberry, Ltd. 401(k) Retirement Plan.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
There are no executive officers of the Company and the Savings Bank who
are not also directors of the Company and the Savings Bank.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of the Company's Common Stock to
file reports of ownership and changes in ownership with the SEC and the National
Association of Securities Dealers, Inc. Officers, directors and greater than 10%
stockholders are required by regulation to furnish the Company with copies of
all Section 16(a) forms they file. The Company knows of no person who owns 10%
or more of the Company's Common Stock.
<PAGE> 12
9
Based solely on review of the copies of such forms furnished to the
Company, the Company believes that during 1996, all Section 16(a) filing
requirements applicable to its officers and directors were complied with.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors of the Company and the Savings Bank meet monthly
and may have special meetings from time-to-time as needed. During the year ended
December 31, 1996, the Board of Directors of the Company met 13 times and the
Board of Directors of the Savings Bank met 13 times. No director attended fewer
than 75% in the aggregate of both the total number of Board meetings during 1996
and the total number of meetings of committees on which he served during the
year.
The entire Board of Directors of the Company acts as a Nominating
Committee. The Board of Directors of the Company has established the following
committees:
The Audit Committee of the Company recommends independent auditors to
the Board annually and reviews the Company's financial statements and the scope
and results of the audit performed by the Company's independent auditors and the
Company's system of internal control with management and such independent
auditors and reviews regulatory examination reports. The Audit Committee, which
is comprised of Messrs. Spaeth, Zumbiel and Luecke was newly formed by the
Company's Board in October 1996 and meet twice during 1996.
The Compensation Committee of the Company administers the stock benefit
plans of the Company. The Compensation Committee reviews existing compensation,
investigates new and different forms of compensation and makes recommendations
with respect thereto to the Board of Directors. The Committee, which is
comprised of Messrs. Jordan, Luecke, and Papadakis was newly formed by the
Company's Board in October 1996 and meet twice during 1996.
The Business Planning Committee of the Company engages in strategic and
long term business planning. The Business Planning Committee, which is comprised
of Messrs. Papadakis, Reusing, Staubach, Hughes and Jordan, was newly formed by
the Company's Board in October 1996 and met once during 1996.
The Board of Directors of the Savings Bank has established several
committees, including an Executive Committee.
The Executive Committee of the Board of Directors of the Savings Bank
is authorized to exercise the powers of the Board of Directors between regular
meetings of the Board. The Executive Committee currently consists of Messrs.
Hughes, Reusing, Staubach, Spaeth and Zumbiel and meets as often as deemed
necessary. The Executive Committee met once during 1996.
<PAGE> 13
10
To date, the Savings Bank has not established a nominating committee,
the functions of which are performed by the Board of Directors.
DIRECTORS' COMPENSATION
From January 1, 1996 to September 30, 1996, each member of the Board of
Directors of the Savings Bank (including directors who were employees of the
Savings Bank) was paid the equivalent of a base annual fee of $18,000. As of
October 1, 1996, each non-employee member of the Board of Directors of the
Savings Bank is paid a base annual fee of $18,000 and each director who is an
employee of the Savings Bank receives a base annual fee of $12,000. Directors of
the Savings Bank do not receive fees for committee meetings. Members of the
Board of Directors of the Company are not paid a separate fee.
The Savings Bank also maintains an Outside Directors' Retirement Plan
("Directors' Retirement Plan"), which was adopted by the Board of Directors of
the Savings Bank in December 1991 to provide retirement benefits to four former
non-employee directors of the Savings Bank (who subsequently retired). Pursuant
to the Directors' Retirement Plan, each participating director receives a
retirement benefit payable in quarterly installments over a ten-year period
consisting of two-thirds of the fees payable to such director for attendance at
all regular meetings of the Board during the 12 calendar months preceding the
director's retirement date, provided that in no event may the annual retirement
benefit be less than $12,000. The percentage of the annual retirement benefit
payable to a participating director varies according to such director's years of
service as a member of the Board of Directors of the Savings Bank, with full
vesting occurring after 10 years of service. Approximately $18,000 of pre-tax
compensation expense related to the Directors' Retirement Plan was accrued by
the Savings Bank during the year ended December 31, 1996.
<PAGE> 14
11
EXECUTIVE COMPENSATION
SUMMARY
The following table sets forth a summary of certain information
concerning the compensation awarded to or paid by the Savings Bank for services
rendered in all capacities during the last three fiscal years to the President
and Chief Executive Officer and other executive officers of the Savings Bank,
whose total compensation during the last fiscal year exceeded $100,000. The
Company currently does not pay separate compensation to its executive officers.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------------------------------------------------------------------
OTHER AWARDS PAYOUTS ALL OTHER
NAME AND ANNUAL COMPENSATION
PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION (4)
(2)
RESTRICTED LTIP
OPTIONS STOCK PAYOUTS
(3) AWARDS
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John R. Reusing 1996 $166,125 $10,474 -- -- $ -- -- $94,325
President and Chief Executive 1995 150,500 19,875 -- 4,500 -- -- 25,912
Officer 1994 143,000 18,750 -- -- -- -- 24,533
- ---------------------------------------------------------------------------------------------------------------------------------
Paul D. Staubach 1996 $98,400 $ 5,733 -- -- $ -- -- $51,600
Senior Vice President, Chief 1995 91,000 10,950 -- 3,375 -- -- 14,250
Financial Officer and Secretary 1994 86,000 10,200 -- -- -- -- 13,334
=================================================================================================================================
</TABLE>
- -----------------
(1) Includes directors' fees in the amount of $16,500 for Messrs. Reusing
and Staubach for the year ended December 31, 1996 and $18,000 for the
years ended December 31, 1995 and 1994. Also includes amounts deferred
by the executive officer pursuant to the Savings Bank's 401(k)
Retirement Plan, which allows employees to defer up to 15% of their
salary per year.
(2) Does not include amounts attributable to miscellaneous benefits received
by the named executive officers, including the use of an automobile
owned by the Savings Bank. The costs to the Savings Bank of providing
such benefits to the named executive officers during the year ended
December 31, 1996 did not exceed the lesser of $50,000 or 10% of the
total of annual salary and bonus reported for the individual.
(Footnotes continued on following page)
<PAGE> 15
12
- ------------
(3) Consists of awards granted pursuant to the 1992 Stock Incentive Plan
during the year ended December 31, 1995, as adjusted for the exchange of
common stock of the Savings Bank in the Conversion and Reorganization.
(4) During the year ended December 31, 1996, consists of amounts allocated,
accrued or paid by the Savings Bank on behalf of Messrs. Reusing and
Staubach for the allocation of shares pursuant to the ESOP of $89,836
and $49,143, respectively, based upon a market value of $11.50 per share
at December 31, 1996, and pursuant to the Savings Bank's 401(k)
Retirement Plan of $4,489 and $2,457, respectively.
Stock Options
No options were granted to the executive officers named in the Summary
Compensation Table during the year ended December 31, 1996.
The following table sets forth certain information concerning exercises
of stock options granted pursuant to the Savings Bank's 1992 Stock Incentive
Plan by the named executive officers during the year ended December 31, 1996 and
options held at December 31, 1996.
<TABLE>
<CAPTION>
=============================================================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION VALUES
- -----------------------------------------------------------------------------------------------------------------------------
Number of Options at Value of Options at
Year End(1) Year End(2)
--------------------------------------------------------------------------
Shares
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John R. Reusing -- -- 21,375 -- $165,847 $ --
- -----------------------------------------------------------------------------------------------------------------------------
Paul D. Staubach -- -- 13,500 -- $102,769 $ --
=============================================================================================================================
- --------------------
<FN>
(1) As adjusted for the exchange of common stock of the Savings Bank in the
Conversion and Reorganization.
(2) Based on a per share market price of $11.50 as of December 31, 1996.
</TABLE>
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company and the Savings Bank (collectively the "Employers") have
entered into employment agreements with Messrs. Reusing and Staubach. The
Employers agreed to
<PAGE> 16
13
employ Messrs. Reusing and Staubach for a term of three years in their
respective current positions and at their respective current salaries, which
salaries may be increased at the discretion of the Board of Directors from time
to time. In addition, subject to satisfactory performance reviews by the Board
of Directors, the employment agreements shall be extended on each anniversary
date for an additional year so that the remaining term shall be three years.
The employment agreements are terminable with or without cause by the
Employers. Messrs. Reusing and Staubach shall have no right to compensation or
other benefits pursuant to the employment agreements for any period after
voluntary termination or termination by the Employers for cause, disability,
retirement or death, provided, however, that (i) in the event that either Mr.
Reusing or Mr. Staubach terminates his employment because of failure of the
Employers to comply with any material provision of the respective employment
agreement or (ii) such employment agreement is terminated by the Employers other
than for cause, disability, retirement or death or by Mr. Reusing or Mr.
Staubach as a result of certain adverse actions which are taken with respect to
Mr. Reusing's or Mr. Staubach's respective employment following a Change in
Control of the Company, as defined, Messrs. Reusing and Staubach will be
entitled to a cash severance amount equal to three times his respective base
salary. In addition, Messrs. Reusing and Staubach will be entitled to a
continuation of benefits similar to those they are receiving at the time of such
termination for the remaining term of the agreement or until such employee
obtains full-time employment with another employer.
A Change in Control is generally defined in the employment agreements to
include any change in control required to be reported under the federal
securities laws, as well as (i) the acquisition by any person of 25% or more of
the Company's outstanding voting securities and (ii) a change in a majority of
the directors of the Company during any two-year period without the approval of
at least two-thirds of the persons who were directors of the Company at the
beginning of such period.
In the event that either Mr. Reusing's or Mr. Staubach's employment is
terminated by the Employers for other than cause, disability, retirement or
death or such employment is terminated by Mr. Reusing or Mr. Staubach due to a
material breach of the employment agreement by the Employers which breach has
not been cured as set forth under the employment agreement, and as of the date
of termination no Change in Control of the Company has occurred, no written
agreement which contemplates a Change in Control of the Company and which still
is in effect has been entered into by either or both of the Employers and no
discussions and/or negotiations are being conducted which relate to the same,
then Messrs. Reusing and Staubach will be entitled to a cash severance amount
equal to his respective base salary which he would have earned over the
remaining term of such employment agreement. In addition, Messrs. Reusing and
Staubach will be entitled to a continuation of benefits similar to those they
are receiving at the time of such termination for the remaining term of the
agreement or until such employee obtains full-time employment with another
employer.
<PAGE> 17
14
The employment agreements provide that in the event that any of the
payments to be made thereunder or otherwise upon termination of employment are
deemed to constitute "excess parachute payments" within the meaning of Section
280G of the Internal Revenue Code of 1986, as amended (the "Code"), then such
payments and benefits received thereunder shall be reduced, in the manner
determined by the employee, by the amount, if any, which is the minimum
necessary to result in no portion of the payments and benefits being
non-deductible by the Employers for federal income tax purposes. Excess
parachute payments generally are payments in excess of three times the base
amount, which is defined to mean the recipient's average annual compensation
from the employer includable in the recipient's gross income during the most
recent five taxable years ending before the date on which a change in control of
the employer occurred. Recipients of excess parachute payments are subject to a
20% excise tax on the amount by which such payments exceed the base amount, in
addition to regular income taxes, and payments in excess of the base amount are
not deductible by the employer as compensation expense for federal income tax
purposes.
