<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
For the Quarterly Period Ended Commission File
September 30, 1995 No. 1-8019
P R O V I D E N T B A N C O R P , I N C .
Incorporated under IRS Employer I.D.
the Laws of Ohio No. 31-0982792
One East Fourth Street, Cincinnati, Ohio 45202
Phone: 513-579-2000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No ______
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: Common
stock, without par value, at October 31, 1995 is 15,646,338.
Please address all correspondence to:
John R. Farrenkopf
Vice President and Chief Financial Officer
Provident Bancorp, Inc.
One East Fourth Street
Cincinnati, Ohio 45202
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
PROVIDENT BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<CAPTION>
September 30, December 31,
1995 1994
ASSETS (Unaudited)
<S> <C> <C>
Cash and Noninterest Bearing Deposits $175,801 $172,025
Federal Funds Sold and Reverse Repurchase Agreements 108,150 252,550
Investment Securities:
Held to Maturity (market value - $255,178 and $31,699) 255,286 31,699
Available for Sale (amortized cost - $622,210 and $679,310) 618,664 654,221
Loans (Net of Unearned Income):
Commercial Lending:
Commercial and Financial 2,155,592 1,878,351
Commercial Mortgage 436,704 420,222
Commercial Construction 218,294 172,190
Equipment Lease Financing 107,348 109,743
Consumer Lending:
Instalment 965,827 930,545
Residential 482,362 507,734
Lease Financing 280,239 185,753
Total Loans 4,646,366 4,204,538
Reserve for Possible Loan Losses (55,830) (51,979)
Net Loans 4,590,536 4,152,559
Premises and Equipment 86,731 64,210
Other Assets 120,089 84,227
$5,955,257 $5,411,491
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest Bearing $479,322 $452,458
Interest Bearing 3,572,142 3,616,191
Total Deposits 4,051,464 4,068,649
Short-Term Debt 862,115 521,707
Long-Term Debt 508,035 383,433
Accrued Interest and Other Liabilities 121,208 78,351
Total Liabilities 5,542,822 5,052,140
Shareholders' Equity:
Preferred Stock, 5,000,000 Shares Authorized,
Series B, 371,418 Issued - 37,000
Series C, 371,418 Issued 37,000 -
Common Stock, No Par Value, $.67 Stated Value, 60,000,000
Shares Authorized, 15,654,649 and 15,639,849 Issued 10,437 10,427
Capital Surplus 108,196 107,264
Retained Earnings 251,198 210,355
Reserve for Retirement of Capital Securities 8,500 10,667
Treasury Stock, 18,283 and 4,487 Shares (590) (134)
Unrealized Losses on Marketable Securities
(net of deferred income tax) (2,306) (16,228)
Total Shareholders' Equity 412,435 359,351
$5,955,257 $5,411,491
</TABLE>
<PAGE>
<TABLE>
PROVIDENT BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In Thousands, Except Per Share Amounts)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Interest Income:
Interest and Fees on Loans:
Taxable $103,998 $80,491 $300,922 $220,244
Exempt From Federal Income Taxes 121 137 388 442
104,119 80,628 301,310 220,686
Interest on Investment Securities:
Taxable 13,701 7,846 35,677 24,825
Exempt From Federal Income Taxes 98 42 293 46
13,799 7,888 35,970 24,871
Interest on Federal Funds Sold and
Reverse Repurchase Agreements 140 421 886 888
Total Interest Income 118,058 88,937 338,166 246,445
Interest Expense:
Interest on Deposits:
Savings and Demand Deposits 5,984 6,439 20,051 18,801
Time Deposits 41,806 26,418 123,994 65,818
Total Interest on Deposits 47,790 32,857 144,045 84,619
Interest on Short-Term Debt 10,783 4,191 26,279 12,014
Interest on Long-Term Debt 7,859 5,336 21,036 14,775
Total Interest Expense 66,432 42,384 191,360 111,408
Net Interest Income 51,626 46,553 146,806 135,037
Provision for Possible Loan Losses 4,000 3,000 9,000 9,000
Net Interest Income After Provision
for Possible Loan Losses 47,626 43,553 137,806 126,037
Other Income:
Service Charges on Deposit Accounts 4,537 3,811 12,219 11,115
Other Service Charges and Fees 4,525 4,171 15,410 11,282
Gain on Sales of Loans 1,426 506 3,858 1,197
Security Gains (Losses) (92) - (92) -
Other 8,329 797 10,971 3,286
Total Other Income 18,725 9,285 42,366 26,880
Other Expense:
Compensation:
Salaries 16,153 13,136 43,041 37,436
Benefits 2,127 1,870 6,865 6,400
Profit Sharing 1,068 850 2,738 2,379
Occupancy 2,334 1,857 6,679 5,735
Equipment Expense 2,296 1,948 6,897 5,772
Deposit Insurance 726 1,894 5,080 5,427
Professional Fees 2,714 1,528 5,651 4,130
Other 8,933 7,212 25,605 20,597
Total Other Expense 36,351 30,295 102,556 87,876
Earnings Before Income Taxes 30,000 22,543 77,616 65,041
Applicable Income Taxes 8,990 7,818 25,131 22,287
Net Earnings $21,010 $14,725 $52,485 $42,754
Net Earnings Per Common Share:
Primary $1.26 $.87 $3.15 $2.52
Fully Diluted 1.13 .80 2.85 2.32
Average Primary Shares 16,162 16,120 16,066 16,074
Average Fully Diluted Shares 18,553 18,458 18,419 18,410
</TABLE>
<PAGE>
<TABLE>
PROVIDENT BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
<CAPTION>
Nine Months Ended September 30,
1995 1994
<S> <C> <C>
Operating Activities:
Net Earnings $52,485 $42,754
Adjustments to Reconcile Net Earnings to
Net Cash Provided by Operating Activities:
Provision for Possible Loan Losses 9,000 9,000
Provision for Depreciation and Amortization 9,018 6,669
Amortization of Investment Security Premiums (Discounts) (606) 602
Amortization of Unearned Income (16,442) (7,583)
Net Decrease in Trading Securities 125 181
Proceeds from Sale of Loans Held for Sale 85,245 66,850
Origination of Loans Held for Sale (83,528) (4,946)
Realized Gains on Loans Held for Sale (964) (709)
Realized Gains on Sale of Loans (2,894) (488)
Realized Investment Security Losses 92 -
Increase in Interest Receivable (3,690) (6,533)
Increase in Accounts Receivable and Other Assets (29,527) (15,439)
Increase in Interest Payable 15,400 13,018
Increase in Accounts Payable and Other Liabilities 3,823 1,993
Other 15,492 4,151
Net Cash Provided By Operating Activities 53,029 109,520
Investing Activities:
Investment Securities Available for Sale:
Proceeds from Sales 18,654 -
Proceeds from Maturities and Prepayments 142,706 158,427
Purchases (103,825) (149,162)
Investment Securities Held to Maturity:
Proceeds from Sales 416 -
Proceeds from Maturities and Prepayments 20,744 1,615
Purchases (244,755) (13,400)
Net Increase in Loans and Leases (435,102) (635,163)
Proceeds from Sale of Other Real Estate 2,208 3,944
Purchases of Premises and Equipment (29,290) (7,703)
Proceeds from Sales of Premises and Equipment 2,305 2,785
Net Cash Used In Investing Activities (625,939) (638,657)
Financing Activities:
Net Decrease in Demand and Savings Deposits (90,609) (136,098)
Net Increase in Certificates of Deposit 73,424 515,026
Net Increase (Decrease) in Short-Term Debt 340,408 (61,434)
Principal Payments on Long-Term Debt (25,466) (108,466)
Proceeds From Issuance of Long-Term Debt 150,000 211,413
Cash Dividends Paid (13,867) (13,006)
Proceeds from Sale of Common and Treasury Stock 4,505 733
Repurchase of Common Stock (6,109) -
Net Cash Provided By Financing Activities 432,286 408,168
Decrease in Cash and Cash Equivalents (140,624) (120,969)
Cash and Cash Equivalents at Beginning of Period 424,575 539,394
Cash and Cash Equivalents at End of Period $283,951 $418,425
Supplemental Disclosures of Cash Flow Information:
Cash Paid for:
Interest $175,960 $98,390
Income Taxes 9,000 22,700
Non-Cash Activity:
Additions to Other Real Estate in Settlement of Loans 539 1,592
Transfer of Premises and Equipment to Other Real Estate - 101
Treasury Stock Reissued to Acquire Business 1,750 -
</TABLE>
<PAGE>
PROVIDENT BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary for fair presentation. The
results of operations for interim periods are not necessarily
indicative of the results to be expected for the full year.
The financial statements presented herein should be read in
conjunction with the financial statements and notes thereto included
in Provident Bancorp, Inc.'s 1994 annual report on Form 10-K filed
with the Securities and Exchange Commission.
Basis of Presentation
The consolidated financial statements include the accounts of
Provident Bancorp, Inc. and its subsidiaries ("Bancorp"), all of which
are wholly owned. All significant intercompany balances and
transactions have been eliminated. Certain reclassifications have been
made to conform to the current year presentation.
The accompanying financial statements have been prepared in accordance
with the instructions to Form 10-Q and therefore do not include all
information and footnotes necessary to be in conformity with generally
accepted accounting principles.
Bancorp adopted Financial Accounting Standards Board("FASB") Statement
No. 114, "Accounting by Creditors for Impairment of a Loan", on
January 1, 1995. Generally, interest income on impaired loans is
computed on the outstanding principal balance. Impaired loans are
generally placed on nonaccrual status when the payment of principal
and/or interest is past due 90 days or more. FASB Statement No. 114 is
not applicable to Bancorp's instalment loans, residential loans,
leases and debt securities. The adoption of FASB Statement No. 114 had
no material impact on Bancorp's financial condition or results of
operations.
Preferred Stock
In the third quarter of 1995, Bancorp exchanged all of the shares of
its Series B Convertible Preferred Stock ("B Preferred") for an
identical number of shares of its Series C Convertible Preferred Stock
("C Preferred"). The terms of the C Preferred are substantially
identical to the B Preferred except that the terms of the C Preferred
permit American Financial Corporation ("American Financial"), its
subsidiaries or affiliates to convert the C Preferred into Bancorp
common stock so long as American Financial, its subsidiaries or
affiliates do not, in the aggregate, beneficially own in excess of
9.9% of Bancorp's voting equity securities.
<PAGE>
Stock Options
Pursuant to Bancorp's 1988 Stock Option Plan and 1992 Outside
Director's Stock Option Plan, options to purchase 250,500 shares of
Bancorp common stock were granted during the first nine months of
1995. The options have exercise prices ranging from $29.69 to $40.00.
Off-Balance Sheet Financial Agreements
In the normal course of business, Bancorp uses various financial
instruments with off-balance sheet risk to manage its interest rate
risk and to meet the financing needs of its customers. At September
30, 1995, these off-balance sheet instruments consisted of standby
letters of credit of $93 million, commitments to extend credit of $1.5
billion and interest rate swaps with a notional amount of $1.3
billion.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Summary
Bancorp's net earnings for the third quarter of 1995 were $21.0
million compared to $14.7 million for the third quarter of 1994. Net
interest income increased by $5.1 million, or 11%, over the comparable
period in 1994. Interest income increased by $29.1 million, or 33%,
which more than offset the $24.0 million, or 57%, increase in interest
expense. Other income increased $9.4 million, or 102%, due primarily
to an additional $7.0 million of income from the sale of all of the
deposits and branches of Heritage Savings Bank ("Heritage"). Other
expense increased $6.1 million, or 20%, due primarily to increases in
compensation expense of $3.5 million and professional fees of $1.2
million, of which $800,000 and $700,000, respectively, are a result of
the Heritage transaction.
Net earnings for the first nine months of 1995 were $52.5 million
compared to $42.8 million for the first nine months of 1994. Net
interest income increased by $11.8 million, or 9%, over the comparable
period in 1994. Interest income increased by $91.7 million, or 37%,
which more than offset the $80.0 million, or 72%, increase in interest
expense. Other income increased $15.5 million, or 58%, primarily due
to increases in gains from the sales of loans, mortgage loan servicing
rights and Heritage's deposits and branches. Other expense increased
$14.7 million, or 17%, primarily due to the same reasons stated for
the quarter to quarter comparison.
<PAGE>
The following ratios compare returns on average assets and average
equity for the first nine months of 1995 and for the year 1994.
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1995 December 31, 1994
<S> <C> <C>
Net Earnings to Average Assets(1) 1.28% 1.24%
Net Earnings to Average Shareholders' Equity(1) 18.35% 16.64%
<FN>
(1)Net earnings for the nine months ended September 30, 1995 have been annualized.
</TABLE>
The ratio of operating expense to tax equivalent revenue ("efficiency
ratio") was 56.8% for the first nine months of 1995 compared to 54.2%
for the first nine months of 1994. Tax equivalent revenue includes tax
equivalent net interest income and other income but excludes non-
recurring gains and security gains or losses. The increase in the
efficiency ratio was due primarily to increased operating expense
which grew at a proportionately greater rate than tax equivalent net
interest income.
Asset quality remained strong during the third quarter of 1995. The
ratio of nonperforming loans to total loans was .43% at September 30,
1995, compared to .17% at December 31, 1994 and .18% at September 30,
1994. The ratio of nonperforming assets to total loans and other real
estate owned was .47% at September 30, 1995, compared to .25% at
December 31, 1994 and .33% at September 30, 1994.
Net Interest Income
See Table 1 for net interest income on a tax equivalent basis and
Table 2 for consolidated average balances, rates earned/paid and net
interest margin.
Net interest income on a tax equivalent basis increased approximately
$11.9 million for the first nine months of 1995 over the comparable
period in 1994. This increase resulted from an $18.4 million increase
due to changes in volume more than offsetting the $6.5 million
decrease which was caused by changes in rates. Volume changes are
caused by changes in the average balances of interest earning assets
and interest bearing liabilities. The net interest margin was 3.82%
for the first nine months of 1995 as compared to 4.24% for the
comparable period in 1994. The decrease in the net interest margin
during this period reflects the increase in the average rate paid on
interest bearing liabilities, which increased 160 basis points, more
than offsetting the increase of 106 basis points in the average rate
earned on interest earning assets. An increase in time deposits
combined with an increase in the rate paid on time deposits was the
primary reason for the increase in Bancorp's overall cost of interest
bearing liabilities. An increase in the amount of commercial and
financial loans combined with their repricing were the primary reasons
for the increase in the average rate earned on interest earning
assets. Although interest rates have been relatively level for the
last six months, the rates increased from January 1994 to March 1995.
During the time of rising interest rates, interest bearing liabilities
reacted more quickly than interest earning assets, causing the net
<PAGE>
interest margin to decrease. The increase in interest rates that began
in 1994 was the primary reason that interest rate swaps decreased the
net interest margin by 15 basis points during the first nine months of
1995. During the first nine months of 1994, interest rate swaps
increased the net interest margin by 22 basis points.
In preparing the net interest margin tables, nonaccrual loan balances
are included in the average balances for loans. Loan fees are included
in loan revenue as follows: third quarter 1995 - $4.3 million, third
quarter 1994 - $3.9 million, year-to-date 1995 - $13.0 million and
year-to-date 1994 - $11.3 million.
Provision for Possible Loan Losses
During the third quarter of 1995 and 1994, the provision for possible
loan losses was $4 million and $3 million, respectively. The increase
was made to cover an increase in total loans of $251.6 million as of
September 30, 1995 as compared to June 30, 1995. The provision for
possible loan losses was $9 million for the first nine months of 1995
and 1994.
Other Income
Third Quarter 1995 Compared to Third Quarter 1994
Other income increased $9.4 million during the third quarter of 1995.
Service charges on deposit accounts increased due to additional fees
received on corporate deposit accounts and increased fee rates on
nonsufficient funds. Gain on sales of loans increased due to sales of
residential loans and an equipment lease. A gain from the sale of
Heritage's deposits and branches was the primary reason for the
increase in other.
Nine Months Ended September 30, 1995 Compared to Nine Months Ended
September 30, 1994
Other income increased $15.5 million during the first nine months of
1995 when compared to 1994. Other service charges and fees increased
primarily due to a gain from the sale of mortgage loan servicing
rights. The sale of equipment leases was the principal reason for the
increase in gain on sale of loans. Other increased chiefly due to a
gain from the sale of Heritage's deposits and branches.
Other Expense
Third Quarter 1995 Compared to Third Quarter 1994
Other expense increased $6.1 million during the third quarter of 1995
when compared to 1994 reflecting higher expenses associated with
expansion of telemarketing, customer service, lending, and electronic
banking services. Compensation increased as a result of incentive
compensation accruals, expenses related to the sale of Heritage's
branches, and displacement accruals associated with the discontinuance
of mortgage loan servicing. Occupancy expense increased primarily due
<PAGE>
to an increase in the amount of office and branch space rented. The
increase in equipment expense was primarily due to increased
depreciation expense relating to the bank's data processing
operations. The decrease in deposit insurance expense reflected a
refund received from the FDIC. Increased professional fees resulted
from the Heritage transaction. Increases in property tax and marketing
expense were the primary reasons for the increase in other.
Nine Months Ended September 30, 1995 Compared to Nine Months Ended
September 30, 1994
Other expense increased $14.7 million during the first nine months of
1995 when compared to 1994. Compensation increased as a result of
merit and promotion increases as well as the reasons given in the
quarterly comparison. Occupancy, equipment expense and professional
fees increased primarily for the same reasons given in the quarterly
comparison. Increases in marketing, postage, and stationery and
supplies expense were the primary reasons for the increase in other.
Financial Condition
Investment Securities and Short-Term Investments
Federal funds sold and reverse repurchase agreements decreased $144.4
million, or 57%, during 1995 as funds were shifted to asset categories
with higher yields. Investment securities increased $188.0 million, or
27%, during 1995 as more funds were invested in investment securities
due to slower loan growth during the first nine months of 1995. During
the third quarter of 1995, Federal Home Loan Bank stock, classified as
held to maturity, was sold. Bancorp was no longer required to hold the
stock due to the sale of Heritage's deposits. The stock was sold at
its cost basis of $416,000 resulting in no gain or loss.
Loans
Total loans increased $441.8 million, or 11%, during 1995. This growth
was primarily due to growth in commercial and financial loans of
$277.2 million. Consumer lease financing also increased by $94.5
million during 1995 as automobile leasing continues to grow.
<PAGE>
The following table shows the composition of the commercial and
financial loan category by industry type at September 30, 1995
(dollars in millions):
<TABLE>
<CAPTION>
Amount on
Type Amount % Nonaccrual
<S> <C> <C> <C>
Construction $97.8 5 $.7
Manufacturing 460.4 21 2.6
Transportation/Utilities 138.9 6 5.7
Wholesale Trade 215.0 10 .8
Retail Trade 253.9 12 .1
Finance & Insurance 110.9 5 .1
Real Estate Operators/Investment 286.0 13 .8
Service Industries 274.6 13 .5
Automobile Dealers 78.6 4 -
Other(1) 239.5 11 .9
Total $2,155.6 100 $12.2
<FN>
(1) Includes various kinds of loans, such as small business loans and loans with
balances under $100,000.
</TABLE>
The composition of the commercial mortgage and construction loan
categories by property type at September 30, 1995 is shown in the
following table (dollars in millions):
<TABLE>
<CAPTION>
Amount on
Type Amount % Nonaccrual
<S> <C> <C> <C>
Apartments $94.2 14 $-
Office/Warehouse 140.7 21 .6
Residential Development 96.3 15 .1
Shopping/Retail 154.8 24 -
Land 28.8 4 -
Industrial Plants 17.4 3 -
Hotel/Motel 25.0 4 -
Health Facilities 5.2 1 -
Auto Sales and Service 21.6 3 -
Churches 12.6 2 -
Mobile Home Parks 10.9 2 -
Other Commercial Properties 47.5 7 .9
Total $655.0 100 $1.6
</TABLE>
At September 30, 1995, approximately $122.8 million, or 2.6%, of
Bancorp's total loan portfolio was classified as highly leveraged
loans. This is an increase of $5.0 million since December 31, 1994. In
general, Bancorp does not originate highly leveraged loans but
participates in loans originated by larger banks. All of the highly
leveraged loans are current at this time except for one loan with a
balance of $2 million that is on nonaccrual status. Placing this loan
on nonaccrual reduced interest income in the first nine months of 1995
by approximately $241,000. These loans were considered by management
in the determination of the adequacy of the reserve for possible loan
losses. Bancorp also has commitments to lend up to an additional $54.4
million at market rates under this type of transaction to present
borrowers.
<PAGE>
Bancorp maintains a reserve for possible loan losses to absorb
potential losses in its loan portfolio. Management's determination of
the adequacy of the reserve is based on reviews of specific loans,
loan loss experience, general economic conditions and other pertinent
factors. Loans deemed uncollectible are charged off and deducted from
the reserve and recoveries on loans previously charged off are added
to the reserve. Management considers the present reserve to be
appropriate and adequate to cover potential losses inherent in the
loan portfolio based on the current economic environment. However,
future economic changes cannot be predicted. Deterioration in general
economic conditions could result in an increase in the risk
characteristics of the loan portfolio and an increase in the provision
for possible loan losses.
The following table shows the progression of the reserve for possible
loan losses (dollars in thousands):
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Balance at January 1 $51,979 $40,542
Provision for Possible Loan Losses 9,000 9,000
Loans Charged Off (11,054) (7,954)
Recoveries 5,905 3,524
Balance at September 30 $55,830 $45,112
</TABLE>
The primary reason for the increase in recoveries in 1995 was the
partial recovery of a commercial loan charge-off that occurred in
1991. As a percentage of total loans outstanding, the reserve was
1.20% at September 30, 1995, 1.24% at December 31, 1994 and 1.14% at
September 30, 1994.
Table 3 shows a comparison of the major components of nonperforming
assets over the past five quarters along with various asset quality
ratios. Nonperforming assets have increased $11.3 million during 1995.
Nonaccrual loans have increased approximately $8.9 million during the
first nine months of 1995, primarily due to two commercial and
financial loans being put on nonaccrual status during the first
quarter. The increase in renegotiated loans was due to one loan being
restructured during the second quarter of 1995. The decrease in other
real estate owned was due primarily to the sale of commercial
properties. Nonperforming assets as a percentage of loans and total
assets at September 30, 1995 are at a level that is more consistent
with historical averages.
Deposits
Although total deposits as of September 30, 1995 decreased $17.2
million, or 0.4% when compared to December 31, 1994, the average total
deposit balance for the first nine months of 1995 increased $579.3
million, or 17%, over the average total deposit balance for year 1994.
The increase in the average balance is primarily due to an increase in
brokered deposits.
<PAGE>
Short-Term Debt
During the first nine months, of 1995, short-term debt increased
$340.4 million, or 65%, primarily due to the $338.0 million increase
in federal funds purchased and repurchase agreements. These borrowings
were used to fund loan growth and investment security purchases.
Long-Term Debt
Long-term debt increased $124.6 million, or 32%, during the first nine
months of 1995. The increase is attributable to two additional
advances totaling $150 million from the Federal Home Loan Bank. The
advances have a variable rate based on the one-month LIBOR rate with
maturity dates in the year 2000. These borrowings were used to fund
loan growth. In addition, principal payments totaling $25.5 million
were made during the first nine months of 1995.
Capital Resources and Adequacy
During the first nine months of 1995, shareholders' equity increased
$53.1 million, or 15%, to $412.4 million. Dividends of $12.1 million
on common stock and $1.8 million on preferred stock were paid in the
first nine months of 1995. Treasury stock increased to $590,000 at
September 30, 1995 as Bancorp purchased 192,222 shares and sold
178,426 shares of its treasury stock during the first nine months of
1995. Of the treasury stock sold, 46,054 was reissued in connection
with the acquisition of Mathematical Investment Management, Inc., a
mutual fund advisor. As a result of the acquisition, $60 million in
mutual fund assets were merged into Bancorp's Riverfront family of
mutual funds. In December, 1994, Bancorp announced that it would
purchase up to 200,000 shares of its common stock to be used for
various company benefit plans and for other corporate purposes. In
May, 1995, Bancorp announced that it would purchase up to an
additional 200,000 shares. As of September 30, 1995, 200,677 shares
remained available to be purchased by Bancorp. Unrealized losses on
marketable securities, net of deferred income taxes, decreased $13.9
million during the first nine months of 1995 as a result of an
improvement in market conditions.
The following table of ratios is important to the analysis of the
adequacy of capital resources.
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1995 December 31, 1994
<S> <C> <C>
Average Shareholders' Equity to Average Assets 6.98% 7.43%
Preferred Dividend Payout to Net Earnings 3.43(1) 5.15
Common Dividend Payout to Net Earnings 22.99(1) 25.47
Tier 1 Leverage Ratio 7.13 7.21
Tier 1 Capital to Risk-Weighted Assets 7.62 7.86
Total Risk-Based Capital To Risk-Weighted Assets 12.02 12.85
<FN>
(1)Net earnings and dividend payouts for the nine months ended September 30, 1995 have
been annualized.
</TABLE>
<PAGE>
In July, 1995, Bancorp announced that the quarterly dividend on its
common stock would increase from $.25 per share to $.275 per share
effective with the dividend paid in the third quarter of 1995. This
dividend rate increase should cause the common dividend payout ratio
to increase in the future.
In the fourth quarter of 1994, Bancorp proceeded with optional
redemption of its Series B preferred stock. Pursuant to the terms of
the Series B preferred stock, the Series B preferred shares were not
redeemed but ceased to accrue dividends at the preferred stock rate of
$8.00 per share. Subsequently, dividends were paid as if the Series B
preferred stock had been converted to Bancorp common stock. The
conversion of Series B preferred stock to Series C preferred stock did
not affect the dividend rate paid on the stock.
Capital expenditures planned by Bancorp for building improvements and
furniture and equipment in 1995 are currently estimated to be
approximately $11 million. Included in this amount are projected
capital expenditures for improvements of the branch banking network
and improvements in telebanking systems. Through September 30, 1995,
approximately $8.6 million of these expenditures have been made.
Management believes that currently available funds and funds provided
by normal operations will be sufficient to meet capital requirements.
Liquidity
Adequate liquidity is necessary to meet the borrowing needs and
deposit withdrawal requirements of customers as well as to satisfy
liabilities, fund operations and support asset growth. Cash flows
generated by new deposits, loan payments and maturities of loans are
sources of liquidity. Other sources include federal funds, investment
securities and access to borrowed funds in the money markets.
Net liquid assets at September 30, 1995 were as follows (dollars in
millions):
<TABLE>
<S> <C>
Cash and deposits due from banks $175.8
Federal funds sold net(1) (609.2)
Investment securities due within one year 215.1
Loans due within one year 1,589.6
Net liquid assets $1,371.3
<FN>
(1) Federal funds sold and reverse repurchase agreements less federal
funds purchased and repurchase agreements.
</TABLE>
Approximately $25.5 million of long-term debt was repaid during the
first nine months of 1995. During the remainder of 1995, approximately
$500,000 of long-term debt is due to be repaid based upon scheduled
principal payments.
The major source of liquidity for Bancorp on a parent-only basis is
dividends paid to it by its subsidiaries. Pursuant to Federal Reserve
and state banking regulations, the maximum amount available for
dividend distribution to Bancorp at September 30, 1995 by its banking
<PAGE>
subsidiaries was approximately $86 million. Bancorp has not received
dividends from its subsidiaries during the first nine months of 1995.
At September 30, 1995, the parent had $143.3 million of short-term
commercial paper outstanding. A portion of commercial paper proceeds
was used to fund short-term loans. Contractual lines of credit
totaling $130 million have been obtained by Bancorp to support its
commercial paper borrowings. These lines had not been used at
September 30, 1995. The parent had approximately $117.1 million in
cash and interest earning deposits at September 30, 1995.
Management believes that the repayment of Bancorp's debt can be made
using funds generated by Bancorp and received as dividends from
subsidiaries both in the short-term as well as in the long-term.
<PAGE>
<TABLE>
Provident Bancorp, Inc. and Subsidiaries
Condensed Consolidated Statements Of Earnings
(unaudited)
(In Thousands)
Table 1.
<CAPTION>
Quarter Ended Nine Months Ended
Sept. Sept. Sept. Sept.
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Total Interest Income $118,058 $88,937 $338,166 $246,445
Taxable Equivalent Adjustment 118 97 367 263
Taxable Equivalent Interest Income 118,176 89,034 338,533 246,708
Total Interest Expense 66,432 42,384 191,360 111,408
Net Interest Income 51,744 46,650 147,173 135,300
Provision for Possible Loan Losses 4,000 3,000 9,000 9,000
Taxable Equivalent Net Interest Income After
Provision for Possible Loan Losses 47,744 43,650 138,173 126,300
Noninterest Income 18,725 9,285 42,366 26,880
Noninterest Expense 36,351 30,295 102,556 87,876
Taxable Equivalent Earnings Before Income Taxes 30,118 22,640 77,983 65,304
Applicable Income Taxes 8,990 7,818 25,131 22,287
Taxable Equivalent Adjustment 118 97 367 263
Net Earnings $21,010 $14,725 $52,485 $42,754
Net Earnings Applicable to Common Stock $20,372 $13,982 $50,686 $40,525
</TABLE>
<PAGE>
<TABLE>
Provident Bancorp, Inc. and Subsidiaries
Consolidated Average Balances, Rates and Yields
On a Fully Taxable Equivalent Basis
(unaudited)
(Dollars In Millions)
Table 2.
<CAPTION>
Quarter Ended Nine Months Ended
Sept. 30, 1995 Sept. 30, 1994 Sept. 30, 1995 Sept. 30, 1994
Rate Rate Rate Rate
Earned/ Earned/ Earned/ Earned/
Balance Paid Balance Paid Balance Paid Balance Paid
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Loans (Net of Unearned Income):
Commercial Lending:
Commercial and Financial $2,048 9.76% $1,674 8.92% $1,984 9.97% $1,594 8.38%
Commercial Mortgage 429 9.34 397 8.61 425 9.23 395 8.68
Commercial Construction 209 9.27 158 8.26 197 9.46 152 7.83
Equipment Lease Financing 103 7.47 87 8.12 100 7.61 88 8.01
Consumer Lending:
Instalment 947 9.32 889 8.00 933 8.97 841 7.84
Residential 492 7.95 508 7.70 497 7.98 504 7.89
Lease Financing 262 7.29 68 9.29 229 7.13 30 9.74
Total Loans 4,490 9.21 3,781 8.47 4,365 9.23 3,604 8.20
Reserve for Possible Loan Losses (56) (46) (55) (45)
Net Loans 4,434 9.32 3,735 8.57 4,310 9.35 3,559 8.30
Investment Securities:
Taxable 898 6.06 638 4.88 813 5.87 681 4.88
Tax Exempt 10 5.76 7 3.81 10 5.87 2 4.00
Total Investment Securities 908 6.05 645 4.87 823 5.87 683 4.87
Federal Funds Sold and Reverse
Repurchase Agreements 10 5.77 37 4.53 21 5.73 29 4.11
Total Earning Assets 5,352 8.76 4,417 8.00 5,154 8.78 4,271 7.72
Cash and Noninterest Bearing Deposits 151 149 147 144
Other Assets 181 113 161 109
Total Assets $5,684 $4,679 $5,462 $4,524
Liabilities and Shareholders' Equity:
Deposits:
Demand Deposits $251 1.96 $267 2.17 $257 2.14 $269 2.16
Savings Deposits 640 2.94 735 2.69 656 3.25 771 2.51
Time Deposits 2,666 6.22 2,162 4.85 2,682 6.18 1,906 4.62
Total Deposits 3,557 5.33 3,164 4.12 3,595 5.36 2,946 3.84
Short-Term Debt:
Federal Funds Purchased and
Repurchase Agreements 577 5.88 246 4.46 454 5.92 304 3.70
Commercial Paper 149 5.88 117 4.76 137 5.97 112 4.25
Short-Term Notes Payable 1 5.90 1 4.62 1 5.61 1 3.61
Total Short-Term Debt 727 5.88 364 4.56 592 5.93 417 3.85
Long-Term Debt 489 6.37 378 5.59 418 6.72 407 4.85
Total Interest Bearing Liabilities 4,773 5.52 3,906 4.30 4,605 5.55 3,770 3.95
Noninterest Bearing Deposits 410 358 387 345
Other Liabilities 102 66 89 66
Shareholders' Equity 399 349 381 343
Total Liabilities and Shareholders' Equity $5,684 $4,679 $5,462 $4,524
Net Interest Spread 3.24% 3.69% 3.23% 3.77%
Net Interest Margin 3.84% 4.19% 3.82% 4.24%
</TABLE>
<PAGE>
<TABLE>
Provident Bancorp, Inc. and Subsidiaries
Consolidated Quarterly Nonperforming Assets
(unaudited)
(Dollars In Thousands)
Table 3.
<CAPTION>
Quarter Ended
Sept. June March Dec. Sept.
1995 1995 1995 1994 1994
<S> <C> <C> <C> <C> <C>
Nonaccrual Loans: (1)
Commercial Lending:
Commercial and Financial $12,231 $14,655 $13,173 $2,973 $2,431
Commercial Mortgage 1,521 2,465 1,868 1,869 2,233
Commercial Construction 78 78 78 78 201
Equipment Lease Financing - - - - -
Consumer Lending:
Instalment 30 - - - 31
Residential 1,367 1,388 1,327 1,396 1,182
Lease Financing - - - - -
Total Nonaccrual Loans 15,227 18,586 16,446 6,316 6,078
Renegotiated Loans (2) 4,886 5,721 896 961 978
Total Nonperforming Loans 20,113 24,307 17,342 7,277 7,056
Other Real Estate and Equipment Owned:
Commercial - - 84 714 2,117
Closed bank branches 189 189 189 311 274
Residential 292 265 271 350 455
Multifamily 601 607 740 1,094 1,101
Land 734 724 857 857 2,148
Total 1,816 1,785 2,141 3,326 6,095
Total Nonperforming Assets $21,929 $26,092 $19,483 $10,603 $13,151
Loans 90 Days Past Due Still Accruing (3) $6,309 $4,717 $4,858 $4,673 $4,420
Total Loans 4,646,366 4,394,802 4,285,665 4,204,538 3,960,845
Reserve for Possible Loan Losses 55,830 54,275 53,987 51,979 45,112
Total Assets 5,955,257 5,607,455 5,298,327 5,411,491 5,140,380
Reserve for Possible Loan Losses as a Percent of:
Nonperforming Loans 277.58% 223.29% 311.31% 714.29% 639.34%
Nonperforming Assets 254.59% 208.01% 277.10% 490.23% 343.03%
Total Loans 1.20% 1.23% 1.26% 1.24% 1.14%
Nonperforming Loans as a % of Total Loans .43% .55% .40% .17% .18%
Nonperforming Assets as a Percent of:
Total Loans and Other Real Estate .47% .59% .45% .25% .33%
Total Assets .37% .47% .37% .20% .26%
<FN>
(1) Bancorp generally stops accruing interest on loans when the payment of principal and/or
interest is past due 90 days or more.
(2) Loans renegotiated to provide a reduction or deferral of interest or principal because of a
deterioration in the financial position of the borrower.
(3) Loans in this category represent primarily consumer loans contractually past due 90 days or
more as to interest or principal payments.
</TABLE>
<PAGE>
PART II - OTHER INFORMATION
Item 2. Changes in Securities
See discussion of Bancorp Series B preferred stock exchanged for
Bancorp Series C preferred stock under Notes to Consolidated Financial
Statements of Item 1 of this form.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits filed:
Exhibit 3(i) - Articles of Incorporation
Exhibit 4 - Plan of Reorganization Relating to Series C,
Non-Voting Convertible Preferred Stock
Exhibit 27 - Financial Data Schedule
All other items required in Part II of this form have been omitted
since they are not applicable or not required.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Provident Bancorp, Inc.
Registrant
Date: November 10, 1995 \s\ John R. Farrenkopf
John R. Farrenkopf
Vice President and
Chief Financial Officer
<PAGE>
CERTIFICATE OF
AMENDMENT TO ARTICLES OF INCORPORATION
BY DIRECTORS OF
PROVIDENT BANCORP, INC.
Allen L. Davis, who is the President of Provident Bancorp,
Inc., an Ohio corporation (the "Corporation"), and Mark E.
Magee, who is the Secretary of the Corporation, do hereby
certify that pursuant to an action taken in writing by all
of the Members of the Executive Committee of the Board of
Directors of the Corporation pursuant to Section 1701.54 of
the Ohio Revised Code, the following resolution was adopted
pursuant to Section 1701.70(B)(1) of the Ohio Revised Code:
RESOLVED: That pursuant to the authority vested in the
Board of Directors of the Corporation in accordance
with Article Fourth of the Articles of Incorporation, a
series of Preferred Stock of the Corporation to be
designated as the "Series C Preferred Stock" be, and
hereby is, created, and that the designation and amount
thereof and the preferences and other special rights of
the shares of such series, and qualifications,
limitations or restrictions thereof are as delineated
on Exhibit A attached hereto and made a part hereof.
