<PAGE> 1
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Provident Bancorp, Inc.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
(5) Total fee paid:
Not Applicable
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
Not Applicable
(2) Form, Schedule or Registration Statement No.:
Not Applicable
(3) Filing Party:
Not Applicable
(4) Date Filed:
Not Applicable
<PAGE> 2
PROVIDENT BANCORP, INC.
ONE EAST FOURTH STREET
CINCINNATI, OHIO 45202
______________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
______________________________
To our Shareholders:
The Annual Meeting of Shareholders of Provident Bancorp, Inc. will be held
on the 3rd floor of the Provident Tower, One East Fourth Street, Cincinnati,
Ohio on May 16, 1996, at 9:00 a.m., (Eastern Time). The meeting will be held for
the following purposes:
1. To elect seven Directors;
2. To amend and restate the 1988 Stock Option Plan; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on April 11, 1996,
are entitled to receive notice of and to vote at the meeting or any adjournment
thereof.
You are cordially invited to be present at the meeting so that you can
vote in person. Whether or not you plan to attend the meeting, please date, sign
and return the accompanying proxy card in the enclosed, postage-paid envelope.
If you do attend the meeting, you may either vote by proxy or revoke your proxy
and vote in person. You may also revoke your proxy at any time before the voting
by written revocation or by submitting a later- dated proxy.
By order of the Board of Directors
Allen L. Davis
President
Cincinnati, Ohio
April 16, 1996
<PAGE> 3
PROVIDENT BANCORP, INC.
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Provident Bancorp, Inc. ("Bancorp" or
"Company") to be voted at the Annual Meeting of Shareholders to be held at 9:00
a.m. (Eastern Time) on May 16, 1996 on the 3rd floor of the Provident Tower, One
East Fourth Street, Cincinnati, Ohio, and at any adjournment thereof.
Bancorp will pay the cost of soliciting proxies, including reimbursement
of brokerage firms, banks and other nominees for their actual out-of-pocket
expenses in forwarding proxy materials to beneficial owners of Bancorp Common
Stock.
Any shareholder who executes the accompanying proxy may revoke it any time
before it is exercised by submitting either written notice to the Secretary of
the Company or a duly executed proxy bearing a later date. Properly executed
proxies not revoked will be voted as specified thereon.
The approximate date on which this Proxy Statement and the accompanying
proxy card were first mailed to shareholders is April 16, 1996.
VOTING AT THE MEETING
RECORD DATE; SHARES OUTSTANDING
Only shareholders of record at the close of business on April 11, 1996 are
entitled to notice of and to vote at the meeting. On that date there were
17,558,092 shares of Common Stock (the only class of voting securities of
Bancorp) outstanding. Each share is entitled to one vote on each matter to be
voted at the meeting.
<PAGE> 4
Principal Shareholders
The following shareholders are the only persons known by the
Company to own beneficially 5% or more of its outstanding Common
Stock as of March 31, 1996:
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership (a) of Class (b)
<S> <C> <C>
American Financial Group, Inc. 2,878,346 (c) 16.4%
Carl H. Lindner 863,832 (d)(e) 4.9%
Carl H. Lindner III 911,228 (d)(f) 5.2%
S. Craig Lindner 955,360 (d)(g) 5.4%
Keith E. Lindner 928,849 (d)(h) 5.3%
One East Fourth Street
Cincinnati, Ohio 45202
Robert D. Lindner 1,080,735 (i) 6.2%
3955 Montgomery Road
Cincinnati, Ohio 45212
Lou Ann Flint 1,474,114 (j) 8.4%
49 East Fourth Street
Cincinnati, Ohio 45202
</TABLE>
(a) Unless otherwise noted, the holder has sole voting and dispositive power
with respect to the shares listed.
(b) The percentages of outstanding shares of Common Stock beneficially owned
(within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934) by Carl H. Lindner III, S. Craig Lindner and Keith E. Lindner are
4.4%, 5.3% and 6.2%, respectively, after attributing the shares held in
various trusts for the benefit of the minor children of Carl H. Lindner
III and S. Craig Lindner (for which Keith E. Lindner acts as trustee with
voting and dispositive power) to Keith E. Lindner.
(c) Includes 2,439,146 shares held by subsidiaries of American Financial
Group, Inc. ("AFG") and 439,200 shares issuable upon conversion of the
Company's Series D Convertible Preferred stock held by certain AFG
subsidiaries. Carl H. Lindner, Carl H. Lindner III, S. Craig Lindner,
Keith E. Lindner and trusts for their benefit (collectively the "Lindner
Family"), are the beneficial owners of approximately 44% of AFG's voting
stock, and share with AFG voting and dispositive power with respect to the
shares of Provident Common Stock beneficially owned by AFG. The Lindner
Family and AFG may be deemed to be controlling persons of the Company.