In connection with the Merger, the Employers entered into an employment
agreement with Mr. Hughes with comparable terms to the employment agreements for
Messrs. Reusing and Staubach.
The Employers have also entered into severance agreements with six
officers of the Employers in order to assist the Employers in maintaining a
stable and competent management base. The agreements provide for a two-year
term, and subject to satisfactory performance reviews by the Board of Directors,
shall extend on each anniversary date for an additional year so that the
remaining term will be two years. The agreements provide for severance payments
in the event that certain adverse actions are taken with respect to an
employee's employment following a Change in Control of the Company, as defined,
in an amount equal to two times the respective employee's annual compensation.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee ("Committee") of the Company's Board of
Directors, which is comprised of Messrs. Jordan, Luecke and Papadakis, reviews
compensation and benefits and recommends to the Board of Directors adjustments
in such compensation. Messrs. Reusing, Hughes and Staubach did not participate
or vote on their individual compensation. The report of the Committee with
respect to compensation for the Chief Executive Officer and all other executive
officers for 1996 is set forth below:
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
the charter of the Committee is to assist the Company in carrying out
its responsibility to evaluate, initiate and oversee executive compensation
arrangements and shareholder-approved benefit plans. The overall goals of the
Committee are to assist the
<PAGE> 18
15
Company in attracting and retaining qualified management and rewarding these
individuals for performance goals that are achieved.
The Committee considered various financial and non-financial criteria in
evaluating the compensation of the Chief Executive Officer and other executive
officers. These included profitability ratios, federal examinations and market
value of the Company. Special consideration was given to the "second step"
conversion completed in March 1996 and the acquisition of CFC in the fourth
quarter of 1996. The Merger not only doubled the size of the institution but
tripled the branch network. The Committee reviewed various compensation surveys
as well as the Southwest Ohio peer group averages for appropriate comparisons.
In March 1996, the Committee approved an employment agreement for Mr.
Reusing. It also recommended a year-end base compensation increase to $160,000.
No bonus program has been implemented at this time for 1997; however, Mr.
Reusing did receive a bonus amount of $10,473.75 for the year ended 1996.
In addition, the executive officers of the Company, who are also
directors, requested that inside directors fees be reduced by 33% to $12,000
annually. The Committee approved this recommendation.
With respect to the Company's other executive officers, the Committee
considered salary and bonus recommendations prepared by the Chief Executive
Officer to establish 1997 base compensation. The salary adjustment
recommendations were based on the Company's overall performance including the
"second step" conversion, the Merger, as well as an analysis of competitive
compensation levels necessary to maintain and attract quality personnel. In
addition, the level of responsibility which increased due to the Company's
doubling of size was a factor that was considered.
Following a review and approval by the Committee, all issues pertaining
to executive compensation were submitted to the full Board of Directors for
their approval. Messrs. Reusing, Hughes and Staubach did not participate or vote
on their individual compensation packages.
Michael W. Jordan
David A. Luecke
Constantine N. Papadakis
<PAGE> 19
16
PERFORMANCE GRAPH
The following graph compares the yearly cumulative total return on the
Common Stock for the period beginning March 4, 1996, the date the Company
converted to a stock company and its stock began trading with (i) the yearly
cumulative total return on the stocks included in the S&P 500 Total Return Index
and (ii) the yearly cumulative total return on the stocks included in the SNL
Securities All Thrifts Index. All of these cumulative returns are computed
assuming the reinvestment of dividends at the frequency with which dividends
were paid during the applicable year.
[INSERT GRAPH]
<TABLE>
<CAPTION>
Period Ending
------------------------------------------------
Index 3/4/96 3/31/96 6/30/96 9/30/96 12/31/96
<S> <C> <C> <C> <C> <C>
Fidelity Financial of Ohio, Inc. 100.00 98.75 101.00 101.52 117.26
S&P 500 100.00 99.33 103.78 106.99 115.83
SNL Thrifts (All) Index 100.00 101.49 104.01 104.76 129.87
</TABLE>
<PAGE> 20
17
INDEBTEDNESS OF MANAGEMENT
In accordance with applicable federal laws and regulations, the Savings
Bank offers mortgage loans to its directors, officers and full-time employees
for the financing of their primary residences and certain other loans. These
loans are generally made on substantially the same terms as those prevailing at
the time for comparable transactions with non-affiliated persons. It is the
belief of management that these loans neither involve more than the normal risk
of collectibility nor present other unfavorable features.
Section 22(h) of the Federal Reserve Act generally provides that any
credit extended by a savings institution, such as the Savings Bank, to its
executive officers, directors and, to the extent otherwise permitted, principal
stockholder(s), or any related interest of the foregoing, must (i) be on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions by the savings institution
with non-affiliated parties; (ii) be pursuant to underwriting standards that are
no less stringent than those applicable to comparable transactions with
non-affiliated parties; (iii) not involve more than the normal risk of repayment
or present other unfavorable features; and (iv) not exceed, in the aggregate,
the institution's unimpaired capital and surplus, as defined. As of December 31,
1996, with the exception of Messrs. Jordan, Staubach, and Hughes (who had in the
aggregate $464,200, $132,600 and $169,000, respectively, of first mortgage loans
from the Savings Bank as of such date, which loans were obtained prior to
Messrs. Jordan, Staubach and Hughes being nominated to the Board and which loans
were made in the ordinary course of business, were not made with favorable terms
and did not involve more than the normal risk of collectibility), no director,
nominee for director or executive officer of the Savings Bank, including members
of their immediate family, had aggregate indebtedness to the Savings Bank
exceeding $60,000.
TRANSACTIONS WITH AFFILIATES
Michael W. Jordan, a director of the Company, is a broker and general
manager of Jordan Realtors, Cincinnati, Ohio. Jordan Realtors received
approximately $142,400 in real estate brokerage fees which were paid by
customers of Jordan Realtors who were also borrowers of the Savings Bank during
the year ended December 31, 1996. Mr. Jordan also received a $6,000 commission
equal to two percent of the purchase price of real estate purchased by the
Company during 1996.
<PAGE> 21
18
PROPOSAL TO ADOPT THE 1997 STOCK OPTION PLAN
GENERAL
The Board of Directors has adopted the Stock Option Plan which is
designed to attract and retain qualified personnel in key positions, provide
officers and key employees with a proprietary interest in the Company as an
incentive to contribute to the success of the Company and reward key employees
for outstanding performance. The Stock Option Plan is also designed to retain
qualified directors for the Company. The Stock Option Plan provides for the
grant of incentive stock options intended to comply with the requirements of
Section 422 of the Code ("incentive stock options"), non-qualified or
compensatory stock options and stock appreciation rights (collectively
"Awards"). Awards will be available for grant to directors and key employees of
the Company and any subsidiaries, except that directors will not be eligible to
receive incentive stock options. If stockholder approval is obtained, options to
acquire shares of Common Stock will be awarded to key employees of the Company
and the Savings Bank and directors of the Company with an exercise price equal
to the fair market value of the Common Stock on the date of such approval. The
Stock Option Plan complies in all material respects with Office of Thrift
Supervision ("OTS") Regulations and the OTS in no way endorses or approves the
Stock Option Plan.
DESCRIPTION OF THE STOCK OPTION PLAN
The following description of the Stock Option Plan is a summary of its
terms and is qualified in its entirety by reference to the Stock Option Plan, a
copy of which is attached hereto as Appendix A.
ADMINISTRATION. The Stock Option Plan is administered and interpreted by
the Compensation Committee that is composed solely of two or more "Non-Employee
Directors."
STOCK OPTIONS. Under the Stock Option Plan, the Board of Directors or
the Committee determines which officers and key employees will be granted
options, whether such options will be incentive or compensatory options, the
number of shares subject to each option, whether such options may be exercised
by delivering other shares of Common Stock and when such options become
exercisable. The per share exercise price of a stock option shall be equal to
the fair market value of a share of Common Stock on the date the option is
granted.
All options granted to participants under the Stock Option Plan shall
become vested and exercisable at the rate of 20% per year, with the first
installment becoming vested and exercisable as of the date the options were
granted, and the right to exercise shall be cumulative. Notwithstanding the
foregoing, no vesting shall occur on or after a participant's employment with
the Company is terminated for any reason other than his death or disability.
Unless the Board or the Committee shall specifically state otherwise at the time
an option is granted, all options granted to participants shall become vested
and exercisable
<PAGE> 22
19
in full on the date an optionee terminates his employment with or service to the
Company or a subsidiary company because of his death or disability. In addition,
all stock options will become vested and exercisable in full on the date an
optionee terminates his employment or service to the Company or a subsidiary
company as the result of a change in control of the Company, as defined in the
Stock Option Plan.
Each stock option or portion thereof shall be exercisable at any time on
or after it vests and is exercisable until the earlier of ten years after its
date of grant or three months after the date on which the optionee's employment
or service as a non-employee director terminates, unless extended by the
Committee to a period not to exceed one year from such termination. However,
failure to exercise incentive stock options within three months after the date
on which the optionee's employment terminates may result in adverse tax
consequences to the optionee. If an optionee dies while serving as an employee
or a non-employee director or terminates his service as an employee or a
non-employee director as a result of disability without having fully exercised
his options, the optionee's executors, administrators, legatees or distributees
of his estate shall have the right to exercise such options during the
twelve-month period following the earlier of his death or termination due to
disability, provided no option will be exercisable more than ten years from the
date it was granted. Stock options are non-transferable except by will or the
laws of descent and distribution. Notwithstanding the foregoing, an optionee who
holds non-qualified options may transfer such options to his or her spouse,
lineal ascendants, lineal descendants, or to a duly established trust for the
benefit or one or more of these individuals. Options so transferred may
thereafter be transferred only to the optionee who originally received the grant
or to an individual or trust to whom the optionee could have initially
transferred the option. Options which are so transferred shall be exercisable by
the transferee according to the same terms and conditions as applied to the
optionee.
STOCK APPRECIATION RIGHTS. Under the Stock Option Plan, the Board of
Directors or the Committee is authorized to grant stock appreciation rights to
optionees under which an optionee may surrender any exercisable incentive stock
option or compensatory stock option or any portion thereof in return for payment
by the Company to the optionee of cash or Common Stock in an amount equal to the
excess of the fair market value of the shares of Common Stock subject to option,
or portion thereof, at the time over the exercise price of the option with
respect to such shares, or a combination of cash and Common Stock. A stock
appreciation right may be granted concurrently with the stock option to which it
relates or at any time thereafter which is prior to the exercise or expiration
of such option.
NUMBER OF SHARES COVERED BY THE STOCK OPTION PLAN. A total of 227,810
shares of Common Stock has been reserved for issuance pursuant to the Stock
Option Plan, which is 10% of the Common Stock issued in connection with the
Conversion and Reorganization. In the event of a stock split, reverse stock
split or stock dividend, the number of shares of Common Stock under the Stock
Option Plan, the number of shares to which any Award relates and the exercise
price per share under any option or stock appreciation right shall
<PAGE> 23
20
be adjusted to reflect such increase or decrease in the total number of shares
of the Common Stock outstanding.
AMENDMENT AND TERMINATION OF THE STOCK OPTION PLAN. Unless sooner
terminated, the Stock Option Plan shall continue in effect for a period of ten
years from the effective date, which is February 18, 1997, the date the Stock
Option Plan was adopted by the Board and became effective by its terms.