IN WITNESS WHEREOF, the above named officers, acting for and
on behalf of the Corporation, have hereunto subscribed their
names this 29th day of September, 1995.
BY:________________________
Allen L. Davis
President
BY:________________________
Mark E. Magee
Secretary
<PAGE>
EXHIBIT A
PROVIDENT BANCORP, INC.
SERIES C NON-VOTING CONVERTIBLE PREFERRED STOCK
Section 1 Designation of Series and Number of Shares.
The shares of such series of Preferred Stock shall be
designated "Series C Non-Voting Convertible Preferred Stock"
(hereinafter referred to as the "Series C Preferred Stock"), and
the number of shares which shall constitute such series shall be
not more than 371,418 shares, $1 par value, which number may be
decreased (but not below the number thereof then outstanding)
from time to time by the Board of Directors.
Section 2 Dividends.
(A) The holders of record of the Series C Preferred Stock on
the dates specified below shall be entitled to receive, as and
when declared by the Board of Directors and out of assets of the
Corporation which are by law available for payment of dividends,
cumulative preferential cash dividends, at the rate of $8.00 per
share per annum, payable quarterly on the first day of January,
April, July and October in each year (each such day being
hereinafter called a "dividend date" and each quarterly period
ending on the last day of the calendar month preceding a dividend
date being hereinafter called a "dividend period"). The holders
of record of the Series C Preferred Stock entitled to receive a
particular dividend payment shall be determined on the date 15
days prior to the dividend date of such payment.
(B) Dividends on the Series C Preferred Stock shall be
cumulative, whether or not in any dividend period or periods
there shall be surplus or net profits of the Corporation legally
available for the payment of such dividends.
(C) So long as any Series C Preferred Stock shall remain
outstanding, no dividend whatsoever shall be declared or paid
upon or set apart for any class of stock or series thereof
ranking junior to or on parity with the Series C Preferred Stock
in the payment of dividends, nor shall any shares of any class of
stock or series thereof ranking junior to or on a parity with the
Series C Preferred Stock in payment of dividends be redeemed or
purchased by the Corporation or any subsidiary thereof, nor shall
any moneys be paid to or made available for a sinking fund for
redemption or purchase of any shares of any class of stock or
series thereof ranking junior to or on a parity with the Series C
Preferred Stock in payment of dividends, unless in each instance
full dividends on all outstanding shares of Series C Preferred
Stock for all past dividend periods shall have been paid at the
rate fixed therefor and the dividends on all outstanding shares
of Series C Preferred Stock for the then current dividend period
<PAGE>
shall have been paid or declared and sufficient funds set apart
for payment thereof.
(D) Accumulations of dividends on any shares of Series C
Preferred Stock shall not bear interest.
(E) No dividend shall be paid upon or declared or set apart
for any share of Series C Preferred Stock for any dividend period
unless at the same time a like proportionate dividend for the
same dividend period shall be paid upon or declared or set apart
for all shares of Series C Preferred Stock then outstanding and
entitled to receive such dividend.
(F) All dividends declared on the Series C Preferred Stock
for any dividend period and on any class or series of stock
ranking on a parity with the Series C Preferred Stock as to
dividends shall be declared pro rata so that the amounts of
dividends per share declared for such period on the Series C
Preferred Stock and on any class or series of stock ranking on a
parity with the Series C Preferred Stock as to dividends that
were outstanding during such period shall in all cases bear to
each other the same proportions that the respective dividend
rates of such stock for such period bear to each other.
(G) As used herein, the word "dividends" shall not include
dividends payable solely in shares of Common Stock of the
Corporation or warrants or rights to subscribe for or purchase
any security of the Corporation.
(H) As used herein, the phrase "set apart for payment" in
respect of the payment of dividends shall not be construed as
requiring deposit of any funds in trust or in any special
account, but shall merely mean that out of the funds available
for the payment of dividends, a sum sufficient for the payment of
dividends on the Series C Preferred Stock shall be reserved by
appropriate notation on the books of the Corporation.
(I) As used herein, the term "market price" for any date
shall mean the average of the closing bid and asked price as
reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") or National Quotation
Bureau, Inc. for that date.
Section 3 Liquidation Preference.
(A) The Series C Preferred Stock shall be preferred over the
Common Stock or any other class or series of stock ranking junior
to the Series C Preferred Stock as to distribution of assets in
the event of any liquidation or dissolution or winding up of the
<PAGE>
Corporation, and in any such event, the holders of the Series C
Preferred Stock shall be entitled to receive, after payment or
provision for payment of the debts and other liabilities of the
Corporation, out of the assets of the Corporation available for
distribution to its shareholders, $100 per share, and no more,
together with an amount equal to all dividends accrued and unpaid
thereon to the date of final distribution, for every share of the
Series C Preferred Stock held by them before any distribution of
the assets shall be made to the holders of the Common Stock or
any other class or series of stock ranking junior to the Series C
Preferred Stock as to distribution of assets. Upon any
liquidation, dissolution or winding up of the Corporation, after
payment shall have been made in full on the Series C Preferred
Stock as provided in the preceding sentence, but not prior
thereto, the Common Stock or any other series or class of stock
ranking junior to the Series C Preferred Stock as to distribution
of assets shall, subject to the respective terms and provisions,
if any, applying thereto, be entitled to receive any and all
assets remaining to be paid or distributed and the Series C
Preferred Stock shall not be entitled to share therein.
(B) If upon any liquidation or dissolution or winding up of
the Corporation, the amounts payable on or with respect to the
Series C Preferred Stock are not paid in full, the holders of
shares of the Series C Preferred Stock, together with all classes
or series of stock ranking on a parity with the Series C
Preferred Stock as to distribution of assets, shall share ratably
in any distribution of assets according to the respective amounts
which would be payable in respect of the shares held by them upon
such distribution if all amounts payable on or with respect to
the Series C Preferred Stock and any other class or series of
stock that so ranks on a parity with the Series C Preferred Stock
were paid in full.
(C) Neither the merger or consolidation of the Corporation
with another corporation nor the sale or lease of all or
substantially all of the assets of the Corporation shall be
deemed to be a liquidation or dissolution or winding up of the
Corporation.
(D) Written notice of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation, stating the payment date and the place where the
distributable amount shall be payable and containing a statement
of the conversion right set forth hereinafter, shall be given by
mail, not less than 30 days prior to the payment date stated
therein, to the holders of record of the Series C Preferred Stock
at their respective addresses as the same shall then appear on
the books of the Corporation.
<PAGE>
Section 4 Redemption.
(A) (i) The Corporation may not redeem any shares of Series
C Preferred Stock prior to three years from the first date any
such shares are issued. Thereafter, if at any time and from time
to time the market price of the Common Stock, exceeds 140% of the
Conversion Price, as defined in Section 5 hereof, for twenty (20)
consecutive trading days immediately preceding a notice of
redemption, all but not less than all the Series C Preferred
Stock, at such time outstanding may be redeemed by the
Corporation at its election expressed by resolution of the Board
of Directors, upon not less than 50 days previous notice to the
holders of record of the Series C Preferred Stock to be redeemed,
given by mail, upon payment of $100.00 per share, together with
the amount of any dividends accrued and unpaid thereon to the
date fixed for redemption (the "Redemption Date").
(ii) On the Redemption Date of a redemption described in
subsection 4(A)(i) above, shares of Series C Preferred Stock
owned by the original holders or any of their affiliates (the
"Original Holders") shall not be redeemed. For purposes of this
provision, an "affiliate" of any person is another person
controlling, controlled by or under common control with such
person. Shares which are not redeemed because of the first
sentence of this subsection shall after the Redemption Date cease
to accrue dividends at the rate of 8% per annum and thereafter
dividends shall be paid on outstanding shares of Series C
Preferred Stock if and when dividends are declared on Provident
Common Stock as if such Series C Preferred Stock was converted at
the Conversion Price in effect on the Redemption Date. Any
shares of Series C Preferred Stock which are not redeemed on the
Redemption Date because of the operation of this paragraph, which
are subsequently transferred to any person other than the
Original Holder, shall upon such transfer be automatically
converted into Provident Common Stock at the Conversion Price in
effect on the Redemption Date.
(iii) In addition to the optional redemption provided for
in subsection 4(A)(i) above, from and after the seventh
anniversary of the first date any shares of Series C Preferred
Stock are first issued, the Corporation may redeem the Series C
Preferred Stock at any time in whole or from time to time in
part, at a price of $100.00 per share together with accrued and
unpaid dividends thereon to the Redemption Date. In the case of
any redemption pursuant to this provision, the Corporation shall
give notice to the holders of record of the Series C Preferred
Stock to be redeemed, at least 50 days prior to the Redemption
Date. In the event that fewer than all the outstanding shares of
Series C Preferred Stock are to be redeemed, the number of shares
to be redeemed shall be determined by the Board of Directors and
<PAGE>
the shares to be redeemed shall be determined by lot or pro rata
as may be determined by the Board of Directors.
(B) Any notice of redemption mailed to a holder of Series C
Preferred Stock at his address as the same shall appear on the
books of the Corporation shall be conclusively presumed to have
been given whether or not the holder receives the notice. Each
such notice shall state the Redemption Date; the redemption price
applicable to the shares to be redeemed; the place or places
where such shares are to be surrendered; that dividends on shares
to be redeemed will cease to accrue on the Redemption Date; and
that shares to be redeemed may be converted at any time prior to
the close of business on the business day next preceding the
Redemption Date as hereinafter provided (such notice to state the
Conversion Price, if any, at the time applicable). No defect in
any such notice to any holder of Series C Preferred Stock shall
affect the validity of the proceedings for the redemption of any
other shares of such Series C Preferred Stock.
(C) From and after the Redemption Date (unless default
shall be made by the Corporation in paying the redemption price
of the shares called for redemption, plus all accrued and unpaid
dividends thereon), all dividends on the Series C Preferred Stock
called for redemption shall cease to accrue and all rights of the
holders thereof as shareholders of the Corporation, except the
right to receive the redemption price as hereinafter provided,
shall cease and terminate. The respective holders of record of
the Series C Preferred Stock to be redeemed shall be entitled on
and after the Redemption Date to receive the redemption price at
any time upon actual delivery to the Corporation of certificates
for the number of shares to be redeemed, duly endorsed in blank
or accompanied by proper instruments of assignment and transfer
thereof duly endorsed in blank.
(D) Any shares of Series C Preferred Stock redeemed
pursuant to the provisions of this Section 4 shall be retired and
given the status of authorized and unissued Preferred Stock,
undesignated as to series, subject to reissuance by the
Corporation as shares of Preferred Stock of one or more series,
as may be determined from time to time by the Board of Directors,
but such shares shall not be reissued as Series C Preferred
Stock.
Section 5 Conversion.
Shares of Series C Preferred Stock may be converted at the
option of the holder thereof (provided, however, that no shares
of the Series C Preferred Stock shall be convertible at any time
by the Original Holders, if, as a result of any such conversion,
the Original Holders would hold in excess of 9.9% of the
<PAGE>
Corporation's outstanding voting securities) from and after the
third anniversary of the date any shares of Series C Preferred
Stock are first issued by the Corporation, at any time prior to
the close of business on the business day next preceding the date
fixed for redemption of such shares pursuant to Section 4 hereof,
into fully paid and nonassessable shares of Common Stock of the
Corporation at the rate of 4.1667 shares of Common Stock as now
constituted for each share of Series C Preferred Stock
surrendered for conversion. The conversion rate expressed may
also be expressed as a conversion price of $24.00 (the
"Conversion Price") based on a liquidation value of each share of
Series C Preferred Stock of $100.00. The conversion right is
subject to the following provisions:
(A) The Conversion Price shall be subject to adjustment
from time to time as follows:
(i) In case the Corporation shall (a) pay a dividend, or
make a distribution, to all holders of its Common Stock in shares
of its capital stock (whether shares of Common Stock or of
capital stock of any other class) (b) subdivide its outstanding
shares of Common Stock into a greater number of shares, (c)
combine its outstanding shares of Common Stock into a small
number of shares, or (d) issue by reclassification of its shares
of Common Stock any securities, the Conversion Price and terms of
conversion in effect immediately prior to such action shall be
adjusted so that the holder of any share of Series C Preferred
Stock thereafter surrendered for conversion shall be entitled to
receive the kind and number of shares of Common Stock of the
Corporation and other securities which he would have owned or
been entitled to receive immediately following such action had
such share of Series C Preferred Stock been converted immediately
prior thereto. An adjustment made pursuant to this Paragraph
(A)(i) shall become effective immediately after the record date
in the case of a dividend or distribution and shall become
effective immediately after the effective date in the case of a
subdivision, combination or reclassification.
(ii) In case the Corporation shall distribute to all
holders of its Common Stock evidences of its indebtedness or
assets (excluding cash distributions made out of current or
retained earnings), then in each such case the Conversion Price
shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect
immediately prior to the date of such distribution by a fraction
of which the numerator shall be the current market price per
share of the Common Stock (determined as provided in Paragraph
(A)(vii) below) at the record date mentioned below, less the then
fair market value per share (as determined by the Board of
Directors of the Corporation, whose determination shall be
conclusive) of the assets or evidences of indebtedness
<PAGE>
distributed, and the denominator of which shall be such current
market price per share of the Common Stock. Such adjustment
shall become effective immediately after the record date for
determination of shareholders entitled to receive such
distribution.
(iii) In case the Corporation shall issue or sell any
securities convertible into shares of Common Stock ("Convertible
Securities"), there shall be determined the price per share for
which shares of Common Stock are issuable upon the conversion or
exchange thereof, such determination to be made by dividing (a)
the total amount received or receivable by the Corporation as
consideration for the issue or sale of such Convertible
Securities, plus the average of the minimum and maximum aggregate
amount of additional consideration, if any, payable to the
Corporation upon the conversion or exchange of all such
Convertible Securities, by (b) the maximum number of shares of
Common Stock of the Corporation issuable upon conversion or
exchange of all of such Convertible Securities; and such issue or
sale shall be deemed for purposes of Section 5(A)(iv) below to be
an issue or sale for cash (as of the date of issue or sale of
such Convertible Securities) of such maximum number of shares of
Common Stock at the price per share so determined.
If such Convertible Securities shall by their
terms provide for an increase or increases, with the passage of
time, in the amount of additional consideration, if any, payable
to the Corporation, or in the rate of exchange, upon the
conversion or exchange thereof, the adjusted Conversion Price
shall, forthwith upon any such increase becoming effective, be
readjusted (but to no greater extent that originally adjusted) to
reflect the same, taking into account any such Convertible
securities previously converted.
(iv) In case the Corporation shall grant any rights,
warrants or options to subscribe for, purchase or otherwise
acquire shares of Common Stock, there shall be determined the
minimum price per share for which a share of Common Stock is
issuable upon the exercise of all such rights, warrants or
options, such determination to be made by dividing (a) the total
amount, if any, received or receivable by the Corporation as
consideration for the granting of such rights, warrants or
options, plus the average of the maximum and minimum aggregate
amount of additional consideration payable to the Corporation
upon the exercise of all ouch rights, warrants or options, by (b)
the maximum number of shares of Common Stock or the Corporation
issuable upon the exercise of all such rights, warrants or
options; and the granting of all such rights, warrants or options
shall be deemed for purposes of Section 5(A)(iv) below to be an
<PAGE>
issue or sale for cash (as of the date of the granting of such
rights, warrants or options) of such maximum number of shares of
Common Stock at the price per share so determined.
If such rights, warrants or options shall by their
terms provide for an increase or increases, with the passage of
time, in the amount of additional consideration payable to the
Corporation upon the exercise thereof, the adjusted Conversion
Price shall, forthwith upon any such increase becoming effective,
be readjusted (but to no greater extent than originally adjusted)
to reflect the same, taking into account any such rights,
warrants or options previously exercised.
(v) In case the Corporation shall grant any rights,
warrants or options to subscribe for, purchase or otherwise
acquire Convertible Securities, such Convertible Securities shall
be deemed, for the purposes of Paragraph 5(A)(iii) above, to have
been issued and sold (as of the actual date of issue or sale of
such Convertible Securities) for the total amount received or
receivable by the Corporation as consideration for the granting
of such rights, warrants or options plus the average of the
maximum and minimum aggregate amount of additional consideration,
if any, payable to the Corporation upon the exercise of all such
rights, warrants or options.
If such rights, warrants or options shall by their
terms provide for an increase or increases, with the passage of
time, in the amount of additional consideration payable to the
Corporation upon the exercise thereof, the adjusted Conversion
Price shall, forthwith upon any such increase becoming effective,
be readjusted (but to no greater extent than originally adjusted)
to reflect the same, taking into account any such rights,
warrants or options previously exercised.
(v) In case the Corporation shall issue or sell its
shares of Common Stock, or be deemed to have issued Common Stock
in accordance with the provisions of Paragraph (a)(iii), (A)(iv),
or (A)(v) above, for a consideration per share which is below the
then current market price per share of the Common Stock (as
defined in Paragraph A(vii) below), the following provisions
shall apply. An Adjusted Fair Market Value shall be computed (to
the nearest cent, a half cent or more being considered a full
cent) by dividing:
(a) the sum of (x) the result obtained by multiplying
the number of shares of Common Stock of the Corporation
outstanding immediately prior to such issue or sale by the then
current market price (as defined in Paragraph A (vii) below),
<PAGE>
plus (y) the consideration, if any, received by the Corporation
upon such issue or sale; by
(b) the number of shares of Common Stock of the
Corporation outstanding immediately after such issue or sale.
The resulting number shall be deemed to be the
Adjusted Fair Market Value per share. Thereafter, the Conversion
Price shall be adjusted so that the number of shares of Common
Stock, into which the shares of Series C Preferred Stock are
thereafter convertible is that number of shares, multiplied by
the Adjusted Fair Market Value per share, which equals the same
dollar amount that is computed by multiplying the number of
shares of Common Stock for which all of the shares of Series C
Preferred Stock then outstanding were convertible immediately
prior to such actions by the current market price per share (as
defined in Paragraph A (vii) below).
The provisions of this Paragraph A (vi) shall not
apply to an issuance or sale of shares of the Common Stock in
connection with an underwritten public offering or in any
transaction involving a conversion and acquisition of a savings
and loan association or savings bank under applicable federal or
state law or regulation.
(vii) For the purpose of any computation under
Paragraphs A(ii) and (vi), the current market price per share of
Common Stock on any date shall be deemed to be the average of the
market price for 20 consecutive business days commencing 35
business days before the day in question.
(viii) All calculations under this Section 5 shall be
made to the nearest cent or to the nearest one hundredth of a
share, as the case may be.
(ix) Whenever the Conversion Price is adjusted as
herein provided, the Corporation shall mail a copy of a statement
setting forth the adjusted Conversion Price determined as
provided herein and setting forth the method of calculation and
the facts requiring such adjustment and upon which such
calculation is based, to each person who is a registered holder
of Series C Preferred Stock at such person's last address as the
same appears on the books of the Corporation. Each adjustment
shall remain in effect until a subsequent adjustment is required
hereunder.
(x) No adjustment in the Conversion Price need be made
under Paragraph A (ii) above if the Corporation issues or
distributes to each holder of Series C Preferred Stock evidences
<PAGE>
of indebtedness or assets referred to in such Paragraph A(ii)
which each holder of Series C Preferred Stock would have been
entitled to receive had the Series C Preferred Stock been
converted prior to the happening of such event or the record date
with respect thereto. No adjustment in the Conversion Price need
be made for sales of Common Stock pursuant to a Corporation plan
for reinvestment of dividends or interest. No such adjustment
need be made for a change in the par value of the Common Stock.
No such adjustment need be made in respect of the issuance of
shares of the Common Stock upon conversion of the Corporation's
Series A ESOP Non-Voting Convertible Preferred Stock or employee
stock options for the purchase of up to 825,000 shares of Common
Stock, so long as such employee and director stock options are
exercisable and shares of Common Stock are issuable at prices no
less than 95% of the current market price of the Common Stock at
the time of the grant of such options.
(xi) Upon any issuance or sale of Common Stock for a
consideration other than cash, or a consideration part of which
is other than cash, of any shares of Common Stock or Convertible
Securities or any rights, warrants or options to subscribe for,
purchase or otherwise acquire any shares of Common Stock or
Convertible Securities, the amount of the consideration other
than cash received by the Corporation shall be deemed to be the
fair value of such consideration as determined in good faith by
the Board of Directors of the Corporation. In case any shares of
Common Stock or Convertible Securities or any rights, options or
warrants to subscribe for, purchase or otherwise acquire any
shares of Common Stock or Convertible Securities shall be issued
or sold together with other shares, stock or securities or other
assets of the Corporation for a consideration which covers both,
the consideration for the issue or sale of such shares of Common
Stock or Convertible Securities or such rights, options or
warrants shall be deemed to be the portion of such consideration
allocated thereto in good faith by the Board of Directors of this
Corporation.
(B) In case of a merger or consolidation of the Corporation
with or into another corporation, or the sale of the
Corporation's property or assets as, or substantially as, an
entirety, to another corporation, or the reclassification of the
Common Stock (other than through a subdivision or combination
thereof, or change in par value), holders of shares of Series C
Preferred Stock shall thereafter have the right to convert each
of such shares into the kind and amount of shares of stock and
other securities and property receivable upon such merger,
consolidation, sale or reclassification by a holder of the number
of shares of Common Stock (whether whole or fractional) into
which such shares of Series C Preferred Stock might have been
converted immediately prior to such a merger, consolidation, sale
<PAGE>
or reclassification, and shall have no other conversion rights
under these provisions; and effective provision shall be made in
the charter of the resulting or surviving corporation or
otherwise, so that the provisions set forth herein for the
protection of conversion rights of Series C Preferred Stock shall
thereafter be applicable, as nearly as reasonably may be, to any
other shares of stock and other securities and property
deliverable upon conversion of Series C Preferred Stock remaining
outstanding or other convertible preferred stock received in
place thereof. Any such resulting or surviving corporation shall
expressly assume the obligation to deliver, upon the exercise of
the conversion right, such shares, securities or property as
holders of Series C Preferred Stock remaining outstanding, or
other convertible preferred stock received by such holders in
place thereof, shall be entitled to receive pursuant to the
provisions hereof, and to make provision for protection of
conversion rights as above provided.
(C) If, at any time while shares of Series C Preferred
Stock are outstanding, the Corporation shall (i) declare a
dividend (or any other distribution) on its Common Stock, other
than in cash out of current or retained earnings, or (ii)
reclassify its Common Stock (other than through a subdivision or
combination thereof) or become a party to any consolidation or
merger for which approval of the holders of its stock is
required, or sell or transfer all or substantially all of the
assets of the Corporation, then the Corporation shall cause to be
mailed to registered holders of Series C Preferred Stock, at
their last addresses as they shall appear on the books of the
Corporation, at least twenty days prior to the applicable record
date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend or
distribution, or, if a record is not to be taken, the date as of
which holders of Common Stock of record to be entitled to such
dividend or distribution are to be determined, or (y) the date on
which any such reclassification, consolidation, merger, sale or
transfer is expected to become effective, and the date as of
which it is expected that holders or record of Common Stock shall
be entitled to exchange their Common Stock for securities or
other property, if any, deliverable upon such reclassification,
consolidation, merger, sale or transfer. Failure to give or
receive the notice required by this Paragraph 5(C) or any defect
therein shall not affect the legality or validity of any such
dividend, distribution, reclassification, consolidation, merger,
sale, transfer or other action.
(D) The holder of any shares of Series C Preferred Stock
may exercise its option to convert such shares into shares of
Common Stock only by surrendering for such purpose to the
Corporation at its principal office the certificates representing
the shares to be converted, accompanied by written notice that
<PAGE>
such holder elects to convert such shares in accordance with the
provisions of this Section 5. Said notice shall also state the
name or names (with addresses) in which the certificate or
certificates for shares of Common Stock which shall be issuable
on such conversion shall be issued. Each certificate or
certificates surrendered for conversion shall, unless the shares
issuable on conversion are to be issued in the same name as that
in which such certificate or certificates are registered, be
accompanied by instruments of transfer, in form satisfactory to
the Corporation, duly executed by the holder or his duly
authorized attorney. Each conversion shall be deemed to have been
effected on the date on which such certificate or certificates
shall have been surrendered and such notice received by the
Corporation as aforesaid, and the person or persons in whose name
or names any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to
have become on said date the holder or holders of record of the
shares represented thereby notwithstanding that the transfer
books of the Corporation may then be closed or that certificates
representing such shares of Common Stock shall not then be
actually delivered to such person. As promptly as practicable on
or after the conversion date, the Corporation shall issue and
deliver to the person or persons entitled to receive the same a
certificate or certificates representing the number of full
shares of Common Stock issuable upon such conversion.
(E) Upon any conversion of shares of Series C Preferred
Stock, no allowance, adjustment or payment shall be made with
respect to accrued but unpaid dividends upon such Series C
Preferred Stock or with respect to dividends on the Common Stock
to be issued upon conversion.
(F) In connection with the conversion of shares of Series C
Preferred Stock into Common Stock, no fractional shares of Series
C Preferred Stock or of Common Stock shall be issued, but the
Corporation shall pay a cash adjustment in respect of such
fractional interest, calculated on the market price of the Common
Stock on the date of conversion.
(G) The issuance of stock certificates on conversions of
shares of Series C Preferred Stock shall be made without charge
to converting shareholders for any tax in respect of the issuance
thereof. The Corporation shall not, however, be required to pay
any tax which may be payable in respect of any registration of
transfer involved in the issue and delivery of stock in any name
other than that of the holder of the shares of Series C Preferred
Stock converted, and the Corporation shall not be required to so
issue or deliver any stock certificate unless and until the
person or persons requesting the registration of transfer shall
have paid to the corporation the amount of such tax or shall have
<PAGE>
established to the satisfaction of the Corporation that such tax
has bean paid.
(H) The Corporation shall at all times reserve and keep
available out of its authorized Common Stock the full number of
shares of Common Stock deliverable upon the conversion of all
outstanding shares of Series C Preferred Stock.
(I) Any shares of Series C Preferred Stock converted shall
be retired and shall assume the status of authorized and unissued
Preferred Stock, undesignated as to series, subject to reissuance
by the Corporation as shares of Preferred Stock of one or more
series, as may be determined from time to time by the Board of
Directors, but such shares shall not be reissued as Series C
Preferred Stock.
(J) For purposes of this Section 5:
(i) "business day" shall mean a day on which the NASDAQ
(or a successor or an equivalent or substitute organization or
facility) is open for trading of securities; and
(ii) "Common Stock" shall mean (a) the Corporation's
Common Stock, without par value, or (b) any other class of stock
resulting from successive changes or reclassifications of such
Common Stock consisting solely of changes in par value, or from
par value to no par value, or from no par value to par value;
provided, however, that in the event that at any time as a result
of an adjustment made pursuant to Paragraph A(i) above, the
holder of any share of Series C Preferred Stock thereafter
surrendered for conversion would become entitled to receive any
stock of the Corporation other than shares of its Common Stock,
thereafter the conversion rate and price with respect to such
other shares so receivable upon conversion of any share of Series
C Preferred Stock shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to Common Stock contained in this
Section 5.
(iii) "Person" means a natural person, company,
government or political subdivision, agency or instrumentality of
a government but shall also include a "group" as that term is
used in Section 13(d)(d) (or any successor provision) of the
Securities Exchange Act of 1934, as amended.
<PAGE>
Section 6 Voting Rights.
(A) The holders of the Series C Preferred Stock shall not
be entitled to vote except as provided in this Section 6 and as
otherwise provided by law.
(B) (i) (a) If at any time the corporation shall be in
default in the payment of dividends on any of the outstanding
Series C Preferred Stock in an amount equivalent to or exceeding
eight full quarterly dividends (whether or not consecutive), the
number of directors constituting the Board of Directors of the
corporation, subject to the provisions of Paragraph B(ii) below,
shall be increased by three, and the holders of the outstanding
Preferred Stock of the Corporation, voting as a separate class,
shall be entitled at the next annual or special meeting of
shareholders, or at a special meeting of holders of the
outstanding Preferred Stock, voting as a separate class, called
as hereinafter provided, to elect three directors to fill such
newly created directorships.
(b) However, when all arrearages in dividends with
respect to the Series C Preferred Stock then outstanding shall
have been paid and dividends thereon for the current quarterly
period shall have been paid or declared and a sum sufficient for
the payment thereof set apart, then (x) the right of holders of
the outstanding Preferred Stock to elect directors under this
Paragraph a shall cease, but subject to the same provisions for
vesting of such voting rights in the case of any similar future
arrearages in dividends; (y) the term of the directors then in
office elected by holders of the outstanding Preferred Stock as a
class shall forthwith terminate; and (z) the number of directors
constituting the Board of Directors shall be reduced by the
number of directors that had been elected by the holders of the
outstanding Preferred Stock pursuant hereto.
(c) In the event that the Board of Directors of the
Corporation shall be divided into two or more classes, the
directors elected by the holders of the outstanding Preferred
Stock shall be distributed among the several classes of directors
as nearly equally as possible.
(ii) Whenever the right to elect directors by this
Section 6 shall vest, it may be exercised initially either at a
special meeting of holders of the outstanding Preferred Stock or
at any annual or special meeting of shareholders, but thereafter
it shall be exercised only at annual shareholders meetings. A
special meeting for the exercise of such right shall be called by
the Secretary of the Corporation within ten days after receipt of
a written request therefor, signed by the holders of record of at
<PAGE>
least ten percent (10%) of the then outstanding shares of
Preferred Stock; provided, however, no such special meeting shall
be held during the 90-day period preceding the date fixed for the
annual meeting of shareholders;
(iii) Any director who shall have been elected by
holders of the Preferred Stock as a class pursuant to this
Paragraph B shall hold office for a term expiring (subject to the
earlier termination of the default in dividends) at the next
annual meeting of shareholders, and during such term may be
removed for cause at any time, but may be removed without cause
only by the affirmative votes of holders of record of a majority
of the then outstanding shares of Preferred Stock given at a
special meeting of such Shareholders called for such purposes.
Any vacancy created by such removal may also be filled at such
special meeting. A meeting for the removal without cause of a
director elected by holders of the outstanding Preferred Stock as
a class and the filling of the vacancy created thereby shall be
called by the Secretary of the Corporation within ten days after
receipt of a written request therefor, signed by the holders of
record of at least 25% of the then outstanding shares of
Preferred stock. Such meeting shall be held at the earliest
practicable date thereafter in accordance with the Corporation's
Articles of Incorporation, Code of Regulations and applicable
state law.
(iv) Any vacancy caused by the removal for cause or by
the death, disability or resignation of a director who shall have
been elected by the holders of the outstanding Preferred Stock as
a class pursuant to this Section 6 may be filled only by the
holders of the outstanding Preferred Stock at a meeting called
for such purpose. Such meeting of the holders of the outstanding
Preferred Stock shall be called by the Secretary of the
Corporation at the earliest practicable date after any such
removal, death, disability or resignation and in any event within
ten days after receipt of a written request therefor, signed by
the holders of record of at least 10% of the then outstanding
shares of Preferred Stock.
(v) If any meeting of the holders of the outstanding
Preferred Stock required by this Section 6 to be called shall not
have been called within ten days after receipt of a written
request therefor by the Secretary of the Corporation as provided
herein, or within fifteen days after mailing the same within the
United States of America by registered mail addressed to the
Secretary of the Corporation at its principal office, then the
holders of record of at least 10% of the then outstanding shares
of Preferred Stock may designate in writing one of their number
to call such a meeting at the expense of the Corporation, and
such meeting may be called by such person so designated upon the
<PAGE>
notice required for annual meetings of shareholders. Any holder
of the outstanding Preferred Stock so designated shall have
access to the stock books of the Corporation for the purpose of
causing meetings of shareholders to be called pursuant to these
provisions.
(vi) Any meeting of holders of the outstanding
Preferred Stock entitled to vote as a class for the election or
removal of directors shall be held at the place for the holding
of the annual meeting of shareholders of the Corporation. At
such meeting, the presence in person or by proxy of holders of a
majority of the votes of the then outstanding shares of Preferred
Stock shall be required to constitute a quorum; in the absence of
a quorum, a majority of the holders present in person or by proxy
shall have the power to adjourn the meeting from time to time
without notice, other than announcement at the meeting, until a
quorum shall be present.
(C) So long as any shares of Series C Preferred Stock are
outstanding, the Corporation shall not, in any manner, whether by
amendment to its Articles of Incorporation or code of
Regulations, by merger (whether or not the Corporation is the
surviving corporation in such merger), by consolidation, or
otherwise, without the written consent of the affirmative vote at
a meeting called for that purpose of the holders of at least two-
thirds of the votes of the shares of Series C Preferred Stock
then outstanding, voting separately as a class, (i) amend, alter
or repeal any of the provisions of any resolution or resolutions
establishing the Series C Preferred Stock so as to affect
adversely the powers, preferences or special rights of such
Series C Preferred Stock or (ii) authorize the issuance of, or
authorize any obligation or security convertible into or
evidencing the right to purchase shares of, any additional class
or series of stock ranking prior to the Series C Preferred Stock
in the payment of dividends or the preferential distribution of
assets.
(D) Nothing in this Section 6 shall be deemed to require
any vote or consent of the holders of shares of Series C
Preferred Stock in connection with the authorization or issuance
of any series of Preferred Stock ranking on a parity with or
junior to the Series C Preferred Stock as to dividends and/or
distribution of assets.
Section 7 Restrictions on Transfer.
The Original Holders of the Series C Preferred Stock shall
be entitled to transfer ownership of their shares only as
follows:
(A) in a widely dispersed public offering;
<PAGE>
(B) in sales pursuant to Rule 144 of the Securities Act of
1933 or rules of similar import;
(C) in sales pursuant to Rule 144A of the Securities Act of
1933, or in any other private sale in which no single purchaser
acquires more than 2% of the voting shares of the Corporation; or
(D) to Provident, to a third party that has acquired a
majority of the shares of Provident or to any other Original
Holder.
Section 8 Reports.
So long as any shares of the Series C Preferred Stock shall
be outstanding, the corporation shall provide to each holder of
such shares a copy of the annual report to shareholders
distributed pursuant to Rule 14a-3 of the Securities Exchange Act
of 1934.
<PAGE>
CERTIFICATE OF ADOPTION
OF
AMENDED ARTICLES OF INCORPORATION
OF
PROVIDENT BANCORP, INC.
Allen L. Davis, President, and Mark E. Magee, Secretary of
Provident Bancorp, Inc., an Ohio corporation with its
principal office located in Cincinnati, Hamilton County,
Ohio, do hereby certify that at a meeting of the Board of
Directors of said Company held on September 23, 1993, the
following resolution was adopted pursuant to Sections
1701.70(B)(3) and 1701.72(B) of the Ohio Revised Code:
RESOLVED, That the following Amended Articles of
Incorporated be, and they hereby are, adopted to
consolidated and supersede the existing Articles of
Incorporation, as amended and to eliminate all references to
Series A ESOP Non-Voting Convertible Preferred Stock which
has been redeemed:
AMENDED ARTICLES OF INCORPORATION
OF
PROVIDENT BANCORP, INC.
FIRST: The name of the corporation shall be Provident
Bancorp, Inc.
SECOND: The principal office of the corporation in the State
of Ohio is to be located in the County of Hamilton, City of
Cincinnati.
THIRD: The purposes for which the corporation is formed are
to engage in any lawful act or activity for which
corporations may be formed under Sections 1701.01 to
1701.93, inclusive, of the Ohio Revised Code.
FOURTH:
A) The total number of shares of all classes of stock which
the Corporation shall be authorized to issue
shall be:
(i) Sixty Million (60,000,000) shares of Common Stock
without par value; and
(ii) Five Million (5,000,000) shares of non-voting,
$1.00 par, Cumulative Preferred Stock comprised
of the following designated series:
(1) Series B Non-Voting Convertible Preferred Stock
Section 1. Designation of Series and Number of Shares.
Shares of such series of Preferred Stock shall be designated
"Series B Non-Voting Convertible Preferred Stock"
(hereinafter referred to as the "Series B Preferred Stock"),
and the number of shares which shall constitute such series
shall be not more than 450,000 shares, $1 par value, which
number may be decreased (but not below the number thereof
then outstanding) from time to time by the Board of
Directors.
Section 2. Dividends.
(A) The holders of record of the Series B Preferred Stock on
the dates specified below shall be entitled to receive, as
and when declared by the Board of Directors and out of
assets of the Corporation which are by law available for
payment of dividends, cumulative
Page 1
<PAGE>
preferential cash dividends, at the rate of $8.00 per share
per annum, payable quarterly on the first day of January,
April, July and October in each year (each such day being
hereinafter called a "dividend date" and each quarterly
period ending on the last day of the calendar month
preceding a dividend date being hereinafter called a
"dividend period"). The holders of record of the Series B
Preferred Stock entitled to receive a particular dividend
payment shall be determined on the date 15 days prior to the
dividend date of such payment.
(B) Dividends on the Series B Preferred Stock shall be
cumulative, whether or not in any dividend period or periods
there shall be surplus or net profits of the Corporation
legally available for the payment of such dividends.
