<PAGE> 1
As filed with the Securities and Exchange Commission on December 18, 1998
Registration No. 333-__________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FIDELITY FINANCIAL OF OHIO, INC.
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
OHIO 6711 31-1455721
------- ------ ------------
(State or other juris- (Primary Standard (I.R.S. Employer
diction of incorporation Industrial Classification Identification No.)
or organization) Code No.)
4555 Montgomery Road
Cincinnati, Ohio 45212
(513) 351-6666
--------------
(Address, including zip code and telephone number,
including area code, of Registrant's
principal executive offices)
John R. Reusing
President and Chief Executive Officer
Fidelity Financial of Ohio, Inc.
4555 Montgomery Road
Cincinnati, Ohio 45212
(513) 351-6666
-----------------------------------
(Name, address, including zip code,
and telephone number,
including area code, of agent
for service) with a copy to:
<TABLE>
<CAPTION>
<S> <C> <C>
Norman B. Antin, Esq. Robert R. Sudbrook Terri R. Abare, Esq.
Jeffrey D. Haas, Esq. President and Chief Executive Officer Vorys, Sater, Seymour and Pease LLP
Elias, Matz, Tiernan & Herrick, L.L.P. Glenway Financial Corporation 221 East 4th Street
734 15th Street, N.W. 5535 Glenway Avenue Cincinnati, Ohio 45201
Washington, D.C. 20005 Cincinnati, Ohio 45238 (513) 723-4001
(202) 347-0300 (513) 922-5959
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
<TABLE>
<CAPTION>
Calculation of Registration Fee
==========================================================================================================================
Title of Each Class Proposed Maximum Proposed Maximum Amount of
of Securities to be Amount to be Registered(1) Offering Price Per Aggregate Offering Registration Fee(2)
Registered Share or Unit(2) Price(2)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par
value $.10 per share 3,596,636 shares $18.50 $66,537,766 $9,431.62
==========================================================================================================================
</TABLE>
(1) This Registration Statement covers the maximum number of shares of
common stock of the Registrant issuable upon consummation of the merger
of Glenway Financial Corporation ("GFCO") with a wholly-owned
subsidiary of the Registrant (the "Merger").
(2) Estimated solely for the purpose of calculation of the registration
fee. Pursuant to Rules 457(f)(1) and 457(c) under the Securities Act of
1933, the registration fee is based on the average of the high and low
prices of the GFCO Common Stock on December 15, 1998 (as reported in
The Wall Street Journal), multiplied by the 1.5 share exchange ratio,
and computed based on the estimated maximum number of shares
(2,397,757) that may be exchanged for the securities being registered.
Pursuant to Rule 457(b), the required fee is reduced by the $9,065.88
filing fee paid at the time of filing preliminary proxy materials in
connection with the Merger on November 25, 1998.
----------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
FIDELITY FINANCIAL OF OHIO, INC.
4555 MONTGOMERY ROAD
CINCINNATI, OHIO 45212
(513) 351-6666
January 5, 1999
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders
of Fidelity Financial of Ohio, Inc. ("FFOH") at 2:00 p.m., Eastern Time, on
February 16, 1999 at the Quality Hotel Central, 4747 Montgomery Road,
Cincinnati, Ohio (the "Special Meeting"). This is a very important meeting
regarding your investment in FFOH.
On September 28, 1998, FFOH and Glenway Financial Corporation ("GFCO")
entered into an Agreement of Merger (the "Merger Agreement") which provides for
the combination of FFOH and GFCO. The combination will be effected as a merger
of equals of FFOH and GFCO. Based on tax and corporate law considerations, the
structure for the merger, as set forth in the Merger Agreement, contemplates the
merger of GFCO with Fidelity Acquisition Corporation ("FAC"), a wholly-owned
subsidiary maintained by FFOH to facilitate business combinations (the
"Merger").
At the Special Meeting, you will be asked to consider and vote upon a
proposal to adopt the Merger Agreement. If the Merger Agreement is adopted and
the Merger is completed, each outstanding share of GFCO common stock will be
converted into the right to receive 1.5 shares of FFOH Common Stock, plus cash
in lieu of any fractional share interest.
Your Board of Directors has determined the Merger to be in the best
interests of FFOH and its shareholders and has unanimously approved the Merger
Agreement and the transactions contemplated thereby, including the Merger. THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" ADOPTION
OF THE MERGER AGREEMENT.
At the Special Meeting, you will also be asked to consider and vote
upon a proposal to adopt an amendment to FFOH's Articles of Incorporation in
order to reduce from two-thirds of the voting power of FFOH to a majority of the
voting power of FFOH the shareholder vote required to approve a proposed merger
or consolidation of FFOH with or into one or more corporations or a proposed
combination or majority share acquisition involving the issuance of shares of
FFOH and requiring shareholder approval. The proposed amendment to FFOH's
Articles of Incorporation would reduce the vote required to approve the Merger
Agreement from two-thirds of the issued and outstanding FFOH Common Stock to a
majority of the issued and outstanding FFOH Common Stock and, consequently,
would enhance FFOH's ability to consummate the Merger. In order to effect the
proposed amendment to FFOH's Articles of Incorporation, FFOH will need to
adjourn the Special Meeting in order to file the amended Articles of
Incorporation with the Secretary of State of the State of Ohio and receive back
confirmation that such amended Articles of Incorporation were properly filed.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
ADOPTION OF THE AMENDMENT TO FFOH'S ARTICLES OF INCORPORATION.
Enclosed are a proxy card, a Notice of Special Meeting of Shareholders
and a Prospectus/Joint Proxy Statement which describes the Merger, its effects
and the background of the transaction. A copy of the Merger Agreement is
included as Annex I to the enclosed Prospectus/ Joint Proxy Statement. Also
enclosed are (i) for FFOH, its 1997 Annual Report to Shareholders and
<PAGE> 3
Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 and (ii)
for GFCO, its 1998 Annual Report to Shareholders and its Form 10-QSB for the
quarter ended September 30, 1998. You are urged to read all of these materials
carefully.
It is very important that your shares be represented at the Special
Meeting. FAILURE TO RETURN A PROPERLY EXECUTED PROXY CARD OR TO VOTE AT THE
SPECIAL MEETING WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER AGREEMENT
AND THE PROPOSAL TO AMEND FFOH'S ARTICLES OF INCORPORATION. Accordingly, even if
you plan to be present at the Special Meeting, you are requested to complete,
date, sign, and return the proxy card in the enclosed postage-paid envelope as
soon as possible. If you decide to attend the Special Meeting, you may vote your
shares in person whether or not you have previously submitted a proxy.
On behalf of the Board, I thank you for your attention to this
important matter.
Very truly yours,
John R. Reusing
President and Chief Executive Officer
<PAGE> 4
FIDELITY FINANCIAL OF OHIO, INC.
4555 MONTGOMERY ROAD
CINCINNATI, OHIO 45212
(513) 351-6666
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on February 16, 1999
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders
(including any adjournment or postponements thereof, the "Special Meeting") of
Fidelity Financial of Ohio, Inc. ("FFOH") will be held at 2:00 p.m., Eastern
Time, on February 16, 1999 at the Quality Hotel Central, 4747 Montgomery Road,
Cincinnati, Ohio for the following purposes:
1. To consider and vote upon a proposal to adopt an amendment to FFOH's
Articles of Incorporation in order to reduce from two-thirds of the
voting power of FFOH to a majority of the voting power of FFOH the vote
required to approve a proposed merger or consolidation of FFOH with or
into one or more corporations or a proposed combination or majority
share acquisition involving the issuance of shares of FFOH and
requiring shareholder approval.
2. To consider and vote upon a proposal to adopt an Agreement of
Merger, dated as of September 28, 1998 ("Merger Agreement"), by and
among FFOH, Fidelity Acquisition Corporation ("FAC"), a wholly owned
subsidiary of FFOH, and Glenway Financial Corporation ("GFCO"), which
provides, among other things, for (i) the merger of GFCO with FAC (the
"Merger") and (ii) the conversion of each share of common stock of GFCO
outstanding immediately prior to the Merger (other than any shares held
by either FFOH or GFCO) into the right to receive 1.50 shares of FFOH
common stock, plus cash in lieu of any fractional share interest.
3. To transact such other business, if any, as may properly come before
the Special Meeting.
Pursuant to the Code of Regulations of FFOH, the Board of Directors has
fixed the close of business on December 21, 1998 as the record date for the
determination of shareholders entitled to notice of and to vote at the Special
Meeting. Only holders of common stock of FFOH of record at the close of business
on that date will be entitled to notice of and to vote at the Special Meeting.
If the Merger is approved and consummated, holders of FFOH common stock
will have the right to dissent from the Merger and to obtain payment of the fair
cash value of their shares by complying with Section 1701.85 of the Ohio General
Corporation Law. A copy of Section 1701.85 of the Ohio General Corporation Law
is attached as Annex VIII to the accompanying Prospectus/Joint Proxy Statement.
<PAGE> 5
THE BOARD OF DIRECTORS OF FFOH HAS DETERMINED THE MERGER TO BE IN THE
BEST INTERESTS OF FFOH AND ITS SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" ADOPTION OF THE MERGER AGREEMENT. IN ADDITION, THE
PROPOSED AMENDMENT TO FFOH'S ARTICLES OF INCORPORATION IS BEING MADE IN ORDER
TO, AMONG OTHER THINGS, ENHANCE FFOH'S ABILITY TO CONSUMMATE THE MERGER.
CONSEQUENTLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" ADOPTION OF THE PROPOSED AMENDMENT TO FFOH'S ARTICLES OF
INCORPORATION.
By Order of the Board of Directors
John R. Reusing
President and Chief Executive Officer
Cincinnati, Ohio
January 5, 1999
- --------------------------------------------------------------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING. FAILURE TO RETURN A
PROPERLY EXECUTED PROXY CARD OR TO VOTE AT THE SPECIAL MEETING WILL HAVE THE
SAME EFFECT AS A VOTE AGAINST THE MERGER AGREEMENT AND THE PROPOSAL TO AMEND
FFOH'S ARTICLES OF INCORPORATION. ACCORDINGLY, EVEN IF YOU PLAN TO BE PRESENT AT
THE SPECIAL MEETING, YOU ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE
PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE. IF YOU
ATTEND THE SPECIAL MEETING, YOU MAY VOTE EITHER IN PERSON OR BY PROXY. ANY PROXY
GIVEN MAY BE REVOKED BY YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE
EXERCISE THEREOF.
- --------------------------------------------------------------------------------
<PAGE> 6
GLENWAY FINANCIAL CORPORATION
5535 GLENWAY AVENUE
CINCINNATI, OHIO 45238
(513) 922-5959
January 5, 1999
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders
of Glenway Financial Corporation ("GFCO") at 2:00 p.m., Eastern Time, on
February 16, 1999 at Dante's Restaurant, Harrison and Rybolt Roads, Cincinnati,
Ohio (the "Special Meeting"). This is a very important meeting regarding your
investment in GFCO.
On September 28, 1998, GFCO and Fidelity Financial of Ohio, Inc.
("FFOH") entered into an Agreement of Merger (the "Merger Agreement") which
provides for the combination of FFOH and GFCO. The combination will be effected
as a merger of equals of FFOH and GFCO. Based on tax and corporate law
considerations, the structure for the merger, as set forth in the Merger
Agreement, contemplates the merger of GFCO with Fidelity Acquisition Corporation
("FAC"), a wholly-owned subsidiary maintained by FFOH to facilitate business
combinations (the "Merger").
At the Special Meeting, you will be asked to consider and vote upon a
proposal to adopt the Merger Agreement. If the Merger Agreement is adopted and
the Merger is completed, each outstanding share of GFCO common stock will be
converted into the right to receive 1.5 shares of FFOH common stock, plus cash
in lieu of any fractional share interest.
Your Board of Directors has determined the Merger to be in the best
interests of GFCO and its shareholders and has unanimously approved the Merger
Agreement and the transactions contemplated thereby, including the Merger. THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" ADOPTION
OF THE MERGER AGREEMENT.
Enclosed are a proxy card, a Notice of Special Meeting of Shareholders
and a Prospectus/Joint Proxy Statement which describes the Merger, its effects
and the background of the transaction. A copy of the Merger Agreement is
included as Annex I to the enclosed Prospectus/Joint Proxy Statement. Also
enclosed are (i) for GFCO, its 1998 Annual Report to Shareholders and Quarterly
Report on Form 10-QSB for the quarter ended September 30, 1998 and (ii) for
FFOH, its 1997 Annual Report to Shareholders and Quarterly Report on Form 10-Q
for the quarter ended September 30, 1998. You are urged to read all of these
materials carefully.
It is very important that your shares be represented at the Special
Meeting. FAILURE TO RETURN A PROPERLY EXECUTED PROXY CARD OR TO VOTE AT THE
SPECIAL MEETING WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER
AGREEMENT. Accordingly, even if you plan to be present at the Special Meeting,
you are requested to complete, date, sign, and return the proxy card in the
enclosed postage-paid envelope as soon as possible. If you decide to attend the
Special Meeting, you may vote your shares in person whether or not you have
previously submitted a proxy.
On behalf of the Board, I thank you for your attention to this
important matter.
Very truly yours,
Robert R. Sudbrook
President and Chief Executive Officer
<PAGE> 7
GLENWAY FINANCIAL CORPORATION
5535 GLENWAY AVENUE
CINCINNATI, OHIO 45238
(513) 922-5959
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on February 16, 1999
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders
(including any adjournment or postponements thereof, the "Special Meeting") of
Glenway Financial Corporation ("GFCO") will be held at 2:00 p.m., Eastern Time,
on February 16, 1999 at Dante's Restaurant, Harrison and Rybolt Roads,
Cincinnati, Ohio for the following purposes:
1. To consider and vote upon a proposal to adopt an Agreement of
Merger, dated as of September 28, 1998 (the "Merger Agreement"), by and
among Fidelity Financial of Ohio, Inc. ("FFOH"), Fidelity Acquisition
Corporation ("FAC"), a wholly owned subsidiary of FFOH, and GFCO, which
provides, among other things, for (i) the merger of GFCO with FAC (the
"Merger") and (ii) the conversion of each share of common stock of GFCO
outstanding immediately prior to the Merger (other than any shares held
by either FFOH or GFCO) into the right to receive 1.50 shares of FFOH
common stock, plus cash in lieu of any fractional share interest.
2. To transact such other business, if any, as may properly come before
the Special Meeting.
Pursuant to the Bylaws of GFCO, the Board of Directors has fixed the
close of business on December 21, 1998 as the record date for the determination
of shareholders entitled to notice of and to vote at the Special Meeting. Only
holders of common stock of GFCO of record at the close of business on that date
will be entitled to notice of and to vote at the Special Meeting.
THE BOARD OF DIRECTORS OF GFCO HAS DETERMINED THE MERGER TO BE IN THE
BEST INTERESTS OF GFCO AND ITS SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" ADOPTION OF THE MERGER AGREEMENT.
By Order of the Board of Directors
Robert R. Sudbrook
President and Chief Executive Officer
Cincinnati, Ohio
January 5, 1999
<PAGE> 8
- --------------------------------------------------------------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING. FAILURE TO RETURN A
PROPERLY EXECUTED PROXY CARD OR TO VOTE AT THE SPECIAL MEETING WILL HAVE THE
SAME EFFECT AS A VOTE AGAINST THE MERGER AGREEMENT. ACCORDINGLY, EVEN IF YOU
PLAN TO BE PRESENT AT THE SPECIAL MEETING, YOU ARE REQUESTED TO COMPLETE, DATE,
SIGN AND RETURN THE PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE AS SOON AS
POSSIBLE. IF YOU ATTEND THE SPECIAL MEETING, YOU MAY VOTE EITHER IN PERSON OR BY
PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING OR IN PERSON AT ANY TIME
PRIOR TO THE EXERCISE THEREOF.
- --------------------------------------------------------------------------------
<PAGE> 9
PROSPECTUS JOINT PROXY STATEMENT
OF FOR
FIDELITY FINANCIAL OF OHIO, INC. SPECIAL MEETINGS OF SHAREHOLDERS
------------ OF
Common Stock FIDELITY FINANCIAL OF OHIO, INC.
(Par Value $.10 Per Share) and
GLENWAY FINANCIAL CORPORATION
-------------
To be held on
February 16, 1999
On September 28, 1998, the Boards of Directors of Fidelity Financial of
Ohio, Inc. ("FFOH") and Glenway Financial Corporation ("GFCO") approved an
Agreement of Merger (the "Merger Agreement"). The Merger Agreement provides for
the combination of FFOH and GFCO in a merger of equals transaction (the
"Merger"). Due to tax and corporate law considerations, the merger of equals is
structured as a merger of GFCO with Fidelity Acquisition Corporation ("FAC"), a
wholly-owned subsidiary of FFOH. FAC does not conduct any business operations.
It was created by FFOH to facilitate business combinations such as the Merger.
We believe that the Merger will enable FFOH and GFCO to offer more
products and services to our customers and will provide greater value for our
shareholders.
If the Merger is completed, GFCO shareholders will receive 1.50 shares
of FFOH common stock for each share of GFCO common stock they own just before
the Merger. The FFOH common stock is traded on the Nasdaq National Market under
the symbol "FFOH" and the GFCO common stock is traded on the Nasdaq National
Market under the symbol "GFCO."
The Merger cannot be completed unless the shareholders of both FFOH and
GFCO approve it. We have scheduled special meetings of both FFOH's and GFCO's
shareholders to vote on the Merger. The date, time and place of the special
meetings are as follows:
<TABLE>
<CAPTION>
<S> <C>
SPECIAL MEETING OF SHAREHOLDERS OF FFOH: SPECIAL MEETING OF SHAREHOLDERS OF GFCO:
February 16, 1999 February 16, 1999
2:00 p.m., Eastern Time 2:00 p.m., Eastern Time
Quality Hotel Central Dante's Restaurant
4747 Montgomery Road Harrison and Rybolt Roads
Cincinnati, Ohio Cincinnati, Ohio
</TABLE>
This Prospectus/Joint Proxy Statement provides detailed information
about the Merger. We encourage you to read this entire document carefully. We
also encourage you to read carefully the publicly-filed documents of FFOH and
GFCO which are attached. Such documents contain important business and financial
information about FFOH and GFCO. You may obtain additional information about
FFOH and GFCO from documents filed with the Securities and Exchange Commission.
Please see "Where You Can Find More Information."
Sandler O'Neill & Partners, L.P. has advised the directors of FFOH that
the number of shares of FFOH common stock to be issued in the Merger in exchange
for shares of GFCO common stock is fair, from a financial point of view, to FFOH
shareholders. The directors of FFOH have determined that the Merger is in the
best interests of FFOH shareholders and unanimously recommend that shareholders
vote to approve the Merger and a proposed amendment to the Articles of
Incorporation of FFOH and the other transactions contemplated herein.
Stifel, Nicolaus & Company, Incorporated has advised the directors of
GFCO that the number of shares of FFOH common stock to be received in the Merger
for each share of GFCO common stock is fair, from a financial point of view, to
GFCO shareholders. The directors of GFCO have determined that the Merger is in
the best interests of GFCO shareholders and unanimously recommend that
shareholders vote to approve the Merger.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the
special meetings, please take the time to vote by completing and mailing the
enclosed proxy card. If you do not return your card, the effect will be a vote
against the Merger.
FFOH shareholders who follow specified procedures will be entitled to
dissenters' rights if the proposed Merger is completed.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE FFOH COMMON STOCK TO BE ISSUED IN
THE MERGER OR DETERMINED IF THIS PROSPECTUS/JOINT PROXY STATEMENT IS ACCURATE
AND COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE
SHARES OF FFOH COMMON STOCK ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
Prospectus/Joint Proxy Statement dated January 5, 1999 and first mailed
to shareholders of FFOH and GFCO on or about January 5, 1999
<PAGE> 10
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY ..................................................................................1
MARKET FOR COMMON STOCK AND DIVIDENDS.....................................................10
COMPARATIVE PER SHARE DATA................................................................11
SELECTED CONSOLIDATED FINANCIAL DATA OF FFOH..............................................14
SELECTED CONSOLIDATED FINANCIAL DATA OF GFCO..............................................16
SELECTED PRO FORMA CONSOLIDATED FINANCIAL DATA............................................18
GENERAL INFORMATION.......................................................................20
THE SPECIAL MEETINGS......................................................................20
Time, Date and Place.............................................................20
Matters to be Considered.........................................................20
Shares Outstanding and Entitled to Vote; Record Dates............................21
Votes Required...................................................................21
Voting and Revocation of Proxies.................................................22
Solicitation of Proxies..........................................................23
Certain Beneficial Owners of FFOH Common Stock...................................23
Certain Beneficial Owners of GFCO Common Stock...................................26
AMENDMENT TO FFOH'S ARTICLES OF INCORPORATION.............................................28
THE MERGER................................................................................29
General ........................................................................29
Background of the Merger ........................................................30
Recommendations of the Boards of Directors and Reasons for the Merger ...........32
Opinions of Financial Advisors...................................................34
Exchange of GFCO Common Stock Certificates.......................................45
Assumption of GFCO Stock Options.................................................46
Conditions to the Merger.........................................................47
Regulatory Approvals.............................................................48
Business Pending the Merger......................................................50
No Solicitation..................................................................50
Effective Time of the Merger.....................................................51
Termination and Amendment........................................................51
Interests of Certain Persons in the Merger.......................................52
Certain Employee Matters.........................................................53
Resale of FFOH Common Stock......................................................54
Certain Federal Income Tax Consequences..........................................55
Accounting Treatment of the Merger...............................................57
Expenses of the Merger...........................................................57
Stock Option Agreements..........................................................58
Stockholder Agreements...........................................................61
Letter Agreements................................................................61
Dissenters' Rights...............................................................61
</TABLE>
(i)
<PAGE> 11
<TABLE>
<S> <C>
MANAGEMENT AND OPERATIONS AFTER THE MERGER................................................64
PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION.....................................66
DESCRIPTION OF FFOH CAPITAL STOCK.........................................................73
COMPARISON OF THE RIGHTS OF SHAREHOLDERS..................................................75
LEGAL OPINION.............................................................................85
EXPERTS...................................................................................85
PROPOSALS FOR THE 1999 ANNUAL MEETINGS....................................................86
WHERE YOU CAN FIND MORE INFORMATION.......................................................86
</TABLE>
Annexes:
Annex I - Agreement of Merger, dated as of September 28, 1998, by and
among FFOH, FAC and GFCO, including an Agreement of
Merger, dated as of September 28, 1998, by and between
Fidelity Bank and Centennial Bank and attached as Exhibit A
thereto
Annex II - Stock Option Agreement, dated as of September 28,
1998, between GFCO (as issuer) and FFOH (as grantee)
Annex III - Stock Option Agreement, dated as of September 28,
1998, between FFOH (as issuer) and GFCO (as grantee)
Annex IV - Stockholder Agreement, dated as of September 28, 1998,
between FFOH and certain stockholders of GFCO
Annex V - Stockholder Agreement, dated as of September 28, 1998,
between GFCO and certain stockholders of FFOH
Annex VI - Opinion of Stifel, Nicolaus & Company, Incorporated
Annex VII - Opinion of Sandler O'Neill & Partners, L.P.
Annex VIII - Section 1701.85 of the Ohio General Corporation Law
Annex IX - Proposed Amendment to FFOH's Articles of Incorporation
(ii)
<PAGE> 12
SUMMARY
This summary highlights selected information from this Prospectus/Joint
Proxy Statement and may not contain all of the information that is important to
you. To understand the Merger fully and for a more complete description of the
legal terms of the Merger, you should read carefully this entire
Prospectus/Joint Proxy Statement, including the Merger Agreement and the other
annexes hereto, as well as the other documents referred to herein. See "Where
You Can Find More Information" on page 86. Page references are included in this
Summary to direct you to a more complete description of topics presented herein.
THE COMPANIES
Fidelity Financial of Ohio, Inc./
Fidelity Acquisition Corporation
4555 Montgomery Road
Cincinnati, Ohio 45201
(513) 351-6666
FFOH is an Ohio corporation and a unitary savings and loan holding
company registered under the Home Owners' Loan Act, as amended (the "HOLA").
FFOH is the parent holding company of Fidelity Federal Savings Bank, a federally
chartered savings bank ("Fidelity Bank"). Fidelity Bank conducts business
through 12 full-service offices located in the Cincinnati, Ohio metropolitan
area. The deposits of Fidelity Bank are insured to the maximum extent provided
by law by the Savings Association Insurance Fund ("SAIF"), which is administered
by the Federal Deposit Insurance Corporation ("FDIC"). The principal business of
Fidelity Bank consists of attracting retail deposits from the general public and
using such deposits and other funds to originate loans secured by first mortgage
liens on existing single-family (one-to-four units) residential properties
located primarily in southwestern Ohio. To a lesser extent, Fidelity Bank
originates loans secured by existing multi-family residential and nonresidential
real estate as well as construction and consumer loans. Fidelity Bank also
invests in U.S. Government and federal agency obligations and mortgage-backed
securities which are insured or guaranteed by federal agencies. FAC is an Ohio
corporation which is wholly owned by FFOH. FAC was formed in June 1996 in order
to facilitate FFOH's acquisition of Circle Financial Corporation, the former
holding company for People's Savings Association. At September 30, 1998, FFOH
had, on a consolidated basis, total assets of $528.1 million, total liabilities
of $461.3 million, including deposits of $419.0 million, and stockholders'
equity of $66.8 million.
<PAGE> 13
Glenway Financial Corporation
5535 Glenway Avenue
Cincinnati, Ohio 45238
(513) 922-5959
GFCO is a Delaware corporation and a unitary savings and loan holding
company registered under the HOLA. GFCO is the parent holding company of
Centennial Savings Bank, an Ohio-chartered savings bank ("Centennial Bank").
Centennial Bank conducts business through five full-service offices located in
the Cincinnati, Ohio metropolitan area. The deposits of Centennial Bank are
insured to the maximum extent provided by law by the SAIF, which is administered
by the FDIC. The principal business of Centennial Bank consists of attracting
retail deposits from the general public and using such deposits and other funds
to originate loans secured by first mortgage liens on existing single-family
residential properties located primarily in southwestern Ohio. Centennial Bank
also originates loans secured by existing multi-family residential and
commercial real estate as well as construction, consumer, commercial business
and other loans. Centennial Bank also invests in U.S. Government, federal agency
and municipal obligations as well as mortgage-backed securities, a substantial
portion of which are insured or guaranteed by federal agencies. At September 30,
1998, GFCO had, on a consolidated basis, total assets of $299.6 million, total
liabilities of $269.7 million, including deposits of $219.3 million, and
stockholders' equity of $29.8 million.
THE MERGER (PAGE 29)
We propose to combine FFOH and GFCO by merging GFCO with FAC, a
subsidiary of FFOH. FAC will be the surviving corporation of this Merger.
Immediately following the Merger, Fidelity Bank will merge with Centennial Bank
(the "Bank Merger"). Centennial Bank will be the surviving corporation of the
Bank Merger.
WHAT GFCO SHAREHOLDERS WILL RECEIVE (PAGE 29)
GFCO shareholders will receive 1.50 shares of common stock, par value
$.10 per share, of FFOH ("FFOH Common Stock") for each share of common stock,
par value $.01 per share of GFCO ("GFCO Common Stock") which they own just
before the Merger, plus cash in lieu of any fractional share interest (the
"Exchange Ratio").
REASONS FOR THE MERGER (PAGE 32)
The Merger will combine the strengths of the individual companies and
substantially enhance the combined company's operations in southwestern Ohio. We
expect that the combined company will have more opportunities to increase
earnings by providing a broader range of products and services to FFOH's and
GFCO's customers and by reducing costs by eliminating overlapping functions and
processes. We believe that the combined company will enable each of FFOH and
2
<PAGE> 14
GFCO to maximize long-term shareholder value while serving the interests of
their respective customers, employees and the communities which they serve.
THE SPECIAL MEETINGS (PAGE 20)
The special meeting of FFOH's shareholders (the "FFOH Special Meeting")
will be held at 2:00 p.m., Eastern Time, on Tuesday, February 16, 1999, at the
Quality Hotel Central, located at 4747 Montgomery Road, Cincinnati, Ohio. At the
FFOH Special Meeting, FFOH shareholders will be asked to approve (i) an
amendment to FFOH's Articles of Incorporation and (ii) the Merger and the
related Agreement of Merger, dated as of September 28, 1998 (the "Merger
Agreement"), among FFOH, FAC and GFCO.
The special meeting of GFCO's shareholders (the "GFCO Special Meeting")
will be held at 2:00 p.m., Eastern Time, on Tuesday, February 16, 1999, at
Dante's Restaurant, located at Harrison and Rybolt Roads, Cincinnati, Ohio. At
the GFCO Special Meeting, GFCO shareholders will be asked to adopt the Merger
Agreement.
RECOMMENDATIONS OF THE BOARD OF DIRECTORS OF FFOH AND GFCO (PAGE 32)
The Board of Directors of FFOH believes that the Merger is in the best
interests of FFOH and its shareholders and unanimously recommends that
shareholders of FFOH vote "FOR" approval of the Merger and the related Merger
Agreement. The Board of Directors of FFOH also unanimously recommends that
shareholders of FFOH vote "FOR" the proposal to amend FFOH's Articles of
Incorporation.
The Board of Directors of GFCO believes that the Merger is in the best
interests of GFCO and its shareholders and unanimously recommends that
shareholders of GFCO vote "FOR" the adoption of the Merger Agreement.
RECORD DATES; VOTING POWER (PAGE 21)
FFOH shareholders are entitled to vote at the FFOH Special Meeting if
they owned FFOH Common Stock as of the close of business on December 21, 1998
(the "FFOH Record Date"). FFOH shareholders will have one vote at the FFOH
Special Meeting for each share of FFOH Common Stock owned on December 21, 1998.
GFCO shareholders are entitled to vote at the GFCO Special Meeting if
they owned GFCO Common Stock as of the close of business on December 21, 1998
(the "GFCO Record Date"). GFCO shareholders will have one vote at the GFCO
Special Meeting for each share of GFCO Common Stock owned on December 21, 1998.
3
<PAGE> 15
VOTES REQUIRED (PAGE 21)
If the FFOH shareholders adopt the proposed amendment to FFOH's
Articles of Incorporation, the holders of a majority of the outstanding shares
of FFOH Common Stock must vote in favor of the Merger and the related Merger
Agreement. If the FFOH shareholders do not adopt the proposed amendment to
FFOH's Articles of Incorporation, the holders of two-thirds of the outstanding
shares of FFOH Common Stock must vote in favor of the Merger and the related
Merger Agreement. The directors of FFOH can cast approximately 4.8% of the votes
entitled to be cast at the FFOH Special Meeting. The directors have agreed that
they will vote all of their shares in favor of the Merger and the related Merger
Agreement.
The holders of a majority of the outstanding shares of GFCO Common
Stock must vote in favor of the Merger Agreement. The directors of GFCO can cast
approximately 12.3% of the votes entitled to be cast at the GFCO Special
Meeting. The directors have agreed that they will vote all of their shares in
favor of the Merger Agreement.
OWNERSHIP OF FFOH FOLLOWING THE MERGER
FFOH will issue up to 3,596,636 shares of FFOH Common Stock to GFCO
shareholders in the Merger (including shares which may be issued in exchange for
GFCO Common Stock acquired before the Merger upon exercise of outstanding GFCO
stock options). If 3,596,636 shares of FFOH Common Stock are issued in the
Merger, GFCO shareholders will own approximately 39.1% of the outstanding FFOH
Common Stock. This information is based on the number of shares of FFOH Common
Stock and GFCO Common Stock and GFCO stock options outstanding on December 21,
1998.
OPINIONS OF FINANCIAL ADVISORS (PAGE 34)
In deciding to approve the Merger, the Board of Directors of FFOH
considered the opinion of its financial advisor, Sandler O'Neill & Partners,
L.P. ("Sandler O'Neill"), that the proposed Exchange Ratio was fair, from a
financial point of view, to FFOH shareholders. Similarly, in deciding to approve
the Merger, the Board of Directors of GFCO considered the opinion of its
financial advisor, Stifel, Nicolaus & Company, Incorporated ("Stifel Nicolaus"),
that the proposed Exchange Ratio was fair from a financial point of view to GFCO
shareholders. The written opinions of Stifel Nicolaus and Sandler O'Neill, each
dated January 5, 1999, are attached as Annexes VI and VII to this
Prospectus/Joint Proxy Statement. You should read these opinions carefully to
understand the assumptions made, matters considered and limitations of the
review undertaken by the respective financial advisors.
4
<PAGE> 16
EXCHANGE OF STOCK CERTIFICATES (PAGE 45)
Please do not send in your GFCO stock certificates until instructed to
do so later.
CONDITIONS TO COMPLETION OF THE MERGER (PAGE 47)
The completion of the Merger depends on meeting a number of conditions,
including the following:
1. FFOH and GFCO shareholders must approve the Merger Agreement;
2. FFOH and GFCO must receive all required regulatory approvals for the
Merger and the Bank Merger and any waiting periods required by law must have
passed;
3. there must be no law or governmental order preventing completion of
the Merger or the Bank Merger, and no proceedings by a governmental entity
trying to prevent the Merger or the Bank Merger shall be pending;
4. each of FFOH and GFCO must receive a legal opinion confirming the
tax-free nature of the Merger;
5. Nasdaq must approve the FFOH Common Stock to be issued in the Merger
for trading on the Nasdaq National Market; and
6. FFOH and GFCO must receive a letter from their independent public
accountants stating that the Merger will qualify for "pooling of interests"
accounting treatment.
Unless prohibited by law, FFOH and GFCO can elect to waive a condition
that has not been satisfied and complete the Merger anyway. The parties cannot
be certain whether or when any of the conditions to the Merger will be
satisfied, or waived where permissible, or that the Merger will be consummated.
TERMINATION OF THE MERGER AGREEMENT (PAGE 51)
FFOH and GFCO can agree at any time to terminate the Merger Agreement
before completing the Merger, even if shareholders of FFOH and/or GFCO have
already voted to approve it.
Either company also can terminate the Merger Agreement:
1. if any governmental entity whose approval is necessary to complete
the Merger or the Bank Merger makes a final decision not to approve the Merger
or the Bank Merger;
5
<PAGE> 17
2. if the Merger is not completed by June 30, 1999;
3. if the FFOH or GFCO shareholders do not approve the Merger
Agreement; or
4. if the other company violates, in a material way, any of its
representations, warranties or obligations under the Merger Agreement.
In addition, FFOH may terminate the Merger Agreement if the Board of
Directors of GFCO does not recommend to its shareholders that the Merger be
approved, or subsequently withdraws or modifies in any adverse manner its
recommendation, and GFCO may terminate the Merger Agreement if the Board of
Directors of FFOH does not recommend to its shareholders that the Merger be
approved, or subsequently withdraws or modifies in any adverse manner its
recommendation.
Generally, the company seeking to terminate must not be in violation of
the Merger Agreement so as to allow the other party to terminate the Merger
Agreement.
AMENDMENT AND EXTENSION OF THE MERGER AGREEMENT (PAGE 51)
The parties may amend the Merger Agreement at any time before the
Merger actually takes place, and may agree to extend the time within which any
action required by the Merger Agreement is to take place. However, if an
amendment would reduce the amount or change the form of what shareholders of
GFCO would receive in the Merger, the GFCO shareholders will have to approve the
amendment.
BOARD OF DIRECTORS AND MANAGEMENT OF FFOH FOLLOWING THE MERGER (PAGE 64)
After the Merger, the Board of Directors of FFOH and Centennial Bank
will consist of seven representatives designated by FFOH and five
representatives designated by GFCO. John R. Reusing will be the Chairman of the
Board of FFOH and President of Centennial Bank, and Robert R. Sudbrook will be
the President and Chief Executive Officer of FFOH and the Chairman of the Board
and Chief Executive Officer of Centennial Bank.
INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS OF GFCO IN THE MERGER (PAGE 52)
Certain directors and executive officers of GFCO have agreements, stock
options, restricted stock and other benefit plans that provide them with
interests in the Merger that are different from, or in addition to, the
interests of GFCO shareholders. GFCO and Centennial Bank have entered into
employment and severance agreements with certain executive and other officers of
GFCO and Centennial Bank, which generally give such persons the right to receive
severance payments equal to up to three times such person's then-applicable
annual salary in the event that their employment is terminated in connection
with the Merger. Certain restricted stock awards which have been granted under
GFCO's equity compensation plans will become vested in connection with the
Merger.
6
<PAGE> 18
In addition, FFOH will honor indemnification obligations of GFCO and continue
liability insurance for directors and officers of GFCO for a three-year period.
REGULATORY APPROVALS (PAGE 48)
The completion of the Merger and the Bank Merger requires the prior
approval of the Office of Thrift Supervision (the "OTS"), the FDIC and the
Division of Financial Institutions of the Ohio Department of Commerce (the
"Division"). Moreover, the U.S. Department of Justice may provide input into the
approval process of the OTS and the FDIC and will have no less than 15 and up to
30 days following any approvals of those agencies to challenge such approvals on
antitrust grounds. FFOH and GFCO have filed all necessary applications with the
applicable regulatory agencies. FFOH and GFCO cannot predict, however, whether
the required regulatory approvals will be obtained or whether any such approvals
will have conditions which would be detrimental to FFOH upon consummation of the
Merger.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES (PAGE 55)
GFCO's shareholders generally will not recognize any gain or loss for
federal income tax purposes when they exchange their GFCO shares for FFOH
shares. GFCO shareholders who receive cash instead of fractional share interests
will generally recognize taxable gain or loss.
This tax treatment may not apply to certain shareholders. Determining
the actual tax consequences of the Merger to you as an individual taxpayer can
be complicated. The tax treatment will depend on your specific situation and
many variables not within the control of FFOH and GFCO. You should consult your
own tax advisor for a full understanding of the Merger's tax consequences.
ACCOUNTING TREATMENT (PAGE 57)
It is expected that the Merger will qualify as a "pooling of
interests," which means that, for accounting and financial reporting purposes,
FFOH and GFCO will be treated as if they had always been one company. FFOH and
GFCO may terminate the Merger if they do not receive a letter from their
independent public accountants that the Merger will qualify as a "pooling of
interests."
STOCK OPTION AGREEMENTS (PAGE 58)
In connection with the Merger Agreement, GFCO granted FFOH an option to
purchase up to 19.9% of the outstanding GFCO Common Stock at an exercise price
of $17.25 per share, and FFOH granted GFCO an option to purchase up to 19.9% of
the outstanding FFOH Common Stock at an exercise price of $12.15 per share. FFOH
and GFCO can exercise their respective options only if specific events occur.
These events relate to a competing transaction involving a merger, business
combination or other acquisition of FFOH and/or GFCO or their respective stock
or assets. As of the date of this Prospectus/Joint Proxy Statement, neither FFOH
nor GFCO is aware of any such
7
<PAGE> 19
event. The stock option agreements are intended to increase the likelihood that
the Merger will occur and may have the effect of discouraging other companies
that might be interested in acquiring FFOH and/or GFCO.
DISSENTERS' RIGHTS (PAGE 61)
Ohio law permits holders of FFOH Common Stock to dissent from the
Merger and to have the fair value of their FFOH Common Stock appraised and paid
to them in cash. To do this, a holder of FFOH Common Stock must follow certain
procedures, including filing notices with FFOH and not voting in favor of the
Merger.
COMPARATIVE PER SHARE MARKET PRICE INFORMATION (PAGE 10)
Shares of FFOH and GFCO trade on the Nasdaq National Market. On
September 28, 1998, the last trading day preceding public announcement of the
Merger, FFOH Common Stock closed at $14.00 per share and GFCO Common Stock
closed at $19.50 per share. On December 21, 1998, FFOH Common Stock closed at
$____ per share and GFCO Common Stock closed at $____ per share.
The market value of 1.50 shares of FFOH Common Stock would be $21.00
based on FFOH's September 28, 1998 closing price and $______ based on FFOH's
December 21, 1998 closing price. Because the market price of FFOH Common Stock
will fluctuate prior to and after completion of the Merger and the exchange
ratio is fixed, GFCO shareholders cannot be sure of the market value of the FFOH
shares they will receive in the Merger. You should obtain current stock
quotations for FFOH Common Stock and GFCO Common Stock. You can get these quotes
from a newspaper, on the Internet or by calling your broker.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Prospectus/Joint Proxy Statement and the documents incorporated
herein by reference contain forward-looking statements by FFOH and GFCO. These
forward-looking statements include information regarding the financial
condition, results of operations and business of FFOH upon consummation of the
Merger, including statements relating to: (a) the estimated cost savings and
accretion to reported earnings that will result from the Merger; (b) the
estimated impact on revenues; and (c) the restructuring charges expected to be
incurred. In addition, any of the words "believes," "expects," "anticipates" or
similar expressions indicate forward-looking statements. Many possible events or
factors could affect the future financial results and performance of FFOH after
the Merger and could cause such results or performance to differ materially from
those expressed in forward-looking statements. These possible events or factors
include the following:
1. estimated cost savings from the Merger cannot be fully realized
within the expected time frame;
8
<PAGE> 20
2. revenues following the Merger are lower than expected;
3. competitive pressure among depository institutions increases
significantly;
4. costs or difficulties related to the integration of the businesses
of FFOH and GFCO are greater than expected;
5. changes in the interest rate environment reduce interest margins;
6. general economic conditions, either nationally or in the markets in
which FFOH will be doing business, are less favorable than expected;
7. legislation or changes in regulatory requirements adversely affect
the businesses in which FFOH would be engaged; and
8. adverse changes occur in the securities markets.
9
<PAGE> 21
MARKET FOR COMMON STOCK AND DIVIDENDS
Each of the FFOH Common Stock and the GFCO Common Stock is listed and
traded on the Nasdaq National Market under the symbols "FFOH" and "GFCO,"
respectively. Application will be made to list on the Nasdaq National Market the
FFOH Common Stock to be issued in connection with the Merger. As of the FFOH
Record Date, there were 5,609,107 shares of FFOH Common Stock outstanding, which
were held by approximately 961 holders of record. As of the GFCO Record Date,
there were 2,311,348 shares of GFCO Common Stock outstanding, which were held by
approximately 501 holders of record. Such numbers of shareholders do not reflect
the number of individuals or institutional investors holding stock in nominee
name through banks, brokerage firms and others.
The following table sets forth information about the high and low
prices of the FFOH Common Stock and the GFCO Common Stock as reported on Nasdaq
and the dividends declared per share of FFOH Common Stock and GFCO Common Stock.
<TABLE>
<CAPTION>
FFOH GFCO
------------------------------- -----------------------------------
Market Price
Market Price Dividends ---------------------- Dividends
------------------- Declared Declared
High Low Per Share High Low Per Share
------- --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
1998
- ----------------------
First Quarter $18.25 $15.50 $0.08 $21.25 $17.75 $0.10
Second Quarter 19.88 15.19 0.08 24.25 19.50 0.11
Third Quarter 16.38 11.88 0.08 23.75 18.00 0.11
Fourth Quarter (through
December 21, 1998)
1997
- ----------------------
First Quarter 13.75 11.50 0.07 11.75 10.75 0.085
Second Quarter 15.00 12.38 0.07 13.25 11.50 0.085
Third Quarter 16.50 14.50 0.07 15.50 11.50 0.10
Fourth Quarter 16.25 14.25 1.07 19.63 14.50 0.10
1996
- ----------------------
First Quarter 11.00 9.75 0.094 11.64 9.98 0.08
Second Quarter 10.63 9.63 0.05 11.05 9.62 0.08
Third Quarter 10.25 9.63 0.05 10.00 9.13 0.085
Fourth Quarter 11.88 9.75 0.05 10.03 9.50 0.085
</TABLE>
10
<PAGE> 22
Set forth below is information regarding the closing price per share of
FFOH Common Stock and GFCO Common Stock on (i) September 28, 1998, the last
trading day preceding public announcement of the execution of the Merger
Agreement, and (ii) December 21, 1998, the last practicable trading day prior to
the printing of this Prospectus/Joint Proxy Statement. The historical prices are
as reported on the Nasdaq National Market.
<TABLE>
<CAPTION>
Historical Market
Value Per Share
------------------------------------
Equivalent Market Value
Date FFOH GFCO Per Share of GFCO(1)
- ------------------------------------ ----------------- ----------------- ------------------------------------
<S> <C> <C> <C>
September 28, 1998 $14.00 $19.50 $21.00
December 21, 1998
</TABLE>
(1) Equivalent market value per share of GFCO Common Stock represents
the historical market value per share of FFOH Common Stock multiplied by the 1.5
share Exchange Ratio.
Shareholders are advised to obtain current market quotations for the
FFOH Common Stock and the GFCO Common Stock. Because the consideration to be
provided to shareholders of GFCO in connection with the Merger is based on a
fixed number of shares of FFOH Common Stock, shareholders of GFCO are not
assured of receiving a specific market value of FFOH Common Stock (and thus a
specific market value for their shares of GFCO Common Stock) at the effective
time of the Merger. The market price of the GFCO Common Stock at the effective
time of the Merger may be higher or lower than the market price at the time the
Merger Agreement was executed, at the date of mailing of this Prospectus/Joint
Proxy Statement or at the time of the Special Meetings.
COMPARATIVE PER SHARE DATA
The following table shows summarized historical per share, pro forma
combined per share and pro forma equivalent per share information regarding the
FFOH Common Stock and the GFCO Common Stock at the dates and for the periods
indicated, giving effect to the Merger using the pooling of interests method of
accounting, assuming that the Merger was consummated as of the beginning of each
of the periods indicated. See "The Merger-Accounting Treatment of the Merger"
and "Pro Forma Combined Consolidated Financial Information."
The data set forth below does not reflect cost savings, operating
synergies and revenue enhancements which are expected to be realized as a result
of the Merger and the Bank Merger. The selected per share data set forth below
should be read in conjunction with, and is qualified in its
11
<PAGE> 23
entirety by, the historical consolidated financial statements of FFOH and GFCO,
including the related notes, incorporated herein by reference, and the unaudited
pro forma combined consolidated financial information appearing elsewhere
herein. See "Where You Can Find More Information" and "Pro Forma Combined
Consolidated Financial Information." The data set forth below is not necessarily
indicative of the results of the future operations of FFOH upon consummation of
the Merger or the actual results that would have been achieved had the Merger
been consummated prior to the periods indicated.
<TABLE>
<CAPTION>
FFOH Common Stock GFCO Common Stock
--------------------------- ------------------------------------
Pro Forma Pro Forma
Historical Combined Historical(6) Equivalent
---------- --------- ------------- ----------
<S> <C> <C> <C> <C>
Basic net earnings per share(1):
Nine months ended September 30, 1998 $0.64 $0.63 $0.94 $0.95
Year ended December 31, 1997 0.90 0.83 1.05 1.25
Year ended December 31, 1996 0.38 0.32 0.38 0.48
Year ended December 31, 1995 0.45 0.44 0.65 0.66
Diluted net earnings per share(1):
Nine months ended September 30, 1998 0.63 0.62 0.92 0.93
Year ended December 31, 1997 0.89 0.81 1.03 1.22
Year ended December 31, 1996 0.38 0.32 0.37 0.48
Year ended December 31, 1995 0.44 0.44 0.64 0.66
Dividends declared per share(2):
Nine months ended September 30, 1998 0.24 0.23 0.32 0.34
Year ended December 31, 1997 1.28 0.88 0.37 1.32
Year ended December 31, 1996 0.24 0.23 0.33 0.35
Year ended December 31, 1995 0.30 0.26 0.31 0.39
Book value per share(3):
September 30, 1998(4) 11.93 10.35 13.01 15.52
December 31, 1997 11.49 10.27 12.41 15.40
Tangible book value per share(5):
September 30, 1998(4) 10.66 9.54 12.92 14.31
December 31, 1997 10.13 9.39 12.28 14.08
</TABLE>
(1) The pro forma equivalent basic and diluted net earnings per share of
GFCO Common Stock represents the pro forma combined basic and diluted
net earnings per share of FFOH Common Stock multiplied by the 1.5 share
Exchange Ratio.
(2) The pro forma combined dividends declared per share of FFOH Common
Stock is determined by dividing FFOH and GFCO combined cash dividends
declared by the pro forma combined average number of shares of FFOH
Common Stock outstanding. The pro forma equivalent dividends declared
per share of GFCO Common Stock represent the FFOH pro forma combined
dividend rates multiplied by the 1.5 share Exchange Ratio. The current
(Footnotes continued on following page)
12
<PAGE> 24
annualized dividend rate per share of FFOH Common Stock, based upon the
most recent quarterly dividend rate of $0.08 per share payable on
October 15, 1998, would be $0.32. On a pro forma equivalent basis per
share of GFCO Common Stock, such current annualized FFOH dividend per
share of GFCO Common Stock would be $0.48, based on the 1.5 share
Exchange Ratio.
(3) The pro forma combined book value per share of FFOH Common Stock is
based upon the historical total stockholders' equity for FFOH and GFCO,
divided by the pro forma combined period-end shares of FFOH Common
Stock outstanding. The pro forma equivalent book value per share of
GFCO Common Stock represents the pro forma combined book value per
share of FFOH Common Stock multiplied by the 1.5 share Exchange Ratio.
(4) Pro forma combined book value and tangible book value per share at
September 30, 1998 reflect a one-time, after tax charge of $3.1 million
which is estimated by FFOH to be recorded by it in connection with the
consummation of the Merger.
(5) The pro forma combined tangible book value per share of FFOH Common
Stock is based upon the historical total stockholders' equity for FFOH
and GFCO, less goodwill and other intangibles, divided by the pro forma
combined period-end shares of FFOH Common Stock outstanding. The pro
forma equivalent tangible book value per share of GFCO Common Stock
represents the pro forma combined tangible book value per share of FFOH
Common Stock multiplied by the 1.5 share Exchange Ratio.
(6) FFOH's fiscal year end is December 31 and GFCO's fiscal year end is
June 30. For purposes of the table above, GFCO financial data is
presented as if GFCO's fiscal year ended on December 31.
13
<PAGE> 25
SELECTED CONSOLIDATED FINANCIAL DATA OF FFOH
(Dollars in Thousands, Except Per Share Data)
The following selected historical consolidated financial data of FFOH
for the five years ended December 31, 1997 is based on the audited consolidated
financial statements of FFOH. The historical consolidated financial data for the
nine months ended September 30, 1998 and 1997 is based on unaudited consolidated
financial statements. The unaudited consolidated financial statements include
all adjustments, consisting of normal recurring accruals, which FFOH considers
necessary for a fair presentation of the financial condition and the results of
operations for these periods. Operating results for the nine months ended
September 30, 1998 are not necessarily indicative of the results that may be
expected for any other interim period or the entire year ending December 31,
1998. The selected historical consolidated financial data set forth below should
be read in conjunction with, and is qualified in its entirety by, the historical
consolidated financial statements of FFOH, including the related notes,
incorporated herein by reference. See "Where You Can Find More Information."
<TABLE>
<CAPTION>
At December 31,
September 30, ------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
SELECTED FINANCIAL CONDITION DATA:
Total assets $528,117 $535,100 $499,918 $231,137 $216,168 $202,991
Federal funds sold and interest-bearing
deposits 17,440 27,730 20,489 2,784 1,766 6,002
Investment securities available for
sale-at market 1,844 6,020 16,120 6,044 4,267 --
Investment securities-at cost -- -- -- -- -- 4,023
Mortgage-backed securities available
for sale-at market 26,629 25,827 30,760 29,378 6,280 --
Mortgage-backed securities-at cost 31,999 13,527 10,744 -- 20,792 23,873
Loans receivable-net (1) 425,695 436,852 396,541 185,132 175,222 162,392
Goodwill and other intangible assets 7,116 7,628 8,322 -- -- --
Deposits 418,953 432,024 408,159 180,697 173,198 157,642
FHLB advances 38,392 34,233 20,186 17,653 12,089 15,954
Stockholders' equity-net 66,827 64,274 66,712 30,113 28,540 26,905
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
---------------------- --------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
--------- ---------- -------- -------- -------- --------- ---------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Total interest income $28,521 $28,449 $38,151 $22,738 $17,001 $15,748 $16,310
Total interest expense 17,265 16,707 22,562 12,656 10,167 8,331 8,106
--------- ---------- -------- -------- -------- --------- ---------
Net interest income 11,256 11,742 15,589 10,082 6,834 7,417 8,204
Provision for losses on loans 77 75 101 129 71 44 52
--------- ---------- -------- -------- -------- --------- ---------
Net interest income after provision
for losses on loans 11,179 11,667 15,488 9,953 6,763 7,373 8,152
Other income 1,166 979 1,415 165 355 347 250
General, administrative and other
expenses 6,952 7,009 9,369 7,638 4,385 4,172 4,000
--------- ---------- -------- -------- -------- --------- ---------
Earnings before income taxes 5,393 5,637 7,534 2,480 2,733 3,548 4,402
Federal income taxes 1,941 1,992 (2,658) (872) (919) (1,176) (1,464)
--------- ---------- -------- -------- -------- --------- ---------
Net earnings $ 3,452 $ 3,645 $ 4,876 $1,608 $1,814 $2,372 $2,938
========= ========== ======== ======== ======== ========= =========
Earnings per share(3):
Basic $0.64 $0.67 $0.90 $0.38 $0.45 $0.58 $0.73
==== ==== ==== ==== ==== ==== ====
Diluted $0.63 $0.66 $0.89 $0.38 $0.44 $0.58 $0.73
==== ==== ==== ==== ==== ==== ====
</TABLE>
14
<PAGE> 26
<TABLE>
<CAPTION>
At or For the Nine Months
Ended September 30, At or For the Year Ended December 31,
-------------------- ------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------ ------ ------ ------ ------ ------ ------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING RATIOS AND
OTHER DATA(2):
Return on average assets(3) 0.86% 0.94% 0.94% 0.53% 0.82% 1.14% 1.47%
Return on average equity(3) 7.00 7.16 7.22 3.16 6.17 8.51 11.41
Tangible equity to tangible assets at
end 11.46 11.72 10.74 11.88 13.03 13.20 13.25
of period
Interest rate spread(4) 2.41 2.61 2.58 2.59 2.44 3.04 3.63
Net interest margin(4) 2.92 3.14 3.11 3.40 3.13 3.63 4.20
Non-performing loans to total loans at
end of period(5) 0.30 0.35 0.22 0.28 0.54 0.47 0.88
Non-performing assets to total assets at
end of period(5) 0.26 0.29 0.18 0.23 0.44 0.43 0.77
Allowance for loan losses to non-
performing loans at end of period 133.21 106.29 167.81 137.88 81.23 95.71 51.50
Average interest-earning assets to
average interest-bearing liabilities 111.34 111.98 111.88 118.89 114.74 114.49 113.91
General, administrative and other
expenses to average total assets(3) 1.74 1.81 1.80 2.51 1.97 2.00 2.01
Full service offices 12 11 12 10 4 4 3
</TABLE>
- --------------------------------
(1) At September 30, 1998 and December 31, 1997 and 1995, included
$197,000, $438,000 and $646,000 of loans classified as held for sale,
respectively.
(2) With the exception of end of period ratios, all ratios are based on
average monthly balances during the periods and have been annualized
where appropriate.
(3) Before consideration of non-recurring charges incurred in 1996,
including the SAIF recapitalization assessment and expenses related to
FFOH's acquisition of Circle Financial Corporation, the ratios set
forth below would have been as follows:
<TABLE>
<CAPTION>
<S> <C>
Basic earnings per share $0.71
Diluted earnings per share $0.71
Return on average assets 0.92%
Return on average equity 5.52%
General, administrative and other expenses to average total assets 1.91%
</TABLE>
(4) Interest rate spread represents the difference between the weighted
average yield on interest-earning assets and the weighted average rate
on interest-bearing liabilities. Net interest margin represents net
interest income as a percentage of average interest-earning assets.
(5) Non-performing loans consist of non-accrual loans and accruing loans
that are contractually past due 90 days or more, and non-performing
assets consist of non-performing loans and real estate acquired by
foreclosure or deed-in-lieu thereof.
15
<PAGE> 27
SELECTED CONSOLIDATED FINANCIAL DATA OF GFCO
(Dollars in Thousands, Except Per Share Data)
The following selected historical consolidated financial data of GFCO
for the five years ended June 30, 1998 is based on the audited consolidated
financial statements of GFCO. The historical consolidated financial data for the
three months ended September 30, 1998 and 1997 is based on unaudited
consolidated financial statements. The unaudited consolidated financial
statements include all adjustments, consisting of normal recurring accruals,
which GFCO considers necessary for a fair presentation of the financial
condition and the results of operations for these periods. Operating results for
the three months ended September 30, 1998 are not necessarily indicative of the
results that may be expected for any other interim period or the entire year
ending June 30, 1999. The selected historical consolidated financial data set
forth below should be read in conjunction with, and is qualified in its entirety
by, the historical consolidated financial statements of GFCO, including the
related notes, incorporated herein by reference. See"Where You Can Find More
Information."
<TABLE>
<CAPTION>
At June 30,
September 30,----------------------------------------------------
1998 1998 1997 1996 1995 1994
-------- -------- -------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
SELECTED FINANCIAL CONDITION DATA:
Total assets $299,571 $303,332 $287,088 $278,809 $265,740 $243,914
Federal funds sold and interest-bearing
deposits 1,941 1,764 -- 340 426 1,821
Investment securities available for
sale-at market -- -- -- 4,084 4,092 4,047
Investment securities-at cost 9,073 8,069 7,042 5,549 7,489 10,499
Mortgage-backed securities available
for sale-at market 4,940 5,570 9,920 14,761 4,769 6,824
Mortgage-backed securities-at cost 10,768 11,304 13,281 15,710 28,011 30,754
Loans receivable-net(1) 257,578 262,327 239,648 221,101 205,413 175,110
Goodwill and other intangible assets-net 200 226 368 576 796 1,037
Deposits 219,335 220,639 226,853 222,768 208,377 196,499
FHLB advances 47,199 50,435 28,114 25,634 27,158 17,731
Stockholders' equity-restricted 29,839 29,221 27,238 26,781 25,387 25,045
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
September 30, Year Ended June 30,
------------------- -------------------------------------------------------
1998 1997 1998 1997 1996 1995 1994
------- ------- ------- ------- ------- ------- -------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Total interest income $ 5,606 $ 5,462 $22,525 $20,735 $19,797 $17,651 $14,960
Total interest expense 3,312 3,224 13,193 12,195 11,933 10,300 8,160
------- ------- ------- ------- ------- ------- -------
Net interest income 2,294 2,238 9,332 8,540 7,864 7,351 6,800
Provision for losses on loans 45 100 363 244 60 84 96
------- ------- ------- ------- ------- ------- -------
Net interest income after provision
for losses on loans 2,249 2,138 8,969 8,296 7,804 7,267 6,704
Other income 298 236 883 954 813 1,124 981
General, administrative and other
expenses 1,476 1,435 5,715 7,348 6,274 6,001 5,664
------- ------- ------- ------- ------- ------- -------
Earnings before income taxes 1,071 939 4,137 1,902 2,451 2,390 2,021
Federal income taxes 365 326 1,433 696 906 915 761
------- ------- ------- ------- ------- ------- -------
Net earnings $ 706 $ 613 $ 2,704 $ 1,206 $ 1,545 $ 1,475 $ 1,260
======= ======= ======= ======= ======= ======= =======
Earnings per share:
Basic(2)(3) $ 0.31 $ 0.27 $ 1.19 $ 0.53 $ 0.68 $ 0.65 $ 0.55
======= ======= ======= ======= ======= ======= =======
Diluted(2)(3) $ 0.30 $ 0.26 $ 1.16 $ 0.52 $ 0.67 $ 0.64 $ 0.53
======= ======= ======= ======= ======= ======= =======
</TABLE>
16
<PAGE> 28
<TABLE>
<CAPTION>
At or For the Three Months
Ended September 30, At or For the Year Ended June 30,
------------------ ------------------------------------------------------
1998 1997 1998 1997 1996 1995 1994
------ ------ ------ ------ ------ ------ ------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING RATIOS AND
OTHER DATA(4):
Return on average assets(3) 0.94% 0.85% 0.91% 0.43% 0.57% 0.57% 0.54%
Return on average equity(3) 9.58 8.91 9.62 4.48 5.92 5.91 5.29
Tangible equity to tangible assets
at end of period 9.90 9.42 9.57 9.37 9.42 9.28 9.88
Interest rate spread(5) 2.85 2.87 2.94 2.87 2.69 2.77 2.96
Net interest margin(5) 3.13 3.24 3.26 3.19 3.03 3.08 3.18
Non-performing loans to total
loans at end of period(6) 0.37 0.25 0.36 0.34 0.38 0.44 1.03
Non-performing assets to total
assets at end of period(6) 0.33 0.24 0.32 0.31 0.40 0.62 0.94
Allowance for loan losses to non-
performing loans at end of period 124.56 139.82 119.60 96.40 70.00 66.50 38.40
Average interest-earning assets to
average interest-bearing
liabilities 108.13 107.91 106.94 106.83 107.27 107.47 105.84
General, administrative and other
expenses to average total
assets(3) 1.96 1.99 1.92 2.60 2.30 2.34 2.42
Full service offices 5 5 5 5 5 6 6
</TABLE>
- -----------------------
(1) Includes loans held for sale.
(2) Basic and diluted earnings per share for 1994 through 1997 have been
adjusted to give effect to 5% stock dividends paid in fiscal 1997 and
1996, and for the 2-for-1 stock split paid in fiscal 1998.
(3) Before giving effect to the SAIF recapitalization assessment, the
ratios set forth above would have been as follows for 1997:
<TABLE>
<CAPTION>
<S> <C>
Basic earnings per share $0.92
Diluted earnings per share $0.91
Return on average assets 0.74%
Return on average equity 7.79%
General, administrative and other
expenses to average total assets 2.12%
</TABLE>
(4) With the exception of end of period ratios, all ratios are based on
average daily balances during the periods and have been annualized
where appropriate.
(5) Interest rate spread represents the difference between the weighted
average yield on interest-earning assets and the weighted average rate
on interest-bearing liabilities. Net interest margin represents net
interest income as a percentage of average interest-earning assets.
(6) Non-performing loans consist of non-accrual loans and accruing loans
that are contractually past due 90 days or more, and non-performing
assets consist of non-performing loans and real estate acquired by
foreclosure or deed-in-lieu thereof.
17
<PAGE> 29
SELECTED PRO FORMA CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, Except Per Share Data)
The following table sets forth selected unaudited consolidated pro
forma financial data of FFOH and GFCO at the dates and for the periods
indicated, giving effect to the Merger using the pooling of interests method of
accounting, assuming that the Merger was consummated as of the beginning of each
of the periods indicated. See "The Merger - Accounting Treatment of the Merger"
and "Pro Forma Combined Consolidated Financial Information." The selected
consolidated financial data set forth below should be read in conjunction with,
and is qualified in its entirety by, the historical consolidated financial
statements of FFOH and GFCO, including the related notes, incorporated by
reference herein, and the other unaudited pro forma combined condensed
consolidated financial information appearing elsewhere herein. See "Where You
Can Find More Information" and "Pro Forma Combined Consolidated Financial
Information." The data set forth below does not reflect cost savings, operating
synergies and revenue enhancements which are expected to be realized as a result
of the Merger and the Bank Merger. The data set forth below is not necessarily
indicative of the results of the future operations of FFOH after the Merger or
the actual results that would have been achieved had the Merger been consummated
prior to the periods indicated. In addition, FFOH's fiscal year end is December
31 while GFCO's fiscal year end is June 30. For purposes of the table below,
GFCO financial data is presented consistent with the fiscal year end of FFOH.
<TABLE>
<CAPTION>
At December 31,
-------------------------------------------------------------
September 30,
1998(1) 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
SELECTED FINANCIAL CONDITION DATA:
Total assets $827,688 $839,721 $778,639 $509,746 $476,177 $433,389
Federal funds sold and interest-bearing
deposits 19,381 27,730 21,351 4,037 2,771 12,009
Investment securities available for
sale-at market 1,844 6,020 16,120 11,138 8,268 5,663
Investment securities-at cost 9,073 8,558 6,556 6,556 8,489 12,569
Mortgage-backed securities available
for sale-at market 31,569 34,623 42,231 45,987 11,208 --
Mortgage-backed securities-at cost 42,767 25,819 25,769 14,301 49,887 56,034
Loans receivable-net (2) 683,273 693,711 625,224 398,955 372,044 322,563
Goodwill and other intangible assets 7,316 7,925 8,794 686 908 1,181
Deposits 638,288 660,774 636,912 397,023 374,539 355,927
FHLB advances 85,591 76,119 39,316 44,680 39,917 18,478
Stockholders' equity-net 93,566 92,580 93,549 56,321 53,316 51,684
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
------------------- -------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Total interest income $45,513 $44,455 $59,834 $43,193 $36,311 $31,583 $32,238
Total interest expense 27,162 26,059 35,298 24,643 21,717 17,038 16,851
------- ------- ------- ------- ------- ------- -------
Net interest income 18,351 18,396 24,536 18,550 14,594 14,545 15,387
Provision for losses on loans 322 280 369 298 137 148 167
------- ------- ------- ------- ------- ------- -------
Net interest income after provision
for losses on loans 18,029 18,116 24,167 18,252 14,457 14,397 15,220
Other income 1,872 1,566 2,241 955 1,065 1,303 1,494
General, administrative and other
expenses 11,241 11,347 15,174 15,315 10,406 10,093 9,533
------- ------- ------- ------- ------- ------- -------
Earnings before income taxes 8,660 8,335 11,234 3,892 5,116 5,607 7,181
Federal income taxes 3,062 2,939 3,956 1,415 1,811 1,970 2,489
------- ------- ------- ------- ------- ------- -------
Net earnings $ 5,598 $ 5,396 $ 7,278 $ 2,477 $ 3,305 $ 3,637 $ 4,692
======= ======= ======= ======= ======= ======= =======
Earnings per share:
Basic $ 0.63 $ 0.61 $ 0.83 $ 0.32 $ 0.44 $ 0.48 $ 0.63
======= ======= ======= ======= ======= ======= =======
Diluted $ 0.62 $ 0.60 $ 0.81 $ 0.32 $ 0.44 $ 0.48 $ 0.62
======= ======= ======= ======= ======= ======= =======
</TABLE>
18
<PAGE> 30
<TABLE>
<CAPTION>
At or For the Nine
Months
Ended September 30, At or For the Year Ended December 31,
------------------ ------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING RATIOS AND
OTHER DATA(3):
Return on average assets(4) 0.89% 0.90% 0.90% 0.42% 0.68% 0.80% 1.09%
Return on average equity(4) 7.88 7.57 7.67 3.20 6.03 6.89 9.85
Tangible equity to tangible assets at end
of period 10.51 10.93 10.18 11.01 10.93 11.03 11.68
Interest rate spread(5) 2.61 2.73 2.71 2.75 2.61 2.95 3.34
Net interest margin(5) 3.05 3.19 3.16 3.31 3.10 3.35 3.73
Non-performing loans to total loans at
end of period(6) 0.32 0.31 0.17 0.31 0.28 0.73 1.04
Non-performing assets to total assets at
end of period(6) 0.29 0.28 0.15 0.31 0.31 0.67 0.96
Allowance for loan losses to non-
performing loans at end of period 129.49 116.36 220.13 111.72 152.81 52.34 41.43
Average interest-earning assets to
average interest-bearing liabilities 109.80 110.11 109.99 112.84 110.53 110.40 109.52
General, administrative and other
expenses to average total assets(4) 1.79 1.89 1.87 2.62 2.13 2.23 2.22
Full service offices 17 16 17 15 9 10 9
</TABLE>
- --------------------------------
(1) The consolidated financial condition data at September 30, 1998
reflects an estimated $3.1 million, net of taxes, of one-time
reorganization and restructuring costs related to the Merger and the
Bank Merger. The effect of the one time charge has been reflected in
the consolidated financial condition data but not in the consolidated
operating data and operating ratios because it is nonrecurring.
(2) Includes loans classified as held for sale.
(3) With the exception of end of period ratios, all ratios are based on
average monthly balances during the period and are annualized where
appropriate.
(4) Before consideration of non-recurring charges incurred in 1996,
including the SAIF recapitalization assessment and expenses related to
FFOH's acquisition of Circle Financial Corporation, the ratios set
forth below would have been as follows:
<TABLE>
<CAPTION>
<S> <C>
Basic earnings per share $0.62
Diluted earnings per share $0.62
Return on average assets 0.82%
Return on average equity 6.15%
General, administrative and other expenses to average total assets 2.08%
</TABLE>
(5) Interest rate spread represents the difference between the weighted
average yield on interest-earning assets and the weighted average rate
on interest-bearing liabilities. Net interest margin represents net
interest income as a percentage of average interest-earning assets.
(6) Non-performing loans consist of non-accrual loans and accruing loans
that are contractually past due 90 days or more, and non-performing
assets consist of non-performing loans and real estate acquired by
foreclosure or deed-in-lieu thereof.
19
<PAGE> 31
GENERAL INFORMATION
This Prospectus/Joint Proxy Statement is being furnished to the
shareholders of FFOH and GFCO in connection with the solicitation of proxies by
the Boards of Directors of FFOH and GFCO for use at the FFOH Special Meeting and
the GFCO Special Meeting, respectively. This Prospectus/Joint Proxy Statement
also serves as a prospectus of FFOH in connection with the issuance of FFOH
Common Stock to holders of GFCO Common Stock upon consummation of the Merger.
All information contained or incorporated by reference in this
Prospectus/Joint Proxy Statement with respect to FFOH has been supplied by FFOH,
and all information contained or incorporated by reference in this
Prospectus/Joint Proxy Statement with respect to GFCO has been supplied by GFCO.
This Prospectus/Joint Proxy Statement and the other documents enclosed
herewith are first being mailed to shareholders of FFOH and GFCO on or about
January 5, 1998.
THE SPECIAL MEETINGS
TIME, DATE AND PLACE
The FFOH Special Meeting will be held at 2:00 p.m., Eastern Time, on
February 16, 1999 at the Quality Hotel Central, 4747 Montgomery Road,
Cincinnati, Ohio. The GFCO Special Meeting will be held at 2:00 p.m., Eastern
Time, on February 16, 1999, at Dante's Restaurant, Harrison and Rybolt Roads,
Cincinnati, Ohio (the FFOH Special Meeting and the GFCO Special Meeting are
collectively referred to herein as the "Special Meetings").