Termination of the Stock Option Plan shall not affect any previously granted
Awards.
FEDERAL INCOME TAX CONSEQUENCES. Under current provisions of the Code,
the federal income tax treatment of incentive stock options and compensatory
stock options is different. As regards incentive stock options, an optionee who
meets certain holding period requirements will not recognize income at the time
the option is granted or at the time the option is exercised, and a federal
income tax deduction generally will not be available to the Company at any time
as a result of such grant or exercise. With respect to compensatory stock
options, the difference between the fair market value on the date of exercise
and the option exercise price generally will be treated as compensation income
upon exercise, and the Company will be entitled to a deduction in the amount of
income so recognized by the optionee. Upon the exercise of a stock appreciation
right, the holder will realize income for federal income tax purposes equal to
the amount received by him, whether in cash, shares of stock or both, and the
Company will be entitled to a deduction for federal income tax purposes in the
same amount.
The above description of tax consequences under federal law is
necessarily general in nature and does not purport to be complete. Moreover,
statutory provisions are subject to change, as are their interpretations, and
their application may vary in individual circumstances. Finally, the
consequences under applicable state and local income tax laws may not be the
same as under the federal income tax laws.
ACCOUNTING TREATMENT. Stock appreciation rights will, in most cases,
require a charge against the earnings of the Company each year representing
appreciation in the value of such rights over periods in which they become
exercisable. Such charge is based on the difference between the exercise price
specified in the related option and the current market price of the Common
Stock. In the event of a decline in the market price of the Common Stock
subsequent to a charge against earnings related to the estimated costs of stock
appreciation rights, a reversal of prior charges is made in the amount of such
decline (but not to exceed aggregate prior charges).
Neither the grant nor the exercise of an incentive stock option or a
non-qualified stock option under the Stock Option Plan currently requires any
charge against earnings under generally accepted accounting principles. In
certain circumstances, shares issuable pursuant to outstanding options under the
Stock Option Plan might be considered outstanding for purposes of calculating
earnings per share.
<PAGE> 24
21
STOCKHOLDER APPROVAL. No Awards will be granted under the Stock Option
Plan unless the Stock Option Plan is approved by stockholders. Stockholder
ratification of the Stock Option Plan will satisfy certain Nasdaq market listing
and tax requirements.
AWARDS TO BE GRANTED. The Board of Directors of the Company adopted the
Stock Option Plan and approved the grant of incentive options to executive
officers and employees of the Company and the Savings Bank and non-qualified
options to non-employee directors thereof. The options shall be effective upon
stockholder approval of the Stock Option Plan with a per share exercise price
equal to the fair market value of a share of Common Stock on the date of grant.
The following table sets forth certain information with respect to such grants.
<TABLE>
<CAPTION>
Number of Shares
Name of Individual or Subject to
Number of Persons in Group Title Stock Options
- -------------------------- ----- ----------------
<S> <C> <C>
John R. Reusing President and Chief 12,500
Executive Officer
Paul D. Staubach Senior Vice President, 10,000
Chief Financial
Officer and Secretary
All executive officers as --- 32,500
a group (3 persons)
All non-employee directors --- 50,000
as a group (5 persons)
All employees, not including --- 91,000
executive officers, as a
group (24 persons)
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR ADOPTION OF
THE 1997 STOCK OPTION PLAN.
<PAGE> 25
22
PROPOSAL TO ADOPT THE 1997 MANAGEMENT
RECOGNITION PLAN AND TRUST
GENERAL
The Board of Directors of the Company has adopted the Recognition Plan,
the objective of which is to retain qualified personnel in key positions,
provide officers, key employees and directors with a proprietary interest in the
Company as an incentive to contribute to its success and reward key employees
for outstanding performance. Officers and key employees of the Company who are
selected by the Board of Directors of the Company or a committee thereof, as
well as non-employee directors of the Company, will be eligible to receive
benefits under the Recognition Plan. If stockholder approval is obtained, shares
will initially be granted to non-employee directors as described below. The
Recognition Plan complies in all material respects with OTS Regulations and the
OTS in no way endorses or approves the Recognition Plan.
DESCRIPTION OF THE RECOGNITION PLAN
The following description of the Recognition Plan is a summary of its
terms and is qualified in its entirety by reference to the Recognition Plan, a
copy of which is attached hereto as Appendix B.
ADMINISTRATION. The Recognition Plan is administered and interpreted by
the Compensation Committee that is composed solely of two or more "Non-Employee
Directors."
Upon stockholder approval of the Recognition Plan, the Company will
initially acquire Common Stock on behalf of the Recognition Plan, in an amount
necessary to fund shares granted to non-employee directors. The Company reserves
the right to purchase additional shares of Common Stock up to 4% of the Common
Stock issued in the Conversion and Reorganization, or 91,124 shares in the
aggregate. These shares will be acquired through open market purchases.
GRANTS. Shares of Common Stock granted pursuant to the Recognition Plan
will be in the form of restricted stock payable over a five-year period at a
rate of 20% per year, beginning one year from the anniversary date of the grant.
A recipient will be entitled to all voting and other stockholder rights with
respect to shares which have been earned and allocated under the Recognition
Plan. However, until such shares have been earned and allocated, they may not be
sold, pledged or otherwise disposed of and are required to be held in the
Recognition Plan Trust. Under the terms of the Recognition Plan, all shares
which have not yet been earned and allocated are required to be voted by the
trustees in their sole discretion. In addition, any cash dividends or stock
dividends declared in respect of unvested share awards will be held by the
Recognition Plan Trust for the benefit of the recipients and such dividends,
including any interest thereon, will be paid out
<PAGE> 26
23
proportionately by the Recognition Plan Trust to the recipients thereof as soon
as practicable after the share awards become earned. Any cash dividends or stock
dividends declared in respect of each vested share held by the Recognition Plan
Trust will be paid by the Recognition Plan Trust as soon as practicable after
the Recognition Plan Trust's receipt thereof to the recipient on whose behalf
such share is then held by the Recognition Plan Trust.
If a recipient terminates employment for reasons other than death or
disability, the recipient will forfeit all rights to the allocated shares under
restriction. All shares subject to an award held by a recipient whose employment
with or service to the Company or any subsidiary terminates due to death or
Disability, as defined in the Recognition Plan, shall be deemed earned as of the
recipient's last day of employment with or service to the Company or any
subsidiary and shall be distributed as soon as practicable thereafter; provided,
however, that awards shall be distributed in accordance with the Recognition
Plan. All shares subject to an award held by a recipient also shall be deemed to
be earned in the event of a change in control of the Company, as defined in the
Recognition Plan.
During the lifetime of the recipient, shares subject to an award may
only be earned by and paid to the recipient, provided that shares subject to an
award and rights to such shares shall be transferable by a recipient to his or
her spouse, lineal ascendants, lineal descendants, or to a duly established
trust. Shares subject to an award so transferred may not again be transferred
other than to the recipient who originally received the grant or to an
individual or trust to whom such recipient could have transferred shares subject
to an award. Shares subject to awards which are transferred shall be subject to
the same terms and conditions as would have applied to such shares subject to
awards in the hands of the recipient who originally received the grant.
FEDERAL INCOME TAX CONSEQUENCES. Pursuant to Section 83 of the Code,
recipients of Recognition Plan awards will recognize ordinary income in an
amount equal to the fair market value of the shares of Common Stock granted to
them at the time that the shares vest and become transferable. A recipient of a
Recognition Plan award may also elect, however, to accelerate the recognition of
income with respect to his or her grant to the time when shares of Common Stock
are first transferred to him or her, notwithstanding the vesting schedule of
such awards. The Company will be entitled to deduct as a compensation expense
for tax purposes the same amounts recognized as income by recipients of
Recognition Plan awards in the year in which such amounts are included in
income.
ACCOUNTING TREATMENT. For accounting purposes, the Company will also
recognize a compensation expense as shares of Common Stock granted pursuant to
the Recognition Plan vest. Unlike the treatment of Recognition Plan awards for
tax purposes, however, the compensation expense recognized for accounting
purposes is limited to the fair market value of the Common Stock at the date of
grant to recipients, rather than the fair market value of the Common Stock at
the time that a Recognition Plan grant vests.
<PAGE> 27
24
STOCKHOLDER APPROVAL. No shares will be granted under the Recognition
Plan unless the Recognition Plan is approved by stockholders. Stockholder
ratification of the Recognition Plan will satisfy certain Nasdaq market listing
and tax requirements.
SHARES TO BE GRANTED. The Board of Directors of the Company adopted the
Recognition Plan and approved the initial grant of shares to the non-employee
directors of the Company. The awards shall be effective upon stockholder
approval of the Recognition Plan. The following table sets forth certain
information with respect to such initial grants. The Company has reserved the
right to make future grants of shares to executive officers and employees of the
Company and the Savings Bank.
<TABLE>
<CAPTION>
Name of Individual or Number of Shares
Number of Persons in Group Title Awarded
- -------------------------- ----- ----------------
<S> <C> <C>
All non-employee directors --- 20,000
as a group (5 persons)
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR ADOPTION OF
THE 1997 MANAGEMENT RECOGNITION PLAN AND TRUST.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed Grant Thornton LLP
as independent auditors for the Company for the year ending December 31, 1997,
and further directed that the selection of auditors be submitted for
ratification by the stockholders at the Annual Meeting. The Company has been
advised by Grant Thornton LLP that neither the firm nor any of its associates
has any relationship with the Company other than the usual relationship that
exists between independent public accountants and clients. Grant Thornton LLP
will have representatives at the Annual Meeting who will have an opportunity to
make a statement, if they so desire, and will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF
THE APPOINTMENT OF GRANT THORNTON LLP, AS INDEPENDENT AUDITORS FOR THE YEAR
ENDING DECEMBER 31, 1997. A MAJORITY OF THE TOTAL VOTES PRESENT, IN PERSON OR BY
PROXY, AT THE ANNUAL MEETING IS REQUIRED FOR RATIFICATION OF THE APPOINTMENT OF
THE INDEPENDENT AUDITORS.
ADJOURNMENT OF ANNUAL MEETING
Each proxy solicited hereby requests authority to vote for an
adjournment of the Annual Meeting, if an adjournment is deemed to be necessary.
The Company may seek an adjournment of the Annual Meeting for not more than 30
days in order to enable the Company to solicit additional votes in favor of the
proposals to adopt the Stock Option Plan
<PAGE> 28
25
and/or the Recognition Plan in the event that either or both of such proposals
have not received the requisite vote of stockholders at the Annual Meeting and
either or both of such proposals have not received the negative votes of the
holders of a majority of the total votes present, in person and by proxy, at the
Annual Meeting. If the Company desires to adjourn the meeting with respect to
either or both of the foregoing proposals, it will request a motion that the
meeting be adjourned for up to 30 days with respect to such proposal or
proposals (and solely with respect to such proposal or proposals, provided that
a quorum is present at the Annual Meeting), and no vote will be taken on such
proposal(s) at the originally scheduled Annual Meeting. Each proxy solicited
hereby, if properly signed and returned to the Company and not revoked prior to
its use, will be voted on any motion for adjournment in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted in favor of any motion to adjourn the meeting.