(C) So long as any Series B Preferred Stock shall remain
outstanding, no dividend whatsoever shall be declared or
paid upon or set apart for any class of stock or series
thereof ranking junior to or on parity with the Series B
Preferred Stock in the payment of dividends nor shall any
shares of any class of stock or series thereof ranking
junior to or on a parity with the Series B Preferred Stock
in payment of dividends be redeemed or purchased by the
Corporation or any subsidiary thereof nor shall any moneys
be paid to or made available for a sinking fund for
redemption or purchase of any shares of any class of stock
or series thereof ranking junior to or on a parity with the
Series B Preferred Stock in payment of dividends, unless in
each instance full dividends on all outstanding shares of
Series B Preferred Stock for all past dividend periods shall
have been paid at the rate fixed therefor and the dividends
on all outstanding shares of Series B Preferred Stock for
the then current dividend period shall have been paid or
declared and sufficient funds set apart for payment thereof.
(D) Accumulations of dividends on any shares of Series B
Preferred Stock shall not bear interest.
(E) No dividend shall be paid upon or declared or set apart
for any share of Series B Preferred Stock for any dividend
period unless at the same time a like proportionate dividend
for the same dividend period shall be paid upon or declared
or set apart for all shares of Series B Preferred Stock then
outstanding and entitled to receive such dividend.
(F) All dividends declared on the Series B Preferred Stock
for any dividend period and on any class or series of stock
ranking on a parity with the Series B Preferred Stock as to
dividends shall be declared pro rata so that the amounts of
dividends per share declared for such period on the Series B
Preferred Stock and on any class or series of stock ranking
on a parity with the Series B Preferred Stock as to
dividends that were outstanding during such period shall in
all cases bear to each other the same proportions that the
respective dividend rates of such stock for such period bear
to each other.
(G) As used herein, the word "dividends" shall not include
dividends payable solely in shares of Common Stock of the
Corporation or warrants or rights to subscribe for or
purchase any security of the Corporation.
(H) As used herein, the phrase "set apart for payment" in
respect of the payment of dividends shall not be construed
as requiring deposit of any funds in trust or in any special
account, but shall merely mean that out of the funds
available for the payment of dividends, a sum sufficient for
the payment of dividends on the Series B Preferred Stock
shall be reserved by appropriate notation on the books of
the Corporation.
(I) As used herein, the term "market price" for any date
shall mean the average of the closing bid and asked price as
reported by the National Association of Securities Dealers
Page 2
<PAGE>
Automated Quotation System ("NASDAQ") or National Quotation
Bureau, Inc. for that date.
Section 3. Liquidation Preference.
(A) The Series B Preferred Stock shall be preferred over the
Common Stock or any other class or series of stock ranking
junior to the Series B Preferred Stock as to distribution of
assets in the event of any liquidation or dissolution or
winding up of the Corporation, and in any such event, the
holders of the Series B Preferred Stock shall be entitled to
receive, after payment or provision for payment of the debts
and other liabilities of the Corporation, out of the assets
of the Corporation available for distribution to its
shareholders, $100 per share, and no more, together with an
amount equal to all dividends accrued and unpaid thereon to
the date of final distribution, for every share of the
Series B Preferred Stock held by them before any
distribution of the assets shall be made to the holders of
the Common Stock or any other class or series of stock
ranking junior to the Series B Preferred Stock as to
distribution of assets. Upon any liquidation, dissolution or
winding up of the Corporation, after payment shall have been
made in full on the Series B Preferred Stock as provided in
the preceding sentence, but not prior thereto, the Common
Stock or any other series or class of stock ranking junior
to the Series B Preferred Stock as to distribution of assets
shall, subject to the respective terms and provisions, if
any, applying thereto, be entitled to receive any and all
assets remaining to be paid or distributed and the Series B
Preferred Stock shall not be entitled to share therein.
(B) If upon any liquidation or dissolution or winding up of
the Corporation, the amounts payable on or with respect to
the Series B Preferred Stock are not paid in full, the
holders of shares of the Series B Preferred Stock, together
with all classes or series of stock ranking on a parity with
the Series B Preferred Stock as to distribution of assets,
shall share ratably in any distribution of assets according
to the respective amounts which would be payable in respect
of the shares held by them upon such distribution if all
amounts payable on or with respect to the Series B Preferred
Stock and any other class or series of stock that so ranks
on a parity with the Series B Preferred Stock were paid in
full.
(C) Neither the merger or consolidation of the Corporation
with another corporation nor the sale or lease of all or
substantially all of the assets of the Corporation shall be
deemed to be a liquidation or dissolution or winding up of
the Corporation.
(D) Written notice of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation, stating the payment date and the place where
the distributable amount shall be payable and containing a
statement of the conversion right set forth hereinafter,
shall be given by mail, not less than 30 days prior to the
payment date stated therein, to the holders of record of the
Series B Preferred Stock at their respective addresses as
the same shall then appear on the books of the Corporation.
Section 4. Redemption.
(A) (i) The Corporation may not redeem any shares of Series
B Preferred Stock prior to three years from the first date
any such shares are issued. Thereafter, if at any time and
from time to time the market price of the Common Stock,
exceeds 140% of the Conversion Price, as defined in Section
5 hereof, for twenty (20) consecutive trading days
immediately preceding a notice of redemption, all but not
less than all the Series B Preferred Stock, at such time
outstanding may be redeemed by the Corporation at its
election expressed by resolution to the Board of Directors,
upon not less than 50 days previous notice to the holders of
record of the Series B Preferred Stock to be redeemed, given
by mail, upon payment of $100.00 per share, together with
the amount of any dividends accrued and unpaid thereon to
the date fixed for
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redemption (the "Redemption Date").
(ii) On the Redemption Date of a redemption described in
subsection (i) above, shares of Series B Preferred Stock
owned by the original holders or any of their affiliates
(the "Original Holders") shall not be redeemed. For purposes
of this provision, an "affiliate" of any person is another
person controlling, controlled by or under common control
with such person. Shares which are not redeemed because of
the first sentence of this subsection shall after the
Redemption Date cease to accrue dividends at the rate of 8%
per annum and thereafter dividends shall be paid on
outstanding shares of Series B Preferred Stock if and when
dividends are declared on Provident Common Stock as if such
Series B Preferred Stock was converted at the Conversion
Price in effect on the Redemption Date. Any shares of Series
B Preferred Stock which are not redeemed on the Redemption
Date because of the operation of this paragraph, which are
subsequently transferred to any person other than the
Original Holder, shall upon such transfer be automatically
converted into Provident Common Stock at the Conversion
Price in effect on the Redemption Date.
(iii) In addition to the optional redemption provided for in
subsection (A) (i) above, from and after the seventh
anniversary of the first date any shares of Series B
Preferred Stock are first issued, the Corporation may redeem
the Series B Preferred Stock at any time in whole or from
time to time in part, at a price of $100.00 per share
together with accrued and unpaid dividends thereon to the
Redemption Date. In the case of any redemption pursuant to
this provision, the Corporation shall give notice to the
holders of record of the Series B Preferred Stock to be
redeemed, at least 50 days prior to the Redemption Date. In
the event that fewer than all the outstanding shares of
Series B Preferred Stock are to be redeemed, the number of
shares to be redeemed shall be determined by the Board of
Directors and the shares to be redeemed shall be determined
by lot or pro rata as may be determined by the Board of
Directors.
(B) Any notice of redemption mailed to a holder of Series B
Preferred Stock at his address as the same shall appear on
the books of the Corporation shall be conclusively presumed
to have been given whether or not the holder receives the
notice. Each such notice shall state the Redemption Date;
the redemption price applicable to the shares to be
redeemed; the place or places where such shares are to be
surrendered; that dividends on shares to be redeemed will
cease to accrue on the Redemption Date; and that shares to
be redeemed may be converted at any time prior to the close
of business on the business day next preceding the
Redemption Date as hereinafter provided (such notice to
state the Conversion Price, if any, at the time applicable).
No defect in any such notice to any holder of Series B
Preferred Stock shall affect the validity of the proceedings
for the redemption of any other shares of such Series B
Preferred Stock.
(C) From and after the Redemption Date (unless default shall
be made by the Corporation in paying the redemption price of
the shares called for redemption, plus all accrued and
unpaid dividends thereon), all dividends on the Series B
Preferred Stock called for redemption shall cease to accrue
and all rights of the holders thereof as shareholders of the
Corporation, except the right to receive the redemption
price as hereinafter provided, shall cease and terminate.
The respective holders of record of the Series B Preferred
Stock to be redeemed shall be entitled on and after the
Redemption Date to receive the redemption price at any time
upon actual delivery to the Corporation of certificates for
the number of shares to be redeemed, duly endorsed in blank
or accompanied by proper instruments of assignment and
transfer thereof duly endorsed in blank.
(D) Any shares of Series B Preferred Stock redeemed pursuant
to the provisions of this Section 4 shall be retired and
given the status of authorized and unissued Preferred Stock,
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undesignated as to series, subject to reissuance by the
Corporation as shares of Preferred Stock of one or more
series, as may be determined from time to time by the Board
of Directors, but such shares shall not be reissued as
Series B Preferred Stock.
Section 5. Conversion.
Shares of Series B Preferred Stock may be converted at the
option of the holder thereof (provided, however, that no
shares of the Series B Preferred Stock shall be convertible
at any time by the Original Holders) from and after the
third anniversary of the date any shares of Series B
Preferred Stock are first issued by the Corporation, at any
time prior to the close of business on the business day next
preceding the date fixed for redemption of such shares
pursuant to Section 4 hereof, into fully paid and
nonassessable shares of Common Stock of the Corporation at
the rate of 4.1667 shares of Common Stock as now constituted
for each share of Series B Preferred Stock surrendered for
conversion. The conversion rate expressed may also be
expressed as a conversion price of $24.00 (the "Conversion
Price") based on a liquidation value of each share of Series
B Preferred Stock of $100.00. The conversion right is
subject to the following provisions:
(A) The Conversion Price shall be subject to adjustment from
time to time as follows:
(i) In case the Corporation shall (a) pay a dividend, or
make a distribution, to all holders of its Common Stock in
shares of its capital stock (whether shares of Common Stock
or of capital stock of any other class), (b) subdivide its
outstanding shares of Common Stock into a greater number of
shares, (c) combine its outstanding shares of Common Stock
into a small number of shares, or (d) issue by
reclassification of its shares of Common Stock any
securities, the Conversion Price and terms of conversion in
effect immediately prior to such action shall be adjusted so
that the holder of any share of Series B Preferred Stock
thereafter surrendered for conversion shall be entitled to
receive the kind and number of shares of Common Stock of the
Corporation and other securities which he would have owned
or been entitled to receive immediately following such
action had such share of Series B Preferred Stock been
converted immediately prior thereto. An adjustment made
pursuant to this Paragraph A(i) shall become effective
immediately after the record date in the case of a dividend
or distribution and shall become effective immediately after
the effective date in the case of a subdivision, combination
or reclassification.
(ii) In case the Corporation shall distribute to all holders
of its Common Stock evidences of its indebtedness or assets
(excluding cash distributions made out of current or
retained earnings), then in each such case the Conversion
Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in
effect immediately prior to the date of such distribution by
a fraction of which the numerator shall be the current
market price per share of the Common Stock (determined as
provided in Paragraph A(vii) below) at the record date
mentioned below, less the then fair market value per share
(as determined by the Board of Directors of the Corporation,
whose determination shall be conclusive) of the assets or
evidences of indebtedness distributed, and the denominator
of which shall be such current market price per share of the
Common Stock. Such adjustment shall become effective
immediately after the record date for determination of
shareholders entitled to receive such distribution.
(iii) In case the Corporation shall issue or sell any
securities convertible into shares of Common Stock
("Convertible Securities"), there shall be determined the
price per share for which shares of Common Stock are
issuable upon the conversion or exchange thereof,
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such determination to be made by dividing (a) the total
amount received or receivable by the Corporation as
consideration for the issue or sale of such Convertible
Securities, plus the average of the minimum and maximum
aggregate amount of additional consideration, if any,
payable to the Corporation upon the conversion or exchange
of all such Convertible Securities, by (b) the maximum
number of shares of Common Stock of the Corporation issuable
upon conversion or exchange of all of such Convertible
Securities; and such issue or sale shall be deemed for
purposes of Section 5(A)(vi) below to be an issue or sale
for cash (as of the date of issue or sale of such
Convertible Securities) of such maximum number of shares of
Common Stock at the price per share so determined.
If such Convertible Securities shall by their terms provide
for an increase or increases, with the passage of time, in
the amount of additional consideration, if any, payable to
the Corporation, or in the rate of exchange, upon the
conversion or exchange thereof, the adjusted Conversion
Price shall, forthwith upon any such increase becoming
effective, be readjusted (but to no greater extent that
originally adjusted) to reflect the same, taking into
account any such Convertible Securities previously converted.
(iv) In case the Corporation shall grant any rights,
warrants or options to subscribe for, purchase or otherwise
acquire shares of Common Stock, there shall be determined
the minimum price per share for which a share of Common
Stock is issuable upon the exercise of all such rights,
warrants or options, such determination to be made by
dividing (a) the total amount, if any, received or
receivable by the Corporation as consideration for the
granting of such rights, warrants or options, plus the
average of the maximum and minimum aggregate amount of
additional consideration payable to the Corporation upon the
exercise of all such rights, warrants or options, by (b) the
maximum number of shares of Common Stock or the Corporation
issuable upon the exercise of all such rights, warrants or
options; and the granting of all such rights, warrants or
options shall be deemed for purposes of Section 5(A)(vi)
below to be an issue or sale for cash (as of the date of the
granting of such rights, warrants or options) of such
maximum number of shares of Common Stock at the price per
share so determined.
If such rights, warrants or options shall by their terms
provide for an increase or increases, with the passage of
time, in the amount of additional consideration payable to
the Corporation upon the exercise thereof, the adjusted
Conversion Price shall, forthwith upon any such increase
becoming effective, be readjusted (but no greater extent
than originally adjusted) to reflect the same, taking into
account any such rights, warrants or options previously
exercised.
(v) In case the Corporation shall grant any rights, warrants
or options to subscribe for, purchase or otherwise acquire
Convertible Securities, such Convertible Securities shall be
deemed, for the purposes of Paragraph A (iii) above, to have
been issued and sold (as of the actual date of issue or sale
of such Convertible Securities) for the total amount
received or receivable by the Corporation as consideration
for the granting of such rights, warrants or options plus
the average of the maximum and minimum aggregate amount of
additional consideration, if any, payable to the Corporation
upon the exercise of all such rights, warrants or options.
If such rights, warrants or options shall by their terms
provide for an increase or increases, with the passage of
time, in the amount of additional consideration payable to
the Corporation upon the exercise thereof, the adjusted
Conversion Price shall, forthwith upon any such increase
becoming effective, be readjusted (but to no greater extent
than originally adjusted) to reflect the same, taking into
account any such rights, warrants or
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options previously exercised.
(vi) In case the Corporation shall issue or sell its shares
of Common Stock, or be deemed to have issued Common Stock in
accordance with the provisions of Paragraph A(iii), (iv) or
(v) above, for a consideration per share which is below the
then current market price per share of the Common Stock (as
defined in Paragraph A(vii) below), the following provisions
shall apply. An Adjusted Fair Market Value shall be computed
(to the nearest cent, a half cent or more being considered a
full cent) by dividing:
a) the sum of (x) the result obtained by multiplying the
number of shares of Common Stock of the Corporation
outstanding immediately prior to such issue or sale by the
then current market price (as defined in Paragraph A(vii)
below), plus (y) the consideration, if any, received by the
Corporation upon such issue or sale; by
b) the number of shares of Common Stock of the Corporation
outstanding immediately after such issue or sale.
The resulting number shall be deemed to be the Adjusted Fair
Market Value per share. Thereafter, the Conversion Price
shall be adjusted so that the number of shares of Common
Stock, into which the shares of Series B Preferred Stock are
thereafter convertible is that number of shares, multiplied
by the Adjusted Fair Market Value per share, which equals
the same dollar amount that is computed by multiplying the
number of shares of Common Stock for which all of the shares
of Series B Preferred Stock then outstanding were
convertible immediately prior to such actions by the current
market price per share (as defined in Paragraph A(vii)
below).
The provisions of this Paragraph A(vi) shall not apply to an
issuance or sale of shares of the Common Stock in connection
with an underwritten public offering or in any transaction
involving a conversion and acquisition of a savings and loan
association or savings bank under applicable federal or
state law or regulation.
(vii) For the purpose of any computation under Paragraphs
A(ii) and (vi), the current market price per share of Common
Stock on any date shall be deemed to be the average of the
market price for 20 consecutive business days commencing 35
business days before the day in question.
(viii) All calculations under this Section 5 shall be made
to the nearest cent or to the nearest one-hundredth of a
share, as the case may be.
(ix) Whenever the Conversion Price is adjusted as herein
provided, the Corporation shall mail a copy of a statement
setting forth the adjusted Conversion Price determined as
provided herein and setting forth the method of calculation
and the facts requiring such adjustment and upon which such
calculation is based, to each person who is a registered
holder of Series B Preferred Stock at such person's last
address as the same appears on the books of the Corporation.
Each adjustment shall remain in effect until a subsequent
adjustment is required hereunder.
(x) No adjustment in the Conversion Price need be made under
Paragraph A (ii) above if the Corporation issues or
distributes to each holder of Series B Preferred Stock
evidences of indebtedness or assets referred to in such
Paragraph A(ii) which each holder of Series B Preferred
Stock would have been entitled to receive had the Series B
Preferred Stock been converted prior to the happening of
such event or the record date
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with respect thereto. No adjustment in the Conversion Price
need be made for sales of Common Stock pursuant to a
Corporation plan for reinvestment of dividends or interest.
No such adjustment need be made for a change in the par
value of the Common Stock. No such adjustment need be made
in respect of the issuance of shares of the Common Stock
upon conversion of the Corporation's Series A ESOP Non-
Voting Convertible Preferred Stock or employee stock options
for the purchase of up to 825,000 shares of Common Stock, so
long as such employee and director stock options are
exercisable and shares of Common Stock are issuable at
prices no less than 95% of the current market price of the
Common Stock at the time of the grant of such options.
(xi) Upon any issuance or sale of Common Stock for a
consideration other than cash, or a consideration part of
which is other than cash, of any shares of Common Stock or
Convertible Securities or any rights, warrants or options to
subscribe for, purchase or otherwise acquire any shares of
Common Stock or Convertible Securities, the amount of the
consideration other than cash received by the Corporation
shall be deemed to be the fair value of such consideration
as determined in good faith by the Board of Directors of the
Corporation. In case any shares of Common Stock or
Convertible Securities or any rights, options or warrants to
subscribe for, purchase or otherwise acquire any shares of
Common Stock or Convertible Securities shall be issued or
sold together with other shares, stock or securities or
other assets of the Corporation for a consideration which
covers both, the consideration for the issue or sale of such
shares of Common Stock or Convertible Securities or such
rights, options or warrants shall be deemed to be the
portion of such consideration allocated thereto in good
faith by the Board of Directors of this Corporation.
(B) In case of a merger or consolidation of the Corporation
with or into another corporation, or the sale of the
Corporation's property or assets as, or substantially as, an
entirety, to another corporation, or the reclassification of
the Common Stock (other than through a subdivision or
combination thereof, or change in par value), holders of
shares of Series B Preferred Stock shall thereafter have the
right to convert each of such shares into the kind and
amount of shares of stock and other securities and property
receivable upon such merger, consolidation, sale or
reclassification by a holder of the number of shares of
Common Stock (whether whole or fractional) into which such
shares of Series B Preferred Stock might have been converted
immediately prior to such a merger, consolidation, sale or
reclassification, and shall have no other conversion rights
under these provisions; and effective provision shall be
made in the charter of the resulting or surviving
corporation or otherwise, so that the provisions set forth
herein for the protection of conversion rights of Series B
Preferred Stock shall thereafter be applicable, as nearly as
reasonably may be, to any other shares of stock and other
securities and property deliverable upon conversion of
Series B Preferred Stock remaining outstanding or other
convertible preferred stock received in place thereof. Any
such resulting or surviving corporation shall expressly
assume the obligation to deliver, upon the exercise of the
conversion right, such shares, securities or property as
holders of Series B Preferred Stock remaining outstanding,
or other convertible preferred stock received by such
holders in place thereof, shall be entitled to receive
pursuant to the provisions hereof, and to make provision for
protection of conversion rights as above provided.
(C) If, at any time while shares of Series B Preferred Stock
are outstanding, the Corporation shall (i) declare a
dividend (or any other distribution) on its Common Stock,
other than in cash out of current or retained earnings, or
(ii) reclassify its Common Stock (other than through a
subdivision or combination thereof) or become a party to any
consolidation or merger for which approval of the holders of
its stock is required, or sell or transfer all or
substantially all of the assets of the Corporation, then the
Corporation shall cause to be mailed to registered
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holders of Series B Preferred Stock, at their last addresses
as they shall appear on the books of the Corporation, at
least twenty days prior to the applicable record date
hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such
dividend or distribution, or, if a record is not to be
taken, the date as of which holders of Common Stock of
record to be entitled to such dividend or distribution are
to be determined, or (y) the date on which any such
reclassification, consolidation, merger, sale or transfer
is expected to become effective, and the date as of which
it is expected that holders or record of Common Stock shall
be entitled to exchange their Common Stock for securities or
other property, if any, deliverable upon such
reclassification, consolidation, merger, sale or transfer.
Failure to give or receive the notice required by this
Paragraph C or any defect therein shall not affect the
legality or validity of any such dividend, distribution,
reclassification, consolidation, merger, sale, transfer or
other action.
(D) The holder of any shares of Series B Preferred Stock may
exercise its option to convert such shares into shares of
Common Stock only by surrendering for such purpose to the
Corporation at its principal office the certificates
representing the shares to be converted, accompanied by
written notice that such holder elects to convert such
shares in accordance with the provisions of this Section 5.
Said notice shall also state the name or names (with
addresses) in which the certificate or certificates for
shares of Common Stock which shall be issuable on such
conversion shall be issued. Each certificate or certificates
surrendered for conversion shall, unless the shares issuable
on conversion are to be issued in the same name as that in
which such certificate or certificates are registered, be
accompanied by instruments of transfer, in form satisfactory
to the Corporation, duly executed by the holder or his duly
authorized attorney. Each conversion shall be deemed to have
been effected on the date on which such certificate or
certificates shall have been surrendered and such notice
received by the Corporation as aforesaid, and the person or
persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable
upon such conversion shall be deemed to have become on said
date the holder or holders of record of the shares
represented thereby notwithstanding that the transfer books
of the Corporation may then be closed or that certificates
representing such shares of Common Stock shall not then be
actually delivered to such person. As promptly as
practicable on or after the conversion date, the Corporation
shall issue and deliver to the person or persons entitled to
receive the same a certificate or certificates representing
the number of full shares of Common Stock issuable upon such
conversion.
(E) Upon any conversion of shares of Series B Preferred
Stock, no allowance, adjustment or payment shall be made
with respect to accrued but unpaid dividends upon such
Series B Preferred Stock or with respect to dividends on the
Common Stock to be issued upon conversion.
(F) In connection with the conversion of shares of Series B
Preferred Stock into Common Stock, no fractional shares of
Series B Preferred Stock or of Common Stock shall be issued,
but the Corporation shall pay a cash adjustment in respect
of such fractional interest, calculated on the market price
of the Common Stock on the date of conversion.
(G) The issuance of stock certificates on conversions of
shares of Series B Preferred Stock shall be made without
charge to converting shareholders for any tax in respect of
the issuance thereof. The Corporation shall not, however, be
required to pay any tax which may be payable in respect of
any registration of transfer involved in the issue and
delivery of stock in any name other than that of the holder
of the shares of Series B Preferred Stock converted, and the
Corporation shall not be required to so issue or deliver any
stock certificate unless and until the person or persons
requesting the registration of transfer shall have paid to
the Corporation the amount of such tax or shall have
established to the satisfaction of the Corporation that such
tax
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has been paid.
(H) The Corporation shall at all times reserve and keep
available out of its authorized Common Stock the full number
of shares of Common Stock deliverable upon the conversion of
all outstanding shares of Series B Preferred Stock.
(I) Any shares of Series B Preferred Stock converted shall
be retired and shall assume the status of authorized and
unissued Preferred Stock, undesignated as to series, subject
to reissuance by the Corporation as shares of Preferred
Stock of one or more series, as may be determined from time
to time by the Board of Directors, but such shares shall not
be reissued as Series B Preferred Stock.
(J) For purposes of this Section 5:
(i) "business day" shall mean a day on which the NASDAQ (or
a successor or an equivalent or substitute organization or
facility) is open for trading of securities; and
(ii) "Common Stock" shall mean (a) the Corporation's Common
Stock, without par value, or (b) any other class of stock
resulting from successive changes or reclassifications of
such Common Stock consisting solely of changes in par value,
or from par value to no par value, or from no par value to
par value; provided, however, that in the event that at any
time as a result of an adjustment made pursuant to Paragraph
A(i) above, the holder of any share of Series B Preferred
Stock thereafter surrendered for conversion would become
entitled to receive any stock of the Corporation other than
shares of its Common Stock, thereafter the conversion rate
and price with respect to such other shares so receivable
upon conversion of any share of Series B Preferred Stock
shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the
provisions with respect to Common Stock contained in this
Section 5.
(iii) "Person" means a natural person, company, government
or political subdivision, agency or instrumentality of a
government but shall also include a "group"" as that term is
used in Section 13(d)(d) (or any successor provision) of the
Securities Exchange Act of 1934, as amended.
Section 6. Voting Rights.
(A) The holders of the Series B Preferred Stock shall not be
entitled to vote except as provided in this Section 6 and as
otherwise provided by law.
(B) (i)(a) If at any time the Corporation shall be in
default in the payment of dividends on any of the
outstanding Series B Preferred Stock in an amount equivalent
to or exceeding eight full quarterly dividends (whether or
not consecutive), the number of directors constituting the
Board of Directors of the Corporation, subject to the
provisions of Paragraph B(ii) below, shall be increased by
three, and the holders of the outstanding Preferred Stock of
the Corporation, voting as a separate class, shall be
entitled at the next annual or special meeting of
shareholders, or at a special meeting of holders of the
outstanding Preferred Stock, voting as a separate class,
called as hereinafter provided, to elect three directors to
fill such newly created directorships.
(b) However, when all arrearages in dividends with respect
to the Series B Preferred Stock then outstanding shall have
been paid and dividends thereon for the
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current quarterly period shall have been paid or declared
and a sum sufficient for the payment thereof set apart, then
(x) the right of holders of the outstanding Preferred Stock
to elect directors under this Paragraph B shall cease, but
subject to the same provisions for vesting of such voting
rights in the case of any similar future arrearages in
dividends; (y) the term of the directors then in office
elected by holders of the outstanding Preferred Stock as a
class shall forthwith terminate; and (z) the number of
directors constituting the Board of Directors shall be
reduced by the number of directors that had been elected by
the holders of the outstanding Preferred Stock pursuant
hereto.
(c) In the event that the Board of Directors of the
Corporation shall be divided into two or more classes, the
directors elected by the holders of the outstanding
Preferred Stock shall be distributed among the several
classes of directors as nearly equally as possible.
(ii) Whenever the right to elect directors by this Section 6
shall vest, it may be exercised initially either at a
special meeting of holders of the outstanding Preferred
Stock or at any annual or special meeting of shareholders,
but thereafter it shall be exercised only at annual
shareholders meetings. A special meeting for the exercise of
such right shall be called by the Secretary of the
Corporation within ten days after receipt of a written
request therefor, signed by the holders of record of at
least ten percent (10%) of the then outstanding shares of
Preferred Stock; provided, however, no such special meeting
shall be held during the 90-day period preceding the date
fixed for the annual meeting of shareholders;
(iii) Any director who shall have been elected by holders of
the Preferred Stock as a class pursuant to this Paragraph B
shall hold office for a term expiring (subject to the
earlier termination of the default in dividends) at the next
annual meeting of shareholders, and during such term may be
removed for cause at any time, but may be removed without
cause only by the affirmative votes of holders of record of
a majority of the then outstanding shares of Preferred Stock
given at a special meeting of such Shareholders called for
such purposes. Any vacancy created by such removal may also
be filled at such special meeting. A meeting for the removal
without cause of a director elected by holders of the
outstanding Preferred Stock as a class and the filling of
the vacancy created thereby shall be called by the Secretary
of the Corporation within ten days after receipt of a
written request therefor, signed by the holders of record of
at least 25% of the then outstanding shares of Preferred
Stock. Such meeting shall be held at the earliest
practicable date thereafter in accordance with the
Corporation's Articles of Incorporation, Code of Regulations
and applicable state law.
(iv) Any vacancy caused by the removal for cause or by the
death, disability or resignation of a director who shall
have been elected by the holders of the outstanding
Preferred Stock as a class pursuant to this Section 6 may be
filled only by the holders of the outstanding Preferred
Stock at a meeting called for such purpose. Such meeting of
the holders of the outstanding Preferred Stock shall be
called by the Secretary of the Corporation at the earliest
practicable date after any such removal, death, disability
or resignation and in any event within ten days after
receipt of a written request therefor, signed by the holders
of record of at least 10% of the then outstanding shares of
Preferred Stock.
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(v) If any meeting of the holders of the outstanding
Preferred Stock required by this Section 6 to be called
shall not have been called within ten days after receipt of
a written request therefor by the Secretary of the
Corporation as provided herein, or within fifteen days after
mailing the same within the United States of America by
registered mail addressed to the Secretary of the
Corporation at its principal office, then the holders of
record of at least 10% of the then outstanding shares of
Preferred Stock may designate in writing one of their number
to call such a meeting at the expense of the Corporation,
and such meeting may be called by such person so designated
upon the notice required for annual meetings of
shareholders. Any holder of the outstanding Preferred Stock
so designated shall have access to the stock books of the
Corporation for the purpose of causing meetings of
shareholders to be called pursuant to these provisions.
(vi) Any meeting of holders of the outstanding Preferred
Stock entitled to vote as a class for the election or
removal of directors shall be held at the place for the
holding of the annual meeting of shareholders of the
Corporation. At such meeting, the presence in person or by
proxy of holders of a majority of the votes of the then
outstanding shares of Preferred Stock shall be required to
constitute a quorum; in the absence of a quorum, a majority
of the holders present in person or by proxy shall have the
power to adjourn the meeting from time to time without
notice, other than announcement at the meeting, until a
quorum shall be present.
(C) So long as any shares of Series B Preferred Stock are
outstanding, the Corporation shall
not, in any manner, whether by amendment to its Articles of
Incorporation or Code of Regulations, by
merger (whether or not the Corporation is the surviving
corporation in such merger), by consolidation, or
otherwise, without the written consent of the affirmative
vote at a meeting called for that purpose of the
holders of at least two-thirds of the votes of the shares of
Series B Preferred Stock then outstanding, voting
separately as a class, (i) amend, alter or repeal any of the
provisions of any resolution or resolutions
establishing the Series B Preferred Stock so as to affect
adversely the powers, preferences or special rights
of such Series B Preferred Stock or (ii) authorize the
issuance of, or authorize any obligation or security
convertible into or evidencing the right to purchase shares
of, any additional class or series of stock ranking prior to
the Series B Preferred Stock in the payment of dividends or
the preferential distribution of assets.
(D) Nothing in this Section 6 shall be deemed to require any
vote or consent of the holders of shares of Series B
Preferred Stock in connection with the authorization or
issuance of any series of Preferred Stock ranking on a
parity with or junior to the Series B Preferred Stock as to
dividends and/or distribution of assets.
Section 7. Restrictions on Transfer.
The original holders of the Series B Preferred Stock shall
be entitled to transfer ownership of their shares only as
follows:
(A) in a widely dispersed public offering;
(B) in sales pursuant to Rule 144 of the Securities
Act of 1933 or rules of similar import;
(C) in sales pursuant to Rule 144A of the Securities
Act of 1933, or in any other private sale in which no single
purchaser acquires more than 2% of the voting shares of the
Corporation; or
Page 12
<PAGE>
(D) to Provident, to a third party that has acquired a
majority of the shares of Provident or to any other original
holder.
Section 8. Reports.
So long as any shares of the Series B Preferred Stock shall
be outstanding, the Corporation shall provide to each holder
of such shares a copy of the annual report to shareholders
distributed pursuant to Rule 14a-3 of the Securities
Exchange Act of 1934.
B) The Board of Directors of the corporation shall have the
right to adopt amendments to the Articles in respect of any
unissued or treasury shares of any class and thereby to fix
or change: the division of such shares into series and the
description and authorized number of shares of each series;
the dividend rate; the dates of payment of dividends and the
dates from which they are cumulative; liquidation price;
redemption rights and price; sinking fund requirements;
conversion rights; and restrictions on the issuance of
shares of any class or series;
C) No holder of shares of any class of the corporation shall
be entitled as such, as a matter of right, to subscribe for
or purchase shares of any class, now or hereafter
authorized, or to purchase or subscribe for securities
convertible into or exchangeable for shares of the
corporation or to which shall be attached or appertain any
warrants or rights entitling the holder thereof to subscribe
for or purchase shares, except such rights of subscription
or purchase, if any, at such price or prices, and upon such
terms and conditions as the Board of Directors in its
discretion from time to time may determine.
FIFTH: The minimum amount of stated capital with which the
corporation will commence business shall be One Thousand
Dollars ($1,000.00).
SIXTH: The corporation shall have the right to purchase or
sell any class of shares of the corporation, or to acquire,
hold and dispose of shares of its own capital and rights
thereto from time to time, to such extent and in such manner
and upon such terms as its Board of Directors shall
determine, or in any other manner authorized by law;
provided, no such purchase would cause any impairment of its
capital.
SEVENTH: That the provisions of Ohio Revised Code Section
1701.831 relating to control share acquisitions shall not be
applicable to the corporation.
RESOLVED FURTHER, That the President and Secretary of the
Corporation be, and they hereby are, authorized and directed
to cause to be prepared, to execute, and to cause to be
filed in the Office of the Secretary of State of the State
of Ohio a Certificate of Amended Articles of Incorporation
containing a copy of this resolution and a statement of the
manner of adoption thereof by the Board of Directors of the
Corporation.
IN WITNESS WHEREOF, said Allen L. Davis, President and Mark
E. Magee, Secretary, of Provident Bancorp, Inc., acting for
and on behalf of said Corporation, have hereunto subscribed
their names this 23rd day of September, 1993.
PROVIDENT BANCORP, INC.
By: /s/ Allen L. Davis
President
and: /s/ Mark E. Magee
Secretary
Page 13
<PAGE>
Certificate of Amendment
By Shareholders
to the Articles of Incorporation
Provident Bancorp, Inc.
(Name of Corporation)
Allen L . Davis, who is [ ] Chairman of the Board
[X] President [ ] Vice President
and Mark E. Magee, who is [X] Secretary [ ] Assistant
Secretary
of the above named Ohio Corporation for profit with its
principal location at One East Fourth Street, Cincinnati,
Hamilton County, Ohio, do hereby certify that: (check the
appropriate box and complete the appropriate statement)
[X] a meeting of the shareholders was duly called for the
purpose of adopting this amendment and held on October 5,
1992 , at which meeting a quorum of the shareholders was
present in person or by proxy, and by the affirmative vote
of the holders of shares entitling them to exercise 87% of
the voting power of the corporation.
[ ] in a writing signed by all of the shareholders who would
be entitled to notice of a meeting held for that purpose,
the following resolution to amend the articles are adopted:
RESOLVED: That Article Four of the Company's Articles of
Incorporation be, and the same is hereby, amended to
increase the number of authorized common shares so that
paragraph (a) of said Article Four will read, in its
entirety, as follows:
(a) The total number of shares of all classes of stock which
the corporation shall be authorized to issue shall be:
(i) 60 million shares of common stock without par value; and
(ii) 5 million shares of non-voting, $1.00 Par, Cumulative
Preferred Stock.
IN WITNESS WHEREOF, the above named officers, acting for and
on the behalf of the corporation, have hereto subscribed
their names this 5th day of October, 1992.
By /s/ Allen L. Davis
President
By /s/ Mark E. Magee
Secretary
NOTE: Ohio law does not permit one officer to sign in two
capacities. Two separate signatures are required, even if
this necessitates the election of a second officer before
the filing can be made.
<PAGE>
AMENDMENT TO ARTICLES OF INCORPORATION
OF
PROVIDENT BANCORP, INC.
We, the undersigned duly authorized officers of Provident
Bancorp, Inc., an Ohio corporation (the "Corporation") in
accordance with the provisions of Section 1701.70(B) (1) of
the Ohio Revised Code, DO HEREBY CERTIFY THAT:
WHEREAS, an amendment to Article Fourth of this
Corporation's Articles of Incorporation was duly filed with
the Ohio Secretary of State on October 28, 1991, which
amendment created a series of 450,000 shares of Preferred
Stock, par value $1.00 per share, designated as Series B Non-
Voting Convertible Preferred Stock; and
WHEREAS, No shares of the Series B Non-Voting Convertible
Preferred Shares have been issued; and
WHEREAS, The Board of Directors now wishes to change certain
restrictions on the transfer of the Series B Preferred
Shares and duly adopted the following resolution on November
12, 1991:
"RESOLVED that, Section 7 of the terms of the Corporation's
Series B Non-Voting Convertible Preferred Stock, as
contained in an amendment to Articles of Incorporation filed
with the Ohio Secretary of State, is hereby deleted in its
entirety, and substituted in place thereof is the following
Section 7:
Section 7. Restrictions on Transfer.