MATTERS TO BE CONSIDERED
At the Special Meetings, shareholders of FFOH and GFCO will each
consider and vote upon a proposal to adopt the Merger Agreement. In addition, at
the FFOH Special Meeting, shareholders of FFOH will consider and vote upon a
proposal to amend FFOH's Articles of Incorporation in order to reduce from
two-thirds of the voting power of FFOH to a majority of the voting power of FFOH
the shareholder vote required to approve a proposed merger or consolidation of
FFOH with or into one or more corporations or a proposed combination or majority
share acquisition involving the issuance of shares of FFOH and requiring
shareholder approval. Pursuant to applicable law and the articles of
incorporation, certificate of incorporation, code of regulations and bylaws of
FFOH and GFCO, as applicable, no other business may properly come before the
FFOH Special Meeting or the GFCO Special Meeting.
20
<PAGE> 32
SHARES OUTSTANDING AND ENTITLED TO VOTE; RECORD DATES
The close of business on December 21, 1998 has been fixed by the Board
of Directors of FFOH (the "FFOH Board") as the FFOH Record Date for the
determination of holders of FFOH Common Stock entitled to notice of and to vote
at the FFOH Special Meeting and any adjournment or adjournments thereof . At the
close of business on the FFOH Record Date, there were ________ shares of FFOH
Common Stock outstanding and entitled to vote. Each share of FFOH Common Stock
entitles the holder thereof to one vote on all matters properly presented at the
FFOH Special Meeting.
The close of business on December 21, 1998 has been fixed by the Board
of Directors of GFCO (the "GFCO Board") as the GFCO Record Date for the
determination of holders of GFCO Common Stock entitled to notice of and to vote
at the GFCO Special Meeting and any adjournment or adjournments thereof. At the
close of business on the GFCO Record Date, there were ___________ shares of GFCO
Common Stock outstanding and entitled to vote. Each share of GFCO Common Stock
entitles the holder thereof to one vote on all matters properly presented at the
GFCO Special Meeting.
VOTES REQUIRED
A quorum, consisting of the holders of a majority of the issued and
outstanding shares of FFOH Common Stock or GFCO Common Stock, as the case may
be, must be present in person or by proxy before any action may be taken at the
FFOH Special Meeting or the GFCO Special Meeting, as the case may be. The
affirmative vote of the holders of a majority of the shares of FFOH Common Stock
outstanding as of the FFOH Record Date, voting in person or by proxy, is
necessary to adopt the proposal to amend FFOH's Articles of Incorporation.
Assuming the FFOH shareholders adopt the proposed amendment to FFOH's Articles
of Incorporation, the affirmative vote of the holders of a majority of the
outstanding shares of FFOH Common Stock will be necessary to approve the Merger
Agreement on behalf of FFOH. If the FFOH shareholders fail to adopt the proposed
amendment to FFOH's Articles of Incorporation, the affirmative vote of
two-thirds of the outstanding shares of FFOH Common Stock will be necessary to
approve the Merger Agreement on behalf of FFOH. The affirmative vote of the
holders of a majority of the shares of GFCO Common Stock outstanding as of the
GFCO Record Date, voting in person or by proxy, is necessary to adopt the Merger
Agreement on behalf of GFCO.
The proposals to adopt the Merger Agreement and the amendment to FFOH's
Articles of Incorporation are considered "non-discretionary items" whereby
brokerage firms may not vote in their discretion on behalf of their clients if
such clients have not furnished voting instructions. Abstentions and such broker
"non-votes" at the FFOH Special Meeting and the GFCO Special Meeting will be
considered in determining the presence of a quorum at the FFOH Special Meeting
and the GFCO Special Meeting, respectively, but will not be counted as votes
cast at such Special Meetings. Because the proposals to adopt the Merger
Agreement and the proposal to amend FFOH's Articles of Incorporation are each
required to be approved by the holders of a majority of the
21
<PAGE> 33
outstanding shares of GFCO Common Stock and FFOH Common Stock (assuming FFOH
shareholders approve the proposed amendment to FFOH's Articles of
Incorporation), abstentions and broker "non-votes" will have the same effect as
a vote against such proposals.
In connection with the execution of the Merger Agreement, FFOH and the
directors of GFCO (nine persons) entered into an agreement pursuant to which,
among other things, such persons agreed to vote their shares of GFCO Common
Stock (which amount to 12.3% of the shares of such stock outstanding as of the
GFCO Record Date, excluding shares subject to options) in favor of the Merger
Agreement. Similarly, in connection with the execution of the Merger Agreement,
GFCO and the directors of FFOH (eight persons) entered into an agreement
pursuant to which, among other things, such persons agreed to vote their shares
of FFOH Common Stock (which amount to 4.8% of the shares of such stock
outstanding as of the FFOH Record Date, excluding shares subject to options) in
favor of the Merger Agreement.
VOTING AND REVOCATION OF PROXIES
Each copy of this Prospectus/Joint Proxy Statement mailed to holders of
FFOH Common Stock and GFCO Common Stock is accompanied by a form of proxy for
use at the FFOH Special Meeting or the GFCO Special Meeting, as the case may be.
Any shareholder executing a proxy may revoke it at any time before it is voted
by (i) filing with the Secretary of FFOH (in the case of a FFOH shareholder) or
the Secretary of GFCO (in the case of a GFCO shareholder) at the address of FFOH
or GFCO set forth on its respective Notice of Special Meeting of Shareholders,
written notice of such revocation; (ii) executing and returning a later-dated
proxy; or (iii) attending the FFOH Special Meeting or the GFCO Special Meeting,
as applicable, and giving notice of such revocation in person. Attendance at the
applicable Special Meeting will not, in and of itself, constitute revocation of
a proxy.
Each proxy returned to FFOH or GFCO (and not revoked) by a holder of
FFOH Common Stock and GFCO Common Stock, respectively, will be voted in
accordance with the instructions indicated thereon. If no instructions are
indicated, the proxy will be voted for adoption of the Merger Agreement and, in
the case of FFOH, for adoption of the amendment to FFOH's Articles of
Incorporation. Proxies marked "FOR" approval of the Merger Agreement and proxies
executed but unmarked will be voted in the discretion of the persons named in
the accompanying proxies as to any proposed adjournment of the FFOH and/or GFCO
Special Meeting. Proxies which are voted against approval of the Merger
Agreement will not be voted in favor of any motion to adjourn the FFOH and/or
GFCO Special Meeting to solicit more votes in favor of approval of the Merger
Agreement.
It is not expected that any matter other than those referred to herein
will be brought before the FFOH and/or GFCO Special Meeting. If other matters
are properly presented, however, the persons named as proxies will vote in
accordance with their judgment with respect to such matters.
22
<PAGE> 34
SOLICITATION OF PROXIES
Each of FFOH and GFCO will bear its costs of mailing this
Prospectus/Joint Proxy Statement to its shareholders, as well as all other costs
incurred by it in connection with the solicitation of proxies from its
shareholders on behalf of its Board of Directors, except that FFOH and GFCO will
share equally the fees for registration of the FFOH Common Stock offered hereby
and the cost of printing this Prospectus/Joint Proxy Statement. In addition to
solicitation by mail, the directors, officers and employees of each company and
its subsidiaries may solicit proxies from shareholders of such company by
telephone, telegram or in person without compensation other than reimbursement
for their actual expenses. Arrangements also will be made with brokerage firms
and other custodians, nominees and fiduciaries for the forwarding of
solicitation material to the beneficial owners of stock held of record by such
persons, and FFOH or GFCO, as the case may be, will reimburse such custodians,
nominees and fiduciaries for their reasonable out-of-pocket expenses in
connection therewith.
FFOH and GFCO have retained Kissel-Blake Inc., a professional proxy
solicitation firm, to assist them in the solicitation of proxies. The fees
payable to such firm in connection with the Merger aggregate $8,500, plus
reimbursement for reasonable out-of-pocket expenses.
CERTAIN BENEFICIAL OWNERS OF FFOH COMMON STOCK
The following table sets forth information as to the FFOH Common Stock
beneficially owned as of the indicated date by (i) each person or entity,
including any "group" as that term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), who or which were known
by FFOH to be the beneficial owner of 5% or more of the outstanding FFOH Common
Stock, (ii) each director of FFOH and (iii) all directors and executive officers
of FFOH as a group.
23
<PAGE> 35
<TABLE>
<CAPTION>
Shares Beneficially Owned
as of December 21, 1998 (1)(2)
------------------------------------
Name of Beneficial Owner Amount Percent
- -------------------------------------------- ---------------- --------------
<S> <C> <C>
5% Owners:
Fidelity Federal Savings Bank
Employee Stock Ownership Plan Trust
4555 Montgomery Road
Cincinnati, Ohio 45212 325,075(2) 5.8%
Wellington Management Company, L.L.P
75 State Street
Boston, MA 02109 287,200(3) 5.1
Directors:
Joseph D. Hughes 50,733(4) *
Michael W. Jordan 17,846(5) *
David A. Luecke 17,149(6) *
Constantine N. Papadakis 14,962(7) *
John R. Reusing 104,851(8) 1.9
Thomas N. Spaeth 18,015(9) *
Paul D. Staubach 70,628(10) 1.3
Robert W. Zumbiel 31,837(11) *
All directors and executive officers
of FFOH as a group (8 persons) 326,021(12) 5.8
</TABLE>
- ----------------
* Represents less than 1.0% of the issued and outstanding FFOH Common
Stock.
(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 FFOH 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
December 21, 1998 are deemed to be outstanding for the purpose of
computing the percentage of FFOH Common Stock beneficially owned by
such person.
(Footnotes continued on following page)
24
<PAGE> 36
(2) The Fidelity Federal Savings Bank Employee Stock Ownership Plan Trust
("Trust") was established pursuant to the Fidelity Federal Savings Bank
Employee Stock Ownership Plan ("ESOP") by an agreement between FFOH and
Messrs. Reusing, Staubach and Hughes, who act as trustees of the ESOP
("Trustees"). As of December 21, 1998, 183,199 shares held in the Trust
were unallocated and 141,876 shares held in the Trust had been
allocated to the accounts of participating employees. Under the terms
of the ESOP, the Trustees will generally 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 generally be voted in the same
ratio on any matter as those shares for which instructions are given,
subject in each case to the fiduciary duties of the ESOP trustees and
applicable law.
(3) Based on a Schedule 13G filed pursuant to the Exchange Act on February
10, 1998 by Wellington Management Company, LLP ("WMC"). WMC, in its
capacity as investment advisor, may be deemed to beneficially own such
shares of FFOH which are held of record by clients of WMC.
(4) Includes 43,506 shares held in Mr. Hughes' individual retirement
account ("IRA"), 919 shares held by FFOH's ESOP for the account of Mr.
Hughes, 2,146 shares held in FFOH's 401(k) Retirement Plan and options
to purchase 4,162 shares pursuant to FFOH's 1997 Stock Option Plan.
(5) Includes 9,925 shares owned jointly with Mr. Jordan's wife, 4,000
shares held in Mr. Jordan's IRA and options to purchase 3,121 shares
pursuant to FFOH's 1997 Stock Option Plan.
(6) Includes 11,687 shares owned jointly with Mr. Luecke's wife, 500 shares
for Mr. Luecke's daughter for which Mr. Luecke is custodian and options
to purchase 4,162 shares pursuant to FFOH's 1997 Stock Option Plan.
(7) Includes options to purchase 4,162 shares pursuant to FFOH's 1997 Stock
Option Plan.
(8) Includes 56,428 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, options to purchase 14,439 shares pursuant to FFOH's 1992 Stock
Incentive Plan, options to purchase 5,202 shares pursuant to FFOH's
1997 Stock Option Plan, 19,573 shares held by FFOH's ESOP for the
account of Mr. Reusing and 8,535 shares held by FFOH's 401(k)
Retirement Plan.
(9) Includes 3,800 shares held by Mr. Spaeth's wife, 9,253 shares held in
Mr. Spaeth's IRA and options to purchase 4,162 shares pursuant to
FFOH's 1997 Stock Option Plan.
(10) Includes 40,953 shares owned jointly with Mr. Staubach's wife, options
to purchase 8,289 shares pursuant to FFOH's 1992 Stock Incentive Plan,
options to purchase 2,896 shares
25
<PAGE> 37
pursuant to FFOH's 1997 Stock Option Plan, 10,616 shares held by FFOH's
ESOP for the account of Mr. Staubach, 3,424 shares held by FFOH's
401(k) Retirement Plan, and 650 shares held in trust for Mr. Staubach's
children, for which Mr. Staubach is custodian.
(11) Includes 26,875 shares owned jointly with Mr. Zumbiel's wife and
options to purchase 4,162 shares pursuant to FFOH's 1997 Stock Option
Plan.
(12) Includes in the case of all directors and executive officers of FFOH as
a group, options to purchase 22,728 shares granted pursuant to FFOH's
1992 Stock Incentive Plan, options to purchase 32,029 shares granted
pursuant to FFOH's 1997 Stock Option Plan, 14,105 shares of FFOH Common
Stock held for the account of participating executive officers in
FFOH's 401(k) Retirement Plan and 31,108 shares of FFOH Common Stock
which are held by the trust established pursuant to FFOH's ESOP, which
have been allocated to the accounts of participating officers and
consequently will be voted at the FFOH Special Meeting by such
participating officers.
CERTAIN BENEFICIAL OWNERS OF GFCO COMMON STOCK
The following table sets forth information as to the GFCO Common Stock
beneficially owned as of the indicated date by (i) each person or entity,
including any "group" as that term is used in Section 13(d)(3) of the Exchange
Act, who or which were known by GFCO to be the beneficial owner of 5% or more of
the outstanding GFCO Common Stock, (ii) each director of GFCO and (iii) all
directors and executive officers of GFCO as a group.
26
<PAGE> 38
<TABLE>
<CAPTION>
Shares Beneficially Owned
as of December 21, 1998(1)(2)
----------------------------------------
Name of Beneficial Owner Amount Percent
- --------------------------------------- ---------- ----------
<S> <C> <C>
5% Owners:
Fifth Third Bancorp and
Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263 115,026(3) 5.00%
Directors:
Daniel W. Geeding 31,453(4) 1.36
Ronald L. Goodfellow 27,238(5) 1.18
Kenneth C. Lichtendahl 40,896(6) 1.77
Albert W. Moeller 23,948(7) 1.04
Edgar A. Rust 75,671(8) 3.27
Robert R. Sudbrook 38,130(9) 1.63
John P. Torbeck 35,294(10) 1.52
John L. Torbeck 31,230(11) 1.35
Milton L. Van Schoik 24,898(12) 1.08
All directors and executive officers as
a group (10 persons) 334,811 14.18
</TABLE>
- ----------------------
(1) Pursuant to rules promulgated by the SEC under the Exchange Act, a
person or entity is considered to beneficially own shares of GFCO
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 December 21, 1998 are deemed to be
outstanding for the purpose of computing the percentage of GFCO Common
Stock beneficially owned by such person.
(2) Each of the persons listed in this table may be contacted at the
address of GFCO, 5535 Glenway Avenue, Cincinnati, Ohio 45238.
(3) Consists of holdings of Fifth Third Bancorp in fiduciary accounts at
several of its banking subsidiaries, including Fifth Third Bank. The
Form 13G filed by the group consisting of Fifth Third Bancorp and Fifth
Third Bank reports sole voting power over 115,026 shares, sole
dispositive power over 108,412 shares and shared dispositive power over
6,614 shares.
(Footnotes continued on following page)
27
<PAGE> 39
(4) Includes 981 shares as to which Mr. Geeding shares voting or investment
power.
(5) Includes 4,716 shares which may be acquired upon the exercise of
options and 3,934 shares owned by Mr. Goodfellow's spouse.
(6) Includes 6,088 shares as to which Mr. Lichtendahl shares voting and
investment power.
(7) Includes 22,694 shares as to which Mr. Moeller shares voting and
investment power.
(8) Includes 9,180 shares held in a trust for which Mr. Rust is the trustee
and 12,762 shares allocated to Mr. Rust's account under GFCO's ESOP.
(9) Includes 21,000 shares which may be acquired upon the exercise of
options, 2,829 shares allocated to Mr. Sudbrook's account under GFCO's
ESOP.
(10) Includes 7,716 shares which may be acquired upon the exercise of
options, 1,152 shares owned by Mr. Torbeck's spouse and 1,560 shares as
to which Mr. Torbeck has sole voting power.
(11) Includes 7,716 shares which may be acquired upon the exercise of
options.
(12) Includes 3,858 shares which may be acquired upon the exercise of
options and 8,398 shares owned by Mr. Van Schoik's spouse.
AMENDMENT TO FFOH'S ARTICLES OF INCORPORATION
The FFOH Board is also seeking shareholder adoption of an amendment to
FFOH's Articles of Incorporation which will reduce from two-thirds of the voting
power of FFOH to a majority of the voting power of FFOH the shareholder vote
required to approve a proposed merger or consolidation of FFOH with or into one
or more corporations or a proposed combination or majority share acquisition
involving the issuance of shares of FFOH and requiring shareholder approval. The
form of the proposed amendment to FFOH's Articles of Incorporation is set forth
as Annex IX to this Prospectus/Joint Proxy Statement.
The proposed amendment to FFOH's Articles of Incorporation would reduce
the vote required to approve the Merger Agreement from two-thirds of the issued
and outstanding FFOH Common Stock to a majority of the issued and outstanding
FFOH Common Stock and, consequently, would enhance FFOH's ability to consummate
the Merger. In order to effect the proposed amendment to FFOH's Articles of
Incorporation, FFOH will need to adjourn the FFOH Special Meeting in order to
file the amended Articles of Incorporation with the Secretary of State of the
State of Ohio and receive back confirmation that such amended Articles of
Incorporation were properly filed.
28
<PAGE> 40
Adoption of the proposed amendment to FFOH's Articles of Incorporation
requires the affirmative vote of the holders of a majority of the outstanding
shares of FFOH Common Stock, voting in person or by proxy. THE FFOH BOARD
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF FFOH VOTE "FOR" THE PROPOSAL TO
AMEND FFOH'S ARTICLES OF INCORPORATION.
THE MERGER
The following information relating to the Merger does not purport to be
complete and is qualified in its entirety by reference to the Merger Agreement,
a copy of which is attached to this Prospectus/Joint Proxy Statement as Annex I.
All shareholders are urged to read the Merger Agreement carefully.
GENERAL
In accordance with the terms of and subject to the conditions set forth
in the Merger Agreement, GFCO will be merged with FAC, with FAC as the surviving
corporation of the Merger. The Merger Agreement provides that at the Effective
Time (as defined under "-Effective Time of the Merger") each outstanding share
of GFCO Common Stock (other than shares held by FFOH or GFCO other than in a
fiduciary capacity that are beneficially owned by third parties or in
satisfaction of a debt previously contracted) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive 1.50 shares of FFOH Common Stock, plus cash in lieu of any
fractional share interest.
If, between the date of the Merger Agreement and the Effective Time,
the shares of FFOH Common Stock are changed into a different number or class of
shares by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares or readjustment, or a stock dividend thereon is
declared with a record date within said period, the Exchange Ratio shall be
adjusted accordingly.
In connection with the execution of the Merger Agreement, Fidelity Bank
and Centennial Bank entered into the Bank Merger Agreement, pursuant to which
Fidelity Bank will merge with and into Centennial Bank substantially
concurrently with the Merger. Centennial Bank shall be the surviving corporation
of the Bank Merger and shall continue its corporate existence under the name
"Centennial Bank" under the laws of the State of Ohio.
Each of the FFOH Board and the GFCO Board has unanimously approved the
Merger Agreement and the transactions contemplated thereby and believes that the
Merger is in the best interests of FFOH and GFCO, respectively, and their
respective shareholders. ACCORDINGLY, THE BOARD OF DIRECTORS OF EACH OF FFOH AND
GFCO UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF FFOH AND GFCO, RESPECTIVELY,
VOTE "FOR" THE ADOPTION OF THE MERGER AGREEMENT.
29
<PAGE> 41
BACKGROUND OF THE MERGER
General. The Cincinnati market is home to several large regional
commercial banks, which have substantial financial and marketing resources
available to them, as well as a significant number of commercial banks and
thrift institutions which are reasonably comparable to GFCO and FFOH in size and
resources. In recent years, competition within the local banking and financial
services industries has intensified, especially for smaller institutions like
GFCO and FFOH. In the context of this competitive environment, GFCO and FFOH
have each pursued their respective business strategies that ultimately brought
the two companies together in 1998.
FFOH. In the fall of 1995, the FFOH Board determined that it was in the
best interests of FFOH and its shareholders to convert from the mutual holding
company ("MHC") ownership structure to a full stock corporation. Among other
things, the benefits of such a transaction included increased flexibility to
pursue strategic acquisitions by eliminating the capital stock ownership
limitations of the MHC form of ownership. In conjunction with its conversion to
the stock form of organization, the FFOH Board adopted a business plan that
called for FFOH to pursue asset growth through internal deposit growth, branch
purchases and optionally through one or more strategic acquisitions and mergers.
Such growth strategies would be pursued with the broad objectives of leveraging
FFOH's excess capital position anticipated as a result of the conversion and
increasing shareholder returns. On March 4, 1996, FFOH completed its conversion
from the mutual to the stock form of organization and, by means of an offering
of FFOH Common Stock in connection with such conversion, raised approximately
$22.1 million of additional capital.
In October 1996, FFOH completed its acquisition of Circle Financial
Corporation, a thrift holding company headquartered in Cincinnati, Ohio.
Although the acquisition of Circle Financial Corporation permitted FFOH to
deploy a portion of the capital raised in its conversion to the stock form of
organization, FFOH continued to remain overcapitalized and continued to seek
additional growth opportunities. In mid 1998, in connection with its normal
strategic planning process, the Board of FFOH authorized senior management of
FFOH to enter into preliminary discussions with senior management of GFCO to
explore a possible combination of the two companies.
GFCO. GFCO has been a public company since 1990, when Centennial Bank
converted to stock form. Throughout GFCO's life as a publicly-traded company,
senior management and the Board of Directors of GFCO have periodically evaluated
the direction and future of the company. Throughout this evaluation process, the
goal has consistently been to assure that GFCO pursued a path that would be,
first and foremost, in the best interest of its shareholders.
Two years ago, GFCO stock was trading below book value, and GFCO's
earnings were below its peer group. The GFCO Board placed improved quality
earnings as its highest priority and challenged its management and employees at
all levels to work with a heightened sensitivity to achieve a better return. As
a result of those efforts and a strong economy, GFCO has achieved increased
earnings and has enjoyed significant appreciation in the market value of its
stock. The GFCO Board and management approached the strategic planning process
in 1998 from the
30
<PAGE> 42
perspective of GFCO's stronger financial position. The GFCO Board and senior
management reviewed GFCO's strengths and weaknesses, as well as the
opportunities and risks presented by current economic conditions. Factors that
received particular attention in this process were the geographic limitations of
Centennial Bank's existing market, its asset size, interest rate risk and the
basic dependence smaller thrifts have on the real estate market.
Centennial Bank's five branch locations are all located in Centennial
Bank's traditional market in western Cincinnati, and Centennial Bank
historically has relied heavily on real estate loans as its primary source of
income. Competition for real-estate loans has increased at a considerable pace,
and competition for deposits has also increased as mutual funds and stocks have
assumed a larger role in the financial planning of the average consumer. The
GFCO Board recognized that expanded bank products on both sides of the balance
sheet would be essential to developing an enhanced profit stream less vulnerable
to interest rate swings.
Recognizing these market realities, Centennial Bank pursued other
avenues that offered the possibility for growth and increased profitability,
building on its strong foundation as a mortgage lender. In recent years, GFCO
has pursued growth through consumer and commercial lending and has been building
the expertise and infrastructure to support financial services for small
businesses. As a $300 million bank with facilities limited to western
Cincinnati, GFCO's opportunities in commercial lending are limited, and the GFCO
Board recognized that a larger asset base could provide more effective support.
The GFCO Board considered the benefits to be gained from combining with another
large thrift in the Cincinnati area and identified FFOH as a potential merger
partner.
Chronology of Merger Discussions. Senior management of both FFOH and
GFCO met on July 7, 1998 to discuss the respective companies, the competitive
challenges faced by each, consolidation within the banking industry and the
rationale for a potential business combination between FFOH and GFCO. Additional
meetings between the parties were held on July 17, 1998 and August 7, 1998,
during which the parties continued to discuss the rationale for a potential
business combination, as well as the management and staffing of the combined
company. On August 21, 1998, FFOH and GFCO entered into a mutual confidentiality
agreement.
On August 24, 1998, representatives of FFOH, GFCO, Sandler O'Neill and
Stifel Nicolaus met to discuss possible financial terms under which a strategic
transaction could be effected. During the following weeks, senior management,
directors and the financial advisors of each of FFOH and GFCO continued to
discuss the financial and other terms of the proposed strategic transaction,
including the form and amount of consideration to be offered, the Exchange
Ratio, the treatment of stock options, the form of the Stock Option Agreements,
and issues relating to the management and operations of the combined entity
following the proposed transaction. During this period, FFOH, GFCO, and their
respective legal counsel and financial advisors conducted reciprocal due
diligence analyses. The process of drafting the Merger Agreement began in early
September and the parties continued to negotiate on an arm's length basis the
form and amount of consideration and the Exchange Ratio.
31
<PAGE> 43
On September 28, 1998, the FFOH Board considered and discussed the
reasons for, and the potential benefits of the Merger; FFOH's legal counsel
reviewed the terms of the Merger Agreement, the Bank Merger Agreement, the Stock
Option Agreements, the Stockholder Agreements and the transactions contemplated
thereby; and FFOH's financial advisor made a presentation regarding the
financial terms of the Merger Agreement and the fairness, from a financial point
of view, of the Exchange Ratio to holders of FFOH Common Stock. After a thorough
discussion and consideration of the factors discussed below under "The Merger -
Recommendations of the Boards of Directors and Reasons for the Merger," the FFOH
Board unanimously approved the Merger Agreement and the transactions
contemplated thereby (including the Bank Merger), and authorized the execution
of the Merger Agreement, the Bank Merger Agreement, the Stock Option Agreements
and the Stockholder Agreements.
On September 28, 1998, the GFCO Board also considered and discussed the
reasons for, and the potential benefits of the Merger. GFCO's legal counsel
reviewed the terms of the Merger Agreement, the Bank Merger Agreement, the Stock
Option Agreements and the Stockholder Agreements and the transactions
contemplated thereby. GFCO's financial advisor presented its analysis of the
financial terms of the Merger Agreement and the fairness, from a financial point
of view, of the Exchange Ratio to holders of GFCO Common Stock. After a thorough
discussion and consideration of the factors discussed below under "The Merger -
Recommendations of the Boards of Directors and Reasons for the Merger," the GFCO
Board unanimously approved the Merger Agreement and the transactions
contemplated thereby (including the Bank Merger), and authorized the execution
of the Merger Agreement, the Bank Merger Agreement, the Stock Option Agreements
and the Stockholder Agreements. The Merger Agreement, the Bank Merger Agreement,
the Stock Option Agreements and the Stockholder Agreements were entered into on
September 28, 1998.
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS AND REASONS FOR THE MERGER
The Merger will result in a holding company with combined assets in
excess of $800 million, positioning FFOH as the largest thrift holding company
in Cincinnati. Upon consummation of the Merger, Centennial Bank will have the
5th largest market share, on a pro forma basis, among financial institutions
headquartered in Hamilton County. The expanded network of 15 branches will reach
from Centennial Bank's current locations in western Hamilton County to beyond
the eastern county line. The merger of equals provides Centennial Bank with an
increased market share and enhanced visibility throughout Hamilton County. With
a larger asset size and the resources and economies of scale that accompany
size, Centennial Bank will offer small business customers a viable alternative
to the larger banks operating in the Cincinnati market.
In reaching their determination that the Merger is in the best
interests of FFOH and GFCO, respectively, and their respective shareholders, and
recommending that such shareholders approve the Merger Agreement and the
transactions contemplated thereby, the FFOH Board and the GFCO Board considered
a number of other factors, including, without limitation, the following:
32
<PAGE> 44
(i) the value of the FFOH Common Stock that would be received based on
the Exchange Ratio in relation to the estimated value of GFCO Common Stock and
the liquidity of the trading market for the FFOH Common Stock;
(ii) FFOH's and GFCO's respective business, results of operations,
financial condition, long-term strategic plan and prospects, as well as the
historical and potential future value of the FFOH Common Stock and the dividends
paid thereon;
(iii) the similar community banking cultures and business philosophies
of FFOH and GFCO;
(iv) the projected market capitalization and market position of the
combined company, the potential operating efficiencies and financial strength
the Merger would provide to the combined company, its customers and the
communities it serves, and the immediate and long-term effect that the Merger
would have on the ability of the combined company to compete more effectively in
southwestern Ohio;
(v) the possible impact of the Merger on FFOH's and GFCO's customers
and the ability of the combined company to offer an expanded range of financial
services;
(vi) the current and prospective economic, regulatory and competitive
climate facing independent community banking organizations, including the
consolidation currently underway in the banking industry and competition from
larger institutions and from nonbank providers of financial services;
(vii) the opinion of Sandler O'Neill that the Exchange Ratio is fair to
FFOH shareholders from a financial point of view, as delivered orally to the
FFOH Board on September 28 and confirmed in writing as of the date of this
Prospectus/Joint Proxy Statement and the opinion of Stifel Nicolaus, that the
Exchange Ratio is fair to GFCO shareholders from a financial point of view, as
delivered orally to the GFCO Board on September 28 and confirmed in writing as
of the date of the Prospectus/Joint Proxy Statement (see "- Opinions of
Financial Advisors");
(viii) the terms of the Merger Agreement;
(ix) the terms of the Stock Option Agreements (see "- Stock Option
Agreements");
(x) the regulatory and shareholder approvals required for the
consummation of the Merger (see "- Regulatory Approvals");
(xi) the treatment of the Merger as a pooling of interests for
accounting purposes and as a tax-free reorganization for federal income tax
purposes (see "- Certain Federal Income Tax Consequences" and "- Accounting
Treatment of the Merger"); and
33
<PAGE> 45
(xii) the long- and short-term interests of FFOH and GFCO and their
respective shareholders as well as the interests of FFOH's and GFCO's other
relevant constituencies, including their respective customers and employees and
the communities served by FFOH and GFCO and their banking subsidiaries.
The foregoing discussion of the information and factors considered by
the FFOH Board and the GFCO Board is not intended to be exhaustive, but includes
all material factors considered by such Boards of Directors. In reaching their
determination to approve and recommend the Merger Agreement and the transactions
contemplated thereby, the FFOH Board and the GFCO Board did not assign relative
or specific weights to the foregoing factors, and individual directors may have
given differing weights to different factors.
FOR THE REASONS DESCRIBED ABOVE, THE FFOH BOARD AND THE GFCO BOARD HAVE
DETERMINED THAT THE MERGER IS IN THE BEST INTERESTS OF FFOH AND GFCO,
RESPECTIVELY, THEIR RESPECTIVE SHAREHOLDERS AND OTHER RELEVANT CONSTITUENCIES,
INCLUDING CUSTOMERS, EMPLOYEES AND COMMUNITIES SERVED. ACCORDINGLY, THE FFOH
BOARD AND THE GFCO BOARD HAVE UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE MERGER, AND UNANIMOUSLY
RECOMMEND THAT THE FFOH AND GFCO SHAREHOLDERS VOTE "FOR" THE ADOPTION OF THE
MERGER AGREEMENT.
OPINIONS OF FINANCIAL ADVISORS
GFCO. GFCO has retained Stifel Nicolaus as its financial advisor in
connection with the Merger and to render a fairness opinion with respect to the
proposed Exchange Ratio. Stifel Nicolaus is an investment banking and securities
firm with membership on all principal U.S. securities exchanges. As part of its
investment banking activities, Stifel Nicolaus is regularly engaged in the
valuation of businesses and their securities in connection with merger
transactions and other types of acquisitions, underwritings, sales and
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. At the September 28, 1998
meeting of the Board of Directors of GFCO, Stifel Nicolaus rendered its oral
opinion that, as of such date, the Exchange Ratio was fair to the holders of
GFCO Common Stock from a financial point of view. Stifel Nicolaus has confirmed
its September 28, 1998 oral opinion by delivery of its written opinion to the
GFCO Board of Directors, dated the date of this Prospectus/Joint Proxy
Statement, that, based upon and subject to the various considerations set forth
therein, as of the date hereof the Exchange Ratio is fair to the holders of GFCO
Common Stock from a financial point of view.
The full text of Stifel Nicolaus' opinion as of the date hereof, which
sets forth the assumptions made, matters considered and limitations of the
review undertaken, is attached as Annex VI to this Prospectus/Joint Proxy
Statement and is incorporated herein by reference, and should be read in its
entirety in connection with this Prospectus/Joint Proxy Statement. The
34
<PAGE> 46
summary of the opinion of Stifel Nicolaus set forth in this Prospectus/Joint
Proxy Statement is qualified in its entirety by reference to the full text of
such opinion. Stifel Nicolaus' opinion addresses the fairness of the Exchange
Ratio applicable to the holders of GFCO Common Stock.
Stifel Nicolaus' opinion is directed only to the fairness of the
Exchange Ratio from a financial point of view and does not constitute a
recommendation to any holders of GFCO Common Stock as to how such holders of
GFCO Common Stock should vote at the GFCO Special Meeting or as to any other
matter.
Stifel Nicolaus is familiar with GFCO, having acted as its financial
advisor in connection with, and having participated in the negotiations leading
to, the Merger Agreement. In connection with its September 28, 1998 oral opinion
and its written opinion dated the date hereof, Stifel Nicolaus reviewed, among
other things: the Merger Agreement; the financial statements of GFCO included in
its Annual Reports on Form 10-KSB for the five years ended June 30, 1997 and the
financial statements of FFOH set forth in its Annual Reports on Form 10-K for
the five years ended December 31, 1997; GFCO's Quarterly Reports on Form 10-QSB
for the quarters ended March 31, 1998, December 31, 1997 and September 30, 1997,
and FFOH's Quarterly Reports on Form 10-Q for the quarters ended June 30, 1998
and March 31, 1998; certain internal financial analyses and forecasts for GFCO
and FFOH prepared by their respective managements; and certain internal
financial forecasts for GFCO and FFOH on a combined basis, giving effect to the
Merger, prepared by the management of GFCO and the management of FFOH. Stifel
Nicolaus conducted conversations with GFCO's senior management and FFOH's senior
management regarding recent developments and managements' respective financial
forecasts for GFCO and FFOH. In addition, Stifel Nicolaus spoke to members of
GFCO's senior management and FFOH's senior management regarding factors which
affect each entity's business. Stifel Nicolaus also compared certain financial
and securities data of GFCO and FFOH with various other companies whose
securities are traded in public markets, reviewed the historical stock prices
and trading volumes of the Common Stock of GFCO and FFOH, reviewed the financial
terms of certain other business combinations and conducted such other financial
studies, analyses and investigations as it deemed appropriate for purposes of
its opinion. Stifel Nicolaus also took into account its assessment of general
economic, market and financial conditions and its experience in other
transactions, as well as its experience in securities valuations and its
knowledge of the commercial banking and thrift industries generally.
In rendering its opinion, Stifel Nicolaus relied upon and assumed,
without independent verification, the accuracy and completeness of all of the
financial and other information that was provided to it or that was otherwise
reviewed by it and did not assume any responsibility for independently verifying
any of such information. With respect to the financial forecasts supplied to
Stifel Nicolaus (including without limitation, projected cost savings and
operating synergies resulting from the Merger), Stifel Nicolaus assumed, with
GFCO's consent, that such forecasts were reasonably prepared and reflected the
best currently available estimates and judgments of GFCO and FFOH as to the
future operating and financial performance of GFCO and FFOH, that they would be
realized in the amounts and time periods estimated and that they provided a
reasonable basis upon which Stifel Nicolaus could form its opinion. Stifel
Nicolaus also assumed that there were no
35
<PAGE> 47
material changes in the assets, liabilities, financial condition, results of
operations, business or prospects of either GFCO or FFOH since the date of the
last financial statements made available to it. Stifel Nicolaus also assumed,
without independent verification and with GFCO's consent, that the aggregate
allowances for loan losses set forth in the financial statements of GFCO and
FFOH are adequate to cover all such losses. Stifel Nicolaus did not make or
obtain any independent evaluation, appraisal or physical inspection of GFCO's or
FFOH's assets or liabilities, the collateral securing any of such assets or
liabilities, or the collectibility of any such assets nor did it review loan or
credit files of GFCO or FFOH. Stifel Nicolaus assumed, with GFCO's consent, that
there are no factors that would delay or subject to any adverse conditions any
necessary regulatory or governmental approval and that all conditions to the
Merger will be satisfied and not waived.
The financial forecasts furnished to Stifel Nicolaus for GFCO and FFOH
and estimates of cost savings and operating synergies resulting from the Merger
were prepared by the respective managements of each company and constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. As a matter of policy, neither GFCO nor FFOH
publicly discloses internal management forecasts, projections or estimates of
the type furnished to Stifel Nicolaus in connection with its analysis of the
financial terms of the Merger, and such forecasts and estimates were not
prepared with a view towards public disclosure. These forecasts and estimates
were based on numerous variables and assumptions which are inherently uncertain
and which may not be within the control of the management of either GFCO or
FFOH, including, without limitation, factors related to the integration of GFCO
and FFOH and general economic, regulatory and competitive conditions.
Accordingly, actual results could vary materially from those set forth in such
forecasts and estimates.
In connection with rendering its September 28, 1998 oral opinion,
Stifel Nicolaus performed a variety of financial analyses that are summarized
below. The summary does not purport to be a complete description of such
analyses. Stifel Nicolaus believes that its analyses and the following summary
must be considered as a whole and that selecting portions of such analyses and
the factors considered therein, without considering all factors and analyses,
could create an incomplete view of the analyses and processes underlying its
opinions. The preparation of a fairness opinion is a complex process involving
subjective judgments and is not necessarily susceptible to partial analysis or
summary description. In its analyses, Stifel Nicolaus made numerous assumptions
with respect to industry performance, business and economic conditions, and
other matters, many of which are beyond the control of GFCO or FFOH. Any
estimates contained in Stifel Nicolaus' analyses are not necessarily indicative
of actual future values or results, which may be significantly more or less
favorable than suggested by such estimates. Estimates of values of companies do
not purport to be appraisals or necessarily reflect the actual prices at which
companies or their securities actually may be sold. No company or transaction
utilized in Stifel Nicolaus' analyses was identical to GFCO or FFOH or the
Merger. Accordingly, such analyses are not based solely on arithmetic
calculations; rather, they involve complex considerations and judgments
concerning differences in financial and operating characteristics of the
relevant companies, the timing of the relevant transactions, and prospective
buyer interest, as well as other factors that could affect the public trading
values of the
36
<PAGE> 48
company or companies to which they are being compared. None of the analyses
performed by Stifel Nicolaus was assigned a greater significance by Stifel
Nicolaus than any other.
The following is a summary of the financial analyses performed by
Stifel Nicolaus in connection with providing its oral opinion on September 28,
1998. In connection with its written opinion dated as of the date of this
Prospectus/Joint Proxy Statement, Stifel Nicolaus performed procedures to update
certain of its analyses and reviewed the assumptions on which such analyses were
based and the factors considered in connection therewith. In updating its
opinion, Stifel Nicolaus did not utilize any methods of analysis in addition to
those described.
PRO FORMA EFFECT OF THE MERGER. Stifel Nicolaus reviewed certain
estimated future operating and financial information developed by both GFCO and
FFOH for the pro forma combined entity resulting from the Merger for the twelve
month period ended December 31, 2000. Based on this analysis, Stifel Nicolaus
compared GFCO's estimated future stand-alone per share earnings with such
estimated figures for the pro forma combined entity for this twelve month
period. Under this scenario the Merger is forecast to be accretive on an
estimated pro forma basis with respect to GFCO's earnings per share by
approximately 9.97%. This analysis did not purport to be indicative of actual
future results. Stifel Nicolaus also reviewed certain historical financial
information developed by both GFCO and FFOH for the pro forma combined entity
resulting from the Merger for the period ended June 30, 1998. Based on this
analysis, Stifel Nicolaus compared GFCO's stand-alone book value per share and
tangible book value with such calculated amounts for the pro forma combined
entity at June 30, 1998. Under this scenario, the Merger is accretive on a pro
forma basis with respect to GFCO's book value per share by approximately 25.04%
and to GFCO's tangible book value per share by approximately 15.84%.
ANALYSIS OF BANK AND THRIFT MERGER TRANSACTIONS. Stifel Nicolaus
analyzed certain information relating to recent transactions in the banking
industry, consisting of 14 mergers of equals announced in the U.S. between
January 1, 1995 and September 28, 1998 (the "Selected Transactions"). The
Selected Transactions included the following parties (Survivor / Partner): Star
Banc Corp. / Firstar Corp.; Norwest Corp. / Wells Fargo; First Hawaiian / Bank
of the West; Citizens Bancshares / Mid Am, Inc.; Banc One Corp. / First Chicago
NBD Corp.; NationsBank Corp. / BankAmerica Corp.; Travelers Group / Citicorp;
Hudson Chartered Bancorp / Progressive Bank; Associated Banc-Corp / First
Financial Corp.; Pinnacle Financial / Indiana Federal Corp.; Hinsdale Financial
Corp. / Liberty Bancorp; Chemical Banking / Chase Manhattan Corp.; NBD Bancorp,
Inc. / First Chicago Corp.; and Charter One Financial / FirstFed Michigan.
Stifel Nicolaus compared certain terms of the Merger to the terms of
the Selected Transactions. Such analysis indicated, among other things, that for
the Selected Transactions the premium to market prices represented by the
Exchange Ratio in such transactions ranged from approximately -3.0% to 44.1%,
compared to a premium of 8.9% represented by the Exchange Ratio in the Merger.
In addition, Stifel Nicolaus also noted the allocation of common stock ownership
between the merging companies in the Selected Transactions ranged from
approximately 40.4% / 59.6% to 53.1% / 46.9%, compared to 39.3% / 60.7% in the
Merger, and that the proposed
37
<PAGE> 49
arrangements with respect to the composition of the board of directors and
senior management of the combined company and certain other non-financial issues
in the Merger were comparable to those of the Selected Transactions.
COMPARISON OF SELECTED COMPANIES. Stifel Nicolaus reviewed and compared
certain multiples and ratios relating to GFCO to the publicly available
corresponding data for a peer group of selected thrifts which Stifel Nicolaus
deemed to be relevant. The group of selected thrifts consisted of Camco
Financial Corp., First Midwest Financial, Inc., Calumet Bancorp, Inc., Citizens
First Financial Corp., Emerald Financial Corp., FFOH, North Central Bancshares,
First Northern Capital Corp., Home Bancorp, HMN Financial, Inc, and Industrial
Bancorp, Inc. (the "Comparable Companies"). Stifel Nicolaus presented a
comparison of GFCO on the basis of various financial ratios and other indicators
including, among other things, market price to earnings per share ("EPS") based
on GAAP EPS ratios for the latest twelve months, fiscal 1998 and fiscal 1999,
historical price to stated book and tangible stated book values. Stifel Nicolaus
compared estimated ratios of price to GAAP EPS for calendar 1998 and calendar
1999 for GFCO based on management's estimated earnings per share. The price to
GAAP EPS ratio for the latest twelve months for GFCO and the median of the
Comparable Companies were 15.73x and 15.63x, respectively. The price to GAAP EPS
ratio for calendar 1998 for GFCO and the median of the Comparable Companies were
14.72x and 15.24x, respectively. The price to GAAP EPS ratio for calendar 1999
for GFCO and the median of the Comparable Companies were 12.85x and 13.60x
respectively. The price to book value ratio for GFCO and the median of the
Comparable Companies were 142.6% and 109.8%, respectively. The price to tangible
book value ratio for GFCO and the median of the Comparable Companies were 143.7%
and 122.9% respectively. This analysis did not purport to reflect the prices at
which shares of GFCO Common Stock may trade.
PRESENT VALUE ANALYSIS. Applying discounted cash flow analysis to the
theoretical future earnings and dividends of GFCO and FFOH, Stifel Nicolaus
compared the calculated value of a share of GFCO common stock to the calculated
value of a share of the combined entity. The analysis was based upon a range of
projected earnings growth rates (consistent with management's estimates),
current dividend rates, a range of assumed price/earnings ratios, and a 10%-14%
discount rate. Stifel Nicolaus selected the range of terminal price/earnings
ratios on the basis of past and current trading multiples for GFCO and other
thrifts. The stand-alone present value of GFCO Common Stock calculated on this
basis ranged from $13.98 to $21.72 per share. The present value of one share in
the combined entity under the terms of the Merger Agreement calculated on this
basis, assuming estimated synergies are recognized fully in 2000, ranged from
$15.22 to $23.71.
DISCOUNTED CASH FLOW ANALYSIS-GFCO. Using a discounted cash flow
("DCF") analysis, Stifel Nicolaus estimated the net present value of the future
streams of after-tax cash flow that GFCO could produce to benefit shareholders
("Dividendable Net Income"). In this analysis, Stifel Nicolaus assumed that GFCO
would perform in accordance with management estimates and calculated assumed
after-tax distributions to shareholders such that GFCO's common equity ratio
would be maintained at 6.5 percent of assets. Stifel Nicolaus calculated the sum
of (1) the estimated terminal values per share of GFCO Common Stock based on
assumed multiples to GFCO's projected 2004
38
<PAGE> 50
earnings ranging from 17.8x to 25.2x, plus (2) the assumed 1999 - 2003
Dividendable Net Income streams per share, in each case discounted to present
values at assumed discount rates ranging from 10.0% to 14.0%. This DCF analysis
indicated an implied equity value reference range of $19.62 to $29.25 per share
of GFCO Common Stock. This analysis did not purport to be indicative of actual
future results and did not purport to reflect the prices at which shares of GFCO
Common Stock may trade. A DCF analysis was included because it is a widely used
valuation methodology, but the results of such methodology are highly dependent
upon the numerous assumptions that must be made, including estimated cost
savings and revenue enhancements, earnings growth rates, dividend payout rates,
terminal values and discount rates.
DISCOUNTED CASH FLOW ANALYSIS-COMBINED. Using a DCF analysis, Stifel
Nicolaus estimated the net present value of the future streams of Dividendable
Net Income that the combined entity could produce to benefit shareholders. In
this analysis, Stifel Nicolaus assumed that the combined entity would perform in
accordance with management estimates and calculated assumed after-tax
distributions to shareholders such that the combined entity's common equity
ratio would be maintained at 6.5 percent of assets. Additionally, Stifel
Nicolaus assumed certain cost savings and revenue enhancements estimated by GFCO
and FFOH to result from the Merger, and Stifel Nicolaus adjusted the combined
entity's pre-merger equity by the amount of the estimated after-tax
restructuring charge estimated by GFCO and FFOH to result from the Merger.
Stifel Nicolaus calculated the sum of (1) the estimated terminal values per
share of the GFCO Common Stock based on assumed multiples to the combined
entity's projected 2004 earnings ranging from 17.8x to 25.2x, plus (2) the
assumed 1999 - 2003 Dividendable Net Income streams per share, in each case
discounted to present values at assumed discount rates ranging from 10.0% to
14.0%. This DCF analysis indicated an implied equity value reference range of
$22.87 to $33.00 per share of GFCO Common Stock. This analysis did not purport
to be indicative of actual future results and did not purport to reflect the
prices at which shares of the combined entity's Common Stock may trade. A DCF
analysis was included because it is a widely used valuation methodology, but the
results of such methodology are highly dependent upon the numerous assumptions
that must be made, including estimated cost savings and revenue enhancements,
earnings growth rates, dividend payout rates, terminal values and discount
rates.
CONTRIBUTION ANALYSIS. Stifel Nicolaus reviewed certain financial
information for GFCO and FFOH for the six month period ended June 30, 1998,
including net interest income before and after provision for loan losses, net
income before preferred dividends and extraordinary items, total assets, loans,
total deposits and total equity and compared the percentage contribution of GFCO
to the pro forma combined figures for GFCO and FFOH and to the percentage of
total outstanding FFOH Common Stock that would be owned by the GFCO stockholders
as a result of the Merger. The contribution analysis showed that GFCO would
contribute 39.0% of pro forma combined net interest income before provision for
loan losses, 38.1% of pro forma combined net interest income after provision for
loan losses, 38.1% of pro forma combined net income before preferred dividends
and extraordinary items, 36.3% of pro forma combined total assets, 38.2% of pro
forma combined loans, 34.5% of pro forma combined total deposits, and 30.7% of
pro forma combined total equity while
39
<PAGE> 51
receiving 39.3% of the outstanding shares in the combined institution. Ownership
figures are based on the proposed Exchange Ratio.
No company or transaction used in the above analyses as a comparison is
identical to FFOH, GFCO, or the Merger. Accordingly, an analysis of the results
of the foregoing is not mathematical; rather, it involves complex considerations
and judgments concerning differences in financial and operating characteristics
of the companies and other facts that could affect the public trading value of
the companies to which they are being compared.
As described above, Stifel Nicolaus' oral opinion was among the many
factors taken into consideration by the GFCO Board in making its determination
to approve the Merger.
Pursuant to the terms of Stifel Nicolaus' engagement, GFCO has agreed
to pay Stifel Nicolaus a cash fee of $25,000 upon the execution of the
engagement letter, a cash fee of $56,250 upon the delivery of the oral fairness
opinion, a cash fee of $56,250 at the time of mailing of the Prospectus/Joint
Proxy Statement and a cash fee of $112,500 upon closing of the transaction. GFCO
has also agreed to reimburse Stifel Nicolaus for certain out-of-pocket expenses
and has agreed to indemnify Stifel Nicolaus, its affiliates and their respective
partners, directors, officers, agents, consultants, employees and controlling
persons against certain liabilities, including liabilities under the federal
securities laws.
In the ordinary course of its business, Stifel Nicolaus actively trades
equity securities of GFCO and FFOH for its own account and for the accounts of
its customers and, accordingly, may at any time hold a long or short position in
such securities.
FFOH. Pursuant to an engagement letter dated as of August 10, 1998 (the
"Sandler O'Neill Agreement"), FFOH retained Sandler O'Neill as an independent
financial advisor in connection with FFOH's consideration of a possible business
combination with GFCO. Sandler O'Neill is a nationally recognized investment
banking firm whose principal business specialty is financial institutions. In
the ordinary course of its investment banking business, Sandler O'Neill is
regularly engaged in the valuation of such businesses and their securities in
connection with mergers and acquisitions and other corporate transactions.
Pursuant to the terms of the Sandler O'Neill Agreement, Sandler O'Neill
acted as financial advisor to FFOH in connection with the Merger. In connection
therewith, the FFOH Board requested Sandler O'Neill to render its opinion as to
the fairness of the Exchange Ratio to the shareholders of FFOH Common Stock from
a financial point of view. On September 28, 1998, Sandler O'Neill delivered to
the FFOH Board its oral opinion, subsequently confirmed in writing, that, as of
such date, the Exchange Ratio was fair to the holders of shares of FFOH Common
Stock from a financial point of view. Sandler O'Neill has also delivered to the
FFOH Board a written opinion, dated the date of this Prospectus/Joint Proxy
Statement (the "Sandler O'Neill Fairness Opinion"), which is substantially
identical to the September 28, 1998 opinion. THE FULL TEXT OF THE SANDLER
O'NEILL FAIRNESS OPINION, WHICH SETS FORTH THE PROCEDURES FOLLOWED, ASSUMPTIONS
MADE, MATTERS
40
<PAGE> 52
CONSIDERED AND QUALIFICATIONS AND LIMITATIONS ON THE REVIEW UNDERTAKEN IN
CONNECTION WITH SUCH OPINION, IS ATTACHED AS ANNEX VII TO THIS PROSPECTUS/JOINT
PROXY STATEMENT AND IS INCORPORATED HEREIN BY REFERENCE. THE DESCRIPTION OF THE
OPINION SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO ANNEX VII.
FFOH'S SHAREHOLDERS ARE URGED TO READ THE SANDLER O'NEILL FAIRNESS OPINION IN
ITS ENTIRETY IN CONNECTION WITH THEIR CONSIDERATION OF THE PROPOSED MERGER.
THE SANDLER O'NEILL FAIRNESS OPINION WAS PROVIDED TO THE FFOH BOARD FOR
ITS INFORMATION AND IS DIRECTED ONLY TO THE FAIRNESS, FROM A FINANCIAL POINT OF
VIEW, OF THE EXCHANGE RATIO TO HOLDERS OF SHARES OF FFOH COMMON STOCK. IT DOES
NOT ADDRESS THE UNDERLYING BUSINESS DECISION OF FFOH TO ENGAGE IN THE MERGER OR
ANY OTHER ASPECT OF THE MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY
HOLDER OF SHARES OF FFOH COMMON STOCK AS TO HOW SUCH SHAREHOLDER SHOULD VOTE AT
THE FFOH SPECIAL MEETING WITH RESPECT TO THE MERGER OR ANY OTHER MATTER RELATED
THERETO.
In connection with rendering its September 28, 1998 opinion, Sandler
O'Neill performed a variety of financial analyses. The following is a summary of
such analyses, but does not purport to be a complete description of all the
analyses underlying the Sandler O'Neill Fairness Opinion. The preparation of a
fairness opinion is a complex process involving subjective judgments and is not
necessarily susceptible to a partial analysis or summary description. Sandler
O'Neill believes that its analyses must be considered as a whole and that
selecting portions of such analyses and the factors considered therein, without
considering all factors and analyses, could create an incomplete view of the
analyses and processes underlying its opinion. In performing its analyses,
Sandler O'Neill made numerous assumptions with respect to industry performance,
business and economic conditions and various other matters, many of which cannot
be predicted and are beyond the control of FFOH, GFCO and Sandler O'Neill. Any
estimates contained in Sandler O'Neill's analyses are not necessarily indicative
of future results or values, which may be significantly more or less favorable
than such estimates. Estimates on the values of companies do not purport to be
appraisals or necessarily reflect the prices at which such companies or their
securities may actually be sold. Because such estimates are inherently subject
to uncertainty, none of FFOH, GFCO or Sandler O'Neill assumes responsibility for
their accuracy.
SUMMARY OF PROPOSAL. Sandler O'Neill reviewed the financial terms of
the proposed transaction. Sandler O'Neill noted that the negotiated Exchange
Ratio was designed to approximate a market for market exchange of common stock.
Based on the closing price of FFOH Common Stock on September 25, 1998 of $13.25
and an Exchange Ratio of 1.50, Sandler O'Neill calculated an implied transaction
value per share of GFCO of $19.875. The closing bid, ask and last sale prices of
GFCO Common Stock on September 25, 1998 were $18.50, $21.75 and $18.25,
respectively.
STOCK TRADING HISTORY. Sandler O'Neill reviewed the history of the
reported trading prices and volume of FFOH Common Stock and GFCO Common Stock,
and the relationship between the movements in the prices of FFOH Common Stock
and GFCO Common Stock, respectively, to movements in certain stock indices,
including the Standard & Poor's 500 Index (the "S&P Index"),
41
<PAGE> 53
the Nasdaq Bank Index (the "Bank Index") and a selected composite group of
publicly traded savings institutions (identified below). During the one-year
period ended September 25, 1998, the FFOH Common Stock underperformed each of
the indices to which it was compared and the GFCO Common Stock outperformed each
of the indices to which it was compared.
COMPARABLE COMPANY ANALYSIS. Sandler O'Neill used publicly available
information to compare selected financial and market trading information,
including balance sheet composition, asset quality ratios, loan loss reserve
levels, profitability, capital adequacy, dividends and trading multiples, for
FFOH, GFCO and two groups of selected institutions. The first group consisted of
FFOH and GFCO and the following seventeen publicly traded Ohio savings
institutions (the "Regional Group"): Emerald Financial Corp., Camco Financial
Corp., First Defiance Financial, PVF Capital Corp., Enterprise Federal Bancorp,
Industrial Bancorp Inc., Winton Financial Corp., Western Ohio Financial Corp.,
OHSL Financial Corp., First Franklin Corp., Milton Federal Financial Corp.,
First Federal Bancorp Inc., Wood Bancorp Inc., Potters Financial Corp., Westwood
Homestead Fin. Corp., ASB Financial Corp., and Delphos Citizens Bancorp, Inc.
Sandler O'Neill also compared FFOH and GFCO to a group of eleven publicly traded
savings institutions which had a return on average equity (based on last twelve
months' earnings) of greater than 15.0% and a price to tangible book value of
greater than 180% (the "Highly Valued Group"). The Highly Valued Group included
People's Bancshares Inc., CFSB Bancorp Inc., Home Federal Bancorp, MetroWest
Bank, Coastal Financial Corp., Lakeview Financial Corp., Highland Bancorp Inc.,
First Citizens Corp., Warren Bancorp Inc., Ipswich Savings Bank and Crusader
Holding Corp. The analysis compared publicly available financial information for
FFOH and GFCO and the median data for each of the Regional Group and the Highly
Valued Group as of and for each of the years ended December 31, 1993 through
December 31, 1997 and as of and for the twelve months ended June 30, 1998.
DISCOUNTED DIVIDEND STREAM AND TERMINAL VALUE ANALYSIS. Sandler O'Neill
also performed an analysis which estimated the future stream of after-tax
dividend flows of FFOH through 2002 under various circumstances, assuming FFOH
performed in accordance with earnings forecasts of its management and certain
variations thereof. To approximate the terminal value of FFOH Common Stock at
December 31, 2002, Sandler O'Neill applied price to earnings multiples ranging
from 10x to 28x and applied multiples of tangible book value ranging from 100%
to 280%. The dividend income streams and terminal values were then discounted to
present values using different discount rates (ranging from 9% to 14%) chosen to
reflect different assumptions regarding required rates of return of holders or
prospective buyers of FFOH Common Stock. This analysis, assuming the current
dividend payout ratio and management's earnings forecasts, indicated an imputed
range of values per share of FFOH Common Stock of between $7.40 and $22.25 when
applying the price to earnings multiples, and an imputed range of values per
share of FFOH Common Stock of between $9.16 and $28.28 when applying multiples
of tangible book value.
Sandler O'Neill also performed a similar analysis which estimated the
future stream of after-tax dividend flows of GFCO through the year 2002 under
various circumstances, assuming GFCO performed in accordance with earnings
forecasts of its management and certain variations thereof. To approximate the
terminal value of GFCO Common Stock at December 31, 2002, Sandler O'Neill
42
<PAGE> 54
applied price to earnings multiples ranging from 10x to 28x and applied
multiples of tangible book value ranging from 100% to 280%. The dividend income
streams and terminal values were then discounted to present values using
different discount rates (ranging from 9% to 14%) chosen to reflect different
assumptions regarding required rates of return of holders or prospective buyers
of GFCO Common Stock. This analysis, assuming the current dividend payout ratio
and management's earnings forecasts, indicated an imputed range of values per
share of GFCO Common Stock of between $11.37 and $34.58 when applying the price
to earnings multiples, and an imputed range of values per share of GFCO Common
Stock of between $11.34 and $34.46 when applying multiples of tangible book
value.
In connection with the above analysis, Sandler O'Neill used sensitivity
analyses to consider the effects changes in the underlying assumptions
(including variations with respect to the growth rate of assets, net interest
spread, non-interest income, non-interest expenses and dividend payout ratio)
would have on the resulting present values. Sandler O'Neill noted that the
discounted dividend stream and terminal value analysis is a widely used
valuation methodology, but the results of such methodology are highly dependent
upon the numerous assumptions that must be made, and the results thereof are not
necessarily indicative of actual values or actual future results.
PRO FORMA MERGER ANALYSIS. Sandler O'Neill analyzed certain potential
pro forma effects of the Merger on the combined company, based upon an Exchange
Ratio of 1.50, FFOH's and GFCO's current and projected income statements and
balance sheets, and assumptions regarding the economic environment, accounting
and tax treatment of the Merger, charges associated with the Merger, operating
efficiencies and other adjustments discussed with the senior managements of FFOH
and GFCO. This analysis indicated that the Merger would be significantly
accretive to FFOH's earnings per share in all periods analyzed and dilutive to
tangible book value per share of FFOH's Common Stock in all periods analyzed.
This analysis also indicated that, from a GFCO shareholder's perspective, the
Merger would be accretive to earnings per share and tangible book value per
share in all periods analyzed. The actual results achieved by the combined
company may vary from projected results and the variations may be material.
CONTRIBUTION ANALYSIS. Sandler O'Neill reviewed the relative
contributions to, among other things, total assets, total securities, total net
loans, total deposits, total borrowings, total equity and last twelve months
("LTM") net income to be made by FFOH and GFCO to the combined institution based
on data at and for the twelve months ended June 30, 1998. This analysis
indicated that GFCO's implied contribution was 36.3% of total assets, 25.5% of
total securities, 38.2% of total net loans, 34.5% of total deposits, 53.5% of
total borrowings, 30.7% of total equity, and 36.1% of LTM net income. Based upon
an Exchange Ratio of 1.50, holders of the GFCO Common Stock would own
approximately 39.3% of the outstanding shares of the combined institution.
In connection with rendering its September 28, 1998 opinion, Sandler
O'Neill reviewed, among other things: (i) the Merger Agreement and exhibits
thereto; (ii) the Stock Option Agreements; (iii) certain publicly available
financial statements of FFOH and other historical financial information provided
by FFOH that Sandler O'Neill deemed relevant; (iv) certain publicly
43
<PAGE> 55
available financial statements of GFCO and other historical financial
information provided by GFCO that Sandler O'Neill deemed relevant; (v) certain
financial analyses and forecasts of FFOH prepared by and reviewed with
management of FFOH and the views of senior management of FFOH regarding FFOH's
past and current business, operations, results thereof, financial condition and
future prospects; (vi) certain financial analyses and forecasts of GFCO prepared
by and reviewed with management of GFCO and the views of senior management of
GFCO regarding GFCO's past and current business, operations, results thereof,
financial condition and future prospects; (vii) the pro forma impact of the
Merger; (viii) the publicly reported historical price and trading activity for
FFOH's and GFCO's Common Stock, including a comparison of certain financial and
stock market information for FFOH and GFCO with similar publicly available
information for certain other companies the securities of which are publicly
traded; (ix) the current market environment generally and the banking
environment in particular; and (x) such other information, financial studies,
analyses and investigations and financial, economic and market criteria as
Sandler O'Neill considered relevant.
In connection with rendering the Sandler O'Neill Fairness Opinion,
Sandler O'Neill confirmed the appropriateness of its reliance on the analyses
used to render its September 28, 1998 opinion by performing procedures to update
certain of such analyses and by reviewing the assumptions upon which such
analyses were based and the factors considered in connection therewith.
In performing its reviews and analyses, Sandler O'Neill assumed and
relied upon, without independent verification, the accuracy and completeness of
all the financial information, analyses and other information that was publicly
available or otherwise furnished to, reviewed by or discussed with it, and
Sandler O'Neill does not assume any responsibility or liability therefor.
Sandler O'Neill did not make an independent evaluation or appraisal of the
specific assets, the collateral securing assets or the liabilities (contingent
or otherwise) of FFOH or GFCO or any of their respective subsidiaries, or the
collectibility of any such assets, nor was it furnished with any such
evaluations or appraisals. Sandler O'Neill is not an expert in the evaluation of
allowances for loan losses and it has not made an independent evaluation of the
adequacy of the allowance for loan losses of FFOH or GFCO, nor has it reviewed
any individual credit files relating to FFOH or GFCO. With FFOH's consent,
Sandler O'Neill has assumed that the respective aggregate allowances for loan
losses for both FFOH and GFCO are adequate to cover such losses and will be
adequate on a pro forma basis for the combined entity. In addition, Sandler
O'Neill has not conducted any physical inspection of the properties or
facilities of FFOH or GFCO. With respect to all financial information and
projections reviewed with each company's management, Sandler O'Neill assumed
that they had been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the respective managements of the
respective future financial performances of FFOH and GFCO and that such
performances will be achieved. Sandler O'Neill expressed no opinion as to such
financial projections or the assumptions on which they were based.
Sandler O'Neill's opinion was necessarily based upon financial,
economic, market and other conditions as they existed on, and could be
evaluated as of, the date of such opinion. Sandler O'Neill assumed,
44
<PAGE> 56
in all respects material to its analysis, that all of the representations and
warranties contained in the Merger Agreement and all related agreements are true
and correct, that each party to such agreements will perform all of the
covenants required to be performed by such party under such agreements and that
the conditions precedent in the Merger Agreement are not waived. Sandler O'Neill
also assumed, with FFOH's consent, that there has been no material change in
FFOH's and GFCO's assets, financial condition, results of operations, business
or prospects since the date of the last publicly filed financial statements made
available to them, that FFOH and GFCO will remain as going concerns for all
periods relevant to its analyses, and that the Merger will be accounted for as a
pooling of interests and will qualify as a tax-free reorganization for federal
income tax purposes.
Under the Sandler O'Neill Agreement, FFOH paid Sandler O'Neill a
retainer fee of $25,000 and will pay Sandler O'Neill a transaction fee in
connection with the Merger, a substantial part of which is contingent upon the
consummation of the Merger. Under the terms of the Sandler O'Neill Agreement,
FFOH will pay Sandler O'Neill a transaction fee of $225,000, of which $56,250
has been paid and the balance of which will be paid when the Merger is
consummated. FFOH has also agreed to reimburse Sandler O'Neill for its
reasonable out-of-pocket expenses incurred in connection with its engagement and
to indemnify Sandler O'Neill and its affiliates and their respective partners,
directors, officers, employees, agents and controlling persons against certain
expenses and liabilities, including liabilities under securities laws.
In the ordinary course of its business as a broker-dealer, Sandler
O'Neill may buy securities from and sell securities to FFOH and GFCO. In
addition, Sandler O'Neill may actively trade the equity securities of FFOH and
GFCO for its own account and for the accounts of customers and, accordingly, may
at any time hold a long or short position in such securities.
EXCHANGE OF GFCO COMMON STOCK CERTIFICATES
At the Effective Time, each holder of a certificate or certificates
evidencing issued and outstanding shares of GFCO Common Stock shall be entitled
to receive in exchange therefor a certificate or certificates representing the
number of full shares of FFOH Common Stock into which the shares of GFCO Common
Stock theretofore represented by the certificate or certificates so surrendered
shall have been converted by virtue of the Merger. As promptly as practicable
after the Effective Time, an agent duly appointed by FFOH (the "Exchange Agent")
shall mail to each holder of record of an outstanding certificate which
immediately prior to the Effective Time evidenced shares of GFCO Common Stock a
form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to such certificate shall pass, only upon
delivery of such certificate to the Exchange Agent) advising such holder of the
terms of the exchange effected by the Merger and of the procedure for
surrendering to the Exchange Agent such certificate in exchange for a
certificate or certificates evidencing FFOH Common Stock. Upon surrender to the
Exchange Agent of one or more certificates evidencing shares of GFCO Common
Stock, together with a properly completed and executed letter of transmittal,
the Exchange Agent will mail to the holder thereof after the Effective Time a
certificate or certificates representing the number of full shares of
45
<PAGE> 57
FFOH Common Stock into which the aggregate number of shares of GFCO Common Stock
previously represented by such certificate or certificates surrendered shall
have been converted pursuant to the Merger Agreement. FFOH shall be entitled,
after the Effective Time, to treat certificates representing shares of GFCO
Common Stock as evidencing ownership of the number of full shares of FFOH Common
Stock into which the shares of GFCO Common Stock represented by such
certificates shall have been converted pursuant to the Merger Agreement,
notwithstanding the failure on the part of the holder thereof to surrender such
certificates.
After the Effective Time, there shall be no further transfer on the
records of GFCO of certificates representing shares of GFCO Common Stock. If any
such certificates are presented to GFCO or the transfer agent for the GFCO
Common Stock for transfer after the Effective Time, they shall be canceled
against delivery of certificates for FFOH Common Stock in accordance with the
Merger Agreement.
No dividends which have been declared on the FFOH Common Stock will be
remitted to any person entitled to receive shares of FFOH Common Stock under the
Merger Agreement until such person surrenders his or her certificate or
certificates representing shares of GFCO Common Stock in exchange for a
certificate or certificates evidencing shares of FFOH Common Stock, at which
time such dividends shall be remitted to such person, without interest.
No fractional shares of FFOH Common Stock shall be issued in the Merger
to holders of shares of GFCO Common Stock. Each holder of shares of GFCO Common
Stock who otherwise would have been entitled to a fraction of a share of FFOH
Common Stock shall receive in lieu thereof, at the time of surrender of the
certificate or certificates representing such holder's shares of GFCO Common
Stock, an amount of cash (without interest) determined by multiplying the
fractional share interest to which such holder would otherwise be entitled by
the closing price per share of the FFOH Common Stock on the Nasdaq National
Market on the business day preceding the Effective Time.
ASSUMPTION OF GFCO STOCK OPTIONS
At the Effective Time, each option to purchase GFCO Common Stock which
is outstanding pursuant to GFCO's Stock Option and Incentive Plan (a "GFCO
Option") which is then outstanding, whether or not exercisable, shall be
converted automatically into an option to purchase shares of FFOH Common Stock.
FFOH shall assume each GFCO Option, in accordance with the terms of GFCO's Stock
Option and Incentive Plan and stock option agreement by which it is evidenced,
including without limitation all such terms pertaining to the acceleration and
vesting of the holder's exercise rights thereunder, except that from and after
the Effective Time, (i) FFOH and the FFOH Board or a duly authorized committee
thereof shall be substituted for GFCO and the GFCO Board or duly authorized
committee thereof administering the GFCO Stock Option and Incentive Plan, (ii)
each GFCO Option assumed by FFOH may be exercised solely for shares of FFOH
Common Stock, (iii) the number of shares of FFOH Common Stock subject to such
GFCO Option shall be equal to the number of shares of GFCO Common Stock subject
to such GFCO Option immediately prior to
46
<PAGE> 58
the Effective Time multiplied by the Exchange Ratio, provided that any
fractional shares of FFOH Common Stock resulting from such multiplication shall
be rounded down to the nearest share, and (iv) the per share exercise price
under each such GFCO Option shall be adjusted by dividing the per share exercise
price under each such GFCO Option by the Exchange Ratio, provided that such
exercise price shall be rounded up to the nearest cent. Notwithstanding clauses
(iii) and (iv) of the preceding sentence, each GFCO Option which is an
"incentive stock option" shall be adjusted as required by Section 424 of the
Internal Revenue Code of 1986, as amended (the "Code"). FFOH also has agreed to
register the shares of FFOH Common Stock issuable upon exercise of the foregoing
FFOH stock options under the Securities Act of 1933, as amended (the "Securities
Act").