Unless revoked prior to its use, any proxy solicited for the Annual Meeting will
continue to be valid for any adjournment of the Annual Meeting, and will be
voted in accordance with instructions contained therein, and if no contrary
instructions are given, for the proposal(s) in question.
Any adjournment will permit the Company to solicit additional proxies
and will permit a greater expression of the stockholders' views with respect to
such proposal(s). Such an adjournment would be disadvantageous to stockholders
who are against the proposal(s), because an adjournment will give the Company
additional time to solicit favorable votes and thus increase the chances of
passing such proposal(s).
If a quorum is not present at the Annual Meeting, no proposal will be
acted upon and the Board of Directors of the Company will adjourn the Annual
Meeting to a later date in order to solicit additional proxies on each of the
proposal(s) being submitted to stockholders.
An adjournment for up to 30 days will not require either the setting of
a new record date or notice of the adjourned meeting as in the case of an
original meeting. The Company has no reason to believe that an adjournment of
the Annual Meeting will be necessary at this time.
BECAUSE THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
PROPOSALS TO ADOPT THE STOCK OPTION PLAN AND RECOGNITION PLAN, AS DISCUSSED
ABOVE, THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE POSSIBLE
ADJOURNMENT OF THE ANNUAL MEETING. THE HOLDERS OF A MAJORITY OF THE COMPANY'S
COMMON STOCK PRESENT, IN PERSON OR BY PROXY, AT THE ANNUAL MEETING WILL BE
REQUIRED TO APPROVE A MOTION TO ADJOURN THE ANNUAL MEETING.
<PAGE> 29
26
OTHER MATTERS
Management is not aware of any business to come before the Annual
Meeting other than those matters described in this Proxy Statement. However, if
any other matters should properly come before the Annual Meeting, it is intended
that the proxies solicited hereby will be voted with respect to those other
matters in accordance with the judgment of the persons voting the proxies.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of the Common Stock. In addition to solicitations by
mail, directors, officers and employees of the Company may solicit proxies
personally or by telephone without additional compensation.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in the proxy
solicitation materials to be used in connection with the next Annual Meeting of
Stockholders of the Company must be received at the main office of the Company
no later than November 28, 1997. If such proposal is in compliance with all of
the requirements of Rule 14a-8 under the Exchange Act, it will be included in
the Proxy Statement and set forth on the form of proxy issued for the next
Annual Meeting of Stockholders. It is urged that any such proposals be sent by
certified mail, return receipt requested.
ANNUAL REPORTS AND FINANCIAL STATEMENTS
Stockholders of the Company as of the record date for the Annual Meeting
are being forwarded a copy of the Company's Annual Report to Stockholders for
the year ended December 31, 1996 ("Annual Report"). Included in the Annual
Report are the financial statements of the Company as of December 31, 1995 and
1996 and for each of the years in the three-year period ended December 31, 1996,
prepared in accordance with generally accepted accounting principles, and the
related report of the Company's independent public accountants. The Annual
Report is not a part of this Proxy Statement.
<PAGE> 30
27
UPON RECEIPT OF A WRITTEN REQUEST, THE COMPANY WILL FURNISH TO ANY
STOCKHOLDER WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM 10-K FILED WITH
THE SEC UNDER THE EXCHANGE ACT FOR THE YEAR ENDED DECEMBER 31, 1996. UPON
WRITTEN REQUEST, THE COMPANY WILL FURNISH TO ANY SUCH STOCKHOLDER A COPY OF THE
EXHIBITS TO THE ANNUAL REPORT ON FORM 10-K. SUCH WRITTEN REQUESTS SHOULD BE
DIRECTED TO FIDELITY FINANCIAL OF OHIO, INC., 4555 MONTGOMERY ROAD, CINCINNATI,
OHIO 45212, ATTENTION: SECRETARY. THE ANNUAL REPORT ON FORM 10-K IS NOT A PART
OF THIS PROXY STATEMENT.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Paul D. Staubach
Paul D. Staubach, Secretary
March 28, 1997
Cincinnati, Ohio
<PAGE> 31
APPENDIX A
FIDELITY FINANCIAL OF OHIO, INC.
1997 STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
Fidelity Financial of Ohio, Inc. (the "Corporation") hereby establishes
this 1997 Stock Option Plan (the "Plan") upon the terms and conditions
hereinafter stated.
ARTICLE II
PURPOSE OF THE PLAN
The purpose of this Plan is to improve the growth and profitability of
the Corporation and its Subsidiary Companies by providing Employees and
Non-Employee Directors with a proprietary interest in the Corporation as an
incentive to contribute to the success of the Corporation and its Subsidiary
Companies, and rewarding those Employees for outstanding performance and the
attainment of targeted goals. All Incentive Stock Options issued under this Plan
are intended to comply with the requirements of Section 422 of the Code, and the
regulations thereunder, and all provisions hereunder shall be read, interpreted
and applied with that purpose in mind.
ARTICLE III
DEFINITIONS
3.01 "Award" means an Option or Stock Appreciation Right granted
pursuant to the terms of this Plan.
3.02 "Bank" means Fidelity Federal Savings Bank, the wholly-owned
subsidiary of the Corporation.
3.03 "Board" means the Board of Directors of the Corporation.
3.04 "Change in Control of the Corporation" shall be deemed to have
occurred if: (i) any "person" as such term is used in Sections 13(d) and 14(d)
of the Exchange Act (other than the Corporation and any trustee or other
fiduciary holding securities under any employee benefit plan of the
Corporation), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 25% or more of the combined voting power of the
Corporation's then outstanding securities; (ii) during any period of two
consecutive years (not including any period prior to the adoption of the Plan),
individuals who at the beginning of such period constitute the Board of
Directors, and any new
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director whose election by the Board of Directors or nomination for election by
the Corporation's stockholders was approved by a vote of at least two-thirds of
the directors then still in office who either were directors at the beginning of
the two-year period or whose election or nomination for election was previously
so approved, cease for any reason to constitute at least a majority of the Board
of Directors; (iii) the stockholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation, other than a merger
or consolidation that would result in the voting securities of the Corporation
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Corporation outstanding immediately after such merger or
consolidation; or (iv) the stockholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the Corporation's
assets. If any of the events enumerated in clauses (i) through (iv) occur, the
Board shall determine the effective date of the Change in Control resulting
therefrom for purposes of the Plan.
3.05 "Code" means the Internal Revenue Code of 1986, as amended.
3.06 "Committee" means a committee of two or more directors appointed
by the Board pursuant to Article IV hereof, each of whom shall be a Non-Employee
Director.
3.07 "Common Stock" means shares of the common stock, $0.10 par value
per share, of the Corporation.
3.08 "Disability" means any physical or mental impairment which
qualifies an Employee for disability benefits under the applicable long-term
disability plan maintained by the Corporation or a Subsidiary Company, or, if no
such plan applies, which would qualify such Employee for disability benefits
under the Federal Social Security System.
3.09 "Effective Date" means the day upon which the Board approves this
Plan.
3.10 "Employee" means any person who is employed by the Corporation or
a Subsidiary Company, or is an Officer of the Corporation or a Subsidiary
Company, but not including directors who are not also Officers of or otherwise
employed by the Corporation or a Subsidiary Company.
3.11 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
3.12 "Fair Market Value" shall be equal to the fair market value per
share of the Corporation's Common Stock on the date an Award is granted. For
purposes hereof, the Fair Market Value of a share of Common Stock shall be the
closing sale price of a share of Common Stock on the date in question (or, if
such day is not a trading day in the U.S. markets, on the nearest preceding
trading day), as reported with respect to the principal market (or the composite
of the markets, if more than one) or national quotation system in which such
shares are then traded, or if no such closing prices are reported, the mean
between the high bid and low asked
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prices that day on the principal market or national quotation system then in
use, or if no such quotations are available, the price furnished by a
professional securities dealer making a market in such shares selected by the
Committee.
3.13 "Incentive Stock Option" means any Option granted under this Plan
which the Board intends (at the time it is granted) to be an incentive stock
option within the meaning of Section 422 of the Code or any successor thereto.
3.14 "Non-Employee Director" means a member of the Board who is not an
Officer or Employee of the Corporation or any Subsidiary Company.
3.15 "Non-Qualified Option" means any Option granted under this Plan
which is not an Incentive Stock Option.
3.16 "Offering" means the offering of Common Stock to the public
pursuant to a Plan of Conversion and Agreement and Plan of Reorganization
adopted by the Corporation, the Bank and Fidelity Federal Mutual Holding
Company.
3.17 "Officer" means an Employee whose position in the Corporation or
Subsidiary Company is that of a corporate officer, as determined by the Board.
3.18 "Option" means a right granted under this Plan to purchase Common
Stock.
3.19 "Optionee" means an Employee or Non-Employee Director to whom an
Option is granted under the Plan.
3.20 "OTS" means the Office of Thrift Supervision.
3.21 "Retirement" means a termination of employment upon or after
attainment of age sixty-five (65) or such earlier age as may be specified in any
applicable qualified pension benefit plan maintained by the Corporation or a
Subsidiary Company.
3.22 "Stock Appreciation Right" means a right to surrender an Option in
consideration for a payment by the Corporation in cash and/or Common Stock, as
provided in the discretion of the Committee in accordance with Section 8.11.
3.23 "Subsidiary Companies" means those subsidiaries of the
Corporation, including the Bank, which meet the definition of "subsidiary
corporations" set forth in Section 425(f) of the Code, at the time of granting
of the Award in question.
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ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 DUTIES OF THE COMMITTEE. The Plan shall be administered and
interpreted by the Committee, as appointed from time to time by the Board
pursuant to Section 4.02. The Committee shall have the authority (subject to
compliance with applicable OTS regulations) to adopt, amend and rescind such
rules, regulations and procedures as, in its opinion, may be advisable in the
administration of the Plan, including, without limitation, rules, regulations
and procedures which (i) deal with satisfaction of an Optionee's tax withholding
obligation pursuant to Section 12.02 hereof, (ii) include arrangements to
facilitate the Optionee's ability to borrow funds for payment of the exercise or
purchase price of an Award, if applicable, from securities brokers and dealers,
and (iii) include arrangements which provide for the payment of some or all of
such exercise or purchase price by delivery of previously-owned shares of Common
Stock or other property and/or by withholding some of the shares of Common Stock
which are being acquired. The interpretation and construction by the Committee
of any provisions of the Plan, any rule, regulation or procedure adopted by it
pursuant thereto or of any Award shall be final and binding in the absence of
action by the Board of Directors.
4.02 APPOINTMENT AND OPERATION OF THE COMMITTEE. The members of the
Committee shall be appointed by, and will serve at the pleasure of, the Board.
The Board from time to time may remove members from, or add members to, the
Committee, provided the Committee shall continue to consist of two or more
members of the Board, each of whom shall be a Non-Employee Director. The
Committee shall act by vote or written consent of a majority of its members.
Subject to the express provisions and limitations of the Plan, the Committee may
adopt such rules, regulations and procedures as it deems appropriate for the
conduct of its affairs. It may appoint one of its members to be chairman and any
person, whether or not a member, to be its secretary or agent. The Committee
shall report its actions and decisions to the Board at appropriate times but in
no event less than one time per calendar year.