The original holders of the Series B Preferred Stock shall
be entitled to transfer ownership of their shares only as
follows.
(A) in a widely dispersed public offering
(B) in sales pursuant to Rule 144 of the Securities Act of
1933 or rules of similar import;
(C) in sales pursuant to Rule 144A of the Securities Act of
1933, or in any other private sale in which no single
purchaser acquires more than 2% of the voting shares of the
Corporation; or
(D) to Provident, to a third party that has acquired a
majority of the shares of Provident or to any other Original
Holder.
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the
penalties of perjury this 13th day of November, 1991.
_______________________
Name: Allen L. Davis
Title: President
_______________________
Name: Mark E Magee
Title: Secretary
<PAGE>
AMENDMENT TO ARTICLES OF INCORPORATION
OF
PROVIDENT BANCORP, INC.
Pursuant to Section 1701.70(B)(1) of the Ohio Revised Code
We, the undersigned duly authorized officers of Provident
Bancorp, Inc., an Ohio corporation (the "Corporation"), in
accordance with the provisions of Section 1701.70(B)(1) of
the Ohio Revised Code, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by Article Fourth of the Articles of Incorporation
of the Corporation, on October 25, 1991 the Board of
Directors authorized the series of Preferred Stock
hereinafter provided for and has adopted the following
resolution creating a series of 450,000 shares of Preferred
Stock, par value $1.00 per share, designated as Series B Non-
Voting Convertible Preferred Stock:
"RESOLVED that, pursuant to the authority vested in the
Board of Directors of the Corporation in accordance with the
provisions of Article Fourth of the Articles of
Incorporation, a series of Preferred Stock of the
Corporation be, and it hereby is, created, and that the
designation and amount thereof and the preferences and other
special rights of the shares of such series, and
qualifications, limitations or restrictions thereof are as
follows:
Section 1. Designation of Series and Number of Shares.
The shares of such series of Preferred Stock shall be
designated "Series B Non-Voting Convertible Preferred Stock"
(hereinafter referred to as the "Series B Preferred Stock"),
and the number of shares which shall constitute such series
shall be not more than 450,000 shares, $1 par value, which
number may be decreased (but not below the number thereof
then outstanding) from time to time by the Board of
Directors.
Section 2. Dividends.
(A) The holders of record of the Series B Preferred Stock on
the dates specified below shall be entitled to receive, as
and when declared by the Board of Directors and out of
assets of the Corporation which are by law available for
payment of dividends cumulative preferential cash dividends,
at the rate of $8.00 per share per annum, payable quarterly
on the first day of January, April, July and October in each
year (each such day being hereinafter called a "dividend
date" and each quarterly period ending on the last day of
the calendar month preceding a dividend date being
hereinafter called a "dividend period"). The holders of
record of the Series B Preferred Stock entitled to receive a
particular dividend payment shall be determined on the date
15 days prior to the dividend date of such payment.
<PAGE>
- 2 -
(B) Dividends on the Series B Preferred Stock shall be
cumulative, whether or not in any dividend period or periods
there shall be surplus or net profits of the Corporation
legally available for the payment of such dividends.
(C) So long as any Series B Preferred Stock shall remain
outstanding, no dividend whatsoever shall be declared or
paid upon or set apart for any class of stock or series
thereof ranking junior to or on parity with the Series B
Preferred Stock in the payment of dividends nor shall any
shares of any class of stock or series thereof ranking
junior to or on a parity with the Series B Preferred Stock
in payment of dividends be redeemed or purchased by the
Corporation or any subsidiary thereof nor shall any moneys
be paid to or made available for a sinking fund for
redemption or purchase of any shares of any class of stock
or series thereof ranking junior to or on a parity with the
Series B Preferred Stock in payment of dividends, unless in
each instance full dividends on all outstanding shares of
Series B Preferred Stock for all past dividend periods shall
have been paid at the rate fixed therefor and the dividends
on all outstanding shares of Series B Preferred Stock for
the then current dividend period shall have been paid or
declared and sufficient funds set apart for payment thereof.
(D) Accumulations of dividends on any shares of Series B
Preferred Stock shall not bear interest.
(E) No dividend shall be paid upon or declared or set apart
for any share of Series B Preferred Stock for any dividend
period unless at the same time a like proportionate dividend
for the same dividend period shall be paid upon or declared
or set apart for all shares of Series B Preferred Stock then
outstanding and entitled to receive such dividend.
(F) All dividends declared on the Series B Preferred Stock
for any dividend period and on any class or series of stock
ranking on a parity with the Series B Preferred Stock as to
dividends shall be declared pro rata so that the amounts of
dividends per share declared for such period on the Series B
Preferred Stock and on any class or series of stock ranking
on a parity with the Series B Preferred Stock as to
dividends that were outstanding during such period shall in
all cases bear to each other the same proportions that the
respective dividend rates of such stock for such period bear
to each other.
(G) As used herein, the word "dividends" shall not include
dividends payable solely in shares of Common Stock of the
Corporation or warrants or rights to subscribe for or
purchase any security of the Corporation.
(H) As used herein, the phrase "set apart for payment" in
respect of the payment of dividends shall not be construed
as requiring deposit of any funds in trust or in any special
account,
<PAGE>
- 3 -
but shall merely mean that out of the funds available for
the payment of dividends, a sum sufficient for the payment
of dividends on the Series B Preferred Stock shall be
reserved by appropriate notation on the books of the
Corporation.
(I) As used herein, the term "market price" for any date
shall mean the average of the closing bid and asked price as
reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") or National Quotation
Bureau, Inc. for that date.
Section 3. Liquidation Preference.
(A) The Series B Preferred Stock shall be preferred over the
Common Stock or any other class or series of stock ranking
junior to the Series B Preferred Stock as to distribution of
assets in the event of any liquidation or dissolution or
winding up of the Corporation, and in any such event, the
holders of the Series B Preferred Stock shall be entitled to
receive, after payment or provision for payment of the debts
and other liabilities of the Corporation, out of the assets
of the Corporation available for distribution to its
shareholders, $100 per share, and no more, together with an
amount equal to all dividends accrued and unpaid thereon to
the date of final distribution, for every share of the
Series B Preferred Stock held by them before any
distribution of the assets shall be made to the holders of
the Common Stock or any other class or series of stock
ranking junior to the Series B Preferred Stock as to
distribution of assets. Upon any liquidation, dissolution or
winding up of the Corporation, after payment shall have been
made in full on the Series B Preferred Stock as provided in
the preceding sentence, but not prior thereto, the Common
Stock or any other series or class of stock ranking junior
to the Series B Preferred Stock as to distribution of assets
shall, subject to the respective terms and provisions, if
any, applying thereto, be entitled to receive any and all
assets remaining to be paid or distributed and the Series B
Preferred Stock shall not be entitled to share therein.
B. If upon any liquidation or dissolution or winding up of
the Corporation, the amounts payable on or with respect to
the Series B Preferred Stock are not paid in full, the
holders of shares of the Series B Preferred Stock, together
with all classes or series of stock ranking on a parity with
the Series B Preferred Stock as to distribution of assets,
shall share ratably in any distribution of assets according
to the respective amounts which would be payable in respect
of the shares held by them upon such distribution if all
amounts payable on or with respect to the Series B Preferred
Stock and any other class or series of stock that so ranks
on a parity with the Series B Preferred Stock were paid in
full.
<PAGE>
- 4 -
C. Neither the merger or consolidation of the Corporation
with another corporation nor the sale or lease of all or
substantially all of the assets of the Corporation shall be
deemed to be a liquidation or dissolution or winding up of
the Corporation.
D. Written notice of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation, stating the payment date and the place where
the distributable amount shall be payable and containing a
statement of the conversion right set forth hereinafter,
shall be given by mail, not less than 30 days prior to the
payment date stated therein, to the holders of record of the
Series B Preferred Stock at their respective addresses as
the same shall then appear on the books of the Corporation.
Section 4. Redemption.
(A) (i) The Corporation may not redeem any shares of Series
B Preferred Stock prior to three years from the first date
any such shares are issued. Thereafter, if at any time and
from time to time the market price of the Common Stock,
exceeds 140% of the Conversion Price, as defined in Section
5 hereof, for twenty (20) consecutive trading days
immediately preceding a notice of redemption, all but not
less than all the Series B Preferred Stock, at such time
outstanding may be redeemed by the Corporation at its
election expressed by resolution to the Board of Directors,
upon not less than 50 days previous notice to the holders of
record of the Series B Preferred Stock to be redeemed, given
by mail, upon payment of $100.00 per share, together with
the amount of any dividends accrued and unpaid thereon to
the date fixed for redemption (the "Redemption Date").
(ii) On the Redemption Date of a redemption described in
subsection (i) above, shares of Series B Preferred Stock
owned by the original holders or any of their affiliates
(the "Original Holders") shall not be redeemed. For purposes
of this provision, an "affiliate" of any person is another
person controlling, controlled by or under common control
with such person. Shares which are not redeemed because of
the first sentence of this subsection shall after the
Redemption Date cease to accrue dividends at the rate of 8%
per annum and thereafter dividends shall be paid on
outstanding shares of Series B Preferred Stock if and when
dividends are declared on Provident Common Stock as if such
Series B Preferred Stock was converted at the Conversion
Price in effect on the Redemption Date. Any shares of Series
B Preferred Stock which are not redeemed on the Redemption
Date because of the operation of this paragraph, which are
subsequently transferred to any person other than the
Original Holder, shall upon such transfer be automatically
converted into Provident Common
<PAGE>
- 5 -
Stock at the Conversion Price in effect on the Redemption
Date.
(iii) In addition to the optional redemption provided for in
subsection (A) (i) above, from and after the seventh
anniversary of the first date any shares of Series B
Preferred Stock are first issued, the Corporation may redeem
the Series B Preferred Stock at any time in whole or from
time to time in part, at a price of $100.00 per share
together with accrued and unpaid dividends thereon to the
Redemption Date. In the case of any redemption pursuant to
this provision, the Corporation shall give notice to the
holders of record of the Series B Preferred Stock to be
redeemed, at least 50 days prior to the Redemption Date. In
the event that fewer than all the outstanding shares of
Series B Preferred Stock are to be redeemed, the number of
shares to be redeemed shall be determined by the Board of
Directors and the shares to be redeemed shall be determined
by lot or pro rata as may be determined by the Board of
Directors.
(B) Any notice of redemption mailed to a holder of Series B
Preferred Stock at his address as the same shall appear on
the books of the Corporation shall be conclusively presumed
to have been given whether or not the holder receives the
notice. Each such notice shall state the Redemption Date;
the redemption price applicable to the shares to be
redeemed; the place or places where such shares are to be
surrendered; that dividends on shares to be redeemed will
cease to accrue on the Redemption Date; and that shares to
be redeemed may be converted at any time prior to the close
of business on the business day next preceding the
Redemption Date as hereinafter provided (such notice to
state the Conversion Price, if any, at the time applicable).
No defect in any such notice to any holder of Series B
Preferred Stock shall affect the validity of the proceedings
for the redemption of any other shares of such Series B
Preferred Stock.
(C) From and after the Redemption Date (unless default shall
be made by the Corporation in paying the redemption price of
the shares called for redemption, plus all accrued and
unpaid dividends thereon), all dividends on the Series B
Preferred Stock called for redemption shall cease to accrue
and all rights of the holders thereof as shareholders of the
Corporation, except the right to receive the redemption
price as hereinafter provided, shall cease and terminate.
The respective holders of record of the Series B Preferred
Stock to be redeemed shall be entitled on and after the
Redemption Date to receive the redemption price at any time
upon actual delivery to the Corporation of certificates for
the number of shares to be redeemed, duly endorsed in blank
or accompanied by proper instruments of assignment and
transfer thereof duly endorsed in blank.
<PAGE>
- 6 -
(D) Any shares of Series B Preferred Stock redeemed pursuant
to the provisions of this Section 4 shall be retired and
given the status of authorized and unissued Preferred Stock,
undesignated as to series, subject to reissuance by the
Corporation as shares of Preferred Stock of one or more
series, as may be determined from time to time by the Board
of Directors, but such shares shall not be reissued as
Series B Preferred Stock.
Section 5. Conversion.
Shares of Series B Preferred Stock may be converted at the
option of the holder thereof (provided, however, that no
shares of the Series B Preferred Stock shall be convertible
at any time by the Original Holders) from and after the
third anniversary of the date any shares of Series B
Preferred Stock are first issued by the Corporation, at any
time prior to the close of business on the business day next
preceding the date fixed for redemption of such shares
pursuant to Section 4 hereof, into fully paid and
nonassessable shares of Common Stock of the Corporation at
the rate of 4.1667 shares of Common Stock as now constituted
for each share of Series B Preferred Stock surrendered for
conversion. The conversion rate expressed may also be
expressed as a conversion price of $24.00 (the "Conversion
Price") based on a liquidation value of each share of Series
B Preferred Stock of $100.00. The conversion right is
subject to the following provisions:
(A) The Conversion Price shall be subject to adjustment from
time to time as follows:
(i) In case the Corporation shall (a) pay a dividend, or
make a distribution, to all holders of its Common Stock in
shares of its capital stock (whether shares of Common Stock
or of capital stock of any other class), (b) subdivide its
outstanding shares of Common Stock into a greater number of
shares, (c) combine its outstanding shares of Common Stock
into a small number of shares, or (d) issue by
reclassification of its shares of Common Stock any
securities, the Conversion Price and terms of conversion in
effect immediately prior to such action shall be adjusted so
that the holder of any share of Series B Preferred Stock
thereafter surrendered for conversion shall be entitled to
receive the kind and number of shares of Common Stock of the
Corporation and other securities which he would have owned
or been entitled to receive immediately following such
action had such share of Series B Preferred Stock been
converted immediately prior thereto. An adjustment made
pursuant to this Paragraph A(i) shall become effective
immediately after the record date in the case of a dividend
or distribution and shall become effective immediately after
the effective date in the case of a subdivision, combination
or reclassification.
<PAGE>
- 7 -
(ii) In case the Corporation shall distribute to all holders
of its Common Stock evidences of its indebtedness or assets
(excluding cash distributions made out of current or
retained earnings), then in each such case the Conversion
Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in
effect immediately prior to the date of such distribution by
a fraction of which the numerator shall be the current
market price per share of the Common Stock (determined as
provided in Paragraph A(vii) below) at the record date
mentioned below, less the then fair market value per share
(as determined by the Board of Directors of the Corporation,
whose determination shall be conclusive) of the assets or
evidences of indebtedness distributed, and the denominator
of which shall be such current market price per share of the
Common Stock. Such adjustment shall become effective
immediately after the record date for determination of
shareholders entitled to receive such distribution.
(iii) In case the Corporation shall issue or sell any
securities convertible into shares of Common Stock
("Convertible Securities"), there shall be determined the
price per share for which shares of Common Stock are
issuable upon the conversion or exchange thereof, such
determination to be made by dividing (a) the total amount
received or receivable by the Corporation as consideration
for the issue or sale of such Convertible Securities, plus
the average of the minimum and maximum aggregate amount of
additional consideration, if any, payable to the Corporation
upon the conversion or exchange of all such Convertible
Securities, by (b) the maximum number of shares of Common
Stock of the Corporation issuable upon conversion or
exchange of all of such Convertible Securities; and such
issue or sale shall be deemed for purposes of Section
5(A)(vi) below to be an issue or sale for cash (as of the
date of issue or sale of such Convertible Securities) of
such maximum number of shares of Common Stock at the price
per share so determined.
If such Convertible Securities shall by their terms provide
for an increase or increases, with the passage of time, in
the amount of additional consideration, if any, payable to
the Corporation, or in the rate of exchange, upon the
conversion or exchange thereof, the adjusted Conversion
Price shall, forthwith upon any such increase becoming
effective, be readjusted (but to no greater extent that
originally adjusted) to reflect the same, taking into
account any such Convertible Securities previously
converted.
(iv) In case the Corporation shall grant any rights,
warrants or options to subscribe for, purchase or otherwise
acquire shares of Common Stock, there shall be determined
the minimum price per share for which a share of Common
Stock is
<PAGE>
- 8 -
issuable upon the exercise of all such rights, warrants or
options, such determination to be made by dividing (a) the
total amount, if any, received or receivable by the
Corporation as consideration for the granting of such
rights, warrants or options, plus the average of the maximum
and minimum aggregate amount of additional consideration
payable to the Corporation upon the exercise of all such
rights, warrants or options, by (b) the maximum number of
shares of Common Stock or the Corporation issuable upon the
exercise of all such rights, warrants or options; and the
granting of all such rights, warrants or options shall be
deemed for purposes of Section 5(A)(vi) below to be an issue
or sale for cash (as of the date of the granting of such
rights, warrants or options) of such maximum number of
shares of Common Stock at the price per share so determined.
If such rights, warrants or options shall by their terms
provide for an increase or increases, with the passage of
time, in the amount of additional consideration payable to
the Corporation upon the exercise thereof, the adjusted
Conversion Price shall, forthwith upon any such increase
becoming effective, be readjusted (but no greater extent
than originally adjusted) to reflect the same, taking into
account any such rights, warrants or options previously
exercised.
(v) In case the Corporation shall grant any rights, warrants
or options to subscribe for, purchase or otherwise acquire
Convertible Securities, such Convertible Securities shall be
deemed, for the purposes of Paragraph A (iii) above, to have
been issued and sold (as of the actual date of issue or sale
of such Convertible Securities) for the total amount
received or receivable by the Corporation as consideration
for the granting of such rights, warrants or options plus
the average of the maximum and minimum aggregate amount of
additional consideration, if any, payable to the Corporation
upon the exercise of all such rights, warrants or options.
If such rights, warrants or options shall by their terms
provide for an increase or increases, with the passage of
time, in the amount of additional consideration payable to
the Corporation upon the exercise thereof, the adjusted
Conversion Price shall, forthwith upon any such increase
becoming effective, be readjusted (but to no greater extent
than originally adjusted) to reflect the same, taking into
account any such rights, warrants or options previously
exercised.
(vi) In case the Corporation shall issue or sell its shares
of Common Stock, or be deemed to have issued Common Stock in
accordance with the provisions of Paragraph A(iii), (iv) or
(v) above, for a consideration per share which is below the
then current market price per share of the Common
<PAGE>
- 9 -
Stock (as defined in Paragraph A(vii) below), the following
provisions shall apply. An Adjusted Fair Market Value shall
be computed (to the nearest cent, a half cent or more being
considered a full cent) by dividing:
a) the sum of (x) the result obtained by multiplying the
number of shares of Common Stock of the Corporation
outstanding immediately prior to such issue or sale by the
then current market price (as defined in Paragraph A(vii)
below), plus (y) the consideration, if any, received by the
Corporation upon such issue or sale; by
b) the number of shares of Common Stock of the Corporation
outstanding immediately after such issue or sale.
The resulting number shall be deemed to be the Adjusted Fair
Market Value per share. Thereafter, the Conversion Price
shall be adjusted so that the number of shares of Common
Stock, into which the shares of Series B Preferred Stock are
thereafter convertible is that number of shares, multiplied
by the Adjusted Fair Market Value per share, which equals
the same dollar amount that is computed by multiplying the
number of shares of Common Stock for which all of the shares
of Series B Preferred Stock then outstanding were
convertible immediately prior to such actions by the current
market price per share (as defined in Paragraph A(vii)
below).
The provisions of this Paragraph A(vi) shall not apply to an
issuance or sale of shares of the Common Stock in connection
with an underwritten public offering or in any transaction
involving a conversion and acquisition of a savings and loan
association or savings bank under applicable federal or
state law or regulation.
(vii) For the purpose of any computation under Paragraphs
A(ii) and (vi), the current market price per share of Common
Stock on any date shall be deemed to be the average of the
market price for 20 consecutive business days commencing 35
business days before the day in question.
(viii) All calculations under this Section 5 shall be made
to the nearest cent or to the nearest one hundredth of a
share, as the case may be.
(ix) Whenever the Conversion Price is adjusted as herein
provided, the Corporation shall mail a copy of a statement
setting forth the adjusted Conversion Price determined as
provided herein and setting forth the method of calculation
and the facts requiring such adjustment and upon
<PAGE>
- 10 -
which such calculation is based, to each person who is a
registered holder of Series B Preferred Stock at such
person's last address as the same appears on the books of
the Corporation. Each adjustment shall remain in effect
until a subsequent adjustment is required hereunder.
(x) No adjustment in the Conversion Price need be made under
Paragraph A (ii) above if the Corporation issues or
distributes to each holder of Series B Preferred Stock
evidences of indebtedness or assets referred to in such
Paragraph A(ii) which each holder of Series B Preferred
Stock would have been entitled to receive had the Series B
Preferred Stock been converted prior to the happening of
such event or the record date with respect thereto. No
adjustment in the Conversion Price need be made for sales of
Common Stock pursuant to a Corporation plan for reinvestment
of dividends or interest. No such adjustment need be made
for a change in the par value of the Common Stock. No such
adjustment need be made in respect of the issuance of shares
of the Common Stock upon conversion of the Corporation's
Series A ESOP Non-Voting Convertible Preferred Stock or
employee stock options for the purchase of up to 825,000
shares of Common Stock, so long as such employee and
director stock options are exercisable and shares of Common
Stock are issuable at prices no less than 95% of the current
market price of the Common Stock at the time of the grant of
such options.
(xi) Upon any issuance or sale of Common Stock for a
consideration other than cash, or a consideration part of
which is other than cash, of any shares of Common Stock or
Convertible Securities or any rights, warrants or options to
subscribe for, purchase or otherwise acquire any shares of
Common Stock or Convertible Securities, the amount of the
consideration other than cash received by the Corporation
shall be deemed to be the fair value of such consideration
as determined in good faith by the Board of Directors of the
Corporation. In case any shares of Common Stock or
Convertible Securities or any rights, options or warrants to
subscribe for, purchase or otherwise acquire any shares of
Common Stock or Convertible Securities shall be issued or
sold together with other shares, stock or securities or
other assets of the Corporation for a consideration which
covers both, the consideration for the issue or sale of such
shares of Common Stock or Convertible Securities or such
rights, options or warrants shall be deemed to be the
portion of such consideration allocated thereto in good
faith by the Board of Directors of this Corporation.
(B) In case of a merger or consolidation of the Corporation
with or into another corporation, or the sale of the
Corporation's property or assets as, or substantially as, an
entirety, to another corporation, or the reclassification of
the
<PAGE>
- 11 -
Common Stock (other than through a subdivision or
combination thereof, or change in par value), holders of
shares of Series B Preferred Stock shall thereafter have the
right to convert each of such shares into the kind and
amount of shares of stock and other securities and property
receivable upon such merger, consolidation, sale or
reclassification by a holder of the number of shares of
Common Stock (whether whole or fractional) into which such
shares of Series B Preferred Stock might have been converted
immediately prior to such a merger, consolidation, sale or
reclassification, and shall have no other conversion rights
under these provisions; and effective provision shall be
made in the charter of the resulting or surviving
corporation or otherwise, so that the provisions set forth
herein for the protection of conversion rights of Series B
Preferred Stock shall thereafter be applicable, as nearly as
reasonably may be, to any other shares of stock and other
securities and property deliverable upon conversion of
Series B Preferred Stock remaining outstanding or other
convertible preferred stock received in place thereof. Any
such resulting or surviving corporation shall expressly
assume the obligation to deliver, upon the exercise of the
conversion right, such shares, securities or property as
holders of Series B Preferred Stock remaining outstanding,
or other convertible preferred stock received by such
holders in place thereof, shall be entitled to receive
pursuant to the provisions hereof, and to make provision for
protection of conversion rights as above provided.
(C) If, at any time while shares of Series B Preferred Stock
are outstanding, the Corporation shall (i) declare a
dividend (or any other distribution) on its Common Stock,
other than in cash out of current or retained earnings, or
(ii) reclassify its Common Stock (other than through a
subdivision or combination thereof) or become a party to any
consolidation or merger for which approval of the holders of
its stock is required, or sell or transfer all or
substantially all of the assets of the Corporation, then the
Corporation shall cause to be mailed to registered holders
of Series B Preferred Stock, at their last addresses as they
shall appear on the books of the Corporation, at least
twenty days prior to the applicable record date hereinafter
specified, a notice stating (x) the date on which a record
is to be taken for the purpose of such dividend or
distribution, or, if a record is not to be taken, the date
as of which holders of Common Stock of record to be entitled
to such dividend or distribution are to be determined, or
(y) the date on which any such reclassification,
consolidation, merger, sale or transfer is expected to
become effective, and the date as of which it is expected
that holders or record of Common Stock shall be entitled to
exchange their Common Stock for securities or other
property, if any, deliverable upon such reclassification,
consolidation, merger, sale or transfer. Failure to give or
receive the notice required by this Paragraph C or any
defect therein shall not affect the legality or validity of
any such dividend, distribution, reclassification,
consolidation, merger, sale, transfer or other action.
<PAGE>
-12 -
(D) The holder of any shares of Series B Preferred Stock may
exercise its option to convert such shares into shares of
Common Stock only by surrendering for such purpose to the
Corporation at its principal office the certificates
representing the shares to be converted, accompanied by
written notice that such holder elects to convert such
shares in accordance with the provisions of this Section 5.
Said notice shall also state the name or names (with
addresses) in which the certificate or certificates for
shares of Common Stock which shall be issuable on such
conversion shall be issued. Each certificate or certificates
surrendered for conversion shall, unless the shares issuable
on conversion are to be issued in the same name as that in
which such certificate or certificates are registered, be
accompanied by instruments of transfer, in form satisfactory
to the Corporation, duly executed by the holder or his duly
authorized attorney. Each conversion shall be deemed to have
been effected on the date on which such certificate or
certificates shall have been surrendered and such notice
received by the Corporation as aforesaid, and the person or
persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable
upon such conversion shall be deemed to have become on said
date the holder or holders of record of the shares
represented thereby notwithstanding that the transfer books
of the Corporation may then be closed or that certificates
representing such shares of Common Stock shall not then be
actually delivered to such person. As promptly as
practicable on or after the conversion date, the Corporation
shall issue and deliver to the person or persons entitled to
receive the same a certificate or certificates representing
the number of full shares of Common Stock issuable upon such
conversion.
(E) Upon any conversion of shares of Series B Preferred
Stock, no allowance, adjustment or payment shall be made
with respect to accrued but unpaid dividends upon such
Series B Preferred Stock or with respect to dividends on the
Common Stock to be issued upon conversion.
(F) In connection with the conversion of shares of Series B
Preferred Stock into Common Stock, no fractional shares of
Series B Preferred Stock or of Common Stock shall be issued,
but the Corporation shall pay a cash adjustment in respect
of such fractional interest, calculated on the market price
of the Common Stock on the date of conversion.
(G) The issuance of stock certificates on conversions of
shares of Series B Preferred Stock shall be made without
charge to converting shareholders for any tax in respect of
the issuance thereof. The Corporation shall not, however, be
required to pay any tax which may be payable in respect of
any registration of transfer involved in the issue and
delivery of stock in any name other than that of the holder
of the shares of Series B Preferred Stock converted, and the
Corporation shall not be required to so
<PAGE>
-13 -
issue or deliver any stock certificate unless and until the
person or persons requesting the registration of transfer
shall have paid to the Corporation the amount of such tax or
shall have established to the satisfaction of the
Corporation that such tax has been paid.
(H) The Corporation shall at all times reserve and keep
available out of its authorized Common Stock the full number
of shares of Common Stock deliverable upon the conversion of
all outstanding shares of Series B Preferred Stock.
(I) Any shares of Series B Preferred Stock converted shall
be retired and shall assume the status of authorized and
unissued Preferred Stock, undesignated as to series, subject
to reissuance by the Corporation as shares of Preferred
Stock of one or more series, as may be determined from time
to time by the Board of Directors, but such shares shall not
be reissued as Series B Preferred Stock.
(J) For purposes of this Section 5:
(i) "business day" shall mean a day on which the NASDAQ (or
a successor or an equivalent or substitute organization or
facility) is open for trading of securities; and
(ii) "Common Stock" shall mean (a) the Corporation's Common
Stock, without par value, or (b) any other class of stock
resulting from successive changes or reclassifications of
such Common Stock consisting solely of changes in par value,
or from par value to no par value, or from no par value to
par value; provided, however, that in the event that at any
time as a result of an adjustment made pursuant to Paragraph
A(i) above, the holder of any share of Series B Preferred
Stock thereafter surrendered for conversion would become
entitled to receive any stock of the Corporation other than
shares of its Common Stock, thereafter the conversion rate
and price with respect to such other shares so receivable
upon conversion of any share of Series B Preferred Stock
shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the
provisions with respect to Common Stock contained in this
Section 5.
(iii) "Person" means a natural person, company, government
or political subdivision, agency or instrumentality of a
government but shall also include a "group" as that term is
used in Section 13(d)(d) (or any successor provision) of the
Securities Exchange Act of 1934, as amended.
Section 6. Voting Rights.
(A) The holders of the Series B Preferred Stock shall not be
entitled to vote except as provided in this Section 6 and as
otherwise provided by law.
<PAGE>
-14 -
(B) (i) (a) If at any time the Corporation shall be in
default in the payment of dividends on any of the
outstanding Series B Preferred Stock in an amount equivalent
to or exceeding eight full quarterly dividends (whether or
not consecutive), the number of directors constituting the
Board of Directors of the Corporation, subject to the
provisions of Paragraph B(ii) below, shall be increased by
three, and the holders of the outstanding Preferred Stock of
the Corporation, voting as a separate class, shall be
entitled at the next annual or special meeting of
shareholders, or at a special meeting of holders of the
outstanding Preferred Stock, voting as a separate class,
called as hereinafter provided, to elect three directors to
fill such newly created directorships.
(b) However, when all arrearages in dividends with respect
to the Series B Preferred Stock then outstanding shall have
been paid and dividends thereon for the current quarterly
period shall have been paid or declared and a sum sufficient
for the payment thereof set apart, then (x) the right of
holders of the outstanding Preferred Stock to elect
directors under this Paragraph B shall cease, but subject to
the same provisions for vesting of such voting rights in the
case of any similar future arrearages in dividends; (y) the
term of the directors then in office elected by holders of
the outstanding Preferred Stock as a class shall forthwith
terminate; and (z) the number of directors constituting the
Board of Directors shall be reduced by the number of
directors that had been elected by the holders of the
outstanding Preferred Stock pursuant hereto.
(c) In the event that the Board of Directors of the
Corporation shall be divided into two or more classes, the
directors elected by the holders of the outstanding
Preferred Stock shall be distributed among the several
classes of directors as nearly equally as possible.
(ii) Whenever the right to elect directors by this Section 6
shall vest, it may be exercised initially either at a
special meeting of holders of the outstanding Preferred
Stock or at any annual or special meeting of shareholders,
but thereafter it shall be exercised only at annual
shareholders meetings. A special meeting for the exercise of
such right shall be called by the Secretary of the
Corporation within ten days after receipt of a written
request therefor, signed by the holders of record of at
least ten percent (10%) of the then outstanding shares of
Preferred Stock; provided, however, no such special meeting
shall be held during the 90-day period preceding the date
fixed for the annual meeting of shareholders;
(iii) Any director who shall have been elected by holders of
the Preferred Stock as a class pursuant to this
<PAGE>
-15 -
Paragraph B shall hold office for a term expiring (subject
to the earlier termination of the default in dividends) at
the next annual meeting of shareholders, and during such
term may be removed for cause at any time, but may be
removed without cause only by the affirmative votes of
holders of record of a majority of the then outstanding
shares of Preferred Stock given at a special meeting of such
Shareholders called for such purposes. Any vacancy created
by such removal may also be filled at such special meeting.
A meeting for the removal without cause of a director
elected by holders of the outstanding Preferred Stock as a
class and the filling of the vacancy created thereby shall
be called by the Secretary of the Corporation within ten
days after receipt of a written request therefor, signed by
the holders of record of at least 25% of the then
outstanding shares of Preferred Stock. Such meeting shall be
held at the earliest practicable date thereafter in
accordance with the Corporation's Articles of Incorporation,
Code of Regulations and applicable state law.
(iv) Any vacancy caused by the removal for cause or by the
death, disability or resignation of a director who shall
have been elected by the holders of the outstanding
Preferred Stock as a class pursuant to this Section 6 may be
filled only by the holders of the outstanding Preferred
Stock at a meeting called for such purpose. Such meeting of
the holders of the outstanding Preferred Stock shall be
called by the Secretary of the Corporation at the earliest
practicable date after any such removal, death, disability
or resignation and in any event within ten days after
receipt of a written request therefor, signed by the holders
of record of at least 10% of the then outstanding shares of
Preferred Stock.
(v) If any meeting of the holders of the outstanding
Preferred Stock required by this Section 6 to be called
shall not have been called within ten days after receipt of
a written request therefor by the Secretary of the
Corporation as provided herein, or within fifteen days after
mailing the same within the United States of America by
registered mail addressed to the Secretary of the
Corporation at its principal office, then the holders of
record of at least 10% of the then outstanding shares of
Preferred Stock may designate in writing one of their number
to call such a meeting at the expense of the Corporation,
and such meeting may be called by such person so designated
upon the notice required for annual meetings of
shareholders. Any holder of the outstanding Preferred Stock
so designated shall have access to the stock books of the
Corporation for the purpose of causing meetings of
shareholders to be called pursuant to these provisions.
(vi) Any meeting of holders of the outstanding Preferred
Stock entitled to vote as a class for the election or
removal of directors shall be held at the place for the
<PAGE>
-16 -
holding of the annual meeting of shareholders of the
Corporation. At such meeting, the presence in person or by
proxy of holders of a majority of the votes of the then
outstanding shares of Preferred Stock shall be required to
constitute a quorum; in the absence of a quorum, a majority
of the holders present in person or by proxy shall have the
power to adjourn the meeting from time to time without
notice, other than announcement at the meeting, until a
quorum shall be present.
(C) So long as any shares of Series B Preferred Stock are
outstanding, the Corporation shall not, in any manner,
whether by amendment to its Articles of Incorporation or
Code of Regulations, by merger (whether or not the
Corporation is the surviving corporation in such merger), by
consolidation, or otherwise, without the written consent of
the affirmative vote at a meeting called for that purpose of
the holders of at least two-thirds of the votes of the
shares of Series B Preferred Stock then outstanding, voting
separately as a class, (i) amend, alter or repeal any of the
provisions of any resolution or resolutions establishing the
Series B Preferred Stock so as to affect adversely the
powers, preferences or special rights of such Series B
Preferred Stock or (ii) authorize the issuance of, or
authorize any obligation or security convertible into or
evidencing the right to purchase shares of, any additional
class or series of stock ranking prior to the Series B
Preferred Stock in the payment of dividends or the
preferential distribution of assets.
(D) Nothing in this Section 6 shall be deemed to require any
vote or consent of the holders of shares of Series B
Preferred Stock in connection with the authorization or
issuance of any series of Preferred Stock ranking on a
parity with or junior to the Series B Preferred Stock as to
dividends and/or distribution of assets.
Section 7. Restrictions on Transfer.
The Original Holders of the Series B Preferred Stock shall
be entitled to transfer ownership of their shares only as
follows:
(A) in a widely dispersed public offering;
(B) in sales pursuant to Rule 144 or Rule 144A of the
Securities Act of 1933 or rules of similar import;
(C) in a private sale in which no single purchaser acquires
more than 2% of the voting share of the Corporation;
(D) to Provident, to a third party that has acquired a
majority of the shares of Provident or to any other Original
Holder; or
<PAGE>
-17 -
(E) in any other transaction approved by the Board of
Governors of the Federal Reserve System, and as long as the
Corporation is a savings and loan holding company, the
Office Thrift Supervision, or any other governmental agency
having jurisdiction over the operation or change in control
of the Corporation.
Section 8. Reports.
So long as any shares of the Series B Preferred Stock shall
be outstanding, the Corporation shall provide to each holder
of such shares a copy of the annual report to shareholders
distributed pursuant to Rule 14a-3 of the Securities
Exchange Act of 1934.
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate of Designations and do affirm the foregoing as
true under the penalties of perjury this 25th day of
October, 1991.
_________________________
Name: Allen L. Davis
Title: President
ATTEST:
_________________________
Name: Mark Magee
Title: Secretary
<PAGE>
CERTIFICATE OF MERGER
The undersigned, Allen L. Davis and Leslie C. Nomeland,
President and Secretary, respectively, of Provident Bancorp,
Inc., an Ohio corporation ("Provident Bancorp"), and Elmer
J. Haas, Jr. and Betty J. Haas, Chairman of the Board and
Secretary, respectively, of Northern Kentucky Financial
Corporation, a Kentucky corporation, ("NKFC"), hereby
certify as follows:
(1) Attached hereto as Exhibit "A" is a true and correct
copy of the Plan and Agreement to Merge Northern Kentucky
Financial Corporation with and into Provident Bancorp, Inc.,
dated as of March 26, 1990 (the "Agreement").