CONDITIONS TO THE MERGER
The Merger Agreement provides that consummation of the Merger is
subject to the satisfaction of certain conditions, or the waiver of such
conditions by the party or parties entitled to do so, at or before the Effective
Time. Each of the parties' obligations under the Merger Agreement is subject to
the following conditions: (i) all corporate action (including without limitation
approval by the requisite votes of the respective shareholders of FFOH and GFCO)
necessary to authorize the execution and delivery of the Merger Agreement and
the Agreement of Merger, dated as of September 28, 1998, between Fidelity Bank
and Centennial Bank (the "Bank Merger Agreement"), and consummation of the
transactions contemplated thereby shall have been duly and validly taken; (ii)
the receipt of all necessary regulatory approvals and consents required to
consummate the Merger and the Bank Merger by any governmental authority, and the
expiration of all notice periods and waiting periods with respect thereto,
provided, however, that no required approval or consent shall be deemed to have
been received if it shall include any condition or requirement that,
individually or in the aggregate, would so materially reduce the economic or
business benefits of the transactions contemplated by the Merger Agreement to
FFOH and GFCO that had such condition or requirement been known neither FFOH nor
GFCO, in its reasonable judgment, would have entered into the Merger Agreement;
(iii) the receipt of the approval or consent of each person (other than a
regulatory authority) whose approval or consent is required in connection with
the Merger or the Bank Merger under any agreement to which FFOH, GFCO or any of
their respective subsidiaries is bound, except as otherwise contemplated by the
Merger Agreement; (iv) none of FFOH or GFCO or their respective subsidiaries
shall be subject to any statute, rule, regulation, order or decree which
prohibits, restricts or makes illegal the consummation of the Merger or the Bank
Merger; (v) the Registration Statement of which this Prospectus/Joint Proxy
Statement is a part shall have become effective under the Securities Act, and
FFOH shall have received all permits, authorizations or exemptions necessary
under all state securities laws to issue FFOH Common Stock in connection with
the Merger, and neither such Registration Statement nor any such permit,
authorization or exemption shall be subject to a stop order or threatened stop
order by any governmental authority; (vi) the shares of FFOH Common Stock to be
issued in connection with the Merger shall have been approved for listing on the
Nasdaq National Market; (vii) the receipt of a letter from FFOH's and GFCO's
independent public accountants, dated as of the Effective Time, to the effect
that the Merger will be accounted for as a pooling of interests under generally
accepted accounting principles; and
47
<PAGE> 59
(viii) the absence of any pending proceeding by a regulatory authority to seek
an order, injunction or decree which prevents consummation of the Merger or the
Bank Merger.
In addition to the foregoing conditions, the obligations of FFOH and
FAC under the Merger Agreement are conditioned upon (i) the accuracy in all
material respects as of the date of the Merger Agreement and as of the Effective
Time of the representations and warranties of GFCO set forth in the Merger
Agreement, except as to any representation or warranty which specifically
relates to an earlier date and except as otherwise contemplated by the Merger
Agreement; (ii) the performance in all material respects of all covenants and
obligations required to be complied with and satisfied by GFCO; (iii) the
receipt of a certificate from specified officers of GFCO with respect to
compliance with the conditions relating to (i) and (ii) immediately above as set
forth in the Merger Agreement; (iv) the receipt of an opinion of counsel to the
effect that the Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code and with respect to certain related federal income
tax considerations; and (v) the receipt by FFOH of such certificates of GFCO's
officers or others and such other documents to evidence fulfillment of the
conditions relating to GFCO as FFOH may reasonably request. Any of the foregoing
conditions may be waived by FFOH.
In addition to the other conditions set forth above, GFCO's obligations
under the Merger Agreement are conditioned upon (i) the accuracy in all material
respects as of the date of the Merger Agreement and as of the Effective Time of
the representations and warranties of FFOH and FAC set forth in the Merger
Agreement, except as to any representation or warranty which specifically
relates to an earlier date and except as otherwise contemplated by the Merger
Agreement; (ii) the performance in all material respects of all covenants and
obligations required to be complied with and satisfied by FFOH and FAC; (iii)
the receipt of a certificate from specified officers of FFOH and FAC with
respect to compliance with the conditions relating to (i) and (ii) immediately
above as set forth in the Merger Agreement; (iv) the receipt of an opinion of
counsel to GFCO to the effect that the Merger will constitute a reorganization
within the meaning of Section 368(a) of the Code and with respect to certain
related federal income tax considerations (see "-Certain Federal Income Tax
Consequences"); and (v) the receipt by GFCO of such certificates of FFOH's
and/or FAC's officers or others and such other documents to evidence fulfillment
of the conditions relating to them as GFCO may reasonably request. Any of the
foregoing conditions may be waived by GFCO.
REGULATORY APPROVALS
In order to consummate the Merger and the Bank Merger, FFOH and GFCO
must obtain the prior consent and approval, as applicable, of the OTS, the FDIC
and the Division.
The Merger is subject to the prior approval of the OTS under the Home
Owners' Loan Act, as amended ("HOLA"), and the Bank Merger is subject to the
prior approval of the FDIC under the Bank Merger Act ("BMA") provisions of the
Federal Deposit Insurance Act. Pursuant to the applicable provisions of the HOLA
and the BMA, the OTS may not approve the Merger and the FDIC may not approve the
Bank Merger if (i) such transaction would result in a monopoly or would be in
furtherance of any combination or conspiracy to monopolize or attempt to
monopolize the
48
<PAGE> 60
business of banking in any part of the United States; or (ii) the effect of such
transaction, in any section of the country, may be to substantially lessen
competition, or tend to create a monopoly, or in any other manner to restrain
trade, in each case unless the OTS or the FDIC, as applicable, finds that the
anticompetitive effects of the proposed transaction are clearly outweighed in
the public interests by the probable effect of the transaction in meeting the
convenience and needs of the community to be served. In conducting its review of
any application for approval, each of the OTS and the FDIC is required to
consider whether the financial and managerial resources of the acquiring savings
and loan holding company and acquiring savings institution are adequate
(including consideration by a variety of means of the competence, experience and
integrity of the applicant's directors, officers and principal shareholders and
compliance with, among other things, fair lending laws). Each of the OTS and the
FDIC has the authority to deny an application if it concludes that the combined
organization would have an inadequate capital position or if the acquiring
organization does not meet the requirements of the Community Reinvestment Act of
1977, as amended.
Each of the HOLA and the BMA provides that a transaction approved by
the applicable federal banking agency generally may not be consummated until 30
days after approval by such agency. If the U.S. Department of Justice and the
relevant agency otherwise agree, this 30-day period may be reduced to as few as
15 days. During such period, the U.S. Department of Justice may commence a legal
action challenging the transaction under the antitrust laws. The commencement of
an action would stay the effectiveness of the approval of the federal banking
agency unless a court specifically orders otherwise. If, however, the U.S.
Department of Justice does not commence a legal action during such waiting
period, it may not thereafter challenge the transaction except in an action
commenced under Section 2 of the Sherman Antitrust Act.
The approval of the Division also is required for consummation of the
Merger. Under Ohio law, the Division shall not approve an application for such a
transaction unless it determines, after a consideration of all relevant
evidence, that the rights of all interested parties are protected. The factors
to be considered by the Division in this regard are substantially similar to
those to be considered by the OTS and the FDIC, as discussed above.
Applications have been filed with applicable regulatory authorities for
approval of the Merger and the Bank Merger. Although neither FFOH nor GFCO is
aware of any basis for disapproving the Merger and the Bank Merger, there can be
no assurance that all requisite approvals will be obtained, that such approvals
will be received on a timely basis or that such approvals will not impose
conditions or requirements which, individually or in the aggregate, would so
materially reduce the economic or business benefits of the transactions
contemplated by the Merger Agreement to FFOH and GFCO that, had such condition
or requirement been known, neither FFOH nor GFCO, in its reasonable judgment,
would have entered into the Merger Agreement. If any such condition or
requirement is imposed, the Merger Agreement permits the Boards of Directors of
FFOH and GFCO to terminate the Merger Agreement.
49
<PAGE> 61
BUSINESS PENDING THE MERGER
The Merger Agreement contains certain covenants of the parties
regarding the conduct of their respective businesses pending consummation of the
Merger. Pending consummation of the Merger, FFOH, GFCO and their respective
subsidiaries generally are required to conduct their respective businesses in
the ordinary course consistent with past practice and to use all reasonable
efforts to preserve their respective business organizations intact. In addition,
FFOH and GFCO shall not, and shall cause each of its respective subsidiaries not
to, among other things, declare any dividend on its capital stock, except (i) in
the case of GFCO, quarterly cash dividends on the GFCO Common Stock which are
not in excess of $.11 per share, provided that the declaration of the last
quarterly dividend by GFCO prior to the Effective Time and the payment thereof
shall be coordinated with, and subject to the approval of, FFOH so as to
preclude any duplication of dividend benefit and be consistent with pooling of
interests accounting treatment of the Merger and (ii) in the case of FFOH,
quarterly cash dividends on the FFOH Common Stock which are not in excess of
$.09 per share; issue any shares of its capital stock or rights to acquire the
same, other than upon exercise of outstanding options and pursuant to the
respective Stock Option Agreements; effect any recapitalization,
reclassification, stock dividend, stock split or like change in capitalization;
take specified actions with respect to its business, including without
limitation increase the rate of compensation of its directors, officers or
employees, enter into or modify any employee benefit plan, change its methods of
accounting or tax reporting, purchase or sell assets, make capital expenditures,
enter into contracts with respect to branch offices, acquire any business or
entity, enter into any new line of business, enter into futures, options and
similar contracts, and enter into any agreement granting any preferential right
or requiring any consent with respect to the purchase of its assets, except in
the case of each of the foregoing as permitted by the Merger Agreement; amend
its articles and bylaws (or other governing instruments); take any action that
would prevent or impede the Merger from qualifying for pooling of interests
accounting or as a reorganization under the Code; take any action that would
result in any of its representations and warranties not being true and correct
in any material respect at or prior to the Effective Time or in any of the
conditions to the Merger set forth in the Merger Agreement not being satisfied;
or agree to do any of the foregoing.
NO SOLICITATION
Pursuant to the Merger Agreement, neither GFCO nor FFOH shall, and each
of them shall cause its respective subsidiaries not to, solicit or encourage
inquiries or proposals with respect to, furnish any information relating to, or
participate in any negotiations or discussions concerning, any acquisition,
lease or purchase of all or a substantial portion of the assets of, or any
equity interest in, such party or any of its subsidiaries, other than as
contemplated by the Merger Agreement, provided, however, that the Board of
Directors of GFCO or FFOH, on behalf of GFCO and FFOH, respectively, may furnish
such information or participate in such negotiations or discussions if such
Board of Directors, after having consulted with and considered the advice of
outside counsel, has determined that the failure to do the same would cause the
members of such Board of Directors to breach their fiduciary duties under
applicable laws. Each of GFCO and FFOH has agreed to promptly inform the other
party of any such request for information or of any such negotiations or
50
<PAGE> 62
discussions, as well as to instruct its and its subsidiaries' directors,
officers, representatives and agents to refrain from taking any action
prohibited by the above-described restrictions.
EFFECTIVE TIME OF THE MERGER
The Merger shall become effective upon the filing of (i) a certificate
of Merger with the Secretary of State of the State of Ohio pursuant to the Ohio
General Corporation Law ("OGCL") and (ii) a certificate of Merger with the
Secretary of State of the State of Delaware pursuant to the Delaware General
Corporation Law ("DGCL"), unless a later date and time is specified as the
effective time (the "Effective Time") in such certificates of Merger
(collectively, the "Certificates of Merger"). Certificates of Merger will be
filed only after the receipt of all requisite regulatory approvals of the Merger
and the Bank Merger, approval of the Merger Agreement by the requisite votes of
the shareholders of GFCO and FFOH and the satisfaction or waiver of all other
conditions to the Merger and the Bank Merger forth in the Merger Agreement.
A closing (the "Closing") shall take place immediately prior to the
Effective Time on the fifth business day following the satisfaction or waiver
(to the extent permitted) of all the conditions to consummation of the Merger
specified in the Merger Agreement (other than the delivery of certificates,
opinions and other instruments and documents to be delivered at the Closing), or
on such other date as the parties may mutually agree upon.
TERMINATION AND AMENDMENT
The Merger Agreement may be terminated (i) by mutual consent of the
parties; (ii) by a non-breaching party if the other party (a) breaches any
material covenants or undertakings contained in the Merger Agreement or (b)
materially breaches any representations or warranties contained in the Merger
Agreement, in each case if such breach has not been cured within thirty days
after notice thereof from the terminating party; (iii) by either party if
certain required regulatory approvals or consents for consummation of the Merger
and the Bank Merger are not obtained; (iv) by either party if the shareholders
of FFOH or GFCO do not approve the Merger Agreement after a vote taken thereon
at a meeting duly called for such purpose; (v) by either FFOH or GFCO if the
Merger is not consummated by June 30, 1999, unless the failure to consummate the
Merger is due to a breach by the party seeking such termination of its
obligations under the Merger Agreement; and (vi) by FFOH if the GFCO Board has
withdrawn, modified or changed in a manner adverse to FFOH its recommendation to
its shareholders to approve the Merger Agreement, or by GFCO if the FFOH Board
has withdrawn, modified or changed in a manner adverse to GFCO its
recommendation to its shareholders to approve the Merger Agreement.
In the event of termination, the Merger Agreement shall become null and
void, except that certain provisions thereof relating to expenses and
confidentiality shall survive any such termination and any such termination
shall not relieve any breaching party from liability for any willful breach of
any covenant, undertaking, representation or warranty giving rise to such
termination.
51
<PAGE> 63
To the extent permitted under applicable law, the Merger Agreement may
be amended or supplemented at any time by written agreement of the parties
whether before or after the approval of the shareholders of FFOH or GFCO,
provided that after any such approval the Merger Agreement may not be amended or
supplemented in a manner which reduces the amount or changes the form of the
consideration to be received by GFCO's shareholders or otherwise materially
adversely affects GFCO shareholders without further approval by those
shareholders.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain directors and executive officers of GFCO may be deemed to have
interests in the Merger in addition to their interests as shareholders
generally. The GFCO Board was aware of these factors and considered them, among
other matters, in approving the Merger Agreement and the transactions
contemplated thereby.
Election of Directors. Pursuant to the Merger Agreement, FFOH has
agreed that effective as of the Effective Time, (i) Paul D. Staubach shall
resign as a director of FFOH, (ii) the number of directors of FFOH shall be
increased by four and (iii) Robert R. Sudbrook, Edgar A. Rust, Daniel W.
Geeding, Kenneth C. Lichtendahl and John L. Torbeck (each of whom is currently a
director of GFCO) shall be elected directors of FFOH. In addition, pursuant to
the Merger Agreement, the directors of FFOH as of the Effective Time shall also
serve as directors of Centennial Bank. Furthermore, pursuant to the Merger
Agreement, FFOH has agreed that effective as of the Effective Time, Ronald L.
Goodfellow, Albert W. Moeller, John P. Torbeck and Milton L. Van Schoik (each of
whom is currently a director of GFCO) shall become directors emeritus of FFOH
for a term of 35 months and in which capacity they will receive a fee for their
service as directors emeritus of $1,000 per month.
Management. Pursuant to the Merger Agreement and effective as of the
Effective Time, Robert R. Sudbrook, the current President and Chief Executive
Officer of GFCO, shall be elected as President and Chief Executive Officer of
FFOH and Chairman of the Board and Chief Executive Officer of Centennial Bank,
and John R. Reusing, the current Chairman of the Board, President and Chief
Executive officer of FFOH, shall be elected as Chairman of the Board of FFOH and
President of Centennial Bank.
Existing Employment and Severance Agreements. Centennial Bank and
Robert R. Sudbrook have entered into an employment agreement, dated as of July
22, 1997, which provides, among other things, that in the event that, in
connection with or within one year of a "change in control," as defined, of
Centennial Bank, Centennial Bank terminates Mr. Sudbrook for any reason other
than for just cause or causes a material reduction in Mr. Sudbrook's
responsibilities, authority, compensation or other benefits, then Mr. Sudbrook
will be entitled to receive a severance payment equal to three times his average
annual compensation. Consummation of the Merger will constitute a change in
control for purposes of the employment agreement. Centennial Bank has also
entered into letter agreements with Gregory P. Niesen, Jennifer D. Mohr and
Elaine M. Schmidt, which provide, among other things, that in the event of a
sale, merger or similar transaction which results
52
<PAGE> 64
in the elimination of the respective officer's position, each such officer would
be entitled to receive severance pay amounting to one year's salary (six month's
salary in the case of Ms. Mohr).
Stock Options and Restricted Stock. Pursuant to the Centennial Bank
Bank Incentive Plan and GFCO Stock Option and Incentive Plan, certain directors
and executive officers of GFCO have been granted restricted stock and options
which vest over specified periods. All options and shares of restricted stock
under the Centennial Bank Bank Incentive Plan and GFCO Stock Option and
Incentive Plan which are outstanding as of the Effective Time of the Merger
shall become immediately fully vested on such date. At the GFCO Record Date, Mr.
Sudbrook held an aggregate of 14,700 shares of restricted GFCO Common Stock and
the directors and executive officers of GFCO held GFCO Options to purchase an
aggregate of 49,006 shares of GFCO Common Stock.
Indemnification and Insurance. Pursuant to the Merger Agreement, FFOH
has agreed to indemnify and hold harmless each present and former director,
officer and employee of GFCO or a GFCO subsidiary determined as of the Effective
Time (the "Indemnified Parties") against any costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages or
liabilities incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the fullest
extent to which such Indemnified Parties would be entitled under the Certificate
of Incorporation or Bylaws of GFCO, or equivalent documents of any GFCO
subsidiary, as applicable, or applicable law, or any agreement, arrangement or
understanding disclosed by GFCO to FFOH pursuant to the Merger Agreement, in
each case as in effect on the date of the Merger Agreement.
Pursuant to the Merger Agreement, FFOH also agreed to maintain GFCO's
existing directors' and officers' liability insurance policy (or a policy
providing coverage on substantially the same terms and conditions) for acts or
omissions occurring prior to the Effective Time by persons who are currently
covered by such insurance policy maintained by GFCO for a period of three years
following the Effective Time, subject to a cost limitation set forth in the
Merger Agreement.
Other than as set forth above, no director or executive officer of GFCO
has any direct or indirect material interest in the Merger, except insofar as
ownership of GFCO Common Stock might be deemed such an interest. See "The
Special Meetings - Certain Beneficial Owners of GFCO Common Stock."
AMENDMENT OF THE ARTICLES OF INCORPORATION AND BYLAWS OF FFOH
Pursuant to the Merger Agreement, FFOH has agreed to take all steps
necessary (including obtaining the requisite approval of FFOH's shareholders)
to amend its Articles of Incorporation in order to provide that a majority of
the issued and outstanding shares of FFOH may approve (i) an agreement of
merger or consolidation providing for the proposed merger or consolidation of
FFOH with or into one or more other corporations or (ii) a proposed combination
or majority share acquisition involving the issuance of shares of FFOH and
requiring shareholder approval. Pursuant to this Prospectus/Joint Proxy
Statement, FFOH is soliciting approval of its shareholders to amend its
Articles of Incorporation in the foregoing manner. See "Amendment to FFOH's
Articles of Incorporation." In addition, pursuant to the Merger Agreement, FFOH
has agreed to amend its Bylaws to provide that the following actions must be
approved by not less than two-thirds of the authorized number of directors of
FFOH:
(i) the hiring, termination, demotion, replacement, change of duties
or reduction of compensation of the Chairman of the Board, Chief Executive
Officer, Chief Financial Officer, President, Secretary, Treasurer, a Senior
Vice President or an Executive Vice President of FFOH, other than the changes
contemplated by the Merger Agreement;
(ii) a change in the number of directors or filling any vacancy on
the FFOH Board, regardless of how such vacancy is created;
(iii) approval of, or recommendation to the shareholders of the
approval of, any merger, consolidation, combination, control share acquisition
or majority share acquisition to which FFOH is a party or any sale or other
transfer of all or substantially all of the assets of FFOH;
(iv) approval of, or recommendation to the shareholders of FFOH of
the approval of, any amendment to the Articles of Incorporation, Code of
Regulations or Bylaws of FFOH; or
(v) the appointment of directors to committees of the FFOH Board, any
change in the members of any committee of the FFOH Board, the filling of any
vacancies with respect to any committees of the FFOH Board and the discharge of
any committee of the FFOH Board.
CERTAIN EMPLOYEE MATTERS
Prior to the Effective Time, FFOH shall take all reasonable action so
that employees of GFCO and its subsidiaries shall be entitled to participate in
the FFOH employee benefit plans of general applicability to the same extent as
similarly-situated employees of FFOH and its subsidiaries. For purposes of
determining eligibility to participate in, the vesting of benefits and for all
other purposes (but not for accrual of pension benefits) under the FFOH employee
benefit plans, FFOH and the FFOH employee benefit plans shall recognize years of
service with GFCO, any GFCO
53
<PAGE> 65
subsidiary or any predecessor thereof or entity acquired by GFCO or a GFCO
subsidiary as such service is recognized by and reflected on the records of GFCO
and the GFCO employee benefit plans.
All employees of GFCO or Centennial Bank as of the Effective Time shall
become employees of FFOH or remain employees of Centennial Bank as of the
Effective Time, provided that FFOH or a FFOH subsidiary shall have no obligation
to continue the employment of any such person and nothing contained in the
Merger Agreement shall give any employee of GFCO or any GFCO subsidiary a right
to continuing employment with FFOH or a FFOH subsidiary after the Effective
Time.
Pursuant to the Merger Agreement, the parties have agreed to either
terminate or merge GFCO's ESOP and 401(k) profit sharing plan with the
comparable FFOH plans.
RESALE OF FFOH COMMON STOCK
The FFOH Common Stock issued pursuant to the Merger will be freely
transferable under the Securities Act, except for shares issued to any GFCO
shareholder who may be deemed to be an affiliate of FFOH for purposes of Rule
144 promulgated under the Securities Act ("Rule 144") or an affiliate of GFCO
for purposes of Rule 145 promulgated under the Securities Act ("Rule 145") (each
an "Affiliate"). Affiliates will include persons (generally executive officers,
directors and 10% shareholders) who control, are controlled by or are under
common control with (i) FFOH or GFCO at the time of the GFCO Special Meeting or
(ii) FFOH at or after the Effective Time.
Rules 144 and 145 will restrict the sale of FFOH Common Stock received
in the Merger by Affiliates and certain of their family members and related
interests. Generally speaking, during the year following the Effective Time,
those persons who are Affiliates of GFCO at the time of the Special Meeting,
provided they are not Affiliates of FFOH at or following the Effective Time, may
publicly resell any FFOH Common Stock received by them in the Merger, subject to
certain limitations as to, among other things, the amount of FFOH Common Stock
sold by them in any three-month period and as to the manner of sale. After the
one-year period, such Affiliates may resell their shares without such
restrictions so long as there is adequate current public information with
respect to FFOH as required by Rule 144. Persons who are Affiliates of FFOH
after the Effective Time may publicly resell the FFOH Common Stock received by
them in the Merger subject to similar limitations and subject to certain filing
requirements specified in Rule 144.
The ability of Affiliates to resell shares of FFOH Common Stock
received in the Merger under Rule 144 or 145 as summarized herein generally will
be subject to FFOH having satisfied its Exchange Act reporting requirements for
specified periods prior to the time of sale. Affiliates also would be permitted
to resell FFOH Common Stock received in the Merger pursuant to an effective
registration statement under the Securities Act or another available exemption
from the Securities Act registration requirements. Neither the Registration
Statement of which this Prospectus/Joint Proxy Statement is a part nor this
Prospectus/Joint Proxy Statement cover any resales of FFOH
54
<PAGE> 66
Common Stock received by persons who may be deemed to be Affiliates of FFOH or
GFCO in the Merger.
Guidelines of the SEC regarding qualifying for the pooling of interests
method of accounting also limit sales of shares of the acquiring and acquired
company by affiliates of either company in a business combination. SEC
guidelines indicate further that the pooling of interests method of accounting
generally will not be challenged on the basis of sales by affiliates of the
acquiring or acquired company if they do not dispose of any of the shares of the
corporation they own or shares of a corporation they receive in connection with
a merger during the period beginning 30 days before the Merger and ending when
financial results covering at least 30 days of post-merger operations of the
combined entity have been published.
Each of FFOH and GFCO has agreed in the Merger Agreement to use its
reasonable best efforts to cause each person who may be deemed to be an
Affiliate (for purposes of Rule 145 and for purposes of qualifying the Merger
for pooling of interests accounting treatment) of such party to deliver to FFOH
a letter agreement intended to preserve the ability to treat the Merger as a
pooling of interests and, in the case of Affiliates of GFCO, to ensure
compliance with the Securities Act. See "- Letter Agreements."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General. The following is a summary description of certain federal
income tax consequences of the Merger to shareholders of GFCO. The federal
income tax laws are complex and the tax consequences of the Merger may vary
depending upon each shareholder's individual circumstances or tax status.
Accordingly, this summary is not a complete description of all of the
consequences of the Merger and, in particular, may not address federal income
tax considerations that may affect the treatment of a shareholder which, at the
Effective Time, already owns some FFOH Common Stock, is not a U.S. citizen, is a
tax-exempt entity, is a financial institution or an insurance company, is an
individual who acquired GFCO Common Stock pursuant to an employee stock option
or right or otherwise as compensation, or who or which exercises some form of
control over GFCO. In addition, no information is provided herein with respect
to the tax consequences of the Merger under applicable foreign, state or local
laws. This summary is based on laws, regulations, rulings and judicial decisions
as in effect on the date of this Prospectus/Joint Proxy Statement, without
consideration of the particular facts or circumstances of any holder of GFCO
Common Stock. These authorities are all subject to change and any such change
may be made with retroactive effect. No assurance can be given that, after any
such change, this summary would not be different.
CONSEQUENTLY, EACH SHAREHOLDER OF GFCO IS URGED TO CONSULT HIS OR HER
OWN TAX ADVISOR CONCERNING THE SPECIFIC FEDERAL AND ANY FOREIGN, STATE AND LOCAL
INCOME TAX AND OTHER TAX CONSEQUENCES OF THE MERGER APPLICABLE TO SUCH
SHAREHOLDER.
The Merger. GFCO has received an opinion from Vorys, Sater, Seymour and
Pease LLP, special counsel to GFCO, which is based on facts, representations and
assumptions that were
55
<PAGE> 67
provided by GFCO and FFOH and that are consistent with the facts that GFCO and
FFOH believe will be existing as of the Effective Time. On the basis of such
facts, representations and assumptions, Vorys, Sater, Seymour and Pease LLP has
opined that for federal income tax purposes: (i) the Merger, when consummated in
accordance with the terms of the Merger Agreement and certain related
documentation, will constitute a reorganization within the meaning of Section
368(a) of the Code; (ii) no gain or loss will be recognized by shareholders of
GFCO upon the exchange of their GFCO Common Stock solely for shares of FFOH
Common Stock pursuant to the Merger, except in respect of cash received in lieu
of a fractional share interest in FFOH Common Stock; (iii) the basis of the FFOH
Common Stock received by a GFCO shareholder receiving solely FFOH Common Stock
will be the same as his or her basis in the GFCO Common Stock surrendered in
exchange therefor, reduced by any amount allocable to a fractional share
interest for which cash is received (as described below); and (iv) the holding
period of the shares of FFOH Common Stock received by a GFCO shareholder
receiving solely FFOH Common Stock will include the period during which such
GFCO shareholder held the GFCO Common Stock surrendered in exchange therefor,
provided the surrendered GFCO Common Stock was held by such shareholder as a
capital asset at the Effective Time.
For federal income tax purposes, cash received by a holder of GFCO
Common Stock in lieu of a fractional share interest in FFOH Common Stock will be
treated as received in exchange for such fractional share interest, and gain or
loss will be recognized for federal income tax purposes measured by the
difference between the amount of cash received and the portion of the basis of
the share of GFCO Common Stock allocable to such fractional share interest. Such
gain or loss should be long-term capital gain or loss if such share of GFCO
Common Stock is held as a capital asset and has been held for more than one year
at the Effective Time. Generally, any long-term capital gain resulting from the
receipt of cash by a holder of GFCO Common Stock in lieu of a fractional share
of FFOH Common Stock will be taxed at a maximum rate of 20% if, at the Effective
Time, such share of GFCO Common Stock had been held for one year.
A holder of FFOH Common Stock who exercises dissenters' rights under
applicable Ohio law and who receives a cash payment of the fair value of the
holder's shares of FFOH Common Stock will be treated as having received such
payment in redemption of such shares. Such redemption will be subject to the
conditions and limitations of Section 302 of the Code, including the attribution
rules of Section 318 of the Code. In general, if the shares of FFOH Common Stock
are held by the holder as a capital asset at the Effective Time, a dissenting
holder will recognize capital gain or loss measured by the difference between
the amount of cash received by such holder and the basis for such shares. If,
however, such holder owns, either actually or constructively, any other FFOH
Common Stock, the payment made to such holder could be treated as dividend
income. In general, under the constructive ownership rules of the Code, a holder
may be considered to own stock that is owned, and in some cases constructively
owned, by certain related individuals or entities, as well as stock that such
holder (or related individuals or entities) has the right to acquire by
exercising an option or converting a convertible security. Each holder of FFOH
Common Stock who contemplates exercising dissenters' rights should consult his
or her own tax advisor as to the
56
<PAGE> 68
federal and other tax consequences of such actions, including the possibility
that the payment will be treated as dividend income.
Closing Opinions. It is a condition precedent to the obligation of GFCO
to effect the Merger that GFCO receive an opinion from Vorys, Sater, Seymour and
Pease LLP, dated as of the Effective Time, with respect to certain federal
income tax consequences of the Merger, which opinion in general will address the
consequences described under the subheading "- The Merger" above. It is also a
condition precedent to the obligation of FFOH to effect the Merger that FFOH
receive an opinion from Elias, Matz, Tiernan & Herrick L.L.P., special counsel
to FFOH, dated as of the Effective Time, to the effect that each of the Merger
and the Bank Merger will constitute a reorganization within the meaning of
Section 368 of the Code. Each of such opinions will be based upon facts existing
at the Effective Time, and in rendering such opinions counsel will require and
rely upon facts, representations and assumptions that will be provided by FFOH,
GFCO and others.
ACCOUNTING TREATMENT OF THE MERGER
It is expected that the Merger will be accounted for as a pooling of
interests under generally accepted accounting principles, and it is a condition
to the obligations of FFOH, FAC and GFCO to consummate the Merger that FFOH and
GFCO receive a letter, dated the Effective Time, from FFOH's and GFCO's
independent public accountants to the effect that the Merger qualifies for such
accounting treatment. See "The Merger- Conditions to the Merger." As required by
generally accepted accounting principles, under pooling of interests accounting,
as of the Effective Time, the assets and liabilities of GFCO would be added to
those of FFOH at their recorded book values and the shareholders' equity
accounts of FFOH and GFCO would be combined on FFOH's consolidated balance
sheet. On a pooling of interests accounting basis, income and other financial
statements of FFOH issued after consummation of the Merger would be restated
retroactively to reflect the consolidated combined financial position and
results of operations of FFOH and GFCO as if the Merger had taken place prior to
the periods covered by such financial statements. The unaudited pro forma
financial information contained in this Prospectus/Joint Proxy Statement has
been prepared using the pooling of interests accounting method to account for
the Merger. See "Selected Pro Forma Consolidated Financial Data" and "Pro Forma
Combined Consolidated Financial Data."
EXPENSES OF THE MERGER
The Merger Agreement provides that each party thereto shall each bear
and pay all costs and expenses incurred by it in connection with the
transactions contemplated by the Merger Agreement, including fees and expenses
of its own financial consultants, accountants and counsel, except that expenses
of printing the Registration Statement of which this Prospectus/Joint Proxy
Statement is a part and the registration fee to be paid to the SEC in connection
therewith shall be shared equally between FFOH and GFCO. The Merger Agreement
also provides that GFCO or FFOH will pay the expenses reasonably incurred by the
other party to the extent it (i) defaults in its obligations under the Merger
Agreement or (ii) fails to recommend approval of the Merger Agreement and the
other transactions contemplated thereby to its shareholders.
57
<PAGE> 69
STOCK OPTION AGREEMENTS
As an inducement and a condition to entering into the Merger Agreement,
FFOH and GFCO entered into reciprocal stock option agreements. FFOH and GFCO
entered into a Stock Option Agreement, dated as of September 28, 1998 (the "GFCO
Stock Option Agreement"), pursuant to which GFCO, as issuer, granted FFOH, as
grantee, an option, which is exercisable upon the occurrence of certain events
(none of which has occurred as of the date hereof to the knowledge of FFOH and
GFCO), to purchase up to 456,349 shares of GFCO Common Stock, representing 19.9%
of the outstanding shares of GFCO Common Stock, at a price of $17.25 per share,
subject to adjustment in certain circumstances and termination within certain
periods (the "GFCO Option").
FFOH and GFCO also entered into a Stock Option Agreement, dated as of
September 28, 1998 (the "FFOH Stock Option Agreement"), pursuant to which FFOH,
as issuer, granted GFCO, as grantee, an option, which is exercisable upon the
occurrence of certain events (none of which has occurred as of the date hereof
to the knowledge of FFOH and GFCO), to purchase up to 1,114,793 shares of FFOH
common Stock, representing 19.9% of the outstanding shares of FFOH Common Stock,
at a price of $12.15 per share, subject to adjustment in certain circumstances
and termination within certain periods (the "FFOH Option").
With the exception of the number of shares of common stock of the
Issuer ("Issuer Common Stock") subject to an option ("Option Shares") and the
per share price at which an option may be exercised, the terms of the GFCO Stock
Option Agreement and the FFOH Stock Option Agreement (which are collectively
referred to as the "Stock Option Agreements") are substantially identical.
For purposes of the following summary of the material provisions of the
Stock Option Agreements, the term (i) "Issuer" means GFCO with respect to the
GFCO Stock Option Agreement and FFOH with respect to the FFOH Stock Option
Agreement, (ii) "Grantee" means FFOH with respect to the GFCO Stock Option
Agreement and GFCO with respect to the FFOH Stock Option Agreement and (iii)
"Option" means the GFCO Option or the FFOH Option, as applicable.
Subject to applicable law and regulatory restrictions, the Grantee may
exercise an Option, in whole or in part, if, but only if, (i) both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), (ii) written notice of such exercise
is given within 90 days following the first Subsequent Triggering Event to occur
(or such later period as is provided in the applicable Stock Option Agreement),
and (iii) the Grantee is not in willful breach of the Merger Agreement such that
the Issuer shall be entitled to terminate the Merger Agreement.
As defined in the Stock Option Agreements, the term "Initial Triggering
Event" means any of the following events or transactions occurring on or after
the date of execution of the applicable Stock Option Agreement:
58
<PAGE> 70
(i) The Issuer or any subsidiary of the Issuer (an "Issuer
Subsidiary"), without having received the Grantee's prior written consent,
enters into an agreement to engage in an Acquisition Transaction (as hereinafter
defined) with any person (the term "person" for purposes of the Stock Option
Agreements having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3)
of the Exchange Act and the rules and regulations thereunder), other than the
Grantee or any subsidiary of the Grantee, or the Issuer's Board of Directors
(the "Issuer Board") recommends that the shareholders of the Issuer approve or
accept any Acquisition Transaction (as defined in the Stock Option Agreement)
with any person other than the Grantee or a Grantee subsidiary.
(ii) Any person, other than the Grantee or a Grantee subsidiary,
acquires beneficial ownership or the right to acquire beneficial ownership of
10% or more of the outstanding shares of Issuer Common Stock (the term
"beneficial ownership" for purposes of the Stock Option Agreements having the
meaning assigned thereto in Section 13(d) of the Exchange Act and the rules and
regulations thereunder);
(iii) Any person, other than the Grantee or a Grantee subsidiary, makes
a bona fide proposal to the Issuer or its shareholders by public announcement or
written communication that is or becomes the subject of public disclosure to
engage in an Acquisition Transaction;
(iv) The Issuer Board, without having received the Grantee's prior
written consent, withdraws or modifies, or publicly announces its interest to
withdraw or modify in any manner adverse in any respect to the Grantee, its
recommendation that the shareholders of the Issuer approve the Merger Agreement
in anticipation of engaging in an Acquisition Transaction, or the Issuer or any
Issuer Subsidiary authorizes, recommends or proposes, or publicly announces its
intention to authorize, recommend or propose, an agreement to engage in an
Acquisition Transaction with any person other than the Grantee or a Grantee
subsidiary;
(v) Any person other than the Grantee or a Grantee subsidiary files
with the SEC a registration statement or tender offer materials with respect to
a potential exchange offer or tender offer that would constitute an Acquisition
Transaction (or filed a preliminary proxy statement with the SEC with respect to
a potential vote by its stockholders to approve the issuance of shares to be
offered in such an exchange offer);
(vi) After an overture is made by any person, other than the Grantee or
a Grantee subsidiary, to the Issuer or its shareholders to engage in an
Acquisition Transaction, the Issuer breaches any covenant or obligation
contained in the Merger Agreement and such breach (x) would entitle the Grantee
to terminate the Merger Agreement and (y) shall not have been cured prior to the
Notice Date (as defined in the Stock Option Agreements); or
(vii) Any person other than the Grantee or a Grantee subsidiary files
an application or notice with the OTS or other federal or state bank regulatory
or antitrust authority, which application or notice has been accepted for
processing, for approval to engage in an Acquisition Transaction.
59
<PAGE> 71
As defined in the Stock Option Agreements, the term "Subsequent
Triggering Event" means any of the following events or transactions occurring
after the date of execution of the applicable Stock Option Agreement:
(i) The acquisition by any person (other than the Grantee or any
Grantee subsidiary) of beneficial ownership of 25% or more of the then
outstanding Issuer Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
paragraph (i) of the definition of Initial Triggering Event above, except that
the percentage referred to in clause (y) of such paragraph shall be 20%;
As defined in the Stock Option Agreements, "Exercise Termination Event"
means each of the following: (i) the Effective Time, (ii) termination of the
Merger Agreement if such termination occurs prior to the occurrence of an
Initial Triggering Event, except a termination by the Grantee due to a willful
breach of the Merger Agreement, or (iii) the passage of 12 months after
termination of the Merger Agreement if such termination follows the occurrence
of an Initial Triggering Event or is a termination by the Grantee due to a
willful breach of the Merger Agreement, provided that if an Initial Triggering
Event continues or occurs beyond such termination and prior to the passage of
such 12-month-period, the Exercise Termination Event shall be 12 months from the
expiration of the Last Triggering Event but in no event more than 18 months
after such termination. As defined in the Stock Option Agreements, the term
"Last Triggering Event" means the last Initial Triggering Event to expire.
Upon the occurrence of a Subsequent Triggering Event prior to an
Exercise Termination Event, (i) at the request of any holder of the Option
delivered within 90 days following such occurrence (or such later period as is
provided in the applicable Stock Option Agreement), the Issuer shall repurchase
the Option at a price equal to the amount by which (A) the Market/Offer Price
(as defined in the Stock Option Agreements) exceeds (B) the Option exercise
price, multiplied by the number of shares for which the Option may then be
exercised, and (ii) at the request of the owner of Option Shares from time to
time (the "Owner"), delivered within 90 days following such occurrence (or such
later period as is provided in the applicable Stock Option Agreement), the
Issuer shall repurchase such number of the Option Shares from the Owner as the
Owner shall designate at a price equal to the greater of (A) the Market/Offer
Price and (B) the average exercise price per share paid by the Owner for the
Option Shares so designated.
The Stock Option Agreements are intended to increase the likelihood
that the Merger will be consummated in accordance with the terms of the Merger
Agreement. The existence of the Options could significantly increase the cost to
a potential acquiror of acquiring FFOH and/or GFCO compared to its cost had the
Stock Option Agreements not been entered into. Such increased cost might
discourage a potential acquiror from considering or proposing an acquisition or
might result in a potential acquiror proposing to pay a lower per share price to
acquire FFOH and/or GFCO than it might otherwise have proposed to pay. Moreover,
the exercise or repurchase of the applicable Option is likely to prohibit any
other acquiror of FFOH and/or GFCO from accounting for an
60
<PAGE> 72
acquisition of FFOH and/or GFCO using the "pooling of interests" accounting
method for a period of two years. In light of the foregoing, the Stock Option
Agreements may have the effect of discouraging persons who might be interested
in acquiring all or a significant interest in FFOH and/or GFCO from considering
or proposing such an acquisition prior to the Effective Time, even if any such
person was prepared to offer to pay consideration that had a higher current
market price.
Copies of the GFCO Stock Option Agreement and the FFOH Stock Option
Agreement are included as Annexes II and III to this Prospectus/Joint Proxy
Statement, respectively. The foregoing discussion is qualified in its entirety
by reference to the Stock Option Agreements.
STOCKHOLDER AGREEMENTS
In conjunction with the Merger Agreement, FFOH and GFCO also entered
into reciprocal stockholder agreements. FFOH entered into a Stockholder
Agreement, dated as of September 28, 1998, with certain directors of GFCO (the
"GFCO Stockholder Agreement"). Pursuant to the GFCO Stockholder Agreement, a
copy of which is included as Annex IV hereto, each of such persons, solely in
his or her capacity as a shareholder of GFCO, agreed, among other things, not to
sell, pledge, transfer or otherwise dispose of his or her shares of GFCO Common
Stock prior to the meeting of shareholders of GFCO at which the Merger Agreement
is considered and to vote such shares of GFCO Common Stock in favor of the
Merger Agreement.
GFCO also entered into a Stockholder Agreement, dated as of September
28, 1998, with certain directors of FFOH (the "FFOH Stockholder Agreement").
Pursuant to the FFOH Stockholder Agreement, a copy of which is included as Annex
V hereto, each of such persons, solely in his or her capacity as a shareholder
of FFOH, agreed, among other things, not to sell, pledge, transfer or otherwise
dispose of his or her shares of FFOH Common Stock prior to the meeting of
shareholders of FFOH at which the Merger Agreement is considered and to vote
such shares of FFOH Common Stock in favor of the Merger Agreement.
LETTER AGREEMENTS
In connection with the execution of the Merger Agreement, directors and
executive officers of GFCO and FFOH agreed to certain restrictions on the
transfer of shares of FFOH Common Stock and GFCO Common Stock which are intended
to ensure that the Merger will be accounted for as a pooling of interests under
generally accepted accounting principles and, in the case of directors and
executive officers of GFCO, compliance with applicable federal securities laws
in connection with the transfer of shares of FFOH Common Stock received by them
upon consummation of the Merger.
See "The Merger - Resale of FFOH Common Stock."
DISSENTERS' RIGHTS
Dissenters' rights are not available to holders of GFCO Common Stock
regardless of how they vote on the adoption of the Merger Agreement.
61
<PAGE> 73
In the event that the Merger is consummated, any holder of shares of
FFOH Common Stock who objects to the Merger is entitled to dissent from the
Merger and to have the fair value of such shares ("Dissenting Stock") as
determined by FFOH, or if necessary, judicially determined, paid to him or her,
by complying with the provisions of Section 1701.85 of the OGCL. Failure to take
any steps set forth in Section 1701.85 in connection with the exercise of such
rights may result in termination or waiver thereof.
The following is a summary of the statutory procedures required to be
followed by a holder of Dissenting Stock (a "dissenting shareholder") in order
to exercise his or her rights under the OGCL. This summary is qualified in its
entirety by reference to Section 1701.85 of the OGCL, the text of which is
attached as Annex VIII to this Prospectus/Joint Proxy Statement.
Under Section 1701.85 where a merger is to be submitted for approval at
a meeting of shareholders, as in the case of the FFOH Special Meeting, not later
than ten days after such meeting, any holder of FFOH common stock for which
appraisal rights are available who wishes to assert his appraisal rights shall
deliver to FFOH a written demand for payment to him of the fair cash value of
the shares for which he seeks relief. The demand shall include the dissenting
shareholder's address, the number and class of such shares and the amount
claimed by him as the fair cash value of the shares. ANY SUCH SHAREHOLDER WHO
WISHES TO EXERCISE SUCH APPRAISAL RIGHTS SHOULD REVIEW CAREFULLY THE FOLLOWING
DISCUSSION AND ANNEX VIII TO THIS PROSPECTUS/JOINT PROXY STATEMENT BECAUSE
FAILURE TO TIMELY AND PROPERLY COMPLY WITH THE PROCEDURES SPECIFIED WILL RESULT
IN THE LOSS OF APPRAISAL RIGHTS UNDER SECTION 1701.85.
A demand for appraisal rights must be in addition to and separate from
any proxy or vote against the Merger. A vote against the Merger does not, by
itself, constitute a demand for appraisal rights. Also, voting for the Merger
will result in the loss of appraisal rights with respect to such shares.
Only a holder of record of shares of FFOH Common Stock is entitled to
assert appraisal rights for the shares of FFOH Common Stock registered in that
holder's name. A demand for appraisal should be executed by or on behalf of the
holder of record fully and correctly, as his name appears on his stock
certificates. If the shares of FFOH Common Stock are owned of record in a
fiduciary capacity, such as by a trustee, guardian or custodian, execution of
the demand should be made in that capacity, and if the shares of FFOH Common
Stock are owned of record by more than one person, as in a joint tenancy or
tenancy in common, the demand should be executed by or on behalf of all joint
owners. An authorized agent, including one or more joint owners, may execute a
demand for appraisal on behalf of a holder of record; however, the agent must
identify the record owner or owners and expressly disclose the fact that, in
executing the demand, the agent is agent for such owner or owners. A record
holder such as a broker who holds shares of FFOH Common Stock as nominee for
several beneficial owners may exercise appraisal rights with respect to the
shares of FFOH Common Stock held for one or more beneficial owners while not
exercising such rights with respect to the shares of FFOH Common Stock held for
other beneficial owners; in such case, the written demand should set forth the
number of shares of FFOH Common Stock as to which appraisal
62
<PAGE> 74
is sought and where no number of shares of FFOH Common Stock is expressly
mentioned the demand will be presumed to cover all shares of FFOH Common Stock
held in the name of the record owner. Shareholders who hold their shares of FFOH
Common Stock in brokerage accounts or other nominee forms and who wish to
exercise appraisal rights must take all necessary steps in order that a demand
for appraisal is made by the record holder of such shares and are urged to
consult with their brokers to determine the appropriate procedures for the
making of a demand for appraisal by the record holder and for surrendering the
certificates for such shares for notation of appraisal rights as set forth
below.
All written demands for appraisal with respect to FFOH Common Stock
should be sent or delivered to Paul D. Staubach, Secretary, Fidelity Financial
of Ohio, Inc., 4555 Montgomery Road, Cincinnati, Ohio 45212, within ten days
following the FFOH Special Meeting.
If FFOH sends to a dissenting shareholder, at the address specified in
his demand, a request for the certificates representing the shares as to which
he seeks relief, the dissenting shareholder, within fifteen days from the date
of the sending of such request, shall deliver to FFOH the certificates requested
so that such institution may endorse on them a legend to the effect that demand
for the fair cash value of such shares has been made. FFOH shall promptly return
such endorsed certificates to the dissenting shareholder. Failure to deliver
such certificates to FFOH terminates, at the option of FFOH, the dissenting
shareholder's appraisal rights if FFOH exercises such option by providing
written notice to the dissenting shareholder within twenty days after the lapse
of fifteen-day period unless a court for good cause shown otherwise directs.
If FFOH and any holder of FFOH Common Stock who has complied with the
foregoing procedures and who is entitled to appraisal rights under Section
1701.85 have not agreed as to the fair value of his shares within three months
after the service of the demand by the dissenting shareholder, FFOH or the
shareholder may file a complaint with the court of common pleas in the county in
which the principal office of FFOH is located. Other dissenting shareholders,
within the three-month period, may join as plaintiffs.
If a complaint requesting an appraisal is timely filed, after a hearing
on such petition, the court may determine that the holders of shares of FFOH
Common Stock are entitled to appraisal rights and, in such a case, may order an
appraisal of the "fair value" of the shares of such FFOH Common Stock, as of the
day prior to the day on which the vote by the shareholders was taken. Such
appraisal may be conducted by an appraiser appointed by the court. The fair cash
value for purposes of appraisal rights is the amount that a willing seller who
is under no compulsion to sell would be willing to accept and that a willing
buyer under no compulsion to purchase would be willing to pay.
The costs of any appraisal proceeding may be apportioned and assessed
by the court as it deems equitable against all or some of the parties. The final
order of the court may be appealed as set forth in Section 1701.85.
63
<PAGE> 75
Any holder of shares of FFOH Common Stock who has duly demanded an
appraisal in compliance with Section 1701.85 will not, after the Effective Time,
be entitled to vote the shares of FFOH Common Stock subject to such demand for
any purpose or be entitled to the payment of dividends or other distributions on
those shares (except dividends or other distributions payable to holders of
record of shares of FFOH Common Stock shall be paid to the holder of record as a
credit upon the fair cash value of the shares).
If any holder of FFOH Common Stock who demands appraisal of his shares
under Section 1701.85 fails to perfect, or effectively withdraws or loses his
right to appraisal as provided in Section 1701.85, such shareholder will
continue to retain his shares of FFOH Common Stock and be entitled to all rights
as an FFOH shareholder. A holder may withdraw his demand for appraisal by
delivering to FFOH a written withdrawal of his demand for appraisal.
Failure to follow the steps required by Section 1701.85 for perfecting
appraisal rights may result in the loss of such rights.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
BOARD OF DIRECTORS AND MANAGEMENT FOLLOWING THE MERGER
Pursuant to the Merger Agreement, at the Effective Time the directors
of FFOH shall include five persons serving as directors of GFCO immediately
prior to the Effective Time (including Robert R. Sudbrook, President and Chief
Executive Officer of GFCO) designated by GFCO. The Merger Agreement also
provides that, at the Effective Time, Mr. Sudbrook shall be President and Chief
Executive Officer of FFOH.
The following table sets forth certain information about each director
of GFCO who will become a director of FFOH upon consummation of the Merger.
<TABLE>
<CAPTION>
Position with GFCO and Director of
Principal Occupation GFCO
Name Age During the Past Five Years Since(1)
---- --- -------------------------- ---------
<S> <C> <C> <C>
Daniel W. Geeding 56 Dean of the College of Business Administration at 1988
Xavier University from 1988 through 1998. Mr.
Geeding currently serves as a Professor of
Management and the Director of the Center
for International Business at Xavier
University. Mr. Geeding also serves as a
director of Frisch's Restaurants, Inc. and
Zaring National Homes, Inc.
Kenneth C. Lichtendahl 49 President of Hudepohl-Schoenling Brewing Company 1997
since 1970. Mr. Lichtendahl also serves as a
director of Cincinnati Financial Corporation.
</TABLE>
64
<PAGE> 76
<TABLE>
<CAPTION>
Position with GFCO and Director of
Principal Occupation GFCO
Name Age During the Past Five Years Since(1)
---- --- -------------------------- ---------
<S> <C> <C> <C>
Edgar A. Rust 55 Chairman of the Board of GFCO and a director of 1975
Centennial Bank. From 1975 through 1993, Mr. Rust
served as President and Chief Executive Officer of
Centennial Bank. Between 1993 and 1996, Mr. Rust
served GFCO and Centennial Bank in various
capacities, including Vice Chairman of GFCO and an
interim appointment as President and Chief Executive
Officer following the death of Mr. Sudbrook's
predecessor. Since January 1995, Mr. Rust has served
as Housing Director of Bethany House Services. He
also serves as Chairman of the Board of the
Cincinnati Development Fund.
Robert R. Sudbrook 55 President and Chief Executive Officer of GFCO and 1996
Centennial Bank since July 1996. Before his arrival
at GFCO, Mr. Sudbrook served for six years as the
President and Chief Executive Officer of The North
Side Bank & Trust Company, a $215 million asset bank
in Cincinnati. Prior to that, Mr. Sudbrook had over
20 years of experience in the banking industry.
John L. Torbeck 44 President of Torbeck Homes, Inc., a residential 1984
construction company located in Cincinnati, a
position he has held since the establishment of that
company in 1984.
- ------------------
(1) Indicates the year that the individual became a director of GFCO's subsidiary, Centennial Bank or The Glenway
Loan and Deposit Company, which converted to stock form and merged into Centennial Bank on August 24, 1993 (the
"Merger-Conversion"). Messrs. Geeding and Rust became directors of GFCO when GFCO was formed in 1990. Mr.
Lichtendahl was a director of GFCO from its formation in 1990 through the expiration of his term in 1996 and
was re-appointed by the Board of Directors to fill a vacancy on the Board in 1998. Mr. Torbeck became a
director of GFCO on the effective date of the Merger-Conversion and served until September 1995. Mr. Torbeck
was reappointed to the GFCO Board in October 1998.
</TABLE>
65
<PAGE> 77
PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma combined condensed consolidated
statement of financial condition combines the consolidated historical statements
of financial condition of FFOH and GFCO, assuming the Merger was consummated as
of September 30, 1998 on a pooling of interests accounting basis. The following
unaudited pro forma combined condensed consolidated statements of operations
present the combined consolidated statements of operations of FFOH and GFCO
assuming the Merger was consummated as of the beginning of the indicated
periods. See "The Merger - Accounting Treatment of the Merger." Certain
insignificant reclassifications have been reflected in the pro forma information
to conform statement presentations. In addition, FFOH's fiscal year end is
December 31 while GFCO's fiscal year end is June 30. For purposes of the tables
below, GFCO financial data is presented as though its fiscal year ended December
31.
The effect of an expected reorganization and restructuring charge in
connection with the Merger and the Bank Merger has been reflected in the pro
forma combined condensed consolidated statement of financial condition, however,
because the reorganization and restructuring charge is nonrecurring, it has not
been reflected in the pro forma combined condensed consolidated statements of
operations. The pro forma financial data does not reflect cost savings,
operating synergies and revenue enhancements which are expected to be realized
after the Merger and the Bank Merger.
The pro forma information presented is not necessarily indicative of
the results of operations or the combined financial position that would have
resulted had the Merger been consummated at September 30, 1998 or at the
beginning of the periods indicated, nor is it necessarily indicative of the
results of operations in future periods or the future financial position of the
combined entities.
The pro forma information should be read in conjunction with the
historical consolidated financial statements of FFOH and GFCO, including the
related notes, incorporated by reference herein, and the selected consolidated
and other pro forma financial information, including the notes thereto,
appearing elsewhere in this Prospectus/Joint Proxy Statement. See "Where you can
Find More Information" and "Selected Pro Forma Consolidated Financial Data."
66
<PAGE> 78
PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
FFOH AND GFCO
SEPTEMBER 30, 1998
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Adjustments Pro Forma
FFOH GFCO Debit/(Credit) Combined
---- ---- -------------- --------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 2,069 $ 2,882 $ -- $ 4,951
Federal funds sold and interest-bearing deposits
in other financial institutions 17,440 1,941 -- 19,381
--------- --------- --------- ---------
Cash and cash equivalents 19,509 4,823 -- 24,332
Investment securities available for sale-at market 1,844 -- -- 1,844
Investment securities held to maturity-at cost -- 9,073 -- 9,073
Mortgage-backed securities available for sale
-at market 26,629 4,940 -- 31,569
Mortgage-backed securities held to maturity-at cost 31,999 10,768 -- 42,767
Loans receivable-net 425,498 257,578 -- 683,076
Loans held for sale-at lower of cost or market 197 -- -- 197
Office premises and equipment-at depreciated cost 7,387 5,707 -- 13,094
Real estate acquired through foreclosure 95 -- -- 95
Federal Home Loan Bank stock-at cost 4,387 2,665 -- 7,052
Accrued interest receivable on loans 2,273 1,567 -- 3,840
Accrued interest receivable on mortgage-backed
securities, investments and other 399 169 -- 568
Cash surrender value of life insurance -- 1,667 -- 1,667
Prepaid expenses and other assets 623 414 -- 1,037
Prepaid federal income taxes 161 -- -- 161
Goodwill and other intangible assets 7,116 200 -- 7,316
--------- --------- --------- ---------
Total assets $ 528,117 $ 299,571 $ -- $ 827,688
========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 418,953 $ 219,335 $ -- $ 638,288
FHLB advances 38,392 47,199 -- 85,591
Advances by borrowers for taxes and insurance 1,690 736 -- 2,426
Accrued interest and other liabilities 1,573 1,862 (4,000)(1) 7,435
Accrued federal income taxes -- 9 9
Deferred federal income taxes 682 591 900 (1) 373
--------- --------- --------- ---------
Total liabilities 461,290 269,732 (3,100) 734,122
--------- --------- --------- ---------
Stockholders' equity
Preferred stock -- --
Common stock:
FFOH 560 -- (344)(2) 904
GFCO -- 24 24 (2) --
Additional paid-in capital 41,634 13,405 13,405 (2) 71,148
(29,514)(2)
Retained earnings-restricted 26,515 17,259 17,259 (2) 23,415
3,100 (1)
Less shares acquired by Employee Stock
Ownership Plan (ESOP) (1,672) -- -- (1,672)
Less shares of common stock held in
treasury-at cost -- (830) (830)(2) -
Less shares acquired by Management
Recognition Plan (MRP) (234) (80) -- (314)
Unrealized gains on securities designated as
available for sale, net of related tax effects 24 61 -- 85
--------- --------- --------- ---------
Total stockholders' equity 66,827 29,839 3,100 93,566
--------- --------- --------- ---------
Total liabilities and stockholders' equity $ 528,117 $ 299,571 $ -- $ 827,688
========= ========= ========= =========
- ---------------------
(1) Reflects an estimated $3.1 million, net of taxes, of one-time reorganization and restructuring costs
related to the Merger and the Bank Merger.
(2) Reflects the par value of the FFOH Common Stock to be issued in exchange for GFCO Common Stock in
connection with the Merger, with related adjustment to paid-in capital. The FFOH Common Stock to be
issued in connection with the Merger was calculated by multiplying the number of outstanding shares of
GFCO Common Stock by the 1.5 share Exchange Ratio.
</TABLE>
67
<PAGE> 79
PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FFOH AND GFCO
NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Pro Forma
FFOH GFCO Combined(1)
---- ---- -----------
<S> <C> <C> <C>
Interest income
Loans $ 24,531 $ 15,547 $ 40,078
Mortgage-backed securities 2,583 881 3,464
Investment securities 243 360 603
Interest-bearing deposits and other 1,164 204 1,368
----------- ----------- -----------
Total interest income 28,521 16,992 45,513
Interest expense
Deposits 15,426 7,903 23,329
Borrowings 1,839 1,994 3,833
----------- ----------- -----------
Total interest expense 17,265 9,897 27,162
----------- ----------- -----------
Net interest income 11,256 7,095 18,351
Provision for losses on loans 77 245 322
----------- ----------- -----------
Net interest income after provision for
losses on loans 11,179 6,850 18,029
Other income
Gain on sale of investment and mortgage-
backed securities 62 42 104
Gain on sale of loans 119 69 188
Gain (loss) on sale of real estate 141 (50) 91
Loss on sale of real estate acquired through
foreclosure -- (19) (19)
Other operating 844 664 1,508
----------- ----------- -----------
Total other income 1,166 706 1,872
General, administrative and other expense
Employee compensation and benefits 2,893 2,524 5,417
Occupancy and equipment 1,148 537 1,685
Federal deposit insurance premiums 197 111 308
Franchise taxes 598 126 724
Amortization of goodwill and other intangible assets 512 97 609
Data processing 376 205 581
Other operating 1,228 689 1,917
----------- ----------- -----------
Total general, administrative and other
expense 6,952 4,289 11,241
----------- ----------- -----------
Earnings before income taxes 5,393 3,267 8,660
Federal income taxes
Current 1,820 1,004 2,824
Deferred 121 117 238
----------- ----------- -----------
Total federal income taxes 1,941 1,121 3,062
----------- ----------- -----------
Net earnings $ 3,452 $ 2,146 $ 5,598
=========== =========== ===========
Earnings per share:
Basic $ 0.64 $ 0.94 $ 0.63
=========== =========== ===========
Diluted $ 0.63 $ 0.92 $ 0.62
=========== =========== ===========
Average shares outstanding:
Basic 5,421,425 2,286,284 8,850,851
Diluted 5,492,363 2,322,979 8,976,832
</TABLE>
68
<PAGE> 80
PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FFOH AND GFCO
NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Pro Forma
FFOH GFCO Combined(1)
---- ---- -----------
<S> <C> <C> <C>
Interest income
Loans $ 24,765 $ 14,336 $ 39,101
Mortgage-backed securities 2,057 1,182 3,239
Investment securities 862 319 1,181
Interest-bearing deposits and other 765 169 934
----------- ----------- -----------
Total interest income 28,449 16,006 44,455
Interest expense
Deposits 15,601 8,266 23,867
Borrowings 1,106 1,086 2,192
----------- ----------- -----------
Total interest expense 16,707 9,352 26,059
----------- ----------- -----------
Net interest income 11,742 6,654 18,396
Provision for losses on loans 75 205 280
----------- ----------- -----------
Net interest income after provision for
losses on loans 11,667 6,449 18,116
Other income
Gain on sale of investment and mortgage-
backed securities 136 -- 136
Gain on sale of loans 29 -- 29
Gain on sale of real estate 6 -- 6
Loss on sale of real estate acquired through
foreclosure -- (5) (5)
Other operating 808 592 1,400
----------- ----------- -----------
Total other income 979 587 1,566
General, administrative and other expense
Employee compensation and benefits 3,066 2,327 5,393
Occupancy and equipment 1,115 492 1,607
Federal deposit insurance premiums 189 109 298
Franchise taxes 557 285 842
Amortization of goodwill and other intangible assets 523 139 662
Data processing 345 257 602
Other operating 1,214 729 1,943
----------- ----------- -----------
Total general, administrative and other expense 7,009 4,338 11,347
----------- ----------- -----------
Earnings before income taxes 5,637 2,698 8,335
Federal income taxes
Current 1,513 809 2,322
Deferred 479 138 617
----------- ----------- -----------
Total federal income taxes 1,992 947 2,939
----------- ----------- -----------
Net earnings $ 3,645 $ 1,751 $ 5,396
=========== =========== ===========
Earnings per share:
Basic $ 0.67 $ 0.77 $ 0.61
=========== =========== ===========
Diluted $ 0.66 $ 0.76 $ 0.60
=========== =========== ===========
Average shares outstanding:
Basic 5,396,962 2,278,521 8,814,744
Diluted 5,446,753 2,318,594 8,924,644
</TABLE>
69
<PAGE> 81
PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FFOH AND GFCO
YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Pro Forma
FFOH GFCO Combined(1)
---- ---- -----------
<S> <C> <C> <C>
Interest income
Loans $ 33,433 $ 19,483 $ 52,916
Mortgage-backed securities 2,651 1,528 4,179
Investment securities 1,006 453 1,459
Interest-bearing deposits and other 1,061 219 1,280
----------- ----------- -----------
Total interest income 38,151 21,683 59,834
Interest expense
Deposits 20,923 11,083 32,006
Borrowings 1,639 1,653 3,292
----------- ----------- -----------
Total interest expense 22,562 12,736 35,298
----------- ----------- -----------
Net interest income 15,589 8,947 24,536
Provision for losses on loans 101 268 369
----------- ----------- -----------
Net interest income after provision for
losses on loans 15,488 8,679 24,167
Other income
Gain on sale of investment and mortgage-
backed securities 267 -- 267
Gain on sale of loans 36 -- 36
Gain on sale of real estate 6 -- 6
Loss on sale of real estate acquired through foreclosure -- (5) (5)
Other operating 1,106 831 1,937
----------- ----------- -----------
Total other income 1,415 826 2,241
General, administrative and other expense
Employee compensation and benefits 4,125 3,138 7,263
Occupancy and equipment 1,477 655 2,132
Federal deposit insurance premiums 256 144 400
Franchise taxes 751 376 1,127
Amortization of goodwill and other intangible assets 694 175 869
Data processing 476 332 808
Other operating 1,590 985 2,575
----------- ----------- -----------
Total general, administrative and other expense 9,369 5,805 15,174
----------- ----------- -----------
Earnings before income taxes 7,534 3,700 11,234
Federal income taxes
Current 2,177 1,235 3,412
Deferred 481 63 544
----------- ----------- -----------
Total federal income taxes 2,658 1,298 3,956
----------- ----------- -----------
Net earnings $ 4,876 $ 2,402 $ 7,278
=========== =========== ===========
Earnings per share:
Basic $ 0.90 $ 1.05 $ 0.83
=========== =========== ===========
Diluted $ 0.89 $ 1.03 $ 0.81
=========== =========== ===========
Average shares outstanding:
Basic 5,395,878 2,279,141 8,814,590
Diluted 5,449,727 2,327,669 8,941,231
</TABLE>
70
<PAGE> 82
PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FFOH AND GFCO
YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Pro Forma
FFOH GFCO Combined(1)
---- ---- -----------
<S> <C> <C> <C>
Interest income
Loans $ 18,872 $ 17,740 $ 36,612
Mortgage-backed securities 2,103 1,974 4,077
Investment securities 833 532 1,365
Interest-bearing deposits and other 930 209 1,139
----------- ----------- -----------
Total interest income 22,738 20,455 43,193
Interest expense
Deposits 11,554 10,777 22,331
Borrowings 1,102 1,210 2,312
----------- ----------- -----------
Total interest expense 12,656 11,987 24,643
----------- ----------- -----------
Net interest income 10,082 8,468 18,550
Provision for losses on loans 129 169 298
----------- ----------- -----------
Net interest income after provision for losses on loans 9,953 8,299 18,252
Other income
Gain (loss) on sale of investment and mortgage-
backed securities (295) 54 (241)
Gain on sale of loans 3 20 23
Gain on sale of real estate -- 65 65
Gain on sale of real estate acquired through foreclosure -- 5 5
Other operating 457 646 1,103
----------- ----------- -----------
Total other income 165 790 955
General, administrative and other expense
Employee compensation and benefits 3,122 3,348 6,470
Occupancy and equipment 853 362 1,215
Federal deposit insurance premiums 1,598 1,723 3,321
Franchise taxes 521 353 874
Amortization of goodwill and other intangible assets 143 214 357
Data processing 268 399 667
Other operating 1,133 1,278 2,411
----------- ----------- -----------
Total general, administrative and other expense 7,638 7,677 15,315
----------- ----------- -----------
Earnings before income taxes 2,480 1,412 3,892
Federal income taxes
Current 916 652 1,568
Deferred (44) (109) (153)
----------- ----------- -----------
Total federal income taxes 872 543 1,415
----------- ----------- -----------
Net earnings $ 1,608 $ 869 $ 2,477
=========== =========== ===========
Earnings per share:
Basic $ 0.38 $ 0.38 $ 0.32
=========== =========== ===========
Diluted $ 0.38 $ 0.37 $ 0.32
=========== =========== ===========
Average shares outstanding:
Basic 4,207,788 2,300,363 7,658,333
Diluted 4,240,638 2,333,644 7,741,104
</TABLE>
71
<PAGE> 83
PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FFOH AND GFCO
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Pro Forma
FFOH GFCO Combined(1)
---- ---- -----------
<S> <C> <C> <C>
Interest income
Loans $ 14,697 $ 16,376 $ 31,073
Mortgage-backed securities 1,695 2,008 3,703
Investment securities 307 774 1,081
Interest-bearing deposits and other 302 152 454
----------- ----------- -----------
Total interest income 17,001 19,310 36,311
Interest expense
Deposits 9,267 9,973 19,240
Borrowings 900 1,577 2,477
----------- ----------- -----------
Total interest expense 10,167 11,550 21,717
----------- ----------- -----------
Net interest income 6,834 7,760 14,594
Provision for losses on loans 71 66 137
----------- ----------- -----------
Net interest income after provision for losses on loans 6,763 7,694 14,457
Other income
Gain (loss) on sale of investment and mortgage-
backed securities (21) 1 (20)
Gain on sale of loans 8 15 23
Gain on sale of real estate -- 79 79
Gain (loss) on sale of real estate acquired through foreclosure (5) 17 12
Other operating 373 598 971
----------- ----------- -----------
Total other income 355 710 1,065
General, administrative and other expense
Employee compensation and benefits 2,107 3,140 5,247
Occupancy and equipment 622 407 1,029
Federal deposit insurance premiums 395 467 862
Franchise taxes 428 384 812
Amortization of goodwill and other intangible assets -- 222 222
Data processing 188 210 398
Other operating 645 1,191 1,836
----------- ----------- -----------
Total general, administrative and other expense 4,385 6,021 10,406
----------- ----------- -----------
Earnings before income taxes 2,733 2,383 5,116
Federal income taxes
Current 774 588 1,362
Deferred 145 304 449
----------- ----------- -----------
Total federal income taxes 919 892 1,811
----------- ----------- -----------
Net earnings $ 1,814 $ 1,491 $ 3,305
=========== =========== ===========
Earnings per share:
Basic $ 0.45 $ 0.65 $ 0.44
=========== =========== ===========
Diluted $ 0.44 $ 0.64 $ 0.44
=========== =========== ===========
Average shares outstanding:
Basic 4,053,980 2,291,410 7,491,095
Diluted 4,077,331 2,320,296 7,557,775
- ---------------------
(1) FFOH expects to achieve cost savings, operating synergies and revenue enhancements following
consummation of the Merger and the Bank Merger. The cost savings, operating synergies and revenue
enhancements are expected to be achieved in various amounts at various times during the periods
subsequent to the consummation of such transactions, and not ratably over or at the beginning or
end of such periods. See "Management and Operations of FFOH after the Merger." No adjustment has
been reflected in the pro forma combined statements of operations for the anticipated cost savings,
operating synergies and revenue enhancements.
</TABLE>
72
<PAGE> 84
DESCRIPTION OF FFOH CAPITAL STOCK
FFOH is authorized to issue up to 15,000,000 shares of FFOH Common
Stock and up to 5,000,000 shares of preferred stock, par value $0.10 per share
(the "FFOH Preferred Stock"). The capital stock of FFOH does not represent or
constitute a deposit account and is not insured by the FDIC.