(d) Excludes 2,878,346 shares of Common Stock held by AFG.
(e) Includes 562,177 shares held by his spouse and 35,815 shares held by a
foundation over which he has voting and dispositive power.
<PAGE> 5
(f) Includes 1,854 shares held by his spouse as trustee. Includes 134,188
shares which are held in various trusts for the benefit of his minor
children for which Keith E. Lindner acts as trustee with voting and
dispositive power.
(g) Includes 1,854 shares held by his spouse as trustee, 144,472 shares held
by his spouse as custodian for their minor children and 2,450 shares held
by a foundation over which he has voting and dispositive power. Includes
20,000 shares which are held in various trusts for the benefit of his
minor children for which Keith E. Lindner acts as trustee with voting and
dispositive power.
(h) Includes 1,746 shares he holds as custodian for his minor children and
151,281 shares held in two trusts for the benefit of his minor children,
over which he or his spouse have shared voting and dispositive power. This
number excludes 154,188 shares (described in footnotes (f) and (g) above),
which are held in trusts for the benefit of the minor children of his
brothers, Carl H. Lindner III and S. Craig Lindner over which Keith E.
Lindner has voting and dispositive power but no financial interest.
(i) Includes 162,927 shares held by his spouse and 6,237 shares held by a
foundation over which he has voting and dispositive power.
(j) Includes 1,473,914 shares which are held in a trust for the benefit of the
family of Carl H. Lindner over which Lou Ann Flint has sole voting and
dispositive power but no pecuniary interest. Also includes 200 shares held
by Ms. Flint as custodian for her minor children.
ELECTION OF DIRECTORS
The Proxies solicited by and on behalf of the Board of Directors will be
voted for the seven nominees shown below, unless otherwise directed. In the
event any one or more of the nominees should be unavailable for election,
proxies may be voted for some substitute person or persons. The Company has no
reason to believe that any of the nominees will be unable to serve. In no case,
however, will any proxy be voted for more than the number of directors to be
elected at the Meeting.
The nominees are JACK M. COOK, ALLEN L. DAVIS, THOMAS D. GROTE, JR.,
PHILIP R. MYERS, JOSEPH A. PEDOTO, SIDNEY A. PEERLESS, and JOSEPH A. STEGER. The
seven nominees receiving the highest number of votes cast at the meeting will be
elected as directors of the Company. All of the nominees are presently serving
as directors of Bancorp. See "Management of Bancorp" for a description of the
background, security holdings and other information relating to the nominees.
<PAGE> 6
Each holder of shares of Bancorp Common Stock is entitled to one vote for
each share held in the holder's name on the record date. Shareholders entitled
to vote have the right, in voting to elect directors, to cumulate their votes
and give one nominee the number of votes equal to the number of directors to be
elected multiplied by the number of votes to which their shares are entitled, or
to distribute their votes on the same principle among as many nominees as they
see fit, provided that notice of cumulative voting is given in writing by a
shareholder to the Secretary of Bancorp not less than 48 hours before the time
fixed for the holding of the meeting.
A properly signed proxy card will be voted "FOR" the election of the seven
nominees proposed by the Board of Directors unless authority is withheld to vote
for any of the nominees. The authority solicited by this Proxy Statement
includes discretionary authority to cumulate votes in the election of directors.
If any other matters properly come before the meeting or any adjournment
thereof, each proxy will be voted in the discretion of the proxies named
therein. Abstentions and shares otherwise not voted for any reason, including
broker non-votes will have no effect on the outcome of any vote taken at the
meeting. The principal shareholders have indicated their intention to vote for
the nominees proposed by management.
Proposal To Amend And Restate 1988 Stock Option Plan
At their meeting on November 30, 1995 the Board of Directors approved
certain amendments to the Provident Bancorp 1988 Stock Option Plan (the "1988
Plan") and a restatement of the 1988 Plan document incorporating such
amendments. The Board of Directors is submitting these amendments for
shareholder approval. The amendments among other things, are designed to
preserve the Company's federal income tax deduction for compensation in excess
of $1,000,000 paid to executives named in the compensation table that results
from the exercise of non-qualified options granted under the Plan. A copy of the
restated 1988 Plan is attached to this Proxy Statement as Annex 1. The 1988 Plan
was first approved by Shareholders at the 1988 annual meeting and subsequently
amended in 1990, 1991 and 1994 to increase the number of shares issuable under
the 1988 Plan to the present aggregate total of 1,737,500 shares.
The original purpose of the 1988 Plan was to enable Bancorp to attract
employees and directors of outstanding ability and to encourage ownership of
Bancorp Common Stock by those persons. That purpose remains the same, and the
proposed amendments are intended to enhance the attractiveness of the options
and to clarify certain of the provisions of the 1988 Plan document.