4.03 REVOCATION FOR MISCONDUCT. The Board of Directors or the Committee
may by resolution immediately revoke, rescind and terminate any Option, or
portion thereof, to the extent not yet vested, or any Stock Appreciation Right,
to the extent not yet exercised, previously granted or awarded under this Plan
to an Employee who is discharged from the employ of the Corporation or a
Subsidiary Company for cause, which, for purposes hereof, shall mean termination
because of the Employee's personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule, or regulation (other
than traffic violations or similar offenses) or final cease-and-desist order.
Options granted to a Non-Employee Director who is removed for cause pursuant to
the Corporation's Articles of Incorporation shall terminate as of the effective
date of such removal.
4.04 LIMITATION ON LIABILITY. Neither the members of the Board of
Directors nor any member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan, any rule, regulation
or procedure adopted pursuant thereto or any Awards
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granted under it. If any members of the Board of Directors or a member of the
Committee is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of anything done or not done by him
in such capacity under or with respect to the Plan, the Corporation shall,
subject to the requirements of applicable laws and regulations, indemnify such
member against all liabilities and expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in the best interests of the
Corporation and its Subsidiary Companies and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful.
4.05 COMPLIANCE WITH LAW AND REGULATIONS. All Awards granted hereunder
shall be subject to all applicable federal and state laws, rules and regulations
and to such approvals by any government or regulatory agency as may be required.
The Corporation shall not be required to issue or deliver any certificates for
shares of Common Stock prior to the completion of any registration or
qualification of or obtaining of consents or approvals with respect to such
shares under any Federal or state law or any rule or regulation of any
government body, which the Corporation shall, in its sole discretion, determine
to be necessary or advisable. Moreover, no Option or Stock Appreciation Right
may be exercised if such exercise would be contrary to applicable laws and
regulations.
4.06 RESTRICTIONS ON TRANSFER. The Corporation may place a legend upon
any certificate representing shares acquired pursuant to an Award granted
hereunder noting that the transfer of such shares may be restricted by
applicable laws and regulations.
ARTICLE V
ELIGIBILITY
Awards may be granted to such Employees of the Corporation and its
Subsidiary Companies as may be designated from time to time by the Board of
Directors or the Committee. Awards may not be granted to individuals who are not
Employees or Non-Employee Directors of either the Corporation or its Subsidiary
Companies. Non-Employee Directors shall be eligible to receive only
Non-Qualified Options.
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ARTICLE VI
COMMON STOCK COVERED BY THE PLAN
6.01 OPTION SHARES. The aggregate number of shares of Common Stock
which may be issued pursuant to this Plan, subject to adjustment as provided in
Article IX, shall be 227,810 shares, which is equal to 10.0% of the shares of
Common Stock issued in the Offering. None of such shares shall be the subject of
more than one Award at any time, but if an Award as to any shares is surrendered
before exercise, or expires or terminates for any reason without having been
exercised in full, or for any other reason ceases to be exercisable, the number
of shares covered thereby shall again become available for grant under the Plan
as if no Awards had been previously granted with respect to such shares.
Notwithstanding the foregoing, if an Option is surrendered in connection with
the exercise of a Stock Appreciation Right, or vice versa, the number of shares
covered thereby shall not be available for grant under the Plan.
6.02 SOURCE OF SHARES. The shares of Common Stock issued under the Plan
may be authorized but unissued shares, treasury shares, shares purchased by the
Corporation on the open market or from private sources for use under the Plan
or, if applicable, shares held in a grantor trust created by the Corporation.
ARTICLE VII
DETERMINATION OF
AWARDS, NUMBER OF SHARES, ETC.
The Board of Directors or the Committee shall, in its discretion,
determine from time to time which Employees and Non-Employee Directors will be
granted Awards under the Plan, the number of shares of Common Stock subject to
each Award, and whether each Option will be an Incentive Stock Option or a
Non-Qualified Stock Option. In making determinations with respect to Employees
there shall be taken into account the duties, responsibilities and performance
of each respective Employee, his present and potential contributions to the
growth and success of the Corporation, his salary and such other factors as the
Board of Directors or the Committee shall deem relevant to accomplishing the
purposes of the Plan. No individual Employee shall receive Awards for more than
25% of the number of shares available for grant under this Plan, and
Non-Employee Directors shall not receive Awards for more than 5% individually,
or 30% in the aggregate, of the number of shares available for grant under this
Plan.
ARTICLE VIII
OPTIONS AND STOCK APPRECIATION RIGHTS
Each Option granted hereunder shall be on the following terms and
conditions:
8.01 STOCK OPTION AGREEMENT. The proper Officers on behalf of the
Corporation and each Optionee shall execute a Stock Option Agreement which shall
set forth the total number of shares of Common Stock to which it pertains, the
exercise price, whether it is a Non-Qualified
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Option or an Incentive Stock Option, and such other terms, conditions,
restrictions and privileges as the Board of Directors or the Committee in each
instance shall deem appropriate, provided they are not inconsistent with the
terms, conditions and provisions of this Plan. Each Optionee shall receive a
copy of his executed Stock Option Agreement.
8.02 AWARDS TO EMPLOYEES AND NON-EMPLOYEE DIRECTORS. Specific Awards to
Employees and Non-Employee Directors shall be made to such persons and in such
amounts as are determined by the Board of Directors or the Committee. However,
Awards equal to 68,343 shares (or 30% of the number of shares available under
this Plan) shall be made to Non-Employee Directors in the aggregate and no
individual Non-Employee Director may receive Awards in excess of 11,390 shares
(or 5% of the number of shares available under this Plan).
8.03 OPTION EXERCISE PRICE.
(A) INCENTIVE STOCK OPTIONS. The per share price at which the
subject Common Stock may be purchased upon exercise of an Incentive Stock Option
shall be no less than one hundred percent (100%) of the Fair Market Value of a
share of Common Stock at the time such Incentive Stock Option is granted, except
as provided in Section 8.10(b), and subject to any applicable adjustment
pursuant to Article IX hereof.
(B) NON-QUALIFIED OPTIONS. The per share price at which the
subject Common Stock may be purchased upon exercise of a Non-Qualified Option
shall be no less than one hundred percent (100%) of the Fair Market Value of a
share of Common Stock at the time such Non-Qualified Option is granted, and
subject to any applicable adjustment pursuant to Article IX hereof.
8.04 VESTING AND EXERCISE OF OPTIONS.
(A) GENERAL RULES. Incentive Stock Options and Non-Qualified
Options granted hereunder shall become vested and exercisable at the rate of 20%
per year, with the first installment becoming vested and exercisable as of the
date the Option was granted, and the right to exercise shall be cumulative.
Notwithstanding the foregoing, no vesting shall occur on or after an Employee's
employment with the Corporation and all Subsidiary Companies is terminated for
any reason other than his death or Disability. In determining the number of
shares of Common Stock with respect to which Options are vested and/or
exercisable, fractional shares will be rounded up to the nearest whole number if
the fraction is 0.5 or higher, and down if it is less.
(B) ACCELERATED VESTING. Unless the Board of Directors or the
Committee shall specifically state otherwise at the time an Option is granted,
all Options granted hereunder shall become vested and exercisable in full on the
date an Optionee terminates his employment with or service to the Corporation or
a Subsidiary Company because of his death or Disability. In addition, all
options hereunder shall become immediately vested and exercisable in full on the
date an Optionee terminates his employment or service to the Corporation or a
Subsidiary Company as the result of a Change in Control of the Corporation.
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8.05 DURATION OF OPTIONS.
(A) GENERAL RULE. Except as provided in Sections 8.05(b) and
8.10, each Option or portion thereof granted to Employees and Non-Employee
Directors shall be exercisable at any time on or after it vests and becomes
exercisable until the earlier of (i) ten (10) years after its date of grant or
(ii) three (3) months after the date on which the Optionee ceases to be employed
(or in the service of the Board of Directors in the case of Non-Employee
Directors) by the Corporation and all Subsidiary Companies, unless the Board of
Directors or the Committee in its discretion decides at the time of grant or
thereafter to extend such period of exercise upon termination of employment or
service from three (3) months to a period not exceeding one (1) year.
(B) EXCEPTION FOR TERMINATION DUE TO DEATH OR DISABILITY. If
an Employee dies while in the employ of the Corporation or a Subsidiary Company
or terminates employment with the Corporation or a Subsidiary Company as a
result of Disability without having fully exercised his Options, the Optionee or
the executors, administrators, legatees or distributee of his estate shall have
the right, during the twelve-month period following the earlier of his death or
Disability, to exercise such Options to the extent vested on the date of such
death or Disability. If a Non-Employee Director dies while serving as a
NonEmployee Director without having fully exercised his Options, the
Non-Employee Director's executors, administrators, legatees or distributee of
his estate shall have the right, during the twelve-month period following such
death, to exercise such Options. In no event, however, shall any Option be
exercisable more than ten (10) years from the date it was granted.
8.06 NONASSIGNABILITY. Options shall not be transferable by an Optionee
except by will or the laws of descent or distribution, and during an Optionee's
lifetime shall be exercisable only by such Optionee or the Optionee's guardian
or legal representative. Notwithstanding the foregoing, or any other provision
of this Plan, an Optionee who holds Non-Qualified Options may transfer such
Options to his or her spouse, lineal ascendants, lineal descendants, or to a
duly established trust for the benefit of one or more of these individuals.
Options so transferred may thereafter be transferred only to the Optionee who
originally received the grant or to an individual or trust to whom the Optionee
could have initially transferred the Option pursuant to this Section 8.06.
Options which are transferred pursuant to this Section 8.06 shall be exercisable
by the transferee according to the same terms and conditions as applied to the
Optionee.
8.07 MANNER OF EXERCISE. Options may be exercised in part or in whole
and at one time or from time to time. The procedures for exercise shall be set
forth in the written Stock Option Agreement provided for in Section 8.01 above.
8.08 PAYMENT FOR SHARES. Payment in full of the purchase price for
shares of Common Stock purchased pursuant to the exercise of any Option shall be
made to the Corporation upon exercise of the Option. All shares sold under the
Plan shall be fully paid and nonassessable. Payment for shares may be made by
the Optionee in cash or, at the discretion of the Board of Directors or the
Committee, by delivering shares of Common Stock (including shares acquired
pursuant to the exercise of an Option) or other property equal in Fair Market
Value to the purchase price of the shares to be acquired pursuant to the Option,
by withholding some of the
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shares of Common Stock which are being purchased upon exercise of an Option, or
any combination of the foregoing.
8.09 VOTING AND DIVIDEND RIGHTS. No Optionee shall have any voting or
dividend rights or other rights of a stockholder in respect of any shares of
Common Stock covered by an Option prior to the time that his name is recorded on
the Corporation's stockholder ledger as the holder of record of such shares
acquired pursuant to an exercise of an Option.
8.10 ADDITIONAL TERMS APPLICABLE TO INCENTIVE STOCK OPTIONS. All
Options issued under the Plan as Incentive Stock Options will be subject, in
addition to the terms detailed in Sections 8.01 to 8.09 above, to those
contained in this Section 8.10.
(A) Notwithstanding any contrary provisions contained
elsewhere in this Plan and as long as required by Section 422 of the Code, the
aggregate Fair Market Value, determined as of the time an Incentive Stock Option
is granted, of the Common Stock with respect to which Incentive Stock Options
are exercisable for the first time by the Optionee during any calendar year
under this Plan and stock options that satisfy the requirements of Section 422
of the Code under any other stock option plan or plans maintained by the
Corporation (or any parent or Subsidiary Company), shall not exceed $100,000.