The following description of the FFOH capital stock does not purport to
be complete and is qualified in all respects by reference to the Articles of
Incorporation ("Articles"), Code of Regulations and Bylaws of FFOH and the OGCL.
FFOH COMMON STOCK
General. Each share of FFOH Common Stock has the same relative rights
and is identical in all respects with each other share of FFOH Common Stock. The
FFOH Common Stock is not subject to call for redemption and, at the Effective
Time of the Merger, each share of FFOH Common Stock offered hereby will be fully
paid and non-assessable.
Voting Rights. Except as provided in any resolution or resolutions
adopted by the FFOH Board establishing any series of FFOH Preferred Stock, the
holders of FFOH Common Stock possess exclusive voting rights in FFOH. Each
holder of FFOH Common Stock is entitled to one vote for each share held on all
matters voted upon by shareholders, and shareholders are not permitted to
cumulate votes in elections of directors.
Dividends. Subject to the rights of the holders of any series of FFOH
Preferred Stock, the holders of the FFOH Common Stock are entitled to such
dividends as may be declared from time to time by the FFOH Board out of funds
legally available therefor.
Preemptive Rights. Holders of FFOH Common Stock do not have any
preemptive rights with respect to any shares which may be issued by FFOH in the
future; thus, FFOH may issue and sell shares of FFOH Common Stock without first
offering them to the then holders of the FFOH Common Stock.
Liquidation. In the event of any liquidation, dissolution or winding up
of FFOH, the holders of the FFOH Common Stock would be entitled to receive,
after payment of all debts and liabilities of FFOH, all assets of FFOH available
for distribution, subject to the rights of the holders of any FFOH Preferred
Stock which may be issued with a priority in liquidation or dissolution over the
holders of the FFOH Common Stock.
FFOH PREFERRED STOCK
The FFOH Board is authorized to issue FFOH Preferred Stock and to fix
and state voting powers, designations, preferences or other special rights of
such shares and the qualifications,
73
<PAGE> 85
limitations and restrictions thereof. The FFOH Preferred Stock may be issued in
distinctly designated series, may be convertible into FFOH Common Stock and may
rank prior to the FFOH Common Stock as to dividend rights, liquidation
preferences, or both.
The authorized but unissued shares of FFOH Preferred Stock (as well as
the authorized but unissued and unreserved shares of FFOH Common Stock) are
available for issuance in future mergers or acquisitions, in a future public
offering or private placement or for other general corporate purposes. Except as
otherwise required to approve the transaction in which the additional authorized
shares of FFOH Preferred Stock (as well as FFOH Common Stock) would be issued,
shareholder approval generally would not be required for the issuance of these
shares. Depending on the circumstances, however, shareholder approval may be
required pursuant to the requirements for continued listing of the FFOH Common
Stock on the Nasdaq National Market or the requirements of any exchange on which
the FFOH Common Stock may then be listed.
OTHER PROVISIONS
Certain provisions of FFOH's Articles, Code of Regulations and Bylaws
which deal with matters of corporate governance and rights of shareholders might
be deemed to have a potential anti-takeover effect. These provisions, which are
described under "Comparison of the Rights of Shareholders" below, provide, among
other things, (i) that the Board of Directors of FFOH shall be divided into up
to three classes; (ii) that special meetings of shareholders may only be called
by the Chairman of the Board, President or the Board of Directors of FFOH and
upon written request by the holders of 50% or more of the outstanding voting
shares; (iii) that shareholders generally must provide FFOH advance notice of
shareholder proposals and nominations for director and provide certain specified
related information; (iv) that no person may acquire more than 10% of the issued
and outstanding shares of any class of an equity security of FFOH, subject to
certain exceptions, until March 4, 2001; (v) for the authority of the FFOH Board
to issue shares of authorized but unissued FFOH Common Stock and FFOH Preferred
Stock and to establish the terms of any one or more series of FFOH Preferred
Stock, including voting rights; and (vi) restrictions on FFOH's ability to
engage in certain business combinations with "related persons." In addition to
the foregoing, and also as described under "Comparison of the Rights of
Shareholders" below, the OGCL generally restricts FFOH's ability to engage in
certain business combinations with "interested shareholders" and restricts the
voting rights of shares acquired by a person in excess of 20% of the outstanding
shares.
The foregoing provisions of the Articles, Code of Regulations and
Bylaws of FFOH and the OGCL could have the effect of discouraging an acquisition
of FFOH or purchases of shares of FFOH Common Stock in furtherance of an
acquisition, and could accordingly, under certain circumstances, discourage
transactions which might otherwise have a favorable effect on the price of the
FFOH Common Stock.
74
<PAGE> 86
TRANSFER AGENT
The transfer agent and registrar for the FFOH Common Stock is Fifth
Third Bank, Cincinnati, Ohio.
COMPARISON OF THE RIGHTS OF SHAREHOLDERS
The rights of holders of FFOH Common Stock are governed by the OGCL and
FFOH's Articles, Code of Regulations and Bylaws, while the rights of holders of
GFCO Common Stock are governed by the DGCL and GFCO's Certificate of
Incorporation and Bylaws. Upon consummation of the Merger, shareholders of GFCO
will become shareholders of FFOH and their rights as shareholders of FFOH will
be governed by the Articles, Code of Regulations and Bylaws of FFOH and the
OGCL.
THE FOLLOWING SUMMARY IS NOT INTENDED TO BE A COMPLETE STATEMENT OF THE
DIFFERENCES AFFECTING THE RIGHTS OF GFCO'S SHAREHOLDERS, BUT RATHER SUMMARIZES
THE MORE SIGNIFICANT DIFFERENCES AFFECTING THE RIGHTS OF SUCH SHAREHOLDERS AND
CERTAIN IMPORTANT SIMILARITIES. THE SUMMARY IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE CERTIFICATE OF INCORPORATION AND BYLAWS OF GFCO, THE ARTICLES,
CODE OF REGULATIONS AND BYLAWS OF FFOH AND APPLICABLE LAWS AND REGULATIONS.
AUTHORIZED CAPITAL STOCK
FFOH's authorized capital stock consists of 15,000,000 shares of FFOH
Common Stock, of which 5,609,107 shares were outstanding as of the FFOH Record
Date, and 5,000,000 shares of FFOH Preferred Stock, none of which is issued and
outstanding. The FFOH Preferred Stock is issuable in series, each series having
such rights and preferences as FFOH's Board may fix and determine.
GFCO's authorized capital stock consists of 3,000,000 shares of GFCO
Common Stock, of which 2,311,348 shares were outstanding as of the GFCO Record
Date, and 500,000 shares of preferred stock, par value $.01 per share ("GFCO
Preferred Stock"), none of which is issued and outstanding. The GFCO Preferred
Stock is issuable in series, each series having such rights and preferences as
GFCO's Board may fix and determine.
ISSUANCE OF CAPITAL STOCK
Under the OGCL and the DGCL, FFOH and GFCO may issue shares of their
capital stock and rights or options for the purchase of shares of their capital
stock on such terms and for such consideration as may be determined by the
respective Boards. Neither the OGCL nor FFOH's Articles, Code of Regulations and
Bylaws or the DGCL or GFCO's Certificate of Incorporation and Bylaws require
shareholder approval of any such actions. However, the Bylaws of the National
Association of Securities Dealers, Inc. ("NASD") generally require corporations,
such as FFOH and
75
<PAGE> 87
GFCO, with securities which are quoted on the Nasdaq National Market to obtain
shareholder approval of certain issuances of common stock and most stock
compensation plans for directors, officers and key employees of the corporation.
Shareholder approval of stock-related compensation plans also may be sought in
certain instances in order to qualify such plans for favorable federal income
tax and securities law treatment under current laws and regulations.
VOTING RIGHTS
Holders of both FFOH Common Stock and GFCO Common Stock are entitled to
one vote per share on all matters properly presented at meetings of
shareholders. Neither FFOH's Articles nor GFCO's Certificate of Incorporation
permit shareholders to cumulate their votes in an election of directors.
For additional information relating to voting rights, see "-
Limitations on Acquisitions of Voting Stock and Voting Rights" and "Business
Combinations with Interested Shareholders" below.
PAYMENT OF DIVIDENDS
Both FFOH and GFCO can pay dividends on their outstanding shares in
accordance with the terms of the OGCL and the DGCL, respectively. The OGCL
generally provides that, subject to any restrictions in the corporation's
articles of incorporation, a corporation may make distributions to its
shareholders, provided that the dividend does not exceed the combination of the
surplus of the corporation (defined generally as the excess of a corporation's
assets plus stated capital over its liabilities) and the difference between the
following: (i) the reduction in surplus that results from the immediate
recognition of the transition obligation under Statement of Financial Accounting
Standards No. 106 ("SFAS No. 106") issued by the Financial Accounting Standards
Board and (ii) the aggregate amount of the transition obligation that would have
been recognized as of the date of the declaration of a dividend or distribution
if the corporation had elected to amortize its recognition of the transition
obligation under SFAS No. 106; and provided further that no dividend or
distribution shall be paid to the holders of shares of any class in violation of
the rights of the holders of shares of any other class, or when the corporation
is insolvent or there is reasonable ground to believe that by such payment the
corporation would be rendered insolvent.
The DGCL generally provides that, subject to any restrictions in the
corporation's certificate of incorporation, dividends may be declared from the
corporation's surplus or, if there is no surplus, from its net profits for the
fiscal year in which the dividend is declared and/or the preceding fiscal year.
However, if the corporation's capital (generally defined in the DGCL as the sum
of the aggregate par value of all shares of the corporation's capital stock,
where all such shares have a par value and the board of directors has not
established a higher level of capital) has been diminished to an amount less
than the aggregate amount of the capital represented by the issued and
outstanding stock of all classes having a preference upon the distribution of
assets, dividends may not be declared and paid out of such net profits until the
deficiency in such capital has been repaired.
76
<PAGE> 88
BOARD OF DIRECTORS
The Articles of FFOH require that the FFOH Board consist of not less
than five nor more than 15 members and be divided into two classes if the FFOH
Board consists of six, seven or eight members, or into three classes if the FFOH
Board consists of nine or more members. Each class must consist of no fewer than
three members and the members of each class shall be elected for a term of two
or three years and until their successors are elected and qualified. The
Certificate of Incorporation of GFCO provides that the number of directors shall
be fixed from time to time exclusively by the Board of Directors pursuant to a
resolution adopted by a majority of the total number of directors which GFCO
would have if there were no vacancies on the Board of Directors (the "Whole
Board"). GFCO's Certificate of Incorporation also provides that the GFCO Board
be divided into three classes, as nearly equal in number as reasonably possible,
and that the members of each class shall be elected for a term of three years
and until their successors are elected and qualified, with one class being
elected annually.
Under FFOH's Articles, any vacancies in the Board may be filled by the
affirmative vote of two-thirds of the remaining directors, whether or not a
quorum. Under GFCO's Bylaws, any vacancies in the Board may be filled by the
affirmative vote of a majority of the directors then in office, though less than
a quorum. Persons elected to fill vacancies on FFOH's or GFCO's Board may serve
until the respective annual meeting of shareholders at which the term of the
class to which the director has been elected expires.
FFOH's Articles provide that any director may be removed without cause
at a duly constituted meeting of shareholders called expressly for that purpose
upon the vote of the holders of at least 75% of the total votes eligible to be
cast by shareholders, and with cause by the affirmative vote of a majority of
the total votes eligible to be cast by shareholders. Cause for removal shall
exist only if the director whose removal is proposed has been either declared
incompetent by order of a court, convicted of a felony or an offense punishable
by imprisonment for a term of more than one year by a court of competent
jurisdiction, or deemed liable by a court of competent jurisdiction for gross
negligence or misconduct in the performance of such directors' duties to FFOH.
Under the Certificate of Incorporation of GFCO, any directors, or the entire
GFCO Board, may be removed from office at any time, but only for cause and only
by the affirmative vote of the holders of at least 80% of the voting power of
all of the then-outstanding shares entitled to vote generally in the election of
directors voting together as a single class.
LIMITATIONS ON LIABILITY
The Articles of FFOH provide that a director of FFOH shall not be
personally liable for monetary damages for any action taken, or for any failure
to take any action, except to the extent that by law a director's liability for
monetary damages may not be limited. Section 1701.59 of the OGCL currently
provides that directors generally will not be liable for any action taken as a
director, or any failure to take any action, unless (i) the director has failed
to perform the duties of the director's office in compliance with said section
(i.e., in good faith, with the care an ordinarily prudent person
77
<PAGE> 89
in a like position would exercise under similar circumstances and in a manner
the director reasonably believes to be in the best interests of the corporation)
and (ii) the breach or failure to act is undertaken with deliberate intent to
cause injury to the corporation or undertaken with reckless disregard for the
best interests of the corporation. The foregoing limitation on the liability of
directors does not apply to certain actions set forth in Sections 1701.60 and
1701.95 of the OGCL.
The Certificate of Incorporation of GFCO provides that a director of
GFCO shall not be personally liable to GFCO or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to GFCO or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the DGCL (i.e.,
unlawful payment of dividend or unlawful stock purchase or redemption), or (iv)
for any transaction from which the director derived an improper personal
benefit. GFCO's Certificate of Incorporation further provides that if the DGCL
is hereafter amended to further eliminate or limit the personal liability of
directors, then the liability of a director of GFCO shall be eliminated or
limited to the fullest extent permitted by the DGCL, as so amended. In addition,
any repeal or modification of the foregoing by the stockholders of GFCO shall
not adversely affect any right or protection of a director of GFCO existing at
the time of such repeal or modification.
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
The Articles of FFOH provide that FFOH shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed formal or informal action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is or was a director, officer, employee or agent of FFOH or any
predecessor of FFOH, or is or was serving at the request of FFOH or any
predecessor of FFOH as a director, officer, trustee, member, manager, employee
or agent of another corporation, partnership, limited liability company, joint
venture, trust or other enterprise, against expenses (including court costs and
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding to the fullest extent authorized by law. Section 1701.13 of the OGCL
provides that such indemnity shall be made only if (i) such person's conduct was
in good faith; (ii) such person acted in a manner he reasonably believed to be
in or not opposed to the corporation's best interests; and (iii) in the case of
any criminal proceeding, the person had no reasonable cause to believe that such
person's conduct was unlawful, with certain exceptions in the case of actions by
or in the right of the corporation.
The Certificate of Incorporation of GFCO provides, among other things,
that each person who was or is made a party or is threatened to be made a party
to or is otherwise involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "proceeding"), by reason of the
fact that he or she is or was a director or an officer of GFCO or is or was
serving at the request of GFCO as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan (an
"indemnitee"), whether the basis of such proceeding is alleged action in an
official
78
<PAGE> 90
capacity as a director, officer, employee or agent or in any other capacity
while serving as a director, officer, employee or agent, shall be indemnified
and held harmless by GFCO to the fullest extent authorized by the DGCL, as the
same exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits GFCO to provide broader
indemnification rights than such law permitted GFCO to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such indemnitee in connection
therewith; provided, however, that, except as provided therein with respect to
proceedings to enforce rights to indemnification, GFCO shall indemnify any such
indemnitee in connection with a proceeding (or part thereof) initiated by such
indemnitee only if such proceeding (or part thereof) was authorized by the Board
of Directors of GFCO.
Under Section 145(a)-(d) of the DGCL as currently in effect, other than
in actions brought by or in the right of GFCO, such indemnification would apply
if it was determined in the specific case that the proposed indemnitee acted in
good faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of GFCO and, with respect to any criminal proceeding, if
he or she had no reasonable cause to believe that his or her conduct was
unlawful. In actions brought by or in the right of GFCO, such indemnification
would probably be limited to reasonable expenses (including attorneys' fees),
and would apply if it were determined in the specific case that the proposed
indemnitee acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of GFCO, except that no
indemnification may be made with respect to any claim, issue or matter as to
which such person is adjudged liable to GFCO, unless, and only to the extent
that, the Delaware Court of Chancery or the court in which that action was
brought determines upon application that, in view of all the circumstances of
the case, the proposed indemnitee is fairly and reasonably entitled to indemnity
for such expenses as the court deems proper. To the extent that any present or
former director or officer of GFCO has been successful on the merits or
otherwise in defense of any proceeding, he or she must be indemnified against
reasonable expenses incurred by him or her in connection therewith.
SPECIAL MEETINGS OF SHAREHOLDERS
The Articles of FFOH contain a provision pursuant to which special
meetings of shareholders may be called only by the Chairman, President (or, in
the President's absence, death or disability, a Vice-President authorized to
exercise the authority of the President), the Board of Directors by action at a
meeting or a majority of the Board of Directors acting without a meeting or by
the Chairman, President or Secretary upon the written request of the holders of
50% or more of the outstanding capital stock entitled to vote at a meeting.
The Certificate of Incorporation of GFCO contains a provision that
special meetings of stockholders of GFCO may be called only by the Board of
Directors pursuant to a resolution adopted by a majority of the Whole Board.
79
<PAGE> 91
SHAREHOLDER NOMINATIONS AND PROPOSALS
The Articles of FFOH provide that all nominations for election to the
FFOH Board and proposals for any new business, other than those made by the FFOH
Board or a committee thereof, shall be made by a shareholder who has complied
with the notice provisions in the Articles. Written notice of a shareholder
nomination or written notice of a shareholder proposal must be communicated to
the attention of the Secretary and either delivered to, or mailed and received
at, the principal executive offices of FFOH not less than 60 days prior to the
anniversary date of the immediately preceding annual meeting. Each such notice
given by a shareholder with respect to nominations for the election of directors
shall set forth (i) the name, age, business address and, if known, residence
address of each nominee proposed in such notice; (ii) the principal occupation
or employment of each such nominee; and (iii) the number of shares of stock of
FFOH which are beneficially owned by each such nominee. Furthermore, any notice
given by a shareholder to the Secretary with respect to business proposals to be
brought before a meeting shall set forth in writing as to each matter: (i) a
brief description of the business desired to be brought before the meeting and
the reasons for conducting such business at the meeting; (ii) the name and
address, as they appear on FFOH's books, of the shareholder proposing such
business; (iii) the class and number of shares of FFOH which are beneficially
owned by the shareholder; and (iv) any material interest of the shareholder in
such business.
GFCO's Bylaws provide that all nominations for election to the GFCO
Board and proposals for any new business, other than those made by the GFCO
Board, shall be made by a shareholder who has complied with the notice
provisions in the Bylaws. Written notice of a shareholder nomination or written
notice of a shareholder proposal must be communicated to the Secretary of GFCO
and delivered or mailed to and received at the principal executive offices of
GFCO not less than 30 days prior to the date of the meeting; provided, however,
that in the event that less than 40 days' notice or prior disclosure of the date
of the meeting is given or made to stockholders, notice by the stockholder to be
timely must be so received not later than the close of business on the 10th day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made. Each such notice given by a shareholder with
respect to nominations for the election of directors shall set forth (i) as to
each person whom such stockholder proposes to nominate for election or
re-election as a director, all information relating to such person that is
required to be disclosed in solicitations of proxies for election of directors,
or is otherwise required, in each case pursuant to Regulation 14A under the
Exchange Act (including such person's written consent to being named in the
proxy statement as a nominee and to serving as a director if elected); and (ii)
as to the stockholder giving the notice (x) the name and address, as they appear
on GFCO's books, of such stockholder and (y) the class and number of shares of
GFCO's capital stock that are beneficially owned by such stockholder.
Furthermore, any written notice of a shareholder proposal shall set forth (i) a
brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (ii)
the name and address, as they appear on GFCO's books, of the stockholder who
proposed such business, (iii) the class and number of shares of GFCO's capital
stock that are beneficially owned by such stockholder and (iv) any material
interest of such stockholder in such business.
80
<PAGE> 92
SHAREHOLDER ACTION WITHOUT A MEETING
The Articles of FFOH provide that any action permitted to be taken by
the shareholders at a meeting may be taken without a meeting if a consent in
writing setting forth the action so taken shall be signed by all of the
shareholders entitled to vote.
The Bylaws of GFCO specifically provide that any action required or
permitted to be taken by the stockholders of GFCO must be effected at a duly
called annual or special meeting of shareholders of GFCO and may not be effected
by any consent in writing by such shareholders.
SHAREHOLDER'S RIGHT TO EXAMINE BOOKS AND RECORDS
Neither FFOH's Articles nor Code of Regulations addresses a
shareholder's right to examine books and records of FFOH. Nevertheless, the OGCL
provides that a shareholder may inspect books and records for any reasonable and
proper purpose upon written demand stating the purpose of the inspection.
Neither GFCO's Certificate of Incorporation nor Bylaws addresses a
shareholder's right to examine books and records of GFCO. The DGCL provides that
a shareholder may inspect books and records upon written demand under oath
stating the purpose of the inspection, if such purpose is reasonably related to
such person's interest as a shareholder.
LIMITATIONS ON ACQUISITIONS OF VOTING STOCK AND VOTING RIGHTS
The Articles of FFOH provide that for a period of five years from March
4, 1996, no person shall directly or indirectly offer to acquire or acquire the
beneficial ownership of (i) more than 10% of the issued and outstanding shares
of any class of an equity security of FFOH, or (ii) any securities convertible
into, or exercisable for, any equity securities of FFOH if, assuming conversion
or exercise by such person of all securities of which such person is the
beneficial owner which are convertible into, or exercisable for, such equity
securities (but of no securities convertible into, or exercisable for, such
equity securities of which such person is not the beneficial owner), such person
would be the beneficial owner of more than 10% of any class of an equity
security of FFOH. The term "person" is broadly defined in the Articles to
prevent circumvention of this restriction.
The foregoing restrictions do not apply to (i) any offer with a view
toward public resale made exclusively to FFOH by underwriters or a selling group
acting on its behalf, (ii) any employee benefit plan established by FFOH or
Fidelity Bank, and (iii) any other offer or acquisition approved in advance by
the affirmative vote of two-thirds of FFOH's Board. In the event that shares are
acquired in violation of this restriction, all shares beneficially owned by any
person in excess of 10% shall not be counted as shares entitled to vote and
shall not be voted by any person or counted as voting shares in connection with
any matters submitted to shareholders for a vote.
81
<PAGE> 93
The Certificate of Incorporation of GFCO contains a similar provision.
However, unlike FFOH's Articles, the provision in GFCO's Certificate of
Incorporation does not expire after a period of time.
MERGERS, CONSOLIDATIONS AND SALES OF ASSETS
The OGCL requires the approval of the board of directors and, unless
the articles of incorporation provide for a different vote (which cannot be less
than a majority), the affirmative vote of the holders of two-thirds of the
outstanding stock entitled to vote thereon for mergers or consolidations, and
for sales, leases or exchanges of all or substantially all of a company's
assets. The OGCL permits a company to merge with another corporation without
obtaining the approval of shareholders if the company is the surviving
corporation of such merger and if: (i) the articles of incorporation or code of
regulations of the company do not require the company to obtain shareholder
approval; (ii) the terms of the merger do not conflict with the company's
articles of incorporation; (iii) the company's articles of incorporation will
not differ from its articles of incorporation before the merger; and (iv) the
number of voting shares issuable as a result of the merger will not exceed
one-sixth of the shares of the company's common stock outstanding immediately
prior to the merger. Although FFOH's Articles do not currently provide for a
lesser vote in the case of mergers, consolidations or sales of assets, FFOH is
seeking shareholder approval of an amendment to its Articles which will reduce
the required vote in the case of mergers, consolidations or sales of assets from
two-thirds of the voting power of FFOH to a majority of the voting power of
FFOH.
The DGCL requires the approval of the Board of Directors and the
holders of a majority of the outstanding stock of GFCO entitled to vote thereon
for mergers or consolidations, and for sales, leases or exchanges of all or
substantially all of GFCO's assets. The DGCL permits GFCO to merge with another
corporation without obtaining the approval of GFCO's shareholders if: (i) GFCO
is the surviving corporation of the merger; (ii) the merger agreement does not
amend GFCO's Certificate of Incorporation; (iii) each share of GFCO's stock
outstanding immediately prior to the effective date of the merger is to be an
identical outstanding or treasury share of GFCO after the merger; and (iv) any
authorized but unissued shares or treasury shares of common stock to be issued
or delivered under the plan of merger plus those initially issuable upon
conversion of any other securities or obligations to be issued or delivered
under such plan do not exceed 20% of the shares of the common stock outstanding
immediately prior to the effective date of the merger.
BUSINESS COMBINATIONS WITH INTERESTED SHAREHOLDERS
The Articles of FFOH contain certain provisions which require the
holders of at least 80% of FFOH's outstanding shares of voting stock and a
majority of such shares not including shares deemed beneficially owned by a
"related person" (generally defined to include any shareholder beneficially
owning more than 10% of FFOH's outstanding voting stock) to approve certain
"business combinations," as defined therein. FFOH's Articles require the
approval of the shareholders in accordance with the increased voting
requirements in connection with any such
82
<PAGE> 94
transactions, except in cases where the proposed transaction has been approved
in advance by at least two-thirds of the Continuing Directors (generally, those
members of the FFOH Board who are not affiliated with the related person and
were directors before the related person became a related person). These
provisions of FFOH's Articles apply to any "business combination," which
generally is defined to include (i) any merger or consolidation of FFOH with or
into a related person; (ii) any sale, lease, exchange, mortgage, transfer or
other disposition of all or a substantial part of the assets of FFOH or of a
subsidiary to a related person (the term "substantial part" is defined to
include more than 25% of the FFOH's total assets); (iii) any merger or
consolidation of a related person with or into FFOH or a subsidiary; (iv) any
sale, lease, exchange, mortgage, transfer or other disposition of all or any
substantial part of the assets of a related person to FFOH or a subsidiary; (v)
the issuance of any securities of FFOH or a subsidiary to a related person; (vi)
the acquisition by FFOH or a subsidiary of any securities of a related person;
(vii) any reclassification of FFOH Common Stock, or any recapitalization
involving the FFOH Common Stock; and (viii) any agreement, contract or other
arrangement providing for any of the foregoing transactions.
In addition, Ohio law generally provides that an "interested
shareholder" (generally defined to include any shareholder owning more than 10%
of a company's outstanding voting stock) may not engage in a business
combination and certain other specified transactions with the company for a
period of three years following the date he became an interested shareholder
unless the business combination or the transaction by which the interested
shareholder became an interested shareholder was approved prior to such date by
the company's Board of Directors. If such Board approval is not obtained,
following the expiration of this three-year period, any business combination
with the interested shareholder must be approved by a two-thirds vote of
disinterested shareholders or meet certain fair price and other procedural
requirements.
The Certificate of Incorporation of GFCO also contains certain
provisions which require the holders of at least 80% of GFCO's outstanding
shares of voting stock to approve certain "business combinations," as defined
therein, with an "interested stockholder" (generally defined to include any
person beneficially owning more than 10% of the outstanding voting stock) or an
"affiliate" (as defined in the Rules under the Exchange Act) of an "interested
stockholder." GFCO's Certificate of Incorporation requires the approval of the
shareholders in accordance with the increased voting requirements in connection
with any such transactions, except in certain circumstances such as where the
"business combination" has been approved in advance by a majority of the
"disinterested directors" (generally, those members of the GFCO Board who are
unaffiliated with the interested stockholder) or certain conditions are met.
These provisions apply to any "business combination," which generally is defined
to include (i) any merger or consolidation of GFCO or any subsidiary with any
interested stockholder; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series of transactions)
to or with any interested stockholder of any assets of GFCO or any subsidiary
having an aggregate fair market value equaling or exceeding 25% or more of the
combined assets of GFCO and its subsidiaries; (iii) the issuance or transfer by
GFCO or any subsidiary (in one transaction or a series of transactions) of any
securities of GFCO or any subsidiary to any interested stockholder in exchange
for cash, securities or other property (or a combination thereof) having an
aggregate fair market value equaling or exceeding 25% of the
83
<PAGE> 95
combined assets of GFCO and its subsidiaries except pursuant to an employee
benefit plan of GFCO or any subsidiary thereof; (iv) the adoption of any plan or
proposal for the liquidation or dissolution of GFCO proposed by or on behalf of
any interested stockholder; and (v) any reclassification of securities
(including any reverse stock split), or recapitalization of GFCO, or any merger
or consolidation of GFCO with any of its subsidiaries or any other transaction
(whether or not with or into or otherwise involving an interested stockholder)
which has the effect, directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or convertible securities
of GFCO or any subsidiary which is directly or indirectly owned by any
interested stockholder.
In addition, Section 203 of the DGCL ("Section 203") imposes certain
restrictions on business combinations between GFCO and large shareholders.
Specifically, Section 203 prohibits a "business combination" (as defined in
Section 203, generally including mergers, sales and leases of assets, issuances
of securities and similar transactions) between GFCO or a subsidiary and an
"interested shareholder" (as defined in Section 203, generally the beneficial
owner of 15% or more of GFCO Common Stock) within three years after the person
or entity becomes an interested shareholder, unless (i) prior to the person or
entity becoming an interested shareholder, the business combination or the
transaction pursuant to which such person or entity became an interested
shareholder shall have been approved by GFCO's Board of Directors, (ii) upon
consummation of the transaction in which the interested shareholder became such,
the interested shareholder holds at least 85% of GFCO Common Stock (excluding
shares held by persons who are both officers and directors and shares held by
certain employee benefit plans), or (iii) the business combination is approved
by GFCO's Board of Directors and by the holders of at least two-thirds of the
outstanding GFCO Common Stock, excluding shares owned by the interested
shareholders.
ACQUISITION OF EQUITY SECURITIES
GFCO's Certificate of Incorporation requires approval by 80% of the
outstanding voting shares of GFCO before GFCO may directly or indirectly
purchase or otherwise acquire any voting stock beneficially owned by a holder of
5% or more of GFCO's voting stock. Any shares beneficially held by such person
would be excluded in calculating such stockholder approval. The provision would
not apply to a pro rata offer made by GFCO to all of its stockholders in
compliance with the Exchange Act and the rules and regulations thereunder, a
purchase of voting shares pursuant to an open market purchase program approved
by a majority of the GFCO Board (including a majority of the Disinterested
Directors) or a purchase of voting shares by GFCO if the GFCO Board (including a
majority of the Disinterested Directors) has determined, pursuant to criteria
set forth in the Certificate of Incorporation, that the purchase price per share
does not exceed the fair market value of such voting shares.
FFOH's Articles do not contain a similar provision.
84
<PAGE> 96
AMENDMENT OF GOVERNING INSTRUMENTS
The Articles of FFOH generally provide that they may be amended by the
affirmative vote of at least a majority of the voting power of FFOH, except that
any amendment to Articles IV (number of directors), VII (indemnification), X
(meetings of shareholders, director nominations and shareholder proposals), XI
(directors), XII (removal of directors), XIII (duties of directors and
limitation of liability), XIV (restrictions on share purchases), XV (business
combinations), XVI (amendments to the Code of Regulations) and XVII (amendments
to the Articles) must be approved by the affirmative vote of the holders of not
less than 75% of the voting power of FFOH entitled to vote thereon. The Code of
Regulations of FFOH may only be amended by a vote of not less than two-thirds of
the then outstanding voting power of FFOH entitled to vote at a meeting of
shareholders called for that purpose and the Bylaws of FFOH may only be amended
by a majority vote of the FFOH Board.
The Certificate of Incorporation of GFCO may generally be amended upon
the affirmative vote of a majority of the voting power of GFCO except that, the
provisions of Article Thirteenth (amendments to Articles), clauses (c) or (d) of
Article Fifth (the business and affairs of GFCO), Article Sixth (directors),
Article Seventh (amendments to the Bylaws), Article Eighth (business
combinations), Article Tenth (acquisition of equity securities) and Article
Eleventh (indemnification) may not be amended or repealed unless the same is
approved by the affirmative vote of the holders of at least 80% of the voting
power of all of the then-outstanding shares of the capital stock of GFCO
entitled to vote generally in the election of directors. The Bylaws of GFCO may
be amended by the shareholders by the affirmative vote of the holders of at
least 80% of the voting power of all of the then-outstanding shares of capital
stock of GFCO entitled to vote generally in the election of directors.
LEGAL OPINION
The validity of the FFOH Common Stock offered hereby will be passed
upon for FFOH by Elias, Matz, Tiernan & Herrick L.L.P., Washington, D.C.
EXPERTS
The consolidated financial statements of FFOH as of December 31, 1997
and 1996, and for each of the years in the three-year period ended December 31,
1997 have been incorporated by reference herein and elsewhere in the
Registration Statement in reliance upon the report of Grant Thornton LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of that firm as experts in accounting and auditing.
The consolidated financial statements of GFCO as of June 30, 1998 and
1997, and for each of the years in the three-year period ended June 30, 1998
have been incorporated by reference herein and elsewhere in the Registration
Statement in reliance upon the report of Grant Thornton L.L.P.,
85
<PAGE> 97
independent certified public accountants, incorporated by reference herein, and
upon the authority of that firm as experts in accounting and auditing.
PROPOSALS FOR THE
1999 ANNUAL MEETINGS
In the case of FFOH, the deadline set forth in Rule 14a-8 under the
Exchange Act for the submission of proposals by shareholders for inclusion in
the proxy statement and form of proxy to be used by FFOH in connection with its
1999 annual meeting of shareholders has passed. In addition, pursuant to FFOH's
Articles of Incorporation, the deadline for submission of shareholder proposals
at the 1999 annual meeting of shareholders of FFOH outside the processes of Rule
14a-8 is February 27, 1999.
In the case of GFCO, pursuant to Rule 14a-8 under the Exchange Act, the
deadline for the submission of proposals by shareholders for inclusion in the
proxy statement and form of proxy to be used by GFCO in connection with its 1999
annual meeting of shareholders, which will be held only if the Merger is not
consummated before the time of such meeting, is June 5, 1999. In addition,
pursuant to GFCO's Bylaws, the deadline for submission of shareholder proposals
for consideration at the 1999 annual meeting of shareholders of GFCO outside the
processes of Rule 14a-8 is August 19, 1999.
WHERE YOU CAN FIND MORE INFORMATION
Each of FFOH and GFCO files annual, quarterly and current reports,
proxy statements and other information with the SEC. You may read and copy any
reports, proxy statements or other information filed by FFOH and GFCO at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. You can request copies of these documents, upon payment of a
duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the SEC's public reference rooms.
FFOH's and GFCO's SEC filings are also available to the public from document
retrieval services and at the SEC Internet website (http://www.sec.gov).
FFOH has filed with the SEC a Registration Statement on Form S-4
(together with all amendments and exhibits, the "Registration Statement") under
the Securities Act and the rules and regulations thereunder. This
Prospectus/Joint Proxy Statement is a part of the Registration Statement. As
permitted by the Securities Act, this Prospectus/Joint Proxy Statement does not
contain all of the information you can find in the Registration Statement. The
Registration Statement is available for inspection and copying as set forth
above.
86
<PAGE> 98
The SEC allows FFOH and GFCO to "incorporate by reference" into this
Prospectus/Joint Proxy Statement, which means that FFOH and GFCO can disclose
important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is considered
to be part of this Prospectus/Joint Proxy Statement, except for any information
superseded by information contained in later filed documents incorporated by
reference in this Prospectus/Joint Proxy Statement. Each of FFOH and GFCO
incorporates by reference the respective documents filed by them with the SEC
listed below and any future filings made by it with the SEC prior to the time of
the Special Meetings under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act.
<TABLE>
<CAPTION>
FFOH SEC Filings (File No. 0-27868) Period/Date
----------------------------------- -----------
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1997
Quarterly Reports on Form 10-Q Quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998
Current Reports on Form 8-K Filed on September 29, and October 1, 1998
<CAPTION>
GFCO SEC Filings (File No. 0-18664) Period/date
----------------------------------- -----------
<S> <C>
Annual Report on Form 10-K Year ended June 30, 1998
Quarterly Report on Form 10-Q Quarter ended September 30, 1998
Current Reports on Form 8-K Filed on October 1, 1998
</TABLE>
Accompanying this Prospectus/Joint Proxy Statement are FFOH's 1997
Annual Report to Shareholders and Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998 and GFCO's 1998 Annual Report to Shareholders and
Quarterly Report on Form 10-QSB for the quarter ended September 30, 1998.
THIS PROSPECTUS/JOINT PROXY STATEMENT INCORPORATED DOCUMENTS OF FFOH
AND GFCO BY REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. ALL
SUCH DOCUMENTS WITH RESPECT TO FFOH ARE AVAILABLE WITHOUT CHARGE (OTHER THAN
CERTAIN EXHIBITS TO SUCH DOCUMENTS) UPON WRITTEN OR ORAL REQUEST FROM: FIDELITY
FINANCIAL OF OHIO, INC., 4555 MONTGOMERY ROAD, CINCINNATI, OHIO 45212,
ATTENTION: PAUL D. STAUBACH, SECRETARY (TELEPHONE NUMBER (513) 351-6666). ALL
SUCH DOCUMENTS WITH RESPECT TO GFCO ARE AVAILABLE WITHOUT CHARGE (OTHER THAN
CERTAIN EXHIBITS TO SUCH DOCUMENTS) UPON WRITTEN OR ORAL REQUEST FROM: GLENWAY
FINANCIAL CORPORATION, 5535 GLENWAY AVENUE, CINCINNATI, OHIO 45238, ATTENTION:
DANIEL W. GEEDING, SECRETARY (TELEPHONE NUMBER (513) 922-5959).
87
<PAGE> 99
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS/JOINT PROXY STATEMENT. NEITHER FFOH NOR GFCO HAS
AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM
THAT WHICH IS CONTAINED IN THIS PROSPECTUS/JOINT PROXY STATEMENT. MOREOVER,
NEITHER FFOH NOR GFCO IS MAKING AN OFFER TO SELL OR SOLICITING AN OFFER TO BUY
ANY SECURITIES OTHER THAN THE FFOH COMMON STOCK TO BE ISSUED BY FFOH IN THE
MERGER, AND NEITHER FFOH NOR GFCO IS MAKING AN OFFER OF SUCH SECURITIES IN ANY
STATE WHERE THE OFFER IS NOT PERMITTED. THE INFORMATION CONTAINED IN THIS
PROSPECTUS/JOINT PROXY STATEMENT SPEAKS ONLY AS OF ITS DATE UNLESS THE
INFORMATION SPECIFICALLY INDICATES THAT ANOTHER DATE APPLIES.
88
<PAGE> 100
ANNEX I
AGREEMENT OF MERGER
AMONG
FIDELITY FINANCIAL OF OHIO, INC.,
FIDELITY ACQUISITION CORPORATION
AND
GLENWAY FINANCIAL CORPORATION
DATED AS OF SEPTEMBER 28, 1998
<PAGE> 101
<TABLE>
<CAPTION>
AGREEMENT OF MERGER
TABLE OF CONTENTS
Page
<S> <C>
ARTICLE I - DEFINITIONS......................................................2
ARTICLE II - THE MERGER......................................................6
2.1 The Merger.......................................................6
2.2 Effective Time; Closing..........................................7
2.3 Treatment of Capital Stock.......................................7
2.4 Stockholder Rights; Stock Transfers..............................7
2.5 Fractional Shares................................................8
2.6 Exchange Procedures..............................................8
2.7 Anti-Dilution Provisions.........................................9
2.8 Options..........................................................9
2.9 Dissenting Shares...............................................10
2.10 Additional Actions..............................................10
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................11
3.1 Capital Structure...............................................11
3.2 Organization, Standing and Authority of GFCO....................11
3.3 Ownership of GFCO Subsidiaries..................................11
3.4 Organization, Standing and Authority of the GFCO Subsidiaries...12
3.5 Authorized and Effective Agreement..............................12
3.6 Securities Documents and Regulatory Reports.....................13
3.7 Financial Statements............................................14
3.8 Material Adverse Change.........................................14
3.9 Environmental Matters...........................................15
3.10 Tax Matters.....................................................15
3.11 Legal Proceedings...............................................16
3.12 Compliance with Laws............................................16
3.13 Deposit Insurance and Other Regulatory Matters..................17
3.14 Certain Information ..................................17
3.15 Employee Benefit Plans..........................................17
3.16 Certain Contracts...............................................19
3.17 Brokers and Finders.............................................20
3.18 Insurance.......................................................20
3.19 Properties......................................................20
3.20 Labor...........................................................21
3.21 Loans; Nonperforming and Classified Assets; Allowance for
Loan Losses....................................................21
</TABLE>
i
<PAGE> 102
<TABLE>
<S> <C>
3.22 Administration of Fiduciary Accounts............................22
3.23 Derivative Transactions.........................................22
3.24 Year 2000.......................................................22
3.25 Required Vote; Antitakeover Provisions..........................22
3.26 Fairness Opinion................................................23
3.27 Accounting for the Merger; Reorganization.......................23
3.28 Disclosures.....................................................23
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF FFOH
AND MERGER CORPORATION....................................23
4.1 Capital Structure of FFOH.......................................23
4.2 Organization, Standing and Authority of FFOH....................24
4.3 Ownership of FFOH Subsidiaries..................................24
4.4 Organization, Standing and Authority of FFOH Subsidiaries.......24
4.5 Authorized and Effective Agreement..............................25
4.6 Securities Documents and Regulatory Reports.....................26
4.7 Financial Statements............................................26
4.8 Material Adverse Change.........................................27
4.9 Environmental Matters...........................................27
4.10 Tax Matters.....................................................28
4.11 Legal Proceedings...............................................29
4.12 Compliance with Laws............................................29
4.13 Deposit Insurance and Other Regulatory Matters..................29
4.14 Certain Information.............................................30
4.15 Employee Benefit Plans..........................................30
4.16 Certain Contracts...............................................32
4.17 Brokers and Finders.............................................32
4.18 Insurance.......................................................32
4.19 Properties......................................................33
4.20 Labor...........................................................33
4.21 Loans; Nonperforming and Classified Assets; Allowance
for Loan Losses................................................33
4.22 Administration of Fiduciary Accounts............................34
4.23 Derivative Transactions.........................................34
4.24 Year 2000.......................................................34
4.25 Ownership of GFCO Common Stock..................................35
4.26 Required Vote; Antitakeover Provisions..........................35
4.27 Fairness Opinion................................................35
4.28 Accounting for the Merger; Reorganization.......................35
4.29 Disclosures.....................................................36
ARTICLE V - COVENANTS.......................................................36
5.1 Reasonable Best Efforts.........................................36
</TABLE>
ii
<PAGE> 103
<TABLE>
<S> <C>
5.2 Shareholder Meetings............................................36
5.3 Regulatory Matters..............................................36
5.4 Investigation and Confidentiality...............................37
5.5 Press Releases..................................................38
5.6 Business of the Parties.........................................38
5.7 Current Information.............................................43
5.8 Indemnification; Insurance......................................43
5.9 Directors, Officers and Employees; Employee Benefit Plans
and Arrangements.............................................45
5.10 Certain Policies; Integration...................................46
5.11 Stock Exchange Listing..........................................46
5.12 The Bank Merger.................................................46
5.13 Affiliates; Restrictions on Resale..............................47
5.14 Disclosure Supplements..........................................47
5.15 Failure to Fulfill Conditions...................................47
5.16 Amendment of the Articles of Incorporation and Bylaws of FFOH...47
ARTICLE VI - CONDITIONS PRECEDENT...........................................48
6.1 Conditions Precedent - FFOH, Merger Corporation and GFCO........48
6.2 Conditions Precedent - GFCO.....................................50
6.3 Conditions Precedent - FFOH and Merger Corporation .............51
ARTICLE VII - TERMINATION, WAIVER AND AMENDMENT.............................52
7.1 Termination.....................................................52
7.2 Effect of Termination...........................................53
7.3 Survival of Representations, Warranties and Covenants...........53
7.4 Waiver..........................................................53
7.5 Amendment or Supplement.........................................53
ARTICLE VIII - MISCELLANEOUS................................................54
8.1 Expenses........................................................54
8.2 Entire Agreement................................................54
8.3 Assignment; Successors..........................................54
8.4 Notices.........................................................55
8.5 Interpretation..................................................56
8.6 Counterparts....................................................56
8.7 Governing Law...................................................56
Signatures ...............................................................57
</TABLE>
iii
<PAGE> 104
EXHIBITS
<TABLE>
<S> <C>
Exhibit A Form of Merger Agreement between Fidelity Federal Savings Bank and
Centennial Savings Bank
Exhibit B Form of GFCO Stock Option Agreement
Exhibit C Form of GFCO Stockholder Agreement
Exhibit D Form of FFOH Stock Option Agreement
Exhibit E Form of FFOH Stockholder Agreement
</TABLE>
iv
<PAGE> 105
AGREEMENT OF MERGER
Agreement of Merger (the "Agreement"), dated as of September 28, 1998, by
and among Fidelity Financial of Ohio, Inc. ("FFOH"), an Ohio corporation,
Fidelity Acquisition Corporation ("Merger Corporation"), an Ohio corporation
and a wholly-owned subsidiary of FFOH, and Glenway Financial Corporation
("GFCO"), a Delaware corporation.
W I T N E S S E T H:
WHEREAS, the Boards of Directors of FFOH, Merger Corporation and GFCO
have determined that it is in the best interests of their respective companies
and their shareholders to consummate the business combination transactions
provided for herein, including the merger of GFCO with and into Merger
Corporation, subject to the terms and conditions set forth herein; and
WHEREAS, the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby; and
WHEREAS, as a condition and inducement to FFOH's willingness to enter
into the Agreement, (i) GFCO is concurrently entering into a Stock Option
Agreement with FFOH (the "GFCO Stock Option Agreement"), in substantially the
form attached hereto as Exhibit B, pursuant to which GFCO is granting to FFOH
the option to purchase shares of GFCO Common Stock (as defined herein) under
certain circumstances and (ii) certain stockholders of GFCO are concurrently
entering into a Stockholder Agreement with FFOH (the "GFCO Stockholder
Agreement"), in substantially the form attached hereto as Exhibit C, pursuant
to which, among other things, such stockholders will agree to vote their shares
of GFCO Common Stock in favor of this Agreement and the transactions
contemplated hereby; and
WHEREAS, as a condition and inducement to GFCO's willingness to enter
into the Agreement, (i) FFOH is concurrently entering into a Stock Option
Agreement with GFCO (the "FFOH Stock Option Agreement"), in substantially the
form attached hereto as Exhibit D, pursuant to which FFOH is granting to GFCO
the option to purchase shares of FFOH Common Stock (as defined herein) under
certain circumstances and (ii) certain stockholders of FFOH are concurrently
entering into a Stockholder Agreement with GFCO (the "FFOH Stockholder
Agreement"), in substantially the form attached hereto as Exhibit E, pursuant
to which, among other things, such stockholders will agree to vote their shares
of FFOH Common Stock in favor of this Agreement and the transactions
contemplated hereby.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto do hereby agree
as follows:
<PAGE> 106
ARTICLE I
DEFINITIONS
The following terms shall have the meanings ascribed to them for all
purposes of this Agreement.
"Affiliate" shall have the meaning specified in Section 5.13 hereof.
"Bank" shall mean Fidelity Federal Savings Bank, a federally-chartered
savings bank and a wholly-owned subsidiary of Merger Corporation.
"Bank Merger" shall have the meaning set forth in Section 5.12 hereof.
"Bank Merger Agreement" shall have the meaning set forth in Section 5.12
hereof.
"Centennial" shall mean Centennial Savings Bank, an Ohio-chartered
savings bank and a wholly-owned subsidiary of GFCO.
"Certificates of Merger" shall have the meaning set forth in Section 2.2
hereof.
"Certificates" shall have the meaning set forth in Section 2.4 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"Confidentiality Agreement" shall mean the Mutual Confidentiality
Agreement dated August 21, 1998, between GFCO and FFOH.
"CSLSC" means Centennial Savings and Loan Service Corporation, an Ohio
corporation and a wholly-owned subsidiary of Centennial.
"DGCL" shall mean the Delaware General Corporation Law.
"Division" shall mean the Division of Financial Institutions of the Ohio
Department of Commerce or any successor thereto.
"Effective Time" shall mean the date and time specified pursuant to
Section 2.2 hereof as the effective time of the Merger.
"Environmental Claim" means any written notice from any Governmental
Entity or third party alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based on, or resulting from the
presence, or release into the environment, of any Materials of Environmental
Concern.
2
<PAGE> 107
"Environmental Laws" shall mean any federal, state or local environmental
law or regulation, including without limitation the Comprehensive Environmental
Response, Compensation and Liability Act, the Resource Conservation and
Recovery Act, the Clean Air Act, the Clean Water Act and the Occupational
Safety and Health Act, each as amended, regulations promulgated thereunder, and
state and local counterparts.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exchange Ratio" shall have the meaning set forth in Section 2.3(c)
hereof.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"FFIEC" shall mean the Federal Financial Institutions Examination Council.
"FFOH Common Stock" shall mean the common stock, par value $.10 per
share, of FFOH.
"FFOH Dissenting Shares" shall have the meaning set forth in Section 2.9
hereof.
"FFOH Employee Plans" shall have the meaning set forth in Section 4.15(a)
hereof.
"FFOH Employee Stock Benefit Plans" shall mean the following employee
benefit plans of FFOH: 1992 Stock Incentive Plan, 1992 Directors' Stock Option
Plan, Management Recognition Plan, Employee Stock Ownership Plan, Fidelity
Federal Savings Bank 401(k) Retirement Plan, 1997 Stock Option Plan and 1997
Management Recognition Plan and Trust.
"FFOH Financial Statements" shall mean (i) the consolidated statements of
financial condition (including related notes and schedules, if any) of FFOH as
of December 31, 1997, 1996 and 1995 and the consolidated statements of
earnings, stockholders' equity and cash flows (including related notes and
schedules, if any) of FFOH for each of the three years ended December 31, 1997,
1996 and 1995 as filed by FFOH in its Securities Documents, and (ii) the
consolidated statements of financial condition of FFOH (including related notes
and schedules, if any) and the consolidated statements of earnings,
stockholders' equity and cash flows (including related notes and schedules, if
any) of FFOH included in the Securities Documents filed by FFOH with respect to
the quarterly and annual periods ended subsequent to December 31, 1997.
"FFOH Preferred Stock" shall mean the shares of serial preferred stock,
par value $.10 per share, of FFOH.
"FHLB" shall mean Federal Home Loan Bank.
3
<PAGE> 108
"Form S-4" shall mean the registration statement on Form S-4 (or on any
successor or other appropriate form) to be filed by FFOH in connection with the
issuance of shares of FFOH Common Stock pursuant to the Merger, including the
Proxy Statement which forms a part thereof, as amended and supplemented.
"GFCO Common Stock" shall mean the common stock, par value $0.01 per
share, of GFCO.
"GFCO Employee Plans" shall have the meaning set forth in Section 3.15(a)
hereof.
"GFCO ESOP" shall mean GFCO's Employee Stock Ownership Plan.
"GFCO Financial Statements" shall mean (i) the consolidated statements of
financial condition (including related notes and schedules, if any) of GFCO as
of June 30, 1998, 1997 and 1996 and the consolidated statements of earnings,
stockholders' equity and cash flows (including related notes and schedules, if
any) of GFCO for each of the three years ended June 30, 1998, 1997 and 1996 as
filed by GFCO in its Securities Documents, and (ii) the consolidated statements
of financial condition of GFCO (including related notes and schedules, if any)
and the consolidated statements of earnings, stockholders' equity and cash
flows (including related notes and schedules, if any) of GFCO included in the
Securities Documents filed by GFCO with respect to the quarterly and annual
periods ended subsequent to June 30, 1998.
"GFCO 401(k) Plan shall mean GFCO's 401(k) Profit Sharing Plan.
"GFCO Bank Incentive Plan" shall mean Centennial Savings Bank Bank
Incentive Plan.
"GFCO Options" shall mean options to purchase shares of GFCO Common Stock
granted pursuant to GFCO Stock Option Plan.
"GFCO Preferred Stock" shall mean the shares of serial preferred stock,
par value $0.01 per share, of GFCO.
"GFCO Stock Option Plan" shall mean the GFCO's Stock Option and Incentive
Plan.
"Governmental Entity" shall mean any federal or state court,
administrative agency or commission or other governmental authority or
instrumentality.
"HOLA" shall mean the Home Owners' Loan Act.
"Lien" shall mean any charge, mortgage, pledge, security interest,
restriction, claim, lien or encumbrance.
"Loan" shall have the meaning set forth in Section 3.21(a) hereof.
"Material Adverse Effect" shall mean, with respect to FFOH or GFCO,
respectively, any effect that (i) is material and adverse to the financial
condition, results of operations or business of
4
<PAGE> 109
FFOH and its Subsidiaries taken as whole or GFCO and its Subsidiaries taken as
a whole, as applicable, or (ii) materially impairs the ability of the GFCO,
FFOH or any of their respective banking subsidiaries to consummate the
transactions contemplated by this Agreement and the Bank Merger Agreement,
provided, however, that Material Adverse Effect shall not be deemed to include
(a) the impact of changes in laws and regulations or interpretations thereof
that are generally applicable to the banking industry or generally accepted
accounting principles that are generally applicable to the banking industry,
(b) reasonable expenses incurred in connection with the transactions
contemplated hereby and (c) actions or omissions of a party (or any of its
Subsidiaries) taken with the prior written consent of the other party in
contemplation of the transactions contemplated hereby.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.
"Merger" shall have the meaning set forth in Section 2.1(a) hereof.
"NASD" shall mean the National Association of Securities Dealers, Inc.,
or any successor thereto.
"OGCL" shall mean the Ohio General Corporation Law.
"OTS" shall mean the Office of Thrift Supervision of the U.S. Department
of the Treasury and its predecessor, the Federal Home Loan Bank Board, or any
successor thereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Previously Disclosed" shall mean disclosed (i) in a disclosure schedule
dated the date hereof delivered from the disclosing party to the other party
specifically referring to the appropriate section of this Agreement and
describing in reasonable detail the matters contained therein, or (ii) in a
disclosure schedule dated after the date hereof from the disclosing party
specifically referring to this Agreement and describing in reasonable detail
the matters contained therein and delivered by the other party pursuant to
Section 5.14 hereof.
"Proxy Statement" shall mean the joint prospectus/proxy statement
contained in the Form S-4, as amended or supplemented, and to be delivered to
shareholders of FFOH and GFCO in connection with the solicitation of their
approval of this Agreement and the transactions contemplated hereby.
"Rights" shall mean warrants, options, rights, convertible securities and
other arrangements or commitments which obligate an entity to issue or dispose
of any of its capital stock or other ownership interests in the entity.
"SAIF" means the Savings Association Insurance Fund administered by the
FDIC or any successor thereto.
5
<PAGE> 110
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, offering circulars, proxy
statements, registration statements and all similar documents filed, or
required to be filed, pursuant to the Securities Laws.
"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of
1940, as amended; the Trust Indenture Act of 1939, as amended; and the rules
and regulations of the Commission promulgated pursuant to such laws.
"SGFSC" shall mean Spring Garden Financial Service Corp., an Ohio
corporation and a wholly-owned subsidiary of the Bank.
"Subsidiary" shall mean any corporation, bank, savings association,
partnership, joint venture or other organization more than 10% of the stock or
ownership interest of which is owned, directly or indirectly, by an entity.
"Surviving Corporation" shall have the meaning specified in Section
2.1(a) hereof.
Other terms used herein are defined in the preamble and elsewhere in this
Agreement.
ARTICLE II
THE MERGER
2.1 The Merger
(a) Subject to the terms and conditions of this Agreement, at the
Effective Time (as defined in Section 2.2 hereof), GFCO shall be merged with
and into Merger Corporation (the "Merger") in accordance with the applicable
provisions of the OGCL and the DGCL. Merger Corporation shall be the surviving
corporation (hereinafter sometimes called the "Surviving Corporation") of the
Merger, and shall continue its corporate existence under the laws of the State
of Ohio. The name of the Surviving Corporation shall continue to be "Fidelity
Merger Corporation" and the Surviving Corporation will continue to operate as a
wholly owned subsidiary of FFOH. Upon consummation of the Merger, the separate
corporate existence of GFCO shall terminate.
(b) From and after the Effective Time, the Merger shall have the
effects set forth in Section 1701.82 of the OGCL and Section 259 of the DGCL.
(c) Upon consummation of the Merger, the Articles of Incorporation,
Code of Regulations and Bylaws of Merger Corporation, as in effect immediately
prior to the Effective Time, shall be the Articles of Incorporation, Code of
Regulations and Bylaws of the Surviving Corporation, respectively, until
altered, amended or repealed in accordance with their terms and applicable law.
(d) The authorized capital stock of the Surviving Corporation shall be
as stated in the Articles of Incorporation of Merger Corporation immediately
prior to the Effective Time.
6
<PAGE> 111
2.2 Effective Time; Closing
The Merger shall become effective upon the occurrence of the filing of
(i) a certificate of merger with the Secretary of State of the State of Ohio
pursuant to the OGCL and (ii) a certificate of merger with the Secretary of the
State of Delaware pursuant to the DGCL, unless a later date and time is
specified as the effective time (the "Effective Time") in such certificates of
merger (collectively, the "Certificates of Merger"). A closing (the "Closing")
shall take place immediately prior to the Effective Time at 10:00 a.m., Eastern
Time, on or before the fifth business day following the satisfaction or waiver,
to the extent permitted hereunder, of the conditions to the consummation of the
Merger specified in Article VI of this Agreement (other than the delivery of
certificates, opinions and other instruments and documents to be delivered at
the Closing), at the principal executive offices of FFOH in Cincinnati, Ohio,
or at such other place, at such other time, or on such other date as the
parties may mutually agree upon. At the Closing, there shall be delivered to
FFOH and GFCO the opinions, certificates and other documents required to be
delivered under Article VI hereof.
2.3 Treatment of Capital Stock
Subject to the provisions of this Agreement, at the Effective Time,
automatically by virtue of the Merger and without any action on the part of any
stockholder:
(a) subject to Section 2.9 hereof, each share of FFOH Common Stock
issued and outstanding immediately prior to the Effective Time shall be
unchanged and shall remain issued and outstanding;
(b) each share of Merger Corporation common stock issued and
outstanding immediately prior to the Effective Time shall be unchanged and
shall remain issued and outstanding; and
(c) subject to Section 2.5 hereof, each share of GFCO Common Stock
issued and outstanding immediately prior to the Effective Time (other than
shares held by FFOH, GFCO or any of their respective wholly-owned Subsidiaries
(other than shares held in a fiduciary capacity that are beneficially owned by
third parties or as a result of debts previously contracted) which shall be
canceled and retired without consideration) shall become and be converted into
the right to receive 1.50 shares of FFOH Common Stock (subject to possible
adjustment as set forth in Section 2.7 hereof, the "Exchange Ratio").
2.4 Stockholder Rights; Stock Transfers
At the Effective Time, each holder of a certificate or certificates
representing outstanding shares of GFCO Common Stock (the "Certificates") shall
cease to have any rights with respect thereto, except the right to receive,
upon the surrender of any such Certificates in accordance with Section 2.6
hereof, certificates representing the number of whole shares of FFOH Common
Stock, and any cash in lieu of a fractional share interest, into which such
shares of GFCO Common Stock shall have been converted pursuant to Section 2.3
hereof, without interest. After the Effective Time, there shall be no further
registration of transfers on the stock transfer books of GFCO of shares of GFCO
Common Stock which were outstanding immediately prior to the Effective Time.
If, after
7
<PAGE> 112
the Effective Time, Certificates are presented to FFOH or the Exchange Agent
for any reason, they shall be canceled and exchanged as provided in Section 2.6
hereof, except as otherwise provided by law.
2.5 Fractional Shares
(a) No certificates or scrip representing fractional shares of FFOH
Common Stock shall be issued upon the surrender for exchange of a Certificate
or Certificates, and such fractional share interests shall not entitle the
owner thereof to vote or to any other rights as a stockholder of FFOH.
(b) Notwithstanding any other provision of this Agreement, each holder
of shares of GFCO Common Stock converted into shares of FFOH Common Stock
pursuant to the Merger who would otherwise have been entitled to receive a
fraction of a share of FFOH Common Stock (after taking into account all
Certificates delivered by such holder) shall, at the time of surrender of the
Certificate or Certificates representing such holder's shares of GFCO Common
Stock receive an amount of cash (without interest) equal to the product arrived
at by multiplying such fraction of a share of FFOH Common Stock by the closing
price of a share of FFOH Common Stock on the Nasdaq Stock Market's National
Market on the business day preceding the Effective Time (as reported in The
Wall Street Journal, or if not reported therein, in another authoritative
source), rounded to the nearest whole cent.
2.6 Exchange Procedures
(a) At or after the Effective Time, each holder of a Certificate or
Certificates, upon surrender of the same to an agent, duly appointed by FFOH
(the "Exchange Agent"), shall be entitled to receive in exchange therefor a
certificate or certificates representing the number of whole shares of FFOH
Common Stock into which the shares of GFCO Common Stock theretofore represented
by the Certificate or Certificates so surrendered shall have been converted as
provided in Section 2.3(c) hereof. Not later than five business days, the
Exchange Agent shall mail to each holder of record of an outstanding
Certificate which is to be exchanged for FFOH Common Stock as provided in
Section 2.3 hereof a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to such Certificate
shall pass, only upon delivery of such Certificate to the Exchange Agent)
advising such holder of the terms of the exchange effected by the Merger and of
the procedure for surrendering to the Exchange Agent such Certificate in
exchange for a certificate or certificates evidencing FFOH Common Stock and any
cash in lieu of any fractional share interest. Notwithstanding anything in
this Agreement to the contrary, Certificates surrendered for exchange by any
Affiliate of GFCO (as defined in Section 5.13(a) hereof) shall not be exchanged
for certificates representing shares of FFOH Common Stock in accordance with
the terms of this Agreement until FFOH has received a written agreement from
such person as specified in Section 5.13(b).
(b) No holder of a Certificate shall be entitled to receive any
dividends in respect of FFOH Common Stock into which such shares shall have
been converted by virtue of the Merger until the Certificate representing such
shares is surrendered in exchange for a certificate or certificates
representing shares of FFOH Common Stock. In the event that dividends are
declared and paid by FFOH in respect of FFOH Common Stock after the Effective
Time but prior to any
8
<PAGE> 113
holder's surrender of Certificates, dividends payable to such holder in respect
of shares of FFOH Common Stock not then issued shall accrue (without interest).
Any such dividends shall be paid (without interest) upon surrender of the
Certificates. FFOH shall be entitled, after the Effective Time, to treat
Certificates as evidencing ownership of the number of whole shares of FFOH
Common Stock into which the shares of GFCO Common Stock represented by such
Certificates shall have been converted pursuant to this Agreement,
notwithstanding the failure on the part of the holder thereof to surrender such
Certificates.
(c) FFOH shall not be obligated to deliver a certificate or
certificates representing shares of FFOH Common Stock to which a holder of GFCO
Common Stock would otherwise be entitled as a result of the Merger until such
holder surrenders a Certificate or Certificates for exchange as provided in
this Section 2.6, or, in default thereof, an appropriate affidavit of loss and
indemnity agreement and/or a bond in an amount as may be reasonably required in
each case by FFOH. If any certificate evidencing shares of FFOH Common Stock
is to be issued in a name other than that in which the Certificate surrendered
in exchange therefor is registered, it shall be a condition of the issuance
thereof that the Certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
exchange pay to the Exchange Agent any transfer or other tax required by reason
of the issuance of a certificate for shares of FFOH Common Stock in any name
other than that of the registered holder of the Certificate surrendered or
otherwise establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not payable.
2.7 Anti-Dilution Provisions
If, between the date hereof and the Effective Time, the shares of FFOH
Common Stock shall be changed into a different number or class of shares by
reason of any reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment, or a stock dividend thereon shall be
declared with a record date within said period, the Exchange Ratio shall be
adjusted accordingly.
2.8 Options
(a) At the Effective Time, each GFCO Option which is then outstanding,
whether or not exercisable, shall cease to represent a right to acquire shares
of GFCO Common Stock and shall be converted automatically into an option to
purchase shares of FFOH Common Stock, and FFOH shall assume each GFCO Option,
in accordance with the terms of the GFCO Stock Option Plan and the stock option
agreement by which it is evidenced, including without limitation all such terms
pertaining to the acceleration and vesting of the holder's exercise rights
thereunder, except that from and after the Effective Time, (i) FFOH and the
Compensation Committee of its Board of Directors shall be substituted for GFCO
and the committee of GFCO's Board of Directors (including, if applicable, the
entire Board of Directors of GFCO) administering the GFCO Stock Option Plan,
(ii) each GFCO Option may be exercised solely for shares of FFOH Common Stock,
(iii) the number of shares of FFOH Common Stock subject to such GFCO Option
shall be equal to the number of shares of GFCO Common Stock subject to such
GFCO Option immediately prior to the Effective Time multiplied by the Exchange
Ratio, provided that any fractional shares of FFOH Common Stock resulting from
such multiplication shall be rounded down to the nearest share, and (iv) the
per share
9
<PAGE> 114
exercise price under each such GFCO Option shall be adjusted by dividing the
per share exercise price under each such GFCO Option by the Exchange Ratio,
provided that such exercise price shall be rounded up to the nearest cent.
Notwithstanding clauses (iii) and (iv) of the preceding sentence, each GFCO
Option which is an "incentive stock option" shall be adjusted as required by
Section 424 of the Code, and the regulations promulgated thereunder, so as not
to constitute a modification, extension or renewal of the option within the
meaning of Section 424(h) of the Code. FFOH and GFCO agree to take all
necessary steps to effect the foregoing provisions of this Section 2.8(a).
(b) Within 30 days after the Effective Time, FFOH shall file a
registration statement on Form S-3 or Form S-8, as the case may be (or any
successor or other appropriate forms), with respect to the shares of FFOH
Common Stock subject to the options referred to in paragraph (a) of this
Section 2.8 and shall use its best efforts to maintain the current status of
the prospectus or prospectuses contained therein for so long as such options
remain outstanding in the case of a Form S-8 or, in the case of a Form S-3,
until the shares subject to such options may be sold without a further holding
period under Rule 144 under the Securities Act.
2.9 Dissenting Shares
Each outstanding share of FFOH Common Stock the holder of which has
perfected his right to dissent under the OGCL and has not effectively withdrawn
or lost such right as of the Effective Time (the "FFOH Dissenting Shares")
shall be entitled to such rights as are granted by the OGCL. FFOH shall give
GFCO prompt notice upon receipt by FFOH of any such written demands for payment
of the fair value of such shares of FFOH Common Stock and of withdrawals of
such demands and any other instruments provided pursuant to the OGCL (any
shareholder duly making such demand being hereinafter called a "Dissenting FFOH
Shareholder"). Any payments made in respect of FFOH Dissenting Shares shall be
made by the Surviving Corporation. If any FFOH Dissenting Shareholder shall
effectively withdraw or lose (through failure to perfect or otherwise) his
right to such payment, such holder's shares of FFOH Common Stock shall remain
issued, outstanding and unchanged in accordance with the applicable provisions
of this Agreement.
2.10 Additional Actions
If, at any time after the Effective Time, the Surviving Corporation shall
consider that any further assignments or assurances in law or any other acts
are necessary or desirable to (i) vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of GFCO acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with,
the Merger, or (ii) otherwise carry out the purposes of this Agreement, GFCO,
and its proper officers and directors, shall be deemed to have granted to the
Surviving Corporation an irrevocable power of attorney to execute and deliver
all such proper deeds, assignments and assurances in law and to do all acts
necessary or proper to vest, perfect or confirm title to and possession of such
rights, properties or assets in the Surviving Corporation and otherwise to
carry out the purposes of this Agreement, and the proper officers and directors
of the Surviving Corporation are fully authorized in the name of the Surviving
Corporation or otherwise to take any and all such action.
10
<PAGE> 115
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
GFCO represents and warrants to FFOH as follows:
3.1 Capital Structure
The authorized capital stock of GFCO consists of 3,000,000 shares of
GFCO Common Stock and 500,000 shares of GFCO Preferred Stock. As of the date
hereof, there are 2,293,210 shares of GFCO Common Stock issued and outstanding,
81,528 shares of GFCO Common Stock are directly or indirectly held as treasury
stock by GFCO and no shares of GFCO Preferred Stock are issued and outstanding.
All outstanding shares of GFCO Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable, and none of the
outstanding shares of GFCO Common Stock has been issued in violation of the
preemptive rights of any person, firm or entity. Except for (i) 93,889 shares
of GFCO Common Stock issuable upon exercise of outstanding stock options which
have been granted pursuant to the GFCO Stock Option Plan, as Previously
Disclosed, and (ii) shares of GFCO Common Stock issuable pursuant to the terms
of GFCO Stock Option Agreement, there are no Rights authorized, issued or
outstanding with respect to the capital stock of GFCO. GFCO has not
repurchased any shares of GFCO Common Stock during the two years preceding the
date hereof, except for any such repurchases (including the number of shares,
date repurchased, repurchase price and the purpose thereof) as are Previously
Disclosed.
3.2 Organization, Standing and Authority of GFCO
GFCO is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware with full corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as now conducted and is duly licensed or qualified to do business and
is in good standing in each jurisdiction in which its ownership or leasing of
property or the conduct of its business requires such licensing or
qualification, except where the failure to be so licensed, qualified or in good
standing would not have a Material Adverse Effect on GFCO. GFCO is duly
registered as a savings and loan holding company under the HOLA and the
regulations of the OTS thereunder. GFCO has heretofore delivered or made
available to FFOH true and complete copies of the Certificate of Incorporation
and Bylaws of GFCO as in effect as of the date hereof.
3.3 Ownership of GFCO Subsidiaries
The only direct or indirect Subsidiaries of GFCO are Centennial and CSLSC
(the "GFCO Subsidiaries"). Except for (i) capital stock of the GFCO
Subsidiaries, (ii) stock in the FHLB of Cincinnati, (iii) securities and other
interests taken in consideration of debts previously contracted and (iv) the
operative provisions of the FFOH Stock Option Agreement, GFCO does not own or
have the right to acquire, directly or indirectly, any outstanding capital
stock or other voting securities or ownership interests of any corporation,
bank, savings association, partnership, joint venture or other organization.
The outstanding shares of capital stock or other ownership interests of each of
the GFCO Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable, and are directly or indirectly owned by GFCO free and
clear of all Liens or rights of third parties
11
<PAGE> 116
of any kind whatsoever. No Rights are authorized, issued or outstanding with
respect to the capital stock or other ownership interests of any GFCO
Subsidiary and there are no agreements, understandings or commitments relating
to the right of GFCO to vote or to dispose of said shares or other ownership
interests.