<PAGE> 7
The 1988 Plan provides for the granting of options that are incentive
stock options under the Internal Revenue Code and for those that are
non-qualified stock options. The major differences between these types of
options relate to federal income tax consequences upon exercise or sale.
Employees who receive options incur no federal income tax liability at the time
of grant and the Company has no tax deduction. Persons exercising non-qualified
options recognize taxable income at the time of exercise to the extent of the
difference between market price at that time and the exercise price and the
Company has a tax deduction to the same extent. Persons exercising incentive
stock options do not recognize taxable income until they sell the stock. If the
stock is sold or disposed of more than two years after the date of grant and one
year after the date of exercise, any gains realized will be treated as capital
gains for federal income tax purposes and the Company will receive no tax
deduction. Sales within those periods of time will generate ordinary income to
the optionee and a tax deduction to the Company, to the extent of the "spread"
(the difference between the option exercise price and the market value of the
stock on the date of exercise). The spread amount of an incentive stock option
constitutes a tax adjustment item for purposes of the alternative minimum tax.
Because of the unpredictability of stock prices, it is possible that the
exercise of a particular non-qualified option could, together with other
compensation paid to the person exercising the option, cause the $1 million
figure to be exceeded, thereby denying the Company an income tax deduction to
that extent. However, if certain conditions specified by these Internal Revenue
Code provisions are met, the deduction can be preserved. Those conditions
include that the terms of the 1988 Plan be approved by shareholders and that the
1988 Plan limit the number of options that may be granted to any one individual
in any one year. Therefore, the 1988 Plan has been amended by the Board of
Directors to limit the number of options that may be granted to any one person
in any one year to 100,000 options.
The exercise price per share may not be less than 100% of the market value
on the date of grant for incentive stock options and not less than 95% of the
market value in the case of non- qualified options. The exercise price of
incentive options for persons beneficially owning 10% or more of the Company's
outstanding Common Stock must be at least 110% of the market value at the time
of grant. On April 4, 1996, the closing sale price for Bancorp's Common Stock
per share in the NASDAQ National Market was $51.25 per share.
<PAGE> 8
The vesting schedule and expiration dates for all options are determined
at the time of each particular stock option grant. Options generally do not
become exercisable until one year from the date of grant. Thereafter, the
options generally provide for vesting on a schedule of 20% per year, although
options may be granted with different vesting schedules. The right to exercise
options is cumulative to the extent not utilized in prior periods. The
amendments provide that the length of each option may vary from one to ten
years. Persons who own beneficially 10% or more of the Company's outstanding
stock may only be granted incentive options for terms of five years or less.
Options may be exercised for cash or for Bancorp Common Stock at its fair market
value on date of exercise. Bancorp does not receive any consideration from
employees or Directors upon the grant of options. The proposed amendments also
accelerate the vesting of options in the event of a merger or Change of Control
of Bancorp. Change of Control is defined in Section 12.4 of the 1988 Plan,
attached hereto as Annex 1. Other changes to the 1988 Plan are not material.
The Compensation Committee, consisting of Messrs. Peerless, Grote and
Pedoto was appointed by the Board of Directors to administer the 1988 Plan. With
the exception of the Committee members, all Officers, Directors and employees of
Bancorp and its subsidiaries are eligible to receive options. The Committee
grants options, determines vesting and otherwise administers the 1988 Plan.
The affirmative vote of a majority of the holders of the Company's Common
Stock present at the meeting, in person or by proxy is required to adopt this
proposal. Abstentions and shares not voted by brokers and other entities holding
shares on behalf of the beneficial owners will have the same effect as votes
cast against the proposal to approve the amendment and restatement of the 1988
Plan. The Board of Directors recommends a vote for adoption of this proposal.
ADJOURNMENT AND OTHER MATTERS
A motion for adjournment or other matters properly brought before the
Meeting requires the affirmative vote of a majority of the shares represented at
the Meeting in person or by proxy for approval.
<PAGE> 9
INFORMATION CONCERNING MANAGEMENT
The following table presents information as of March 31, 1996 concerning
the directors, nominees and executive officers and all such persons as a group
including their beneficial ownership of Bancorp Common Stock. Except as set
forth, no director or officer owns beneficially as of such date more than 1% of
Bancorp's outstanding Common Stock.
DIRECTORS AND NOMINEES
<TABLE>
<CAPTION>
Name and Year Amount and Principal Occupation
Nominee First Nature of For Last Five Years
Became a Director Beneficial and Other Information
Ownership
and Percent
of Class
<S> <C> <C>
Jack M. Cook 5,250 (a) President and Chief
(1992) Executive Officer of Health
Alliance of Greater
Cincinnati which includes
Christ, University, Jewish
and St. Luke Hospitals. Age
51.