(B) LIMITATION ON TEN PERCENT STOCKHOLDERS. The price at which
shares of Common Stock may be purchased upon exercise of an Incentive Stock
Option granted to an individual who, at the time such Incentive Stock Option is
granted, owns, directly or indirectly, more than ten percent (10%) of the total
combined voting power of all classes of stock issued to stockholders of the
Corporation or any Subsidiary Company, shall be no less than one hundred and ten
percent (110%) of the Fair Market Value of a share of the Common Stock of the
Corporation at the time of grant, and such Incentive Stock Option shall by its
terms not be exercisable after the earlier of the date determined under Section
8.04 or the expiration of five (5) years from the date such Incentive Stock
Option is granted.
(C) NOTICE OF DISPOSITION; WITHHOLDING; ESCROW. An Optionee
shall immediately notify the Corporation in writing of any sale, transfer,
assignment or other disposition (or action constituting a disqualifying
disposition within the meaning of Section 421 of the Code) of any shares of
Common Stock acquired through exercise of an Incentive Stock Option, within two
(2) years after the grant of such Incentive Stock Option or within one (1) year
after the acquisition of such shares, setting forth the date and manner of
disposition, the number of shares disposed of and the price at which such shares
were disposed of. The Corporation shall be entitled to withhold from any
compensation or other payments then or thereafter due to the Optionee such
amounts as may be necessary to satisfy any withholding requirements of Federal
or state law or regulation and, further, to collect from the Optionee any
additional amounts which may be required for such purpose. The Committee may, in
its discretion, require shares of Common Stock acquired by an Optionee upon
exercise of an Incentive Stock Option to be held in an escrow arrangement for
the purpose of enabling compliance with the provisions of this Section 8.10(c).
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8.11 STOCK APPRECIATION RIGHTS.
(A) GENERAL TERMS AND CONDITIONS. The Board of Directors or
the Committee may, but shall not be obligated to, authorize the Corporation, on
such terms and conditions as it deems appropriate in each case, to grant rights
to Optionees to surrender an exercisable Option, or any portion thereof, in
consideration for the payment by the Corporation of an amount equal to the
excess of the Fair Market Value of the shares of Common Stock subject to the
Option, or portion thereof, surrendered over the exercise price of the Option
with respect to such shares (any such authorized surrender and payment being
hereinafter referred to as a "Stock Appreciation Right"). Such payment, at the
discretion of the Board of Directors or the Committee, may be made in shares of
Common Stock valued at the then Fair Market Value thereof, or in cash, or partly
in cash and partly in shares of Common Stock.
The terms and conditions set with respect to a Stock Appreciation Right
may include (without limitation), subject to other provisions of this Section
8.11 and the Plan, the period during which, date by which or event upon which
the Stock Appreciation Right may be exercised (which shall be on the same terms
as the Option to which it relates pursuant to Section 8.04 hereunder); the
method for valuing shares of Common Stock for purposes of this Section 8.11; a
ceiling on the amount of consideration which the Corporation may pay in
connection with exercise and cancellation of the Stock Appreciation Right; and
arrangements for income tax withholding. The Board of Directors or the Committee
shall have complete discretion to determine whether, when and to whom Stock
Appreciation Rights may be granted. Notwithstanding the foregoing, the
Corporation may not permit the exercise of a Stock Appreciation Right issued
pursuant to this Plan until the Corporation has been subject to the reporting
requirements of Section 13 of the Exchange Act for a period of at least one year
prior to the exercise of any such Stock Appreciation Right.
(B) TIME LIMITATIONS. If a holder of a Stock Appreciation
Right terminates service with the Corporation, the Stock Appreciation Right may
be exercised only within the period, if any, within which the Option to which it
relates may be exercised. Notwithstanding the foregoing, any election by an
Optionee to exercise the Stock Appreciation Rights provided in this Plan shall
be made during the period beginning on the third business day following the
release for publication of quarterly or annual financial information required to
be prepared and disseminated by the Corporation pursuant to the requirements of
the Exchange Act and ending on the twelfth business day following such date. The
required release of information shall be deemed to have been satisfied when the
specified financial data appears on or in a wire service, financial news service
or newspaper of general circulation or is otherwise first made publicly
available.
(C) EFFECTS OF EXERCISE OF STOCK APPRECIATION RIGHTS OR
OPTIONS. Upon the exercise of a Stock Appreciation Right, the number of shares
of Common Stock available under the Option to which it relates shall decrease by
a number equal to the number of shares for which the Stock Appreciation Right
was exercised. Upon the exercise of an Option, any related Stock Appreciation
Right shall terminate as to any number of shares of Common Stock subject to the
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Stock Appreciation Right that exceeds the total number of shares for which the
Option remains unexercised.
(D) TIME OF GRANT. A Stock Appreciation Right may be granted
concurrently with the Option to which it relates or at any time thereafter prior
to the exercise or expiration of such Option.
(E) NON-TRANSFERABLE. The holder of a Stock Appreciation Right
may not transfer or assign the Stock Appreciation Right otherwise than by will
or in accordance with the laws of descent and distribution, and during a
holder's lifetime a Stock Appreciation Right may be exercisable only by the
holder.
ARTICLE IX
ADJUSTMENTS FOR CAPITAL CHANGES
The aggregate number of shares of Common Stock available for issuance
under this Plan, the number of shares to which any Award relates and the
exercise price per share of Common Stock under any Award shall be
proportionately adjusted for any increase or decrease in the total number of
outstanding shares of Common Stock issued subsequent to the effective date of
this Plan resulting from a split, subdivision or consolidation of shares or any
other capital adjustment, the payment of a stock dividend, or other increase or
decrease in such shares effected without receipt or payment of consideration by
the Corporation. If, upon a merger, consolidation, reorganization, liquidation,
recapitalization or the like of the Corporation, the shares of the Corporation's
Common Stock shall be exchanged for other securities of the Corporation or of
another corporation, each recipient of an Award shall be entitled, subject to
the conditions herein stated, to purchase or acquire such number of shares of
Common Stock or amount of other securities of the Corporation or such other
corporation as were exchangeable for the number of shares of Common Stock of the
Corporation which such Optionees would have been entitled to purchase or acquire
except for such action, and appropriate adjustments shall be made to the per
share exercise price of outstanding Awards. Notwithstanding any provision to the
contrary, the exercise price of shares subject to outstanding Awards may be
proportionately adjusted upon the payment of a special large and nonrecurring
dividend that has the effect of a return of capital to the stockholders.
ARTICLE X
AMENDMENT AND TERMINATION OF THE PLAN
The Board may, by resolution, at any time terminate or amend the Plan
with respect to any shares of Common Stock as to which Awards have not been
granted, subject to regulations of the OTS and any required stockholder approval
or any stockholder approval which the Board may deem to be advisable for any
reason, such as for the purpose of obtaining or retaining any statutory or
regulatory benefits under tax, securities or other laws or satisfying any
applicable
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stock exchange listing requirements. The Board may not, without the consent of
the holder of an Award, alter or impair any Award previously granted or awarded
under this Plan as specifically authorized herein.
ARTICLE XI
EMPLOYMENT RIGHTS
Neither the Plan nor the grant of any Awards hereunder nor any action
taken by the Committee or the Board in connection with the Plan shall create any
right on the part of any Employee or Non-Employee Director of the Corporation or
a Subsidiary Company to continue in such capacity.
ARTICLE XII
WITHHOLDING
12.01 TAX WITHHOLDING. The Corporation 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
insufficient, the Corporation may require the Optionee to pay to the Corporation
the amount required to be withheld as a condition to delivering the shares
acquired pursuant to an Award. The Corporation also may withhold or collect
amounts with respect to a disqualifying disposition of shares of Common Stock
acquired pursuant to exercise of an Incentive Stock Option, as provided in
Section 8.10(c).
12.02 METHODS OF TAX WITHHOLDING. The Board of Directors or the
Committee is authorized to adopt rules, regulations or procedures which provide
for the satisfaction of an Optionee's tax withholding obligation by the
retention of shares of Common Stock to which the Employee would otherwise be
entitled pursuant to an Award and/or by the Optionee's delivery of
previously-owned shares of Common Stock or other property.
ARTICLE XIII
EFFECTIVE DATE OF THE PLAN; TERM
13.01 EFFECTIVE DATE OF THE PLAN. This Plan shall become effective on
the Effective Date, and Awards may be granted hereunder as of or after the
Effective Date and prior to the termination of the Plan, provided that no
Incentive Stock Option issued pursuant to this Plan shall qualify as such unless
this Plan is approved by the requisite vote of the holders of the outstanding
voting shares of the Corporation at a meeting of stockholders of the Corporation
held within twelve (12) months of the Effective Date. Notwithstanding the
foregoing or anything to the contrary in this Plan, the implementation of this
Plan and any Awards granted pursuant hereto are subject to the approval of the
Corporation's stockholders.
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13.02 TERM OF PLAN. Unless sooner terminated, this Plan shall remain in
effect for a period of ten (10) years ending on the tenth anniversary of the
Effective Date. Termination of the Plan shall not affect any Awards previously
granted and such Awards shall remain valid and in effect until they have been
fully exercised or earned, are surrendered or by their terms expire or are
forfeited.
ARTICLE XIV
MISCELLANEOUS
14.01 GOVERNING LAW. To the extent not governed by Federal law, this
Plan shall be construed under the laws of the State of Ohio.
14.02 PRONOUNS. Wherever appropriate, the masculine pronoun shall
include the feminine pronoun, and the singular shall include the plural.
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APPENDIX B
FIDELITY FINANCIAL OF OHIO, INC.
1997 MANAGEMENT RECOGNITION PLAN AND TRUST AGREEMENT
ARTICLE I
ESTABLISHMENT OF THE PLAN AND TRUST
1.01 Fidelity Financial of Ohio, Inc. (the "Corporation") hereby
establishes a Management Recognition Plan (the "Plan") and Trust (the "Trust")
upon the terms and conditions hereinafter stated in this 1997 Management
Recognition Plan and Trust Agreement (the "Agreement").
1.02 The Trustee hereby accepts this 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 hereinafter stated.
ARTICLE II
PURPOSE OF THE PLAN
2.01 The purpose of the Plan is to retain personnel of experience and
ability in key positions by providing Employees and Non-Employee Directors of
the Corporation and of Fidelity Federal Savings Bank (the "Bank") with a
proprietary interest in the Corporation as compensation for their contributions
to the Corporation, the Bank, and any other Subsidiaries and as an incentive to
make such contributions in the future.
ARTICLE III
DEFINITIONS
The following words and phrases when used in this Agreement with an
initial capital letter, unless the context clearly indicates otherwise, shall
have the meanings set forth below. Wherever appropriate, the masculine pronouns
shall include the feminine pronouns and the singular shall include the plural.
3.01 "Bank" means Fidelity Federal Savings Bank, the wholly-owned
subsidiary of the Corporation.
3.02 "Beneficiary" means the person or persons designated by a
Recipient to receive any benefits payable under the Plan in the event of such
Recipient's death. Such person or persons shall be designated in writing on
forms provided for this purpose by the Committee and may be changed from time to
time by similar written notice to the Committee. In the absence of a
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written designation, the Beneficiary shall be the Recipient's surviving spouse,
if any, or if none, his estate.