3.4 Organization, Standing and Authority of the GFCO Subsidiaries
Centennial is a savings bank duly organized, validly existing and in good
standing under Chapter 1161 of the Ohio Revised Code, and CSLSC is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Ohio. Each of the GFCO Subsidiaries (i) has full power
and authority to own or lease all of its properties and assets and to carry on
its business as now conducted, and (ii) is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which its ownership or
leasing of property or the conduct of its business requires such qualification,
except where the failure to be so licensed, qualified or in good standing would
not have a Material Adverse Effect on GFCO. GFCO has heretofore delivered or
made available to FFOH true and complete copies of the Articles of
Incorporation, Constitution and Bylaws of Centennial and the Articles of
Incorporation, Code of Regulations and Bylaws of CSLSC as in effect as of the
date hereof.
3.5 Authorized and Effective Agreement
(a) GFCO has all requisite corporate power and authority to enter into
this Agreement and (subject to receipt of all necessary governmental approvals
and expiration of applicable waiting periods and the approval of GFCO's
shareholders of this Agreement) to perform all of its obligations under this
Agreement. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of GFCO,
except for the approval of this Agreement by GFCO's shareholders. This
Agreement has been duly and validly executed and delivered by GFCO and,
assuming due authorization, execution and delivery by FFOH and Merger
Corporation, constitutes a legal, valid and binding obligation of GFCO which is
enforceable against GFCO in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
(b) Neither the execution and delivery of this Agreement, nor
consummation of the transactions contemplated hereby (including the Merger and
the Bank Merger), nor compliance by GFCO with any of the provisions hereof (i)
does or will conflict with or result in a breach of any provisions of the
Certificate of Incorporation or Bylaws of GFCO or the equivalent documents of
any GFCO Subsidiary, (ii) violate, conflict with or result in a breach of any
term, condition or provision of, or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, or
give rise to any right of termination, cancellation or acceleration with
respect to, or result in the creation of any Lien upon any property or asset of
GFCO or any GFCO Subsidiary pursuant to, any material note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which GFCO or any GFCO Subsidiary is a party, or by which any of
their respective properties or assets may be bound or affected, or (iii)
subject to receipt of all required governmental and shareholder approvals,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to GFCO or any GFCO Subsidiary.
12
<PAGE> 117
(c) Except for (i) the filing of applications and notices with, and the
consents and approvals of, as applicable, the OTS, the FDIC and the Division,
(ii) the filing and effectiveness of the Form S-4 with the Commission, (iii)
compliance with applicable state securities or "blue sky" laws in connection
with the issuance of FFOH Common Stock pursuant to this Agreement, (iv) the
approval of this Agreement by the requisite vote of the shareholders of GFCO
and FFOH, (v) the filing of the Certificates of Merger with the Secretary of
State of the States of Ohio and Delaware pursuant to the OGCL and DGCL,
respectively, in each case in connection with the Merger and (vi) the filing of
a Certificate of Merger with the Division and the Secretary of the State of
Ohio in connection with the Bank Merger, and except for such filings,
authorizations or approvals which are Previously Disclosed, no consents or
approvals of or filings or registrations with any Governmental Entity or with
any third party are necessary on the part of GFCO or any GFCO Subsidiary in
connection with (i) the execution and delivery by GFCO of this Agreement and
the consummation by GFCO of the transactions contemplated hereby and (ii) the
execution and delivery by Centennial of the Bank Merger Agreement and the
consummation by Centennial of the transactions contemplated thereby.
(d) As of the date hereof, neither GFCO nor any of the GFCO
Subsidiaries is aware of any reasons (relating to GFCO or any of the GFCO
Subsidiaries (including, without limitation, Community Reinvestment Act
compliance)) why all consents and approvals shall not be procured from all
Governmental Entities having jurisdiction over the transactions contemplated by
this Agreement as shall be necessary for (i) consummation of the transactions
contemplated by this Agreement and the Bank Merger Agreement and (ii) the
continuation by FFOH after the Effective Time of the business of each of FFOH,
GFCO and their respective Subsidiaries as such business is carried on
immediately prior to the Effective Time, free of any conditions or requirements
which, in the reasonable opinion of GFCO, could reasonably be expected to have
a Material Adverse Effect on FFOH or GFCO or materially impair the value of
GFCO and the GFCO Subsidiaries.
3.6 Securities Documents and Regulatory Reports
(a) GFCO has previously delivered or made available to FFOH a complete
copy of all Securities Documents filed by GFCO pursuant to the Securities Laws
or mailed by GFCO to its shareholders as a class since January 1, 1994. GFCO
has timely filed with the Commission all Securities Documents required by the
Securities Laws and such Securities Documents complied in all material respects
with the Securities Laws and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, provided that
information as of a later date shall be deemed to modify information as of an
earlier date.
(b) Since January 1, 1994, each of GFCO and Centennial has duly filed
with the OTS, the FDIC and the Division, as the case may be, in correct form
the reports required to be filed under applicable laws and regulations and such
reports were in all material respects complete and accurate and in compliance
with the requirements of applicable laws and regulations, and GFCO has
previously delivered or made available to FFOH accurate and complete copies of
all such reports. In connection with the most recent examinations of GFCO or a
GFCO Subsidiary by the OTS, the
13
<PAGE> 118
FDIC and the Division, neither GFCO nor any GFCO Subsidiary was required to
correct or change any action, procedure or proceeding which has not been
corrected or changed as required.
3.7 Financial Statements
(a) GFCO has previously delivered or made available to FFOH accurate
and complete copies of the GFCO Financial Statements which, in the case of the
consolidated statements of financial condition of GFCO as of June 30, 1998,
1997 and 1996 and the consolidated statements of earnings, stockholders' equity
and cash flows for each of the three years ended June 30, 1998, 1997 and 1996,
are accompanied by the audit reports of Grant Thornton LLP, independent public
accountants with respect to the GFCO. The GFCO Financial Statements referred
to herein, as well as the GFCO Financial Statements to be delivered pursuant to
Section 5.7 hereof, fairly present or will fairly present, as the case may be,
the consolidated financial condition of GFCO as of the respective dates set
forth therein, and the consolidated results of operations, stockholders' equity
and cash flows of GFCO for the respective periods or as of the respective dates
set forth therein.
(b) Each of the GFCO Financial Statements has been or will be, as the
case may be, prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved, except as stated
therein. The audits of GFCO and the GFCO Subsidiaries have been conducted in
all material respects in accordance with generally accepted auditing standards.
The books and records of GFCO and the GFCO Subsidiaries are being maintained in
material compliance with applicable legal and accounting requirements, and such
books and records accurately reflect in all material respects all dealings and
transactions in respect of the business, assets, liabilities and affairs of
GFCO and the GFCO Subsidiaries.
(c) Except to the extent (i) reflected, disclosed or provided for in
the consolidated statement of financial condition of GFCO as of June 30, 1998
(including related notes) and (ii) of liabilities incurred since June 30, 1998
in the ordinary course of business, neither GFCO nor any GFCO Subsidiary has
any liabilities, whether absolute, accrued, contingent or otherwise, which
could reasonably be expected to have a Material Adverse Effect on GFCO.
3.8 Material Adverse Change
(a) Since June 30, 1998, (i) GFCO and the GFCO Subsidiaries have
conducted their respective businesses in the ordinary and usual course
(excluding the incurrence of expenses in connection with this Agreement and the
transactions contemplated hereby) and (ii) no event has occurred or
circumstance arisen that, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect on GFCO.
(b) Except as Previously Disclosed, neither GFCO nor any of the GFCO
Subsidiaries has taken or permitted any of the actions set forth in Section
5.6(a) hereof between June 30, 1998 and the date hereof.
14
<PAGE> 119
3.9 Environmental Matters
(a) To the best of GFCO's knowledge, GFCO and the GFCO Subsidiaries are
in compliance with all Environmental Laws, except for any violations of any
Environmental Law which would not, singly or in the aggregate, have a Material
Adverse Effect on GFCO. Neither GFCO nor any GFCO Subsidiary has received any
written communication alleging that GFCO or any GFCO Subsidiary is not in such
compliance and, to the best knowledge of GFCO, there are no present
circumstances that would prevent or interfere with the continuation of such
compliance.
(b) To the best of GFCO's knowledge, none of the properties owned,
leased or operated by GFCO or GFCO's Subsidiaries has been or is in violation
of or liable under any Environmental Law, except any such violations or
liabilities which would not, singly or in the aggregate, have a Material
Adverse Effect on GFCO.
(c) To the best of GFCO's knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents that could
reasonably form the basis of any Environmental Claim or other claim or action
or governmental investigation that could result in the imposition of any
liability arising under any Environmental Law against GFCO or any GFCO
Subsidiary or against any person or entity whose liability for any
Environmental Claim GFCO or any GFCO Subsidiary has or may have retained or
assumed either contractually or by operation of law, except such which would
not have a Material Adverse Effect on GFCO.
(d) Except as Previously Disclosed, GFCO has not conducted any
environmental studies during the past five years with respect to any properties
owned by it or any GFCO Subsidiary as of the date hereof or which secure loans
of a GFCO Subsidiary as of the date hereof.
3.10 Tax Matters
(a) GFCO and the GFCO Subsidiaries, and each of their predecessors,
have timely filed all federal, state and local (and, if applicable, foreign)
income, franchise, bank, excise, real property, personal property and other tax
returns required by applicable law to be filed by them (including, without
limitation, estimated tax returns, income tax returns, information returns and
withholding and employment tax returns) and have paid, or where payment is not
required to have been made, have set up an adequate reserve or accrual for the
payment of, all taxes required to be paid in respect of the periods covered by
such returns and, as of the Effective Time, will have paid, or where payment is
not required to have been made, will have set up an adequate reserve or accrual
for the payment of, all taxes for any subsequent periods ending on or prior to
the Effective Time. Neither GFCO nor any of the GFCO Subsidiaries will have
any material liability for any such taxes in excess of the amounts so paid or
reserves or accruals so established.
(b) All federal, state and local (and, if applicable, foreign) income,
franchise, bank, excise, real property, personal property and other tax returns
filed by GFCO and the GFCO Subsidiaries are complete and accurate in all
material respects. Neither GFCO nor any of the GFCO Subsidiaries is delinquent
in the payment of any tax, assessment or governmental charge, and none of them
has requested any extension of time within which to file any tax returns in
respect of any fiscal year or portion thereof which have not since been filed.
Except as Previously Disclosed, the
15
<PAGE> 120
federal, state and local income tax returns of GFCO and the GFCO Subsidiaries
have been examined by the applicable tax authorities (or are closed to
examination due to the expiration of the applicable statute of limitations) and
no deficiencies for any tax, assessment or governmental charge have been
proposed, asserted or assessed (tentatively or otherwise) against GFCO or any
GFCO Subsidiary as a result of such examinations or otherwise which have not
been settled and paid. There are currently no agreements in effect with
respect to GFCO or any GFCO Subsidiary to extend the period of limitations for
the assessment or collection of any tax. As of the date hereof, no audit,
examination or deficiency or refund litigation with respect to such return is
pending or, to the best of GFCO's knowledge, threatened.
(c) Except as Previously Disclosed, none of GFCO or the GFCO
Subsidiaries (i) is a party to any agreement providing for the allocation or
sharing of taxes, (ii) is required to include in income any adjustment pursuant
to Section 481(a) of the Code by reason of a voluntary change in accounting
method initiated by GFCO or the GFCO Subsidiaries (nor does GFCO have any
knowledge that the Internal Revenue Service has proposed any such adjustment or
change of accounting method) or (iii) has filed a consent pursuant to Section
341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply.
3.11 Legal Proceedings
Except as Previously Disclosed, there are no actions, suits, claims,
governmental investigations or proceedings instituted, pending or, to the best
knowledge of GFCO, threatened against GFCO or any GFCO Subsidiary or against
any asset, interest or right of GFCO or any of GFCO Subsidiaries, or against
any officer, director or employee of any of them that in any such case, if
decided adversely, could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on GFCO. Neither GFCO nor any GFCO
Subsidiary is a party to any order, judgment or decree which has or could
reasonably be expected to have a Material Adverse Effect on GFCO.
3.12 Compliance with Laws
(a) GFCO and each of the GFCO Subsidiaries has all permits, licenses,
certificates of authority, orders and approvals of, and has made all filings,
applications and registrations with, federal, state, local and foreign
governmental or regulatory bodies that are required in order to permit it to
carry on its business as it is presently being conducted and the absence of
which could reasonably be expected to have a Material Adverse Effect on GFCO;
all such permits, licenses, certificates of authority, orders and approvals are
in full force and effect; and to the best knowledge of GFCO, no suspension or
cancellation of any of the same is threatened.
(b) Neither GFCO nor any of GFCO Subsidiaries is in violation of its
respective Certificate of Incorporation or Bylaws or equivalent documents, or
of any applicable federal, state or local law or ordinance or any order, rule
or regulation of any federal, state, local or other governmental agency or body
(including, without limitation, all banking (including, without limitation, all
regulatory capital requirements), securities, municipal securities, safety,
health, environmental, zoning, anti-discrimination, antitrust, and wage and
hour laws, ordinances, orders, rules and regulations), or in default with
respect to any order, writ, injunction or decree of any court,
16
<PAGE> 121
or in default under any order, license, regulation or demand of any
governmental agency, any of which violations or defaults could reasonably be
expected to have a Material Adverse Effect on GFCO; and neither GFCO nor any
GFCO Subsidiary has received any written notice or communication from any
federal, state or local governmental authority asserting that GFCO or any GFCO
Subsidiary is in violation of any of the foregoing which could reasonably be
expected to have a Material Adverse Effect on GFCO. Neither GFCO nor any GFCO
Subsidiary is subject to any regulatory or supervisory cease and desist order,
agreement, written directive, memorandum of understanding or written commitment
(other than those of general applicability to all savings institutions or
holding companies thereof issued by governmental authorities), and none of them
has received any written communication requesting that they enter into any of
the foregoing.
3.13 Deposit Insurance and Other Regulatory Matters
(a) The deposit accounts of Centennial are insured by the SAIF to the
maximum extent permitted by the FDIA, and Centennial has paid all premiums and
assessments required by the FDIA and the regulations thereunder.
(b) Centennial is a member in good standing of the FHLB of Cincinnati
and owns the requisite amount of stock in the FHLB of Cincinnati.
(c) Centennial has at all relevant times qualified as a "domestic
building and loan association," as such term is defined in Section 7701(a)(19)
of the Code, for purposes of Section 593 of the Code.
3.14 Certain Information
None of the information relating to GFCO and the GFCO Subsidiaries
supplied or to be supplied for inclusion or incorporation by reference in (i)
the Form S-4 will, at the time the Form S-4 and any amendment thereto becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
(ii) the Proxy Statement, as of the date(s) such Proxy Statement is mailed to
shareholders of GFCO and FFOH and up to and including the date(s) of the
meetings of shareholders to which such Proxy Statement relates, will contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, provided that information as of a later
date shall be deemed to modify information as of an earlier date. The Proxy
Statement mailed by FFOH and GFCO to their respective shareholders in
connection with the meetings of shareholders at which this Agreement will be
considered by such shareholders will comply as to form in all material respects
with the Exchange Act and the rules and regulations promulgated thereunder.
3.15 Employee Benefit Plans
(a) GFCO has Previously Disclosed all stock option, employee stock
purchase and stock bonus plans, qualified pension or profit-sharing plans, any
fringe benefit, incentive, deferred compensation, consultant, bonus or group
insurance contract, plan or arrangement, or any other
17
<PAGE> 122
welfare plan (as defined under Section 3(1) of ERISA), employee pension benefit
plan (as defined under Section 3(2) of ERISA) or agreement maintained for the
benefit of employees or former employees of GFCO or any GFCO Subsidiary (the
"GFCO Employee Plans"), and GFCO has previously furnished or made available to
FFOH accurate and complete copies of the same together with (i) the most recent
actuarial and financial reports prepared with respect to any qualified plans,
(ii) the most recent annual reports filed with any governmental agency with
respect to each GFCO Employee Plan, and (iii) all rulings and determination
letters and any open requests for rulings or letters that pertain to any
qualified plan.
(b) None of GFCO, any GFCO Subsidiary, any pension plan maintained by
any of them and qualified under Section 401 of the Code or, to the best of
GFCO's knowledge, any fiduciary of such plan has incurred any material
liability to the PBGC or the Internal Revenue Service with respect to any
employees of GFCO or any GFCO Subsidiary. To the best of GFCO's knowledge, no
reportable event under Section 4043(b) of ERISA has occurred with respect to
any such pension plan.
(c) Neither GFCO nor any GFCO Subsidiary participates in or has
incurred any liability under Section 4201 of ERISA for a complete or partial
withdrawal from a multi-employer plan (as such term is defined in ERISA), and
neither GFCO nor any GFCO Subsidiary (or their respective successors) will
incur any liability in the event of a complete withdrawal from any
multi-employer plan of which GFCO or any of its Subsidiaries is a participant
as of the date hereof in connection with the transactions contemplated hereby.
(d) A favorable determination letter has been issued by the Internal
Revenue Service with respect to each GFCO Employee Plan which is an "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) (a "GFCO Pension
Plan") which is intended to qualify under Section 401 of the Code to the effect
that such plan is qualified under Section 401 of the Code and the trust
associated with such employee pension plan is tax exempt under Section 501 of
the Code. No such letter has been revoked or, to the best of GFCO's knowledge,
is threatened to be revoked and GFCO does not know of any ground on which such
revocation may be based. Neither GFCO nor any GFCO Subsidiary has any
liability under any such plan that is not reflected on the consolidated
statement of financial condition of GFCO at June 30, 1998 included in the GFCO
Financial Statements, other than liabilities incurred in the ordinary course of
business in connection therewith subsequent to the date thereof.
(e) No prohibited transaction (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of ERISA or
Section 4975 of the Code) has occurred with respect to any GFCO Employee Plan
which would result in the imposition, directly or indirectly, of a material
excise tax under Section 4975 of the Code or otherwise have a Material Adverse
Effect on GFCO.
(f) Full payment has been made (or proper accruals have been
established) of all contributions which are required for periods prior to the
date hereof, and full payment will be so made (or proper accruals will be so
established) of all contributions which are required for periods after the date
hereof and prior to the Effective Time, under the terms of each GFCO Employee
Plan or ERISA; no accumulated funding deficiency (as defined in Section 302 of
ERISA or Section 412
18
<PAGE> 123
of the Code), whether or not waived, exists with respect to any GFCO Pension
Plan, and there is no "unfunded current liability" (as defined in Section 412
of the Code) with respect to any GFCO Pension Plan.
(g) GFCO Employee Plans have been operated in compliance in all
material respects with the applicable provisions of the GFCO Employee Plans,
ERISA, the Code, all regulations, rulings and announcements promulgated or
issued thereunder and all other applicable governmental laws and regulations.
(h) There are no pending or, to the best knowledge of GFCO, threatened
claims (other than routine claims for benefits) by, on behalf of or against any
of GFCO Employee Plans or any trust related thereto or any fiduciary thereof
relating to a GFCO Employee Plan.
(i) Except as Previously Disclosed, the consummation of the
transactions contemplated by this Agreement would not, directly or indirectly
(including, without limitation, as a result of any termination of employment
prior to or following the Effective Time) reasonably be expected to (i) entitle
any director, officer, employee or consultant of or to GFCO or any GFCO
Subsidiary to any payment (including severance pay or similar compensation) or
any increase in compensation, (ii) result in the vesting or acceleration of any
benefits under any GFCO Employee Plan or (iii) result in any material increase
in benefits payable under any GFCO Employee Plan.
(j) Neither GFCO nor any of its Subsidiaries maintains any compensation
plans, programs or arrangements the payments under which would not reasonably
be expected to be deductible as a result of the limitations under Section
162(m) of the Code and the regulations issued thereunder.
(k) As a result, directly or indirectly, of the transactions
contemplated by this Agreement (including, without limitation, as a result of
any termination of employment prior to or following the Effective Time), none
of GFCO, FFOH or any of their respective Subsidiaries will be obligated to make
a payment that would be characterized as an "excess parachute payment" to an
individual who is a "disqualified individual" (as such terms are defined in
Section 280G of the Code), without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in the future.
3.16 Certain Contracts
(a) Except as Previously Disclosed, none of GFCO or the GFCO
Subsidiaries is a party to, is bound or affected by, receives, or is obligated
to pay, benefits under (i) any agreement, arrangement or commitment, including
without limitation any agreement, indenture or other instrument, relating to
the borrowing of money by GFCO or any GFCO Subsidiary (other than deposits,
federal funds purchased, FHLB advances and securities sold under agreements to
repurchase) or the guarantee by GFCO or any GFCO Subsidiary of any obligation,
(ii) any agreement, arrangement or commitment relating to the employment of a
consultant or the employment, election or retention in office of any present or
former director, officer or employee of GFCO or any GFCO Subsidiary, (iii) any
agreement, arrangement or understanding pursuant to which GFCO or any GFCO
Subsidiary is obligated to indemnify any existing or former director,
19
<PAGE> 124
officer, employee or agent of GFCO or any GFCO Subsidiary, (iv) any agreement,
arrangement or understanding to which GFCO or any GFCO Subsidiary is a party or
by which any of the same is bound which limits the freedom of GFCO or any GFCO
Subsidiary to compete in any line of business or with any person, or (v) any
other agreement, arrangement or understanding which would be required to be
filed as an exhibit to GFCO's Annual Report on Form 10-KSB under the Exchange
Act and which has not been so filed.
(b) Neither GFCO nor any GFCO Subsidiary is in default or in
non-compliance, which default or non-compliance could reasonably be expected to
have a Material Adverse Effect on GFCO, under any contract, agreement,
commitment, arrangement, lease, insurance policy or other instrument to which
it is a party or by which its assets, business or operations may be bound or
affected, whether entered into in the ordinary course of business or otherwise
and whether written or oral, and there has not occurred any event that with the
lapse of time or the giving of notice, or both, would constitute such a default
or non-compliance.
3.17 Brokers and Finders
Except for an agreement with Stifel, Nicolaus & Company, Incorporated, as
Previously Disclosed, neither GFCO nor any GFCO Subsidiary, nor any of their
respective directors, officers or employees, has employed any broker or finder
or incurred any liability for any broker or finder fees or commissions in
connection with the transactions contemplated hereby.
3.18 Insurance
GFCO and each GFCO Subsidiary is insured for reasonable amounts with
financially sound and reputable insurance companies against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured and has maintained all insurance required by
applicable laws and regulations. Neither GFCO nor any of GFCO Subsidiaries has
received any notice of cancellation or notice of a material amendment of any
such insurance policy or bond or is in default under such policy or bond, no
coverage thereunder is being disputed and all material claims thereunder have
been filed in a timely fashion.
3.19 Properties
All real and personal property owned by GFCO or any of the GFCO
Subsidiaries or presently used by any of them in their respective business is
in an adequate condition (ordinary wear and tear excepted) and is sufficient to
carry on the business of GFCO and the GFCO Subsidiaries in the ordinary course
of business consistent with their past practices. GFCO and the GFCO
Subsidiaries have good and marketable title free and clear of all Liens (other
than equities of redemption under applicable foreclosure laws) to all of the
material properties and assets, real and personal, reflected on the
consolidated statement of financial condition of GFCO as of June 30, 1998
included in the GFCO Financial Statements or acquired after such date, except
(i) Liens for current taxes not yet due or payable, (ii) pledges to secure
deposits and other Liens incurred in the ordinary course of its banking
business, (iii) such imperfections of title, easements and encumbrances, if
any, as are not material in character, amount or extent and (iv) as reflected
on the consolidated statement of financial condition of GFCO as of June 30,
1998 included in the GFCO Financial Statements. All
20
<PAGE> 125
real and personal property which is material to GFCO's business on a
consolidated basis and leased or licensed by GFCO or any GFCO Subsidiary is
held pursuant to leases or licenses which are valid and enforceable in
accordance with their respective terms and such leases will not terminate or
lapse prior to the Effective Time.
3.20 Labor
No work stoppage involving GFCO or any GFCO Subsidiary is pending or, to
the best knowledge of GFCO, threatened. Neither GFCO nor any GFCO Subsidiary
is involved in, or threatened with or affected by, any labor dispute,
arbitration, lawsuit or administrative proceeding involving the employees of
GFCO or any GFCO Subsidiary which reasonably could be expected to have a
Material Adverse Effect on GFCO. Employees of GFCO and the GFCO Subsidiaries
are not represented by any labor union nor are any collective bargaining
agreements otherwise in effect with respect to such employees, and to the best
of GFCO's knowledge, there have been no efforts to unionize or organize any
employees of GFCO or any GFCO Subsidiary during the past five years.
3.21 Loans; Nonperforming and Classified Assets; Allowance for Loan Losses
(a) Each loan agreement, note or borrowing arrangement, including
without limitation portions of outstanding lines of credit and loan commitments
(collectively, "Loans"), on the books and records of GFCO and its Subsidiaries,
was made and has been serviced in all material respects in accordance with
customary lending standards in the ordinary course of business, is evidenced in
all material respects by appropriate and sufficient documentation and, to the
best knowledge of GFCO, constitutes the legal, valid and binding obligation of
the obligor named therein, subject to bankruptcy, insolvency, fraudulent
conveyance and other laws of general applicability relating to or affecting
creditor's rights and to general equity principles.
(b) GFCO has Previously Disclosed as to GFCO and each GFCO Subsidiary
as of June 30, 1998: (i) any written or, to GFCO's knowledge, oral Loan under
the terms of which the obligor is 60 or more days delinquent in payment of
principal or interest, or to the best of GFCO's knowledge, in default of any
other material provision thereof; (ii) each Loan which has been classified as
"substandard," "doubtful," "loss" or "special mention" (or words of similar
import) by GFCO, a GFCO Subsidiary or an applicable regulatory authority; (iii)
a listing of the real estate owned acquired by foreclosure or by deed-in-lieu
thereof, including the book value thereof; and (iv) each Loan with any
director, executive officer or five percent or greater stockholder of GFCO or a
GFCO Subsidiary, or to the best knowledge of GFCO, any person, corporation or
enterprise controlling, controlled by or under common control with any of the
foregoing.
(c) The allowance for loan losses reflected on GFCO's consolidated
statements of financial condition included in GFCO Financial Statements is, or
will be in the case of subsequently delivered GFCO Financial Statements, as the
case may be, in the opinion of GFCO's management, adequate in all material
respects as of their respective dates under the requirements of generally
accepted accounting principles to provide for reasonably anticipated losses on
outstanding loans, net of recoveries.
21
<PAGE> 126
3.22 Administration of Fiduciary Accounts
GFCO and each of its Subsidiaries has properly administered all accounts
for which it acts as a fiduciary, including but not limited to accounts for
which it serves as a trustee, agent, custodian, personal representative,
guardian, conservator or investment advisor, in accordance with the terms of
the governing documents and applicable laws and regulations, except for
failures to so administer which would not have a Material Adverse Effect on
GFCO. Neither GFCO nor any of its Subsidiaries, nor any of their respective
directors, officers or employees, has committed any breach of trust with
respect to any such fiduciary account and the records for each such fiduciary
account are true and correct and accurately reflect the assets of such
fiduciary account, except for breaches of trust and failures to maintain
records which would not, individually or in the aggregate, have a Material
Adverse Effect on GFCO.
3.23 Derivative Transactions
Except as Previously Disclosed, between June 30, 1998 and the date
hereof, neither GFCO nor any of its Subsidiaries entered into any futures
contract, option contract, interest rate caps, interest rate floors, interest
rate exchange agreement or other derivative instruments.
3.24 Year 2000
Neither GFCO nor any of its Subsidiaries has received or has reason to
believe that it will receive a rating of less than "satisfactory" on any Year
2000 Report of Examination of any Governmental Entity. GFCO has disclosed or
made available to FFOH a complete and accurate copy of its plan, including an
estimate of the anticipated associated costs, for addressing the issues set
forth in the statements of the FFIEC dated May 5, 1997, entitled "Year 2000
Project Management Awareness," and December 17, 1997, entitled "Safety and
Soundness Guidelines Concerning the Year 2000 Business Risk," as such issues
affect it and its Subsidiaries, and such plan is in material compliance with
the schedule set forth in the FFIEC statements.
3.25 Required Vote; Antitakeover Provisions
(a) The affirmative vote of the holders of a majority of the issued and
outstanding shares of GFCO Common Stock is the only vote of stockholders of
GFCO required to approve this Agreement and the transactions contemplated
hereby on behalf of GFCO.
(b) To the best of our knowledge, FFOH is not an "interested
stockholder" of GFCO as defined in Section 203(c)(5) of the DGCL (assuming the
accuracy of the representation and warranty of FFOH contained in Section 4.25
hereof) and, as a result, the provisions of Section 203 of the DGCL do not
apply to the Merger and the other transactions contemplated hereby.
(c) The Board of Directors of GFCO has taken all necessary action so
that the provisions of Article Eight of GFCO's Certificate of Incorporation do
not and will not apply to this Agreement and GFCO Stock Option Agreement and
the transactions contemplated hereby and thereby.
22
<PAGE> 127
3.26 Fairness Opinion
GFCO has received an opinion of Stifel, Nicolaus & Company, Incorporated
to the effect that, as of the date hereof, the consideration to be received by
the stockholders of GFCO pursuant to this Agreement is fair from a financial
point of view to the holders of GFCO Common Stock.
3.27 Accounting for the Merger; Reorganization
As of the date hereof, GFCO does not have any reason to believe that the
Merger will fail to qualify, as a result of any action or omission by GFCO or
any GFCO Subsidiary, (i) for pooling-of- interests accounting treatment under
generally accepted accounting principles or (ii) as a reorganization under
Section 368(a) of the Code.
3.28 Disclosures
None of the representations and warranties of GFCO or any of the written
information or documents furnished or to be furnished by GFCO to FFOH in
connection with or pursuant to this Agreement or the consummation of the
transactions contemplated hereby, when considered as a whole, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact required to be stated or necessary to make any such
information or document, in light of the circumstances, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FFOH
AND MERGER CORPORATION
FFOH and Merger Corporation represent and warrant to GFCO as follows:
4.1 Capital Structure of FFOH
The authorized capital stock of FFOH consists of 15,000,000 shares of
FFOH Common Stock and 5,000,000 shares of FFOH Preferred Stock. As of the date
hereof, there are 5,601,977 shares of FFOH Common Stock issued and
outstanding, no shares of FFOH Common Stock which are directly or indirectly
held as treasury stock by FFOH, and no shares of FFOH Preferred Stock issued
and outstanding. All outstanding shares of FFOH Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable, and none of
the outstanding shares of FFOH Common Stock has been issued in violation of the
preemptive rights of any person, firm or entity. Except for (i) 220,009 shares
of FFOH Common Stock issuable upon exercise of stock options which have been
granted pursuant to the 1992 Stock Incentive Plan, the 1992 Directors' Stock
Option Plan and the 1997 Stock Option Plan, as Previously Disclosed, (ii)
shares of FFOH Common Stock issuable pursuant to the terms of the FFOH Stock
Option Agreement and (iii) the operative provisions of this Agreement, there
are no Rights authorized, issued or outstanding with respect to the capital
stock of FFOH. FFOH has not repurchased any shares of FFOH Common Stock during
the two years preceding the date hereof, except for any such repurchases
(including the number of shares, date repurchased, repurchase price and the
purpose thereof) as are Previously Disclosed.
23
<PAGE> 128
FFOH Common Stock to be issued in connection with the Merger is duly authorized
and, when issued in accordance with the terms hereof, will be validly issued
and fully paid and nonassessable.
4.2 Organization, Standing and Authority of FFOH
FFOH is a corporation duly organized, validly existing and in good
standing under the laws of the State of Ohio with full corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as now conducted and is duly licensed or qualified to do business and
is in good standing in each jurisdiction in which its ownership or leasing of
property or the conduct of its business requires such licensing or
qualification, except where the failure to be so licensed, qualified or in good
standing would not have a Material Adverse Effect on FFOH. FFOH is duly
registered as a savings and loan holding company under the HOLA and the
regulations of the OTS thereunder. FFOH has heretofore delivered or made
available to GFCO true and complete copies of the Articles of Incorporation,
Code of Regulations and Bylaws of FFOH as in effect as of the date hereof.
4.3 Ownership of FFOH Subsidiaries
The only direct or indirect Subsidiaries of FFOH are Merger Corporation,
the Bank and SGFSC (the "FFOH Subsidiaries"). Except for (i) capital stock of
the FFOH Subsidiaries, (ii) stock in the FHLB of Cincinnati, (iii) securities
and other interests taken in consideration of debts previously contracted and
(iv) the operative provisions of this Agreement and the GFCO Stock Option
Agreement, FFOH does not own or have the right to acquire, directly or
indirectly, any outstanding capital stock or other voting securities or
ownership interests of any corporation, bank, savings association, partnership,
joint venture or other organization. The outstanding shares of capital stock
or other ownership interests in each of the FFOH Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable, and are
directly or indirectly owned by FFOH free and clear of all Liens or rights of
third parties of any kind whatsoever. No Rights are authorized, issued or
outstanding with respect to the capital stock or other ownership interests of
any FFOH Subsidiary and there are no agreements, understandings or commitments
relating to the right of FFOH to vote or to dispose of said shares or other
ownership interests.
4.4 Organization, Standing and Authority of FFOH Subsidiaries
The Bank is a savings bank duly organized, validly existing and in good
standing under the laws of the United States, and Merger Corporation and SGFSC
are corporations duly organized, validly existing and in good standing under
the laws of the State of Ohio. Each of the FFOH Subsidiaries (i) has full
power and authority to own or lease all of its properties and assets and to
carry on its business as now conducted, and (ii) is duly licensed or qualified
to do business and is in good standing in each jurisdiction in which its
ownership or leasing of property or the conduct of its business requires such
qualification, except where the failure to be so licensed, qualified or in good
standing would not have a Material Adverse Effect on FFOH. FFOH has heretofore
delivered or made available to GFCO true and complete copies of the Charter and
Bylaws of the Bank and the Articles of Incorporation, Code of Regulations and
Bylaws of each of Merger Corporation and SGFSC as in effect as of the date
hereof.
24
<PAGE> 129
4.5 Authorized and Effective Agreement
(a) Each of FFOH and Merger Corporation has all requisite corporate
power and authority to enter into this Agreement and (subject to receipt of all
necessary governmental approvals and the approval of FFOH's shareholders of
this Agreement and the other transactions contemplated hereby) to perform all
of its obligations under this Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action in respect
thereof on the part of FFOH and Merger Corporation, except for the approval of
this Agreement and the other transactions contemplated hereby by FFOH's
shareholders. This Agreement has been duly and validly executed and delivered
by each of FFOH and Merger Corporation and, assuming due authorization,
execution and delivery by GFCO, constitutes a legal, valid and binding
obligation of FFOH and Merger Corporation which is enforceable against FFOH and
Merger Corporation in accordance with its terms, subject, as to enforceability,
to bankruptcy, insolvency and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
(b) Neither the execution and delivery of this Agreement, nor
consummation of the transactions contemplated hereby (including the Merger and
the Bank Merger), nor compliance by FFOH or Merger Corporation with any of the
provisions hereof (i) does or will conflict with or result in a breach of any
provisions of the Articles of Incorporation, Code of Regulations or Bylaws of
FFOH, Merger Corporation or SGFSC or the Charter or Bylaws of the Bank, (ii)
violate, conflict with or result in a breach of any term, condition or
provision of, or constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, or give rise to any right
of termination, cancellation or acceleration with respect to, or result in the
creation of any Lien upon any property or asset of FFOH or the FFOH
Subsidiaries pursuant to, any material note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which
FFOH or the FFOH Subsidiaries is a party, or by which any of their respective
properties or assets may be bound or affected, or (iii) subject to receipt of
all required governmental and shareholder approvals, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to FFOH or the FFOH
Subsidiaries.
(c) Except for (i) the filing of applications and notices with, and the
consents and approvals of, as applicable, the OTS and the Division, (ii) the
filing and effectiveness of the Form S-4 with the Commission, (iii) compliance
with applicable state securities or "blue sky" laws in connection with the
issuance of FFOH Common Stock pursuant to this Agreement, (iv) the approval of
this Agreement by the requisite vote of the shareholders of GFCO and FFOH, (v)
the filing of the Certificates of Merger with the Secretary of State of the
States of Ohio and Delaware, pursuant to the OGCL and DGCL, respectively, in
each case in connection with the Merger and (vi) the filing of a Certificate of
Merger with the Secretary of the State of Ohio in connection with the Bank
Merger, and except for such filings, authorizations or approvals which are
Previously Disclosed, no consents or approvals of or filings or registrations
with any Governmental Entity or with any third party are necessary on the part
of FFOH or the FFOH Subsidiaries in connection with (i) the execution and
delivery by FFOH and Merger Corporation of this Agreement and the consummation
by FFOH and Merger Corporation of the transactions contemplated hereby and (ii)
the execution and delivery by the Bank of the Bank Merger Agreement and the
consummation by the Bank of the transactions contemplated thereby.
25
<PAGE> 130
(d) As of the date hereof, none of FFOH or the FFOH Subsidiaries is
aware of any reasons (relating to FFOH or the FFOH Subsidiaries (including,
without limitation, Community Reinvestment Act compliance)) why all consents
and approvals shall not be procured from all Governmental Entities having
jurisdiction over the transactions contemplated by this Agreement as shall be
necessary for (i) consummation of the transactions contemplated by this
Agreement and the Bank Merger Agreement and (ii) the continuation by FFOH after
the Effective Time of the business of each of FFOH, GFCO and their respective
Subsidiaries as such business is carried on immediately prior to the Effective
Time, free of any conditions or requirements which, in the reasonable opinion
of FFOH, could have a Material Adverse Effect on FFOH or GFCO or materially
impair the value of GFCO and the GFCO Subsidiaries to FFOH.
4.6 Securities Documents and Regulatory Reports
(a) FFOH has previously delivered or made available to GFCO a complete
copy of all Securities Documents filed by FFOH or the Bank pursuant to the
Securities Laws or mailed by FFOH or the Bank to its respective shareholders as
a class since January 1, 1994. FFOH has timely filed with the Commission (and
the Bank has timely filed with the OTS) all Securities Documents required by
the Securities Laws and such Securities Documents complied in all material
respects with the Securities Laws and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, provided that
information as of a later date shall be deemed to modify information as of an
earlier date.
(b) Since January 1, 1994, each of FFOH and the Bank has duly filed
with the OTS and the FDIC, as the case may be, in correct form the reports
required to be filed under applicable laws and regulations and such reports
were in all material respects complete and accurate and in compliance with the
requirements of applicable laws and regulations, and FFOH has previously
delivered or made available to GFCO accurate and complete copies of all such
reports. In connection with the most recent examinations of FFOH or a FFOH
Subsidiary by the OTS or the FDIC, neither FFOH nor any FFOH Subsidiary was
required to correct or change any action, procedure or proceeding which has not
been corrected or changed as required.
4.7 Financial Statements
(a) FFOH has previously delivered or made available to GFCO accurate
and complete copies of the FFOH Financial Statements which, in the case of the
consolidated statements of financial condition of FFOH as of December 31, 1997,
1996 and 1995 and the consolidated statements of earnings, stockholders' equity
and cash flows for each of the three years ended December 31, 1997, 1996 and
1995, are accompanied by the audit reports of Grant Thornton LLP, independent
public accountants with respect to FFOH. The FFOH Financial Statements
referred to herein, as well as the FFOH Financial Statements to be delivered
pursuant to Section 5.7 hereof, fairly present or will fairly present, as the
case may be, the consolidated financial condition of FFOH as of the respective
dates set forth therein, and the consolidated results of operations,
stockholders' equity and cash flows of FFOH for the respective periods or as of
the respective dates set forth therein.
26
<PAGE> 131
(b) Each of the FFOH Financial Statements has been or will be, as the
case may be, prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved, except as stated
therein. The audits of FFOH and the FFOH Subsidiaries have been conducted in
all material respects in accordance with generally accepted auditing standards.
The books and records of FFOH and the FFOH Subsidiaries are being maintained in
material compliance with applicable legal and accounting requirements, and all
such books and records accurately reflect in all material respects all dealings
and transactions in respect of the business, assets, liabilities and affairs of
FFOH and the FFOH Subsidiaries.
(c) Except to the extent (i) reflected, disclosed or provided for in
the consolidated statement of financial condition of FFOH as of June 30, 1998
(including related notes) and (ii) of liabilities incurred since June 30, 1998
in the ordinary course of business, none of FFOH or the FFOH Subsidiaries has
any liabilities, whether absolute, accrued, contingent or otherwise, which
could reasonably be expected to have a Material Adverse Effect on FFOH.
4.8 Material Adverse Change
(a) Since June 30, 1998, (i) FFOH and the FFOH Subsidiaries have
conducted their respective businesses in the ordinary and usual course
(excluding the incurrence of expenses in connection with this Agreement and the
transactions contemplated hereby) and (ii) no event has occurred or
circumstance arisen that, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect on FFOH.
(b) Except as Previously Disclosed, none of FFOH or the FFOH
Subsidiaries has taken or permitted any of the actions set forth in Section
5.6(b) hereof between June 30, 1998 and the date hereof.
4.9 Environmental Matters
(a) To the best of FFOH's knowledge, FFOH and the FFOH Subsidiaries are
in compliance with all Environmental Laws, except for any violations of any
Environmental Law which would not, singly or in the aggregate, have a Material
Adverse Effect on FFOH. None of FFOH or the FFOH Subsidiaries has received any
written communication alleging that FFOH or the FFOH Subsidiaries is not in
such compliance and, to the best knowledge of FFOH, there are no present
circumstances that would prevent or interfere with the continuation of such
compliance.
(b) To the best of FFOH's knowledge, none of the properties owned,
leased or operated by FFOH or the FFOH Subsidiaries has been or is in violation
of or liable under any Environmental Law, except any such violations or
liabilities which would not singly or in the aggregate, have a Material Adverse
Effect on FFOH.
(c) To the best of FFOH's knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents that could
reasonably form the basis of any Environmental Claim or other claim or action
or governmental investigation that could result in the imposition of any
liability arising under any Environmental Law against FFOH or the FFOH
Subsidiaries or against any person or entity whose liability for any
Environmental Claim FFOH or
27
<PAGE> 132
any of the FFOH Subsidiaries has or may have retained or assumed either
contractually or by operation of law, except such which would not have a
Material Adverse Effect on FFOH.
(d) Except as Previously Disclosed, FFOH has not conducted any
environmental studies during the past five years with respect to any properties
owned by it or an FFOH Subsidiaries as of the date hereof or which secure loans
of an FFOH Subsidiary as of the date hereof.
4.10 Tax Matters
(a) FFOH, the FFOH Subsidiaries, and each of their predecessors, have
timely filed all federal, state and local (and, if applicable, foreign) income,
franchise, bank, excise, real property, personal property and other tax returns
required by applicable law to be filed by them (including, without limitation,
estimated tax returns, income tax returns, information returns and withholding
and employment tax returns) and, except as Previously Disclosed, have paid, or
where payment is not required to have been made, have set up an adequate
reserve or accrual for the payment of, all taxes required to be paid in respect
of the periods covered by such returns and, as of the Effective Time, will have
paid, or where payment is not required to have been made, will have set up an
adequate reserve or accrual for the payment of, all taxes for any subsequent
periods ending on or prior to the Effective Time. None of FFOH or the FFOH
Subsidiaries will have any material liability for any such taxes in excess of
the amounts so paid or reserves or accruals so established.
(b) All federal, state and local (and, if applicable, foreign) income,
franchise, bank, excise, real property, personal property and other tax returns
filed by FFOH and the FFOH Subsidiaries are complete and accurate in all
material respects. None of FFOH or the FFOH Subsidiaries is delinquent in the
payment of any tax, assessment or governmental charge, and none of them has
requested any extension of time within which to file any tax returns in
respect of any fiscal year or portion thereof which have not since been filed.
Except as Previously Disclosed, the federal, state and local income tax returns
of FFOH and the FFOH Subsidiaries have been examined by the applicable tax
authorities (or are closed to examination due to the expiration of the
applicable statute of limitations) and no deficiencies for any tax, assessment
or governmental charge have been proposed, asserted or assessed (tentatively or
otherwise) against FFOH or the FFOH Subsidiaries as a result of such
examinations or otherwise which have not been settled and paid. There are
currently no agreements in effect with respect to FFOH or the FFOH Subsidiaries
to extend the period of limitations for the assessment or collection of any
tax. As of the date hereof, no audit, examination or deficiency or refund
litigation with respect to such return is pending or, to the best of FFOH's
knowledge, threatened.
(c) None of FFOH or the FFOH Subsidiaries (i) is a party to any
agreement providing for the allocation or sharing of taxes, (ii) is required to
include in income any adjustment pursuant to Section 481(a) of the Code by
reason of a voluntary change in accounting method initiated by FFOH or the FFOH
Subsidiaries (nor does FFOH have any knowledge that the Internal Revenue
Service has proposed any such adjustment or change of accounting method) or
(iii) has filed a consent pursuant to Section 341(f) of the Code or agreed to
have Section 341(f)(2) of the Code apply.
28
<PAGE> 133
4.11 Legal Proceedings
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the best knowledge of FFOH, threatened
against FFOH or the FFOH Subsidiaries or against any asset, interest or right
of FFOH or the FFOH Subsidiaries, or against any officer, director or employee
of any of them that in any such case, if decided adversely, could reasonably be
expected to have individually or in the aggregate, a Material Adverse Effect on
FFOH. None of FFOH or the FFOH Subsidiaries is a party to any order, judgment
or decree which has or could reasonably be expected to have a Material Adverse
Effect on FFOH.
4.12 Compliance with Laws
(a) Each of FFOH and the FFOH Subsidiaries has all permits, licenses,
certificates of authority, orders and approvals of, and has made all filings,
applications and registrations with, federal, state, local and foreign
governmental or regulatory bodies that are required in order to permit it to
carry on its business as it is presently being conducted and the absence of
which could reasonably be expected to have a Material Adverse Effect on FFOH;
all such permits, licenses, certificates of authority, orders and approvals are
in full force and effect; and to the best knowledge of FFOH, no suspension or
cancellation of any of the same is threatened.
(b) None of FFOH or the FFOH Subsidiaries is in violation of its
respective Articles of Incorporation, Code of Regulations, Charter, Bylaws or
equivalent documents, or of any applicable federal, state or local law or
ordinance or any order, rule or regulation of any federal, state, local or
other governmental agency or body (including, without limitation, all banking
(including, without limitation, all regulatory capital requirements),
securities, municipal securities, safety, health, environmental, zoning,
anti-discrimination, antitrust, and wage and hour laws, ordinances, orders,
rules and regulations), or in default with respect to any order, writ,
injunction or decree of any court, or in default under any order, license,
regulation or demand of any governmental agency, any of which violations or
defaults could reasonably be expected to have a Material Adverse Effect on
FFOH; and none of FFOH or the FFOH Subsidiaries has received any written notice
or communication from any federal, state or local governmental authority
asserting that FFOH or the FFOH Subsidiaries is in violation of any of the
foregoing which could reasonably be expected to have a Material Adverse Effect
on FFOH. None of FFOH or the FFOH Subsidiaries is subject to any regulatory or
supervisory cease and desist order, agreement, written directive, memorandum of
understanding or written commitment (other than those of general applicability
to all savings institutions or holding companies thereof issued by governmental
authorities), and none of them has received any written communication
requesting that it enter into any of the foregoing.
4.13 Deposit Insurance and Other Regulatory Matters
(a) The deposit accounts of the Bank are insured by the SAIF to the
maximum extent permitted by the FDIA, and the Bank has paid all premiums and
assessments required by the FDIA and the regulations thereunder.
(b) The Bank is a member in good standing of the FHLB of Cincinnati and
owns the requisite amount of stock in the FHLB of Cincinnati.
29
<PAGE> 134
(c) The Bank has at all relevant times qualified as a "domestic
building and loan association," as such term is defined in Section 7701(a)(19)
of the Code, for purposes of Section 593 of the Code.
4.14 Certain Information
None of the information relating to FFOH and the FFOH Subsidiaries to be
included or incorporated by reference in (i) the Form S-4 will, at the time the
Form S-4 and any amendment thereto becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and (ii) the Proxy Statement, as of
the date(s) such Proxy Statement is mailed to shareholders of FFOH and GFCO and
up to and including the date(s) of the meetings of shareholders to which such
Proxy Statement relates, will contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, provided
that information as of a later date shall be deemed to modify information as of
an earlier date. The Proxy Statement mailed by FFOH and GFCO to their
respective shareholders in connection with the meetings of shareholders at
which this Agreement will be considered by such shareholders will comply as to
form in all material respects with the Securities Act and the Exchange Act and
the rules and regulations promulgated thereunder. The Proxy Statement will
comply as to form in all material respects with the Securities Act.
4.15 Employee Benefit Plans
(a) FFOH has Previously Disclosed all stock option, employee stock
purchase and stock bonus plans, qualified pension or profit-sharing plans, any
fringe benefit, incentive, deferred compensation, consultant, bonus or group
insurance contract, plan or arrangement, or any other welfare plan (as defined
in Section 3(1) of ERISA), employee pension benefit plan (as defined under
Section 3(2) of ERISA) or agreement maintained for the benefit of employees or
former employees of FFOH or the FFOH Subsidiaries (the "FFOH Employee Plans"),
and FFOH has previously furnished or made available to GFCO accurate and
complete copies of the same together with (i) the most recent actuarial and
financial reports prepared with respect to any qualified plans, (ii) the most
recent annual reports filed with any governmental agency with respect to each
FFOH Employee Plan, and (iii) all rulings and determination letters and any
open requests for rulings or letters that pertain to any qualified plan.
(b) None of FFOH, the FFOH Subsidiaries, any pension plan maintained by
any of them and qualified under Section 401 of the Code or, to the best of
FFOH's knowledge, any fiduciary of such plan has incurred any material
liability to the PBGC or the Internal Revenue Service with respect to any
employees of FFOH or the FFOH Subsidiaries. To the best of FFOH's knowledge,
no reportable event under Section 4043(b) of ERISA has occurred with respect to
any such pension plan.
(c) None of FFOH or the FFOH Subsidiaries participates in or has
incurred any liability under Section 4201 of ERISA for a complete or partial
withdrawal from a multi-employer plan (as such term is defined in ERISA), and
none of FFOH or the FFOH Subsidiaries (or their respective
30
<PAGE> 135
successors) will incur any liability in the event of a complete withdrawal from
any multi-employer plan of which FFOH or any of its Subsidiaries is a
participant as of the date hereof in connection with the transactions
contemplated hereby.
(d) A favorable determination letter has been issued by the Internal
Revenue Service with respect to each FFOH Employee Plan which is an "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) (an "FFOH Pension
Plan") which is intended to qualify under Section 401 of the Code to the effect
that such plan is qualified under Section 401 of the Code and the trust
associated with such employee pension plan is tax exempt under Section 501 of
the Code. No such letter has been revoked or, to the best of FFOH's knowledge,
is threatened to be revoked and FFOH does not know of any ground on which such
revocation may be based. None of FFOH or the FFOH Subsidiaries has any
liability under any such plan that is not reflected on the consolidated
statement of financial condition of FFOH at June 30, 1998 included in the FFOH
Financial Statements, other than liabilities incurred in the ordinary course of
business in connection therewith subsequent to the date thereof.
(e) No prohibited transaction (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of ERISA or
Section 4975 of the Code) has occurred with respect to any FFOH Employee Plan
which would result in the imposition, directly or indirectly, of a material
excise tax under Section 4975 of the Code or otherwise have a Material Adverse
Effect on FFOH.
(f) Full payment has been made (or proper accruals have been
established) of all contributions which are required for periods prior to the
date hereof, and full payment will be so made (or proper accruals will be so
established) of all contributions which are required for periods after the date
hereof and prior to the Effective Time, under the terms of each FFOH Employee
Plan or ERISA; no accumulated funding deficiency (as defined in Section 302 of
ERISA or Section 412 of the Code), whether or not waived, exists with respect
to any FFOH Pension Plan, and there is no "unfunded current liability" (as
defined in Section 412 of the Code) with respect to any FFOH Pension Plan.
(g) The FFOH Employee Plans have been operated in compliance in all
material respects with the applicable provisions of the FFOH Employee Plans,
ERISA, the Code, all regulations, rulings and announcements promulgated or
issued thereunder and all other applicable governmental laws and regulations.
(h) There are no pending or, to the best knowledge of FFOH, threatened
claims (other than routine claims for benefits) by, on behalf of or against any
of FFOH Employee Plans or any trust related thereto or any fiduciary thereof
relating to any of the FFOH Employee Plans.
(i) As a result, directly or indirectly, of the transactions
contemplated by this Agreement (including, without limitation, as a result of
any termination of employment prior to or following the Effective Time), none
of FFOH or any of the FFOH Subsidiaries will be obligated to make a payment
that would be characterized as an "excess parachute payment" to an individual
who is a "disqualified individual" (as such terms are defined in Section 280G
of the Code), without regard
31
<PAGE> 136
to whether such payment is reasonable compensation for personal services
performed or to be performed in the future.
4.16 Certain Contracts
(a) Except as Previously Disclosed, none of FFOH or the FFOH
Subsidiaries is a party to, is bound or affected by, receives, or is obligated
to pay, benefits under (i) any agreement, arrangement or commitment, including
without limitation any agreement, indenture or other instrument, relating to
the borrowing of money by FFOH or the FFOH Subsidiaries (other than deposits,
federal funds purchased, FHLB advances and securities sold under agreements to
repurchase) or the guarantee by FFOH or the FFOH Subsidiaries of any
obligation, (ii) any agreement, arrangement or commitment relating to the
employment of a consultant or the employment, election or retention in office
of any present or former director, officer or employee of FFOH or the FFOH
Subsidiaries, (iii) any agreement, arrangement or understanding pursuant to
which any payment (whether of severance pay or otherwise) became or may become
due to any director, officer or employee of FFOH or the FFOH Subsidiaries upon
execution of this Agreement or upon or following consummation of the
transactions contemplated by this Agreement (either alone or in connection with
the occurrence of any additional acts or events), (iv) any agreement,
arrangement or understanding pursuant to which FFOH or the FFOH Subsidiaries is
obligated to indemnify any existing or former director, officer, employee or
agent of FFOH or the FFOH Subsidiaries, (v) any agreement, arrangement or
understanding to which FFOH or the FFOH Subsidiaries is a party or by which any
of the same is bound which limits the freedom of FFOH or the FFOH Subsidiaries
to compete in any line of business or with any person, or (vi) any other
agreement, arrangement or understanding which would be required to be filed as
an exhibit to FFOH's Annual Report on Form 10-K under the Exchange Act and
which has not been so filed.
(b) None of FFOH or the FFOH Subsidiaries is in default or in
non-compliance, which default or non-compliance could reasonably be expected to
have a Material Adverse Effect on FFOH, under any contract, agreement,
commitment, arrangement, lease, insurance policy or other instrument to which
it is a party or by which its assets, business or operations may be bound or
affected, whether entered into in the ordinary course of business or otherwise
and whether written or oral, and there has not occurred any event that with the
lapse of time or the giving of notice, or both, would constitute such a default
or non-compliance.
4.17 Brokers and Finders
Except for an agreement with Sandler O'Neill & Partners, L.P., as
Previously Disclosed, none of FFOH or the FFOH Subsidiaries, nor any of their
respective directors, officers or employees, has employed any broker or finder
or incurred any liability for any broker or finder fees or commissions in
connection with the transactions contemplated hereby.
4.18 Insurance
FFOH and each FFOH Subsidiary are insured for reasonable amounts with
financially sound and reputable insurance companies against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured and has maintained all
32
<PAGE> 137
insurance required by applicable laws and regulations. None of FFOH or the
FFOH Subsidiaries has received any notice of cancellation or notice of a
material amendment of any such insurance policy or bond or is in default under
such policy or bond, no coverage thereunder is being disputed and all material
claims thereunder have been filed in a timely fashion.
4.19 Properties
All real and personal property owned by FFOH or any of the FFOH
Subsidiaries or presently used by any of them in its respective business is in
an adequate condition (ordinary wear and tear excepted) and is sufficient to
carry on its business in the ordinary course of business consistent with their
past practices. FFOH and the FFOH Subsidiaries have good and marketable title
free and clear of all Liens (other than equities of redemption under applicable
foreclosure laws) to all of the material properties and assets, real and
personal, reflected on the consolidated statement of financial condition of
FFOH as of June 30, 1998 included in the FFOH Financial Statements or acquired
after such date, except (i) Liens for current taxes not yet due or payable,
(ii) pledges to secure deposits and other Liens incurred in the ordinary course
of its banking business, (iii) such imperfections of title, easements and
encumbrances, if any, as are not material in character, amount or extent and
(iv) as reflected on the consolidated statement of financial condition of FFOH
as of June 30, 1998 included in the FFOH Financial Statements. All real and
personal property which is material to FFOH's business on a consolidated basis
and leased or licensed by FFOH or any FFOH Subsidiary is held pursuant to
leases or licenses which are valid and enforceable in accordance with their
respective terms and such leases will not terminate or lapse prior to the
Effective Time.
4.20 Labor
No work stoppage involving FFOH or any of the FFOH Subsidiaries is
pending or, to the best knowledge of FFOH, threatened. None of FFOH or the
FFOH Subsidiaries is involved in, or threatened with or affected by, any labor
dispute, arbitration, lawsuit or administrative proceeding involving its
employees which reasonably could be expected to have a Material Adverse Effect
on FFOH. Employees of FFOH and the FFOH Subsidiaries are not represented by
any labor union nor are any collective bargaining agreements otherwise in
effect with respect to such employees, and to the best of FFOH's knowledge,
there have been no efforts to unionize or organize any employees of FFOH or any
of the FFOH Subsidiaries during the past five years.
4.21 Loans; Nonperforming and Classified Assets; Allowance for Loan Losses
(a) Each Loan on the books and records of FFOH and its Subsidiaries,
was made and has been serviced in all material respects in accordance with
customary lending standards in the ordinary course of business, is evidenced in
all material respects by appropriate and sufficient documentation and, to the
best knowledge of FFOH, constitutes the legal, valid and binding obligation of
the obligor named therein, subject to bankruptcy, insolvency, fraudulent
conveyance and other laws of general applicability relating to or affecting
creditor's rights and to general equity principles.
(b) FFOH has Previously Disclosed as to FFOH and each FFOH Subsidiary
as of June 30, 1998: (i) any written or, to FFOH's knowledge, oral Loan under
the terms of which the obligor is 60 or more days delinquent in payment of
principal or interest, or to the best of FFOH's
33
<PAGE> 138
knowledge, in default of any other material provision thereof; (ii) each Loan
which has been classified as "substandard," "doubtful," "loss" or "special
mention" (or words of similar import) by FFOH, an FFOH Subsidiary or an
applicable regulatory authority; (iii) a listing of the real estate owned
acquired by foreclosure or by deed-in-lieu thereof, including the book value
thereof; and (iv) each Loan with any director, executive officer or five
percent or greater stockholder of FFOH or an FFOH Subsidiary, or to the best
knowledge of FFOH, any person, corporation or enterprise controlling,
controlled by or under common control with any of the foregoing.
(c) The allowance for loan losses reflected on FFOH's consolidated
statements of financial condition included in the FFOH Financial Statements is,
or will be in the case of subsequently delivered FFOH Financial Statements, as
the case may be, in the opinion of FFOH's management, adequate in all material
respects as of their respective dates under the requirements of generally
accepted accounting principles to provide for reasonably anticipated losses on
outstanding loans, net of recoveries.
4.22 Administration of Fiduciary Accounts
FFOH and each of its Subsidiaries has properly administered all accounts
for which it acts as a fiduciary, including but not limited to accounts for
which it serves as a trustee, agent, custodian, personal representative,
guardian, conservator or investment advisor, in accordance with the terms of
the governing documents and applicable laws and regulations, except for
failures to so administer which would not have a Material Adverse Effect on
FFOH. Neither FFOH nor any of its Subsidiaries, nor any of their respective
directors, officers or employees, has committed any breach of trust with
respect to any such fiduciary account and the records for each such fiduciary
account are true and correct and accurately reflect the assets of such
fiduciary account, except for breaches of trust and failures to maintain
records which would not, individually or in the aggregate, have a Material
Adverse Effect on FFOH.
4.23 Derivative Transactions
Except as Previously Disclosed, between June 30, 1998 and the date
hereof, neither FFOH nor any of its Subsidiaries has entered into any futures
contract, option contract, interest rate caps, interest rate floors, interest
rate exchange agreements or other derivative instruments.
4.24 Year 2000
Neither FFOH nor any of its Subsidiaries has received or has reason to
believe that it will receive a rating of less than "satisfactory" on any Year
2000 Report of Examination of any Governmental Entity. FFOH has disclosed or
made available to GFCO a complete and accurate copy of its plan, including an
estimate of the anticipated associated costs, for addressing the issues set
forth in the statements of the FFIEC dated May 5, 1997, entitled "Year 2000
Project Management Awareness," and December 17, 1997, entitled "Safety and
Soundness Guidelines Concerning the Year 2000 Business Risk," as such issues
affect it and its Subsidiaries, and such plan is in material compliance with
the schedule set forth in the FFIEC statements.
34
<PAGE> 139
4.25 Ownership of GFCO Common Stock
Except for GFCO Stock Option Agreement, none of FFOH nor any of its
Subsidiaries, nor to FFOH's knowledge, any of its other affiliates or
associates (as such terms are defined under the Exchange Act), owns
beneficially or of record, directly or indirectly, or is a party to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, shares of GFCO Common Stock (other than shares held in
a fiduciary capacity that are beneficially owned by third parties or as a
result of debts previously contracted) which in the aggregate represent 5% or
more of the outstanding GFCO Common Stock.
4.26 Required Vote; Antitakeover Provisions
(a) Subject to FFOH amending its Articles of Incorporation in
accordance with Section 5.16(a) hereof and subject to the presence of a quorum
at the meeting of the shareholders of FFOH called for the purpose of
considering and acting upon the Merger, a majority of the issued and
outstanding shares of FFOH Common Stock is necessary to approve the Merger and
this Agreement and the transactions contemplated hereby on behalf of FFOH.
(b) At least two-thirds of the Continuing Directors (as defined in the
Articles of Incorporation of FFOH) has approved the Merger and this Agreement
such that the provisions of (i) Paragraph A of Article XIV of the Articles of
Incorporation of FFOH and (ii) Paragraph A of Article XV of the Articles of
Incorporation of FFOH shall be inapplicable to the Merger and this Agreement
and the transactions contemplated hereby.
(c) The affirmative vote of the holders of two-thirds of the issued and
outstanding shares of common stock of Merger Corporation is necessary to
approve the Merger and this Agreement and the transaction contemplated hereby
on behalf of Merger Corporation.
(d) The board of directors of FFOH took action on September 22, 1998,
to approve GFCO as an "interested shareholder" for purposes of Chapter 1704 of
the Ohio Revised Code.
4.27 Fairness Opinion
FFOH has received an opinion of Sandler O'Neill & Partners, L.P. to the
effect that, as of the date hereof, the Exchange Ratio is fair from a financial
point of view to the holders of FFOH Common Stock.
4.28 Accounting for the Merger; Reorganization
As of the date hereof, FFOH does not have any reason to believe that the
Merger will fail to qualify, as a result of any action or omission by FFOH or
any FFOH Subsidiary, (i) for pooling-of- interests accounting treatment under
generally accepted accounting principles or (ii) as a reorganization under
Section 368(a) of the Code.
35
<PAGE> 140
4.29 Disclosures
None of the representations and warranties of FFOH or any of the written
information or documents furnished or to be furnished by FFOH to GFCO in
connection with or pursuant to this Agreement or the consummation of the
transactions contemplated hereby, when considered as a whole, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact required to be stated or necessary to make any such
information or document, in light of the circumstances, not misleading.
ARTICLE V
COVENANTS
5.1 Reasonable Best Efforts
Subject to the terms and conditions of this Agreement, each of GFCO, FFOH
and Merger Corporation shall use its reasonable best efforts in good faith to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary or advisable under applicable laws and regulations so as to
permit consummation of the Merger and the Bank Merger as promptly as reasonably
practicable and to otherwise enable consummation of the transactions
contemplated hereby, and shall cooperate fully with the other party or parties
hereto to that end.
5.2 Shareholder Meetings
Each of FFOH and GFCO shall take all action necessary to properly call
and convene a meeting of its respective shareholders as soon as practicable
after the date hereof to consider and vote upon this Agreement and the
transactions contemplated hereby. The Board of Directors of FFOH and the Board
of Directors of GFCO will recommend that their respective shareholders approve
this Agreement and the transactions contemplated hereby. Notwithstanding the
foregoing, the Boards of Directors of FFOH or GFCO may fail to make such
recommendation, or withdraw, modify or change any such recommendation, if such
respective Board of Directors, after having consulted with and considered the
advice of outside counsel, has determined that the making of such
recommendation, or the failure to withdraw, modify or change such
recommendation, would constitute a breach of the fiduciary duties of such
directors under applicable law.
5.3 Regulatory Matters
(a) The parties hereto shall promptly cooperate with each other in the
preparation and filing of the Form S-4, including the Proxy Statement. Each of
FFOH and GFCO shall use its reasonable best efforts to have the Form S-4
declared effective under the Securities Act as promptly as practicable after
such filing, and FFOH and GFCO each shall thereafter promptly mail the Proxy
Statement to their respective shareholders. FFOH also shall use its best
efforts to obtain all necessary state securities law or "blue sky" permits and
approvals required to carry out the issuance of FFOH Common Stock pursuant to
the Merger and all other transactions contemplated by this Agreement, and GFCO
shall furnish all information concerning GFCO and the holders of GFCO Common
Stock as may be reasonably requested in connection with any such action.
36
<PAGE> 141
(b) The parties hereto shall cooperate with each other and use their
best efforts to prepare and file within 30 days of the date of this Agreement
all necessary documentation, to effect all applications, notices, petitions and
filings, and to obtain as promptly as practicable all permits, consents,
approvals and authorizations of all Governmental Entities and third parties
which are necessary or advisable to consummate the transactions contemplated by
this Agreement (including without limitation the Merger and the Bank Merger).
FFOH and GFCO shall have the right to review in advance, and to the extent
practicable each will consult with the other on, in each case subject to
applicable laws relating to the exchange of information, all the information
which appears in any filing made with or written materials submitted to any
third party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
parties hereto shall act reasonably and as promptly as practicable. The
parties hereto agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the transactions
contemplated herein.
(c) FFOH and GFCO shall, upon request, furnish each other with all
information concerning themselves, their respective Subsidiaries, directors,
officers and shareholders and such other matters as may be reasonably necessary
or advisable in connection with the Proxy Statement, the Form S-4 or any other
statement, filing, notice or application made by or on behalf of FFOH, GFCO or
any of their respective Subsidiaries to any Governmental Entity in connection
with the transactions contemplated by this Agreement and the Bank Merger
Agreement.
(d) FFOH and GFCO shall promptly furnish each other with copies of
written communications received by FFOH or GFCO, as the case may be, or any of
their respective Subsidiaries from, or delivered by any of the foregoing to,
any Governmental Entity in respect of the transactions contemplated by this
Agreement and the Bank Merger Agreement.
5.4 Investigation and Confidentiality
(a) Each of FFOH and GFCO shall permit the other party and its
representatives reasonable access to its properties and personnel, and shall
disclose and make available to such other party all books, papers and records
relating to the assets, stock ownership, properties, operations, obligations
and liabilities of it and its Subsidiaries, including, but not limited to, all
books of account (including the general ledger), tax records, minute books of
meetings of boards of directors (and any committees thereof) and shareholders,
organizational documents, bylaws, material contracts and agreements, filings
with any regulatory authority, accountants' work papers, litigation files, loan
files, plans affecting employees, and any other business activities or
prospects in which the other party may have a reasonable interest, provided
that such access shall be reasonably related to the transactions contemplated
hereby and, in the reasonable opinion of the respective parties providing such
access, not unduly interfere with normal operations. Each of FFOH and GFCO and
their respective Subsidiaries shall make their respective directors, officers,
employees and agents and authorized representatives (including counsel and
independent public accountants) available to confer with the other party and
its representatives, provided that such
37
<PAGE> 142
access shall be reasonably related to the transactions contemplated hereby and
shall not unduly interfere with normal operations.
(b) Each of GFCO and FFOH shall hold all information furnished by or on
behalf of the other party or any of such party's Subsidiaries or
representatives pursuant to Section 5.4(a) in confidence to the extent required
by, and in accordance with, the Confidentiality Agreement.
(c) No investigation by either of the parties hereto or their
respective representatives shall affect the representations, warranties,
covenants or agreements of the other party set forth herein.
5.5 Press Releases
FFOH and GFCO shall agree with each other as to the form and substance of
any press release related to this Agreement or the transactions contemplated
hereby, and consult with each other as to the form and substance of other
public disclosures which may relate to the transactions contemplated by this
Agreement, provided, however, that nothing contained herein shall prohibit
either party, following notification to the other party, from making any
disclosure which is required by law or regulation.