(2) Pursuant to the terms of the Agreement, NKFC is to be
merged with and into Provident Bancorp, with Provident
Bancorp being the surviving corporation of the merger.
(3) Approval of the Shareholders of Provident Bancorp is not
required to consummate the merger.
(4) Approval of the Shareholders of NKFC is not required to
consummate the merger.
(5) On March 23, 1990, all of the directors of Provident
Bancorp voted in favor of the Agreement by unanimous written
consent.
(6) On March 26, 1990, all of the directors of NKFC voted in
favor of the Agreement by unanimous written consent.
(7) The effective date of the Merger shall be the 30th day
of March, 1990.
IN WITNESS WHEREOF, we have hereunto set our hands as of the
26th day of March, 1990.
_________________________________ _______________________
Elmer J. Haas, Jr., Allen L. Davis,
Chairman of the Board President
Northern Kentucky Financial Corporation Provident Bancorp, Inc.
_________________________________ _______________________
Betty J. Haas, Leslie C. Nomeland,
Secretary Secretary
Northern Kentucky Financial Corporation Provident Bancorp, Inc.
<PAGE>
PLAN AND AGREEMENT OF MERGER
OF
NORTHERN KENTUCKY FINANCIAL CORPORATION
(A Kentucky Corporation)
INTO
PROVIDENT BANCORP, INC.
(An Ohio Corporation)
THIS PLAN AND AGREEMENT OF MERGER made this 26th day of
March, 1990 (hereinafter "Agreement of Merger"), pursuant to
the Ohio General Corporation law by and between Northern
Kentucky Financial Corporation, a Kentucky corporation
(hereinafter "NKFC") and PROVIDENT BANCORP, INC., an Ohio
corporation (hereinafter "PROVIDENT BANCORP" or "Surviving
Corporation") NKFC and PROVIDENT BANCORP (being hereinafter
sometimes jointly referred to as "Constituent
Corporations").
WHEREAS, NKFC has authorized 2000 shares of no par common
stock, of which 1000 shares are outstanding and owned solely
by Provident Bancorp; and
WHEREAS, PROVIDENT BANCORP has authorized 20,000,000 shares
of no par common stock, of which 7,750,808 shares are
outstanding; and 5,000,000 shares $1 par value preferred
stock, of which 52,379 shares are outstanding
WHEREAS, the Board of Directors of NKFC and the Board of
Directors of PROVIDENT BANCORP deem it advisable for the
general welfare of such corporations that NKFC merge with
and into Provident Bancorp on the terms and conditions
hereinafter set forth; and
WHEREAS, the Board of Directors of each of the Constituent
Corporations have, by an action taken in writing by all of
the Directors of the Constituent Corporations, duly adopted
and approved this Agreement of Merger.
NOW, THEREFORE, in consideration of the above premises and
the mutual agreements herein contained, the Constituent
Corporations have agreed and do hereby agree to merge upon
the terms and conditions as set forth below.
(1) Merger NKFC hereby agrees to and shall merge into
PROVIDENT BANCORP and upon the effective date of such merger
as hereinafter specified, NKFC shall cease to exist and
shall no longer exercise its powers, privileges and
franchises subject to the laws of the State of Kentucky, its
state of incorporation.
<PAGE>
(2) Name. The name of the Surviving Corporation shall remain
PROVIDENT BANCORP, INC.
(3) State of Incorporation and Principal Office. The
Surviving Corporation shall remain an Ohio corporation and
this merger shall be effective pursuant to the Ohio General
Corporation Law. The principal office of the Surviving
Corporation shall be One East Fourth Street, Cincinnati,
Hamilton county, State of Ohio.
(4) Purposes. The purposes of the Surviving Corporation
shall be as set forth in the Articles of Incorporation of
PROVIDENT BANCORP, INC.
(5) Directors of Surviving Corporation. The Directors of
PROVIDENT BANCORP shall continue as such and shall hold
office until their respective successors have been duly
elected and qualified.
(6) Registered Agent. CT Corporation System, Carew Tower,
Suite 813, Cincinnati, Ohio 45202 shall be the Resident
Agent upon whom service of process, tax notices, and demands
against the Surviving Corporation may be served.
(7) Mode of Effecting Merger. The mode of carrying said
merger into effect, and the manner and bases of converting
shares of the Constituent Corporations into shares of the
Surviving Corporation shall be as follows: The shares of
PROVIDENT BANCORP issued and outstanding prior to the merger
shall remain issued and outstanding after the merger and
upon the effective date of the merger the currently issued
and outstanding shares of common stock of NKFC shall be
eliminated, and the certificates representing the same shall
be surrendered and cancelled.
(8) Assets and Liabilities. The assets and liabilities of
the Surviving Corporation shall be recorded on the books of
PROVIDENT BANCORP in the amounts by which they are stated on
NKFC's books immediately prior to the effective date of the
merger. The aggregate stated capital, capital surplus, and
earned surplus of the Surviving Corporation shall be
respectively, the aggregate stated capital, capital surplus,
and earned surplus of the Constituent Corporations.
(9) Effective Date. The effective date of this merger shall
be March 30, 1990. Each of the Constituent Corporations
hereto, hereby agree to do promptly all such acts and to
take promptly all such measures as may be appropriate to
enable them to perform as early as practicable the covenants
and agreements herein provided to be performed by them.
(10) Articles of Incorporation and Code of Regulations. The
Articles of Incorporation and Code of Regulations of
PROVIDENT BANCORP shall be the Articles of Incorporation and
Code of Regulations of the Surviving Corporation.
<PAGE>
(11) Due Authorization. This Agreement of Merger has been
duly authorized by the respective Boards of Directors of
each of the Constituent Corporations.
(12) Counterparts. This Agreement of merger may be executed
in any number of counterparts, each of which shall be deemed
an original, but all such counterparts together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Constituent Corporations have caused
their respective corporate names to be signed hereto, by
their respective President and Secretary thereunto duly
authorized by the Board of Directors of each of the
Constituent Corporations.
NORTHERN KENTUCKY FINANCIAL PROVIDENT BANCORP, INC.
CORPORATION
By:____________________________ By:______________________
By:____________________________ By:______________________
<PAGE>
CERTIFICATE OF MERGER
The undersigned, Allen L. Davis, President of Provident
Bancorp, Inc., an Ohio corporation ("Provident"), and Leslie
C. Nomeland, Secretary of Provident, hereby certify that the
Plan and Agreement to Merge Northern Kentucky Trustcorp,
Inc. with and into Provident Bancorp, Inc. ("Agreement"),
dated as of April 28, 1989, between Provident and Northern
Kentucky Trustcorp, Inc., a Kentucky corporation
("Trustcorp"), a copy of which Agreement is attached hereto
as Exhibit "A", was approved by the Board of Directors of
Provident at a Meeting of the Directors held on April 25,
1989. Pursuant to Ohio Revised Code S1701.78(D), the
Agreement is not required to be adopted by shareholders of
Provident. Attached hereto as Exhibit "B" is a true and
correct copy of an Amendment to the Articles of
Incorporation of Provident increasing the number of
authorized shares of common stock to 20,000,000, which was
filed with the Secretary of State of Ohio on May 30, 1989.
Attached hereto as Exhibit "C" is a true and correct copy of
an Amendment to the Articles of Incorporation of Provident
designating 70,000 shares of authorized preferred stock as
Series A ESOP Non-Voting Convertible Preferred Stock, which
was filed with the Secretary of State of Ohio on September
28, 1989. Exhibits "B" and "C" are incorporated herein and
into the Agreement by reference.
The undersigned, Elmer J. Haas, Jr., Chairman of the Board
of Trustcorp, and Betty J. Haas, Secretary of Trustcorp,
hereby certify that the Agreement attached hereto was
approved by the Board of Directors of Trustcorp at a Meeting
of the Directors held on April 29, 1989 and duly adopted by
the Shareholders of Trustcorp at a Special Meeting of
Shareholders held on September 19, 1989.
The effective date of the Merger shall be 10:00 A.M.,
January 16, 1990.
IN WITNESS WHEREOF, we have hereunto set our hands as of the
16th day of January, 1990.
_________________________ ____________________________
Allen L. Davis, President Elmer J. Haas, Jr., Chairman
Provident Bancorp, Inc. of the Board
Northern Kentucky Trustcorp, Inc.
_________________________ ___________________________
Leslie C. Nomeland, Secretary Betty J Haas, Secretary
Provident Bancorp, Inc. Northern Kentucky Trustcorp, Inc.
<PAGE>
EXHIBIT A
<PAGE>
CONFORMED COPY
PLAN AND AGREEMENT
TO
MERGE
NORTHERN KENTUCKY TRUSTCORP, INC.
WITH AND INTO
PROVIDENT BANCORP, INC.
Dated as of April 28, 1989
<PAGE>
PLAN AND AGREEMENT TO MERGE
NORTHERN KENTUCKY TRUSTCORP, INC.
WITH AND INTO PROVIDENT BANCORP, INC.
Dated as of April 28, 1989
Table Of Contents*
Section Page
Recitals 1
I. Merger of Trustcorp into Provident 2
1.1 Merger 2
1.2 Effective Time of the Merger 3
1.3 Effect of Merger 3
1.4 Board of Directors of Surviving
Corporation 3
1.5 Articles of Incorporation Of Surviving
Corporation 3
II. Conversion and Exchange of Shares 4
2.1 Conversion of Shares 4
2.2 Exchange of Certificates 5
2.3 First Refusal Purchase Option 7
III. Representations and Warranties of
Trustcorp 8
3.1 Organization and Capitalization 8
3.2 Authority 10
3.3 Subsidiaries 11
3.4 Stock Options and Other Arrangements 11
3.5 Financial Statements 11
3.6 Liabilities 11
3.7 Claims 12
3.8 Assets 12
3.9 Adequate Reserves 12
3.10 Operations Since December 31, 1988 12
3.11 Taxes 13
3.12 Loans, Loan Pools, Leases 14
3.13 Insurance 14
3.14 Contracts 15
3.15 Employee Benefit Plans 15
3.16 No Default 17
*This Table of Contents is included for convenience and does
not form a part of, or affect any construction or
interpretation of, this Agreement.
<PAGE>
Section Page
3.17 Proxy Statement 17
3.18 Compliance with Laws 17
3.19 Full Disclosure 18
IV. Representations and Warranties of
Provident 18
4.1 Organization and Capitalization 18
4.2 Authority 18
4.3 Financial Statements 19
4.4 Liabilities 19
4.5 Claims 19
4.6 No Default 20
4.7 Power and Authority and Board Approval 20
4.8 Registration Statement 20
V. Registration of Provident Common Stock 21
VI. Conditions Precedent to the Obligations of
Provident and Trustcorp 22
6.1 Necessary Approvals 22
6.2 Shareholder Approval 22
6.3 Effectiveness of Registration Statement 22
VII. Conditions to Obligations Of Provident 22
7.1 Representations and Warranties True;
Covenants and Obligations Performed 22
7.2 Access to Books and Records and
Condition of Assets 23
7.3 No Material Adverse Change 23
7.4 No Litigation 23
7.5 Approval of Counsel to Certain Legal
Matters 23
7.6 Opinion Of Counsel 24
7.7 Auditor's Comfort Letter 26
7.8 Loan Modifications 27
7.9 Dissenting Shareholders 27
7.10 Notice of Redemption 27
VIII. Conditions to Obligations Of Trustcorp 28
8.1 Representations and Warranties True;
Covenants; and Obligations Performed 28
8.2 No Material Adverse Change 28
8.3 Approval of Counsel to Certain
Legal Matters 28
8.4 No Litigation 28
8.5 Approval of Counsel 28
8.6 Opinion of Counsel 29
<PAGE>
Section Page
IX. Covenants of Trustcorp 30
9.1 Access to Properties and Records 30
9.2 Operations Pending Merger 30
9.3 Best Efforts to Expedite Closing 32
9.4 Notice of Redemption 32
X. Covenants of Provident 33
10.1 Best Efforts 33
10.2 Registered Shares 33
10.3 Filing of Reports 33
Xl. Shareholders' Meeting 33
XII. Termination of Merger Agreement 33
XIII. Brokers 34
XIV. Indemnification 34
XV. Notices 35
VI. Governing Law 36
XVII. Captions; Counterparts 36
XVIII. Entire Agreement 37
XIX Waiver; Modification; Assignment 37
XX. Recourse 37
Signatures 38
<PAGE>
INDEX OF DEFINED TERMS*
WHERE
TERM DEFINED PAGE
Act 2.2 (d) 6
Agreement Preamble 1
Bank Recital C 1
Benefit Plans 3.15 (a) 15
Benefit Plans Schedule 3.15 (a) 15
Claims Schedule 3.7 12
Closing 1.2 3
Code 1.1 (b) 3
Commission 3.17 (a) 17
Contract Schedule 3.14 15
Disclosure Package 3.1 (a) 9
ERISA 3.15 (a) 15
Financial Statements 3.5 11
Insurance Schedule 3.13 14
Lease Schedule 3.12 (c) 14
Litigation Letter 7.3 (a) 23
Loan Schedule 3.12 (a) 14
Merger Recital E 2
*This Index of Defined Terms is included for convenience and
does not form a part of, or affect any construction or
interpretation of, this Agreement.
<PAGE>
WHERE
TERM DEFINED PAGE
Merger Subsidiary 1.1 (b) 2
NKFC Recital D 2
Notice of Proposed Sale 2.3 (a) 7
Notice of Redemption 3.1 (b) 9
Operations Schedule 3.10 12
Pension Plan 3.15 (c) 15
Permitted Encumbrances 3.8 12
Provident Preamble 1
Provident Common Stock Recital A 1
Provident Financial Statements 4.3 19
Proxy Statement 3.17 (a) 17
Purchase Option 2.3 7
Real Property Schedule 3.8 12
Redemption Couponholder List 3.1 (b) 10
Registration Statement 3.17 (a) 17
Securities Schedule 3.8 12
Selling Shareholder 2.3 (a) 7
Shareholder List 3.1 (a) 9
Subsidiaries 3.3 11
Trustcorp Preamble 1
Trustcorp Common Stock Recital B 1
<PAGE>
PLAN AND AGREEMENT TO MERGE
NORTHERN KENTUCKY TRUSTCORP, INC.
WITH AND INTO PROVIDENT BANCORP, INC.
This Plan and Agreement To Merge dated as of April 28, 1989
(this "Agreement") is entered into between PROVIDENT
BANCORP, INC. ("Provident") and NORTHERN KENTUCKY
TRUSTCORP, INC.("Trustcorp").
Recitals
A. Provident is a bank holding company and Ohio corporation
having its main office at One East Fourth Street,
Cincinnati, Ohio 45202. Provident's authorized capital stock
consists of (i) Ten Million (10,000,000) shares of common
stock, no par value, (the "Provident Common Stock"), of
which Seven Million Six Hundred Thirteen Thousand Four
Hundred Three (7,613,403) shares have been validly issued,
are outstanding, are fully paid and non-accessible, and none
of which shares are held by Provident as treasury stock,
and (ii) Five Million (5,000,000) shares of preferred stock,
One Dollar ($1.00) par value, of which none are outstanding.
B. Trustcorp is a bank holding company and Kentucky
corporation having its main office at 3701 Alexandria Pike,
U.S. 27, Cold Spring, Kentucky 41076. Trustcorp's authorized
capital stock consists of Six Hundred Fifty Thousand
(650,000) shares of capital stock of which (i) Fifty
Thousand (50,000) shares are designated as no par value
preferred shares, of which none are outstanding, and (ii) Six
Hundred Thousand (600,000) shares are designated as $5 par
value Class R common shares (the "Trustcorp Common Stock")
of which Three Hundred Eighteen Thousand Four Hundred Seven
(318,407) shares have been validly issued, are outstanding,
are fully paid and non-assessable (except for those shares
which are being held for issuance upon surrender by former
shareholders of Bank of their respective Bank stock
certificates), and none of which shares are held by
Trustcorp as treasury stock.
C. Northern Kentucky Bank & Trust, Inc. ("Bank") is a
Kentucky banking corporation with its main office at Main
Street and U.S. 27, Alexandria, Kentucky 41001. Bank's
authorized capital stock consists of Six Hundred Thousand
(600,000) shares of common stock designated as follows:
45,000 shares of Class A common stock; 45,000 shares of
Class B common stock; 45,000 shares of Class C common stock;
45,000 shares of Class D common stock; 45,000 shares of
Class E common stock; and 375,000 shares of Class R common
stock. Of the total 600,000 authorized shares,
<PAGE>
- 2 -
345,000 shares are issued and outstanding as follows: 45,000
Class A; 45,000 Class B; 45,000 Class C; 45,000 Class D;
45,000 Class E; and 120,000 Class R, which shares have been
validly issued, are outstanding, are fully paid and non-
assessable, and owned by Trustcorp, except for 309,985
shares which have been pledged to Huntington Bank of Kenton
County, Inc. to secure an open line of credit up to
$1,500,000.
D. Northern Kentucky Financial Corporation ("NKFC") is a
Kentucky corporation with its; main office at 7955 Mall Road,
Florence, Kentucky 41042. NKFC's authorized capital stock
consists of Two Thousand (2,000) shares of common stock of
which One Thousand (1,000) shares have been validly issued,
are outstanding, are fully paid and non-assessable, and owned
by Trustcorp.
E. The respective boards of directors of Provident and
Trustcorp deem it advisable and for the benefit of their
respective corporations and shareholders that Trustcorp
merge with and into Provident on the terms and conditions
hereinafter set forth (the "Merger").
NOW THEREFORE, in consideration of the premises and the
mutual agreements, provisions and covenants contained
herein, the parties agree as follows:
ARTICLE I
Merger of Trustcorp into Provident
1.1 Merger.
(a) At the effective time of the Merger (as described in
Section 1.2), Trustcorp shall merge into Provident and the
surviving corporation shall continue its existence under the
laws of the State of Ohio under the name "Provident Bancorp,
Inc.," or such other name as provided in the Articles of
Incorporation of Provident immediately prior to the
Effective Time.
(b) At the election of Provident and notwithstanding any
other provision hereof to the contrary, the Merger may be
restructured as a triangular merger to provide for (i) the
addition as a party hereto of a corporation to be organized
and wholly-owned by Provident ("Merger Subsidiary"), and
(ii) the merger of Trustcorp into Merger Subsidiary or the
merger of Merger Subsidiary into Trustcorp; provided,
however, such restructure to a triangular merger format
shall not materially adversely affect the kind and amount of
Provident securities and other consideration into which
presently outstanding Trustcorp
<PAGE>
- 3 -
Common Stock shall be converted, nor the consequences under
the Internal Revenue Code of 1986, as amended (the "Code")
to holders of Trustcorp Common Stock. Provident shall not be
deemed to have breached any of its representations,
warranties, or covenants herein solely by reason of such
election. In the event of such election, the parties agree
to execute an appropriate amendment to this Agreement in
order to reflect the foregoing and to provide, if
appropriate, inter alia, that Merger Subsidiary or
Trustcorp, shall be the "surviving corporation".
1.2 Effective Time of the Merger. The closing of the Merger
(the "Closing") shall occur as soon as practicable, and in
any event within ten (10) days, following receipt of all
shareholder and regulatory approvals and expiration of
applicable waiting periods, if any. The last action taken in
connection with the Closing shall be the filing of a
Certificate of Merger with respect to this Agreement with
the Secretary of State of Ohio and Articles of Merger with
respect to this Agreement with the Secretary of State of the
Commonwealth of Kentucky. The Merger shall become effective
as of 11:59 p.m. on the day on which such Certificate of
Merger is filed with the Secretary of State of the State of
Ohio, and such Articles of Merger are filed with the
Secretary of State of the Commonwealth of Kentucky or such
other date as is specified in such Certificate and Articles
of Merger.
1.3 Effect of Merger. Upon the Merger becoming effective,
the separate corporate existence of Trustcorp shall cease,
and Trustcorp shall be merged into and continued in
Provident, which shall be deemed to be the "Surviving
Corporation," pursuant to the provisions of and with the
effect provided in the Ohio General Corporation Law and
Kentucky Business Corporation Act. The Surviving
Corporation shall possess all the rights, privileges,
immunities, powers and franchises and shall be subject to
all of the duties and liabilities of a corporation organized
and existing under the laws of the State of Ohio.
1.4 Board of Directors of Surviving Corporation. The present
Board of Directors of Provident shall continue to serve as
the Board of Directors of the Surviving Corporation until
the next annual meeting of the shareholders of the Surviving
Corporation or until such time as their successors have been
elected and have qualified.
1.5 Articles of Incorporation of Surviving Corporation. Upon
the Merger becoming effective, the Articles of Incorporation
of the Surviving Corporation shall read in their entirety as
in effect on the date thereof.
<PAGE>
- 4 -
ARTICLE II
Conversion and Exchange of Shares
2.1 Conversion of Shares. The manner of converting shares of
Trustcorp into shares of Provident shall be as follows:
(a) Each share of Trustcorp Common stock issued and
outstanding at the effective time of the Merger, by virtue
of the Merger and at the effective time of the Merger, shall
be converted into and become, without action on the part of
the holder thereof, that fraction of a share of Provident
Common Stock which shall result from dividing One Hundred
Seventy Nine Thousand Four Hundred Ninety (179,490) (being
the total number of shares of Provident Common Stock
issuable upon the Merger becoming effective) by the number
of shares of Trustcorp Common Stock issued and outstanding
upon the Merger becoming effective. Each shareholder of
Trustcorp Common Stock who becomes entitled to receive
shares of Provident Common Stock by virtue of the Merger
shall have the option of electing to receive cash in lieu of
any or all of such shares of Provident Common Stock on the
basis of Twenty Six Dollars ($26) cash per share.
Notwithstanding the foregoing provision, if holders of more
than fifty percent (50%) of the shares of Trustcorp Common
Stock elect to receive cash in lieu of Provident Common
Stock (or give notice of their dissent from the Merger and
demand to be paid for their Trustcorp Common stock pursuant
to the statutory right to dissent referred to in Section
2.2(a) hereof), each such holder's Trustcorp shares to be
exchanged for cash in lieu of Provident Common Stock
pursuant to the foregoing provision shall be reduced pro
rata such that the maximum number of shares of Trustcorp
Common Stock exchanged for cash in lieu of Provident Stock
(or for which payment is demanded pursuant to the aforesaid
statutory dissenter's rights) is no more than fifty percent
(50%) of the total number of shares of Trustcorp Common
Stock outstanding at the effective time of the Merger.
(b) Each share or Trustcorp Common stock, if any, held in
the treasury of Trustcorp immediately prior to the effective
time of the Merger shall, by virtue of the Merger and
without any action on the part of the holder thereof, be
canceled, retired and cease to exist and no payment shall be
made with respect thereto.
(c) The exchange ratio determined as set forth in Section
2.1(a) shall be subject to a mutually agreeable and
proportionate adjustment in the event that prior to the
effective time of the Merger, the Provident Common Stock
shall have been without fair consideration changed into or
exchanged for a
<PAGE>
- 5 -
different number or amount of shares or securities through
reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other like
changes in Provident's capitalization.
2.2 Exchange of Certificates. The manner of exchanging
Trustcorp Common Stock for Provident Common Stock or cash in
lieu thereof shall be as follows:
(a) At the effective time of the Merger, each holder of a
certificate evidencing outstanding shares of Trustcorp
Common Stock, upon surrender of such certificate (or
evidence of the loss or theft of same as hereinafter
provided) as directed by Provident at or after the effective
time of the Merger, free, clear and unencumbered, shall be
entitled to receive as soon as practicable following the
Merger a certificate representing such number of shares of
Provident Common Stock or amount of cash into which the
shares of Trustcorp Common Stock represented by the
surrendered certificate shall have been converted as
provided in this Article II. No such conversion shall be
deemed to be made in respect of any shares of Trustcorp
Common Stock the holder of which shall have properly
exercised dissenters rights with respect thereto pursuant to
Kentucky Revised Statute Sections 271B.13-010 through
271B.13-310, such holder to have only the rights with
respect to such shares as are provided in said Kentucky
Revised Statute. If any holder of Trustcorp Common Stock
shall have lost or misplaced or had stolen the certificate
evidencing such shares of Trustcorp Common Stock, such
holder shall not be entitled to receive the shares of
Provident Common Stock or cash in lieu thereof into which
such shares of Trustcorp Common Stock have been converted
pursuant to this Article II until such holder has provided
Provident with an affidavit in form and substance reasonably
satisfactory to Provident and, if required by Provident, a
bond in an amount reasonably satisfactory to Provident.
b) Until surrendered as provided in this Section 2.2, each
outstanding certificate evidencing shares of Trustcorp
Common Stock shall be deemed for all corporate purposes,
except as provided in the following sentence, to represent
ownership of the number of shares of Provident Common Stock,
or cash in lieu thereof if so elected, into which the shares
of Trustcorp Common Stock represented thereby were
converted. Until surrender of the certificates representing
shares of Trustcorp Common Stock (or evidence of the loss or
theft of same as hereinabove provided) the holder of such
certificates shall not be entitled to receive any dividend
or other distribution payable to holders of Provident
Common Stock or interest with respect to the cash in lieu of
such Provident Common Stock if so elected; provided,
<PAGE>
- 6 -
however, that upon surrender of such certificates
representing shares of Trustcorp Common Stock (or evidence
of the loss or theft of same as hereinabove provided) there
shall be paid to the record holder of the certificate
representing Provident Common Stock issued upon such
surrender, the amount of dividends or other distributions
(without interest) which theretofore became payable and were
not paid to such holder with respect to the number of shares
of Provident Common Stock represented by the certificate
issued upon such surrender.
(c) Notwithstanding any provision in this Agreement to the
contrary, Provident shall not be required to deliver, and no
holder of shares of Trustcorp Common Stock shall be entitled
to receive, any certificate for a fractional share of
Provident Common Stock but, if a fractional share of
Provident Common Stock would, but for this sentence, be
issuable, Provident shall redeem such fractional share for
an amount in cash equal to the product determined by
multiplying such fractional share by Twenty Six Dollars
($26.00). The number of shares of Trustcorp stock held by
each holder thereof at the effective time of the Merger
shall be aggregated for the purposes of determining (i) the
amount of any cash in lieu of fractional shares of Provident
Common Stock to be paid to such Trustcorp shareholder
pursuant to this Section 2.2(c) hereof, and (ii) whether the
Provident Common Stock issued to such holder by virtue of
the Merger is subject to a first refusal purchase option in
favor of Provident pursuant to Section 2.4 hereof.
(d) Certificates representing Provident Common Stock issued
to each holder of shares of Trustcorp Common Stock who, in
the opinion of counsel for Provident, may be deemed to be an
"affiliate" of Trustcorp or Provident, as that term is used
in Rule 145 under the Securities Act of 1933, as amended
(the "Act"), shall bear a legend substantially as follows:
"The securities represented by this certificate must be sold
pursuant to Rule 145(d) promulgated by the Securities and
Exchange Commission under the provisions of the Securities
Act of 1933 or under some other exemption from the
registration requirements of the Securities Act of 1933,
inasmuch as the shares represented by this certificate have
been acquired in a transaction described in Rule 145 by
persons who may be deemed to be "affiliates" of a party to
the transaction and the resale of the shares represented by
this certificate has not been registered under the
Securities Act of 1933."
(e) Trustcorp shall promptly furnish Provident with a
listing duly certified by an appropriate officer of
Trustcorp
<PAGE>
- 7 -
stating the name, mailing address and number of shares of
each record shareholder of Trustcorp Common Stock as of the
date of this Agreement. Trustcorp shall furnish an updated
certificate stating the same information as of the Closing
and Trustcorp shall permit no transfer of shares of
Trustcorp Common Stock subsequent to the date of such
certificate. Provident shall be entitled to rely on all such
certificates and shall incur no liability to Trustcorp or
its shareholders if any such certificate is incorrect.
2.3 First Refusal Purchase Option. Provident Common Stock
issued to any holder of shares of Trustcorp Common Stock
whose Trustcorp shares, in the aggregate after taking into
account such holder's cash election, if any, are converted
into more than One Thousand (1,000) shares of Provident
Common Stock by virtue of the Merger shall be subject to a
first refusal purchase option ("Purchase Option") in favor
of Provident as herein provided.
(a) Prior to any sale or other transfer (except by Will or
the laws of descent and distribution) of such Provident
Common Stock by the holder thereof (the "Selling
Shareholder"), such Selling Shareholder shall submit to
Provident a notice ("Notice of Proposed Sale") identifying
(i) the name, address and telephone or facsimile number of
the Selling Shareholder, (ii) the proposed buyer (if known),
and (iii) the price and other terms and conditions of such
proposed sale or transfer. Thereafter, Provident shall have
the right for a period of four (4) business days to purchase
all, but not less than all, of such Provident Common Shares
for (i) a price equal to the price identified in the
aforesaid Notice of Proposed Sale if such price is proposed
to be paid in full in cash, or (ii) if such proposed sale of
Provident Common Stock is to be paid for by consideration
any part of which is not cash, a price equal to the average
of the publicly quoted last sale price for Provident Common
Stock for the five (5) consecutive business days commencing
two (2) days before the aforesaid Notice of Proposed Sale is
given to Provident.
(b) If Provident elects to exercise the Purchase Option,
Provident shall give notice thereof to the Selling
Shareholder by telephone or facsimile transmission at the
number of such Selling Shareholder set forth in the
aforesaid Notice of Proposed Sale followed promptly by
written notice by U.S. Mail or other means of delivery to
the address of such Selling Shareholder set forth in the
aforesaid Notice of Proposed Sale, or if no such address is
provided, then at the last address of such Selling
Shareholder appearing in the stock transfer records of
Provident. In such event, the Selling Shareholder promptly
shall deliver such Provident Common Stock to Provident, and
<PAGE>
- 8 -
Provident promptly shall make payment therefore to such
Selling Shareholder.
(c) If Provident does not exercise the Purchase Option
within the permitted time period, Selling Shareholder shall
have the right to sell such Provident Common Stock upon the
terms and condition set forth in the Notice of Proposed Sale
for a period of sixty (60) consecutive days commencing with
the fifth business day following giving of such Notice of
Proposed Sale. If sale by Selling Shareholder is not
completed as to all or any part of the Provident Common
Stock covered by the Notice of Proposed Sale within such
sixty (60) day period, those shares shall continue to be
subject to the first refusal purchase option in favor of
Provident herein set forth.
(d) For purposes of this Agreement, a pledge of Provident
Common Stock shall not be treated as a sale or transfer, but
the pledgee shall become subject to this Agreement.
(e) The first refusal purchase option contained herein shall
not apply to sales of securities made to Provident, and
shall terminate as to all shares of Provident Common Stock
on the tenth anniversary of the effective date of the
Merger.
(f) Each certificate of Provident Common Stock subject to
this Purchase Option shall contain a legend substantially as
follows:
"The sale or other transfer of the shares represented by
this certificate are subject to the right of first refusal
to purchase such shares in favor of Provident Bancorp, Inc.
pursuant to a certain Agreement dated April__, 1989, a copy
of which will be furnished to any holder of this certificate
upon written request."
ARTICLE III
Representations and Warranties of Trustcorp
Trustcorp hereby represents and warrants to Provident as of
the date hereof and as of the effective time of the Merger,
as though made at such time, as follows:
3.1 Organization and Capitalization.
(a) Trustcorp is duly organized, validly existing and in
good standing under the laws of the State of Kentucky.
Trustcorp's authorized capital stock consists of Six Hundred
Fifty Thousand (650,000) shares of capital stock of which (i)
<PAGE>
- 9 -
Fifty Thousand (50,000) shares are designated as no par
value preferred shares, of which none are outstanding, and
(ii) Six Hundred Thousand (600,000) shares are designated at
$5 par value Class R common shares of which Three Hundred
Eighteen Thousand Four Hundred Seven (318,407) shares have
been validly issued, are outstanding, are fully paid and non-
assessable (except for those shares which are being held for
issuance upon surrender by former shareholders of Bank of
their respective Bank stock certificates which now represent
only the right to receive shares of Trustcorp Class R Common
Stock pursuant to the Plan of Share Exchange and as
identified on Schedule 3.1) and none of which shares are
held by Trustcorp as treasury stock. Schedule 3.1(a) of the
disclosure package delivered by Trustcorp to Provident on or
prior to the date hereof (the "Disclosure Package") is a
list of all shareholders of record of Trustcorp Common Stock
(the "Shareholder List") as of the date indicated on such
list.
(b) Trustcorp has Two Hundred Twenty Five Thousand (225,000)
Redemption Coupons outstanding. Each Redemption Coupon
provides, inter alia (i) that on or after the date on which
Trustcorp receives the last required approval of its
directors, its shareholders, or any regulatory agency in
order to consummate any merger of Trustcorp with or into
another corporation (other than a merger with an affiliate
of Trustcorp or a merger in which Trustcorp is the surviving
corporation) the holder may present to Trustcorp any
Redemption Coupon for redemption by Trustcorp at the
redemption value of One Dollar ($1.00) per Redemption
Coupon, subject to all necessary regulatory approvals and
compliance with all applicable laws; and (ii) provides that
if the holder fails to present any Redemption Coupon for
redemption on or before the expiration of the Thirty (30)
Days immediately following the last required approval of a
merger of the type specified in clause (i) above, then the
Redemption Coupon shall become void and the holder thereof
shall no longer be entitled to any rights with respect
thereto. Each Redemption Coupon has been legally and validly
issued and each provision thereof, including those
hereinabove get forth is legal, valid, binding and
enforceable on, respectively Trustcorp and each holder of a
Redemption Coupon. Upon giving of notice (the "Notice of
Redemption") by Trustcorp to each holder of a Redemption
Coupon that Trustcorp has received the last required
approval of its directors and shareholders, or any
regulatory agency in order to consummate the Merger
contemplated by this Agreement the Redemption Coupons shall
(i) be immediately eligible for redemption for a period of
Thirty (30) days upon presentment thereof at a redemption
price of One Dollar ($1.00) per Redemption Coupon, (ii)
cease to represent or entitle the holder thereof to any
rights of any kind except the right to redemption as
aforesaid, and (iii) become void for all purposes if not
presented for redemption within the
<PAGE>
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aforesaid Thirty (30) Day period. Schedule 3.1(b) of the
Disclosure Package is a list of all holders of record of
Trustcorp Redemption Coupons (the "Redemption Couponholder
List") as of the date indicated and contains a true, correct
and complete copy of the form of each Redemption Coupon.
(c) Bank is a duly organized and validly existing Kentucky
banking corporation in good standing under the laws of the
Commonwealth of Kentucky. Bank has authorized capital of
Six Hundred Thousand (600,000) shares of common stock
designated as follows: 45,000 shares of Class A common
stock; 45,000 shares of Class B common stock; 45,000 shares
of Class C common stock; 45,000 shares of Class D common
stock; 45,000 shares of Class E common stock; and 375,000
shares of Class R common stock. Of the total 600,000
authorized shares, 345,000 shares are issued and outstanding
as follows: 45,000 Class A; 45,000 Class B; 45,000 Class C;
45,000 Class D; 45,000 Class E; and 120,000 Class R, which
shares have been validly issued, are outstanding, are fully
paid and non-assessable, and owned by Trustcorp, except for
309,985 shares which have been pledged to Huntington Bank of
Kenton County, Inc. to secure an open line of credit of up
to $1,500,000.
(d) NKFC is a duly organized and validly existing
corporation in good standing under the laws of the
Commonwealth of Kentucky. NKFC has authorized capital of Two
Thousand (2,000) shares of common stock without par value,
of which One Thousand (1,000) shares are validly issued and
outstanding, fully paid and non-assessable. All of such
outstanding shares are owned by Trustcorp free, clear and
unencumbered.
3.2 Authority. Trustcorp has the corporate power and
authority to own its properties and to carry on its business
as now being conducted and to enter into this Agreement and,
subject to the approval and adoption of this Agreement by
its shareholders as required by law and receipt of all other
approvals required by law, to perform all of the obligations
to be performed by it hereunder. Bank has the corporate
power and authority to own its properties and to carry on
its banking and trust business at its main office and
branches as now being conducted. Bank's deposits are insured
by the Federal Deposit insurance Corporation. NKFC has the
corporate power and authority to own its properties and to
carry on its business as now being conducted. This Agreement
constitutes the valid and legally binding obligation of
Trustcorp, and the execution and delivery hereof and the
consummation of the Merger has been approved by the board of
directors of Trustcorp.
<PAGE>
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3.3 Subsidiaries. Each of Bank and NKFC is a wholly-owned
subsidiary of Trustcorp. Trustcorp has no other
subsidiaries. Neither Bank nor NKFC has any subsidiary.
(Bank and NKFC are referred to herein collectively as the
"Subsidiaries.")
3.4 Stock Options and Other Arrangements. Neither Trustcorp
nor any of the Subsidiaries has any securities, options,
obligations or agreements of any nature outstanding which
commit it to issue additional shares of stock or securities
exercisable for or convertible into additional shares or
which would commit it, directly or indirectly, to issue
additional shares upon the fulfillment of the conditions
specified therein.