3.03 "Board" means the Board of Directors of the Corporation.
3.04 "Change in Control of the Corporation" shall be deemed to have
occurred if: (i) any "person" as such term is used in Sections 13(d) and 14(d)
of the Exchange Act (other than the Corporation and any trustee or other
fiduciary holding securities under any employee benefit plan of the
Corporation), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 25% or more of the combined voting power of the
Corporation's then outstanding securities; (ii) during any period of two
consecutive years (not including any period prior to the adoption of the Plan),
individuals who at the beginning of such period constitute the Board of
Directors, and any new director whose election by the Board of Directors or
nomination for election by the Corporation's stockholders was approved by a vote
of at least two-thirds of the directors then still in office who either were
directors at the beginning of the two-year period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at least a majority of the Board of Directors; (iii) the stockholders
of the Corporation approve a merger or consolidation of the Corporation with any
other corporation, other than a merger or consolidation that would result in the
voting securities of the Corporation outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Corporation outstanding immediately
after such merger or consolidation; or (iv) the stockholders of the Corporation
approve a plan of complete liquidation of the Corporation or an agreement for
the sale or disposition by the Corporation of all or substantially all of the
Corporation's assets. If any of the events enumerated in clauses (i) through
(iv) occur, the Board shall determine the effective date of the Change in
Control resulting therefrom for purposes of the Plan.
3.05 "Code" means the Internal Revenue Code of 1986, as amended.
3.06 "Committee" means the committee appointed by the Board pursuant to
Article IV hereof.
3.07 "Common Stock" means shares of the common stock, $0.10 par value
per share, of the Corporation.
3.08 "Disability" means any physical or mental impairment which
qualifies an Employee for disability benefits under the applicable long-term
disability plan maintained by the Corporation or any Subsidiary or, if no such
plan applies, which would qualify such Employee for disability benefits under
the Federal Social Security System.
3.09 "Effective Date" means the day upon which the Board approves this
Plan.
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3.10 "Employee" means any person who is employed by the Corporation,
the Bank, or any Subsidiary, or is an officer of the Corporation, the Bank, or
any Subsidiary, including officers or other employees who may be directors of
the Corporation.
3.11 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
3.12 "Non-Employee Director" means a member of the Board who is not an
Employee.
3.13 "OTS" means the Office of Thrift Supervision.
3.14 "Plan Shares" or "Shares" means shares of Common Stock held in the
Trust which may be distributed to a Recipient pursuant to the Plan.
3.15 "Plan Share Award" or "Award" means a right granted under this
Plan to receive a distribution of Plan Shares upon completion of the service
requirements described in Article VII.
3.16 "Recipient" means an Employee or Non-Employee Director who
receives a Plan Share Award under the Plan.
3.17 "Subsidiary" means Fidelity Federal Savings Bank and any other
subsidiaries of the Corporation or the Bank which, with the consent of the
Board, agree to participate in this Plan.
3.18 "Trustee" means such firm, entity or persons approved by the Board
of Directors to hold legal title to the Plan for the purposes set forth herein.
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 two or more members of the
Board, each of whom shall be a Non-Employee Director. The Committee shall have
all of the powers allocated to it in this and other Sections of the Plan. The
interpretation and construction by the Committee of any provisions of the Plan
or of any Plan Share Award granted hereunder shall be final and binding in the
absence of action by the Board of Directors. The Committee shall act by vote or
written consent of a majority of its members. Subject to the express provisions
and limitations of the Plan and subject to compliance with applicable OTS
regulations, the Committee may adopt such rules, regulations and procedures as
it deems appropriate for the conduct of its affairs. The Committee shall report
its actions and decisions with respect to the Plan to the Board at appropriate
times, but in no event less than one time per calendar year.
4.02 ROLE OF THE BOARD. The members of the Committee and the Trustee
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
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remove or replace the Trustee, provided that any directors who are selected as
members of the Committee shall be Non-Employee Directors.
4.03 LIMITATION ON LIABILITY. No member of the Board or the Committee
shall be liable for any determination made in good faith with respect to the
Plan or any Plan Shares or Plan Share Awards granted under it. If a member of
the Board or the Committee is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of anything done or not
done by him in such capacity under or with respect to the Plan, the Corporation
shall, subject to the requirements of applicable laws and regulations, indemnify
such member against all liabilities and expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in the best interests of the
Corporation and any Subsidiaries and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
4.04 COMPLIANCE WITH LAWS AND REGULATIONS. All Awards granted hereunder
shall be subject to all applicable federal and state laws, rules and regulations
and to such approvals by any government or regulatory agency or stockholders as
may be required.
ARTICLE V
CONTRIBUTIONS
5.01 AMOUNT AND TIMING OF CONTRIBUTIONS. The Board shall determine the
amount (or the method of computing the amount) and timing of any contributions
by the Corporation and any Subsidiaries to the Trust established under this
Plan. Such amounts may be paid in cash or in shares of Common Stock and shall be
paid to the Trust at the designated time of contribution. No contributions by
Employees shall be permitted.
5.02 INVESTMENT OF TRUST ASSETS; NUMBER OF PLAN SHARES. Subject to
Section 8.02 hereof, the Trustee shall invest all of the Trust's assets
primarily in Common Stock. The aggregate number of Plan Shares available for
distribution pursuant to this Plan shall be 91,124 shares of Common Stock, which
shares shall be purchased from the Corporation and/or from stockholders thereof
by the Trust with funds contributed by the Corporation.
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ARTICLE VI
ELIGIBILITY; ALLOCATIONS
6.01 AWARDS TO NON-EMPLOYEE DIRECTORS. Plan Share Awards to
Non-Employee Directors shall be made to such persons and in such amounts as
determined by the Board of Directors or the Committee. However, Plan Share
Awards equal to 27,337 shares (or 30% of the number of shares available under
this Plan) shall be made to Non-Employee Directors in the aggregate and no
individual Non-Employee Director may receive Plan Share Awards in excess of
4,556 shares (or 5% of the number of shares available under this Plan). In the
event of a forfeiture of the right to any Shares subject to an Award, such
forfeited Shares shall be reallocated on the first day of the month following
such forfeiture to the remaining Non-Employee Directors who are eligible to
receive such re-allocation by dividing the number of forfeited shares of Common
Stock by such remaining number of Non-Employee Directors at such time.
6.02 AWARDS TO EMPLOYEES. Plan Share Awards may be made to such
Employees as may be selected by the Board of Directors or the Committee. In
selecting those Employees to whom Plan Share Awards may be granted and the
number of Shares covered by such Awards, the Board of Directors or the Committee
shall consider the duties, responsibilities and performance of each respective
Employee, his present and potential contributions to the growth and success of
the Corporation, his salary and such other factors as shall be deemed relevant
to accomplishing the purposes of the Plan. Other than with respect to Plan Share
Awards to be granted to the Chief Executive Officer, the Board of Directors or
the Committee may, but shall not be required to, request the written
recommendation of the Chief Executive Officer of the Corporation.
6.03 FORM OF ALLOCATION. As promptly as practicable after a
determination is made pursuant to Sections 6.01 or 6.02 that a Plan Share Award
is to be issued, the Board of Directors or 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 shall be distributed to the Recipient. The date on which the Board of
Directors or the Committee so notifies the Recipient shall be considered the
date of grant of the Plan Share Award. The Board of Directors or the Committee
shall maintain records as to all grants of Plan Share Awards under the Plan.
6.04 MAXIMUM NUMBER OF PLAN SHARES TO ANY INDIVIDUAL. During the life
of this Plan, (i) no Employee shall be granted Plan Share Awards pursuant to
this Plan covering an aggregate number of Plan Shares in excess of 25% of the
number of shares of Common Stock available under this Plan, (ii) no Non-Employee
Director shall be granted Plan Share Awards pursuant to this Plan covering an
aggregate number of Plan Shares in excess of 5% of the shares of Common Stock
available under this Plan, and (iii) non-Employee Directors in the aggregate
shall not be granted Plan Share Awards pursuant to this Plan covering more than
30% of the shares of Common Stock available under this Plan.
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6.05 ALLOCATIONS NOT REQUIRED TO ANY SPECIFIC EMPLOYEE. Notwithstanding
anything to the contrary in Section 6.02 hereof, no Employee shall have any
right or entitlement to receive a Plan Share Award hereunder, such Awards being
at the total discretion of the Board of Directors or the Committee.
ARTICLE VII
EARNING AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 EARNING PLAN SHARES; FORFEITURES.
(a) GENERAL RULES. Subject to the terms hereof, Plan Share
Awards shall be earned by a Recipient at the rate of twenty percent (20%) of the
aggregate number of Shares covered by the Award as of each annual anniversary of
the date of grant of the Award. If the employment of an Employee or service as a
Non-Employee Director is terminated prior to the fifth (5th) annual anniversary
of the date of grant of a Plan Share Award for any reason (except as
specifically provided in subsections (b) and (c) below), the Recipient shall
forfeit the right to any Shares subject to the Award which have not theretofore
been earned. In the event of a forfeiture of the right to any Shares subject to
an Award by an Employee, such forfeited Shares shall become available for
allocation pursuant to Section 6.02 hereof as if no Award had been previously
granted with respect to such Shares. No fractional shares shall be distributed
pursuant to this Plan. In determining the number of Plan Shares which are to be
earned, fractional Shares shall be rounded down to the nearest whole number,
provided that such fractional Shares shall be aggregated and distributed on the
fifth annual anniversary of the date of grant.
(b) EXCEPTION FOR TERMINATIONS DUE TO DEATH OR DISABILITY.
Notwithstanding the general rule contained in Section 7.01(a), all Plan Shares
subject to a Plan Share Award held by a Recipient whose employment or service
with the Corporation or any Subsidiary terminates due to death or Disability
shall be deemed earned as of the Recipient's last day of employment with the
Corporation or any Subsidiary and shall be distributed as soon as practicable
thereafter; provided, however, that Awards shall be distributed in accordance
with Section 7.03(a).
(c) EXCEPTION FOR TERMINATIONS AFTER A CHANGE IN CONTROL OF
THE CORPORATION. Notwithstanding the general rule contained in Section 7.01(a),
all Plan Shares subject to a Plan Share Award held by a Recipient shall be
deemed to be earned in the event of a Change in Control of the Corporation.
(d) REVOCATION FOR MISCONDUCT. Notwithstanding anything
hereinafter to the contrary, the Board may by resolution immediately revoke,
rescind and terminate any Plan Share Award, or portion thereof, previously
awarded under this Plan, to the extent Plan Shares have not been distributed
hereunder to the Recipient, whether or not yet earned, in the case of an
Employee who is discharged from the employ of the Corporation or any Subsidiary
for cause (as hereinafter defined). Termination for cause shall mean termination
because of the Employee's personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving
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personal profit, intentional failure to perform stated duties, willful violation
of any law, rule, or regulation (other than traffic violations or similar
offenses) or final cease-and-desist order. Plan Share Awards granted to a
Non-Employee Director who is removed for cause pursuant to the Corporation's
Articles of Incorporation shall terminate as of the effective date of such
removal.