5.6 Business of the Parties
(a) During the period from the date of this Agreement and continuing
until the Effective Time, except as expressly contemplated or permitted by this
Agreement or with the prior written consent of FFOH, GFCO and GFCO Subsidiaries
shall carry on their respective businesses in the ordinary course consistent
with past practice. GFCO will use all reasonable efforts to (x) preserve its
business organization and that of the GFCO Subsidiaries intact, (y) keep
available to itself and FFOH the present services of the employees of GFCO and
the GFCO Subsidiaries and (z) preserve for itself and FFOH the goodwill of the
customers of GFCO and the GFCO Subsidiaries and others with whom business
relationships exist. Without limiting the generality of the foregoing, except
with the prior written consent of FFOH or as expressly contemplated hereby,
between the date hereof and the Effective Time, GFCO shall not, and shall cause
each GFCO Subsidiary not to:
(i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of GFCO Common Stock, other than (i) quarterly cash
dividends at a rate per share of GFCO Common Stock not in excess of $.11
per share and with record and payment dates consistent with past
practice, provided that the declaration of the last quarterly dividend by
GFCO prior to the Effective Time and the payment thereof shall be
coordinated with, and subject to the approval of, FFOH so as to preclude
any duplication of dividend benefit and be consistent with the condition
set forth in Section 6.1(f) hereof (it being the intention of the parties
that the stockholders of GFCO receive dividends for any particular
quarter on either the GFCO Common Stock or the FFOH Common Stock but not
both), and (ii) dividends paid by a GFCO Subsidiary on its capital stock
to GFCO;
38
<PAGE> 143
(ii) issue any shares of its capital stock, other than pursuant to
(i) GFCO Options outstanding as of the date hereof pursuant to the GFCO
Stock Option Plan, as Previously Disclosed pursuant to Section 3.1
hereof, and (ii) the GFCO Stock Option Agreement; issue, grant, modify or
authorize any Rights, other than pursuant to GFCO Stock Option Agreement;
or purchase any shares of GFCO Common Stock or FFOH Common Stock;
(iii) effect any recapitalization, reclassification, stock
dividend, stock split or like change in capitalization;
(iv) amend its Certificate of Incorporation or Bylaws or
equivalent documents; impose, or suffer the imposition, on any share of
stock held by GFCO in any GFCO Subsidiary of any material Lien or permit
any such Lien to exist; or waive or release any material right or cancel
or compromise any material debt or claim;
(v) increase the rate of compensation of any of its directors,
officers or employees, or pay or agree to pay any bonus or severance to,
or accelerate the payment of any employment benefit or incentive to, or
provide any other new employee benefit or incentive to, any of its
directors, officers or employees, except (i) as may be required pursuant
to binding commitments existing on the date hereof as Previously
Disclosed and (ii) in the case of employees who are not executive
officers, such as may be granted in the ordinary course of business
consistent with past practice;
(vi) enter into or, except as may be required by law, modify any
pension, retirement, stock option, stock purchase, stock appreciation
right, savings, profit sharing, deferred compensation, supplemental
retirement, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust
agreement related thereto, in respect of any of its directors, officers
or employees; or make any contributions to or on behalf of any GFCO
Employee Plan not in the ordinary course of business consistent with past
practice;
(vii) enter into (w) any agreement, arrangement or commitment not
made in the ordinary course of business, (x) any agreement, indenture or
other instrument relating to the borrowing of money by GFCO or any GFCO
Subsidiary or guarantee by GFCO or any GFCO Subsidiary of any such
obligation, except in the case of Centennial for deposits, federal funds
purchased, FHLB advances and securities sold under agreements to
repurchase in the ordinary course of business consistent with past
practice, (y) except as contemplated by Section 5.9 hereof, any
agreement, arrangement or commitment relating to the employment of, or
severance of, an employee, or amend any such existing agreement,
arrangement or commitment, provided that GFCO and any GFCO Subsidiary may
employ an employee if necessary to operate the business of GFCO or a GFCO
Subsidiary in the ordinary course of business consistent with past
practice and if the employment of such employee is terminable by GFCO and
any successor at will without liability, other than as required by law,
or (z) any contract, agreement or understanding with a labor union;
(viii) change its method of accounting in effect for the year ended
June 30, 1998, except as required by changes in laws or regulations or
generally accepted accounting
39
<PAGE> 144
principles concurred in by its and FFOH's independent certified public
accountants, or change any of its methods of reporting income and
deductions for federal income tax purposes from those employed in the
preparation of its federal income tax return for the year ended June 30,
1998, except as required by changes in laws or regulations;
(ix) purchase or otherwise acquire, or sell or otherwise dispose
of, any assets or incur any liabilities other than in the ordinary course
of business consistent with past practice and policies;
(x) make any capital expenditures in excess of $25,000
individually or $200,000 in the aggregate, other than pursuant to binding
commitments existing on the date hereof and other than expenditures
necessary to maintain existing assets in good repair;
(xi) file any applications or make any contract with respect to
branching or site location or relocation;
(xii) acquire in any manner whatsoever (other than to realize upon
collateral for a defaulted loan) any business or entity or enter into any
new line of business;
(xiii) enter into any futures contract, option contract, interest
rate cap, interest rate floor, interest rate exchange agreement or other
agreement for purposes of hedging the exposure of its interest-earning
assets and interest-bearing liabilities to changes in market rates of
interest;
(xiv) enter or agree to enter into any agreement or arrangement
granting any preferential right to purchase any of its assets or rights
or requiring the consent of any party to the transfer and assignment of
any such assets or rights;
(xv) take any action that would prevent or impede the Merger from
qualifying (A) for pooling-of-interests accounting treatment under
generally accepted accounting principles or (B) as a reorganization
within the meaning of Section 368(a) of the Code;
(xvi) take any action that would or could reasonably be expected to
result in any of the representations and warranties of GFCO contained in
this Agreement not to be true and correct in any material respect at or
prior to the Effective Time, or in any of the conditions to the Merger
set forth in Article VI hereof not being satisfied or in violation of any
provision of this Agreement, except in each case as may be required by
applicable law; or
(xvii) agree to do any of the foregoing.
(b) During the period from the date of this Agreement and continuing
until the Effective Time, except as expressly contemplated or permitted by this
Agreement or with the prior written consent of GFCO, FFOH, Merger Corporation
and the Bank shall carry on their respective businesses in the ordinary course
consistent with past practice. FFOH will use all reasonable efforts to (x)
preserve its business organization and that of its Subsidiaries intact, (y)
keep available
40
<PAGE> 145
the present services of the employees of FFOH and its Subsidiaries and (z)
preserve the goodwill of the customers of FFOH and its Subsidiaries and others
with whom business relationships exist. Without limiting the generality of the
foregoing, except with the prior written consent of GFCO or as expressly
contemplated hereby, between the date hereof and the Effective Time, FFOH shall
not, and shall cause Merger Corporation and the Bank not to:
(i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of FFOH Common Stock, other than (i) quarterly cash
dividends at a rate per share of FFOH Common Stock not in excess of $0.09
per share and with record and payment dates consistent with past
practice, and (ii) dividends paid by a FFOH Subsidiary on its capital
stock to FFOH;
(ii) issue any shares of its capital stock, other than in each
case pursuant to (i) Rights outstanding as of the date hereof pursuant to
FFOH Employee Stock Benefit Plans and (ii) the FFOH Stock Option
Agreement; issue, grant, modify or authorize any Rights other than
pursuant to the FFOH Stock Option Agreement; or purchase any shares of
GFCO Common Stock or FFOH Common Stock;
(iii) effect any recapitalization, reclassification, stock split or
like change in capitalization;
(iv) except as set forth in Section 5.16 hereof, amend its
Articles of Incorporation, Code of Regulations, Charter or other
governing instrument or Bylaws; impose, or suffer the imposition, on any
share of stock held by GFCO in any GFCO Subsidiary of any material Lien
or permit any such Lien to exist; or waive or release any material right
or cancel or compromise any material debt or claim;
(v) except as Previously Disclosed, increase the rate of
compensation of any of its directors, officers or employees, or pay or
agree to pay any bonus or severance to, or accelerate the payment of any
employment benefit or incentive to, or provide any other new employee
benefit or incentive to, any of its directors, officers or employees,
except (i) as may be required pursuant to binding commitments existing on
the date hereof as Previously Disclosed and (ii) in the case of employees
who are not executive officers, such as may be granted in the ordinary
course of business consistent with past practice;
(vi) enter into or, except as may be required by law, modify any
pension, retirement, stock option, stock purchase, stock appreciation
right, savings, profit sharing, deferred compensation, supplemental
retirement, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust
agreement related thereto, in respect of any of its directors, officers
or employees; or make any contributions to or on behalf of any FFOH
Employee Plan not in the ordinary course of business consistent with past
practice;
(vii) enter into (w) any agreement, arrangement or commitment not
made in the ordinary course of business, (x) any agreement, indenture or
other instrument relating to the borrowing of money by FFOH or any FFOH
Subsidiary or guarantee by FFOH or any
41
<PAGE> 146
FFOH Subsidiary of any such obligation, except in the case of the Bank
for deposits, federal funds purchased, FHLB advances and securities sold
under agreements to repurchase in the ordinary course of business
consistent with past practice, (y) except as contemplated by Section 5.9
hereof, any agreement, arrangement or commitment relating to the
employment of, or severance of, an employee, or amend any such existing
agreement, arrangement or commitment, provided that FFOH and any FFOH
Subsidiary may employ an employee if necessary to operate the business of
FFOH or an FFOH Subsidiary in the ordinary course of business consistent
with past practice and if the employment of such employee is terminable
by FFOH and any successor at will without liability, other than as
required by law, or (z) any contract, agreement or understanding with a
labor union;
(viii) change its method of accounting in effect for the year ended
December 31, 1997, except as required by changes in laws or regulations
or generally accepted accounting principles concurred in by its and
GFCO's independent certified public accountants, or change any of its
methods of reporting income and deductions for federal income tax
purposes from those employed in the preparation of its federal income tax
return for the year ended December 31, 1997, except as required by
changes in laws or regulations;
(ix) purchase or otherwise acquire, or sell or otherwise dispose
of, any assets or incur any liabilities other than in the ordinary course
of business consistent with past practice and policies;
(x) make any capital expenditures in excess of $25,000
individually or $200,000 in the aggregate, other than pursuant to binding
commitments existing on the date hereof and other than expenditures
necessary to maintain existing assets in good repair;
(xi) file any applications or make any contract with respect to
branching or site location or relocation;
(xii) acquire in any manner whatsoever (other than to realize upon
collateral for a defaulted loan) any business or entity or enter into any
new line of business;
(xiii) enter into any futures contract, option contract, interest
rate cap, interest rate floor, interest rate exchange agreement or other
agreement for purposes of hedging the exposure of its interest-earning
assets and interest-bearing liabilities to changes in market rates of
interest;
(xiv) enter or agree to enter into any agreement or arrangement
granting any preferential right to purchase any of its assets or rights
or requiring the consent of any party to the transfer and assignment of
any such assets or rights;
(xv) take any action that would prevent or impede the Merger from
qualifying (A) for pooling-of-interests accounting treatment under
generally accepted accounting principles or (B) as a reorganization
within the meaning of Section 368(a) of the Code;
42
<PAGE> 147
(xvi) take any action that would or could reasonably be expected to
result in any of the representations and warranties of FFOH contained in
this Agreement not to be true and correct in any material respect at or
prior to the Effective Time, or in any of the conditions to the Merger
set forth in Article VI hereof not being satisfied or in violation of any
provision of this Agreement, except in each case as may be required by
applicable law; or
(xvii) agree to do any of the foregoing.
(c) Neither GFCO nor FFOH shall, and each of them shall cause its
respective Subsidiaries not to, solicit or encourage inquiries or proposals
with respect to, furnish any information relating to, or participate in any
negotiations or discussions concerning, any acquisition, lease or purchase of
all or a substantial portion of the assets of, or any equity interest in, such
party or any of its Subsidiaries, provided, however, that the Board of
Directors of GFCO or FFOH, on behalf of GFCO and FFOH, respectively, may
furnish such information or participate in such negotiations or discussions if
such Board of Directors, after having consulted with and considered the advice
of outside counsel, has determined that the failure to do the same would cause
the members of such Board of Directors to breach their fiduciary duties under
applicable laws. Each of GFCO and FFOH will promptly inform the other party of
any such request for information or of any such negotiations or discussions, as
well as instruct its and its Subsidiaries' directors, officers, representatives
and agents to refrain from taking any action prohibited by this Section 5.6(c).
5.7 Current Information
During the period from the date of this Agreement to the Effective Time,
each party shall, upon the request of the other party, cause one or more of its
designated representatives to confer on a monthly or more frequent basis with
representatives of the other party regarding its financial condition,
operations and business and matters relating to the completion of the
transactions contemplated hereby. As soon as reasonably available, but in no
event more than 45 days after the end of each calendar quarter ending after the
date of this Agreement (other than the last quarter of each fiscal year ending
June 30, in the case of GFCO, and December 31, in the case of FFOH), GFCO and
FFOH will deliver to the other party its quarterly report on Form 10-Q (or Form
10-QSB) under the Exchange Act, and, as soon as reasonably available, but in no
event more than 90 days after the end of each fiscal year, GFCO and FFOH will
deliver to the other party its Annual Report on Form 10-K (or Form 10-KSB).
Within 25 days after the end of each month, GFCO and FFOH will deliver to the
other party a consolidated statement of financial condition and a consolidated
statement of earnings, without related notes, for such month prepared in
accordance with generally accepted accounting principles.
5.8 Indemnification; Insurance
(a) From and after the Effective Time through the fifth anniversary of
the Effective Time, FFOH (the "Indemnifying Party") shall indemnify and hold
harmless each present and former director, officer and employee of GFCO or any
GFCO Subsidiary determined as of the Effective Time (the "Indemnified Parties")
against any costs or expenses (including reasonable attorneys'
43
<PAGE> 148
fees), judgments, fines, losses, claims, damages or liabilities (collectively,
"Costs") incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
arising out of matters existing or occurring at or prior to the Effective Time,
whether asserted or claimed prior to, at or after the Effective Time, to the
fullest extent to which such Indemnified Parties were entitled under the
Certificate of Incorporation or Bylaws of GFCO or equivalent documents of any
GFCO Subsidiary, as applicable, or applicable law or any agreement, arrangement
or understanding which has been Previously Disclosed by GFCO pursuant to
Section 3.16(a)(iii) hereof, in each case as in effect on the date hereof.
(b) Any Indemnified Party wishing to claim indemnification under
Section 5.8(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Indemnifying Party, but the failure to
so notify shall not relieve the Indemnifying Party of any liability it may have
to such Indemnified Party if such failure does not materially prejudice the
Indemnifying Party. In the event of any such claim, action, suit, proceeding
or investigation (whether arising before or after the Effective Time), (i) the
Indemnifying Party shall have the right to assume the defense thereof and the
Indemnifying Party shall not be liable to such Indemnified Parties for any
legal expenses of other counsel or any other expenses subsequently incurred by
such Indemnified Parties in connection with the defense thereof, except that if
the Indemnifying Party elects not to assume such defense or counsel for the
Indemnified Parties advises that there are issues which raise conflicts of
interest between the Indemnifying Party and the Indemnified Parties, the
Indemnified Parties may retain counsel which is reasonably satisfactory to the
Indemnifying Party, and the Indemnifying Party shall pay, promptly as
statements therefor are received, the reasonable fees and expenses of such
counsel for the Indemnified Parties (which may not exceed one firm in any
jurisdiction), (ii) the Indemnified Parties will cooperate in the defense of
any such matter and (iii) the Indemnifying Party shall not be liable for any
settlement effected without its prior written consent.
(c) FFOH shall use its reasonable best efforts to maintain GFCO's
existing directors' and officers' liability insurance policy (or a policy
providing coverage on substantially the same terms and conditions) for acts or
omissions occurring prior to the Effective Time by persons who are currently
covered by such insurance policy maintained by GFCO for a period of three years
following the Effective Time, provided, however, that in no event shall FFOH
expend, in order to obtain such insurance, any amount per annum in excess of
200% of the amount of the actual annual premium paid as of the date hereof by
GFCO for such insurance (the "Maximum Amount"), and provided further that if
the amount of the annual premium necessary to maintain or procure such
insurance coverage exceeds the Maximum Amount, FFOH shall use its reasonable
best efforts to maintain the most advantageous policy of directors' and
officers' insurance obtainable for an annual premium equal to the Maximum
Amount.
(d) In the event that FFOH or any of its respective successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then, and in each such case the successors and assigns of such
entity shall assume the obligations set forth in this Section 5.8, which
obligations are expressly intended to be for the irrevocable benefit of, and
shall be enforceable by, each director and officer covered hereby.
44
<PAGE> 149
5.9 Directors, Officers and Employees; Employee Benefit Plans and
Arrangements
(a) Effective as of the Effective Time, Paul D. Staubach shall resign
as a director of FFOH.
(b) Effective as of the Effective Time, (i) the number of directors of
FFOH shall be increased by four and (ii) FFOH agrees to take all action
necessary to elect Robert R. Sudbrook, Edgar A. Rust, Daniel W. Geeding,
Kenneth C. Lichtendahl and John L. Torbeck as directors of FFOH.
(c) Effective as of the Effective Time, (i) the number of directors of
the Bank and Merger Corporation shall be increased by six, (ii) FFOH agrees to
take all action necessary to elect Joseph D. Hughes, Robert R. Sudbrook, Edgar
A. Rust, Daniel W. Geeding, Kenneth C. Lichtendahl and John L. Torbeck as
directors of the Bank and Merger Corporation and (iii) Ronald L. Goodfellow,
Albert W. Moeller, John P. Torbeck and Milton L. Van Schoik shall become
directors emeritus of FFOH for a term of 35 months and in which capacity they
will receive a fee for their service as directors emeritus of $1,000 per month.
(d) Effective as of the Effective Time, Robert R. Sudbrook shall be
elected as President and Chief Executive Officer of FFOH and Chairman of the
Board and Chief Executive Officer of the Bank and Mr. Sudbrook shall be
entitled to be compensated at a rate not less than the rate of compensation
received by him from Centennial immediately prior to the Effective Time.
(e) Effective as of the Effective Time, John R. Reusing shall be
elected as Chairman of the Board of FFOH and President of the Bank.
(f) Prior to the Effective Time, FFOH shall take all reasonable action
so that employees of GFCO and GFCO Subsidiaries shall be entitled to
participate in the FFOH Employee Plans of general applicability to the same
extent as similarly-situated employees of FFOH and its Subsidiaries as of the
Effective Time. For purposes of determining eligibility to participate in, the
vesting of benefits and for all other purposes (but not for benefit accrual)
under the FFOH Employee Plans, FFOH and the FFOH Employee Plans shall recognize
years of service with GFCO, any GFCO Subsidiary or any predecessor thereof or
entity acquired by GFCO or a GFCO Subsidiary as such service is recognized by
and reflected on the records of GFCO and the GFCO Employee Plans.
(g) All employees of GFCO or a GFCO Subsidiary as of the Effective Time
shall become employees of FFOH or an FFOH Subsidiary as of the Effective Time,
provided that, with respect to employees of GFCO or Centennial who are not
covered by employment agreements, FFOH shall have no obligation to continue the
employment of any such person and nothing contained in this Agreement shall
give any employee of GFCO or any GFCO Subsidiary who is not covered by an
employment agreement a right to continuing employment with FFOH or an FFOH
Subsidiary after the Effective Time.
(h) The parties hereto agree that the GFCO ESOP and the GFCO 401(k)
Plan shall either be terminated or merged with the comparable FFOH plans in
accordance with the terms thereof and applicable laws and regulations effective
as of the Effective Time in the case of the GFCO 401(k) Plan and as soon
thereafter as practicable in the case of the GFCO ESOP.
45
<PAGE> 150
(i) To enable the Merger to qualify for "pooling of interests"
accounting treatment, GFCO and Centennial will use their best efforts to cause
holders of GFCO Options pursuant to the GFCO Stock Option Plan to, as promptly
as practicable, waive the features of such GFCO Options that allow such options
to be converted into cash.
5.10 Certain Policies; Integration
(a) FFOH and GFCO shall confer and shall, consistent with generally
accepted accounting principles, establish such additional accruals and reserves
as may be necessary to conform their accounting and credit loss reserve
practices and methods with respect to the conduct of their combined businesses
following the Merger and to provide for the costs and expenses relating to the
consummation of the transactions contemplated by this Agreement; provided,
however, that neither party shall be required to take such action (i) if such
action is prohibited by applicable law or by generally accepted accounting
principles, (ii) if such action would have a Material Adverse Effect on such
party following consummation of the Merger and the Bank Merger or (iii) all
conditions precedent to the consummation of the transactions contemplated by
this Agreement set forth in Article VI hereof have been satisfied or waived.
The establishment of such accruals and reserves shall not, in and of itself,
constitute a breach of any representation or warranty of FFOH or GFCO contained
in this Agreement.
(b) During the period from the date of this Agreement to the Effective
Time, FFOH and GFCO each shall, and each shall cause its directors, officers
and employees to, cooperate with and assist in the formulation of a plan of
integration for FFOH and GFCO and their respective banking subsidiaries.
5.11 Stock Exchange Listing
FFOH shall cause the shares of FFOH Common Stock to be issued in
connection with the Merger to be approved for quotation on the Nasdaq Stock
Market's National Market, subject to official notice of issuance, as of or
prior to the Effective Time.
5.12 The Bank Merger
(a) FFOH and GFCO shall take all action necessary and appropriate,
including causing the entering into of an appropriate merger agreement (the
"Bank Merger Agreement"), to cause the Bank to merge with and into Centennial
(the "Bank Merger") in accordance with applicable laws and regulations and the
terms of the Bank Merger Agreement as soon as practicable after consummation of
the Merger. GFCO shall cause Centennial to enter into the Bank Merger
Agreement not later than one week from the date hereof. Centennial shall be
the surviving corporation in the Bank Merger, and shall continue its corporate
existence under the name "Centennial Bank" under the laws of the State of Ohio.
Centennial will become a wholly-owned subsidiary of Merger Corporation upon the
receipt of all requisite regulatory approvals. Upon consummation of the Bank
Merger, the separate corporate existence of the Bank shall cease. The directors
and executive officers of Centennial upon consummation of the Bank Merger shall
be as set forth in the Bank Merger Agreement.
46
<PAGE> 151
5.13 Affiliates; Restrictions on Resale
(a) GFCO has Previously Disclosed to FFOH, and FFOH has Previously
Disclosed to GFCO, a schedule of each person that, to the best of its
knowledge, is deemed to be an "affiliate" of GFCO and FFOH, respectively (each
an "Affiliate"), as that term is used in Rule 145 under the Securities Act or
Accounting Series Releases 130 and 135 of the Commission.
(b) Each of GFCO and FFOH shall use its reasonable best efforts to
cause each person who may be deemed to be an Affiliate of GFCO and FFOH,
respectively, to execute and deliver to FFOH as soon as practicable after the
date of this Agreement, and in any event prior to the date of the meeting(s) of
stockholders to be called pursuant to Section 5.2 hereof, a written agreement
in the forms previously agreed to by FFOH and GFCO.
5.14 Disclosure Supplements
From time to time prior to the Effective Time, each party shall promptly
supplement or amend any materials Previously Disclosed and delivered to the
other party pursuant hereto with respect to any matter hereafter arising which,
if existing, occurring or known at the date of this Agreement, would have been
required to be set forth or described in materials Previously Disclosed to the
other party or which is necessary to correct any information in such materials
which has been rendered materially inaccurate thereby; no such supplement or
amendment to such materials shall be deemed to have modified the
representations, warranties and covenants of the parties for the purpose of
determining whether the conditions set forth in Article VI hereof have been
satisfied.
5.15 Failure to Fulfill Conditions
In the event that either of the parties hereto determines that a
condition to its respective obligations to consummate the transactions
contemplated hereby cannot be fulfilled on or prior to the termination of this
Agreement, it will promptly notify the other party or parties. Each party will
promptly inform the other party or parties of any facts applicable to it that
would be likely to prevent or materially delay approval of the Merger or the
Bank Merger by any Governmental Entity or third party or which would otherwise
prevent or materially delay completion of the Merger or the Bank Merger.
5.16 Amendment of the Articles of Incorporation and Bylaws of FFOH
(a) FFOH shall take all steps necessary (including obtaining the
requisite approval of FFOH's shareholders) to amend its Articles of
Incorporation in order to provide that a majority of the issued and outstanding
shares of FFOH Common Stock may approve (i) an agreement of merger or
consolidation providing for the proposed merger or consolidation of FFOH with
or into one or more other corporations or (ii) a proposed combination or
majority share acquisition involving the issuance of shares of FFOH and
requiring shareholder approval.
(b) FFOH shall amend its Bylaws to provide that the following actions
must be approved by not less than two-thirds of the authorized number of
directors:
47
<PAGE> 152
(i) the hiring, termination, demotion, replacement, change of duties or
reduction of compensation of the Chairman of the Board, Chief Executive
Officer, Chief Financial Officer, President, Secretary, Treasurer, a Senior
Vice President or an Executive Vice President of FFOH, other than the changes
contemplated by this Agreement;
(ii) a change in the number of directors or filling any vacancy on the
board of directors, regardless of how such vacancy is created;
(iii) approval of, or recommendation to the shareholders of the approval
of, any merger, consolidation, combination, control share acquisition or
majority share acquisition to which FFOH is a party or any sale or other
transfer of all or substantially all of the assets of FFOH;
(iv) approval of, or recommendation to the shareholders of FFOH of the
approval of, any amendment to the Articles of Incorporation, Code of
Regulations or Bylaws of FFOH; or
(v) the appointment of directors to committees of the Board of
Directors of FFOH, any change in the members of any committee of the Board of
Directors of FFOH, the filling of any vacancies with respect to any committees
of the Board of Directors of FFOH and the discharge of any committee of the
Board of Directors of FFOH.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent - FFOH, Merger Corporation and GFCO
The respective obligations of FFOH, Merger Corporation and GFCO to effect
the transactions contemplated by this Agreement shall be subject to
satisfaction of the following conditions at or prior to the Effective Time.
(a) All corporate action necessary to authorize the execution and
delivery of this Agreement and consummation of the transactions contemplated
hereby shall have been duly and validly taken by FFOH, Merger Corporation and
GFCO, including approval by the requisite vote of the respective shareholders
of FFOH and GFCO of this Agreement, and all corporate and shareholder action
necessary to authorize the execution and delivery of the Bank Merger Agreement
and consummation of the transactions contemplated thereby shall have been duly
and validly taken by Centennial and the Bank.
(b) All approvals and consents for the transactions contemplated hereby
and the Bank Merger Agreement from any Governmental Entity the approval or
consent of which is required for the consummation of the Merger, the Bank
Merger and the other transactions contemplated hereby shall have been received
and all statutory waiting periods in respect thereof shall have expired,
provided, however, that no approval, consent or waiver referred to in this
Section 6.1(b) shall be deemed to have been received if it shall include any
condition or requirement that, individually or in the aggregate, would so
materially reduce the economic or business benefits of the transactions
contemplated by this Agreement to FFOH and GFCO that had such condition or
requirement been
48
<PAGE> 153
known neither GFCO nor FFOH, in its reasonable judgment, would have entered
into this Agreement.
(c) The consent, approval or waiver of each person (other than the
Governmental Entities referred to in Section 6.1(b) hereof) whose consent,
approval or waiver shall be required in connection with the Merger and the Bank
Merger under any loan or credit agreement, note, mortgage, indenture, lease,
license or other agreement or instrument to which GFCO, FFOH, or any of their
respective Subsidiaries is a party or is otherwise bound shall have been
obtained, except those consents or approvals for which failure to obtain would
not have, or could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on GFCO and FFOH.
(d) None of FFOH, GFCO or their respective Subsidiaries shall be
subject to any statute, rule, regulation, injunction or other order or decree
which shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits, restricts or makes illegal consummation of
the Merger or the Bank Merger or any of the other transactions contemplated
hereby.
(e) The Form S-4 shall have become effective under the Securities Act,
and FFOH shall have received all state securities laws or "blue sky" permits
and other authorizations or there shall be exemptions from registration
requirements necessary to issue FFOH Common Stock in connection with the
Merger, and neither the Form S-4 nor any such permit, authorization or
exemption shall be subject to a stop order or threatened stop order by the
Commission or any state securities authority.
(f) The shares of FFOH Common Stock to be issued in connection with the
Merger shall have been approved for listing on the Nasdaq Stock Market's
National Market, subject to official notice of issuance.
(g) Grant Thornton LLP shall have issued a letter dated as of the
Effective Time to FFOH and to GFCO to the effect that, based on a review of
this Agreement and related agreements and the facts and circumstances then
known to it, the Merger shall be accounted for as a pooling-of-interests under
generally accepted accounting principles, and FFOH shall have received from the
Affiliates of GFCO the agreements referred to in Section 5.13(b) hereof to the
extent necessary to ensure in the reasonable judgment of FFOH and GFCO that the
Merger shall be accounted for in such manner.
(h) There shall not be pending any proceeding initiated by any
Governmental Entity to seek an order, injunction or decree which prevents
consummation of the Merger or the Bank Merger.
49
<PAGE> 154
6.2 Conditions Precedent - GFCO
The obligations of GFCO to effect the transactions contemplated by this
Agreement shall be subject to satisfaction of the following conditions at or
prior to the Effective Time unless waived by GFCO pursuant to Section 7.4
hereof.
(a) The representations and warranties of FFOH and Merger Corporation
set forth in Article IV hereof shall be true and correct as of the date of this
Agreement and as of the Effective Time as though made on and as of the
Effective Time (or on the date when made in the case of any representation and
warranty which specifically relates to an earlier date), provided, however,
that notwithstanding anything herein to the contrary, this Section 6.2(a) shall
be deemed to have been satisfied even if such representations or warranties are
not true and correct (exclusive of any exception in such representations and
warranties relating to materiality or Material Adverse Effect) unless the
failure of any of the representations or warranties to be so true and correct
would have, or reasonably could be expected to have, individually or in the
aggregate, a Material Adverse Effect on FFOH.
(b) FFOH and Merger Corporation shall have performed in all material
respects all obligations and complied with all covenants required to be
performed and complied with by them pursuant to this Agreement on or prior to
the Effective Time.
(c) Each of FFOH and Merger Corporation shall have delivered to GFCO a
certificate, dated the date of the Closing and signed by its President and by
its Chief Financial Officer, to the effect that the conditions set forth in
Sections 6.2(a) and 6.2(b) have been satisfied.
(d) GFCO shall have received the written opinion of Vorys, Sater,
Seymour & Pease LLP (which shall be based on such written representations
(including without limitation the standard representations set forth in Revenue
Procedure 86-42, 1986-2 C.B. 722) from FFOH, GFCO and others as such counsel
shall reasonably request as to factual matters) to the effect that the Merger
will constitute a reorganization within the meaning of Section 368(a) of the
Code and to the effect that (i) except for cash received in lieu of fractional
share interests, holders of GFCO Common Stock who receive FFOH Common Stock in
the Merger will not recognize gain or loss for federal income tax purposes,
(ii) the basis of such FFOH Common Stock will equal the basis of GFCO Common
Stock for which it is exchanged, reduced by any amount allocable to a
fractional share interest for which cash is received, and (iii) the holding
period of such FFOH Common Stock will include the holding period of GFCO Common
Stock for which it is exchanged, assuming that such stock is a capital asset in
the hands of the holder thereof at the Effective Time.
(e) FFOH and/or Merger Corporation shall have furnished GFCO with such
certificates of its respective officers or others and such other documents to
evidence fulfillment of the conditions set forth in Sections 6.1 and 6.2 as
GFCO may reasonably request.
50
<PAGE> 155
6.3 Conditions Precedent - FFOH and Merger Corporation
The obligations of FFOH and Merger Corporation to effect the transactions
contemplated by this Agreement shall be subject to satisfaction of the
following conditions at or prior to the Effective Time unless waived by FFOH or
Merger Corporation pursuant to Section 7.4 hereof.
(a) The representations and warranties of GFCO set forth in Article III
hereof shall be true and correct as of the date of this Agreement and as of the
Effective Time as though made on and as of the Effective Time (or on the date
when made in the case of any representation and warranty which specifically
relates to an earlier date), provided, however, that notwithstanding anything
herein to the contrary, this Section 6.3(a) shall be deemed to have been
satisfied even if such representations or warranties are not true and correct
(exclusive of any exceptions in such representations and warranties relating to
materiality or Material Adverse Effect) unless the failure of any of the
representations or warranties to be so true and correct would have, or
reasonably could be expected to have, individually or in the aggregate, a
Material Adverse Effect on GFCO.
(b) GFCO shall have performed in all material respects all obligations
and covenants required to be performed by it pursuant to this Agreement on or
prior to the Effective Time.
(c) GFCO shall have delivered to FFOH a certificate, dated the date of
the Closing and signed by its President and by its Chief Financial Officer, to
the effect that the conditions set forth in Sections 6.3(a) and 6.3(b) have
been satisfied.
(d) FFOH shall have received the written opinion of Elias, Matz,
Tiernan & Herrick L.L.P. (which shall be based on such written representations
(including without limitation the standard representations set forth in Revenue
Procedure 86-42, 1986-2 C.B. 722) from FFOH, GFCO and others as such counsel
shall reasonably request as to factual matters) to the effect that the Merger
and the Bank Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code and that, accordingly, for federal income tax
purposes no gain or loss will be recognized by FFOH, GFCO, the Bank or
Centennial (except to the extent that any such party may be required to
recognize income due to the recapture of bad debt reserves as a result of the
Bank Merger).
(e) GFCO shall have furnished FFOH with such certificates of its
officers or others and such other documents to evidence fulfillment of the
conditions set forth in Sections 6.1 and 6.3 as FFOH may reasonably request.
51
<PAGE> 156
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 Termination
This Agreement may be terminated:
(a) at any time on or prior to the Effective Time, by the mutual
consent in writing of the parties hereto;
(b) at any time on or prior to the Effective Time, by either FFOH or
GFCO (provided that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained herein) in
writing if there shall have been a breach by the other party of (i) any
covenant or undertaking of it contained herein or (ii) any representation or
warranty of it contained herein, which in the case of GFCO would have, or could
reasonably be expected to have, a Material Adverse Effect on GFCO and in the
case of FFOH would have, or could reasonably be expected to have, a Material
Adverse Effect on FFOH, in any case if such breach has not been cured by the
earlier of 30 days after the date on which written notice of such breach is
given to the party committing such breach or the Effective Time;
(c) at any time, by any party hereto in writing, if any of the
applications for prior approval referred to in Section 5.3 hereof are denied or
withdrawn at the request or recommendation of the applicable Governmental
Entity or are approved in a manner which does not satisfy the requirements of
Section 6.1(b) hereof, and the time period for appeals and requests for
reconsideration has run, or if any Governmental Entity of competent
jurisdiction shall have issued a final nonappealable order enjoining or
otherwise prohibiting the Merger or the Bank Merger;
(d) at any time, by any party hereto in writing, if the shareholders of
FFOH or GFCO do not approve this Agreement after a vote taken thereon at a
meeting duly called for such purpose (or at any adjournment thereof), unless
the failure of such occurrence shall be due to the failure of the party seeking
to terminate to perform or observe in any material respect its agreements set
forth herein to be performed or observed by such party at or before the
Effective Time;
(e) by either GFCO or FFOH in writing if the Effective Time has not
occurred by the close of business on June 30, 1999, provided that this right to
terminate shall not be available to any party whose failure to perform an
obligation in breach of such party's obligations under this Agreement has been
the cause of, or resulted in, the failure of the Merger and the other
transactions contemplated hereby to be consummated by such date; and
(f) by FFOH in writing if the Board of Directors of GFCO shall have
failed to recommend or withdrawn, modified or changed in a manner adverse to
the Merger its recommendation of this Agreement and the transactions
contemplated hereby pursuant to Section 5.2 hereof or by the Board of Directors
of GFCO if the Board of Directors of FFOH shall have failed to recommend or
withdrawn, modified or changed in a manner adverse to GFCO its
52
<PAGE> 157
recommendation of this Agreement and the transactions contemplated hereby
pursuant to Section 5.2 hereof.
7.2 Effect of Termination
In the event that this Agreement is terminated pursuant to Section 7.1
hereof, this Agreement shall become void and have no effect, except that (i)
the provisions relating to confidentiality and expenses set forth in Section
5.4 and Section 8.1, respectively, and this Section 7.2 shall survive any such
termination and (ii) a termination pursuant to Section 7.1(b), (c), (d), (e) or
(f) shall not relieve the breaching party from liability for willful breach of
any covenant, undertaking, representation or warranty giving rise to such
termination.
7.3 Survival of Representations, Warranties and Covenants
All representations, warranties and covenants in this Agreement or in any
instrument delivered pursuant hereto or thereto shall expire on, and be
terminated and extinguished at, the Effective Time other than covenants that by
their terms are to be performed after the Effective Time (including without
limitation the covenants set forth in Sections 2.6, 2.8, 5.8 and 5.9 hereof),
provided that no such representations, warranties or covenants shall be deemed
to be terminated or extinguished so as to deprive FFOH or GFCO (or any
director, officer or controlling person thereof) of any defense at law or in
equity which otherwise would be available against the claims of any person,
including, without limitation, any shareholder or former shareholder of either
FFOH or GFCO.
7.4 Waiver
Each party hereto by written instrument signed by an executive officer of
such party, may at any time (whether before or after approval of this Agreement
by the shareholders of FFOH and GFCO) extend the time for the performance of
any of the obligations or other acts of the other party hereto and may waive
(i) any inaccuracies of the other party in the representations or warranties
contained in this Agreement or any document delivered pursuant hereto, (ii)
compliance with any of the covenants, undertakings or agreements of the other
party, (iii) to the extent permitted by law, satisfaction of any of the
conditions precedent to its obligations contained herein or (iv) the
performance by the other party of any of its obligations set forth herein,
provided that any such waiver granted, or any amendment or supplement pursuant
to Section 7.5 hereof executed after shareholders of FFOH or GFCO have approved
this Agreement shall not modify either the amount or form of the consideration
to be provided hereby to the holders of GFCO Common Stock upon consummation of
the Merger or otherwise materially adversely affect such shareholders without
the approval of the shareholders who would be so affected.
7.5 Amendment or Supplement
This Agreement may be amended or supplemented at any time by mutual
agreement of FFOH, Merger Corporation and GFCO, subject to the proviso to
Section 7.4 hereof. Any such amendment or supplement must be in writing and
authorized by the parties' respective Boards of Directors.
53
<PAGE> 158
ARTICLE VIII
MISCELLANEOUS
8.1 Expenses
(a) Except as set forth in paragraphs (b) and (c) of this Section 8.1,
each party hereto shall bear and pay all costs and expenses incurred by it in
connection with the transactions contemplated by this Agreement, including fees
and expenses of its own financial consultants, accountants and counsel, except
that expenses of printing the Form S-4 and the registration fees to be paid to
the Commission in connection therewith shall be shared equally between GFCO and
FFOH.
(b) GFCO shall pay the expenses reasonably incurred by FFOH in
connection with the transactions contemplated by this Agreement in the event
GFCO or its Subsidiaries shall (i) default in its obligations hereunder or (ii)
fail to recommend approval of the Merger to the GFCO shareholders pursuant to
Section 5.2 of this Agreement;
(c) FFOH shall pay the expenses reasonably incurred by GFCO in
connection with he transactions contemplated by this Agreement in the event
FFOH or Merger Corporation shall (i) default in its obligations hereunder or
(ii) fail to recommend approval of the Merger and the other transactions
contemplated hereby (including the amendment to FFOH's Articles of
Incorporation in accordance with Section 5.16(a) hereof) to the FFOH
shareholders pursuant to Section 5.2 of this Agreement;
(d) Notwithstanding any provision in this Agreement to the contrary, in
the event that any of the parties shall default in its obligations hereunder,
either of the non-defaulting parties may pursue any remedy available at law or
in equity to enforce its rights and shall be paid by the defaulting party for
all damages, costs and expenses, including without limitation legal,
accounting, investment banking and printing expenses, incurred or suffered by
such non-defaulting party in connection herewith or in the enforcement of its
rights hereunder.
8.2 Entire Agreement
This Agreement (including the agreements to be executed and delivered
pursuant hereto), the GFCO Stock Option Agreement, the FFOH Stock Option
Agreement, the GFCO Stockholder Agreement, the FFOH Stockholder Agreement and
the Confidentiality Agreement contain the entire agreement among the parties
with respect to the transactions contemplated hereby and supersede all prior
arrangements or understandings with respect thereto, written or oral, other
than documents referred to herein and therein. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the parties
hereto and thereto and their respective successors.
8.3 Assignment; Successors
A party hereto may not assign any of its rights or obligations under this
Agreement to any other person without the prior written consent of the other
party or parties. The terms and conditions of this Agreement shall inure to
the benefit of and be binding upon the parties hereto
54
<PAGE> 159
and their respective successors. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party, other than the parties hereto,
and their respective successors, any rights, remedies, obligations or
liabilities, except as otherwise expressly provided in Sections 5.8 and 5.9
hereof.
8.4 Notices
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally,
telecopied (with confirmation) or sent by overnight mail service or by
registered or certified mail (return receipt requested), postage prepaid,
addressed as follows:
If to FFOH or Merger Corporation:
Fidelity Financial of Ohio, Inc.
4555 Montgomery Road
Cincinnati, Ohio 45212
Attn: John R. Reusing
President and Chief Executive Officer
Fax: 513-458-3473
With a required copy to:
Elias, Matz, Tiernan & Herrick L.L.P.
734 15th Street, N.W.
Washington, D.C. 20005
Attn: Jeffrey D. Haas, Esq.
Fax: 202-347-2172
If to GFCO:
Glenway Financial Corporation
5535 Glenway Avenue
Cincinnati, Ohio 45238
Attn: Robert R. Sudbrook
President and Chief Executive Officer
Fax: 513-922-3024
With a required copy to:
Vorys, Sater, Seymour & Pease LLP
221 East 4th Street
Cincinnati, Ohio 45201
Attn: Terri R. Abare, Esq.
Fax: 513-723-4056
55
<PAGE> 160
8.5 Interpretation
The table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. The phrases "the date of this Agreement,"
"the date hereof" and terms of similar import herein, unless the context
otherwise requires, shall be deemed to be the date first above written.
8.6 Counterparts
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
8.7 Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of Ohio applicable to agreements made and entirely to be
performed within such jurisdiction.
56
<PAGE> 161
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers and their corporate
seal to be hereunto affixed and attested by their officers thereunto duly
authorized, all as of the day and year first above written.
<TABLE>
<CAPTION>
FIDELITY FINANCIAL OF OHIO, INC.
<S> <C>
Attest:
/s/ Paul D. Staubach By: /s/ John R. Reusing
- --------------------------------------- --------------------------------
Name: Paul D. Staubach Name: John R. Reusing
Title: Senior Vice President, Chief Title: President and Chief Executive
Financial Officer and Secretary Officer
FIDELITY ACQUISITION CORPORATION
Attest:
/s/ Paul D. Staubach By: /s/ John R. Reusing
- --------------------------------------- --------------------------------
Name: Paul D. Staubach Name: John R. Reusing
Title: Senior Vice President, Chief Title: President and Chief Executive
Financial Officer and Secretary Office
GLENWAY FINANCIAL CORPORATION
Attest:
/s/ Daniel W. Geeding By: /s/ Robert R. Sudbrook
- ---------------------------------- --------------------------------
Name: Daniel W. Geeding Name: Robert R. Sudbrook
Title: Secretary Title: President and Chief Executive
Officer
</TABLE>
57
<PAGE> 162
EXHIBIT A
AGREEMENT OF MERGER
Agreement of Merger, dated as of September 28, 1998, by and between
Fidelity Federal Savings Bank (the "Bank") and Centennial Savings Bank
("Centennial").
WITNESSETH:
WHEREAS, Centennial is an Ohio-chartered savings bank and a wholly-owned
subsidiary of Glenway Financial Corporation ("GFCO"); and
WHEREAS, the Bank is a federally chartered savings bank and a
wholly-owned subsidiary of Fidelity Acquisition Corporation ("Merger
Corporation") which is in turn a wholly-owned subsidiary of Fidelity Financial
of Ohio, Inc. ("FFOH"); and
WHEREAS, FFOH, Merger Corporation and GFCO have entered into an Agreement
of Merger, dated as of September 28, 1998 (the "Agreement"), pursuant to which
GFCO will merge with and into Merger Corporation (the "Parent Merger"); and
WHEREAS, the Bank and Centennial desire to merge on the terms and
conditions herein provided immediately following the effective time of the
Parent Merger.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. THE MERGER. Subject to the terms and conditions of this Agreement
of Merger, at the Effective Time (as defined in Section 2 hereof), the Bank
shall merge with and into Centennial (the "Merger") under the laws of the State
of Ohio and the United States. Centennial shall be the surviving bank of the
Merger (the "Surviving Bank").
2. EFFECTIVE TIME. The Merger shall become effective on the date and
at the time that a Certificate of Merger is filed with the Secretary of State
of Ohio, unless a later date and time is specified as the effective time on
such Certificate of Merger (the "Effective Time").
3. ARTICLES OF INCORPORATION; CONSTITUTION; BYLAWS. The Articles of
Incorporation, Constitution and Bylaws of Centennial in effect immediately
prior to the Effective Time shall be the Articles of Incorporation,
Constitution and Bylaws of the Surviving Bank, until altered, amended or
repealed in accordance with their terms and applicable law.
<PAGE> 163
4. NAME; OFFICES. The name of the Surviving Bank shall be "Centennial
Bank." The main office of the Surviving Bank shall be the main office of
Centennial immediately prior to the Effective Time. All branch offices of the
Bank and Centennial which were in lawful operation immediately prior to the
Effective Time shall be the branch offices of the Surviving Bank upon
consummation of the Merger, subject to the opening or closing of any offices
which may be authorized by the Bank or Centennial and applicable regulatory
authorities after the date hereof. Schedule I hereto contains a list of each
of the deposit taking offices of the Bank and Centennial which shall be
operated by the Surviving Bank, subject to the opening or closing of any
offices which may be authorized by the Bank or Centennial and applicable
regulatory authorities after the date hereof.
5. DIRECTORS AND EXECUTIVE OFFICERS. Upon consummation of the Merger,
(i) the directors of the Surviving Bank shall consist of 12 persons the names
and residence addresses of which are set forth as Schedule II hereto and (ii)
the executive officers of the Surviving Bank shall be the executive officers of
the Bank immediately prior to the Effective Time, except that Robert R.
Sudbrook shall be Chairman of the Board of Directors and Chief Executive
Officer of the Surviving Bank, John R. Reusing shall be the President of the
Surviving Bank and Elaine M. Schmidt shall be the Senior Vice President and
Chief Operations Officer of the Surviving Bank. Directors and officers of the
Surviving Bank shall serve for such terms as are specified in the Articles of
Incorporation, Constitution and Bylaws of the Surviving Bank.
6. EFFECTS OF THE MERGER. Upon consummation of the Merger, and in
addition to the effects set forth at 12. C.F.R. Section 552.13 and Sections
1161.76 and 1701.82 of the Ohio Revised Code and other applicable law:
(i) all rights, franchises and interests of the Bank in and to
every type of property (real, personal and mixed), tangible and intangible, and
chooses in action shall be transferred to and vested in the Surviving Bank by
virtue of the Merger without any deed or other transfer, and the Surviving
Bank, without any order or other action on the part of any court or otherwise,
shall hold and enjoy all rights of property, franchises and interests,
including appointments, designations and nominations, and all other rights and
interests as trustee, executor, administrator, registrar of stocks and bonds,
guardian of estates, assignee, receiver and committee, and in every other
fiduciary capacity, in the same manner and to the same extent as such rights,
franchises and interest were held or enjoyed by the Bank immediately prior to
the Effective Time; and
(ii) the Surviving Bank shall be liable for all liabilities of the
Bank, fixed or contingent, including all deposits, accounts, debts, obligations
and contracts thereof, matured or unmatured, whether accrued, absolute,
contingent or otherwise, and whether or not reflected or reserved against on
balance sheets, books of account or records thereof, and all rights of
creditors or obligees and all liens on property of the Bank shall be preserved
unimpaired. In accordance with 12 C.F.R. Section 563b.3(f), the Surviving Bank
shall assume and maintain the liquidation account established by the Bank in
connection with its conversion to stock form.
2
<PAGE> 164
(iii) Upon the consummation of the Merger, and as a result of the Merger,
each savings deposit or other account of the Bank then existing shall,
automatically and without further act of the Surviving Bank or the Bank or the
holder thereof, be canceled and extinguished. In substitution and exchange for
each passbook savings deposit so canceled and extinguished, the holder thereof
shall automatically receive from the Surviving Bank a Surviving Bank passbook
savings account with a beginning balance equal in dollar amount to the dollar
amount of the Bank passbook savings deposit account so canceled and
extinguished and otherwise on the same terms as other passbook savings accounts
accepted by the Surviving Bank at the time of the consummation of the Merger.
In substitution for each Bank savings deposit other than a passbook savings
deposit so canceled and extinguished, the holder thereof shall automatically
receive from the Surviving Bank a Surviving Bank savings account with a
beginning balance equal in dollar amount to the dollar amount of the Bank
savings deposit account so canceled and extinguished and otherwise having the
same terms as the Bank savings deposit so canceled and extinguished.
The holder of each Bank savings deposit or other account canceled and
extinguished in connection with the Merger shall forthwith be entered on the
records of the Surviving Bank as the holder of an appropriate Surviving Bank
savings deposit or other account in an amount determined as provided in this
Agreement of Merger. Until surrendered to the Surviving Bank, each passbook,
certificate of deposit or other account issued by the Bank and outstanding at
the effective time of the Merger shall be deemed, for all purposes, to evidence
a savings deposit or other account of the Surviving Bank.
Upon surrender of a passbook, certificate of deposit or other document
issued by the Bank which theretofore evidenced a Bank savings deposit or other
account, the Surviving Bank shall deliver in substitution therefor an account
book or other document evidencing the Surviving Bank savings deposit or other
account received by such person in accordance with this Agreement of Merger.
7. EFFECT ON SHARES OF STOCK.
(a) Each share of Acquiror Bank common stock issued and outstanding
immediately prior to the Effective Time shall be unchanged and shall remain
issued and outstanding.
(b) At the Effective Time, each share of Bank common stock issued and
outstanding prior to the Merger shall, by virtue of the Merger and without any
action on the part of the holder thereof, be canceled. Any shares of Bank
common stock held in the treasury of the Bank immediately prior to the
Effective Time shall be retired and canceled.
8. ADDITIONAL ACTIONS. If, at any time after the Effective Time, the
Surviving Bank shall consider that any further assignments or assurances in law
or any other acts are necessary or desirable to (i) vest, perfect or confirm,
of record or otherwise, in the Surviving Bank its rights, title or interest in,
to or under any of the rights, properties or assets of the Bank acquired or to
be acquired by the Surviving Bank as a result of, or in connection with, the
Merger, or (ii) otherwise
3
<PAGE> 165
carry out the purposes of this Agreement of Merger, the Bank and its proper
officers and directors shall be deemed to have granted to the Surviving Bank an
irrevocable power of attorney to execute and deliver all such proper deeds,
assignments and assurances in law and to do all acts necessary or proper to
vest, perfect or confirm title to and possession of such rights, properties or
assets in the Surviving Bank and otherwise to carry out the purposes of this
Agreement of Merger; and the proper officers and directors of the Surviving
Bank are fully authorized in the name of the Bank or otherwise to take any and
all such action.
9. COUNTERPARTS. This Agreement of Merger may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one agreement.
10. GOVERNING LAW. This Agreement of Merger shall be governed in all
respects, including, but not limited to, validity, interpretation, effect and
performance, by the laws of the United States and, to the extent applicable,
the State of Ohio.
11. AMENDMENT. Subject to applicable law, this Agreement of Merger may
be amended, modified or supplemented only by written agreement of the Acquiror
Bank and the Bank at any time prior to the Effective Time.
12. WAIVER. Any of the terms or conditions of this Agreement of Merger
may be waived at any time by whichever of the parties hereto is, or the
shareholders of which are, entitled to the benefit thereof by action taken by
the Board of Directors of such waiving party.
13. ASSIGNMENT. This Agreement of Merger may not be assigned by any
party hereto without the prior written consent of the other party.
14. TERMINATION. This Agreement of Merger shall terminate upon the
termination of the Agreement in accordance with its terms.
15. PROCUREMENT OF APPROVALS. This Agreement of Merger shall be
subject to the approval of GFCO, as the sole shareholder of Centennial, and
Merger Corporation, as the sole shareholder of the Bank, at meetings to be
called and held or by consent in lieu thereof in accordance with the applicable
provisions of law and their respective Charter, Articles of Incorporation,
Constitution and Bylaws (or a consent or consents in lieu thereof). The
Acquiror Bank and the Bank shall proceed expeditiously and cooperate fully in
the procurement of any other consents and approvals and in the taking of any
other action, and the satisfaction of all other requirements prescribed by law
or otherwise necessary for consummation of the Merger on the terms provided
herein, including without limitation the preparation and submission of such
applications or other filings for approval of or in connection with the Merger
to the Ohio Department of Commerce, Division of Financial Institutions, the
Federal Deposit Insurance Corporation and the Office of Thrift Supervision as
may be required by applicable laws and regulations.
4
<PAGE> 166
16. CONDITIONS PRECEDENT. The obligations of the parties under this
Agreement of Merger shall be subject to: (i) the approval of this Agreement of
Merger by GFCO, as the sole shareholder of Centennial, and Merger Corporation,
as the sole shareholder of the Bank, at meetings of shareholders duly called
and held (or by consent or consents in lieu thereof), in each case without any
exercise of such dissenters' rights as may be applicable; (ii) receipt of
approval of the Merger from all governmental and banking authorities whose
approval is required; (iii) receipt of any necessary regulatory approval to
operate the main office and the branch offices of the Bank as offices of the
Surviving Bank; and (iv) the consummation of the Parent Merger pursuant to the
Agreement on or before the Effective Time.
17. EFFECTIVENESS OF MERGER. Notwithstanding anything to the contrary
contained herein, the Merger shall not be deemed to be effective unless and
until the requirements of 12 C.F.R. Section 552.13 and Section 1161.76 of the
Ohio Revised Code are met.
5
<PAGE> 167
IN WITNESS WHEREOF, each of the Acquiror Bank and the Bank has caused
this Agreement of Merger to be executed on its behalf by its duly authorized
officers.
<TABLE>
<CAPTION>
FIDELITY FEDERAL SAVINGS BANK
Attest:
<S> <C>
/s/ Paul D. Staubach By: /s/ John R. Reusing
- ---------------------------------- ------------------------------
Name: Paul D. Staubach Name: John R. Reusing
Title: Senior Vice President, Title: President and Chief Executive
Chief Financial Officer and Officer
Secretary
CENTENNIAL SAVINGS BANK
Attest:
/s/ Daniel W. Geeding By: /s/ Robert R. Sudbrook
- ---------------------------------- ------------------------------
Name: Daniel W. Geeding Name: Robert R. Sudbrook
Title: Secretary Title: President and Chief Executive
Officer
</TABLE>
6
<PAGE> 168
SCHEDULE I
List of Offices of
the Surviving Corporation
Home Office:
5535 Glenway Avenue
Cincinnati, Ohio 45238
Branch Offices:
4555 Montgomery Road
Cincinnati, Ohio 45212
8434 Vine Street
Cincinnati, Ohio 45216
7136 Miami Avenue
Cincinnati, Ohio 45243
11100 Reading Road
Cincinnati, Ohio 45241
11700 Princeton Pike
Springdale, Ohio 45246
4144 Hunt Road
Blue Ash, Ohio 45236
5030 Delhi Avenue
Cincinnati, Ohio 45238
3316 Glenmore Avenue
Cincinnati, Ohio 45211
3777 Hamilton Cleves Road
Hamilton, Ohio 45013
8045 Colerain Avenue
Cincinnati, Ohio 45239
7
<PAGE> 169
4221 Glenway Avenue
Cincinnati, Ohio 45205
5681 Rapid Run
Cincinnati, Ohio 45238
3916 Harrison Avenue
Cincinnati, Ohio 45211
9090 Colerain Avenue
Cincinnati, Ohio 45251
7944 Beechmont Avenue
Cincinnati, Ohio 45255
10640 Loveland-Madeira Road
Loveland, Ohio 45140
8
<PAGE> 170
SCHEDULE II
<TABLE>
<CAPTION>
Term of
Office
Name of Director Residence Address Expires
- ----------------------------- --------------------------------- ------------
<S> <C> <C>
Joseph D. Hughes 743 Huntersknoll Lane 1999
Cincinnati, Ohio 45230
David A. Luecke 6609 Powner Farm Drive 1999
Cincinnati, Ohio 45248
Michael W. Jordan 9266 Witherbone Court 1999
Cincinnati, Ohio 45242
Constantine N. Papadakis 103 Airdale Road 1999
Rosemont, Pennsylvania 19010
John R. Reusing 1307 Tara Ridge 1999
Milford, Ohio 45150
Thomas N. Spaeth 824 Farmsworth Drive 1999
Cincinnati, Ohio 45255
Robert W. Zumbiel 121 Sunset Drive 1999
Crestview Hills, Kentucky 41017
Robert R. Sudbrook 5581 Woodbridge Lane 1999
Cincinnati, Ohio 45069
Edgar A. Rust 5848 Bayou Court 1999
Cincinnati, Ohio 45248
Daniel W. Geeding 3584 Raymar Drive 1999
Cincinnati, Ohio 45208
Kenneth C. Lichtendahl 5889 Lawrence Road 1999
Cincinnati, Ohio 45248
John L. Torbeck 2275 Beechgrove Drive 1999
Cincinnati, Ohio 45233
</TABLE>
9
<PAGE> 171
ANNEX II
STOCK OPTION AGREEMENT
Stock Option Agreement, dated as of September 28, 1998, between Fidelity
Financial of Ohio, Inc., an Ohio corporation ("Grantee"), and Glenway Financial
Corporation, a Delaware corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement of Merger of
even date herewith (the "Merger Agreement"), providing for, among other things,
the merger of Issuer with and into a wholly-owned subsidiary of Grantee (the
"Merger");
WHEREAS, as a condition and an inducement to Grantee to enter into the
Merger Agreement, Issuer has agreed to grant Grantee the Option (as hereinafter
defined); and
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to an
aggregate of 456,349 fully paid and nonassessable shares (the "Option Shares")
of common stock, par value $0.01 per share, of Issuer (the "Common Stock") at a
price per share equal to $17.25 (the "Option Price"); provided, however, that
in no event shall the number of shares for which this Option is exercisable
exceed 19.9% of the issued and outstanding shares of Common Stock without
giving effect to any shares subject to or issued pursuant to the Option. The
number of shares of Common Stock that may be received upon the exercise of the
Option and the Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), including, without limitation, pursuant to stock option
or other employee plans or as a result of the exercise of conversion rights,
the number of shares of Common Stock subject to the Option shall be increased
so that, after such event, such number equals 19.9% of the number of shares of
Common Stock then issued and outstanding without giving effect to any shares
subject to or issued pursuant to the Option. Nothing contained in this Section
l(b) or elsewhere in this Agreement shall be deemed to authorize Issuer to
issue shares in breach of any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, and from time to time, if, but only if, both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of
<PAGE> 172
an Exercise Termination Event (as hereinafter defined), provided that the
Holder shall have sent the written notice of the first exercise (as provided in
paragraph (e) of this Section 2) within 90 days following the first Subsequent
Triggering Event to occur (or such later period as provided in Section 10).
Each of the following shall be an Exercise Termination Event: (i) the Effective
Time (as defined in the Merger Agreement); (ii) termination of the Merger
Agreement in accordance with the provisions thereof if such termination occurs
prior to the occurrence of an Initial Triggering Event, except a termination by
Grantee pursuant to Section 7.1(b) of the Merger Agreement (unless the breach
by Issuer giving rise to such right of termination was non-volitional); or
(iii) the passage of 12 months after termination of the Merger Agreement if
such termination follows the occurrence of an Initial Triggering Event or is a
termination by Grantee pursuant to Section 7.1(b) of the Merger Agreement
(unless the breach by Issuer giving rise to such right of termination is
non-volitional), provided that if an Initial Triggering Event continues or
occurs beyond such termination and prior to the passage of such
12-month-period, the Exercise Termination Event shall be 12 months from the
expiration of the Last Triggering Event but in no event more than 18 months
after such termination. The term "Last Triggering Event" shall mean the last
"Initial Triggering Event" to expire, and the term "Holder" shall mean the
holder or holders of the Option pursuant to this Agreement. Notwithstanding
anything to the contrary contained herein, the Option may not be exercised at
any time when Grantee shall be in willful material breach of any of its
covenants or agreements contained in the Merger Agreement such that Issuer
shall be entitled to terminate the Merger Agreement pursuant to Section 7.1(b)
thereof as a result of such a willful material breach.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or any Subsidiary of Issuer (an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition Transaction (as hereinafter
defined) with any person (the term "person" for purposes of this Agreement
having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules and
regulations thereunder), other than Grantee or any Subsidiary of Grantee (a
"Grantee Subsidiary") or the Board of Directors of Issuer (the "Issuer Board")
shall have recommended that the shareholders of Issuer approve or accept any
Acquisition Transaction with any person other than Grantee or a Grantee
Subsidiary. For purposes of this Agreement, (a) "Acquisition Transaction"
shall mean (w) a merger or consolidation, or any similar transaction, involving
Issuer or any Issuer Subsidiary (other than mergers, consolidations or similar
transactions (i) involving solely Issuer and/or one or more wholly-owned
Subsidiaries of Issuer, provided any such transaction is not entered into in
violation of the terms of the Merger Agreement, or (ii) in which the
shareholders of Issuer immediately prior to the completion of such transaction
own at least 50% of the Common Stock of Issuer (or the resulting or surviving
entity in such transaction) immediately after completion of such transaction,
provided any such transaction is not entered into in violation of the terms of
the Merger Agreement), (x) a purchase, lease or other acquisition of all or any
substantial part of the assets or deposits of Issuer or any Issuer Subsidiary,
(y) a purchase or other acquisition (including by way of merger, consolidation,
share exchange or otherwise) of securities representing 10% or more of the
voting
-2-
<PAGE> 173
power of Issuer or any Issuer Subsidiary or (z) any substantially similar
transaction; and (b) "Subsidiary" shall have the meaning set forth in Rule
12b-2 under the 1934 Act;
(ii) Any person, other than Grantee or a Grantee Subsidiary, shall have
acquired beneficial ownership or the right to acquire beneficial ownership of
10% or more of the outstanding shares of Common Stock (the term "beneficial
ownership" for purposes of this Agreement having the meaning assigned thereto
in Section 13(d) of the 1934 Act, and the rules and regulations thereunder);
(iii) Any person, other than Grantee or a Grantee Subsidiary, shall have
made a bona fide proposal to Issuer or its stockholders by public announcement
or written communication that is or becomes the subject of public disclosure to
engage in an Acquisition Transaction;
(iv) The Issuer Board, without having received Grantee's prior written
consent, shall have withdrawn or modified, or publicly announced its interest
to withdraw or modify in any manner adverse in any respect to Grantee, its
recommendation that the stockholders of Issuer approve the transactions
contemplated by the Merger Agreement in anticipation of engaging in an
Acquisition Transaction, or Issuer or any Issuer Subsidiary shall have
authorized, recommended or proposed, or publicly announced its intention to
authorize, recommend or propose, an agreement to engage in an Acquisition
Transaction with any person other than Grantee or a Grantee Subsidiary;
(v) Any person other than Grantee or a Grantee Subsidiary shall have
filed with the Securities and Exchange Commission ("SEC") a registration
statement or tender offer materials with respect to a potential exchange or
tender offer that would constitute an Acquisition Transaction (or filed a
preliminary proxy statement with the SEC with respect to a potential vote by
its stockholders to approve the issuance of shares to be offered in such an
exchange offer);
(vi) After an overture is made by any person, other than Grantee or a
Grantee Subsidiary, to Issuer or its stockholders to engage in an Acquisition
Transaction, Issuer shall have breached any covenant or obligation contained in
the Merger Agreement and such breach (x) would entitle Grantee to terminate the
Merger Agreement (whether immediately or after the giving of notice or passage
of time or both) and (y) shall not have been cured prior to the Notice Date (as
defined below); or
(vii) Any person other than Grantee or a Grantee Subsidiary shall have
filed an application or notice with the Office of Thrift Supervision (the
"OTS") or other federal or state bank regulatory or antitrust authority, which
application or notice has been accepted for processing, for approval to engage
in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 25% or more of the then outstanding
Common Stock; or
-3-
<PAGE> 174
(ii) The occurrence of the Initial Triggering Event described in clause
(i) of subsection (b) of this Section 2, except that the percentage referred to
in clause (y) of the second sentence thereof shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event") of which it has notice, it being understood that the giving
of such notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares of Common Stock it will purchase pursuant to such
exercise and (ii) a place and date not earlier than three business days nor
later than 60 business days from the Notice Date for the closing of such
purchase (the "Closing"); provided that if prior notification to or approval of
the OTS or any other regulatory or antitrust agency is required in connection
with such purchase, the Holder shall promptly file the required notice or
application for approval, shall promptly notify Issuer of such filing and shall
expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which any required
notification periods have expired or been terminated or such approvals have
been obtained and any requisite waiting period or periods shall have passed.
Any exercise of the Option shall be deemed to occur on the Notice Date relating
thereto. The term "business day" for purposes of this Agreement means any day,
excluding Saturdays, Sundays and any other day that is a legal holiday in the
State of Ohio or a day on which banking institutions in the State of Ohio are
authorized by law or executive order to close.
(f) At a Closing, the Holder shall (i) pay to Issuer the aggregate
purchase price for the shares of Common Stock purchased pursuant to the
exercise of the Option in immediately available funds by wire transfer to a
bank account designated by Issuer, and (ii) present and surrender this
Agreement to Issuer at its principal executive offices, provided that the
failure or refusal of the Issuer to designate such a bank account or accept
surrender of this Agreement shall not preclude the Holder from exercising the
Option.
(g) At a Closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder
thereof to purchase the balance of the shares purchasable hereunder, and the
Holder shall deliver to Issuer a copy of this Agreement and a letter agreeing
that the Holder will not offer to sell or otherwise dispose of such shares in
violation of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a Closing hereunder may be
endorsed (in the sole discretion of Issuer) with a restrictive legend that
shall read substantially as follows:
-4-
<PAGE> 175
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered
holder hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on file
at the principal office of Issuer and will be provided to the holder
hereof without charge upon receipt by Issuer of a written request
therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such
reference if the Holder shall have delivered to Issuer a copy of a letter from
the staff of the SEC, or an opinion of counsel, in form and substance
reasonably satisfactory to Issuer, to the effect that such legend is not
required for purposes of the 1933 Act; (ii) the reference to the provisions of
this Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference in the
reasonable opinion of counsel to the Holder; and (iii) the legend shall be
removed in its entirety if the conditions in the preceding clauses (i) and (ii)
are both satisfied. In addition, such certificates shall bear any other legend
as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under paragraph (e) of this Section 2, the
tender of the applicable purchase price in immediately available funds and the
tender of a copy of this Agreement to Issuer, the Holder shall be deemed,
subject to the receipt of any necessary regulatory approvals, to be the holder
of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Common Stock shall not then be
actually delivered to the Holder. Issuer shall pay all expenses, and any and
all United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its assignee,
transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock;
(ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all action as may from time to time be required
(including without limitation (x) complying with all applicable premerger
notification, reporting and waiting period requirements specified in 15 U.S.C.
Section 18a and regulations promulgated thereunder and (y) in the event, under
the Home Owners Loan Act ("HOLA"), or the Change in Bank Control Act of 1978,
as amended, or any state or other federal banking law, prior approval of or
notice to the OTS or to any state or other federal regulatory authority is
necessary before the Option may be exercised, cooperating fully with the Holder
in connection with the preparation of such applications or notices and
providing such information to
-5-
<PAGE> 176
the OTS or such state or other federal regulatory authority as they may
require) in order to permit the Holder to exercise the Option and Issuer duly
and effectively to issue shares of Common Stock pursuant hereto; and (iv)
promptly to take all action provided herein to protect the rights of the Holder
against dilution.
4. This Agreement and the Option granted hereby are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender
of this Agreement at the principal office of Issuer, for other Agreements
providing for Options of different denominations entitling the holder thereof
to purchase on the same terms and subject to the same conditions as are set
forth herein in the aggregate the same number of shares of Common Stock
purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any Stock Option Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by
Issuer of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, Issuer will execute and deliver a
new Agreement of like tenor and date. Any such new Agreement executed and
delivered shall constitute an additional contractual obligation on the part of
Issuer, subject to the aforementioned indemnification, if applicable, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of Option Shares purchasable upon the exercise of the
Option and the Option Price shall be subject to adjustment from time to time as
provided in this Section 5.
(a) In the event of any change in, or distributions in respect of, the
Common Stock by reason of stock dividend, split-up, merger, recapitalization,
combination, subdivision, conversion, exchange of shares, distribution on or in
respect of the Common Stock or similar transaction, the type and number of
Option Shares shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, so that Grantee shall
receive upon exercise of the Option the number and class of Option Shares that
Grantee would have held immediately after such event if the Option had been
exercised immediately prior to such event, or the record date therefor, as
applicable.
(b) Whenever the number of Option Shares is adjusted as provided in this
Section 5, the Option Price shall be adjusted by multiplying the Option Price
by a fraction, the numerator of which shall be equal to the number of Option
Shares purchasable prior to the adjustment and the denominator of which shall
be equal to the number of Option Shares purchasable after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within six months (or such later period as provided in Section 10)
following such Subsequent Triggering Event (whether on its own behalf or on
behalf of any subsequent holder of this Option (or part thereof) or any of the
Option
-6-
<PAGE> 177
Shares issued pursuant hereto), promptly prepare, file and keep current, with
respect to the Option and the Option Shares, a registration statement under the
1933 Act and qualify such Option and Option Shares for resale or other
disposition under applicable state securities laws, in each case in accordance
with any plan of disposition requested by Grantee. Issuer will use all
reasonable efforts to cause such registration statement promptly to become
effective and then to remain effective for such period not in excess of 180
days from the day such registration statement first becomes effective or such
shorter time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations.
The Issuer shall bear the costs of such registrations (including, but not
limited to, Issuer's attorneys' fees, printing costs and filing fees, except
for underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
the Option or Option Shares as provided above, Issuer is in registration with
respect to an underwritten public offering by Issuer of shares of Common Stock,
and if in the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters, of such
offering, the inclusion of the Option and/or Option Shares would interfere with
the successful marketing of the shares of Common Stock offered by Issuer, the
number of shares represented by the Option and/or the number of Option Shares
otherwise to be covered in the registration statement contemplated hereby may
be reduced; provided, however, that after any such required reduction the
number of shares represented by the Option and/or the number of Option Shares
to be included in such offering for the account of the Holder shall constitute
at least 25% of the total number of shares to be sold by the Holder and Issuer
in the aggregate; and provided further, however, that if such reduction occurs,
then Issuer shall file a registration statement for the balance as promptly as
practicable thereafter as to which no reduction pursuant to this Section 6
shall be permitted or occur. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any such registration statement
to be filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement
relating to the sale of such shares, but only to the extent of obligating
itself in respect of representations, warranties, indemnities and other
agreements customarily included in secondary offering underwriting agreements.