3.5 Financial Statements. The audited consolidated balance
sheets of Trustcorp and the Subsidiaries as of December 31,
1987 and As of December 31, 1988, and the related
consolidated statements of earnings, changes in financial
position and changes in shareholders' equity for the years
then ended (collectively the "Financial Statements") which
are included in Schedule 3.5 of the Disclosure Package are,
and the unaudited consolidated balance sheets and related
consolidated statements of earnings and changes in financial
position for the three months ended March 31, 1989, and such
statements for all subsequent fiscal periods will be,
complete and correct as of the dates thereof and prepared in
accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods covered
and with prior periods, and fairly present in accordance
therewith the consolidated financial condition of Trustcorp
and the Subsidiaries as of the dates thereof and the
consolidated results of operations of Trustcorp and the
Subsidiaries for the years and periods ended on such dates.
3.6 Liabilities. Except to the extent reflected and reserved
against in the Financial Statements or disclosed in
Schedules 3.6 or 3.7 of the Disclosure Package, and except
for liabilities and obligations occurring in the ordinary
course of business consistent with prior practice, none of
Trustcorp, Bank nor NKFC has any liabilities or obligations
of any nature, whether accrued, absolute, contingent or
otherwise and whether due or to become due, or arising out
of transactions entered into, or any state of facts
existing, prior thereto which has a material adverse effect
on Trustcorp and the Subsidiaries, taken as a whole.
Schedule 3.6 includes a true, correct, and complete list of
all deposit liabilities of Bank as of the date set forth
thereon. Except for liabilities and obligations occurring in
the ordinary course of business, Trustcorp does not know or
have reasonable grounds to know of any basis for the
assertion against Trustcorp, Bank or NKFC of any material
liability not fully reflected or reserved against in the
Financial Statements or
<PAGE>
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otherwise disclosed in Schedules 3.6 or 3.7 of the
Disclosure Package.
3.7 Claims. There are no governmental proceedings or
investigations or any claims, suits or proceedings pending,
asserted, threatened or in prospect against Trustcorp or any
of the Subsidiaries, or any valid basis therefor which if
determined adversely to Trustcorp or any of the Subsidiaries
could have a material adverse effect on the consolidated
financial condition or operations of Trustcorp, except as
disclosed on Schedule 3.7 of the Disclosure Package (the
"Claims Schedule").
3.8 Assets. Schedule 3.8 of the Disclosure Package contains
a list setting forth a brief description of all real
property (the "Real Property Schedule") and all investment
securities (the "Securities Schedule") now owned by or, in
the case of real estate, leased by Trustcorp or any of the
Subsidiaries. Trustcorp and each of the Subsidiaries has
good and marketable title in fee simple to all real estate
owned by it and valid leasehold title to all real estate
leased by it as described in the Real Property Schedule,
free and clear of all liens, mortgages, pledges,
encumbrances and charges of every kind, except (i) as
reflected in the Financial Statements, (ii) statutory liens
for taxes not yet due and payable, and (iii) inchoate liens
for work performed or materials delivered (the "Permitted
Encumbrances"). Trustcorp and each of the Subsidiaries owns
all of the investment securities described on the Securities
Schedule free and clear of all liens, pledges, encumbrances
and charges of any kind. Each of Trustcorp and the
Subsidiaries owns all of its properties and assets reflected
on the Financial Statements, or acquired by it after the
date thereof, free and clear of all liens, mortgages,
pledges, encumbrances and charges of every kind except for
the Permitted Encumbrances.
3.9 Adequate Reserves. Adequate provisions have been made
and reflected on the Financial Statements for bad debts and
for depreciation of physical assets, and deductions or
reserves for such items have been provided for on the
Financial Statements in accordance with generally accepted
accounting principles. The loans and other accounts
receivable shown on the Financial Statements, and those
thereafter made or acquired, have been collected or are
collectable at the aggregate recorded amounts thereof less
applicable reserves.
3.10 Operations Since December 31, 1988. Since December 31,
1988, except as noted on Schedule 3.10 of the Disclosure
Package (the "Operations Schedule"), neither Trustcorp nor
any of the Subsidiaries has (i) incurred any obligation or
liability
<PAGE>
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(absolute or contingent), except obligations and liabilities
incurred in the ordinary course of business consistent with
prior practice; (ii) discharged or satisfied any lien or
encumbrance, or paid any obligation or liability (absolute
or contingent), other than current liabilities reflected in
the Financial Statements and current liabilities incurred
since that day in the ordinary course of business consistent
with prior practice; (iii) declared or made any payment or
distribution of assets or dividends except those dividends
normally paid by Subsidiaries to Bank or Trustcorp; (iv)
purchased or redeemed any shares, or issued or committed to
issue any additional shares or any securities exercisable
for or convertible into shares; (v) other than in the
ordinary course of business consistent with prior practice
made any general wage or salary increases or increased the
salary or other compensation of any officer; (vi) mortgaged,
pledged or subjected to lien, or any other encumbrance, any
of its assets, tangible or intangible; (vii) sold, assigned
or transferred any of its tangible assets or cancelled any
debt or claim other than in the ordinary course of business
consistent with prior practice; (viii) sold, assigned or
transferred any trademark, tradename, copyright, license or
other intangible asset; (ix) suffered any net operating loss
or extraordinary loss, or waived any right of substantial
value; or (x) entered into any transaction other than in the
ordinary course of business consistent with prior practice.
3.11 Taxes. Reserves for taxes on the Financial Statements
are sufficient for the payment of all accrued but unpaid
federal, state, county and local taxes of Trustcorp and the
Subsidiaries, for the period ended on said date and for all
prior periods. All tax returns required to be filed by
Trustcorp and the Subsidiaries have been filed, all such
returns were correct as filed in all material respects, and
no claims have been asserted with respect to such returns,
except in each case where the result thereof could not have
a material adverse effect on Trustcorp and the Subsidiaries
taken as a whole. All federal income tax returns through the
year ended December 31, 1984 have been audited by the
Internal Revenue Service or are closed by the applicable
statute of limitations, and except as set forth on Schedule
3.11 of the Disclosure Package, Trustcorp has not waived any
applicable statute of limitations. True, correct and
complete copies of all federal income tax returns of
Trustcorp and the Subsidiaries filed for all periods
subsequent to December 31, 1984 are included in the
Disclosure Package as part of Schedule 3.11.
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3.12 Loans, Loan Pools, Leases .
(a) Schedule 3.12(a) of the Disclosure Package is a list by
customer name of all loan agreements, notes and borrowing
arrangements (the "Loan Schedule") between Trustcorp, Bank,
or NKFC and borrowers from Trustcorp, Bank or NKFC
(including industrial revenue bond and similar obligations)
under which the current outstanding balance or the lending
commitment exceeds Ten Thousand Dollars ($10,000). Except as
specifically noted on the Loan Schedule, none of Trustcorp,
Bank, nor NKFC is a party to any written or oral (i) loan
Agreement, note or borrowing arrangement under the terms of
which the obligor is in default in payment of principal,
interest or other material provision as of the dates shown
thereon; (ii) loan agreement, note or borrowing arrangement
which has been classified by the examiner for the Federal
Deposit Insurance Corporation or the Commonwealth of
Kentucky as "substandard," "doubtful," "loss," or "other
loans especially mentioned", or which Trustcorp, Bank, or
NKFC has reason to believe should be so classified; (iii)
loan agreement, note or borrowing arrangement with any
director, officer or ten (1O) percent shareholder of
Trustcorp or Bank, or any person, corporation or enterprise
controlling, controlled by or under common control with any
of the foregoing; or (iv) loan agreement, note or borrowing
arrangement in violation of any law, regulation or rule of
any governmental authority.
(b) The Loan Schedule contains a description of each loan in
which Trustcorp, Bank, or NKFC has a participating interest,
and such participating interest in each such loan has been
validly created and is enforceable. Except as disclosed on
the Loan Schedule, each loan underlying each such
participation is validly created, enforceable, adequately
documented and, if secured, adequately collateralized.
(c) Schedule 3.12(c) of the Disclosure Package contains a
list of all lease agreements between Trustcorp, Bank, or
NKFC and lessees of personal property (the "Lease
Schedule"). Except as specifically noted on the Lease
Schedule, all of such leases are legal, valid and binding
agreements of the lessee thereunder and none of such lessees
is in default under any material provision thereof as of the
dates shown thereon.
3.13 Insurance. Schedule 3.13 of the Disclosure Package is a
list of all property, liability, life and other insurance
policies (the "Insurance Schedule") for the benefit of
Trustcorp and the Subsidiaries and all such insurance is in
full force and effect. Since December 31, 1988 there have
been no material losses or damage to the property of
Trustcorp or any of the Subsidiaries whether or not insured,
except as disclosed on the Insurance Schedule.
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3.14 Contracts. Schedule 3.14 of the Disclosure Package is a
list of all continuing contracts, agreements, commitments
and engagements (the "Contract Schedule") of Trustcorp or
the Subsidiaries, including, without limitation, all supply
and service contracts to which Trustcorp or any of the
Subsidiaries is a party as vendor or vendee of a value of
Ten Thousand Dollars ($10,000) or more, long term loan
agreements or other debt instruments under which Trustcorp,
Bank or NKFC is the borrower, contracts for the purchase of
capital equipment or improvements of a value of Ten Thousand
Dollars ($10,000) or more, employment contracts, union
contracts, health and welfare plans, life or hospitalization
insurance plans, pension, profit sharing or other similar
benefit plans, deferred incentive-compensation agreements or
plans and lease agreements.
3.15 Employee Benefit Plans.
(a) All employee benefit plans, as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), maintained currently or in the past by
Trustcorp or any of the Subsidiaries under which Trustcorp
or any of the Subsidiaries has any present or future
obligation or liability or under which any employee of
Trustcorp or any of the Subsidiaries has any present or
future rights to benefits ("Benefit Plans"), are disclosed
in the list of Benefit Plans included in Schedule 3.15 of
the Disclosure Package (the "Benefit Plans Schedule").
(b) There are no multi-employer plans, as defined in Section
4001(a)(3) of ERISA, to which Trustcorp or any of the
Subsidiaries contributes, or under which Trustcorp or any of
the Subsidiaries has any present or future obligation or
liability.
(c) Except as set forth on the Benefit Plans Schedule, each
of the Benefit Plans which is an employee pension benefit
plan, as defined in Section 3(2) of ERISA, and which is
intended to be "qualified" within the meaning of Section
401(a) of the Code ("Pension Plan"), has been determined by
the Internal Revenue Service to be so qualified, and the
executive officers of Trustcorp, Bank and NKFC are not aware
of any fact that would adversely affect such qualified
status. Each Benefit Plan has been operated and administered
in accordance with the requirements of ERISA and, where
applicable, Sections 401(a) and 501(c)(9) of the Code.
(d) With respect to each Benefit Plan for which an annual
report has been filed, no material adverse change has
occurred with respect to the matters covered by the most
recent such annual report since the end of the period
covered thereby.
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(e) None of the Pension Plans (or any pension plan
maintained by a trade or business, whether or not
incorporated, which is under common control with Trustcorp
within the meaning of Section 414(b) or (c) of the Code)
which is subject to Title IV of ERISA has completely or
partially terminated, or been the subject of a reportable
event as defined in section 4043 of ERISA.
(f) No proceedings by the Pension Benefit Guaranty
Corporation to terminate a Pension Plan (or any pension plan
maintained by a trade or business, whether or not
incorporated, which is under common control with Trustcorp
or any Subsidiary within the meaning of Section 414(b) or
(c) of the Code) pursuant to Subtitle C of Title IV of ERISA
have been instituted or threatened. No liability under
Subtitle D of Title IV of ERISA has been incurred by
Trustcorp or any of the Subsidiaries with respect to a
Pension Plan or a pension plan maintained by a trade or
business whether or not incorporated which is under common
control with Trustcorp or any of the Subsidiaries within the
meaning of Section 414(b) or (c) of the Code.
(g) The actuarial present value of the total accrued
benefits under each Pension Plan which is a defined benefit
pension plan did not, as of its latest valuation date,
exceed the fair market value of the total assets of the
Plan, based upon the actuarial assumptions and methods used
to fund the Plan and determined on an ongoing basis.
(h) No Pension Plan which is a defined benefit pension plan
has incurred any accumulated funding deficiency (whether or
not waived) as defined in Section 412 of the Code.
(i) There has been no material prohibited transaction (as is
defined in Section 4975 of the Code or in Part 4 of Subtitle
B of Title I of ERISA) with respect to any Benefit Plan. No
penalty or tax under Section 502(i) of ERISA or Section 4975
of the Code has been imposed upon Trustcorp or any of the
Subsidiaries .
(j) There are no pending or, to the best knowledge of
Trustcorp's and the Subsidiaries' executive officers,
threatened claims with respect to the Benefit Plans, by any
employee or beneficiary covered under the Benefit Plans, or
otherwise involving the Benefit Plans which allege a breach
of fiduciary duties or violations of other applicable state
or federal law which could result in liability on the part
of Trustcorp or any of the Subsidiaries, or any of the
Benefit Plans under ERISA or any other law, nor to the best
knowledge of Trustcorp's and the Subsidiaries executive
officers is there any basis for such a claim.
<PAGE>
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3.16 No Default. Neither Trustcorp nor any of the
Subsidiaries is in default under any material contract,
agreement, commitment or engagement of any kind, the
consequence of which could be materially adverse to
Trustcorp and the subsidiaries, taken as a whole, except as
disclosed on the Contract Schedule, and the consummation of
the transactions provided for in this Agreement will not
contravene or conflict with or constitute a violation of, or
result in a default under, cancellation of, termination of,
or acceleration of obligation under, its Articles of
Incorporation, Bylaws or other organizational documents or
any material contract, agreement, commitment, engagement,
judgment, injunction, order, decree, statutes, ordinance,
regulation or instrument to which Trustcorp or any
Subsidiary is a party of by which it or any of its assets
are bound.
3.17 Proxy Statement.
(a) When the Registration Statement on Form S-4 described in
Article V hereof (the "Registration Statement") is filed
with the Securities and Exchange Commission (the
"Commission") and the related Prospectus/Proxy
Statement/Notice of Special Shareholders Meeting to be
distributed to the shareholders of Trustcorp (the "Proxy
Statement") in connection with this transaction shall first
be mailed to such shareholders, the information with respect
to Trustcorp and the Subsidiaries set forth in the
Registration Statement (a) will comply in all material
respects with the applicable requirements of any Federal
securities and state "blue sky" laws and (b) will not
contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements contained therein not
misleading. If at any time prior to the effective time of
the Merger, any event relating to Trustcorp or the
Subsidiaries shall occur which, pursuant to the applicable
securities laws, should be disclosed in the Registration
Statement and which is not so disclosed, Trustcorp shall
promptly so inform Provident.
3.18 Compliance with Laws. Except as disclosed in Schedule
3.18 of the Disclosure Package, each of Trustcorp and the
Subsidiaries has complied with all laws, regulations and
orders (including zoning ordinances) applicable to it and to
the conduct of its business, including without limitation,
all statutes, rules and regulations pertaining to the
conduct of its banking activities except where the failure
to so comply could not have a material adverse effect on
Trustcorp and the Subsidiaries, taken as a whole. Except as
disclosed in Schedule 3.18 of the Disclosure Package neither
Trustcorp nor any of the Subsidiaries is in default under,
and no event has occurred which, with the
<PAGE>
- 18 -
lapse of time or action by a third party, could result in
the default under the terms of any judgment, decree, order,
writ, rule or regulation of any governmental authority or
court, whether federal, state or local and whether at law or
in equity.
3.19 Full Disclosure. No representation or warranty by
Trustcorp in this Agreement, and no schedule, list,
certificate or other instrument or exhibit furnished or to
be furnished by Trustcorp pursuant hereto or in connection
with the transactions contemplated hereby (including without
limitation the Disclosure package), contains or will contain
any untrue statement of a material fact or omits any
material fact necessary in order to make the statements
contained therein not misleading.
ARTICLE IV
Representations and Warranties Of Provident
Provident hereby represents and warrants to Trustcorp as of
the date hereof and as of the effective time of the Merger,
as though made at such time, as follows:
4.1 Organization and Capitalization. Provident is duly
organized, validly existing and in good standing under the
laws of the State of Ohio. The authorized capital stock of
Provident consists of (i) Ten Million (10,000,000) shares of
common stock (which may be increased to Twenty Million
(20,000,000) shares of common stock prior to the effective
time of the Merger), Seven Million, Six Hundred Thirteen
Thousand Four Hundred Three (7,613,403) of which are
outstanding, and Three Hundred Seventy Five Thousand
(375,000) of which are reserved for issuance pursuant to
Provident's 1988 Stock Option Plan, some of which may be
exercised prior to the effective time of the Merger, and
(ii) Five Million (5,000,000) shares of preferred stock, One
Dollar ($1.00) par value, none of which is outstanding. All
of said outstanding shares of Provident are validly issued,
fully paid and non-assessable.
4.2 Authority. Provident has the corporate power and
authority to own its properties and to carry on its
business as now being conducted and to enter into this
Agreement and, subject to receipt of all approvals required
by law, to perform all of the obligations to be performed by
it hereunder. This Agreement constitutes the valid and
legally binding obligation of Provident, and the execution
and delivery hereof and the consummation of the Merger has
been approved by the board of directors of Provident.
<PAGE>
- 19 -
4.3 Financial Statements. The audited consolidated balance
sheets of Provident as of December 31, 1987 and December 31,
1988, and the related consolidated statements of income,
shareholders' equity and changes in financial position for
the years then ended which were previously delivered to
Trustcorp (collectively the "Provident Financial
Statements"), are, and the unaudited consolidated balance
sheets, and related consolidated statements of income,
shareholders' equity and changes in financial position for
the three months ended March 31, 1989 will be, complete and
correct as of the dates thereof, and prepared in accordance
with generally accepted accounting principles applied on a
consistent basis throughout the periods covered and with
prior periods, and fairly present in accordance therewith
the consolidated financial condition of Provident and its
subsidiaries as of the dates thereof and their consolidated
results of operations for the years and periods ended on
such dates.
4.4 Liabilities. Except to the extent reflected and reserved
against in the Provident Financial Statements or as
disclosed in this Agreement or in writing to Trustcorp, and
except for liabilities and obligations occurring in the
ordinary course of business consistent with prior practice,
Provident and its subsidiaries do not have any liabilities
or obligation of any nature, whether accrued, absolute,
contingent or otherwise and whether due or to become due, or
arising out of transactions entered into, or any state of
facts existing, prior thereto which has a material adverse
affect on Provident and its subsidiaries, taken as a whole.
Except for liabilities and obligations occurring in the
ordinary course of business consistent with prior practice,
Provident neither knows nor has reasonable grounds to know
of any basis for the assertion against Provident and its
subsidiaries of any liability of any nature not fully
reflected or reserved against in the Provident Financial
Statements or disclosed in this Agreement or in writing to
Trustcorp which would have a material adverse affect on the
consolidated operations of Provident. Excepted from the
provisions of this Section 4.3 are those obligations of
Provident arising from any acquisition publicly announced by
Provident prior to the Closing.
4.5 Claims. There are no governmental proceedings or
investigations or any claims, suits or proceedings pending,
asserted, threatened or in prospect against Provident or any
of its subsidiaries, or any valid basis therefor which if
determined adversely to Provident or any of its subsidiaries
could have a material adverse effect on the consolidated
financial condition or operations of Provident, except as
disclosed in the Provident Financial Statements.
<PAGE>
- 20 -
4.6 No Default. Neither Provident nor any of its
subsidiaries is in default under any material contract,
agreement, commitment or engagement of any kind, the
consequence of which could be materially adverse to
Provident and its subsidiaries, taken as a whole, except as
disclosed on the Provident Financial Statements, and the
consummation of the transactions provided for in this
Agreement will not contravene or conflict with or constitute
a violation of, or result in a default under, cancellation
of, termination of, or acceleration of obligation under, its
Articles of Incorporation, Code of Regulations or other
organizational documents or any material contract,
agreement, commitment, engagement, judgment, injunction,
order, decree, statutes, ordinance, regulation or instrument
to which Provident or any subsidiary of Provident is a party
of by which it or any of its assets are bound.
4.7 Power and Authority and Board Approval. Provident has
all necessary corporate power and authority to enter into
this Agreement and to perform all of the obligations to be
performed by it hereunder. This Agreement constitutes the
valid and legally binding obligation of Provident, and this
Agreement and the execution and delivery hereof and the
consummation of the Merger have been approved by the board
of directors of Provident.
4.8 Registration Statement.
(a) When the Registration Statement is filed with the
Commission and the related Prospectus shall first be mailed
to the shareholders of Trustcorp, and at all times
subsequent thereto up to and including the effective time
of the Merger, the information with respect to Provident set
forth in the Registration Statement and the Prospectus (i)
will comply in all material respects with the applicable
provisions of the Federal securities and state "blue sky"
laws and (ii) will not contain any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary to make the statements
contained therein not misleading. If at any time prior to
the effective time of the Merger, any event relating to
Provident shall occur which, pursuant to the applicable
securities laws, should be disclosed in the Registration
statement or the Proxy statement and which is not so
disclosed, Provident shall promptly make such disclosure.
(b) Provident has timely filed with the Commission all
documents and reports required to be filed by it pursuant to
the Securities Exchange Act of 1934 since January 1, 1989
and has or will timely file all such required documents and
reports at all times subsequent to the date of this
Agreement up to and including the effective time of the
Merger. No such document or
<PAGE>
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report contains or will contain any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary to make the statements
contained therein not misleading.
ARTICLE V
Registration of Provident Common Stock
The parties hereto contemplate that the Registration
Statement will be filed with the Commission on Form S-4 for
the registration of the Provident Common Stock to be
delivered in connection with this Agreement. In connection
with the preparation of the Registration Statement and the
Prospectus to be mailed to the shareholders of Trustcorp in
connection with the meeting of shareholders of Trustcorp
referred to in Article XI, Provident and Trustcorp will
cooperate with each other and will furnish the information
relating to Provident and Trustcorp, as the case may be,
required by applicable law to be set forth in the
Registration Statement. Trustcorp and Provident each agrees
to use its best efforts to have the Registration Statement
declared effective as soon as may be practicable and to
distribute the related Prospectus, to the shareholders of
Trustcorp not less than twenty (20) business days prior to
the date on which this Agreement and the transactions
contemplated hereby are submitted to such shareholders for
approval and adoption. Trustcorp agrees to postpone the
special meeting of its shareholders in the event the twenty
(20) business day requirement would not be fulfilled.
Except to the extent permitted by Rule 145(b) promulgated by
the Commission and as required by applicable securities
laws, Trustcorp and Provident agree not to publish any
communication other than the Registration Statement or
notices and proxy material accompanied by the Proxy
statement with respect to this Agreement or the transactions
contemplated hereby. Trustcorp agrees to submit to Provident
and its counsel all proxy soliciting material for approval
prior to the use thereof. Trustcorp and Provident each
agrees to use its best efforts to maintain the effectiveness
of the Registration statement by the preparation and filing
of amendments and/or supplements thereto from the original
effective date through the effective time of the Merger.
Provident shall not be required to maintain the
effectiveness of the Registration Statement for the purpose
of resales by affiliates of Trustcorp.
<PAGE>
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ARTICLE VI
Conditions Precedent to the
Obligations of Provident and Trustcorp
The obligations of Provident and Trustcorp under this
Agreement are subject to:
6.1 Necessary Approvals. All necessary governmental
approvals having been received from the Federal Reserve
Board, the bank regulatory authorities of the State of Ohio
and the Commonwealth of Kentucky, and any other required
governmental authority, all necessary waiting periods having
expired, no action then being pending by or before any
governmental agency or authority seeking to enjoin the
Merger, and all material third-party non-governmental
approvals having been received. Each party shall cooperate
fully with the other in applying for such approvals and in
prosecuting applications. including the execution of
supplemental agreements and other documents consistent with
the terms of this Agreement.
6.2 Shareholder Approval. Approval of this Agreement and the
Merger by the shareholders of Trustcorp as required by law.
6.3 Effectiveness of Registration Statement. The
Registration Statement shall have become effective pursuant
to an order of the Commission, or any state securities
authority and there shall have been no stop order issued or
threatened by the Commission suspending the effectiveness of
the Registration Statement.
ARTICLE VII
Conditions to Obligations Of Provident
The performance of the obligations of Provident under this
Agreement are subject to the following conditions unless
waived in writing by Provident:
7.1 Representations and Warranties True; Covenants and
Obligations Performed. All of the representations and
warranties of Trustcorp shall have been true and complete in
all material respects when made and shall be true and
complete in all material respects as of the effective time
of the Merger, with the same force and effect as though such
representations and warranties had been made at the
effective time of the Merger. Trustcorp shall have performed
in all material respects all covenants and obligations to be
performed by it hereunder at or before the effective time of
the Merger. Trustcorp shall have delivered to Provident
certificates to such effect.
<PAGE>
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7.2 Access to Books and Records and Condition of Assets. The
books and records of Trustcorp, Bank and NKFC, including all
work papers and documents prepared or used by Trustcorp's
auditors in the preparation of the Financial Statements,
shall have been available to Provident for its inspection
and audit, authorized representatives of Provident shall
have been permitted to inspect such papers and documents and
the assets of Trustcorp, Bank and NKFC prior to the time the
Merger becomes effective, and the assets of Trustcorp, Bank
and NKFC shall be in the same condition at the time the
Merger becomes effective as they were when originally
inspected by Provident, reasonable use and ordinary wear and
tear and changes in the ordinary course of business
excepted.
7.3 No Material Adverse Change. There shall have been no
change in the business, properties, operations or financial
condition of Trustcorp and its Subsidiaries, taken as a
whole, since December 31, 1988, which would have a material
adverse effect on the value of its business. Provident shall
have been advised by Frost & Jacobs, trial counsel to
Trustcorp, by letter dated the effective time of the Merger
in form and substance reasonably satisfactory to Provident
and its counsel, that:
(a) Provident may rely on the letter of such trial counsel
addressed to Arthur Young s Company dated April 7, 1989 (the
"Litigation Letter") as if such Litigation Letter was
addressed to Provident and dated the effective date of the
Merger; and
(b) the maximum cost and expense estimated by such counsel
to be incurred subsequent to the effective date of the
Merger in litigating to conclusion the two items of pending
litigation described in the Litigation Letter will not
exceed $150,000.
7.4 No Litigation. On or prior to the effective time of the
Merger, (i) no litigation shall have been commenced or
threatened or governmental investigation proposed or
pending, and (ii) no statute, rule, regulation, or order
shall have been entered, promulgated, proposed or enacted by
any governmental regulatory or administrative agency or
authority, which in the reasonable good faith opinion of
Provident, after investigation, could materially adversely
affect the Merger or the value of Trustcorp, Bank and NKFC,
taken as a whole.
7.5 Approval of Counsel to Certain Legal Matters. All
actions, proceedings, instruments and documents required to
carry out this Agreement or incidental business thereto and
all other related legal matters shall have been approved by
counsel for
<PAGE>
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Provident, provided that such approval shall not be
unreasonably withheld.
7.6 Opinion of Counsel. Provident shall have received an
opinion of counsel for Trustcorp reasonably satisfactory to
Provident, dated the effective time of the Merger, in form
and substance reasonably satisfactory to Provident and its
counsel, to the effect that:
(a) Trustcorp is duly incorporated, validly existing and in
good standing under the laws of the Commonwealth of Kentucky
and has the corporate power and authority to own its
properties and to carry on its business as now being
conducted;
(b) Bank is duly incorporated, validly existing and in good
standing under the laws of the Commonwealth of Kentucky and
has the corporate power and authority to own its properties
and to carry on the banking and trust business at its main
office and branches as now being conducted;
(c) NKFC is duly incorporated, validly existing and in good
standing under the laws of the Commonwealth of Kentucky and
has the corporate power and authority to own its properties
and to carry on its business as now conducted;
(d) Trustcorp has full corporate power and authority to
enter into this Agreement;
(e) Trustcorp's authorized capital stock consists of Six
Hundred Fifty Thousand (650,000) shares of capital stock of
which (i) Fifty Thousand (50,000) shares are designated as
no par value preferred shares, of which none are
outstanding, and (ii) Six Hundred Thousand (600,000) shares
are designated as $5 par value Class R common shares of
which Three Hundred Eighteen Thousand Four Hundred Seven
(318,407) shares have been validly issued, are outstanding,
are fully paid and non-assessable (except for those shares
which are being held for issuance upon surrender by former
shareholders of Bank of their respective Bank stock
certificates which now represent the right to receive shares
of Trustcorp Class R common stock pursuant to the Plan of
share Exchange), and none of which shares are held by
Trustcorp as treasury stock;
(f) Bank has authorized capital of Six Hundred Thousand
(600,000) shares of common stock designated as follows:
45,000 shares of Class A common stock; 45,000 shares of
Class B common stock; 45,000 shares of Class C common stock;
45,000 shares of Class D common stock; 45,000 shares of
Class E common stock; and 375,000 shares of Class R common
stock. Of the
<PAGE>
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total 600,000 authorized shares, 345,000 shares are issued
and outstanding as follows: 45,000 Class A; 45,000 Class B;
45,000 Class C; 45,000 Class D; 45,000 Class E; and 120,000
Class R, which shares have been validly issued, are
outstanding, are fully paid and non-assessable, and owned by
Trustcorp, except for 309,985 shares which have been pledged
to Huntington Bank of Kenton County, Inc. to secure an open
line of credit of up to $1,500,000.
(g) NKFC has authorized capital of Two Thousand (2,000)
shares of common stock, without par value, of which One
Thousand (1,000) shares are validly issued and outstanding,
fully paid and non-assessable. All of such outstanding
shares are owned by Trustcorp free, clear and unencumbered;
(h) Neither Trustcorp nor any of the Subsidiaries has any
securities options, obligations, or agreements of any nature
outstanding which commit it to issue additional shares of
capital stock of any class or securities exercisable for or
convertible into additional shares of capital stock or which
would commit it, directly or indirectly, to issue additional
shares of capital stock upon the fulfillment of the
conditions specified therein;
(i) The December 28, 1988 Plan of Share Exchange (which
shall be described) was legally and validly accomplished,
with the effect set forth in such opinion;
(j) The April 10, 1989 Reorganization (which shall be
described) was legally and validly accomplished with the
effect set forth in such opinion. Trustcorp has Two Hundred
Twenty Five Thousand (225,000) Redemption Coupons
outstanding each of which has been legally and validly
issued. The Notice of Redemption of the Redemption Coupons
has been legally and validly given by Trustcorp in
accordance with the terms of such Redemption Coupons, with
the effect that the Redemption Coupons (i) became
immediately eligible for redemption for a period of Thirty
(30) days upon presentment thereof at a redemption price of
One Dollar ($1.00) per Redemption Coupon, (ii) no longer
represent or entitle the holder thereof to any rights of any
kind except the right to redemption as aforesaid, (iii)
become void for all purposes if not presented for redemption
within the aforesaid Thirty (30) Day period, and (iv) the
date on which such Thirty (30) Day period expires.
(k) This Agreement has been duly authorized, adopted,
executed and delivered by Trustcorp and constitutes the
valid and binding obligation of Trustcorp;
<PAGE>
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(l) Neither the execution nor delivery of this Agreement nor
the consummation of the transactions contemplated hereby nor
compliance by Trustcorp with any of the provisions hereof
will conflict with or result in the breach of any provision
of or constitute any default (or an event, which, with
notice or lapse of time would constitute default), or result
in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of
Trustcorp, Bank or NKFC, or the acceleration of any of their
obligations, under any of the terms, conditions or
provisions of the Articles of Incorporation or Bylaws of
Trustcorp, Bank or NKFC under any note, bond, mortgage,
indenture, license, or other instrument or obligation known
to such counsel to which Trustcorp or any of the
Subsidiaries is a party, or by which it or any of its
properties or assets may be bound, except for such conflict,
breach, default or creation as to which requisite waivers or
consents either shall have been obtained by Trustcorp by the
effective time of the Merger or shall have been waived by
Provident;
(m) At the effective time of the Merger, ownership of all of
the issued and outstanding stock of Bank will vest in
Provident free, clear and unencumbered; And
(n) As to such other matters as Provident or its counsel
reasonably may request.
7.7 Auditor's Comfort Letter. If the Registration Statement
and/or the Proxy Statement shall contain any unaudited
interim financial statements of Trustcorp, Provident shall
have received, if requested, "Comfort" letters from
Trustcorp's independent certified public accountants, dated
(i) the effective date of the Registration Statement and
(ii) the Closing, in each case substantially to the effect
that:
(a) They are a firm of independent public accountants with
respect to Trustcorp within the meaning of the Act and the
rules and regulations of the Commission thereunder;
(b) In their opinion the audited financial statements of
Trustcorp examined by them and included in the Registration
Statement comply as to form in all material respects with
the applicable requirements of the Federal securities laws
and the applicable published rules and regulations of the
Commission thereunder with respect to registration
statements on Form S-4; and
(c) On the basis of specified procedures (which do not
constitute an examination in accordance with generally
accepted auditing standards), consisting of a reading of the
<PAGE>
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unaudited financial statements of Trustcorp included in the
Registration Statement and of the latest available unaudited
financial statements of Trustcorp, inquiries of officers of
Trustcorp responsible for financial and accounting matters
and a reading of the minutes of meetings of shareholders and
the Board of Directors of Trustcorp, nothing has come to
their attention which causes them to believe: (i) that the
unaudited financial statements of Trustcorp included in the
Registration Statement do not comply as to form in all
material respects with the applicable accounting
requirements of the Federal securities laws and the
published rules and regulations thereunder, (ii) that any
such unaudited financial statements are not, or any
unaudited financial statements of Trustcorp from which
unaudited quarterly financial information set forth in the
Registration Statement has been derived are not, fairly
presented in conformity with generally accepted accounting
principles consistently applied and on a basis substantially
consistent with that of the audited financial statements or
(iii) that during the period from December 31, 1988 to a
date five business days prior to the date of such letter
there was any change in the capital stock or any increase in
long term debt of Trustcorp as compared to the amounts shown
in the balance sheet as of December 31, 1988 included in the
Trustcorp Financial Statements, or that during the period
from the date of said balance sheet to the most recent month-
end for which financial statements are available there was
any material decrease in net assets or any material
decrease, as compared with the corresponding period in the
preceding year, in net income of Trustcorp except in all
instances for changes or decreases which are set forth in
such letter or which the Registration Statement and/or the
Proxy Statement discloses have occurred.
7.8 Loan Modifications. The documentation and collateral for
the two currently outstanding loans from Bank identified as
Items ___ and ___ on the Loan Schedule shall have been modified to
the satisfaction of Provident.
7.9 Dissenting Shareholders. On or prior to the date of the
closing, holders of no more than Thirty Two Thousand
(32,000) shares of Trustcorp Common Stock shall have
demanded, or become entitled to receive payment in cash for
such shares pursuant to Kentucky Revived Statute Sections
271B.13-010 through 271B.13-310.
7.10 Notice of Redemption. Trustcorp shall have issued the
Notice of Redemption to all holders of Redemption Coupons
with the effect described in Section 3.1(b) hereof.
<PAGE>
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ARTICLE VIII
Conditions to Obligations of Trustcorp
The performance of the obligations of Trustcorp under this
Agreement are subject to the following conditions unless
waived in writing by Trustcorp:
8.1 Representations and Warranties True; Covenants and
Obligation Performed. All of the representations and
warranties made by Provident shall have been true and
complete in all material respects when made and shall be
true and complete, in all material respects, as of the
effective time of the Merger with the same force and effect
as though such representations and warranties were made At
the effective time of the Merger. Provident shall have
performed in all material respects all covenants and
obligation to be performed by them hereunder at or before
the effective time of the Merger. Provident shall have
delivered to Trustcorp certificates to such effect.
8.2 No Material Adverse Change. There shall have been no
change in the business, properties, operations or financial
condition of Provident and the Provident Subsidiaries, taken
as a whole, since December 31, 1988, which would have a
material adverse effect on Provident and the Provident
subsidiaries, taken as a whole.
8.3 Approval of Counsel to Certain Legal Matters. All
actions, proceedings, instruments and documents required to
carry out this Agreement or incidental thereto and all other
related legal matters shall have been approved by counsel to
Trustcorp, provided that such approval shall not be
unreasonably withheld.
8.4 No Litigation. On or prior to the effective time of the
Merger, (i) no litigation shall have been commenced or
threatened or governmental investigation proposed or
pending, and (ii) no statute, rule, regulation, or order
shall have been entered, promulgated, proposed or enacted by
any governmental regulatory or administrative agency or
authority, which in the reasonable good faith opinion of
Trustcorp, after investigation, could materially adversely
affect the Merger or the value of Provident and its
subsidiaries taken as a whole.