7.02 DISTRIBUTION OF DIVIDENDS. Any cash dividends (including special
large and non-recurring dividends including one that has the effect of a return
of capital to the Corporation's stockholders) or stock dividends declared in
respect of each unvested Plan Share Award will be held by the Trust for the
benefit of the Recipient on whose behalf such Plan Share Award is then held by
the Trust and such dividends, including any interest thereon, will be paid out
proportionately by the Trust to the Recipient thereof as soon as practicable
after the Plan Share Awards become earned. Any cash dividends or stock dividends
declared in respect of each vested Plan Share held by the Trust will be paid by
the Trust, as soon as practicable after the Trust's receipt thereof, to the
Recipient on whose behalf such Plan Share is then held by the Trust.
7.03 DISTRIBUTION OF PLAN SHARES.
(a) TIMING OF DISTRIBUTIONS: GENERAL RULE. 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.
(b) FORM OF DISTRIBUTIONS. All Plan Shares, together with any
Shares representing stock dividends, shall be distributed in the form of Common
Stock. One share of Common Stock shall be given for each Plan Share earned and
distributable. Payments representing cash dividends shall be made in cash.
(c) WITHHOLDING. The Trustee may withhold from any cash
payment or Common Stock distribution made under this Plan sufficient amounts to
cover any applicable withholding and employment taxes, and if the amount of a
cash payment is insufficient, the Trustee may require the Recipient or
Beneficiary to pay to the Trustee the amount required to be withheld as a
condition of delivering the Plan Shares. The Trustee shall pay over to the
Corporation or any Subsidiary which employs or employed such Recipient any such
amount withheld from or paid by the Recipient or Beneficiary.
(d) RESTRICTIONS ON SELLING OF PLAN SHARES. Plan Share Awards
may not be sold, assigned, pledged or otherwise disposed of prior to the time
that they are earned and distributed pursuant to the terms of this Plan.
Following distribution, the Board of Directors or the Committee may require the
Recipient or his Beneficiary, as the case may be, to agree not to sell or
otherwise dispose of his distributed Plan Shares except in accordance with all
then applicable Federal and state securities laws, and the Board of Directors or
the Committee may cause a legend to be placed on the stock certificate(s)
representing the distributed Plan Shares in order to restrict the transfer of
the distributed Plan Shares for such period of time or under such circumstances
as the Board of Directors or the Committee, upon the advice of counsel, may deem
appropriate.
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7.04 VOTING OF PLAN SHARES. All Plan Shares which have not yet been
earned and allocated shall be voted by the Trustee in its sole discretion.
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 Trust and the applicable directions, rules,
regulations, procedures and policies established by the Board of Directors or
the Committee pursuant to the Plan.
8.02 MANAGEMENT OF TRUST. It is the intent of this Plan and Trust that
the Trustee shall have complete authority and discretion with respect to the
arrangement, control and investment of the Trust, and that the Trustee shall
invest all assets of the Trust in Common Stock to the fullest extent
practicable, except to the extent that the Trustee determine that the holding of
monies in cash or cash equivalents is necessary to meet the obligations of the
Trust. In performing their duties, 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 one hundred percent (100%) of all Trust
assets in Common Stock 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 are authorized to purchase Common Stock from the
Corporation or from any other source, and such Common Stock so purchased may be
outstanding, newly issued, or treasury shares.
(b) To invest any Trust assets not otherwise invested in
accordance with (a) above, in such deposit accounts, and certificates of
deposit, 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 in
the opinion of the Trustee be reasonable for the proper operation of the Plan
and Trust.
(f) To employ brokers, agents, custodians, consultants and
accountants.
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(g) To hire counsel to render advice with respect to their
rights, duties and obligations hereunder, and such other legal services or
representation as they may deem desirable.
(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.
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 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 Board of Directors or the Committee.
8.04 EXPENSES. All costs and expenses incurred in the operation and
administration of this Plan shall be borne by the Corporation.
8.05 INDEMNIFICATION. Subject to the requirements of applicable laws
and regulations, the Corporation shall indemnify, defend and hold the Trustee
harmless against all claims, expenses and liabilities arising out of or related
to the exercise of the Trustee's powers and the discharge of their duties
hereunder, unless the same shall be due to their gross negligence or willful
misconduct.
ARTICLE IX
MISCELLANEOUS
9.01 ADJUSTMENTS FOR CAPITAL CHANGES. The aggregate number of Plan
Shares available for distribution pursuant to the Plan Share Awards and the
number of Shares to which any Plan Share Award relates shall be proportionately
adjusted for any increase or decrease in the total number of outstanding shares
of Common Stock issued subsequent to
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the effective date of the Plan resulting 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 and the Trust (including amendments
which may result in the merger of the Plan or the Trust with and into other
plans or trusts of the Corporation or successor thereto), subject to regulations
of the OTS and any required stockholder approval or any stockholder approval
which the Board may deem to be advisable for any reason, such as for the purpose
of obtaining or retaining any statutory or regulatory benefits under tax,
securities or other laws or satisfying any applicable stock exchange listing
requirements. The Board may not, without the consent of the Recipient, alter or
impair his Plan Share Award except as specifically authorized herein. Upon
termination of the Plan, the Recipient's Plan Share Awards shall be distributed
to the Recipient in accordance with the terms of Article VII hereof.
9.03 NONTRANSFERABLE. During the lifetime of the Recipient, Plan Shares
may only be earned by and paid to the Recipient who was notified in writing of
the Award pursuant to Section 6.03, provided that Plan Share Awards and rights
to Plan Shares shall be transferable by a Recipient to his or her spouse, lineal
ascendants, lineal descendants, or to a duly established trust. Plan Share
Awards so transferred may not again be transferred other than to the Recipient
who originally received the grant of Plan Share Awards or to an individual or
trust to whom such Recipient could have transferred Plan Share Awards pursuant
to this Section 9.03. Plan Share Awards which are transferred pursuant to this
Section 9.03 shall be subject to the same terms and conditions as would have
applied to such Plan Share Awards in the hands of the Recipient who originally
received the grant of such Plan Share Award. No Recipient or Beneficiary shall
have any right in or claim to any assets of the Plan or Trust, nor shall the
Corporation or any Subsidiary be subject to any claim for benefits hereunder.
9.04 EMPLOYMENT OR SERVICE RIGHTS. Neither the Plan nor any grant of a
Plan Share Award or Plan Shares hereunder nor any action taken by the Trustee,
the Committee or the Board in connection with the Plan shall create any right on
the part of any Employee or Non-Employee Director to continue in such capacity.
9.05 VOTING AND DIVIDEND RIGHTS. No Recipient shall have any voting or
dividend rights or other rights of a stockholder in respect of any Plan Shares
covered by a Plan Share Award, except as expressly provided in Sections 7.02 and
7.04 above, prior to the time said Plan Shares are actually earned and
distributed to him.
9.06 GOVERNING LAW. To the extent not governed by Federal law, the Plan
and Trust shall be governed by the laws of the State of Ohio.
9.07 EFFECTIVE DATE. This Plan shall be effective as of the Effective
Date, and Awards may be granted hereunder as of or after the Effective Date and
as long as the Plan remains in effect. Notwithstanding the foregoing or anything
to the contrary in this Plan, the implementation
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<PAGE> 54
of this Plan and any Awards granted pursuant hereto are subject to the approval
of the Corporation's stockholders.
9.08 TERM OF PLAN. This Plan shall remain in effect until the earlier
of (1) ten (10) years from the Effective Date, (2) termination by the Board, or
(3) the distribution to Recipients and Beneficiaries of all assets of the Trust.
9.09 TAX STATUS OF TRUST. It is intended that the trust established
hereby be treated as a Grantor Trust of the Corporation under the provisions of
Section 671 et seq. of the Code, as the same may be amended from time to time.
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<PAGE> 55
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officers and the corporate seal to be affixed
and duly attested, and the initial Trustee of the Trust established pursuant
hereto have duly and validly executed this Agreement, all on this 18th day of
February 1997.
FIDELITY FINANCIAL OF OHIO, INC.
By: /s/ John R. Reusing
--------------------------------------
John R. Reusing
President and Chief Executive Officer
ATTEST:
By: /s/ Paul D. Staubach
-----------------------------
Paul D. Staubach
Secretary
TRUSTEE:
By:/s/ Michael W. Jordan
-----------------------------------
Michael W. Jordan
Trustee
By: /s/ David A. Luecke
-----------------------------------
David A. Luecke
Trustee
By: /s/ Constantine N. Papadakis
-----------------------------------
Constantine N. Papadakis
Trustee
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<PAGE> 56
FIDELITY FINANCIAL OF OHIO, INC. REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FIDELITY
FINANCIAL OF OHIO, INC. FOR USE ONLY AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON APRIL 29, 1997 AND AT ANY ADJOURNMENT THEREOF.
The undersigned hereby appoints the Board of Directors of the Company,
or any successors thereto, as proxies, with full powers of substitution, to vote
the shares of the undersigned at the Annual Meeting of Stockholders of the
Company to be held at the Quality Hotel Central located at 4747 Montgomery Road,
Cincinnati, Ohio, on April 29, 1997, at 2:00 p.m., Eastern Time, or at any
adjournment thereof, with all the powers that the undersigned would possess if
personally present, as follows:
1. Election of Directors
[ ] FOR all nominees listed below [ ] WITHHOLD authority to
[ ] (except as marked to the [ ] vote for all nominees
contrary below) listed below
Nominees for three-year term: David A. Luecke, John R. Reusing
and Robert W. Zumbiel
To withhold authority to vote for any individual nominee, write the
name of the nominee in the space provided below:
-------------------------------------------------------------------------
2. PROPOSAL to adopt the 1997 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL to adopt the 1997 Management Recognition Plan and Trust.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 57
4. Proposal to ratify the appointment of Grant Thornton LLP as the
Company's independent auditors for fiscal 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. PROPOSAL to adjourn the Annual Meeting, if necessary, to solicit
additional proxies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote with respect to
approval of the minutes of the last meeting of stockholders, the election of any
person as a director if the nominee is unable to serve or for good cause will
not serve, matters incident to the conduct of the meeting, and upon such other
matters as may properly come before the meeting.
The Board of Directors recommends that you vote FOR the Board of
Directors' nominees listed above and FOR Proposals 2, 3, 4 and, if necessary, 5.
You are encouraged to specify your choices by marking the appropriate boxes on
the reverse side, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. This proxy may not be
voted for any person who is not a nominee of the Board of Directors of the
Company. THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED.
Shares of common stock of the Company will be voted as specified. IF NO
SPECIFICATION IS MADE, SHARES WILL BE VOTED FOR THE ELECTION OF THE BOARD OF
DIRECTORS' NOMINEES TO THE BOARD OF DIRECTORS AND FOR PROPOSALS 2, 3, 4 AND, IF
NECESSARY, 5, AND OTHERWISE AT THE DISCRETION OF THE PROXIES.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders of Fidelity Financial of Ohio, Inc. called for April 29,
1997, a Proxy Statement for the Annual Meeting and the 1996 Annual Report to
Stockholders.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
<PAGE> 58
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD
USING THE ENCLOSED ENVELOPE.
Date: , 1997
-----------------
Signature
-------------------------
Signature
------------------------------------------------
PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR ON THIS PROXY.
ONLY ONE SIGNATURE IS REQUIRED IN THE CASE OF A JOINT
ACCOUNT. WHEN SIGNING IN A REPRESENTATIVE CAPACITY, PLEASE
GIVE TITLE.