Upon receiving any request under this Section 6 from any Holder, Issuer agrees
to send a copy thereof to any other person known to Issuer to be entitled to
registration rights under this Section 6, in each case by promptly mailing the
same, postage prepaid, to the address of record of the persons entitled to
receive such copies. Notwithstanding anything to the contrary contained
herein, in no event shall the number of registrations that Issuer is obligated
to effect be increased by reason of the fact that there shall be more than one
Holder as a result of any assignment or division of this Agreement.
7. (a) Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, (i) at the request of any Holder
delivered within 90 days following such occurrence (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase the
Option from the Holder at a price (the "Option Repurchase Price") equal to the
amount by which (A) the Market/Offer Price (as defined below) exceeds (B) the
Option Price, multiplied by the number of shares for which the Option may then
be exercised, and (ii) at the request of the owner of Option Shares from time
to time (the "Owner"), delivered within 90 days
-7-
<PAGE> 178
following such occurrence (or such later period as provided in Section 10),
Issuer (or any successor thereto) shall repurchase such number of the Option
Shares from the Owner as the Owner shall designate at a price (the "Option
Share Repurchase Price") equal to the greater of (A) the Market/Offer Price and
(B) the average exercise price per share paid by the Owner for the Option
Shares so designated. The term "Market/Offer Price" shall mean the highest of
(i) the price per share of Common Stock at which a tender offer or exchange
offer therefor has been made, (ii) the price per share of Common Stock to be
paid by any person, other than Grantee or a Grantee Subsidiary, pursuant to an
agreement with Issuer of the kind described in Section 2(b)(i), (iii) the
highest closing price for shares of Common Stock within the shorter of the
period from the date of this Agreement up to the date on which such required
repurchase of the Option or Option Shares, as the case may be, occurs or the
six-month period immediately preceding the date of such required repurchase of
the Option or Option Shares, as the case may be, or (iv) in the event of a
sale of all or any substantial part of Issuer's assets or deposits, the sum of
the price paid in such sale for such assets or deposits and the current market
value of the remaining assets of Issuer as determined by a
nationally-recognized investment banking firm selected by a majority in
interest of the Holders or the Owners, as the case may be, and reasonably
acceptable to Issuer, divided by the number of shares of Common Stock of Issuer
outstanding at the time of such sale. In determining the Market/Offer Price,
the value of consideration other than cash shall be determined by a
nationally-recognized investment banking firm selected by the Holder or Owner,
as the case may be, and reasonably acceptable to Issuer.
(b) Each Holder and Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and any Option Shares pursuant to this
Section 7 by surrendering for such purpose to Issuer, at its principal office,
a copy of this Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that such Holder or Owner,
as the case may be, elects to require Issuer to repurchase this Option and/or
Option Shares in accordance with the provisions of this Section 7. As promptly
as practicable, and in any event within five business days after the surrender
of the Option and/or certificates representing Option Shares and the receipt of
such notice or notices relating thereto, Issuer shall deliver or cause to be
delivered to the Holder the Option Repurchase Price and/or to the Owner the
Option Share Repurchase Price therefor or the portion thereof that Issuer is
not then prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, or as a result of a
written agreement or other binding obligation with a governmental or regulatory
body or agency, from repurchasing the Option and/or the Option Shares in full,
Issuer shall immediately so notify each Holder and/or each Owner and thereafter
deliver or cause to be delivered, from time to time, to such Holder and/or such
Owner, as appropriate, the portion of the Option Repurchase Price and the
Option Share Repurchase Price, respectively, that it is no longer prohibited
from delivering, within two business days after the date on which Issuer is no
longer so prohibited; provided, however, that if Issuer at any time after
delivery of a notice of repurchase pursuant to paragraph (b) of this Section 7
is prohibited under applicable law or regulation, or as a consequence of
administrative policy, or as a result of a written
-8-
<PAGE> 179
agreement or other binding obligation with a governmental or regulatory body or
agency, from delivering to the Holder and/or the Owner, as appropriate, the
Option Repurchase Price and the Option Share Repurchase Price, respectively, in
part or in full (and Issuer hereby undertakes to use all reasonable efforts to
obtain all required regulatory and legal approvals and to file any required
notices as promptly as practicable in order to accomplish such repurchase),
such Holder or Owner may revoke its notice of repurchase of the Option and/or
the Option Shares either in whole or to the extent of the prohibition,
whereupon, in the latter case, Issuer shall promptly (i) deliver to the Holder
and/or the Owner, as appropriate, that portion of the Option Repurchase Price
and/or the Option Share Repurchase Price that Issuer is not prohibited from
delivering with respect to Options or Option Shares as to which the Holder or
the Owner, as the case may be, has not revoked its repurchase demand; and (ii)
deliver, as appropriate, either (A) to the Holder, a new Agreement evidencing
the right of the Holder to purchase that number of shares of Common Stock
obtained by multiplying the number of shares of Common Stock for which the
surrendered Agreement was exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the Option Repurchase Price
less the portion thereof theretofore delivered to the Holder and the
denominator of which is the Option Repurchase Price, and/or (B) to such Owner,
a certificate for the Option Shares it is then so prohibited from repurchasing.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or a Grantee Subsidiary, or engage in a plan of exchange
with any person, other than Grantee or a Grantee Subsidiary, and Issuer shall
not be the continuing or surviving corporation of such consolidation or merger
or the acquiror in such plan of exchange, (ii) to permit any person, other than
Grantee or a Grantee Subsidiary, to merge into Issuer or be acquired by Issuer
in a plan of exchange and Issuer shall be the continuing or surviving or
acquiring corporation, but, in connection with such merger or plan of exchange,
the then outstanding shares of Common Stock shall be changed into or exchanged
for stock or other securities of any other person or cash or any other property
or the then outstanding shares of Common Stock shall after such merger or plan
of exchange represent less than 50% of the outstanding shares and share
equivalents of the merged or acquiring company, or (iii) to sell or otherwise
transfer all or a substantial part of its or any Issuer Subsidiary's assets or
deposits to any person, other than Grantee or a Grantee Subsidiary, then, and
in each such case, the agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
any Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or
(y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving person of a consolidation or merger with Issuer (if other than
Issuer), (ii) the acquiring person in a plan of exchange in which Issuer
is acquired, (iii) Issuer in a merger or plan of exchange in which
-9-
<PAGE> 180
Issuer is the continuing or surviving or acquiring person, and (iv) the
transferee of all or a substantial part of Issuer's assets or deposits (or
the assets or deposits of an Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute
Option.
(iii)"Assigned Value" shall mean the Market/Offer Price, as defined
in Section 7.
(iv) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for the one year immediately preceding the
consolidation, merger, share exchange or sale in question, but in no event
higher than the closing price of the shares of Substitute Common Stock on
the day preceding such consolidation, merger, share exchange or sale;
provided that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common stock
issued by the person merging into Issuer or by any company which controls
or is controlled by such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall, to the extent legally permissible,
be as similar as possible to, and in no event less advantageous to the Holder
than, the terms of the Option. The issuer of the Substitute Option also shall
enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement (after giving effect
for such purpose to the provisions of Section 9), which agreement shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares
of Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than
19.9% of the shares of Substitute Common Stock outstanding prior to exercise
but for this paragraph (e), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall make a cash payment to Holder equal to the
excess of (i) the value of the Substitute Option without giving effect to the
limitation in this paragraph (e) over (ii) the value of the Substitute Option
after giving effect to the limitation in this paragraph (e). This difference
in value shall be determined by a nationally-
-10-
<PAGE> 181
recognized investment banking firm selected by a majority in interest of the
Holders and reasonably acceptable to the Acquiring Corporation.
(f) Issuer shall not enter into any transaction described in paragraph
(a) of this Section 8 unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option Issuer shall
repurchase the Substitute Option from the Substitute Option Holder at a price
(the "Substitute Option Repurchase Price") equal to the amount by which (i) the
Highest Closing Price (as hereinafter defined) exceeds (ii) the exercise price
of the Substitute Option, multiplied by the number of shares of Substitute
Common Stock for which the Substitute Option may then be exercised, and at the
request of each owner (the "Substitute Share Owner") of shares of Substitute
Common Stock (the "Substitute Shares"), the Substitute Option Issuer shall
repurchase the Substitute Shares at a price (the "Substitute Share Repurchase
Price") equal to the greater of (A) the Highest Closing Price and (B) the
average exercise price per share paid by the Substitute Share Owner for the
Substitute Shares so designated, multiplied by the number of Substitute Shares
so designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner
gives notice of the required repurchase of the Substitute Shares, as
applicable.
(b) Each Substitute Option Holder and Substitute Share Owner, as the case
may be, may exercise its respective right to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant
to this Section 9 by surrendering for such purpose to the Substitute Option
Issuer, at its principal office, the agreement for such Substitute Option (or,
in the absence of such an agreement, a copy of this Agreement) and/or
certificates for Substitute Shares accompanied by a written notice or notices
stating that the Substitute Option Holder or the Substitute Share Owner, as the
case may be, elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with the
provisions of this Section 9. As promptly as practicable, and in any event
within two business days after the surrender of the Substitute Option and/or
certificates representing Substitute Shares and the receipt of such notice or
notices relating thereto, the Substitute Option Issuer shall deliver or cause
to be delivered to the Substitute Option Holder the Substitute Option
Repurchase Price and/or to the Substitute Share Owner the Substitute Share
Repurchase Price therefor, or the portion(s) thereof which the Substitute
Option Issuer is not then prohibited under applicable law and regulation from
so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, or
as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from repurchasing the Substitute
Option and/or the Substitute Shares in part or in full, the Substitute Option
Issuer following a request for repurchase pursuant to this Section 9 shall
immediately so notify the
-11-
<PAGE> 182
Substitute Option Holder and/or the Substitute Share Owner and thereafter
deliver or cause to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the portion of the
Substitute Option Repurchase Price and/or the Substitute Share Repurchase Price,
respectively, which it is no longer prohibited from delivering, within two
business days after the date on which the Substitute Option Issuer is no longer
so prohibited; provided, however, that if the Substitute Option Issuer is at any
time after delivery of a notice of repurchase pursuant to subsection (b) of this
Section 9 prohibited under applicable law or regulation, or as a consequence of
administrative policy, or as a result of a written agreement or other binding
obligation with a governmental or regulatory body or agency, from delivering to
the Substitute Option Holder and/or the Substitute Share Owner, as appropriate,
the Substitute Option Repurchase Price and the Substitute Share Repurchase
Price, respectively, in full (and the Substitute Option Issuer shall use all
reasonable efforts to obtain all required regulatory and legal approvals as
promptly as practicable in order to accomplish such repurchase), the Substitute
Option Holder and/or Substitute Share Owner may revoke its notice of repurchase
of the Substitute Option or the Substitute Shares either in whole or to the
extent of the prohibition, whereupon, in the latter case, the Substitute Option
Issuer shall promptly (i) deliver to the Substitute Option Holder or Substitute
Share Owner, as appropriate, that portion of the Substitute Option Repurchase
Price or the Substitute Share Repurchase Price that the Substitute Option Issuer
is not prohibited from delivering; and (ii) deliver, as appropriate, either (A)
to the Substitute Option Holder, a new Substitute Option evidencing the right of
the Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, and/or (B) to the Substitute
Share Owner, a certificate for the Substitute Option Shares it is then so
prohibited from repurchasing.
10. The 90-day or 6-month periods for exercise of certain rights under
Sections 2, 6, 7 and 12 shall be extended: (i) to the extent necessary to
obtain all regulatory approvals for the exercise of such rights (for so long as
the Holder, Owner, Substitute Option Holder or Substitute Share Owner, as the
case may be, is using its reasonable best efforts to obtain such regulatory
approvals), and for the expiration of all statutory waiting periods; (ii)
during the pendency of any temporary restraining order, injunction or other
legal bar to exercise of such rights; and (iii) to the extent necessary to
avoid liability under Section 16(b) of the 1934 Act by reason of such exercise.
11. (a) Issuer hereby represents and warrants to Grantee as follows:
(i) Issuer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Issuer Board and no other corporate proceedings on the part of Issuer are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered
by Issuer and is a valid and legally binding
-12-
<PAGE> 183
obligation of Issuer, enforceable against Issuer in accordance with its terms,
except that enforcement thereof may be limited by the receivership,
conservatorship and supervisory powers of bank regulatory agencies generally as
well as bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting enforcement of creditors rights generally and except that
enforcement thereof may be subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law) and
the availability of equitable remedies.
(ii) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock at
any time and from time to time issuable hereunder, and all such shares, upon
issuance pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
(b) Grantee hereby represents and warrants to Issuer that:
(i) Grantee has full corporate power and authority to execute and deliver
this Agreement and, subject to any approvals or consents referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Grantee and no other corporate proceedings on the part of Grantee are necessary
to authorize this Agreement or to consummate the transactions so contemplated.
This Agreement has been duly executed and delivered by Grantee and is a valid
and legally binding obligation of Grantee.
(ii) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within six
months following such Subsequent Triggering Event; provided, however, that
until the date 15 days following the date on which the OTS approves an
application by Grantee under the HOLA to acquire the shares of Common Stock
subject to the Option, Grantee may not assign its rights under the Option
except in (i) a widely dispersed public distribution, (ii) a private placement
in which no one party acquires the right to purchase in excess of 2% of the
voting shares of Issuer, (iii) an assignment to a single party (e.g., a broker
or investment banker) for the sole purpose of conducting a widely dispersed
public distribution on Grantee's behalf or (iv) any other manner approved by
the OTS.
-13-
<PAGE> 184
13. Each of Grantee and Issuer will use all reasonable efforts to make
all filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including, without limitation, applying to the OTS under the
HOLA for approval to acquire the shares issuable hereunder and applying for
listing or quotation of such shares on any exchange or quotation system on
which the Common Stock is then listed or quoted.
14. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
15. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this
Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or Issuer or
Substitute Option Issuer, as the case may be, is not permitted to repurchase
pursuant to Section 7 or Section 9, as the case may be, the full number of
shares of Common Stock provided in Section l(a) hereof (as adjusted pursuant to
Section l(b) or Section 5 hereof), it is the express intention of Issuer (which
shall be binding on the Substitute Option Issuer) to allow the Holder to
acquire or to require Issuer or Substitute Option Issuer, as the case may be,
to repurchase such lesser number of shares as may be permissible, without any
amendment or modification hereof.
16. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
17. This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio, without regard to the conflict of law principles
thereof.
18. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
19. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
20. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties
with respect to the transactions contemplated hereunder and supersedes all
prior arrangements or understandings with respect
-14-
<PAGE> 185
thereof, written or oral. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Nothing in this Agreement,
express or implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors and permitted assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
21. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
-15-
<PAGE> 186
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
<TABLE>
<S> <C>
FIDELITY FINANCIAL OF OHIO, INC.
Attest:
/s/ Paul D. Staubach By: /s/ John R. Reusing
- ---------------------------------- -----------------------------------------
Name: Paul D. Staubach Name: John R. Reusing
Title: Senior Vice President, Title: President and Chief Executive Officer
Chief Financial Officer
and Secretary
GLENWAY FINANCIAL CORPORATION
Attest:
/s/ Daniel W. Geeding By: /s/ Robert R. Sudbrook
- ---------------------------------- -----------------------------------------
Name: Daniel W. Geeding Name: Robert R. Sudbrook
Title: Secretary Title: President and Chief Executive Officer
</TABLE>
-16-
<PAGE> 187
ANNEX III
STOCK OPTION AGREEMENT
Stock Option Agreement, dated as of September 28, 1998, between Fidelity
Financial of Ohio, Inc., an Ohio corporation ("Issuer"), and Glenway Financial
Corporation, a Delaware corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Issuer and Grantee have entered into an Agreement of Merger of
even date herewith (the "Merger Agreement"), providing for, among other things,
the merger of Grantee with and into a wholly-owned subsidiary of Issuer (the
"Merger");
WHEREAS, as a condition and an inducement to Grantee to enter into the
Merger Agreement, Issuer has agreed to grant Grantee the Option (as hereinafter
defined); and
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to an
aggregate of 1,114,793 fully paid and nonassessable shares (the "Option
Shares") of common stock, par value $0.10 per share, of Issuer (the "Common
Stock") at a price per share equal to $12.15 (the "Option Price"); provided,
however, that in no event shall the number of shares for which this Option is
exercisable exceed 19.9% of the issued and outstanding shares of Common Stock
without giving effect to any shares subject to or issued pursuant to the
Option. The number of shares of Common Stock that may be received upon the
exercise of the Option and the Option Price are subject to adjustment as herein
set forth.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), including, without limitation, pursuant to stock option
or other employee plans or as a result of the exercise of conversion rights,
the number of shares of Common Stock subject to the Option shall be increased
so that, after such event, such number equals 19.9% of the number of shares of
Common Stock then issued and outstanding without giving effect to any shares
subject to or issued pursuant to the Option. Nothing contained in this Section
l(b) or elsewhere in this Agreement shall be deemed to authorize Issuer to
issue shares in breach of any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, and from time to time, if, but only if, both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of
<PAGE> 188
an Exercise Termination Event (as hereinafter defined), provided that the
Holder shall have sent the written notice of the first exercise (as provided in
paragraph (e) of this Section 2) within 90 days following the first Subsequent
Triggering Event to occur (or such later period as provided in Section 10).
Each of the following shall be an Exercise Termination Event: (i) the Effective
Time (as defined in the Merger Agreement); (ii) termination of the Merger
Agreement in accordance with the provisions thereof if such termination occurs
prior to the occurrence of an Initial Triggering Event, except a termination by
Grantee pursuant to Section 7.1(b) of the Merger Agreement (unless the breach
by Issuer giving rise to such right of termination was non-volitional); or
(iii) the passage of 12 months after termination of the Merger Agreement if
such termination follows the occurrence of an Initial Triggering Event or is a
termination by Grantee pursuant to Section 7.1(b) of the Merger Agreement
(unless the breach by Issuer giving rise to such right of termination is
non-volitional), provided that if an Initial Triggering Event continues or
occurs beyond such termination and prior to the passage of such
12-month-period, the Exercise Termination Event shall be 12 months from the
expiration of the Last Triggering Event but in no event more than 18 months
after such termination. The term "Last Triggering Event" shall mean the last
"Initial Triggering Event" to expire, and the term "Holder" shall mean the
holder or holders of the Option pursuant to this Agreement. Notwithstanding
anything to the contrary contained herein, the Option may not be exercised at
any time when Grantee shall be in willful material breach of any of its
covenants or agreements contained in the Merger Agreement such that Issuer
shall be entitled to terminate the Merger Agreement pursuant to Section 7.1(b)
thereof as a result of such a willful material breach.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or any Subsidiary of Issuer (an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition Transaction (as hereinafter
defined) with any person (the term "person" for purposes of this Agreement
having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules and
regulations thereunder), other than Grantee or any Subsidiary of Grantee (a
"Grantee Subsidiary") or the Board of Directors of Issuer (the "Issuer Board")
shall have recommended that the shareholders of Issuer approve or accept any
Acquisition Transaction with any person other than Grantee or a Grantee
Subsidiary. For purposes of this Agreement, (a) "Acquisition Transaction"
shall mean (w) a merger or consolidation, or any similar transaction, involving
Issuer or any Issuer Subsidiary (other than mergers, consolidations or similar
transactions (i) involving solely Issuer and/or one or more wholly-owned
Subsidiaries of Issuer, provided any such transaction is not entered into in
violation of the terms of the Merger Agreement, or (ii) in which the
shareholders of Issuer immediately prior to the completion of such transaction
own at least 50% of the Common Stock of Issuer (or the resulting or surviving
entity in such transaction) immediately after completion of such transaction,
provided any such transaction is not entered into in violation of the terms of
the Merger Agreement), (x) a purchase, lease or other acquisition of all or any
substantial part of the assets or deposits of Issuer or any Issuer Subsidiary,
(y) a purchase or other acquisition (including by way of merger, consolidation,
share exchange or otherwise) of securities representing 10% or more of the
voting
-2-
<PAGE> 189
power of Issuer or any Issuer Subsidiary or (z) any substantially similar
transaction; and (b) "Subsidiary" shall have the meaning set forth in Rule
12b-2 under the 1934 Act;
(ii) Any person, other than Grantee or a Grantee Subsidiary, shall have
acquired beneficial ownership or the right to acquire beneficial ownership of
10% or more of the outstanding shares of Common Stock (the term "beneficial
ownership" for purposes of this Agreement having the meaning assigned thereto
in Section 13(d) of the 1934 Act, and the rules and regulations thereunder);
(iii) Any person, other than Grantee or a Grantee Subsidiary, shall have
made a bona fide proposal to Issuer or its stockholders by public announcement
or written communication that is or becomes the subject of public disclosure to
engage in an Acquisition Transaction;
(iv) The Issuer Board, without having received Grantee's prior written
consent, shall have withdrawn or modified, or publicly announced its interest
to withdraw or modify in any manner adverse in any respect to Grantee, its
recommendation that the stockholders of Issuer approve the transactions
contemplated by the Merger Agreement in anticipation of engaging in an
Acquisition Transaction, or Issuer or any Issuer Subsidiary shall have
authorized, recommended or proposed, or publicly announced its intention to
authorize, recommend or propose, an agreement to engage in an Acquisition
Transaction with any person other than Grantee or a Grantee Subsidiary;
(v) Any person other than Grantee or a Grantee Subsidiary shall have
filed with the Securities and Exchange Commission ("SEC") a registration
statement or tender offer materials with respect to a potential exchange or
tender offer that would constitute an Acquisition Transaction (or filed a
preliminary proxy statement with the SEC with respect to a potential vote by
its stockholders to approve the issuance of shares to be offered in such an
exchange offer);
(vi) After an overture is made by any person, other than Grantee or a
Grantee Subsidiary, to Issuer or its stockholders to engage in an Acquisition
Transaction, Issuer shall have breached any covenant or obligation contained in
the Merger Agreement and such breach (x) would entitle Grantee to terminate the
Merger Agreement (whether immediately or after the giving of notice or passage
of time or both) and (y) shall not have been cured prior to the Notice Date (as
defined below); or
(vii) Any person other than Grantee or a Grantee Subsidiary shall have
filed an application or notice with the Office of Thrift Supervision (the
"OTS") or other federal or state bank regulatory or antitrust authority, which
application or notice has been accepted for processing, for approval to engage
in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 25% or more of the then outstanding
Common Stock; or
-3-
<PAGE> 190
(ii) The occurrence of the Initial Triggering Event described in clause
(i) of subsection (b) of this Section 2, except that the percentage referred to
in clause (y) of the second sentence thereof shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event") of which it has notice, it being understood that the giving
of such notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares of Common Stock it will purchase pursuant to such
exercise and (ii) a place and date not earlier than three business days nor
later than 60 business days from the Notice Date for the closing of such
purchase (the "Closing"); provided that if prior notification to or approval of
the OTS or any other regulatory or antitrust agency is required in connection
with such purchase, the Holder shall promptly file the required notice or
application for approval, shall promptly notify Issuer of such filing and shall
expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which any required
notification periods have expired or been terminated or such approvals have
been obtained and any requisite waiting period or periods shall have passed.
Any exercise of the Option shall be deemed to occur on the Notice Date relating
thereto. The term "business day" for purposes of this Agreement means any day,
excluding Saturdays, Sundays and any other day that is a legal holiday in the
State of Ohio or a day on which banking institutions in the State of Ohio are
authorized by law or executive order to close.
(f) At a Closing, the Holder shall (i) pay to Issuer the aggregate
purchase price for the shares of Common Stock purchased pursuant to the
exercise of the Option in immediately available funds by wire transfer to a
bank account designated by Issuer, and (ii) present and surrender this
Agreement to Issuer at its principal executive offices, provided that the
failure or refusal of the Issuer to designate such a bank account or accept
surrender of this Agreement shall not preclude the Holder from exercising the
Option.
(g) At a Closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder
thereof to purchase the balance of the shares purchasable hereunder, and the
Holder shall deliver to Issuer a copy of this Agreement and a letter agreeing
that the Holder will not offer to sell or otherwise dispose of such shares in
violation of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a Closing hereunder may be
endorsed (in the sole discretion of Issuer) with a restrictive legend that
shall read substantially as follows:
-4-
<PAGE> 191
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered
holder hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on file
at the principal office of Issuer and will be provided to the holder
hereof without charge upon receipt by Issuer of a written request
therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such
reference if the Holder shall have delivered to Issuer a copy of a letter from
the staff of the SEC, or an opinion of counsel, in form and substance
reasonably satisfactory to Issuer, to the effect that such legend is not
required for purposes of the 1933 Act; (ii) the reference to the provisions of
this Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference in the
reasonable opinion of counsel to the Holder; and (iii) the legend shall be
removed in its entirety if the conditions in the preceding clauses (i) and (ii)
are both satisfied. In addition, such certificates shall bear any other legend
as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under paragraph (e) of this Section 2, the
tender of the applicable purchase price in immediately available funds and the
tender of a copy of this Agreement to Issuer, the Holder shall be deemed,
subject to the receipt of any necessary regulatory approvals, to be the holder
of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Common Stock shall not then be
actually delivered to the Holder. Issuer shall pay all expenses, and any and
all United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its assignee,
transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock;
(ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all action as may from time to time be required
(including without limitation (x) complying with all applicable premerger
notification, reporting and waiting period requirements specified in 15 U.S.C.
Section 18a and regulations promulgated thereunder and (y) in the event, under
the Home Owners Loan Act ("HOLA"), or the Change in Bank Control Act of 1978,
as amended, or any state or other federal banking law, prior approval of or
notice to the OTS or to any state or other federal regulatory authority is
necessary before the Option may be exercised, cooperating fully with the Holder
in connection with the preparation of such applications or notices and
providing such information to
-5-
<PAGE> 192
the OTS or such state or other federal regulatory authority as they may
require) in order to permit the Holder to exercise the Option and Issuer duly
and effectively to issue shares of Common Stock pursuant hereto; and (iv)
promptly to take all action provided herein to protect the rights of the Holder
against dilution.
4. This Agreement and the Option granted hereby are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender
of this Agreement at the principal office of Issuer, for other Agreements
providing for Options of different denominations entitling the holder thereof
to purchase on the same terms and subject to the same conditions as are set
forth herein in the aggregate the same number of shares of Common Stock
purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any Stock Option Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by
Issuer of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, Issuer will execute and deliver a
new Agreement of like tenor and date. Any such new Agreement executed and
delivered shall constitute an additional contractual obligation on the part of
Issuer, subject to the aforementioned indemnification, if applicable, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of Option Shares purchasable upon the exercise of the
Option and the Option Price shall be subject to adjustment from time to time as
provided in this Section 5.
(a) In the event of any change in, or distributions in respect of, the
Common Stock by reason of stock dividend, split-up, merger, recapitalization,
combination, subdivision, conversion, exchange of shares, distribution on or in
respect of the Common Stock or similar transaction, the type and number of
Option Shares shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, so that Grantee shall
receive upon exercise of the Option the number and class of Option Shares that
Grantee would have held immediately after such event if the Option had been
exercised immediately prior to such event, or the record date therefor, as
applicable.
(b) Whenever the number of Option Shares is adjusted as provided in this
Section 5, the Option Price shall be adjusted by multiplying the Option Price
by a fraction, the numerator of which shall be equal to the number of Option
Shares purchasable prior to the adjustment and the denominator of which shall
be equal to the number of Option Shares purchasable after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within six months (or such later period as provided in Section 10)
following such Subsequent Triggering Event (whether on its own behalf or on
behalf of any subsequent holder of this Option (or part thereof) or any of the
Option
-6-
<PAGE> 193
Shares issued pursuant hereto), promptly prepare, file and keep current, with
respect to the Option and the Option Shares, a registration statement under the
1933 Act and qualify such Option and Option Shares for resale or other
disposition under applicable state securities laws, in each case in accordance
with any plan of disposition requested by Grantee. Issuer will use all
reasonable efforts to cause such registration statement promptly to become
effective and then to remain effective for such period not in excess of 180
days from the day such registration statement first becomes effective or such
shorter time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations.
The Issuer shall bear the costs of such registrations (including, but not
limited to, Issuer's attorneys' fees, printing costs and filing fees, except
for underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
the Option or Option Shares as provided above, Issuer is in registration with
respect to an underwritten public offering by Issuer of shares of Common Stock,
and if in the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters, of such
offering, the inclusion of the Option and/or Option Shares would interfere with
the successful marketing of the shares of Common Stock offered by Issuer, the
number of shares represented by the Option and/or the number of Option Shares
otherwise to be covered in the registration statement contemplated hereby may
be reduced; provided, however, that after any such required reduction the
number of shares represented by the Option and/or the number of Option Shares
to be included in such offering for the account of the Holder shall constitute
at least 25% of the total number of shares to be sold by the Holder and Issuer
in the aggregate; and provided further, however, that if such reduction occurs,
then Issuer shall file a registration statement for the balance as promptly as
practicable thereafter as to which no reduction pursuant to this Section 6
shall be permitted or occur. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any such registration statement
to be filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement
relating to the sale of such shares, but only to the extent of obligating
itself in respect of representations, warranties, indemnities and other
agreements customarily included in secondary offering underwriting agreements.
Upon receiving any request under this Section 6 from any Holder, Issuer agrees
to send a copy thereof to any other person known to Issuer to be entitled to
registration rights under this Section 6, in each case by promptly mailing the
same, postage prepaid, to the address of record of the persons entitled to
receive such copies. Notwithstanding anything to the contrary contained
herein, in no event shall the number of registrations that Issuer is obligated
to effect be increased by reason of the fact that there shall be more than one
Holder as a result of any assignment or division of this Agreement.
7. (a) Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, (i) at the request of any Holder
delivered within 90 days following such occurrence (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase the
Option from the Holder at a price (the "Option Repurchase Price") equal to the
amount by which (A) the Market/Offer Price (as defined below) exceeds (B) the
Option Price, multiplied by the number of shares for which the Option may then
be exercised, and (ii) at the request of the owner of Option Shares from time
to time (the "Owner"), delivered within 90 days
-7-
<PAGE> 194
following such occurrence (or such later period as provided in Section 10),
Issuer (or any successor thereto) shall repurchase such number of the Option
Shares from the Owner as the Owner shall designate at a price (the "Option
Share Repurchase Price") equal to the greater of (A) the Market/Offer Price and
(B) the average exercise price per share paid by the Owner for the Option
Shares so designated. The term "Market/Offer Price" shall mean the highest of
(i) the price per share of Common Stock at which a tender offer or exchange
offer therefor has been made, (ii) the price per share of Common Stock to be
paid by any person, other than Grantee or a Grantee Subsidiary, pursuant to an
agreement with Issuer of the kind described in Section 2(b)(i), (iii) the
highest closing price for shares of Common Stock within the shorter of the
period from the date of this Agreement up to the date on which such required
repurchase of the Option or Option Shares, as the case may be, occurs or the
six-month period immediately preceding the date of such required repurchase of
the Option or Option Shares, as the case may be, or (iv) in the event of a
sale of all or any substantial part of Issuer's assets or deposits, the sum of
the price paid in such sale for such assets or deposits and the current market
value of the remaining assets of Issuer as determined by a
nationally-recognized investment banking firm selected by a majority in
interest of the Holders or the Owners, as the case may be, and reasonably
acceptable to Issuer, divided by the number of shares of Common Stock of Issuer
outstanding at the time of such sale. In determining the Market/Offer Price,
the value of consideration other than cash shall be determined by a
nationally-recognized investment banking firm selected by the Holder or Owner,
as the case may be, and reasonably acceptable to Issuer.
(b) Each Holder and Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and any Option Shares pursuant to this
Section 7 by surrendering for such purpose to Issuer, at its principal office,
a copy of this Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that such Holder or Owner,
as the case may be, elects to require Issuer to repurchase this Option and/or
Option Shares in accordance with the provisions of this Section 7. As promptly
as practicable, and in any event within five business days after the surrender
of the Option and/or certificates representing Option Shares and the receipt of
such notice or notices relating thereto, Issuer shall deliver or cause to be
delivered to the Holder the Option Repurchase Price and/or to the Owner the
Option Share Repurchase Price therefor or the portion thereof that Issuer is
not then prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, or as a result of a
written agreement or other binding obligation with a governmental or regulatory
body or agency, from repurchasing the Option and/or the Option Shares in full,
Issuer shall immediately so notify each Holder and/or each Owner and thereafter
deliver or cause to be delivered, from time to time, to such Holder and/or such
Owner, as appropriate, the portion of the Option Repurchase Price and the
Option Share Repurchase Price, respectively, that it is no longer prohibited
from delivering, within two business days after the date on which Issuer is no
longer so prohibited; provided, however, that if Issuer at any time after
delivery of a notice of repurchase pursuant to paragraph (b) of this Section 7
is prohibited under applicable law or regulation, or as a consequence of
administrative policy, or as a result of a written
-8-
<PAGE> 195
agreement or other binding obligation with a governmental or regulatory body or
agency, from delivering to the Holder and/or the Owner, as appropriate, the
Option Repurchase Price and the Option Share Repurchase Price, respectively, in
part or in full (and Issuer hereby undertakes to use all reasonable efforts to
obtain all required regulatory and legal approvals and to file any required
notices as promptly as practicable in order to accomplish such repurchase),
such Holder or Owner may revoke its notice of repurchase of the Option and/or
the Option Shares either in whole or to the extent of the prohibition,
whereupon, in the latter case, Issuer shall promptly (i) deliver to the Holder
and/or the Owner, as appropriate, that portion of the Option Repurchase Price
and/or the Option Share Repurchase Price that Issuer is not prohibited from
delivering with respect to Options or Option Shares as to which the Holder or
the Owner, as the case may be, has not revoked its repurchase demand; and (ii)
deliver, as appropriate, either (A) to the Holder, a new Agreement evidencing
the right of the Holder to purchase that number of shares of Common Stock
obtained by multiplying the number of shares of Common Stock for which the
surrendered Agreement was exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the Option Repurchase Price
less the portion thereof theretofore delivered to the Holder and the
denominator of which is the Option Repurchase Price, and/or (B) to such Owner,
a certificate for the Option Shares it is then so prohibited from repurchasing.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or a Grantee Subsidiary, or engage in a plan of exchange
with any person, other than Grantee or a Grantee Subsidiary, and Issuer shall
not be the continuing or surviving corporation of such consolidation or merger
or the acquiror in such plan of exchange, (ii) to permit any person, other than
Grantee or a Grantee Subsidiary, to merge into Issuer or be acquired by Issuer
in a plan of exchange and Issuer shall be the continuing or surviving or
acquiring corporation, but, in connection with such merger or plan of exchange,
the then outstanding shares of Common Stock shall be changed into or exchanged
for stock or other securities of any other person or cash or any other property
or the then outstanding shares of Common Stock shall after such merger or plan
of exchange represent less than 50% of the outstanding shares and share
equivalents of the merged or acquiring company, or (iii) to sell or otherwise
transfer all or a substantial part of its or any Issuer Subsidiary's assets or
deposits to any person, other than Grantee or a Grantee Subsidiary, then, and
in each such case, the agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
any Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or
(y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving person of a consolidation or merger with Issuer (if other than
Issuer), (ii) the acquiring person in a plan of exchange in which Issuer
is acquired, (iii) Issuer in a merger or plan of exchange in which
-9-
<PAGE> 196
Issuer is the continuing or surviving or acquiring person, and (iv) the
transferee of all or a substantial part of Issuer's assets or deposits (or
the assets or deposits of an Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock issued by
the issuer of the Substitute Option upon exercise of the Substitute
Option.
(iii)"Assigned Value" shall mean the Market/Offer Price, as defined
in Section 7.
(iv) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for the one year immediately preceding the
consolidation, merger, share exchange or sale in question, but in no event
higher than the closing price of the shares of Substitute Common Stock on
the day preceding such consolidation, merger, share exchange or sale;
provided that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common stock
issued by the person merging into Issuer or by any company which controls
or is controlled by such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall, to the extent legally permissible,
be as similar as possible to, and in no event less advantageous to the Holder
than, the terms of the Option. The issuer of the Substitute Option also shall
enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement (after giving effect
for such purpose to the provisions of Section 9), which agreement shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares
of Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than
19.9% of the shares of Substitute Common Stock outstanding prior to exercise
but for this paragraph (e), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall make a cash payment to Holder equal to the
excess of (i) the value of the Substitute Option without giving effect to the
limitation in this paragraph (e) over (ii) the value of the Substitute Option
after giving effect to the limitation in this paragraph (e). This difference
in value shall be determined by a nationally-
-10-
<PAGE> 197
recognized investment banking firm selected by a majority in interest of the
Holders and reasonably acceptable to the Acquiring Corporation.
(f) Issuer shall not enter into any transaction described in paragraph
(a) of this Section 8 unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option Issuer shall
repurchase the Substitute Option from the Substitute Option Holder at a price
(the "Substitute Option Repurchase Price") equal to the amount by which (i) the
Highest Closing Price (as hereinafter defined) exceeds (ii) the exercise price
of the Substitute Option, multiplied by the number of shares of Substitute
Common Stock for which the Substitute Option may then be exercised, and at the
request of each owner (the "Substitute Share Owner") of shares of Substitute
Common Stock (the "Substitute Shares"), the Substitute Option Issuer shall
repurchase the Substitute Shares at a price (the "Substitute Share Repurchase
Price") equal to the greater of (A) the Highest Closing Price and (B) the
average exercise price per share paid by the Substitute Share Owner for the
Substitute Shares so designated, multiplied by the number of Substitute Shares
so designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner
gives notice of the required repurchase of the Substitute Shares, as
applicable.
(b) Each Substitute Option Holder and Substitute Share Owner, as the case
may be, may exercise its respective right to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant
to this Section 9 by surrendering for such purpose to the Substitute Option
Issuer, at its principal office, the agreement for such Substitute Option (or,
in the absence of such an agreement, a copy of this Agreement) and/or
certificates for Substitute Shares accompanied by a written notice or notices
stating that the Substitute Option Holder or the Substitute Share Owner, as the
case may be, elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with the
provisions of this Section 9. As promptly as practicable, and in any event
within two business days after the surrender of the Substitute Option and/or
certificates representing Substitute Shares and the receipt of such notice or
notices relating thereto, the Substitute Option Issuer shall deliver or cause
to be delivered to the Substitute Option Holder the Substitute Option
Repurchase Price and/or to the Substitute Share Owner the Substitute Share
Repurchase Price therefor, or the portion(s) thereof which the Substitute
Option Issuer is not then prohibited under applicable law and regulation from
so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, or
as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from repurchasing the Substitute
Option and/or the Substitute Shares in part or in full, the Substitute Option
Issuer following a request for repurchase pursuant to this Section 9 shall
immediately so notify the
-11-
<PAGE> 198
Substitute Option Holder and/or the Substitute Share Owner and thereafter
deliver or cause to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the portion of the
Substitute Option Repurchase Price and/or the Substitute Share Repurchase
Price, respectively, which it is no longer prohibited from delivering, within
two business days after the date on which the Substitute Option Issuer is no
longer so prohibited; provided, however, that if the Substitute Option Issuer
is at any time after delivery of a notice of repurchase pursuant to subsection
(b) of this Section 9 prohibited under applicable law or regulation, or as a
consequence of administrative policy, or as a result of a written agreement or
other binding obligation with a governmental or regulatory body or agency, from
delivering to the Substitute Option Holder and/or the Substitute Share Owner,
as appropriate, the Substitute Option Repurchase Price and the Substitute Share
Repurchase Price, respectively, in full (and the Substitute Option Issuer shall
use all reasonable efforts to obtain all required regulatory and legal
approvals as promptly as practicable in order to accomplish such repurchase),
the Substitute Option Holder and/or Substitute Share Owner may revoke its
notice of repurchase of the Substitute Option or the Substitute Shares either
in whole or to the extent of the prohibition, whereupon, in the latter case,
the Substitute Option Issuer shall promptly (i) deliver to the Substitute
Option Holder or Substitute Share Owner, as appropriate, that portion of the
Substitute Option Repurchase Price or the Substitute Share Repurchase Price
that the Substitute Option Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, and/or (B) to the Substitute Share Owner, a certificate for
the Substitute Option Shares it is then so prohibited from repurchasing.
10. The 90-day or 6-month periods for exercise of certain rights under
Sections 2, 6, 7 and 12 shall be extended: (i) to the extent necessary to
obtain all regulatory approvals for the exercise of such rights (for so long as
the Holder, Owner, Substitute Option Holder or Substitute Share Owner, as the
case may be, is using its reasonable best efforts to obtain such regulatory
approvals), and for the expiration of all statutory waiting periods; (ii)
during the pendency of any temporary restraining order, injunction or other
legal bar to exercise of such rights; and (iii) to the extent necessary to
avoid liability under Section 16(b) of the 1934 Act by reason of such exercise.
11. (a) Issuer hereby represents and warrants to Grantee as follows:
(i) Issuer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Issuer Board and no other corporate proceedings on the part of Issuer are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered
by Issuer and is a valid and legally binding
-12-
<PAGE> 199
obligation of Issuer, enforceable against Issuer in accordance with its terms,
except that enforcement thereof may be limited by the receivership,
conservatorship and supervisory powers of bank regulatory agencies generally as
well as bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting enforcement of creditors rights generally and except that
enforcement thereof may be subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law) and
the availability of equitable remedies.
(ii) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock at
any time and from time to time issuable hereunder, and all such shares, upon
issuance pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
(b) Grantee hereby represents and warrants to Issuer that:
(i) Grantee has full corporate power and authority to execute and deliver
this Agreement and, subject to any approvals or consents referred to herein, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Grantee and no other corporate proceedings on the part of Grantee are necessary
to authorize this Agreement or to consummate the transactions so contemplated.
This Agreement has been duly executed and delivered by Grantee and is a valid
and legally binding obligation of Grantee.
(ii) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within six
months following such Subsequent Triggering Event; provided, however, that
until the date 15 days following the date on which the OTS approves an
application by Grantee under the HOLA to acquire the shares of Common Stock
subject to the Option, Grantee may not assign its rights under the Option
except in (i) a widely dispersed public distribution, (ii) a private placement
in which no one party acquires the right to purchase in excess of 2% of the
voting shares of Issuer, (iii) an assignment to a single party (e.g., a broker
or investment banker) for the sole purpose of conducting a widely dispersed
public distribution on Grantee's behalf or (iv) any other manner approved by
the OTS.
-13-
<PAGE> 200
13. Each of Grantee and Issuer will use all reasonable efforts to make
all filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including, without limitation, applying to the OTS under the
HOLA for approval to acquire the shares issuable hereunder and applying for
listing or quotation of such shares on any exchange or quotation system on
which the Common Stock is then listed or quoted.
14. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
15. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this
Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or Issuer or
Substitute Option Issuer, as the case may be, is not permitted to repurchase
pursuant to Section 7 or Section 9, as the case may be, the full number of
shares of Common Stock provided in Section l(a) hereof (as adjusted pursuant to
Section l(b) or Section 5 hereof), it is the express intention of Issuer (which
shall be binding on the Substitute Option Issuer) to allow the Holder to
acquire or to require Issuer or Substitute Option Issuer, as the case may be,
to repurchase such lesser number of shares as may be permissible, without any
amendment or modification hereof.
16. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
17. This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio, without regard to the conflict of law principles
thereof.
18. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
19. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
20. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties
with respect to the transactions contemplated hereunder and supersedes all
prior arrangements or understandings with respect
-14-
<PAGE> 201
thereof, written or oral. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Nothing in this Agreement,
express or implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors and permitted assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
21. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
-15-
<PAGE> 202
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
<TABLE>
<S> <C>
FIDELITY FINANCIAL OF OHIO, INC.
Attest:
/s/ Paul D. Staubach By: /s/ John R. Reusing
- --------------------------------- ----------------------------------------------
Name: Paul D. Staubach Name: John R. Reusing
Title: Senior Vice President, Title: President and Chief Executive Officer
Chief Financial Officer
and Secretary
GLENWAY FINANCIAL CORPORATION
Attest:
/s/ Daniel W. Geeding By: /s/ Robert R. Sudbrook
- --------------------------------- ----------------------------------------------
Name: Daniel W. Geeding Name: Robert R. Sudbrook
Title: Secretary Title: President and Chief Executive
Officer
</TABLE>
-16-
<PAGE> 203
ANNEX IV
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of September 28, 1998, by and among
Fidelity Financial of Ohio, Inc. ("FFOH"), an Ohio corporation, and certain
stockholders of Glenway Financial Corporation ("GFCO"), a Delaware corporation,
named on Schedule I hereto (collectively, the "Stockholders").
WITNESSETH:
WHEREAS, FFOH and GFCO have entered into an Agreement of Merger of even
date herewith (the "Agreement"), providing for, among other things, the merger
of GFCO with and into a wholly-owned subsidiary of FFOH (the "Merger"); and
WHEREAS, in order to induce FFOH to enter into the Agreement, each of
the Stockholders agrees to, among other things, vote in favor of the Agreement
in his or her capacity as a stockholder of GFCO.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements set forth herein and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. OWNERSHIP OF GFCO COMMON STOCK. Each Stockholder represents and
warrants that the Stockholder has or shares the right to vote and dispose of
the number of shares of common stock of GFCO, $0.01 par value per share ("GFCO
Common Stock"), set forth opposite such Stockholder's name on Schedule I hereto
(which does not include shares held solely in a fiduciary capacity).
2. AGREEMENTS OF THE STOCKHOLDERS. Each Stockholder covenants and
agrees that:
(a) such Stockholder shall, at any meeting of GFCO's
stockholders called for the purpose, vote, or cause to be voted, all
shares of GFCO Common Stock in which such stockholder has the right to
vote (whether owned as of the date hereof or hereafter acquired) in
favor of the Agreement;
(b) except as otherwise expressly permitted hereby, such
Stockholder shall not, prior to the meeting of GFCO's stockholders
referred to in Section 2(a) hereof or the earlier termination of the
Agreement in accordance with its terms, sell, pledge, transfer or
otherwise dispose of the Stockholder's shares of GFCO Common Stock;
<PAGE> 204
(c) such Stockholder shall not in his capacity as a
stockholder of GFCO directly or indirectly encourage or solicit or hold
discussions or negotiations with, or provide any information to, any
person, entity or group (other than FFOH or an affiliate thereof)
concerning any merger, sale of substantial assets or liabilities not in
the ordinary course of business, sale of shares of capital stock or
similar transactions involving GFCO or any subsidiary of GFCO (provided
that nothing herein shall be deemed to affect the ability of any
Stockholder to fulfill his duties as a director and/or officer of
GFCO); and
(d) such Stockholder shall use his reasonable best efforts to
take or cause to be taken all action, and to do or cause to be done all
things, necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the agreements
contemplated by this Stockholder Agreement.
Each Stockholder further agrees that GFCO's transfer agent shall be
given an appropriate stop transfer order and shall not be required to register
any attempted transfer of shares of GFCO Common Stock unless the transfer has
been effected in compliance with the terms of this Stockholder Agreement.
3. SUCCESSORS AND ASSIGNS. Subject to Section 5.13 of the
Agreement and the terms of the agreement with affiliates of GFCO referred to
therein, a Stockholder may sell, pledge, transfer or otherwise dispose of his
shares of GFCO Common Stock, provided that, with respect to any sale, transfer
or disposition which would occur on or before the meeting of GFCO's
stockholders referred to in Section 2(a) hereof, such Stockholder obtains the
prior written consent of FFOH and that any acquiror of such GFCO Common Stock
expressly agrees in writing to be bound by the terms of this Stockholder
Agreement.
4. TERMINATION. The parties agree and intend that this Stockholder
Agreement be a valid and binding agreement enforceable against the parties
hereto and that damages and other remedies at law for the breach of this
Stockholder Agreement are inadequate. This Stockholder Agreement may be
terminated at any time prior to the consummation of the Merger by mutual
written consent of the parties hereto and shall be automatically terminated in
the event that the Agreement is terminated in accordance with its terms.
5. NOTICES. Notices may be provided to FFOH and the Stockholders
in the manner specified in Section 8.4 of the Agreement, with all notices to
the Stockholders being provided to them at GFCO in the manner specified in such
section.
6. GOVERNING LAW. This Stockholder Agreement shall be governed by
the laws of the State of Ohio without giving effect to the principles of
conflicts of laws thereof.
7. COUNTERPARTS. This Stockholder Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same and
each of which shall be deemed an original.
2
<PAGE> 205
8. HEADINGS AND GENDER. The Section headings contained herein are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Stockholder Agreement. Use of the masculine gender
herein shall be considered to represent the masculine, feminine or neuter
gender whenever appropriate.
3
<PAGE> 206
IN WITNESS WHEREOF, FFOH, by a duly authorized officer, and each of the
Stockholders have caused this Stockholder Agreement to be executed as of the
day and year first above written.
FIDELITY FINANCIAL OF OHIO, INC.
By: /s/ John R. Reusing
-----------------------------
Name: John R. Reusing
Title: President and Chief
Executive Officer
STOCKHOLDERS OF
GLENWAY FINANCIAL CORPORATION :
/s/ Daniel W. Geeding
------------------------------------
Daniel W. Geeding
/s/ Ronald L. Goodfellow
------------------------------------
Ronald L. Goodfellow
/s/ Kenneth C. Lichtendahl
------------------------------------
Kenneth C. Lichtendahl
/s/ Albert W. Moeller
------------------------------------
Albert W. Moeller
/s/ Edgar A. Rust
------------------------------------
Edgar A. Rust
4
<PAGE> 207
/s/ Robert R. Sudbrook
------------------------------------
Robert R. Sudbrook
/s/ John P. Torbeck
------------------------------------
John P. Torbeck
/s/ Milton L. Van Schoik
------------------------------------
Milton L. Van Schoik
5
<PAGE> 208
<TABLE>
<CAPTION>
SCHEDULE I
Number of Shares of
GFCO Common Stock
Name of Stockholder Beneficially Owned
- ----------------------------------- ----------------------------
<S> <C>
Daniel W. Geeding 31,453
Ronald L. Goodfellow 27,238
Kenneth C. Lichtendahl 40,896
Albert W. Moeller 23,948
Edgar A. Rust 75,671
Robert R. Sudbrook 46,950
John P. Torbeck 35,294
Milton L. Van Schoik 24,898
</TABLE>
6
<PAGE> 209
ANNEX V
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of September 28, 1998, by and among
Glenway Financial Corporation ("GFCO"), a Delaware corporation, and certain
stockholders of Fidelity Financial of Ohio, Inc. ("FFOH"), an Ohio corporation,
named on Schedule I hereto (collectively the "Stockholders").
WITNESSETH:
WHEREAS, FFOH and GFCO have entered into an Agreement of Merger of even
date herewith (the "Agreement"), providing for, among other things, the merger
of GFCO with and into a wholly-owned subsidiary of FFOH (the "Merger"); and
WHEREAS, in order to induce GFCO to enter into the Agreement, each of the
Stockholders agrees to, among other things, vote in favor of the Agreement in
his or her capacity as a stockholder of FFOH.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements set forth herein and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. OWNERSHIP OF FFOH COMMON STOCK. Each Stockholder represents and
warrants that the Stockholder has or shares the right to vote and dispose of the
number of shares of common stock of FFOH, $.10 par value per share ("FFOH Common
Stock"), set forth opposite such Stockholder's name on Schedule I hereto (which
does not include shares held solely in a fiduciary capacity).
2. AGREEMENTS OF THE STOCKHOLDERS. Each Stockholder covenants and
agrees that:
(a) such Stockholder shall, at any meeting of FFOH's stockholders
called for the purpose, vote, or cause to be voted, all shares of FFOH
Common Stock in which such stockholder has the right to vote (whether
owned as of the date hereof or hereafter acquired) in favor of the
Agreement and the other transactions contemplated thereby (including
approval of the amendment to FFOH's Articles of Incorporation in
accordance with Section 5.16(a) of the Agreement);
(b) except as otherwise expressly permitted hereby, such
Stockholder shall not, prior to the meeting of FFOH's stockholders
referred to in Section 2(a) hereof or the earlier
<PAGE> 210
termination of the Agreement in accordance with its terms, sell, pledge,
transfer or otherwise dispose of the Stockholder's shares of FFOH Common
Stock;
(c) such Stockholder shall not in his capacity as a stockholder
of FFOH directly or indirectly encourage or solicit or hold discussions
or negotiations with, or provide any information to, any person, entity
or group (other than GFCO or an affiliate thereof) concerning any merger,
sale of substantial assets or liabilities not in the ordinary course of
business, sale of shares of capital stock or similar transactions
involving FFOH or any subsidiary of FFOH (provided that nothing herein
shall be deemed to affect the ability of any Stockholder to fulfill his
duties as a director and/or officer of FFOH); and
(d) such Stockholder shall use his reasonable best efforts to
take or cause to be taken all action, and to do or cause to be done all
things, necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the agreements contemplated
by this Stockholder Agreement.
Each Stockholder further agrees that FFOH's transfer agent shall be given
an appropriate stop transfer order and shall not be required to register any
attempted transfer of shares of FFOH Common Stock, unless the transfer has been
effected in compliance with the terms of this agreement.
3. SUCCESSORS AND ASSIGNS. Subject to Section 5.13 of the Agreement
and the terms of the agreement with affiliates of FFOH referred to therein, a
Stockholder may sell, pledge, transfer or otherwise dispose of his shares of
FFOH Common Stock, provided that, with respect to any sale, transfer or
disposition which would occur on or before the meeting of FFOH's stockholders
referred to in Section 2(a) hereof, such Stockholder obtains the prior written
consent of GFCO and that any acquiror of such FFOH Common Stock expressly agrees
in writing to be bound by the terms of this Stockholder Agreement.
4. TERMINATION. The parties agree and intend that this Stockholder
Agreement be a valid and binding agreement enforceable against the parties
hereto and that damages and other remedies at law for the breach of this
Stockholder Agreement are inadequate. This Stockholder Agreement may be
terminated at any time prior to the consummation of the Merger by mutual written
consent of the parties hereto and shall be automatically terminated in the event
that the Agreement is terminated in accordance with its terms.
5. NOTICES. Notices may be provided to GFCO and the Stockholders in
the manner specified in Section 8.4 of the Agreement, with all notices to the
Stockholders being provided to them at FFOH in the manner specified in such
section.
6. GOVERNING LAW. This Stockholder Agreement shall be governed by
the laws of the State of Ohio without giving effect to the principles of
conflicts of laws thereof.
2
<PAGE> 211
7. COUNTERPARTS. This Stockholder Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same and each
of which shall be deemed an original.
8. HEADINGS AND GENDER. The Section headings contained herein are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Stockholder Agreement. Use of the masculine gender herein
shall be considered to represent the masculine, feminine or neuter gender
whenever appropriate.
3
<PAGE> 212
IN WITNESS WHEREOF, GFCO, by a duly authorized officer, and each of 1the
Stockholders have caused this Stockholder Agreement to be executed as of the day
and year first above written.
GLENWAY FINANCIAL CORPORATION
By: /s/ Robert R. Sudbrook
---------------------------------------------
Name: Robert R. Sudbrook
Title: President and Chief Executive Officer
STOCKHOLDERS OF FIDELITY
FINANCIAL OF OHIO:
/s/ Joseph D. Hughes
-------------------------------------------------
Joseph D. Hughes
/s/ Michael W. Jordan
-------------------------------------------------
Michael W. Jordan
/s/ David A. Luecke
-------------------------------------------------
David A. Luecke
/s/ Constantine N. Papadakis
-------------------------------------------------
Constantine N. Papadakis
/s/ John R. Reusing
-------------------------------------------------
John R. Reusing
4
<PAGE> 213
/s/ Thomas N. Spaeth
-------------------------------------------------
Thomas N. Spaeth
/s/ Paul D. Staubach
-------------------------------------------------
Paul D. Staubach
/s/ Robert W. Zumbiel
-------------------------------------------------
Robert W. Zumbiel
5
<PAGE> 214
SCHEDULE I
<TABLE>
<CAPTION>
Number of Shares of
FFOH Common Stock
Name of Stockholder Beneficially Owned
- --------------------------------------------------- -------------------------
<S> <C>
Joseph D. Hughes 46,549
Michael W. Jordan 14,725
David A. Luecke 12,987
Constantine N. Papadakis 10,800
John R. Reusing 85,351
Thomas N. Spaeth 13,853
Paul D. Staubach 55,700
Robert W. Zumbiel 27,675
</TABLE>
6
<PAGE> 215
ANNEX VI
January 5, 1999
Board of Directors
Glenway Financial Corporation
5535 Glenway Avenue
Cincinnati, Ohio 45238
Members of the Board:
You have requested our opinion as to the fairness from a financial point
of view to the shareholders of Glenway Financial Corporation ("Glenway") of the
exchange ratio (the "Exchange Ratio") of 1.50 shares of common stock, par value
$0.10 per share, of Fidelity Financial of Ohio, Inc. ("FFOH") to be exchanged
for each share of common stock, par value $0.01 per share, of Glenway pursuant
to the terms of the Agreement of Merger, dated as of September 28, 1998 (the
"Agreement") among FFOH, Fidelity Acquisition Corporation and Glenway. For the
purposes of our opinion, we have assumed that the merger of Glenway with a
subsidiary of FFOH pursuant to the Agreement (the "Merger") will constitute a
tax-free reorganization as contemplated by the Agreement and the Merger will
qualify as a pooling of interests for accounting purposes.
Stifel, Nicolaus & Company, Incorporated ("Stifel"), as part of its
investment banking services, is regularly engaged in the independent valuation
of businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes. In
the ordinary course of its business, Stifel actively trades equity securities of
Glenway and FFOH for its own account and for the accounts of its customers and,
accordingly, may at any time hold a long or short position in such securities.
In rendering our opinion, we have reviewed, among other things: the
Agreement; the financial statements of Glenway in its Annual Reports on Form
10-K for the 5 years ended June 30, 1997, and Quarterly Reports on Form 10-Q for
the quarter ended March 31, 1998; the financial statements of FFOH in its Annual
Reports on Form 10-K for the 5 years ended December 31, 1997, and Quarterly
Reports on Form 10-Q for the quarter ended June 30, 1998; certain internal
financial analyses and forecasts for Glenway and FFOH prepared by their
<PAGE> 216
Board of Directors - Glenway Financial Corporation
Page 2
respective managements; and certain internal financial forecasts for Glenway and
FFOH on a pro forma combined basis, giving effect to the Merger, prepared by the
management of Glenway and FFOH. We have conducted conversations with Glenway's
senior management regarding recent developments and management's financial
forecasts for Glenway and FFOH. In addition, we have spoken to members of
Glenway's senior management and FFOH's senior management regarding factors which
affect each entity's business. We have also compared certain financial and
securities data of Glenway and FFOH with various other companies whose
securities are traded in public markets, reviewed the historical stock prices
and trading volumes of the common stock of Glenway and FFOH, reviewed the
financial terms of certain other business combinations and conducted such other
financial studies, analyses and investigations as we deemed appropriate for
purposes of this opinion. We also took into account our assessment of general
economic, market and financial conditions and our experience in other
transactions, as well as our experience in securities valuations and our
knowledge of the commercial banking and thrift industries generally.
In rendering our opinion, we have relied upon and assumed, without
independent verification, the accuracy and completeness of all of the financial
and other information that was provided to us or that was otherwise reviewed by
us and have not assumed any responsibility for independently verifying any of
such information. With respect to the financial forecasts supplied to us
(including without limitation, projected cost savings and operating synergies
resulting from the Merger), we have assumed that they were reasonably prepared
on the basis reflecting the best currently available estimates and judgments of
the management of Glenway and FFOH as to the future operating and financial
performance of Glenway and FFOH, that they would be realized in the amounts and
time periods estimated and that they provided a reasonable basis upon which we
could form our opinion. We also assumed that there were no material changes in
the assets, liabilities, financial condition, results of operations, business or
prospects of either Glenway or FFOH since the date of the last financial
statements made available to us. We have also assumed, without independent
verification and with your consent, that the aggregate allowances for loan
losses set forth in the financial statements of Glenway and FFOH are in the
aggregate adequate to cover all such losses. We did not make or obtain any
independent evaluation, appraisal or physical inspection of Glenway's or FFOH's
assets or liabilities, the collateral securing any of such assets or
liabilities, or the collectibility of any such assets nor did we review loan or
credit files of Glenway or FFOH. We relied on advice of Glenway's counsel and
accountants as to all legal and accounting matters with respect to Glenway, the
Agreement and the transactions and other matters contained or contemplated
therein. We have assumed, with your consent, that there are no factors that
would delay or subject to any adverse conditions any necessary regulatory or
governmental approval and that all conditions to the Merger will be satisfied
and not waived.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. Our opinion is directed to the Board of Directors of
Glenway for its information and assistance in
<PAGE> 217
Board of Directors - Glenway Financial Corporation
Page 3
connection with its consideration of the financial terms of the transaction
contemplated by the Merger and does not constitute a recommendation to any
shareholder as to how such shareholder should vote on the proposed transaction,
nor have we expressed any opinion as to the prices at which any securities of
Glenway or FFOH might trade in the future. Except as required by applicable law,
including without limitation federal securities laws, our opinion may not be
published or otherwise used or referred to, nor shall any public reference to
Stifel be made, without our prior written consent.
Based upon the foregoing and such other factors as we deem relevant, we
are of the opinion, as of the date hereof, that the Exchange Ratio pursuant to
the Agreement is fair to the holders of Glenway Common Stock from a financial
point of view.
Very truly yours,
STIFEL, NICOLAUS & COMPANY, INCORPORATED
<PAGE> 218
ANNEX VII
, 1999
- ------- --
Board of Directors
Fidelity Financial of Ohio, Inc.
4555 Montgomery Road
Cincinnati, OH 45212-3133
Ladies and Gentlemen:
Fidelity Financial of Ohio, Inc. ("Fidelity"), Fidelity Acquisition
Corporation, a wholly-owned subsidiary of Fidelity ("Merger Corp.") and Glenway
Financial Corporation ("Glenway") have entered into an Agreement of Merger,
dated as of September 28, 1998 (the "Agreement"), pursuant to which Glenway will
be merged with and into (the "Merger"). Under the terms of the Agreement, upon
consummation of the Merger, each share of Glenway common stock, par value $.01
per share, issued and outstanding immediately prior to the effective time of the
Merger (the "Glenway Shares"), other than certain shares specified in the
Agreement, will be converted into the right to receive 1.50 shares (the
"Exchange Ratio") of Fidelity common stock, par value $.10 per share. The terms
and conditions of the Merger are more fully set forth in the Agreement. You have
requested our opinion as to the fairness, from a financial point of view, of the
Exchange Ratio to the holders of shares of Fidelity common stock.
Sandler O'Neill & Partners, L.P., as part of its investment banking
business, is regularly engaged in the valuation of financial institutions and
their securities in connection with mergers and acquisitions and other corporate
transactions. In connection with this opinion, we have reviewed, among other
things: (i) the Agreement and exhibits thereto; (ii) the Stock Option
Agreements, dated as of September 28, 1998, by and between Fidelity and Glenway;
(iii) certain publicly available financial statements of Fidelity and other
historical financial information provided by Fidelity that we deemed relevant;
(iv) certain publicly available financial statements of Glenway and other
historical financial information provided by Glenway that we deemed relevant;
(v) certain financial analyses and forecasts of Fidelity prepared by and
reviewed with management of Fidelity and the views of senior management of
Fidelity regarding Fidelity's past and current business, operations, results
thereof, financial condition and future prospects; (vi) certain financial
analyses and forecasts of Glenway prepared by and reviewed with management of
Glenway and the views of senior management of Glenway regarding Glenway's past
and current business, operations, results thereof, financial condition and
future prospects; (vii) the pro forma impact of the Merger; (viii) the publicly
<PAGE> 219
Board of Directors
Fidelity Financial of Ohio, Inc.
, 1999
- ------- --
Page 2
reported historical price and trading activity for Fidelity's and Glenway's
common stock, including a comparison of certain financial and stock market
information for Fidelity and Glenway with similar publicly available information
for certain other companies the securities of which are publicly traded; (ix)
the financial terms of recent business combinations in the savings institution
industry, to the extent publicly available; (x) the current market environment
generally and the banking environment in particular; and (xi) such other
information, financial studies, analyses and investigations and financial,
economic and market criteria as we considered relevant.
In performing our review, we have assumed and relied upon, without
independent verification, the accuracy and completeness of all the financial
information, analyses and other information that was publicly available or
otherwise furnished to, reviewed by or discussed with us, and we do not assume
any responsibility or liability therefor. We did not make an independent
evaluation or appraisal of the specific assets, the collateral securing assets
or the liabilities (contingent or otherwise) of Fidelity or Glenway or any of
their subsidiaries, or the collectibility of any such assets, nor have we been
furnished with any such evaluations or appraisals. We did not make an
independent evaluation of the adequacy of the allowance for loan losses of
Fidelity or Glenway nor have we reviewed any individual credit files relating to
Fidelity or Glenway. We have assumed that the respective aggregate allowance for
loan losses for both Fidelity and Glenway are adequate to cover such losses and
will be adequate on a pro forma basis for the combined entity. With respect to
the financial projections reviewed with management, we have assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the respective managements of the respective future
financial performances of Fidelity and Glenway and that such performances will
be achieved, and we express no opinion as to such financial projections or the
assumptions on which they are based. We have also assumed that there has been no
material change in Fidelity's or Glenway's assets, financial condition, results
of operations, business or prospects since the date of the most recent financial
statements made available to us. We have assumed in all respects material to our
analysis that Fidelity and Glenway will remain as going concerns for all periods
relevant to our analyses, that all of the representations and warranties
contained in the Agreement and all related agreements are true and correct, that
each party to such agreements will perform all of the covenants required to be
performed by such party under such agreements, that the conditions precedent in
the Agreement are not waived, and that the Merger will be accounted for as a
pooling of interests and will qualify as a tax-free reorganization for federal
income tax purposes.
Our opinion is necessarily based on financial, economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof. Events occurring after the date hereof could materially affect this
opinion. We have not undertaken to update, revise or reaffirm this opinion or
otherwise comment upon events occurring after the date hereof. We are expressing
no opinion herein as to what the value of Fidelity's common stock will be when
issued
<PAGE> 220
Board of Directors
Fidelity Financial of Ohio, Inc.
, 1999
- ------- --
Page 3
to Glenway's shareholders pursuant to the Agreement or the prices at which
Fidelity's or Glenway's common stock will trade at any time.
We have acted as Fidelity's financial advisor in connection with the
Merger and will receive a fee for our services, a significant portion of which
is contingent upon consummation of the Merger.
In the ordinary course of our business as a broker-dealer, we may
purchase securities from and sell securities to Fidelity and Glenway. We may
also actively trade the equity securities of Fidelity and Glenway for our own
account and for the accounts of our customers and, accordingly, may at any time
hold a long or short position in such securities.
Our opinion is directed to the Board of Directors of Fidelity in
connection with its consideration of the Merger and does not constitute a
recommendation to any stockholder of Fidelity as to how such stockholder should
vote at any meeting of stockholders called to consider and vote upon the Merger.
Our opinion is not to be quoted or referred to, in whole or in part, in a
registration statement, prospectus, proxy statement or in any other document,
nor shall this opinion be used for any other purposes, without Sandler O'Neill's
prior written consent; provided, however, that we hereby consent to the
inclusion of this opinion as an Annex to Fidelity's and Glenway's Joint Proxy
Statement/Prospectus dated the date hereof and to the references to this opinion
therein.
Based upon and subject to the foregoing, it is our opinion, as of the
date hereof, that the Exchange Ratio is fair, from a financial point of view, to
the holders of shares of Fidelity common stock.
Very truly yours,
Sandler O'Neill & Partners, L.P.
<PAGE> 221
ANNEX VIII
1701.85 RELIEF FOR DISSENTING SHAREHOLDERS; QUALIFICATION;
PROCEDURES.---(A)(1) A shareholder of a domestic corporation is entitled to
relief as a dissenting shareholder in respect of the proposals described in
sections 1701.74, 1701.76, and 1701.84 of the Revised Code, only in compliance
with this section.
(2) If the proposal must be submitted to the shareholders of the
corporation involved, the dissenting shareholder shall be a record holder of the
shares of the corporation as to which he seeks relief as of the date fixed for
the determination of shareholders entitled to notice of a meeting of the
shareholders at which the proposal is to be submitted, and such shares shall not
have been voted in favor of the proposal. Not later than ten days after the date
on which the vote on the proposal was taken at the meeting of the shareholders,
the dissenting shareholder shall deliver to the corporation a written demand for
payment to him of the fair cash value of the shares as to which he seeks relief,
which demand shall state his address, the number and class of such shares, and
the amount claimed by him as the fair cash value of the shares.
(3) The dissenting shareholder entitled to relief under division (C)
of section 1701.84 of the Revised Code in the case of a merger pursuant to
section 1701.80 of the Revised Code and a dissenting shareholder entitled to
relief under division (E) of section 1701.84 of the Revised Code in the case of
a merger pursuant to section 1701.801 of the Revised Code shall be a record
holder of the shares of the corporation as to which he seeks relief as of the
date of which the agreement of merger was adopted by the directors of that
corporation. Within twenty days after he has been sent the notice provided in
section 1701.80 or 1701.801 of the Revised Code, the dissenting shareholder
shall deliver to the corporation a written demand for payment with the same
information as that provided for in division (A)(2) of this section.
(4) In the case of a merger or consolidation, a demand served on the
constituent corporation involved constitutes service on the surviving or the new
entity, whether the demand is served before, on, or after the effective date of
the merger or consolidation.
(5) If the corporation sends to the dissenting shareholder, at the
address specified in his demand, a request for the certificates representing the
shares as to which he seeks relief, the dissenting shareholder, within fifteen
days from the date of the sending of such request, shall deliver to the
corporation the certificates requested so that the corporation may forthwith
endorse on them a legend to the effect that demand for the fair cash value of
such shares has been made. The corporation promptly shall return such endorsed
certificates to the dissenting shareholder. A dissenting shareholder's failure
to deliver such certificates terminates his rights as a dissenting shareholder,
at the option of the corporation, exercised by written notice sent to the
dissenting shareholder within twenty days after the lapse of the fifteen-day
period, unless a court for good cause shown otherwise directs. If shares
represented by a certificate on which such a legend has been endorsed are
transferred, each new certificate issued for them shall bear a similar legend,
together
<PAGE> 222
with the name of the original dissenting holder of such shares. Upon receiving a
demand for payment from a dissenting shareholder who is the record holder of
uncertificated securities, the corporation shall make an appropriate notation of
the demand for payment in its shareholder records. If uncertificated shares for
which payment has been demanded are to be transferred, any new certificate
issued for the shares shall bear the legend required for certificated securities
as provided in this paragraph. A transferee of the shares so endorsed, or of
uncertificated securities where such notation has been made, acquires only such
rights in the corporation as the original dissenting holder of such shares had
immediately after the service of a demand for payment of the fair cash value of
the shares. A request under this paragraph, by the corporation is not an
admission by the corporation that the shareholder is entitled to relief under
this section.