8.5 Approval of Counsel. Trustcorp and its counsel shall be
reasonably satisfied that the Merger will constitute a
statutory merger and reorganization within the meaning of
S368(a)(1)(A) of the Code; and no gain or loss will be
recognized by holders of Trustcorp Common Stock as a result
of their exchanging Trustcorp Common Stock for Provident
Common Stock pursuant to the Merger, except that holders of
Trustcorp Common
<PAGE>
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Stock electing to receive cash in lieu of Provident Common
Stock may recognize taxable gain or loss to the extent of
such cash received in lieu of Provident Common Stock.
8.6 Opinion of Counsel. Trustcorp shall have received an
opinion of Keating, Muething & Klekamp, counsel to
Provident, dated the effective time of the Merger, in form
and substance reasonably satisfactory to Trustcorp and its
counsel, to the effect that:
(a) Provident is duly organized, validly existing and in
good standing under the laws of the State of Ohio and has
the corporate power and authority to own its properties and
to carry on its business as now being conducted;
(b) Provident has full corporate power and authority to
enter into this Agreement;
(c) The authorized capital stock of Provident consists of
Ten Million (10,000,000) (or such other numbers of shares as
shall then be authorized) shares of common stock, no par
value, Seven Million Six Hundred Thousand Thirteen Four
Hundred Three (7,613,403) (or such other number of shares as
shall then be outstanding) of which are outstanding, and
Three Hundred Seventy Five Thousand (375,000) of which are
reserved for issuance pursuant to outstanding stock options
(some of which may be exercised prior to the effective time
of the Merger), and Five Million (5,000,000) shares of
preferred stock, One Dollar ($1.00) par value, none of which
is outstanding. All of said issued shares of Provident are
fully paid and non-assessable;
(d) This Agreement has been duly authorized, adopted,
executed and delivered by Provident, and constitutes the
valid and binding obligation of Provident;
(e) All shares of Provident to be issued pursuant to the
terms of this Agreement will be duly authorized, validly
issued and outstanding, fully paid and non-assessable and
free of any claim of preemptive rights;
(f) The Registration Statement has become effective pursuant
to an order of the Commission and, to the best knowledge of
such counsel, no stop order has been issued or threatened by
the Commission suspending the effectiveness of the
Registration Statement and all necessary filings under state
securities laws with respect to the issuance of the
Provident Common Stock pursuant to the Merger have been
made;
<PAGE>
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(g) As to such other matters as Trustcorp or its counsel
reasonably may request; and
(h) The Merger will constitute a statutory merger and
reorganization within the meaning of S368(a)(1)(A) of the
Code; and no gain or loss will be recognized by holders of
Trustcorp Common Stock as a result of their exchanging
Trustcorp Common Stock for Provident Common Stock pursuant
to the Merger, except that holders of Trustcorp Common stock
electing to receive cash in lieu of Provident Common Stock
may recognize taxable gain or loss to the extent of such
cash received in lieu of Provident Common Stock.
ARTICLE IX
Covenants of Trustcorp
From the date hereof through the effective time of the
Merger, Trustcorp covenants and agrees as follows:
9.1 Access to Properties and Records. Provident's officers,
employees, attorneys, accountants and other authorized
agents shall be given free and full access during normal
business hours to all of the offices, properties and records
of Trustcorp and the Subsidiaries so that Provident may make
an investigation of Trustcorp's business, assets and
affairs. Provident shall be permitted to make such extracts,
or copies of such documents, books or records of Trustcorp
as Provident may desire and Trustcorp and the Subsidiaries
shall furnish to Provident such financial and operating data
and other information concerning the business, assets and
affairs of Trustcorp and the Subsidiaries as Provident may
request. Trustcorp shall instruct its accountants and
attorneys to disclose to Provident any and all information
they may have with respect to Trustcorp's business, assets
and affairs. Provident shall treat all information it
receives concerning Trustcorp and the subsidiaries during
the course of its investigation as confidential and shall
return to Trustcorp a11 extracts and copies of documents,
books and records which it has received if the Merger is not
consummated.
9.2 Operations Pending Merger. Trustcorp and the
subsidiaries will be operated only in the ordinary course of
business consistent with prior practice without substantial
change in current operational policy or plans, and Trustcorp
will use its best efforts to maintain its and each of the
Subsidiaries' properties and facilities in their present
condition, reasonable use and ordinary wear and tear
excepted, to retain its and each of the Subsidiaries'
employees, and to maintain its and each of the Subsidiaries'
assets and its and
<PAGE>
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each of the Subsidiaries relationship with its customers and
others having business relations with it or any of the
Subsidiaries. Trustcorp agrees that from the date hereof to
the effective time of the Merger, neither it nor any of the
Subsidiaries will, without the prior consent of Provident
which consent shall not be unreasonably withheld, except as
may be required by applicable law:
(a) Issue any securities or options, or incur any
obligations, or enter into any agreements of any nature
which commit any of them to issue additional shares or
securities exercisable for or convertible into shares or
combine, split or reclassify any shares of stock;
(b) Declare any dividends or make any distribution of assets
to their shareholders, or increase the aggregate outstanding
balance of loans or make other payments (except scheduled
wage and salary payments, and normal director fees for
meetings of the Board of Directors and any committee thereof
in the ordinary course of business) to any of their
shareholders, directors, officers and employees or any
members of their immediate families;
(c) Create or incur any indebtedness or liability except in
the ordinary course of business consistent with prior
practice;
(d) Make any capital expenditures, other than pursuant to
contracts listed on the Contract Schedule, aggregating in
excess of Ten Thousand dollars ($10,000);
(e) Increase the rate of compensation of any of their
officers or employees other than in the ordinary course of
business consistent with prior practice;
(f) Cancel any of the insurance existing at the date hereof
or permit any of their insurance to lapse or terminate;
(g) Make any contract not in the ordinary course of business
or any contract (except for renewals of existing contracts)
which in the ordinary course of business consistent with
prior practice cannot be performed within 60 days after the
time the Merger shall become effective;
(h) Knowingly be in default under any contract, agreement,
commitment or engagement of any kind, including those
described on lists delivered to Provident, the result of
which could have a material adverse effect on Trustcorp and
the Subsidiaries taken as a whole;
<PAGE>
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(i) Except as may be required by law, enter into, adopt,
amend or terminate any bonus, profit sharing, compensation,
severance, termination, stock option, pension, retirement,
deferred compensation, severance or either employee benefit
or welfare agreement, trust, plan or arrangement;
(i) Acquire, sell, lease or dispose of any assets outside
the ordinary course of business which in the aggregate are
material to Trustcorp and the subsidiaries taken as a whole;
(k) Except as may be required to conform with generally
accepted accounting principles, change any of the accounting
principles or practices used by it;
(l) Make any material tax election or compromise any
material income tax liability;
(m) Pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accused, asserted or
unasserted, contingent or otherwise) other than in the
ordinary course of business consistent with prior practice;
or
(n) Take or agree to take any of the actions described in
Sections 9.2 (a) through (m) or any action which would make
any of the representations and warranties of Trustcorp
contained in this Agreement untrue or incorrect as of the
date then made or would result in any of the conditions set
forth in Articles VI, VII and VIII hereof not being
satisfied at Closing.
9.3 Best Efforts to Expedite Closing. Trustcorp will exert
its best efforts and cooperate with Provident to accomplish
by the earliest practicable date all those things necessary
to cause this Agreement to be carried out including but not
limited to the making of applications to, and the obtaining
of approvals from, the appropriate regulatory agencies for
the accomplishment of the Merger and calling a special
meeting of Trustcorp shareholders at which the Trustcorp
Board of Directors will present and, consistent with its
fiduciary duties, recommend this Agreement and the Merger to
such shareholders for their approval.
9.4 Notice of Redemption. Promptly upon satisfaction or
occurrence of all conditions precedent thereto, Trustcorp
shall issue the Notice of Redemption to all holders of
Redemption Coupons.
<PAGE>
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ARTICLE X
Covenants of Provident
10.1 Best Efforts. From the date hereof through the
effective time of the Merger, Provident covenants and agrees
to exert its best efforts and cooperate with Trustcorp to
accomplish all those things necessary to cause this
Agreement to be carried out including but not limited to the
making of applications to, and the obtaining of approvals
from, the appropriate regulatory agencies for the
accomplishment of the Merger, and the registration of the
Provident Common Stock and the compliance with applicable
state "blue sky" laws.
10.2 Registered Shares. The shares of Provident Common Stock
to be issued to the shareholders of Trustcorp hereunder
shall be issued pursuant to the registration requirements of
the Act and any applicable state securities laws and shall
be free of restrictions relating to transferability, except
to the extent a shareholder of Trustcorp shall be deemed an
affiliate of Trustcorp or Provident, or as otherwise
provided herein.
10.3 Filing of reports. For a period of three (3) years
after the effective time of the Merger, Provident will use
its best efforts to file in a timely manner all material
presently required to be filed pursuant to Section 12(g) of
the Exchange Act and the rules and regulations promulgated
thereunder, or as would be required to be filed under
Section 12(g) of the Exchange Act if Provident is no longer
subject to such Section, so as to continue the availability
of Rule 145 for sales of Provident Common Stock by those
shareholders of Trustcorp subject thereto.
ARTICLE XI
Shareholders' Meetings
Prior to the Closing, and in accordance with its Bylaws and
applicable law, Trustcorp shall hold a special meeting of
its shareholders at which it shall present this Agreement
and the Merger for the approval of its shareholders.
ARTICLE XII
Termination of Merger Agreement
This Agreement and the transactions contemplated herein may
be terminated without liability to either party,
notwithstanding approval thereof by the shareholders of
Trustcorp, at any time prior to the effective time of the
Merger only (i) by the directors of either party to this
Agreement if consummation of the Merger has not occurred on
or before December 31, 1989,
<PAGE>
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unless such date has been mutually extended in writing by
the parties to this Agreement, or (ii) by agreement of the
directors of both parties.
ARTICLE XIII
Brokers
Each party hereto represents and warrants to the other that
there are no claims or rights for brokerage commissions or
finders fees in connection with the Merger or the other
transactions contemplated by this Agreement, insofar as such
claims or rights shall be based on an arrangement or
agreements made by or on behalf of the party, and each party
indemnifies against and holds the other harmless from any
such claims.
ARTICLE XIV
Indemnification
(a) Trustcorp hereby indemnifies and agrees to hold
Provident harmless from any And all losses, costs, expenses
(including attorneys' fees) and liabilities arising from any
misrepresentation or breach of any warranty, covenant or
agreement of Trustcorp set forth in this Agreement,
nonfulfillment of any covenant, agreement or obligation of
Trustcorp, and any misrepresentation or omission from any
certificate, instrument, list or schedule furnished to
Provident pursuant to this Agreement.
(b) Provident hereby indemnifies and agrees to hold
Trustcorp harmless from any and all loss, costs, expenses
(including attorneys' fees) and liabilities arising from any
misrepresentation or breach of any warranty, covenant or
agreement of Provident set forth in this Agreement,
nonfulfillment of any covenant, Agreement or obligation of
Provident, and any misrepresentation or omission from any
certificate or instrument furnished to Trustcorp pursuant to
this Agreement.
(c) If any action is brought or any claim is made against
any person indemnified pursuant to this Article XIV in
respect of which indemnity may be sought against an
indemnified pursuant to this Article XIV, such person shall
promptly notify the indemnitor of the institution of such
action or the making of such claim and the indemnitor shall
assume the defense of such action or claim, including the
employment of counsel and payment of expenses. Such person
shall have the right to employ its or their own counsel in
any such case, but the fees and expenses of
<PAGE>
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such counsel shall be at the expenses of such person unless
the employment of such counsel shall have been authorized in
writing by the indemnitor in connection with the defense of
such action or claim or the indemnitor shall not have
employed counsel (within twenty (20) days of demand for
same) to have charge of the defense of such action or claim
or such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them
which are different from or additional to those available to
the indemnitor (in which case the indemnitor shall not have
the right to direct any different or additional defense of
such action or claim on behalf of the indemnified party or
parties), in any of which events such fees and expenses of
not more than one additional counsel for all indemnified
parties shall be borne by the indemnitor. Except as
expressly provided above, if the indemnitor shall not
previously have assumed the defense of any such action or
claim, at such time as the indemnitor does assume the
defense of such action or claim, the indemnitor shall not
thereafter be liable to any person indemnified pursuant to
this Article XIV for any legal or other expenses
subsequently incurred by such person in investigating,
preparing or defending against such action or claim.
Anything in this paragraph to the contrary notwithstanding
an indemnitor shall not be liable for any settlement of any
such claim or action effected without its consent and an
indemnitor may not agree to any settlement without the
consent of the indemnified parties unless such settlement
provides only for the payment of monetary damages which are
paid by the indemnitor.
(d) Notwithstanding the foregoing, the representations and
warranties of the parties to this Agreement contained in
Articles III and IV hereof, shall not survive after the
effective time of the Merger.
ARTICLE XV
Notices
All notices, consents, waivers or other communications
between the parties shall be in writing and shall be mailed
or delivered to the attention of each of the following
persons:
(a) If to Provident:
Provident Bancorp, Inc.
One East Fourth Street
Cincinnati, Ohio 45202
Attention: Allen L. Davis
<PAGE>
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- - with a copy to:
Keating, Muething & Klekamp
18th Floor, Provident Tower
Cincinnati, Ohio 45202
Attention: J. David Rosenberg
(b) If to Trustcorp:
Northern Kentucky Trustcorp, Inc.
3701 Alexandria Pike, U.S. 27
Cold Springs, Kentucky 41076
Attention: Elmer Haas, Jr., Chairman
with a copies to:
Don Johnson, P.S.C.
20 North Grand Avenue, Suite 15
St. Thomas, Kentucky 41075
Elizabeth Horwitz
Cors, Bassett, Kohlhepp, Halloran & Moran
1700 Carew Tower
441 Vine Street
Cincinnati, Ohio 45202
or such other address as a party may designate by notice
given to the others as provided above.
ARTICLE XVI
Governing Law
This Agreement shall be construed in accordance with the
laws of the United States and the laws of the State of Ohio,
applicable to agreements made and to be performed therein.
ARTICLE XVII
Captions; Counterparts
The captions in this Agreement are for convenience purposes
only and shall not be considered a part of or affect the
construction or interpretation of any provision of this
Agreement. This Agreement may be executed in counterparts by
the parties and any such counterpart shall be deemed an
original hereof.
<PAGE>
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ARTICLE XVIII
Entire Agreement
This Agreement is binding upon and is for the benefit of the
parties hereto and their respective successors, legal
representatives and assigns. Except for the Letter Agreement
respecting confidentiality dated March 30, 1989, the Letter
Agreement and Supplement thereto each dated April 18, 1989,
and the Agreements dated the date hereof between Provident
and certain shareholders of Trustcorp all which shall remain
in full force and effect, this Agreement supersedes any
other agreement, whether written or oral, that may have been
made or entered into by Trustcorp and Provident or by any
officer or officers of such parties relating to the
acquisition of Trustcorp by Provident. This Agreement
constitutes the entire agreement by the parties, and there
are no agreements or commitments except as set forth herein.
ARTICLE XIX
Waiver; Modification; Assignment
No delay on the part of any party hereto in the exercise of
any right, power or remedy arising hereunder shall operate
as a waiver thereof. No waiver shall be effective unless in
writing and signed by the party granting the waiver. This
Agreement may be amended by agreement of the directors of
both the parties at any time prior to the filing of the
Certificate and Articles of Merger except as provided in
applicable provisions of the laws of the State of Ohio or
the Commonwealth of Kentucky. No amendment or modification
of this Agreement shall be effective unless in writing and
signed by both parties hereto. No assignment of this
Agreement or any rights or obligation hereunder shall be
effective without the prior written consent of both parties
hereto.
ARTICLE XX
Recourse
Notwithstanding any provision to the contrary contained
herein, the representations, warranties and covenants of
each party hereto are, and for all purposes shall be deemed,
the corporate obligations of each party hereto and no
director, shareholder or officer of either party shall have
any personal liability therefor. In the event of any
material inaccuracy in any representation or warranty, or
breach of any covenant except those covenants of Sections
9.3 and 10.1 prior to Closing, the sole remedy of the other
party hereto shall be to terminate this
<PAGE>
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Agreement prior to Closing, in which case neither party
shall have any liability of any kind to the other. (The
inaccuracy of any representation or warranty or breach of
any covenant by Trustcorp shall not be grounds for
adjustment in the consideration to be issued by Provident
pursuant to Article II in exchange for Trustcorp Common
Stock.)
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date and year first
above written.
PROVIDENT BANCORP, INC.
ATTEST:
By:/s/ Allen L. Davis
/s/ Leslie C. Nomeland Allen L. Davis
Secretary President and Chief
Operating Officer
NORTHERN KENTUCKY TRUSTCORP,
ATTEST: INC.
By:/s/ Elmer Haas, Jr.
/s/ Betty J Haas Elmer Haas, Jr.
Secretary Chairman
<PAGE>
Certificate of Amendment
By Shareholders
to the Articles of Incorporation of
Provident Bancorp, Inc.
(Name of Corporation)
Allen L. Davis who is [ ] Chairman of the Board
[X]President [ ] Vice President
and Leslie C. Nomeland , who is [X] Secretary [ ]
Assistant Secretary
of the above named Ohio corporation for profit with its
principal location at One E. 4th Street, Cincinnati,
Hamilton County Ohio do hereby certify that:
[ ] a meeting of the shareholders was duly called for the
purpose of adopting this amendment and held on May 17, 1989,
at which meeting a quorum of the shareholders was present in
person or by proxy, and by the affirmative vote of the
holders of shares entitling them to exercise 83 % of the
voting power of the corporation.
[ ] in a writing signed by all of the shareholders who would
be entitled to notice of a meeting held for that purpose,
the following resolution to amend the articles was adopted:
RESOLVED: That Article Four of the Company's Articles of
Incorporation be, and the same is hereby, amended to
increase the number of authorized common shares to that
paragraph (a) of said Article Four will read, in its
entirety, as follows:
(a) The total number of shares of all classes of stock which
the corporation shall be authorized to issue shall be:
(i) 20 million shares of common stock without par value; and
(ii) 5 million shares of non-voting, $1.00 Par, Cumulative
Preferred Stock.
IN WITNESS WHEREOF, the above named officers, acting for and
on the behalf of the corporation, have hereto subscribed
their names this 17th day of May, 1989.
BY ________________________
President
BY ________________________
Secretary
NOTE: Ohio law does not permit one officers to sign in two
capacities. Two separate signatures are required, even it
this necessitates the election of a second officer before
the tiling can be made.
<PAGE>
AMENDMENT TO ARTICLES OF INCORPORATION
OF
PROVIDENT BANCORP, INC.
Pursuant to Section 1701.70(B)(1) of the Ohio Revised Code
We, the undersigned duly authorized officers of Provident
Bancorp, Inc., an Ohio corporation (the "Corporation"), in
accordance with the provisions of Section 1701.70(B)(1) of
the Ohio Revised Code, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by Article Fourth of the Articles of Incorporation
of the Corporation, on September 21, 1989 the Board of
Directors authorized the series of Preferred Stock
hereinafter provided for and has adopted, the following
resolution creating a series of 70,000 shares of Preferred
Stock, par value $1.00 per share, designated as Series A
ESOP Non-Voting Convertible Preferred Stock:
"RESOLVED that, pursuant to the authority vested in the
Board of Directors of the Corporation in accordance with the
provisions of Article Fourth of the Articles of
Incorporation, a series of Preferred Stock of the
Corporation be, and it hereby is, created, and that the
designation and amount thereof and the preferences and other
special rights of the shares of such series, and
qualifications, limitations or restrictions thereof are as
follows:
Section 1. Designation and Amount; Special Purpose
Restricted Transfer Issue.
(A) The shares of such series shall be designated as "Series
A ESOP Non-Voting Convertible Preferred Stock" ("Series A
Preferred Stock") and the number of shares constituting such
series shall be 70,000.
(B) Shares of Series A Preferred Stock shall be issued only
to Merchants National Bank and Trust Company, as trustee or
any successor trustee (the "Trustee") of the employee stock
ownership plan feature of the Retirement Plan of the
Corporation (the "Plan"). All references to the holder of
shares of Series A Preferred Stock shall mean the Trustee
under the Plan. In the event of any transfer of record
ownership of shares of Series A Preferred Stock to any
person other than any
<PAGE>
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successor trustee under the Plan, the shares of Series A
Preferred Stock so transferred, upon such transfer and
without any action by the Corporation or the holder thereof,
shall be automatically converted into shares of Common
Stock, without par value, on the terms otherwise provided in
Section 5 hereof and no such transferee shall have any of
the preferences and other special rights ascribed to shares
of Series A Preferred Stock hereunder but, rather, only the
powers and rights pertaining to the Common Stock into which
such shares of Series A Preferred Stock shall be so
converted. In the event of such a conversion, the transferee
of the shares of Series A Preferred Stock shall be treated
for all purposes as the record holder of the shares of
Common Stock into which such shares of Series A Preferred
Stock have been automatically converted as of the date of
such transfer. Certificates representing shares of Series A
Preferred Stock shall bear a legend to reflect the foregoing
provisions.
Section 2. Dividends and Distributions.
(A) Subject to the provisions for adjustment hereinafter set
forth, the holders of shares of Series A Preferred Stock
shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally available
therefor, cash dividends ("Preferred Dividends") in an
amount per share equal to $8.00 per share per annum, and no
more, payable semi-annually in arrears, one-half on the 1st
day of January and one-half on the 1st day of July of each
year (each a "Dividend Payment Date") commencing on January
1, 1990, to the Trustee. If any Dividend Payment Date shall
fall on any day other than a "Business Day" "as hereinafter
defined), the dividend payment due on such Dividend Payment
Date shall be paid on the Business Day immediately preceding
such Dividend Payment Date. Preferred Dividends shall begin
to accrue on outstanding shares of Series A Preferred Stock
from the date of issuance of such shares of Series A
Preferred Stock. Preferred Dividends shall accrue on a daily
basis whether or not the Corporation shall have earnings or
surplus at the time, but Preferred Dividends accrued after
issuance on the shares of Series A Preferred Stock for any
period less than a full semi-annual period between Dividend
Payment Dates shall be computed on the basis of a 360-day
year of 30-day months. Accrued but unpaid Preferred
Dividends shall cumulate as of the Dividend Payment Date on
which they first become payable, but no interest shall
accrue on accumulated but unpaid Preferred Dividends.
<PAGE>
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(B) So long as any shares of Series A Preferred Stock shall
be outstanding, no dividend shall be declared or paid or set
apart for payment on any other series of stock ranking on a
parity with the Series A Preferred Stock as to dividends,
unless there shall also be or have been declared and paid or
set apart for payment on the Series A Preferred Stock,
dividends payable on all Dividend Payment Dates of the
Series A Preferred Stock ending on or before the dividend
payment date of such parity stock, ratably in proportion to
the respective amounts of dividends accumulated and unpaid
through such Dividend Payment Date on the Series A Preferred
Stock and accumulated and unpaid on such parity stock
through the dividend payment date on such parity stock next
preceding such dividend payment date. If full cumulative
dividends on the Series A Preferred Stock have not been
declared and paid or set apart for payment when due, the
Corporation shall not declare or pay or set apart for
payment any dividends or make any other distributions on, or
make any payment on account of the purchase, redemption or
other retirement of any other class of stock or series
thereof of the Corporation ranking, as to dividends or as to
distributions in the event of a liquidation, dissolution or
winding-up of the Corporation, junior to the Series A
Preferred Stock until full cumulative dividends on the
Series A Preferred Stock shall have been paid or declared
and set apart for payment; provided, however, that the
foregoing shall not apply to (i) any dividend payable solely
in any shares of any stock of the Corporation ranking, as to
dividends and as to distributions in the event of a
liquidation, dissolution or winding-up of the Corporation,
junior to the Series A Preferred Stock or (ii) the
acquisition of shares of any stock of the Corporation
ranking, as to dividends or as to distributions in the event
of a liquidation, dissolution or winding-up of the
Corporation, junior to the Series A Preferred Stock in
exchange solely for shares of any other stock of the
Corporation ranking, as to dividends and as to distributions
in the event of a liquidation, dissolution or winding-up of
the Corporation, junior to the Series A Preferred Stock.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have no voting rights except as
provided for by the provisions of the Ohio Revised Code.
Section 4. Liquidation, Dissolution or Winding-Up.
(A) Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of
Series A Preferred Stock shall be entitled to receive
<PAGE>
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out of assets of the Corporation which remain after
satisfaction in full of all valid claims of creditors of the
Corporation and which are available for payment to
stockholders, and subject to the rights of the holders of
any stock of the Corporation ranking senior to or on a
parity with the Series A Preferred Stock in respect of
distributions upon liquidation, dissolution or winding up of
the Corporation, before any amount shall be paid or
distributed among the holders of Common Stock or any other
shares ranking junior to the Series A Preferred Stock in
respect of distributions upon liquidation, dissolution or
winding up of the Corporation, liquidating distributions in
the amount of $100 per share, plus an amount equal to all
accrued and unpaid dividends thereon to the date fixed for
distribution, and no more. If upon any liquidation,
dissolution or winding up of the Corporation, the amounts
payable with respect to the Series A Preferred Stock and any
other stock ranking as to any such distribution on a parity
with the Series A Preferred Stock are not paid in full, the
holders of the Series A Preferred Stock and such other stock
shall share ratably in any distribution of assets in
proportion to the full respective preferential amounts to
which they are entitled. After payment of the full amount to
which they are entitled as provided by the foregoing
provisions of this paragraph 4(A), the holders of shares of
Series A Preferred Stock shall not be entitled to any
further right or claim to any of the remaining assets of the
Corporation.
(B) Neither a merger or consolidation of the Corporation
with or into any other corporation, nor the sale, lease,
exchange or other transfer of all or any portion of the
assets of the Corporation, shall be deemed to be a
dissolution, liquidation or winding up of the affairs of the
Corporation for purposes of this Section 4, but the holders
of Series A Preferred Stock shall nevertheless be entitled
in the event of any such merger or consolidation to the
rights provided by Section 8 hereof.
(C) Written notice of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation,
stating the payment date or dates when, and the place or
places where, the amounts distributable to holders of Series
A Preferred Stock in such circumstances shall be payable,
shall be given by first-class mail, postage prepaid, mailed
not less than twenty (20) days prior to any payment date
stated therein, to the holders of Series A Preferred Stock,
at the address shown on the books of the Corporation or any
transfer agent for the Series A Preferred Stock.
<PAGE>
- 5 -
Section 5. Conversion into Common Stock.
(A) A holder of shares of Series A Preferred Stock shall be
entitled, at any time prior to the close of business on the
date fixed for redemption of such shares pursuant to Section
6, 7 or 8 hereof, to cause any or all of such shares to be
converted into shares of Common Stock, at a conversion ratio
of shares of Common Stock for each share of Series A
Preferred Stock so converted the numerator of which shall be
$100 and the denominator of which (the "Conversion Price")
shall be $30 which shall be adjusted as hereinafter
provided.
(B) Any holder of shares of Series A Preferred Stock
desiring to convert such shares into shares of Common Stock
shall surrender the certificate or certificates representing
the shares of Series A Preferred Stock being converted, duly
assigned or endorsed for transfer to the Corporation (or
accompanied by duly executed stock powers relating thereto),
at the principal executive office of the Corporation or the
offices of the transfer agent for the Series A Preferred
Stock or such office or offices in the continental United
States of an agent for conversion as may from time to time
be designated by notice to the holders of the Series A
Preferred Stock by the Corporation or the transfer agent for
the Series A Preferred Stock, accompanied by written notice
of conversion. Such notice of conversion shall specify (i)
the number of shares of Series A Preferred Stock to be
converted and the name or names in which such holder wishes
the certificate or certificates for Common Stock and for any
shares of Series A Preferred Stock not to be so converted to
be issued and (ii) the address to which such holder wishes
delivery to be made of such new certificates to be issued
upon such conversion.
(C) Upon surrender of certificates representing Series A
Preferred Stock for conversion, the Corporation shall issue
and send by hand delivery (with receipt to be acknowledged)
or by first class mail, postage prepaid, to the holder
thereof or to such holder's designee, at the address
designated by such holder, a certificate for the shares of
Common Stock to which such holder shall be entitled upon
conversion. If all of such shares of Series A Preferred
Stock, are not converted, the Corporation shall issue and
deliver to such holder or such holder's designee a new
certificate representing the shares of Series A Preferred
Stock which shall not have been converted.
<PAGE>
- 6 -
(D) The issuance by the Corporation of shares of Common
Stock upon a conversion of shares of Series A Preferred
Stock into shares of Common Stock made at the option of the
holder thereof shall be effective as of the earlier of (i)
the delivery to such holder or such holder's designee of the
certificates representing the shares of Common Stock issued
upon conversion thereof or (ii) the commencement of business
on the second business day after the surrender of the
certificate or certificates for the shares of Series A
Preferred Stock to be converted, duly assigned or endorsed
for transfer to the Corporation (or accompanied by duly
executed stock powers relating thereto) as provided by
Section 5(B) hereof. On and after the effective day of
conversion, the person or persons entitled to receive the
Common Stock issuable upon such conversion shall be treated
for all purposes as the record holder or holders of such
shares of Common Stock, but no allowance or adjustment shall
be made in respect of dividends payable to Holders of Common
Stock in respect of any period prior to such effective date.
The Corporation shall not be obligated to pay any dividends
which shall have been declared and shall be payable to
holders of shares of Series A Preferred Stock on a Dividend
Payment Date if such Dividend Payment Date for such dividend
is subsequent to the effective date of conversion of such
shares.
(E) Cash shall be paid in lieu of the issuance of fractional
shares of Common Stock.
(F) The Corporation shall at all times reserve and keep
available out of its authorized and unissued Common Stock,
solely for issuance upon the conversion of shares of Series
A Preferred Stock as herein provided, free from any
preemptive rights, such number of shares of Common Stock as
shall from time to time be issuable upon the conversion of
all the shares of Series A Preferred Stock then outstanding.
Nothing contained herein shall preclude the Corporation from
issuing shares of Common Stock held in its treasury upon the
conversion of shares of Series A Preferred Stock into Common
Stock pursuant to the terms hereof. The corporation shall
prepare and shall use its best efforts to obtain and keep in
force such governmental or regulatory permits or other
authorizations as may be required by law.
<PAGE>
- 7 -
Section 6. Redemption At the Option of the Corporation.
(A) The Series A Preferred Stock shall be redeemable, in
whole or in part, at the option of the Corporation at any
time after October 1, 1990, at the following redemption
prices per share:
During the Twelve Month
Period Beginning October 1 Price Per Share
1990 $108.00
1991 107.00
1992 106.00
1993 105.00
1994 104.00
1995 103.00
1996 102.00
1997 101.00
and thereafter at $100 per share, plus, in each case, an
amount equal to all accrued and unpaid dividends thereon to
the date fixed for redemption. Payment of the redemption
price shall be made by the Corporation in cash or shares of
Common Stock, or a combination thereof, as permitted by
paragraph (D) of this Section 6. From and after the date
fixed for redemption, dividends on shares of Series A
Preferred Stock called for redemption will cease to accrue,
such shares will no longer be deemed to be outstanding and
all rights in respect of such shares of the Corporation
shall cease, except the right to receive the redemption
price. If less than all of the outstanding shares of Series
A Preferred Stock are to be redeemed, the Corporation shall
either redeem a portion of the shares of each holder
determined pro rata based on the number of shares held by
each holder or shall select the shares to be redeemed by
lot, as may be determined by the Board of Directors of the
Corporation.
(B) Unless otherwise required by law, notice of redemption
will be sent to the holders of Series A Preferred Stock at
the address shown on the books of the Corporation or any
transfer agent for the Series A Preferred Stock by first
class mail, postage prepaid, mailed not less than twenty
(20) days nor more than sixty (60) days prior to the
redemption date. Each such notice shall state: (i) the
redemption date; (ii) the total number of shares of the
Series A Preferred Stock to be redeemed and, if fewer than
all the shares held by such holder are to be
<PAGE>
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redeemed, the number of such shares to be redeemed from such
holder; (iii) the redemption price; (iv) the place or places
where certificates for such shares are to be surrendered for
payment of the redemption price; (v) that dividends on the
shares to be redeemed will cease to accrue on such
redemption date; and (vi) the conversion rights of the
shares to be redeemed, the period within which conversion
rights may be exercised, and the Conversion Price and number
of shares of Common Stock issuable upon conversion of a
share of Series A Preferred Stock at that time. Upon
surrender of the certificate for any shares so called for
redemption and not previously converted (properly endorsed
or assigned for transfer, if the Board of Directors of the
Corporation shall so require and the notice shall so state),
such shares shall be redeemed by the Corporation at the date
fixed for redemption and at the redemption price set forth
in this Section 6.
(C) If the Plan is terminated in accordance with its terms,
the Corporation shall, as soon thereafter as practicable,
call for redemption all then outstanding shares of Series A
Preferred Stock at the price determined pursuant to the
provisions of paragraph (A) of this Section 6.
(D) The Corporation, at its option, may make payment of the
redemption price required upon redemption of shares of
Series A Preferred Stock in cash or in shares of Common
Stock, or in a combination of such shares and cash, any such
shares of Common Stock to be valued for such purposes at
their Fair Market Value (as defined in paragraph (G) of
Section 9 hereof).
Section 7. Other Redemption Rights.
Shares of Series A Preferred Stock shall be redeemed by the
Corporation in shares of Common Stock, valued at the Current
Market Price, at a redemption price of $100.00 per share
plus accrued and unpaid dividends thereon to the date fixed
for redemption, at the option of the holder, at any time and
from time to time upon notice to the Corporation given not
less than five (5) business days prior to the date fixed by
the holder in such notice for such redemption, upon
certification by such holder to the Corporation of the
following events: (i) when and to the extent necessary for
such holder to provide for distributions required to be made
to participants under, or to satisfy an investment election
provided to participants in accordance with, the Plan, or
any successor plan; or (ii) if the
<PAGE>
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Plan is not initially determined by the Internal Revenue
Service to be qualified within the meaning of 401(a) and
4975(e)(7) of the Internal Revenue Code of 1986, as amended.
Section 8. Consolidation, Merger, etc.
(A) If the Corporation shall consummate any consolidation or
merger or similar business combination, pursuant to which
the outstanding shares of Common Stock are by operation of
law exchanged solely for or changed, reclassified or
converted solely into stock of any successor- or resulting
corporation (including the Corporation) that constitutes
"qualifying employer securities" with respect to a holder of
Series A Preferred Stock within the meaning of Section
409(e) of the Internal Revenue Code of 1986, as amended, and
Section 407(c)(5) of the Employee Retirement Income Security
Act of 1974, as amended, or any successor provisions of law,
and, if applicable, for a cash payment in lieu of fractional
shares, if any, the shares of Series A Preferred Stock of
such holder shall, in connection with such consolidation,
merger or similar business combination, be assumed by and
shall become preferred stock of such successor or resulting
corporation, having in respect of such corporation, insofar
as possible, the same powers, preferences and relative,
participating, optional or other special rights (including
the redemption rights provided by Sections 6, 7 and 8
hereof), and the qualifications, limitations or restrictions
thereon, that the Series A Preferred Stock shall be
convertible, otherwise on the terms and conditions provided
by Section 5 hereof, into the number and kind of qualifying
employer securities so receivable by a holder of the number
of shares of Common Stock into which such shares of Series A
Preferred Stock could have been converted immediately prior
to such transaction; provided, however, that if by virtue of
the structure of such transaction, a holder of Common Stock
is required to make an election with respect to the nature
and kind of consideration to be received in such
transaction, which election cannot practicably be made by
the holders of the Series A Preferred Stock, then the shares
of Series A Preferred stock shall, by virtue of such
transaction and on the same terms as apply to the holders of
Common Stock, be converted into or exchanged for the
aggregate amount of stock, securities, cash or other
property (payable in kind) receivable by a holder of the
number of shares of Common Stock into which such shares of
Series A Preferred Stock could have been converted
immediately prior to such transaction if such holder of
Common Stock failed to exercise any rights of election to
receive any kind or amount of stock, securities, cash or
other property
<PAGE>
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(other than such qualifying employer securities and a cash
payment, if applicable, in lieu of fractional shares)
receivable upon such transaction (provided that, if the kind
or amount of qualifying employer securities receivable upon
such transaction is not the same for each non-electing
share, then the kind and amount so receivable upon such
transaction for each non-electing share shall be the kind
and amount so receivable per share by the plurality of the
non-electing shares). The rights of the Series A Preferred
Stock as preferred stock of such successor or resulting
corporation shall successively be subject to adjustments
pursuant to Section 9 hereof after any such transaction as
nearly equivalent as practicable to the adjustment provided
for by such section prior to such transaction. The
Corporation shall not consummate any such merger,
consolidation or similar transaction unless all then
outstanding shares of Series A Preferred Stock shall be
assumed and authorized by the successor or resulting
corporation as aforesaid.