(B) Unless the corporation and the dissenting shareholder have come
to an agreement on the fair cash value per share of the shares as to which the
dissenting shareholder seeks relief, the dissenting shareholder or the
corporation, which in case of a merger or consolidation may be the surviving or
new entity, within three months after the service of the demand by the
dissenting shareholder, may file a complaint in the court of common pleas of the
county in which the principal office of the corporation that issued the shares
is located or was located when the proposal was adopted by the shareholders of
the corporation, or, if the proposal was not required to be submitted to the
shareholders, was approved by the directors. Other dissenting shareholders,
within that three-month period may join as plaintiffs or may be joined as
defendants in any such proceeding, and any two or more such proceedings may be
consolidated. The complaint shall contain a brief statement of the facts,
including the vote and the facts entitling the dissenting shareholder to the
relief demanded. No answer to such a complaint is required. Upon the filing of
such a complaint, the court, on motion of the petitioner, shall enter an order
fixing a date for a hearing on the complaint and requiring that a copy of the
complaint and a notice of the filing and of the date for hearing be given to the
respondent or defendant in the manner in which summons is required to be served
or substituted service is required to be made in other cases. On the day fixed
for the hearing on the compliant of any adjournment of it, the court shall
determine from the complaint and from such evidence as is submitted by either
party whether the dissenting shareholder is entitled to be paid the fair cash
value of any shares and, if so, the number and class of such shares. If the
court finds that the dissenting shareholder is so entitled, the court may
appoint one or more persons as appraisers to receive evidence and to recommend a
decision on the amount of the fair cash value. The appraisers have such power
and authority as is specified in the order of their appointment. The court
thereupon shall make a finding as to the fair cash value of a share and shall
render judgment against the corporation for the payment of it, with interest at
such rate and from such date as the court considers equitable. The costs of the
proceeding, including reasonable compensation to the appraisers to be fixed by
the court, shall be assessed or apportioned as the court considers equitable.
The proceeding is a special proceeding and final orders in it may be vacated,
modified, or reversed on appeal pursuant to the Rules of Appellate Procedure
and, to the extent not in conflict with those rules, Chapter 2505 of the Revised
Code. If, during the pendency of any proceeding instituted under this section, a
suit or proceeding is or has been instituted to enjoin or otherwise to prevent
the carrying out of the action as to which the shareholder has dissented, the
proceeding instituted under this section shall be stayed until the final
determination of the other suit or proceeding. Unless any
<PAGE> 223
provision in division (D) of this section is applicable, the fair cash value of
the shares that is agreed upon by the parties or fixed under this section shall
be paid within thirty days after the date of final determination of such value
under this division, the effective date of the amendment to the articles, or the
consummation of the other action involved, whichever occurs last. Upon the
occurrence of the last such event, payment shall be made immediately to a holder
of uncertificated securities entitled to such payment. In the case of holders of
shares represented by certificates, payment shall be made only upon and
simultaneously with the surrender to the corporation of the certificates
representing the shares for which the payment is made.
(C) If the proposal was required to be submitted to the shareholders
of the corporation, fair cash value as to those shareholders shall be determined
as of the day prior to the day on which the vote by the shareholders was taken,
and, in the case of a merger pursuant to section 1701.80 or 1701.801 of the
Revised Code, fair cash value as to shareholders of a constituent subsidiary
corporation shall be determined as of the day before the adoption of the
agreement of merger by the directors of the particular subsidiary corporation.
The fair cash value of a share for the purposes of this section is the amount
that a willing seller who is under no compulsion to sell would be willing to
accept and that a willing buyer who is under no compulsion to purchase would be
willing to pay, but in no event shall the fair cash value of a share exceed the
amount specified in the demand of the particular shareholder. In computing such
fair cash value, any appreciation or depreciation in market value resulting from
the proposal submitted to the directors or to the shareholders shall be
excluded.
(D)(1) The right and obligation of a dissenting shareholder to receive
such fair cash value and to sell such shares as to which he seeks relief, and
the right and obligation of the corporation to purchase such shares and to pay
fair cash value of them terminates if any of the following applies:
(a) The dissenting shareholder has not complied with this
section, unless the corporation by its directors waives such failure;
(b) The corporation abandons the action involved or is finally
enjoined or prevented from carrying it out, or the shareholders rescind their
adoption, of the action involved;
(c) The dissenting shareholder withdraws his demand, with the
consent of the corporation by its directors;
(d) The corporation and the dissenting shareholder have not come
to an agreement as to the fair cash value per share, and neither the shareholder
nor the corporation filed or joined in a complaint under division (B) of this
section within the period provided in that division.
(2) For purposes of division (D)(1) of this section, if the merger or
consolidation has become effective and the surviving or new entity is not a
corporation, action required to be taken by the directors of the corporation
shall be taken by the general partners of a surviving or new partnership or the
comparable representatives of any other surviving or new entity.
<PAGE> 224
(E) From the time of the dissenting shareholder's giving of the
demand until either the termination of the rights and obligations arising from
it or the purchase of the shares by the corporation, all other rights accruing
from such shares, including voting and dividend or distribution rights, are
suspended. If during the suspension, any dividend or distribution is paid in
money upon shares of such class or any dividend, distribution, or interest is
paid in money upon any securities issued in extinguishment of or in substitution
for such shares, an amount equal to the dividend, distribution, or interest
which, except for the suspension, would have been payable upon such shares or
securities, shall be paid to the holder of record as a credit upon the fair cash
value of the shares. If the right to receive fair cash value is terminated other
than by the purchase of the shares by the corporation, all rights of the holder
shall be restored and all distributions which, except for the suspension, would
have been made shall be made to the holder of record of the shares at the time
of termination.
<PAGE> 225
ANNEX IX
PROPOSED AMENDMENT TO THE AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF
FIDELITY FINANCIAL OF OHIO, INC.
Upon shareholder approval of the proposed amendment to FFOH's Amended and
Restated Articles of Incorporation, the following article will be added as a new
Article XVIII of FFOH's Amended and Restated Articles of Incorporation:
ARTICLE XVIII
STOCKHOLDER APPROVAL OF CERTAIN MATTERS
Notwithstanding any provision of the Revised Code of Ohio which might
otherwise require a greater vote and except as otherwise expressly provided in
these Articles of Incorporation, the affirmative vote of the holders of not less
than a majority of the voting power of the Corporation entitled to vote at a
meeting of stockholders called for that purpose shall be required to approve a
proposed merger or consolidation of the Corporation with or into one or more
other corporations or a proposed combination or majority share acquisition
involving the issuance of shares of the Corporation and requiring shareholder
approval.
<PAGE> 226
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article VII of the Registrant's Articles of Incorporation provides as
follows:
The Corporation shall indemnify any person who was or 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,
including actions by or in the right of the Corporation, by reason of the fact
that such person is or was a director, officer, employee, or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, trustee, officer, employee, member, manager, or agent of another
corporation, a limited liability company, or a partnership, joint venture,
trust, or other enterprise, against expenses, including attorney's fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit, or proceeding to the full
extent permissible under Ohio law.
Section 1701.13 of the Ohio General Corporation Law provides as follows
with respect to indemnification:
(E) (1) A corporation may indemnify or agree to indemnify any person
who was or 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, other than an action by or in the right of the
corporation, by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request of
the corporation as a director, trustee, officer, employee, member, manager, or
agent of another corporation, domestic or foreign, nonprofit or for profit, a
limited liability company, or a partnership, joint venture, trust, or other
enterprise, against expenses, including attorney's 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 or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, if he had
no reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment order, settlement, or conviction, or upon
a plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
(2) A corporation may indemnify or agree to indemnify any person who
was or is a party, or is threatened to be made a party, to any threatened,
pending, or completed action or suit by or in the right of the corporation. to
procure a judgment in its favor, by reason of the fact that he is or was a
director, officer, employee, or agent of the corporation, or is or was serving
at the request of the corporation as a director, trustee, officer, employee,
member, manager, or agent of another corporation, domestic or foreign, nonprofit
or for profit, a limited liability company, or a partnership,
<PAGE> 227
joint venture, trust, or other enterprise, against expenses, including
attorney's fees, actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation, except that no indemnification shall be made in respect of any
of the following:
(a) Any claim, issue, or matter as to which such person is adjudged
to be liable for negligence or misconduct in the performance of his duty to the
corporation unless, and only to the extent that, the court of common pleas or
the court in which such action or suit was brought determines, upon application,
that, despite the adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the court of common pleas or such other court
shall deem proper;
(b) Any action or suit in which the only liability asserted against
a director is pursuant to section 1701.95 of the Revised Code.
(3) To the extent that a director, trustee, officer, employee, member,
manager, or agent has been successful on the merits or otherwise in defense of
any action, suit, or proceeding referred to in division (E)(1) or (2) of this
section, or in defense of any claim, issue, or matter therein, he shall be
indemnified against expenses, including attorney's fees, actually and reasonably
incurred by him in connection with the action, suit, or proceeding.
(4) Any indemnification under division (E)(1) or (2) of this section,
unless ordered by a court, shall be made by the corporation only as authorized
in the specific case, upon a determination that indemnification of the director,
trustee, officer, employee, member, manager, or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
division (E)(1) or (2) of this section. Such determination shall be made as
follows:
(a) By a majority vote of a quorum consisting of directors of the
indemnifying corporation who were not and are not parties to or threatened with
the action, suit or proceeding referred to in division (E)(1) or (2) of this
section;
(b) If the quorum described in division (E)(4)(a) of this section
is not obtainable or if a majority vote of a quorum of disinterested directors
so directs, in a written opinion by independent legal counsel other than an
attorney, or a firm having associated with it an attorney, who has been retained
by or who has performed services for the corporation or any person to be
indemnified within the past five years;
(c) By the shareholders;
(d) By the court of common pleas or the court in which the action,
suit, or proceeding referred to in division (E)(1) or (2) of this section was
brought.
II-2
<PAGE> 228
Any determination made by the disinterested directors under division
(E)(4)(a) or by independent legal counsel under division (E)(4)(b) of this
section shall be promptly communicated to the person who threatened or brought
the action or suit by or in the right of the corporation under division (E)(2)
of this section, and, within ten days after receipt of such notification, such
person shall have the right to petition the court of common pleas or the court
in which such action or suit was brought to review the reasonableness of such
determination.
(5) (a) Unless at the time of a director's act or omission that is the
subject of an action, suit, or proceeding referred to in division (E)(1) or (2)
of this section, the articles or the regulations of a corporation state, by
specific reference to this division, that the provisions of this division do not
apply to the corporation and unless the only liability asserted against a
director in an action, suit or proceeding referred to in division (E)(1) or (2)
of this section is pursuant to section 1701.95 of the Revised Code, expenses,
including attorney's fees, incurred by a director in defending the action, suit,
or proceeding shall be paid by the corporation as they are incurred, in advance
of the final disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director in which he agrees to do both of the
following:
(i) Repay such amount if it is proved by clear and convincing
evidence in a court of competent jurisdiction that his action or failure to act
involved an act or omission undertaken with deliberate intent to cause injury to
the corporation or undertaken with reckless disregard for the best interests of
the corporation;
(ii) Reasonably cooperate with the corporation concerning the
action, suit, or proceeding.
(b) Expenses, including attorney's fees, incurred by a director,
trustee, officer, employee, member, manager, or agent in defending any action,
suit, or proceeding referred to in division (E)(1) or (2) of this section, may
be paid by the corporation as they are incurred, in advance of the final
disposition of the action, suit, or proceeding, as authorized by the directors
in the specific case, upon the receipt of an undertaking by or on behalf of the
director, trustee, officer, employee, member, manager, or agent to repay such
amount, if it ultimately is determined that he is not entitled to be indemnified
by the corporation.
(6) The indemnification authorized by this section shall not be
exclusive of, and shall be in addition to, any other rights granted to those
seeking indemnification under the articles, the regulations, any agreement a
vote of shareholders or disinterested directors, or otherwise, both as to action
in their official capacities and as to action in another capacity while holding
their offices or positions, and shall continue as to a person who has ceased to
be a director, trustee, officer, employee, member, manager, or agent and shall
inure to the benefit of the heirs, executors, and administrators of such a
person.
(7) A corporation may purchase and maintain insurance or furnish
similar protection, including, but not limited to, trust funds, letters of
credit, or self-insurance, on behalf of
II-3
<PAGE> 229
or for any person who is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, trustee, officer, employee, member, manager, or agent or another
corporation, domestic or foreign, nonprofit or for profit, a limited liability
company, or a partnership, joint venture, trust, or other enterprise, against
any liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would have the
power to indemnify him against such liability under this section. Insurance may
be purchased from or maintained with a person in which the corporation has a
financial interest.
(8) The authority of a corporation to indemnify persons pursuant to
division (E)(1) or (2) of this section does not limit the payment of expenses as
they are incurred, indemnification, insurance, or other protection that may be
provided pursuant to divisions (E)(5), (6), and (7) of this section. Divisions
(E)(1) and (2) of this section do not create any obligation to repay or return
payments made by the corporation pursuant to division (E)(5), (6), or (7).
(9) As used in division (E) of this section, "corporation" includes all
constituent entities in a consolidation or merger and the new or surviving
corporation, so that any person who is or was a director, officer, employee,
trustee, member, manager, or agent of such a constituent entity, or is or was
serving at the request of such constituent entity as a director, trustee,
officer, employee, member, manager, or agent of another corporation, domestic or
foreign, nonprofit or for profit, a limited liability company, or a partnership,
joint venture, trust, or other enterprise, shall stand in the same position
under this section with respect to the new or surviving corporation as he would
if he had served the new or surviving corporation in the same capacity.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The exhibits and financial statement schedules filed as a part of this
Registration Statement are as follows:
(a) List of Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Exhibit Location
----------- ------- --------
<S> <C> <C> <C>
2(a) Agreement of Merger, dated as of September 28, (1)
1998, among FFOH, FAC and GFCO, including the
Agreement of Merger, dated as of September 28, 1998,
between Fidelity Bank and Centennial Bank, and
attached as Exhibit A thereto.
2(b) Stock Option Agreement, dated as of September 28, (2)
1998, between FFOH (as grantee) and GFCO (as
issuer)
</TABLE>
II-4
<PAGE> 230
<TABLE>
<CAPTION>
Exhibit No. Exhibit Location
----------- ------- --------
<S> <C> <C> <C>
2(c) Stock Option Agreement, dated as of September 28, (2)
1998, between FFOH (as issuer) and GFCO (as
grantee)
2(d) Stockholder Agreement, dated as of September 28, (2)
1998, among FFOH and certain shareholders of
GFCO
2(e) Stockholder Agreement, dated as of September 28, (2)
1998, among GFCO and certain shareholders of
FFOH
3(a) Amended and Restated Articles of Incorporation of (3)
FFOH
3(b) Code of Regulations of FFOH (3)
3(c) Bylaws of FFOH (3)
4(a) Specimen Common Stock certificate (4)
5 Opinion of Elias, Matz, Tiernnan & Herrick L.L.P.
regarding legality of securities being registered
8 Opinion of Vorys, Sater, Seymour & Pease LLP regarding
certain federal income tax consequences
10(a) 1992 Stock Incentive Plan (3)
10(b) 1992 Directors' Stock Option Plan (3)
10(c) Management Recognition Plan (3)
10(d) Employee Stock Ownership Plan (3)
10(e) Employment Agreements among FFOH, Fidelity (4)
Bank, John R. Reusing and Paul D. Staubach
10(f) Employment Agreement among FFOH, Fidelity (5)
Bank and Joseph D. Hughes
10(g) Form of Severance Agreements among FFOH, (4)
Fidelity Bank and certain officers of FFOH and
Fidelity Bank
10(h) 1997 Stock Option Plan (6)
</TABLE>
II-5
<PAGE> 231
<TABLE>
<CAPTION>
Exhibit No. Exhibit Location
----------- ------- --------
<S> <C> <C> <C>
10(i) 1997 Management Recognition Plan and Trust (6)
21 Subsidiaries of FFOH (6)
23(a) Consent of Elias, Matz, Tiernan & Herrick L.L.P. --
(contained in the opinion included as Exhibit 5)
23(b) Consent of Vorys, Sater, Seymour & Pease LLP --
(contained in the opinion as Exhibit 8)
23(c) Consents of Grant Thornton LLP
23(d) Consent of Sandler O'Neill & Partners, L.P. (7)
23(e) Consent of Stifel, Nicolaus & Company,
Incorporated
24 Powers of Attorney (included in the signature page
to the initial filing of this Registration Statement)
99(a) Form of proxy for the FFOH Special Meeting
99(b) Form of proxy for the GFCO Special Meeting
99(c) Other FFOH solicitation materials
99(d) Other GFCO solicitation materials
</TABLE>
- -------------------------
(1) Exhibit is attached as an Annex I to the Prospectus/Joint Proxy
Statement included herein.
(2) Exhibit is incorporated by reference to the Form 8-K report filed by
FFOH with the SEC on October 1, 1998. In addition, the exhibit is
attached as an Annex to the Prospectus/Joint Proxy Statement included
herein.
(3) Exhibit is incorporated by reference to the Form S-1 Registration
Statement (No. 33-993304) filed by FFOH with the SEC on November 14,
1995.
(4) Exhibit is incorporated by reference to FFOH's Annual Report on Form
10-K for the year ended December 31, 1995, filed with the SEC on April
1, 1996.
(5) Exhibit is incorporated by reference to FFOH's Annual Report on Form
10-K for the year ended December 31, 1996, filed with the SEC on March
28, 1997.
II-6
<PAGE> 232
(6) Exhibit and/or discussion is incorporated by reference to FFOH's Annual
Report on Form 10- K for the year ended December 31, 1997, filed with
the SEC on March 30, 1998.
(7) To be filed by amendment.
FFOH's management contracts or compensatory plans or arrangements
consists of Exhibit Nos. 10(a)-(i) listed above.
(b) Financial Statement Schedules.
No financial statement schedules are filed because the required
information not applicable or is included in the consolidated financial
statements or related notes.
ITEM 22. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes as follows:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of
1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of
the registration statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the registration
statement; and
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a) (1) (i) and
(a) (1) (ii) do not apply if the registration statement is on
Form S-3 or Form S-8, and the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in the registration
statement.
(2) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities Exchange
Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new
II-7
<PAGE> 233
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) That prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a part of
this registration statement, by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c), the issuer undertakes
that such reoffering prospectus will contain the information called for
by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information
called for by the other Items of the applicable form.
(4) That every prospectus (i) that is filed pursuant to
paragraph (3) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as a
part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) That, for the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that contains
a form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(6) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(7) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the questions whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(b) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b) 11 or 13 of this form,
II-8
<PAGE> 234
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
(c) The undersigned registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-9
<PAGE> 235
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Cincinnati,
State of Ohio on the 18th day of December 1998.
FIDELITY FINANCIAL OF OHIO, INC.
By: /s/ John R. Reusing
-------------------
John R. Reusing
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each of the directors and/or officers of
Fidelity Financial of Ohio, Inc. whose signature appears below hereby appoints
John R. Reusing and Paul D. Staubach, and each of them severally, as his or her
attorney-in-fact to sign in his or her name and behalf, in any and all
capacities stated below and to file with the Securities and Exchange Commission
any and all amendments, including post-effective amendments, to this
Registration Statement on Form S-4, making such changes in the Registration
Statement as appropriate, and generally to do all such things in their behalf in
their capacities as directors and/or officers to enable Fidelity Financial of
Ohio, Inc. to comply with the provisions of the Securities Act of 1933, and all
requirements of the Securities and Exchange Commission.
<TABLE>
<S> <C>
/s/ John R. Reusing December 18, 1998
- --------------------------------------
John R. Reusing, President,
Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Michael W. Jordan December 18, 1998
- --------------------------------------
Michael W. Jordan, Director
</TABLE>
II-10
<PAGE> 236
<TABLE>
<S> <C>
/s/ David A. Luecke December 18, 1998
- --------------------------------------
David A. Luecke, Director
December , 1998
- -------------------------------------- --
Constantine N. Papadakis, Director
/s/ Paul D. Staubach December 18, 1998
- --------------------------------------
Paul D. Staubach, Senior Vice President,
Chief Financial Officer and Director
(Principal Financial Officer)
/s/ Robert W. Zumbiel December 18, 1998
- --------------------------------------
Robert W. Zumbiel, Director
/s/ Joseph D. Hughes December 18, 1998
- --------------------------------------
Joseph D. Hughes, Executive Vice
President and Director
/s/ Thomas N. Spaeth December 18, 1998
- --------------------------------------
Thomas N. Spaeth, Director
</TABLE>
II-11
<PAGE> 1
EXHIBIT 5
December 18, 1998
Board of Directors
Fidelity Financial of Ohio, Inc.
4555 Montgomery Road
Cincinnati, Ohio 45212
Re: Registration Statement on Form S-4
3,578,636 Shares of Common Stock
Ladies and Gentlemen:
We have acted as special counsel to Fidelity Financial of Ohio, Inc.
(the "Company") in connection with the preparation and filing with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended, of the registration statement on Form S-4 (the "Registration
Statement") relating to the issuance of up to 3,578,636 shares of the Company's
common stock, $.10 par value per share (the "Shares"), in connection with the
proposed merger of Glenway Financial Corporation with and into Fidelity
Acquisition Corporation, a wholly owned subsidiary of the Company, all as
described in the Registration Statement. As such counsel, we have made such
legal and factual examinations and inquiries as we deemed advisable for the
purpose of rendering this opinion.
Based upon the foregoing, it is our opinion that the Shares, when
issued, delivered and sold in the manner described in the Registration
Statement, will be legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Company's Registration Statement, and we consent to the use of our name under
the heading "Legal Opinion" in the Prospectus/Joint Proxy Statement constituting
a part thereof.
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
By: /s/ Jeffrey D. Haas
--------------------------------
Jeffrey D. Haas, a Partner
<PAGE> 1
EXHIBIT 8
[Letterhead of Vorys, Sater, Seymour and Pease LLP]
(513) 723-4000
December 18, 1998
Board of Directors
Glenway Financial Corporation
5535 Glenway Avenue
Cincinnati, Ohio 45238
Gentlemen:
We have acted as special counsel to Glenway Financial Corporation, a
Delaware corporation ("GFCO"), in connection with the transactions described in
the Agreement of Merger dated as of September 28, 1998 (the "Agreement"), by and
among Fidelity Financial of Ohio, Inc., an Ohio corporation ("FFOH"), Fidelity
Acquisition Corporation, an Ohio corporation and a wholly-owned subsidiary of
FFOH ("Merger Corporation") and GFCO. As a condition to the closing of the
merger by and between GFCO and Merger Corporation pursuant to the terms of the
Agreement (the "Merger"), you have requested our opinion regarding certain of
the federal income tax consequences of the Merger. Unless otherwise specified,
all capitalized terms in this opinion have the meanings assigned to them in the
Agreement.
In rendering this opinion, we have examined the originals or certified,
conformed, or reproduction copies of, and have relied upon the accuracy of,
without independent verification or investigation, (1) the Agreement, (2) the
Glenway Financial Corporation Officer's Certificate dated as of September 28,
1998 and (3) the Fidelity Financial of Ohio, Inc. and Fidelity Acquisition
Corporation Officers' Certificate dated as of September 28, 1998.
In connection with our review of the Agreement and the officers'
certificates described above (collectively, the "Officers' Certificates"), we
have assumed the genuineness of all signatures, the authenticity of all items
submitted to us as originals, the uniformity with authentic originals of all
items submitted to us as copies, and the conformity to final versions of all
items submitted to us in draft version. We also have assumed, without
independent verification or investigation, that (1) we have been provided with
true, correct, and complete
<PAGE> 2
Board of Directors
Glenway Financial Corporation
December 18, 1998
Page 2
copies of all such documents, (2) none of such documents has been amended or
modified, (3) all such documents are in full force and effect in accordance with
the terms thereof, (4) there are no other documents which affect the opinions
hereinafter set forth, and (5) the documents reviewed by us reflect the entire
agreement of the parties thereto with respect to the subject matter thereof.
THE MERGER
The Agreement provides that the Merger will constitute a
merger, both under the DGCL and under the OGCL, of GFCO with and into Merger
Corporation. At the Effective Time of the Merger, GFCO's separate corporate
existence will cease, and Merger Corporation will be the surviving corporation.
Pursuant to Section 2.3 of the Agreement, the Merger will have
the following effects:
1. Subject to Section 2.9 of the Agreement (governing the
treatment of FFOH Dissenting Shares), each share of FFOH
Common Stock issued and outstanding immediately prior to the
Effective Time will be unchanged and will remain issued and
outstanding.
2. Each share of Merger Corporation common stock that is issued
and outstanding immediately prior to the Effective Time will
be unchanged and will remain issued and outstanding;
3. Each share of GFCO Common Stock that is issued and outstanding
immediately prior to the Effective Time will be converted into
the right to receive 1.50 shares of FFOH Common Stock (subject
to any adjustment to this Exchange Ratio by reason of any
reclassification, recapitalization, split-up, combination,
exchange of shares, readjustment or stock dividend); provided,
however, that any shares held by FFOH, GFCO or any of their
respective wholly-owned Subsidiaries (other than shares held
in a fiduciary capacity that are beneficially owned by third
parties or as a result of debts previously contracted) shall
be canceled and retired without consideration.
Notwithstanding the foregoing, no fractional shares of FFOH
Common Stock will be issued, and any shareholder who would
otherwise have received a fractional share of FFOH Common
Stock will have a right to receive an amount of cash (without
interest) equal to the product of such fraction and the
closing price of a share of FFOH Common Stock on the Nasdaq
Stock Market's National Market on the business day preceding
the Effective Time (as reported in THE WALL STREET
<PAGE> 3
Board of Directors
Glenway Financial Corporation
December 18, 1998
Page 3
JOURNAL, or, if not reported therein, in another authoritative
source), rounded to the nearest whole cent; and
4. Each outstanding certificate theretofore representing shares
of GFCO Common Stock will be deemed, for all purposes, to
evidence only the right to receive, upon surrender of such
certificate, FFOH Common Stock into which such shares of GFCO
Common Stock are convertible.
In connection with the Merger, the Officers' Certificates set
forth the following representations:
1. The Merger is being effected for bona fide business reasons.
2. The fair market value of the FFOH Common Stock to be received
by the shareholders of GFCO will be approximately equal to the
fair market value of the GFCO Common Stock surrendered by each
such shareholder pursuant to the Merger.
3. To the best knowledge of the management of GFCO, there is no
plan or intention by the GFCO shareholders to sell, exchange,
or otherwise transfer a number of shares of FFOH Common Stock
received in the transaction to FFOH or a person related to
FFOH that would reduce the GFCO shareholders' ownership of
FFOH Common Stock to a number of shares having a value, as of
the date of the transaction, of less than fifty percent (50%)
of the value of all formerly outstanding stock of GFCO as of
the same date. For purposes of this representation, any shares
of GFCO Common Stock exchanged for cash in lieu of fractional
shares of FFOH Common Stock will be treated as outstanding on
the date of the transaction. Furthermore, any redemptions or
extraordinary distributions by GFCO, prior to and in
connection with the Merger, will be considered in making this
representation. Finally, any acquisitions of GFCO Common Stock
by a person related to GFCO, prior to and in connection with
the Merger, with consideration other than stock of either the
acquired corporation or the acquiring corporation, will be
considered in making this representation.
4. Merger Corporation will acquire at least 90 percent of the
fair market value of the net assets and at least 70 percent of
the fair market value of the gross assets held by GFCO
immediately prior to the Merger. For purposes of this
representation, assets of GFCO used to pay its expenses
attributable to the Merger, and all redemptions and
distributions (except for regular, normal dividends) made by
<PAGE> 4
Board of Directors
Glenway Financial Corporation
December 18, 1998
Page 4
GFCO immediately preceding the Merger, will be included as
assets of GFCO held immediately prior to the Merger.
5. No dividends or distributions will be made with respect to any
GFCO Common Stock prior to the Merger, with the exception of
normal quarterly dividends.
6. The liabilities of GFCO assumed by Merger Corporation and the
liabilities to which the transferred assets of GFCO are
subject were incurred by GFCO in the ordinary course of its
business.
7. Prior to the Merger, FFOH will be in control of Merger
Corporation within the meaning of Code Section 368(c).
8. Following the Merger, Merger Corporation will not issue
additional shares of its stock that would result in FFOH
losing control of Merger Corporation within the meaning of
Code Section 368(c).
9. Neither FFOH nor a related person has any plan or intention to
reacquire any shares of FFOH Common Stock issued in the
Merger.
10. FFOH has no plan or intention to (a) liquidate Merger
Corporation, (b) merge Merger Corporation with and into
another corporation, (c) sell or otherwise dispose of the
stock of Merger Corporation, or (d) cause Merger Corporation
to sell or otherwise dispose of any of the assets of GFCO
acquired in the Merger, except for dispositions made in the
ordinary course of business or transfers described in Code
Section 368(a)(2)(C).
11. Following the Merger, Merger Corporation will continue the
historic business of GFCO or use a significant portion of
GFCO's historic business assets in a business.
12. GFCO, the GFCO shareholders, FFOH, and Merger Corporation will
pay their respective expenses, if any, incurred in connection
with the Merger.
13. There is no intercorporate indebtedness existing between FFOH
and GFCO, or between Merger Corporation and GFCO, that was
issued, acquired, or will be settled at a discount.
14. No parties to the Merger are "investment companies" as defined
in Code Section 368(a)(2)(F)(iii) and (iv).
<PAGE> 5
Board of Directors
Glenway Financial Corporation
December 18, 1998
Page 5
15. GFCO is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Code Section 368(a)(3)(A).
16. The fair market value of the assets of GFCO transferred to
Merger Corporation will equal or exceed the sum of the
liabilities assumed by Merger Corporation, plus the amount of
liabilities, if any, to which the transferred assets are
subject.
17. No stock of Merger Corporation will be issued pursuant to the
Merger.
18. The payment of cash in lieu of fractional shares of FFOH is
solely for the purpose of avoiding the expense and the
inconvenience to FFOH of issuing fractional shares and does
not represent separately bargained for consideration. The
total cash that will be paid in the Merger to the shareholders
of GFCO instead of issuing fractional shares of FFOH Common
Stock will not exceed one percent (1%) of the total
consideration that will be issued in the Merger to the GFCO
shareholders in exchange for their shares of GFCO Common
Stock. The fractional share interests of each GFCO shareholder
will be aggregated, and no shareholder will receive cash in an
amount equal to or greater than the value of one full share of
FFOH Common Stock.
19. None of the compensation received by any shareholder who is an
employee of GFCO will be separate consideration for, or
allocable to, any of his shares of GFCO Common Stock. None of
the shares of FFOH Common Stock received by any shareholder
who is an employee of GFCO will be separate consideration for,
or allocable to, any employment agreement. Furthermore, the
compensation paid to any shareholder who is an employee of
GFCO will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at
arm's length for similar services.
20. The Merger will be effected in accordance with the applicable
provisions of the OGCL and the DGCL.
21. After the Merger, no dividends or distributions will be made
by FFOH to FFOH shareholders, other than regular or normal
dividend distributions made with regard to all shares of FFOH
Common Stock.
<PAGE> 6
Board of Directors
Glenway Financial Corporation
December 18, 1998
Page 6
DISCUSSION OF LEGAL AUTHORITIES
Code Section 368(a)(1)(A) defines a tax-free reorganization to
include a statutory merger. Code Section 368(a)(2)(D) further provides that:
The acquisition by one corporation, in exchange for stock of a
corporation [referred to as "controlling corporation"] which is
in control of the acquiring corporation, of substantially all
of the properties of another corporation shall not disqualify a
transaction under [Code Section 368(a)](1)(A) . . . if --
(i) no stock of the acquiring corporation is used in the
transaction, and (ii) in the case of a transaction under [Code
Section 368(a)](1)(A), such transaction would have qualified
under [Code Section 368(a)](1)(A) had the merger been into the
controlling corporation.
In accordance with the safe harbor provided by the Internal Revenue Service (the
"Service"), "substantially all" of the properties of a corporation means at
least 90 percent of the fair market value of the net assets and at least 70
percent of the fair market value of the gross assets of the acquired
corporation. Rev. Proc. 77-37, 1977-1 C.B. 568 (Section 3.01). The courts
generally have been less rigid in their application of the "substantially all"
test, instead focusing on the nature of the assets, if any, retained by the
acquired corporation. SEE, E.G., WESTERN INDUSTRIES CO. V. HELVERING, 82 F.2d
461 (D.C. Cir. 1936); THE SOUTHLAND ICE CO. V. COMMISSIONER, 5 T.C. 842 (1945),
ACQ., 1946-1 C.B. 4.
Other non-statutory requirements have been imposed by the
courts and by the Service in determining whether reorganizations are in
compliance with Code Section 368. These requirements are that (1) there be a
business purpose for the reorganization, (2) there be a continuity of the
business enterprise of the acquired corporation, and (3) the shareholders of the
acquired corporation emerge with a continuing proprietary interest in the entity
resulting from the merger.
Section 1.368-2(g) of the Treasury Regulations (the
"Regulations") provides that a reorganization must be undertaken for reasons
germane to the continuance of the business of a corporation which is a party to
the reorganization. As indicated in the Officers' Certificates, the Merger is
being effected for bona fide business reasons. Accordingly, the Merger satisfies
the business purpose requirement as set forth in the Regulations.
Regulations Section 1.368-1(b) provides that a continuity of
business enterprise is a prerequisite to a reorganization. Regulations Section
1.368-1(d) (as modified by T.D. 8760) provides that continuity of business
enterprise requires that the acquiring corporation or a related
<PAGE> 7
Board of Directors
Glenway Financial Corporation
December 18, 1998
Page 7
person either continue the acquired corporation's historic business or use a
significant portion of the acquired corporation's historic assets in a business.
Revenue Ruling 85-197, 1985-2 C.B. 120, provides that for purposes of the
continuity of business enterprise requirement, the historic business of a
holding company is the business of its operating subsidiary. Similarly, Revenue
Ruling 85-198, 1985-2 C.B. 120, held that the continuity of business enterprise
requirement was met where the business of a former subsidiary of the acquired
holding company was continued through a subsidiary of the acquiring corporation.
Accordingly, the continuity of business enterprise requirement is met with
regard to the Merger because Merger Corporation will continue the business
formerly conducted by GFCO.
Generally, the continuity of interest test requires the owners
of the acquired corporation to receive and maintain a meaningful equity in the
surviving entity. The Service has issued final and temporary regulations (T.D.
8760 and 8761) providing rules for satisfying the continuity of interest
requirement. These regulations substantially liberalize the historic rules,
generally providing that continuity of interest is satisfied if a substantial
part of the value of the proprietary interest in the acquired corporation is
preserved in the reorganization. In determining whether a substantial part of
the value of the proprietary interest is preserved, the following transactions,
in connection with the reorganization, are considered. First, under Regulations
Section 1.368-1, any acquisition by the acquiring corporation of acquired
corporation stock for consideration other than stock, or, in connection with the
reorganization, the redemption of acquiring corporation stock received by the
shareholders of the acquired corporation (or the purchase of such acquiring
corporation stock by a person related to the acquiring corporation), will be
considered in determining whether a substantial proprietary interest is
preserved. Second, under Regulations Section 1.368-1T, the acquisition by the
acquired corporation, prior to and in connection with the plan of
reorganization, of the stock of the acquired corporation with consideration
other than stock of the acquired corporation or an extraordinary distribution
made by the acquired corporation with respect to its stock, will be considered
in determining whether a substantial proprietary interest is preserved. Third,
under Regulations Section 1.368-1T, the acquisition by a person related to the
acquired corporation, prior to and in connection with the plan of
reorganization, of the stock of the acquired corporation with consideration
other than stock of the acquired corporation or stock of the acquiring
corporation, will be considered in determining whether a substantial proprietary
interest is preserved. Generally, two corporations are related persons either if
the corporations are members of the same affiliated group (without regard to the
exceptions in Code Section 1504(b)) or the purchase of stock of one corporation
by another corporation would result in the purchase being treated as a
redemption of stock of the first corporation under Code Section 304(a)(2)
(determined without regard to Regulations Section 1.1502-80(b)). Sales by the
shareholders of the acquired corporation of stock of the acquiring corporation
received in the transaction to unrelated persons occurring before or after a
reorganization are disregarded.
<PAGE> 8
Board of Directors
Glenway Financial Corporation
December 18, 1998
Page 8
The Merger will satisfy the continuity of interest
requirement. FFOH and Merger Corporation have represented that all the shares of
GFCO Common Stock outstanding immediately prior to the Merger will be exchanged
solely for shares of FFOH Common Stock, except for cash paid in lieu of
fractional shares. As a condition precedent to the obligations of the parties
under the Agreement, such cash paid in lieu of fractional shares or to FFOH
shareholders who have demanded the appraised value of their shares of FFOH
Common Stock will constitute, in the aggregate, less than ten percent (10%) of
the total consideration payable in connection with the Merger. FFOH and Merger
Corporation have represented further that neither FFOH nor a related person has
any plan or intention, in connection with the plan of reorganization, to
reacquire any shares of FFOH Common Stock issued in the Merger, other than to
acquire a small amount of shares of FFOH Common Stock in ordinary business
transactions (including, but not limited to, open market purchases in brokers'
transactions). In addition, GFCO has represented that neither GFCO nor a related
person has any plan or intention, prior to and in connection with the plan of
reorganization, to redeem, acquire, or make an extraordinary distribution with
respect to GFCO's Common Stock for consideration other than Common Stock of GFCO
(or in the case of a related person, for consideration other than GFCO Common
Stock FFOH Common Stock), that would cause a substantial part of the value of
the proprietary interest in the acquired corporation not to be preserved.
Even though a merger may qualify as a tax-free reorganization
under Code Sections 368(a)(1)(A) and 368(a)(2)(D), the acquired corporation's
shareholders receive tax free only the stock of the controlling corporation.
Code Section 354. Code Section 356(a)(1) provides that if a shareholder of the
acquired corporation receives "boot" (i.e., cash) in a reorganization as well as
nonrecognition property (i.e., stock of the controlling corporation), his gain,
if any, is to be recognized, but not in excess of the boot. In no event may the
shareholder recognize a loss. Code Section 356(c).
Furthermore, Code Section 356(a)(2) prescribes rules for
determining whether any such recognized gain will be taxed as a dividend or as
capital gain. Specifically, if the exchange has the "effect of the distribution
of a dividend" to a shareholder of the acquired corporation, the recognized gain
of such shareholder must be treated as a dividend (and, therefore, as ordinary
income and without any offset for such shareholder's adjusted basis in his
shares), to the extent of such shareholder's ratable share of earnings and
profits.
Where the payment of cash to a shareholder of the acquired
corporation in lieu of fractional share interests in the controlling corporation
is solely for the purpose of avoiding the expense and inconvenience of issuing
fractional shares and does not represent separately bargained-for consideration,
the cash payment will be treated as having been received as a distribution
subject to the provisions of Code Section 302. Rev. Rul. 66-365, 1966-2 C.B.
116. Where, as a result of such distribution, a shareholder owns no shares of
the controlling
<PAGE> 9
Board of Directors
Glenway Financial Corporation
December 18, 1998
Page 9
corporation, either directly or through the application of the constructive
ownership rules of Code Section 318, the redemption will be a "complete
termination" of the shareholder's interest within the meaning of Section Code
302(b)(3), resulting in capital gain or loss equal to the difference between the
cash received and such shareholder's adjusted basis in his shares.
OPINIONS
Therefore, based on the description of the Merger in the
Agreement, the representations set forth in the Officers' Certificates, the
foregoing legal authorities, and the assumptions stated above, it is our opinion
that:
1. The Merger constitutes a "reorganization" within the
meaning of Code Sections 368(a)(1)(A) and
368(a)(2)(D). GFCO, FFOH, and Merger Corporation each
is a "party to the reorganization" within the meaning
of Code Section 368(b).
2. No gain or loss will be recognized (a) to GFCO on the
transfer of substantially all of its properties to
Merger Corporation in exchange for FFOH Common Stock,
or (b) to either FFOH or Merger Corporation upon
Merger Corporation's receipt of substantially all of
the properties of GFCO in exchange for FFOH Common
Stock.
3. The adjusted basis of the properties of GFCO in the
hands of Merger Corporation will be the same as the
adjusted basis of such properties in the hands of
GFCO immediately prior to the Merger. The holding
period of the properties of GFCO to be received by
Merger Corporation will include the period during
which such properties were held by GFCO.
4. Payment of cash to a GFCO shareholder in lieu of
fractional share interests in FFOH should be treated
as having been received by such shareholder as a
distribution subject to the provisions of Code
Section 302.
5. The adjusted basis of the FFOH Common Stock to be
received by the GFCO shareholders will be the same as
the adjusted basis of GFCO Common Stock surrendered
in
<PAGE> 10
Board of Directors
Glenway Financial Corporation
December 18, 1998
Page 10
exchange therefor, decreased by the amount of cash received
and increased by the amount of gain, if any, recognized on the
exchange. The holding period of FFOH Common Stock to be
received by the GFCO shareholders will be the same as the
holding period of the GFCO Common Stock surrendered in
exchange therefor.
This opinion is not binding on the Service and no ruling has
been, or will be, requested from the Service as to any federal income tax
consequence described above. Although this opinion is based upon our best
interpretation of current provisions of the Code and the Regulations promulgated
thereunder, as well as existing court decisions and administrative rulings and
procedures, and sets forth the conclusions we believe would be reached by a
court if the issues were properly briefed and presented to it, no assurance can
be provided that a court in fact would agree with our interpretation. Further,
no assurance can be provided that the applicable law will not change in a manner
that will adversely affect these consequences, and any such adverse change could
be retroactive.
No opinion is expressed as to any federal income tax
consequence other than as specifically set forth herein, and no opinion is
expressed with respect to the federal income tax consequences to any particular
shareholder. Further, no opinion is expressed with respect to any tax issue
arising under state, local, or foreign tax provisions. Finally, any change in
the facts as set forth herein or in the Agreement or the Officers' Certificates
could affect this opinion, and possibly in an adverse manner.
The opinion expressed herein is furnished specifically for the
benefit of the GFCO shareholders, and may not be relied upon, assigned, quoted,
or otherwise used in any manner or for any purpose by any other person or entity
without our specific prior written consent.
Very truly yours,
/s/ Vorys, Sater, Seymour and Pease LLP
Vorys, Sater, Seymour and Pease LLP
<PAGE> 1
EXHIBIT 23(c)
ACCOUNTANTS' CONSENT
We have issued our report dated February 12, 1998 accompanying the
consolidated financial statements of Fidelity Financial of Ohio, Inc. contained
in Form S-4 to be filed with the Securities and Exchange Commission on or about
December 18, 1998. We consent to the use of the aforementioned report in the
Registration Statement and to the use of our name, as it appears under the
caption "Experts."
/s/ Grant Thornton LLP
- -------------------------------------
Cincinnati, Ohio
December 18, 1998
<PAGE> 2
EXHIBIT 23(c)
ACCOUNTANTS' CONSENT
We have issued our report dated August 31, 1998 accompanying the
consolidated financial statements of Glenway Financial Corporation contained in
Form S-4 to be filed with the Securities and Exchange Commission on or about
December 18, 1998. We consent to the use of the aforementioned report in the
Registration Statement and to the use of our name, as it appears under the
caption "Experts."
/s/ Grant Thornton LLP
- -------------------------------------
Cincinnati, Ohio
December 18, 1998
<PAGE> 1
EXHIBIT 23(e)
[Letterhead of Stifel, Nicolaus & Company Incorporated]
December 18, 1998
Board of Directors
Glenway Financial Corporation
5535 Glenway Avenue
Cincinnati, Ohio 45238
Members of the Board:
We hereby consent to the inclusion of our opinion letter to the Board of
Directors of Glenway Financial Corporation ("GFCO") attached as an exhibit to
the Prospectus/Joint Proxy Statement of Fidelity Financial of Ohio, Inc.
("FFOH") and GFCO relating to the proposed merger transaction involving FFOH and
GFCO and references thereto in such Prospectus/Joint Proxy Statement. In giving
such consent, we do not admit that we come within the category of persons whose
consent is required under, and we do not admit that we are "experts" for the
purposes of, the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
Very truly yours,
/s/ Stifel, Nicolaus & Company, Incorporated
--------------------------------------------
Stifel, Nicolaus & Company, Incorporated
<PAGE> 1
EXHIBIT 99(a)
FIDELITY FINANCIAL OF OHIO, INC.
REVOCABLE PROXY
SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 16, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned, as a holder of common stock of Fidelity Financial of
Ohio, Inc. ("FFOH"), hereby appoints the Board of Directors of FFOH, or any
successors thereto, as Proxies, with the full power of substitution, to
represent and to vote as designated on the reverse of this card all of the
shares of common stock of FFOH which the undersigned is entitled to vote at the
Special Meeting of Shareholders to be held at the Quality Hotel Central, 4747
Montgomery Road, Cincinnati, Ohio, on February 16, 1999, at 2:00 p.m., Eastern
Time, or any adjournment thereof.
THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED.
SHARES OF COMMON STOCK OF FFOH WILL BE VOTED AS SPECIFIED. UNLESS
OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSAL TO AMEND FFOH'S
ARTICLES OF INCORPORATION AND FOR THE PROPOSAL TO ADOPT AN AGREEMENT OF MERGER,
DATED AS OF SEPTEMBER 28, 1998, BY AND AMONG FFOH, FIDELITY ACQUISITION
CORPORATION ("FAC"), A WHOLLY OWNED SUBSIDIARY OF FFOH, AND GLENWAY FINANCIAL
CORPORATION ("GFCO"). IF ANY OTHER MATTER IS PROPERLY PRESENTED AT THE SPECIAL
MEETING OF SHAREHOLDERS, THE PROXY WILL BE VOTED IN ACCORDANCE WITH THE JUDGMENT
OF THE PERSONS APPOINTED AS PROXIES.
IMPORTANT: PLEASE DATE AND SIGN THE PROXY ON THE REVERSE SIDE.
<PAGE> 2
PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK
-------------------
I plan to attend the
meeting
[ ]
-------------------
1. Proposal to adopt an amendment to FFOH's Articles of Incorporation to
reduce the vote required to approve a proposed merger or consolidation
of FFOH with or into one or more corporations or a proposed combination
or majority share acquisition involving the issuance of shares of FFOH
and requiring shareholder approval from two-thirds of the voting power
of FFOH to a majority of the voting power of FFOH.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THE BOARD OF DIRECTORS OF FFOH RECOMMENDS A VOTE FOR THE PROPOSAL TO
AMEND FFOH'S ARTICLES OF INCORPORATION.
2. Proposal to adopt an Agreement of Merger, dated as of September 28, 1998
(the "Agreement"), by and among FFOH, FAC, and GFCO, which provides,
among other things, for (i) the merger of GFCO with and into FAC (the
"Merger") and (ii) the conversion of each share of common stock of GFCO
outstanding immediately prior to the Merger (other than any shares held
by either FFOH or GFCO) into the right to receive 1.50 shares of FFOH
common stock, plus cash in lieu of any fractional share interest.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THE BOARD OF DIRECTORS OF FFOH RECOMMENDS A VOTE FOR APPROVAL OF THE
AGREEMENT. SUCH VOTES ARE HEREBY SOLICITED BY THE BOARD OF DIRECTORS.
Dated: _____________________, 1999
Signature__________________________________
Signature__________________________________
(print name)
IMPORTANT: Please sign your name exactly as it
appears hereon. When shares are held as joint
tenants, either may sign. When signing as an
attorney, executor, administrator, trustee or
guardian, add such title to your signature.
NOTE: If you receive more than one proxy card,
please date and sign each card and return all
proxy cards in the enclosed envelope.
<PAGE> 1
EXHIBIT 99(b)
GLENWAY FINANCIAL CORPORATION
REVOCABLE PROXY
SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 16, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned, as a holder of common stock of Glenway Financial
Corporation ("GFCO"), hereby appoints the Board of Directors of GFCO, or any
successors thereto, as Proxies, with the full power of substitution, to
represent and to vote as designated on the reverse of this card all of the
shares of common stock of GFCO which the undersigned is entitled to vote at the
Special Meeting of Shareholders to be held at Dante's Restaurant, Harrison
and Rybolt Roads, Cincinnati, Ohio, on February 16, 1999, at 2:00 p.m.,
Eastern Time, or any adjournment thereof.
THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED.
SHARES OF COMMON STOCK OF GFCO WILL BE VOTED AS SPECIFIED. UNLESS
OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSAL TO ADOPT AN
AGREEMENT OF MERGER, DATED AS OF SEPTEMBER 28, 1998, BY AND AMONG FIDELITY
FINANCIAL OF OHIO, INC. ("FFOH"), FIDELITY ACQUISITION CORPORATION ("FAC"), A
WHOLLY OWNED SUBSIDIARY OF FFOH, AND GFCO. IF ANY OTHER MATTER IS PROPERLY
PRESENTED AT THE SPECIAL MEETING OF SHAREHOLDERS, THE PROXY WILL BE VOTED IN
ACCORDANCE WITH THE JUDGMENT OF THE PERSONS APPOINTED AS PROXIES.
IMPORTANT: PLEASE DATE AND SIGN THE PROXY ON THE REVERSE SIDE.
<PAGE> 2
PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK
-------------------
I plan to attend the
meeting
[ ]
-------------------
Proposal to adopt an Agreement of Merger, dated as of September 28, 1998 (the
"Agreement"), by and among FFOH, FAC, and GFCO, which provides, among other
things, for (i) the merger of GFCO with and into FAC (the "Merger") and (ii) the
conversion of each share of common stock of GFCO outstanding immediately prior
to the Merger (other than any shares held by either FFOH or GFCO) into the right
to receive 1.50 shares of FFOH common stock, plus cash in lieu of any fractional
share interest.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THE BOARD OF DIRECTORS OF GFCO RECOMMENDS A VOTE FOR APPROVAL OF THE
AGREEMENT. SUCH VOTES ARE HEREBY SOLICITED BY THE BOARD OF DIRECTORS.
Dated: ___________________________, 1999
Signature__________________________________________
Signature__________________________________________
(print name)
IMPORTANT: Please sign your name exactly as it appears hereon. When
shares are held as joint tenants, either may sign. When signing as an
attorney, executor, administrator, trustee or guardian, add such title
to your signature.
NOTE: If you receive more than one proxy card, please date and sign each
card and return all proxy cards in the enclosed envelope.
<PAGE> 1
EXHIBIT 99(c)
[FFOH Letterhead]
January 5, 1999
To: Participants in the 401(k) Retirement Plan and
Employee Stock Ownership Plan
of Fidelity Financial of Ohio, Inc.
As described in the enclosed materials, your proxy as a shareholder of
Fidelity Financial of Ohio, Inc. ("FFOH") is being solicited in connection with
an upcoming Special Meeting of Shareholders of FFOH, at which shareholders of
FFOH will consider and vote upon a proposal to adopt an Agreement of Merger,
dated as of September 28, 1998 (the "Agreement"), by and among FFOH, Fidelity
Acquisition Corporation ("FAC"), a wholly owned subsidiary of FFOH, and Glenway
Financial Corporation ("GFCO"), pursuant to which, among other things, GFCO will
be merged with and into FAC (the "Merger"). If the Merger is approved and
consummated, each share of common stock of GFCO outstanding immediately prior to
the Merger (other than any shares held by either FFOH or GFCO) will be converted
into the right to receive 1.50 shares of FFOH common stock, plus cash in lieu of
any fractional share interest. In addition, your proxy as a shareholder of FFOH
is also being solicited in connection with a proposal to adopt an amendment to
FFOH's Articles of Incorporation to reduce the vote required to approve a
proposed merger or consolidation of FFOH with or into one or more corporations
or a proposed combination or majority share acquisition involving the issuance
of shares of FFOH and requiring shareholders approval from two-thirds of the
voting power of FFOH to a majority of the voting power of FFOH. I hope you will
take advantage of the opportunity to direct, on a confidential basis, the manner
in which shares of FFOH common stock allocated to your accounts under FFOH's
401(k) Retirement Plan and Employee Stock Ownership Plan (together the "Plans")
will be voted.
Enclosed with this letter is the Prospectus/Joint Proxy Statement, which
describes the matters to be voted upon, a voting instruction ballot for each of
the Plans, which will permit you to vote the shares allocated to your accounts
under the Plans, and a stamped, pre-addressed return envelope. After you review
the Prospectus/Joint Proxy Statement, I urge you to vote your shares in the
Plans by marking, dating, signing and returning the enclosed voting instruction
ballots to________________________________ . Your voting instruction will remain
completely confidential. Only _______________, who will tabulate the voting
instructions, will have access to your ballots. __________________will certify
the totals for the Employee Stock Ownership Plan and the 401(k) Retirement Plan,
respectively, to the members of the Board of Directors of FFOH, who act as the
trustees for such
<PAGE> 2
Plans, for the purpose of having those shares voted. No other person associated
with FFOH or Fidelity Federal Savings Bank will see the individual voting
instructions.
If your voting instructions are not received, the shares allocated to
your accounts will be voted in the same proportion as the shares under the
respective Plans have voted.
Your Board of Directors has determined the Merger to be in the best
interests of FFOH and its shareholders and has unanimously approved the
Agreement and the transactions contemplated thereby, including the Merger.
Similarly, your Board of Directors has determined the proposed amendment to
FFOH's Articles of Incorporation to be in the best interests of FFOH and its
shareholders and has unanimously approved the proposed amendment to FFOH's
Articles of Incorporation. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR APPROVAL OF THE AGREEMENT AND THE PROPOSED AMENDMENT TO
FFOH'S ARTICLES OF INCORPORATION.
On behalf of the Board, I thank you for your attention to this important
matter.
Sincerely,
John R. Reusing
President and Chief Executive Officer
<PAGE> 3
EXHIBIT 99(c)
(cont.)
FIDELITY FINANCIAL OF OHIO, INC.
SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 16, 1999
The undersigned, as a holder of common stock of Fidelity Financial of
Ohio, Inc. ("FFOH") pursuant to the FFOH's 401(k) Retirement Plan (the "Plan"),
hereby instructs the members of the Board of Directors of FFOH, as the Trustees
for the Plan, to vote as designated on the reverse of this card all of the
shares of common stock of FFOH which the undersigned holds pursuant to the Plan
at the Special Meeting of Shareholders to be held at the Quality Hotel Central,
4747 Montgomery Road, Cincinnati, Ohio, on February 16, 1999, at 2:00 p.m.,
Eastern Time, or any adjournment thereof.
SHARES OF COMMON STOCK OF FFOH WILL BE VOTED AS SPECIFIED. IF YOU RETURN
THIS BALLOT PROPERLY SIGNED BUT DO NOT OTHERWISE SPECIFY, SHARES HELD BY YOU
PURSUANT TO THE PLAN WILL BE VOTED FOR THE PROPOSAL TO AMEND FFOH'S ARTICLES OF
INCORPORATION AND FOR THE PROPOSAL TO ADOPT AN AGREEMENT OF MERGER, DATED AS OF
SEPTEMBER 28, 1998, BY AND AMONG FFOH, FIDELITY ACQUISITION CORPORATION ("FAC"),
A WHOLLY OWNED SUBSIDIARY OF FFOH, AND GLENWAY FINANCIAL CORPORATION ("GFCO").
IF YOU DO NOT RETURN THIS BALLOT, SHARES HELD BY YOU PURSUANT TO THE PLAN WILL
BE VOTED IN THE SAME PROPORTION AS THE SHARES UNDER THE PLAN HAVE VOTED.
IMPORTANT: PLEASE DATE AND SIGN THE BALLOT ON THE REVERSE SIDE.
<PAGE> 4
PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK
-------------------
I plan to attend the
meeting
[ ]
-------------------
1. Proposal to adopt an amendment to FFOH's Articles of Incorporation to
reduce the vote required to approve a proposed merger or consolidation
of FFOH with or into one or more corporations or a proposed combination
or majority share acquisition involving the issuance of shares of FFOH
and requiring shareholder approval from two-thirds of the voting power
of FFOH to a majority of the voting power of FFOH.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THE BOARD OF DIRECTORS OF FFOH RECOMMENDS A VOTE FOR THE PROPOSAL TO
AMEND FFOH'S ARTICLES OF INCORPORATION.
2. Proposal to adopt an Agreement of Merger, dated as of September 28, 1998
(the "Agreement"), by and among FFOH, FAC, and GFCO, which provides,
among other things, for (i) the merger of GFCO with and into FAC (the
"Merger") and (ii) the conversion of each share of common stock of GFCO
outstanding immediately prior to the Merger (other than any shares held
by either FFOH or GFCO) into the right to receive 1.50 shares of FFOH
common stock, plus cash in lieu of any fractional share interest.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THE BOARD OF DIRECTORS OF FFOH RECOMMENDS A VOTE FOR APPROVAL OF THE
AGREEMENT. SUCH VOTES ARE HEREBY SOLICITED BY THE BOARD OF DIRECTORS.
Dated: _____________________, 1999
Signature__________________________________
Signature__________________________________
(print name)
IMPORTANT: Please sign your name exactly as it
appears hereon. When shares are held as joint
tenants, either may sign. When signing as an
attorney, executor, administrator, trustee or
guardian, add such title to your signature.
NOTE: If you receive more than one proxy card,
please date and sign each card and return all
proxy cards in the enclosed envelope.
<PAGE> 5
EXHIBIT 99(c)
(cont.)
FIDELITY FINANCIAL OF OHIO, INC.
SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 16, 1999
The undersigned, as a holder of common stock of Fidelity Financial
of Ohio, Inc. ("FFOH") pursuant to the FFOH's Employee Stock Ownership Plan
(the"ESOP), hereby instructs the members of the Board of Directors of FFOH, as
the Trustees for the ESOP, to vote as designated on the reverse of this
card all of the shares of common stock of FFOH which the undersigned holds
pursuant to the ESOP at the Special Meeting of Shareholders to be held at the
Quality Hotel Central, 4747 Montgomery Road, Cincinnati, Ohio, on February
16, 1999, at 2:00 p.m., Eastern Time, or any adjournment thereof.
SHARES OF COMMON STOCK OF FFOH WILL BE VOTED AS SPECIFIED. IF YOU RETURN
THIS BALLOT PROPERLY SIGNED BUT DO NOT OTHERWISE SPECIFY, SHARES HELD BY YOU
PURSUANT TO THE ESOP WILL BE VOTED FOR THE PROPOSAL TO AMEND FFOH'S ARTICLES OF
INCORPORATION AND FOR THE PROPOSAL TO ADOPT AN AGREEMENT OF MERGER, DATED AS OF
SEPTEMBER 28, 1998, BY AND AMONG FFOH, FIDELITY ACQUISITION CORPORATION ("FAC"),
A WHOLLY OWNED SUBSIDIARY OF FFOH, AND GLENWAY FINANCIAL CORPORATION ("GFCO").
IF YOU DO NOT RETURN THIS BALLOT, SHARES HELD BY YOU PURSUANT TO THE ESOP WILL
BE VOTED IN THE SAME PROPORTION AS THE SHARES UNDER THE ESOP HAVE VOTED.
IMPORTANT: PLEASE DATE AND SIGN THE BALLOT ON THE REVERSE SIDE.
<PAGE> 6
PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK
-------------------
I plan to attend the
meeting
[ ]
-------------------
1. Proposal to adopt an amendment to FFOH's Articles of Incorporation to
reduce the vote required to approve a proposed merger or consolidation
of FFOH with or into one or more corporations or a proposed combination
or majority share acquisition involving the issuance of shares of FFOH
and requiring shareholder approval from two-thirds of the voting power
of FFOH to a majority of the voting power of FFOH.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THE BOARD OF DIRECTORS OF FFOH RECOMMENDS A VOTE FOR THE PROPOSAL TO
AMEND FFOH'S ARTICLES OF INCORPORATION.
2. Proposal to adopt an Agreement of Merger, dated as of September 28, 1998
(the "Agreement"), by and among FFOH, FAC, and GFCO, which provides,
among other things, for (i) the merger of GFCO with and into FAC (the
"Merger") and (ii) the conversion of each share of common stock of GFCO
outstanding immediately prior to the Merger (other than any shares held
by either FFOH or GFCO) into the right to receive 1.50 shares of FFOH
common stock, plus cash in lieu of any fractional share interest.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THE BOARD OF DIRECTORS OF FFOH RECOMMENDS A VOTE FOR APPROVAL OF THE
AGREEMENT. SUCH VOTES ARE HEREBY SOLICITED BY THE BOARD OF DIRECTORS.
Dated: _____________________, 1999
Signature__________________________________
Signature__________________________________
(print name)
IMPORTANT: Please sign your name exactly as it
appears hereon. When shares are held as joint
tenants, either may sign. When signing as an
attorney, executor, administrator, trustee or
guardian, add such title to your signature.
NOTE: If you receive more than one proxy card,
please date and sign each card and return all
proxy cards in the enclosed envelope.
<PAGE> 1
EXHIBIT 99(d)
[GFCO Letterhead]
January 5, 1999
To: Participants in the 401(k) Profit Sharing Plan and
Employee Stock Ownership Plan
of Glenway Financial Corporation
As described in the enclosed materials, your proxy as a shareholder of
Glenway Financial Corporation ("GFCO") is being solicited in connection with an
upcoming Special Meeting of Shareholders of GFCO, at which shareholders of GFCO
will consider and vote upon a proposal to adopt an Agreement of Merger, dated as
of September 28, 1998 (the "Agreement"), by and among Fidelity Financial of
Ohio, Inc. ("FFOH"), Fidelity Acquisition Corporation ("FAC"), a wholly owned
subsidiary of FFOH, and GFCO, pursuant to which, among other things, GFCO will
be merged with and into FAC (the "Merger"). If the Merger is approved and
consummated, each share of common stock of GFCO outstanding immediately prior to
the Merger (other than any shares held by either FFOH or GFCO) will be converted
into the right to receive 1.50 shares of FFOH Common Stock, plus cash in lieu of
any fractional share interest. I hope you will take advantage of the opportunity
to direct, on a confidential basis, the manner in which shares of GFCO common
stock allocated to your accounts under GFCO's 401(k) Profit Sharing Plan and
Employee Stock Ownership Plan (together the "Plans") will be voted.
Enclosed with this letter is the Prospectus/Joint Proxy Statement, which
describes the matter to be voted upon, a voting instruction ballot for each of
the Plans, which will permit you to vote the shares allocated to your accounts
under the Plans, and a stamped, pre-addressed return envelope. After you review
the Prospectus/Joint Proxy Statement, I urge you to vote your shares in the
Plans by marking, dating, signing and returning the enclosed voting instruction
ballots to
. Your voting instructions will remain completely confidential.
Only ________________, who will tabulate the voting instructions, will have
access to your ballots. _________ will certify the totals for the Employee Stock
Ownership Plan and the 401(k) Profit Sharing Plan, respectively, to [THE
MEMBERS OF THE BOARD OF DIRECTORS OF GFCO, WHO ACT AS THE TRUSTEES FOR SUCH
PLANS,] for the purpose of having those shares voted. No other person
associated with GFCO or Centennial Bank will see the individual voting
instructions.
[IF YOUR VOTING INSTRUCTIONS ARE NOT RECEIVED, THE SHARES ALLOCATED TO
YOUR ACCOUNTS WILL BE VOTED IN THE SAME PROPORTION AS THE SHARES UNDER THE
RESPECTIVE PLANS HAVE VOTED.]
<PAGE> 2
Your Board of Directors has determined the Merger to be in the best
interests of GFCO and its shareholders and has unanimously approved the
Agreement and the transactions contemplated thereby, including the Merger. THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
THE AGREEMENT.
On behalf of the Board, I thank you for your attention to this important
matter.
Sincerely,
Robert R. Sudbrook
President and Chief Executive Officer
<PAGE> 3
EXHIBIT 99(d)
(cont.)
GLENWAY FINANCIAL CORPORATION
SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 16, 1999
The undersigned, as a holder of common stock of Glenway Financial
Corporation ("GFCO") pursuant to the GFCO 401(k) Profit Sharing Plan (the
"Plan"), hereby instructs [THE MEMBERS OF THE BOARD OF DIRECTORS OF GFCO, AS THE
TRUSTEES FOR THE PLAN,] to vote as designated on the reverse of this card all of
the shares of common stock of GFCO which the undersigned holds pursuant to the
Plan at the Special Meeting of Shareholders to be held at Dante's Restaurant,
Harrison and Rybolt Roads, Cincinnati, Ohio, on February 16, 1999, at 2:00 p.m.,
Eastern Time, or any adjournment thereof.
SHARES OF COMMON STOCK OF GFCO WILL BE VOTED AS SPECIFIED. IF YOU
RETURN THIS BALLOT PROPERLY SIGNED BUT DO NOT OTHERWISE SPECIFY, SHARES HELD BY
YOU PURSUANT TO THE PLAN WILL BE VOTED FOR THE PROPOSAL TO ADOPT AN AGREEMENT OF
MERGER, DATED AS OF SEPTEMBER 28, 1998, BY AND AMONG FIDELITY FINANCIAL OF OHIO,
INC. ("FFOH"), FIDELITY ACQUISITION CORPORATION ("FAC"), A WHOLLY OWNED
SUBSIDIARY OF FFOH, AND GFCO. [IF YOU DO NOT RETURN THIS BALLOT, SHARES HELD BY
YOU PURSUANT TO THE PLAN WILL BE VOTED IN THE SAME PROPORTION AS THE SHARES
UNDER THE PLAN HAVE VOTED.]
IMPORTANT: PLEASE DATE AND SIGN THE BALLOT ON THE REVERSE SIDE.
<PAGE> 4
PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK
-------------------
I plan to attend the
meeting
[ ]
-------------------
Proposal to adopt an Agreement of Merger, dated as of September 28, 1998
(the "Agreement"), by and among FFOH, FAC, and GFCO, which provides,
among other things, for (i) the merger of GFCO with and into FAC (the
"Merger") and (ii) the conversion of each share of common stock of GFCO
outstanding immediately prior to the Merger (other than any shares held
by either FFOH or GFCO) into the right to receive 1.50 shares of FFOH
common stock, plus cash in lieu of any fractional share interest.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THE BOARD OF DIRECTORS OF GFCO RECOMMENDS A VOTE FOR APPROVAL OF THE
AGREEMENT. SUCH VOTES ARE HEREBY SOLICITED BY THE BOARD OF DIRECTORS.
Dated: _____________________, 1999
Signature__________________________________
Signature__________________________________
(print name)
IMPORTANT: Please sign your name exactly as it
appears hereon. When shares are held as joint
tenants, either may sign. When signing as an
attorney, executor, administrator, trustee or
guardian, add such title to your signature.
NOTE: If you receive more than one proxy card,
please date and sign each card and return all
proxy cards in the enclosed envelope.
<PAGE> 5
EXHIBIT 99(d)
(cont.)
GLENWAY FINANCIAL CORPORATION
SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 16, 1999
The undersigned, as a holder of common stock of Glenway Financial
Corporation ("GFCO") pursuant to the GFCO Employee Stock Ownership Plan (the
"ESOP"), hereby instructs [THE MEMBERS OF THE BOARD OF DIRECTORS OF GFCO, AS THE
TRUSTEES FOR THE ESOP,] to vote as designated on the reverse of this card all of
the shares of common stock of GFCO which the undersigned holds pursuant to the
ESOP at the Special Meeting of Shareholders to be held at Dante's Restaurant,
Harrison and Rybolt Roads, Cincinnati, Ohio, on February 16, 1999, at 2:00 p.m.,
Eastern Time, or any adjournment thereof.
SHARES OF COMMON STOCK OF GFCO WILL BE VOTED AS SPECIFIED. IF YOU
RETURN THIS BALLOT PROPERLY SIGNED BUT DO NOT OTHERWISE SPECIFY, SHARES HELD BY
YOU PURSUANT TO THE ESOP WILL BE VOTED FOR THE PROPOSAL TO ADOPT AN AGREEMENT OF
MERGER, DATED AS OF SEPTEMBER 28, 1998, BY AND AMONG FIDELITY FINANCIAL OF OHIO,
INC. ("FFOH"), FIDELITY ACQUISITION CORPORATION ("FAC"), A WHOLLY OWNED
SUBSIDIARY OF FFOH, AND GFCO. [IF YOU DO NOT RETURN THIS BALLOT, SHARES HELD BY
YOU PURSUANT TO THE ESOP WILL BE VOTED IN THE SAME PROPORTION AS THE SHARES
UNDER THE ESOP HAVE VOTED.]
IMPORTANT: PLEASE DATE AND SIGN THE BALLOT ON THE REVERSE SIDE.
<PAGE> 6
PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK
-------------------
I plan to attend the
meeting
[ ]
-------------------
Proposal to adopt an Agreement of Merger, dated as of September 28, 1998
(the "Agreement"), by and among FFOH, FAC, and GFCO, which provides,
among other things, for (i) the merger of GFCO with and into FAC (the
"Merger") and (ii) the conversion of each share of common stock of GFCO
outstanding immediately prior to the Merger (other than any shares held
by either FFOH or GFCO) into the right to receive 1.50 shares of FFOH
common stock, plus cash in lieu of any fractional share interest.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THE BOARD OF DIRECTORS OF GFCO RECOMMENDS A VOTE FOR APPROVAL OF THE
AGREEMENT. SUCH VOTES ARE HEREBY SOLICITED BY THE BOARD OF DIRECTORS.
Dated: _____________________, 1999
Signature__________________________________
Signature__________________________________
(print name)
IMPORTANT: Please sign your name exactly as it
appears hereon. When shares are held as joint
tenants, either may sign. When signing as an
attorney, executor, administrator, trustee or
guardian, add such title to your signature.
NOTE: If you receive more than one proxy card,
please date and sign each card and return all
proxy cards in the enclosed envelope.