(B) In the event that the Corporation shall consummate any
consolidation or merger or similar business combination,
pursuant to which the outstanding shares of Common Stock are
by operation of law exchanged for or changed, reclassified
or converted into other stock or securities or cash or any
other property, or any combination thereof, other than any
such consideration which is constituted solely of qualifying
employer securities (as referred to in paragraph (A) of this
Section 8) and cash payments, if applicable, in lieu of
fractional shares, outstanding shares of Series A Preferred
Stock shall, without any action on the part of the
Corporation or any holder thereof (but subject to paragraph
(C) of this Section 8), be automatically converted by virtue
of such merger, consolidation or similar transaction
immediately prior to such consummation into the number of
shares of Common Stock into which such shares of Series A
Preferred Stock could have been converted at such time so
that each share of Series A Preferred Stock shall, by virtue
of such transaction and on the same terms as apply to the
holders of Common Stock, be converted into or exchanged for
the aggregate amount of stock, securities, cash or other
property (payable in like kind) receivable by a holder of
the number of shares of Common Stock into which such shares
of Series A Preferred Stock could have been converted
immediately prior to such transaction; provided, however,
that if by virtue of the structure of such transaction, a
holder of Common Stock is required to make an election with
respect to the nature and kind of consideration to be
received in such transaction, which election cannot
practicably be made by the holders of the Series
<PAGE>
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A Preferred Stock, then the shares of Series A Preferred
Stock shall, by virtue of such transaction and on the same
terms as apply to the holders of Common Stock, be converted
into or exchanged for the aggregate amount of stock,
securities, cash or other property (payable in kind)
receivable by a holder of the number of shares of Common
Stock into which such shares of Series A Preferred Stock
could have been converted immediately prior to such
transaction if such holder of Common Stock failed to
exercise any rights of election as to the kind or amount of
stock, securities, cash or other property receivable upon
such transaction in not the same for each non-electing
share, then the kind and amount of stock, securities, cash
or other property receivable upon such transaction for each
non-electing share shall be the kind and amount so
receivable per share by a plurality of the non-electing
shares).
(C) In the event the Corporation shall enter into any
agreement providing for any consolidation or merger or
similar business combination described in paragraph (B) of
this Section 8, then the Corporation shall as soon as
practicable thereafter (and in any event at least ten (10)
business days before consummation of such transaction) give
notice of such agreement and the material terms thereof to
each holder of Series A Preferred Stock and each such holder
shall have the right to elect, by written notice to the
Corporation, to receive, upon consummation of such
transaction (if and when such transaction is consummated),
from the Corporation or the successor of the Corporation, in
redemption and retirement of such Series A Preferred Stock,
a cash payment equal to the amount payable in respect of
shares of Series A Preferred Stock upon liquidation of the
Corporation pursuant to Section 4 thereof. No such notice of
redemption shall be effective unless given to the
Corporation prior to the close of business on the fifth
business day prior to consummation of such transaction,
unless the Corporation or the successor of the Corporation
shall waive such prior notice, but any notice of redemption
so given prior to such time may be withdrawn by notice of
withdrawal given to the Corporation prior to the close of
business on the fifth business day prior to consummation of
such transaction.
<PAGE>
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Section 9. Anti-dilution Adjustments.
(A) In the event the Corporation shall, at any time or from
time to time while any of the shares of the Series A
Preferred Stock are outstanding, (i) pay a dividend or make
a distribution in respect of the Common Stock in shares of
Common Stock, (ii) subdivide the outstanding shares of
Common Stock, or (iii) combine the outstanding shares of
Common Stock into a smaller number of shares, in each case
whether by reclassification of shares, recapitalization of
the Corporation (including a recapitalization effected by a
merger or consolidation to which Section 8 hereof does not
apply) or otherwise, the Conversion Price in effect
immediately prior to such action shall be adjusted by
multiplying such Conversion Price by a fraction, the
numerator of which is the number of shares of Common Stock
outstanding immediately before such event, and the
denominator of which is the number of shares of Common Stock
outstanding immediately after such event. An adjustment made
pursuant to this paragraph 9(A) shall be given effect, upon
payment of such a dividend or distribution, as of the record
date for the determination of stockholders entitled to
receive such dividend or distribution (on a retroactive
basis) and in the case of a subdivision or combination shall
become effective immediately as of the date thereof.
(B) In the event that the Corporation shall, at any time or
from time to time while any of the shares of Series A
Preferred Stock are outstanding, issue to holder of shares
of Common Stock as a dividend or distribution, including by
way of a reclassification of shares or a recapitalization of
the Corporation, any right or warrant to purchase shares of
Common Stock (but not including as such right or warrant any
security convertible into or exchangeable for shares of
Common Stock) at a purchase price per share less than the
Fair Market Value (as hereinafter defined) of a share of
Common Stock on the date of issuance of such right or
warrant, then, subject to the provisions of paragraphs (D)
and (E) of this Section 9, the Conversion Price shall be
adjusted by multiplying such Conversion Price by a fraction,
the numerator of which shall be the number of shares of
Common Stock outstanding immediately before such issuance of
rights or warrants plus the number of shares of Common Stock
which could be purchased at the Fair Market Value of a share
of Common Stock at the time of such issuance for the maximum
aggregate consideration payable upon exercise in full of all
such rights or warrants, and the denominator of which shall
be the number of shares of Common Stock outstanding
immediately
<PAGE>
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before such issuance of rights or warrants plus the maximum
number of shares of Common Stock that could be acquired upon
exercise in full of all such rights and warrants.
(C) In the event the Corporation shall, at any time or from
time to time while any of the shares of Series A Preferred
Stock are outstanding, make an Extraordinary Distribution
(as hereinafter defined) in respect of the Common Stock,
whether by dividend, distribution, reclassification of
shares or recapitalization of the Corporation (including a
recapitalization or reclassification effected by a merger or
consolidation to which Section 8 hereof does not apply) or
effect a Pro Rata Repurchase (as hereinafter defined) of
Common Stock, the Conversion Price in effect immediately
prior to such Extraordinary Distribution or Pro Rata
Repurchase shall, subject to Paragraphs (D) and (E) of this
Section 9, be adjusted by multiplying such Conversion Price
by the fraction the numerator of which is (i) the product of
(x) the number of shares of Common Stock outstanding
immediately before such Extraordinary Distribution or Pro
Rata Repurchase multiplied by (y) the Fair Market Value of a
share of Common Stock on the day before the exdividend date
with respect to an Extraordinary Distribution which is paid
in cash and on the distribution date with respect to an
Extraordinary Distribution which is paid other than in cash,
or on the applicable expiration date (including all
extensions thereof) of any tender offer which is a Pro Rata
Repurchase, or on the date of purchase with respect to any
Pro Rata Repurchase which is not a tender offer, as the case
may be, minus (ii) the Fair Market Value of the
Extraordinary Distribution or the aggregate purchase price
of the Pro Rata Repurchase, as the case may be, and the
denominator of which shall be the product of (a) the number
of shares of Common Stock outstanding immediately before
such Extraordinary Dividend or Pro Rata Repurchase minus, in
the case of a Pro Rata Repurchase, the number of shares of
Common Stock repurchased by the Corporation multiplied by
(b) the Fair Market Value of a share of Common Stock on the
day before the ex-dividend date with respect to an
Extraordinary Distribution which is paid in cash and on the
distribution date with respect to an Extraordinary
Distribution which is paid other than in cash, or on the
applicable expiration date (including all extensions
thereof) of any tender offer which is a Pro Rata Repurchase
or on the date of purchase with respect to any Pro Rata
Repurchase which is not a tender offer, as the case may be.
The Corporation shall send each holder of Series A Preferred
Stock (i) notice of its intent-to make any dividend or
distribution and (ii) notice of any offer by the Corporation
to
<PAGE>
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make a Pro Rata Repurchase, in each case at the same time
as, or as soon as practicable after, such offer is first
communicated (including by announcement of a record date in
accordance with the rules of any stock exchange on which the
Common Stock is listed or admitted to trading) to holders of
Common Stock. Such notice shall indicate the intended record
date and the amount and nature of such dividend or
distribution, or the number of shares subject to such offer
for a Pro Rata Repurchase and the purchase price payable by
the Corporation pursuant to such offer, as well as the
Conversion Price and the number of shares of Common Stock
into which a share of Series A Preferred Stock may be
converted at such time.
(D) Notwithstanding any other provisions of this Section 9,
the Corporation shall not be required to make any adjustment
to the Conversion Price unless such adjustment would require
an increase or decrease of at least one percent (1%) in the
Conversion Price. Any lesser adjustment shall be carried
forward and shall be made no later than the time of, and
together with, the next subsequent adjustment which,
together with any adjustment or adjustments so carried
forward, shall amount to an increase or decrease of at least
one percent (1%) in the Conversion Price.
(E) If the Corporation shall make any dividend or
distribution on the Common Stock or issue any Common Stock,
other capital stock or other security of the Corporation or
any rights or warrants to purchase or acquire any such
security, which transaction does not result in an adjustment
to the Conversion Price pursuant to the foregoing provisions
of this Section 9, the Board of Directors of the Corporation
shall consider whether such action is of such a nature that
an adjustment to the Conversion Price should equitable be
made in respect of such transaction. If in such case the
Board of Directors of the Corporation determines that an
adjustment to the Conversion Price should be made, an
adjustment shall be made effective as of such date, as
determined by the Board of Directors of the Corporation. The
determination of the Board of Directors of the Corporation
as to whether an adjustment to the Conversion Price should
be made pursuant to the foregoing provisions of this
Paragraph 9(E), and, if so, as to what adjustment should be
made and when, shall be final and binding on the Corporation
and all stockholders of the Corporation. The Corporation
shall be entitled to make such additional adjustments in the
Conversion Price, in addition to those required by the
foregoing provisions of this Section 9, as shall be
necessary in
<PAGE>
- 15 -
order that any dividend or distribution in shares of capital
stock of the Corporation, subdivision, reclassification or
combination of shares of stock of the Corporation or any
recapitalization of the Corporation shall not be taxable to
the holders of the Common Stock.
(F) For purposes of this Resolution, the following
definitions shall apply:
"Business Day" shall mean each day that is not a Saturday,
Sunday or a day on which state or federally chartered
banking institutions in Cincinnati, Ohio are not required to
be open.
"Current Market Price" of publicly traded shares of Common
Stock or any other class of capital stock or other security
of the Corporation or any other issuer for any day shall
mean the last reported sales price, regular way, or, in the
event that no sale takes place on such day, the average of
the reported closing bid and asked prices, regular way, in
either case as reported on the New York Stock Exchange
Composite Tape or, if such security is not listed or
admitted to trading on the New York Stock Exchange, on the
principal national securities exchange on which security is
listed or admitted to trading or, if not listed or admitted
to trading on any national securities exchange, on the
NASDAQ National Market System or, if such security is not
quoted on such National Market System, the average of the
closing bid and asked prices on each such day in the over
the counter marked as reported by NASDAQ or, if bid and
asked prices for such security on each such day shall not
have been reported through NASDAQ, the average of the bid
and asked prices for such day as furnished by any New York
Stock Exchange member firm regularly making a market in such
security selected for such purpose by the Board of Directors
of the Corporation or a committee thereof, in each case, on
each trading day during the Adjustment Period. "Adjustment
Period" shall mean the period of five (5) consecutive
trading days preceding, and including, the date as of which
the Fair Market Value of a security is to be determined.
"Extraordinary Distribution" shall mean any dividend or
other distribution to holders of Common Stock (effected
while any of the shares of Series A Preferred Stock are
outstanding) (i) of cash, where the aggregate amount of such
cash dividend or distribution together with the amount of
all cash dividends and distributions made during the
preceding period of
<PAGE>
- 16 -
twelve (12) months, when combined with the aggregate amount
of all Pro Rata Repurchases (for this purpose, including
only that portion of the aggregate purchase price of such
Pro Rata Repurchase which is in excess of the Fair Market
Value of the Common Stock repurchased as determined on the
applicable expiration date (including all extensions
thereof) of any tender offer or exchange offer which is a
Pro Rata Repurchase, or the date of purchase with respect to
any other Pro Rata Repurchase which is not a tender offer or
exchange offer made during such period), exceeds twelve and
one-half percent (12-1/2%) of the aggregate Fair Market
Value of all shares of--Common Stock outstanding on the day
before the ex-dividend date with respect to such
Extraordinary distribution which is paid in cash and on the
distribution date with respect to an Extraordinary
Distribution which is paid other than in cash,, and/or (ii)
of any shares of capital stock of the Corporation (other
than shares of Common Stock), other securities of the
Corporation (other than securities of the type referred to
in Paragraph (B) of this Section 9), evidences of
indebtedness of the Corporation or any other person or any
other property (including shares of any subsidiary of the
Corporation) or any combination thereof. The Fair Market
Value of an Extraordinary Distribution for purposes of
Paragraph (C) of this Section 9 shall be equal to the sum of
the Fair Market Value of such Extraordinary Distribution
plus the amount of any cash dividends which are not
Extraordinary Distributions made during such twelve (12)
month period and not previously included in the calculation
of an adjustment pursuant to Paragraph (C) of this Section
9.
"Fair Market Value" shall mean, as to shares of Common Stock
or any other class of capital stock or securities of the
Corporation or any other issuer which are publicly traded,
the average of the Current Market Prices of such shares or
securities for each day of the Adjustment Period. As to any
security which is not publicly traded or any other asset,
"Fair Market Value" shall be as determined by the Board of
Directors in its good faith judgment.
"Pro Rata Repurchase" shall mean any purchase of shares of
Common Stock by the Corporation or any subsidiary thereof,
whether for cash, shares of capital stock of the
Corporation, other securities of the Corporation, evidences
of indebtedness of the Corporation or any other person or
any other property (including shares of a subsidiary of the
Corporation), or any combination thereof, effected while any
of the shares of Series A Preferred Stock are outstanding,
pursuant to any tender
<PAGE>
- 17 -
offer or exchange offer subject to Section 13(e) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or any successor provision of law, or pursuant to any
other offer available to substantially all holders of Common
Stock; provided, however, that no purchase of shares by the
Corporation, or any subsidiary thereof made in open market
transactions shall be deemed a Pro Rata Repurchase. For
purposes of this paragraph 9(F), shares shall be deemed to
have been purchased by the Corporation or any subsidiary
thereof "in open market transactions" if they have been
purchased substantially in accordance with the requirements
of Rule 10b-18 as in effect under the Exchange Act on the
date shares of Series A Preferred Stock are initially issued
by the Corporation or on such other terms and conditions as
the Corporation or on such other and conditions as the Board
of Directors of the Corporation or a committee thereof shall
have determined are reasonably designed to prevent such
purchases from having a material effect on the trading
market for the Common Stock.
(G) Whenever an adjustment to the Conversion Price of the
Series A Preferred Stock is required pursuant to this
Resolution, the Corporation shall forthwith place on file
with the transfer agent for the Common Stock and the Series
A Preferred Stock, and with the Secretary of the
Corporation, a statement signed by two officers of the
Corporation stating the adjusted Conversion Price determined
as provided herein and the resulting conversion ratio, and
the voting rights (as appropriately adjusted), of the Series
A Preferred Stock. Such statement shall set forth in
reasonable detail such facts as shall be necessary to show
the reason and the manner of computing such adjustment,
including any determination of Fair Market Value involved in
such computation. Promptly after each adjustment to the
Conversion Price and the related voting rights of the Series
A Preferred Stock, the Corporation shall mail a notice
thereof and of the then prevailing conversion ratio to each
holder of shares of the Series A Preferred Stock.
Section 10. Ranking; Attributable Capital and Adequacy of
Surplus; Retirement of Shares.
(A) The Series A Preferred Stock shall rank senior to the
Common Stock as to the payment of dividends and the
distribution of assets on liquidation, dissolution and
winding up of the Corporation, and, unless otherwise
provided in the Articles of Incorporation of the
Corporation, as the same may be amended, relating to a
subsequent series of Preferred Stock, par
<PAGE>
- 18 -
value $1.00 per share, of the Corporation, the Series A
Preferred Stock shall rank junior to all other series of the
Corporation's Preferred Stock, par value $1.00 per share, as
to the payment of dividends and the distribution of assets
on liquidation, dissolution or winding up.
(B) Any shares of Series A Preferred Stock acquired by the
Corporation by reason of the conversion or redemption of
such shares as provided by this Resolution, or otherwise so
acquired, shall be retired as shares of Series A Preferred
Stock and restored to the status of authorized but unissued
shares of Preferred Stock, par value $1.00 per share, of the
Corporation, undesignated as to series, and may thereafter
be reissued as part of a new series of such Preferred Stock
as permitted by law.
Section 11. Miscellaneous.
(A) All notices referred to herein shall be in writing, and
all notices hereunder shall be deemed to have been given
upon the earlier of receipt thereof or three (3) business
days after the mailing thereof if sent by registered mail
(unless first-class mail shall be specifically permitted for
such notice under the terms of this Resolution) with postage
prepaid, addressed: (i) if to the Corporation, to its office
at One East Fourth Street, Cincinnati, Ohio 45202
(Attention: Secretary) or to the transfer agent for the
Series A Preferred Stock, or other agent of the Corporation
designated as permitted by this Resolution or (ii) if to any
holder of the Series A Preferred Stock or Common Stock, as
the case may be- to such holder at the address of such
holder as listed in the stock record books of the
Corporation (which may include the records of any transfer
agent for the Series A Preferred Stock or ('"Common Stock,
as the case may be) or (iii) to such other address as the
Corporation or any such holder, as the case may be shall
have designated by notice similarly given.
(B) The term "Common Stock" as used in this Resolution means
the Corporation's Common Stock, without par value, as the
same exists at the date of filing of an Amendment to the
Articles of Incorporation relating to Series A Preferred
Stock or any other class of stock resulting from successive
changes or reclassifications of such Common Stock consisting
solely of changes in par value, or from par value to no par
value, or from no par value to par value. In the event that,
at any time as a result of an adjustment made pursuant to
Section 9
<PAGE>
- 19 -
of this Resolution, the holder of any share of the Series A
Preferred Stock upon thereafter surrendering such shares for
conversion, shall become entitled to receive any shares or
other securities of the Corporation other than shares of
Common Stock, the Conversion Price in respect of such other
shares or securities so receivable upon conversion of shares
of Series A Preferred Stock shall thereafter be adjusted,
and shall be subject to further adjustment from time to
time, in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to Common Stock
contained in Section 9 hereof, and the provisions of
Sections 1 through 8, 10 and 11 of this Resolution with
respect to the Common Stock shall apply on like or similar
terms to any such other shares or securities.
(C) The Corporation shall pay any and all stock transfer and
documentary stamp taxes that may be payable in respect of
any issuance or delivery of shares of Series A Preferred
Stock or shares of Common Stock or other securities issued
on account of Series A Preferred Stock pursuant hereto or
certificates representing such shares or securities. The
Corporation shall not, however, be required to pay any such
tax which may be payable in respect of any transfer involved
in the issuance or delivery of shares of Series A Preferred
Stock or Common Stock or other securities in a name other
than that in which the shares of Series A Preferred Stock
with respect to which such shares or other securities are
issued or delivered were registered, or in respect of any
payment to any person with respect to any such shares or
securities other than a payment, to the registered holder
thereof, and shall not be required to make any such
issuance, delivery or payment unless and until the person
otherwise entitled to such issuance, delivery or payment has
paid to the Corporation the amount of any such tax or has
established, to the satisfaction of the Corporation, that
such tax has been paid or is not payable.
(D) The Corporation may appoint, and from time to time
discharge and change, a transfer agent for the Series A
Preferred Stock. Upon any such appointment or discharge of a
transfer agent, the Corporation shall send notice thereof by
first-class mail, postage prepaid, to each holder of record
of Series A Preferred Stock."
<PAGE>
- 20 -
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate of Designations and do affirm the foregoing as
true under the penalties of perjury this 27th day of
September, 1989.
______________________
Name: Allen L. Davis
Title: President
ATTEST:
______________________
Name: Mark E. Magee
Title: Assistant Secretary
<PAGE>
Certificate of Amendment
By Shareholders
to the Articles of Incorporation of
Provident Bancorp, Inc.
(Name of Corporation)
Allen L. Davis, who is [ ] Chairman of the Board [X]
President [ ] Vice President
and Leslie C. Nomeland, who is [X] Secretary [ ] Assistant
Secretary
of the above named Ohio corporation for profit with its
principal location at One E. 4th Street, Cincinnati,
Hamilton County Ohio do hereby certify that (check the
appropriate box and complete the appropriate statements)
[ ] a meeting of the shareholders was duly called for the
purpose of adopting this amendment and held on May 17, 1989,
at which meeting a quorum of the shareholders was present in
person or by proxy, and by the affirmative vote of the
holders of shares entitling them to exercise 83% of the
voting power of the Corporation.
[ ] in a writing signed by all of the shareholders who would
be entitled to notice of a meeting held for that purpose,
the following resolution to amend the articles was adopted:
RESOLVED: That Article Four of the Company's Articles of
Incorporation be, and the same is hereby, amended to
increase the number of authorized common shares to that
paragraph (a) of said Article Four will read, in its
entirety, as follows:
(a) The total number of shares of all classes of stock which
the corporation shall be authorized to issue shall be:
(i) 20 million shares of common stock without par value; and
(ii) 5 million shares non-voting $1.00 Par, Cumulative
Preferred Stock.
IN WITNESS WHEREOF, the above named officers, acting for and
on the behalf of the corporation, have hereto subscribed
their names this 17th day of May, 1989
BY ____________________
President
BY ____________________
Secretary
NOTE: Ohio law does not permit one officer to sign in two
capacities. Two separate signatures are required, even if
this necessitates the election of a second officer before
the filing can be made.
<PAGE>
CERTIFICATE OF AMENDMENT
(BY SHAREHOLDERS)
TO THE ARTICLES OF INCORPORATION OF
PROVIDENT BANCORP, INC.
Joseph F. Rippe, who is (X ) Chairman of the Board ( )
President ( ) Vice President
and Leslie C. Nomeland, who is (X ) Secretary ( )
Assistant Secretary
of the above named Ohio corporation for profit with its
principal location at One East Fourth Street, Cincinnati,
Ohio, do hereby certify that: (check the appropriate box and
complete the appropriate statements)
(X) a meeting of the shareholders was duly called and held
on May 18, 1983, at which meeting a quorum of the
shareholders was present in person or by proxy, and by the
affirmative vote of the holders of shares entitling them to
exercise 66.67% of the voting power of the corporation,
( ) in a writing signed by all of the shareholders who would
be entitled to a notice of a meeting held for that purpose,
the following resolution was adopted to amend the articles:
RESOLVED: That this Company's Articles of Incorporation be
and the same hereby are, amended by adding a seventh article
thereto, which article shall read as follows:
SEVENTH: That the provisions of Ohio Revised Code Section
1701.831 relating to control share acquisitions shall not be
applicable to the corporation.
IN WITNESS WHEREOF, the above named officers, acting for and
on behalf of the corporation, have subscribed their names
this 19th day of May, 1983.
_______________________________
Joseph F. Rippe
Chairman & President
_______________________________
Leslie C. Nomeland
Secretary
NOTE: Ohio law does not permit one officer to sign in two
capacities. Two separate signatures are required, even if
this necessitates the election of a second officer before
the filing can be made.
<PAGE>
CERTIFICATE OF AMENDMENT
(BY SHAREHOLDERS)
TO THE ARTICLES OF INCORPORATION OF
PROVIDENT BANCORP, INC.
Joseph F. Rippe, who is (X ) Chairman of the Board ( )
President ( ) Vice President
and Leslie C. Nomeland, who is (X ) Secretary ( )
Assistant Secretary
of the above named Ohio corporation for profit with its
principal location at One East Fourth Street, Cincinnati,
Ohio, do hereby certify that: (check the appropriate box and
complete the appropriate statements)
(X) a meeting of the shareholders was duly called and held
on May 19, 1982, at which meeting a quorum of the
shareholders was present in person or by proxy, and by the
affirmative vote of the holders of shares entitling them to
exercise 66.67% of the voting power of the corporation,
( ) in a writing signed by all of the shareholders who would
be entitled to a notice of a meeting held for that purpose,
the following resolution was adopted to amend the articles:
See attached.
IN WITNESS WHEREOF, the above named officers, acting for and
on behalf of the corporation, have subscribed their names
this 19th day of May, 1982.
_______________________________
Joseph F. Rippe
Chairman & President
_______________________________
Leslie C. Nomeland
Secretary
NOTE: Ohio law does not permit one officer to sign in two
capacities. Two separate signatures are required, even if
this necessitates the election of a second officer before
the filing can be made.
<PAGE>
RESOLVED: That Article Fourth of the Company's Articles of
Incorporation be, and the same is hereby, amended by adding
the phrase "having a stated value of $6.00 per share" to
paragraph (a)(i) thereof, so that the said paragraph (a)
will read, in its entirety, as follows:
(a) The total number of shares of all classes of stock which
the corporation shall be authorized to issue shall be:
(i) 10 million shares of Common Stock without par value,
having a stated value of $6.00 Per share; and
(ii) 5 million shares of Non-Voting, $1 Par, Cumulative
Preferred Stock.
<PAGE>
CERTIFICATE OF AMENDMENT
(BY SHAREHOLDERS)
TO THE ARTICLES OF INCORPORATION OF
PROVIDENT BANCORP, INC.
Joseph F. Rippe, who is (X ) Chairman of the Board ( )
President ( ) Vice President
and Leslie C. Nomeland, who is (X ) Secretary ( )
Assistant Secretary
of the above named Ohio corporation for profit with its
principal location at One East Fourth Street, Cincinnati,
Ohio, do hereby certify that: (check the appropriate box and
complete the appropriate statements)
( ) a meeting of the shareholders was duly called and held
on __________ , 19___, at which meeting a quorum of the
shareholders was present in person or by proxy, and by the
affirmative vote of the holders of shares entitling them to
exercise______ % of the voting power of the corporation,
(X) in a writing signed by all of the shareholders who would
be entitled to a notice of a meeting held for that purpose,
the following resolution was adopted to amend the articles:
See Page 2 attached hereto.
IN WITNESS WHEREOF, the above named officers, acting for and
on behalf of the corporation, have subscribed their names
this 4th day September, l980.
_______________________________
Joseph F. Rippe
Chairman & President
_______________________________
Leslie C. Nomeland
Secretary
NOTE: Ohio law does not permit one officer to sign in two
capacities. Two separate signatures are required, even if
this necessitates the election of a second officer before
the filing can be made.
<PAGE>
RESOLVED: That Article Fourth of the Company's Articles of
Incorporation be, and the same is hereby, amended to read as
follows:
Fourth:
(a) The total number of shares of all classes of stock which
the corporation shall be authorized to issue shall be:
(i) 10 million shares of Common Stock without par value; and
(ii) 5 million shares of Non-Voting, $1 Par, Cumulative
Preferred Stock.
(b) The Board of Directors of the corporation shall have the
right to adopt amendments to the Articles in respect of any
unissued or treasury shares of any class and thereby to fix
or change: the division of such shares into series and the
description and authorized number of shares of each series;
the dividend rate; the dates of payment of dividends and the
dates from which they are cumulative; liquidation price;
redemption rights and price; sinking fund requirements;
conversion rights; and restrictions on the issuance of
shares of any class or series.
(c) No holder of shares of any class of the corporation
shall be entitled as such, as a matter of right, to
subscribe for or purchase shares of any class, now or
hereafter authorized, or to purchase or subscribe for
securities convertible into or exchangeable for shares of
the corporation or to which shall be attached or appertain
any warrants or rights entitling the holder thereof to
subscribe for or purchase shares, except such rights of
subscription or purchase, if any, at such price or prices,
and upon such terms and conditions as the Board of Directors
in its discretion from time to time may determine.
<PAGE>
ARTICLES OF INCORPORATION
OF
PROVIDENT BANCORP, INC.
The undersigned, who is a citizen of the United States of
America, desiring to form a corporation for profit under the
General Corporation Law of the State of Ohio, does hereby
certify:
FIRST: The name of the corporation shall be Provident
Bancorp, Inc.
SECOND: The principal office of the corporation in the State
of Ohio is to be located in the County of Hamilton, City of
Cincinnati.
THIRD: The purposes for which the corporation is formed are
to engage in any lawful act or activity for which
corporations may be formed under Sections 1701.01 to
1701.93, inclusive, of the Ohio Revised Code.
FOURTH:
(a) The total number of shares of all classes of stock which
the corporation shall be authorized to issue shall be 750
common shares without par value.
(b) No holder of shares of any class of the corporation
shall be entitled as such, as a matter of right, to
subscribe for or purchase shares of any class, now or
hereafter authorized, or to purchase or subscribe for
securities convertible into or exchangeable for shares of
<PAGE>
the corporation or to which shall be attached or appertain
any warrants or rights entitling the holder thereof to
subscribe for or purchase shares, except such rights of
subscription or purchase, if any, at such price or prices,
and upon such terms and conditions as the Board of Directors
in its discretion from time to time may determine.
FIFTH: The minimum amount of stated capital with which the
corporation will commence business shall be One Thousand
Dollars ($1,000.00).
SIXTH: The corporation shall have the right to purchase or
sell any class of shares of the corporation, or to acquire,
hold and dispose of shares of its own capital and rights
thereto from time to time, to such extent and in such manner
and upon such terms as its Board of Directors shall
determine, or in any other manner authorized by law;
provided, no such purchase would cause any impairment of its
capital.
IN WITNESS WHEREOF, the undersigned has hereunto set his
respective hand this 8th day of February , 1980.
_____________________
MARK E. MAGEE
<PAGE>
PLAN OF REORGANIZATION
THIS Plan of Reorganization is entered into on this 29th
day of September, 1995 (the "Agreement"), by and between
Provident Bancorp, Inc., an Ohio corporation ("Provident"),
and Great American Insurance Company and Great American Life
Insurance Company, both Ohio corporations (collectively
"Shareholders").
WHEREAS, Provident desires to engage in this Plan of
Reorganization because it furthers the original intention of
Provident in its issuance of the Series B Shares by allowing
conversion of convertible preferred stock into Provident
common stock and this Plan of Reorganization saves Provident
the time and expense of putting forth an amendment to the
terms of the Series B Shares for the consideration of holders
of Provident common stock; and
WHEREAS, this Agreement sets forth the terms and
conditions upon which Provident shall convert 371,418 of its
shares of Series B, Non-Voting Convertible Preferred Stock
owned by Shareholders ("Series B Shares") into 371,418
shares of its Series C, Non-Voting Convertible Preferred
Stock ("Series C Shares");
NOW, THEREFORE, in consideration of the mutual covenants
and agreements contained herein and other valuable
consideration which is hereby acknowledged, the parties
hereto hereby agree as follows:
1. Exchange of Shares. Effective the date hereof,
subject to the terms and conditions of this Agreement, and in
reliance on the representations, warranties and covenants
contained herein, Shareholders agree to exchange, assign and
deliver free and clear of all liens, claims, options,
proxies, charges and encumbrances of whatever nature to
Provident and Provident agrees to convert the Series B Shares
into Series C Shares at the rate of one share of Series C for
each share of Series B. The terms of the Series C Shares are
as set forth on Exhibit A attached hereto.
2. Representation and Warranties of Shareholders.
Shareholders represent and warrant to Provident that
Shareholders have good and marketable title to the Series B
Shares and there exist no liens, claims, options, proxies,
charges or encumbrances of whatever nature affecting such
Series B Shares.
<PAGE>
3. Acknowledgment of Status of Series B and Series
C Shares. Shareholders acknowledge (i) the Series B Shares
have heretofore been called for redemption by Provident
pursuant to Section 4(a)(i) of Article Fourth of Provident's
Articles of Incorporation relating to the Series B Shares
and (ii) Shareholders own the Series B Shares on the date of
this Agreement subject to Section 4(a)(ii) and all other
applicable provisions thereof. The parties agree that
neither this Agreement nor the consummation of the exchange
provided for herein is intended to change, as a result of the
issuance of the Series C Shares pursuant hereto, the status
of the Series B Shares existing on the date of this Agreement
as a result of Provident's previous call of the Series B
Shares for redemption.
Shareholders agree that the Series C Shares are
intended to be equivalent to the Series B Shares except with
respect to the right of the Shareholders to convert the
Series C Shares and the Series C Shares (i) shall be deemed
to have been called for redemption on the date of their
issuance, September 29, 1995, (the "Redemption Date") and
issued to them as though they have been called for redemption
pursuant to Section 4(a)(i) of Article Fourth of Provident's
Articles of Incorporation relating to the Series C Shares and
(ii) the conversion price (as defined in Provident's Articles
of Incorporation) in effect with respect to the Series C
Shares on the Redemption Date shall be $16.00, resulting in
each Series C Shares being convertible into 6.25 shares of
Common Stock of Provident. Shareholders waive any terms of
Article Fourth of Provident's Articles of Incorporation
relating to the Series C Shares which are inconsistent with
the previous sentence. Shareholders further agree they shall
own the Series C Shares from and after the date of this
Agreement subject to Section 4(a)(ii) and all other
applicable provisions of Provident's Articles of
Incorporation relating to the Series C Shares and that the
following legend shall be placed on the certificates
representing the Series C Shares to such effect:
"NOTICE OF REDEMPTION
The Series C Preferred Shares represented by this
certificate have been called for redemption. The
shares were not redeemed pursuant to Section 4(a)(ii)
of Article Fourth of the Articles of Incorporation of
Provident Bancorp, Inc. relating to the Series C
Preferred Shares. Upon transfer to any person other
than an Original Holder, these shares shall be
automatically converted into Provident Bancorp, Inc.
Common Stock at a Conversion Price of $16 per share."
4. Representations and Warranties of Provident.
Provident represents and warrants to Shareholders as follows:
<PAGE>
(a) Provident is a corporation organized,
validly existing and in good standing under the laws of the
State of Ohio and has the corporate power and authority to
execute and deliver this Agreement;
(b) The execution and delivery of this Agreement
and the Series C Shares have been duly and validly authorized
by all necessary corporate action by Provident, and the
Series C Shares are validly issued, fully paid and non-
assessable shares; and
(c) To the best of Provident's knowledge, there
is no action, suit or proceeding at law or in equity or by or
before any court, governmental agency or other
instrumentality now pending which seeks to enjoin the
consummation of the transactions contemplated by this
Agreement, nor has any such action been threatened.
5. Legends. Shareholders agree to the placement on
the certificates representing the Series C Shares of any
legends presently appearing on the front or reverse of the
certificates representing Series B Shares.
6. Miscellaneous.
(a) This Agreement constitutes the entire
Agreement and supersedes all prior agreements and
understandings, whether oral or written, among the parties
hereto with respect to the subject matter hereof. This
Agreement may not be amended orally, but only by an
instrument in writing signed by each of the parties to this
Agreement.
(b) This Agreement shall be binding upon the
parties hereto and shall inure to the benefit of and be
enforceable by the successors and assigns of the parties
hereto.
(c) All representations, warranties and
covenants shall survive the execution of this Agreement.
(d) This Agreement may be executed in any number
of counterparts, each of which shall, when executed, be
deemed to be an original and all of which shall be deemed to
be one and the same instrument.
(e) This Agreement shall be governed by and
construed and enforced in accordance with the laws of the
State of Ohio, without reference to the conflict of laws
principals thereof.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned parties
has caused this Agreement to be executed on the date first
above written.
PROVIDENT BANCORP, INC.
By:___________________________________
Title:
GREAT AMERICAN INSURANCE COMPANY
By:____________________________________
Karen Holley Horrell
Title: Senior Vice President,
General Counsel & Secretary
GREAT AMERICAN LIFE INSURANCE COMPANY
By:____________________________________
Mark F. Muething
Title: Senior Vice President,
General Counsel & Secretary
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from
Provident Bancorp, Inc.'s 10-Q for September 30, 1995 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 175,801
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 108,150
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 618,664
<INVESTMENTS-CARRYING> 255,286
<INVESTMENTS-MARKET> 255,178
<LOANS> 4,646,366
<ALLOWANCE> 55,830
<TOTAL-ASSETS> 5,955,257
<DEPOSITS> 4,051,464
<SHORT-TERM> 862,115
<LIABILITIES-OTHER> 121,208
<LONG-TERM> 508,035
<COMMON> 10,437
0
37,000
<OTHER-SE> 364,998
<TOTAL-LIABILITIES-AND-EQUITY> 5,955,257
<INTEREST-LOAN> 301,310
<INTEREST-INVEST> 35,970
<INTEREST-OTHER> 886
<INTEREST-TOTAL> 338,166
<INTEREST-DEPOSIT> 144,045
<INTEREST-EXPENSE> 191,360
<INTEREST-INCOME-NET> 146,806
<LOAN-LOSSES> 9,000
<SECURITIES-GAINS> (92)
<EXPENSE-OTHER> 102,556
<INCOME-PRETAX> 77,616
<INCOME-PRE-EXTRAORDINARY> 52,485
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,485
<EPS-PRIMARY> 3.15
<EPS-DILUTED> 2.85
<YIELD-ACTUAL> 3.82
<LOANS-NON> 15,227
<LOANS-PAST> 6,309
<LOANS-TROUBLED> 4,886
<LOANS-PROBLEM> 54,810
<ALLOWANCE-OPEN> 51,979
<CHARGE-OFFS> 11,054
<RECOVERIES> 5,905
<ALLOWANCE-CLOSE> 55,830
<ALLOWANCE-DOMESTIC> 55,830
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