Allen L. Davis 315,838 (a) President and Chief
(1984) (1.8%) Executive Officer of Bancorp
and The Provident Bank
("Provident"). Director, LSI
Industries, Inc. Age 54.
Thomas D. Grote, Jr. 6,246 (a) President, Thomas J. Dyer
(1991) Company. Age 41
Philip R. Myers 334,852 (a) Senior Executive Vice
(1982) (1.9%) President of Provident and
Senior Vice President of
Bancorp. Age 53.
Joseph A. Pedoto 545,202 (a)(b) President, JLM Financial,
(1993) (3.1%) Inc. a financial consulting
firm. Age 54.
Sidney A. Peerless 26,324 (a) President of E.N.T.
(1980) Associates. Staff member at
several local hospitals.
Clinical Professor,
University of
Cincinnati. Director, Jewish
Hospital. Age 74.
Joseph A. Steger 5,153 (a) President of the University
(1992) of Cincinnati. Director,
Cincinnati Milacron, Inc.
Age 59.
</TABLE>
<PAGE> 10
EXECUTIVE OFFICERS WHO ARE NOT ALSO DIRECTORS
<TABLE>
<CAPTION>
Name and Year Amount and Principal Occupation
Nominee First Nature of For Last Five Years
Became a Beneficial and Other Information
Director Ownership
and Percent
of Class
<S> <C> <C>
John R. Farrenkopf 42,978 (a) Vice President and Chief
Financial Officer of Bancorp
and Senior Vice President
and Chief Financial Officer
of Provident since August,
1992, prior to which he
served as Audit Director for
Bancorp, and Vice President
and Audit Director for
Provident. Age 47.
Jerry L. Grace 80,015 (a) Vice President and Treasurer
of Bancorp since August,
1992. Senior Vice President
and Treasurer of Provident.
Age 54.
Robert L. Hoverson 159,623 (a) Senior Vice President of
Bancorp since August, 1992.
Executive Vice President of
Provident. Age 54.
Mark E. Magee 43,561 (a) Vice President, Secretary and
General Counsel of Bancorp
and Senior Vice President,
Secretary and General Counsel
of Provident. Age 48.
All Directors & 1,565,042 (a)
Executive Officers (8.9%)
as a Group
</TABLE>
(a) Including options to purchase common stock currently exercisable or
exercisable within 60 days from April 11, 1996 for Mr. Davis, 167,500
shares; Mr. Myers, 95,500 shares; Mr. Hoverson, 111,500 shares; Mr. Grace,
57,500 shares; Mr. Magee, 16,000 shares; Mr. Farrenkopf, 18,750 shares;
4,500 shares each for Messrs. Cook, Grote, Peerless and Steger and 3,000
shares for Mr. Pedoto. Includes shares held in the Company's Employee
Stock Ownership Plan, 401 (k) Plan and Deferred Compensation Plan,
collectively, as follows: Mr. Davis, 39,738 shares; Mr. Myers, 33,577
shares; Mr. Hoverson, 22,338 shares; Mr. Grace, 12,498 shares; Mr.
Farrenkopf, 17,774 shares; and Mr. Magee, 16,396 shares.
(b) Includes 525,000 shares held in Trust under which Mr. Pedoto serves as
co-trustee with shared voting and dispositive powers.
<PAGE> 11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table is a summary of certain information concerning the
compensation awarded or paid to, or earned by, the Company's chief executive
officer and each of the Company's other four most highly compensated executive
officers in 1995 (the "named executives") during each of the last three fiscal
years in which they served as an executive officer.
<TABLE>
<CAPTION>
Annual Long term
Compensation(a) Compensation
Securities
Underlying All
Name and Options Other
Principal Salary Bonus Granted Compensation
Positions Year ($) ($) (# ) (b)
<S> <C> <C> <C> <C> <C>
Allen L. Davis 1995 567,242 525,000 20,000 326,392
President & CEO 1994 547,531 425,000 ---- 145,308
1993 515,031 400,000 15,000 135,814
Philip R. Myers 1995 396,586 240,000 7,500 188,651
Senior Vice 1994 384,760 200,000 ---- 71,343
President 1993 368,125 180,000 19,000 76,885
Robert L. Hoverson 1995 391,731 365,000 12,500 173,269
Senior Vice 1994 372,019 300,000 ---- 73,690
President 1993 349,712 280,000 10,000 83,277
Jerry L. Grace 1995 176,058 155,000 5,000 94,562
Vice President 1994 169,337 125,000 5,000 31,055
& Treasurer 1993 159,952 120,000 ---- 47,101
John R. Farrenkopf 1995 140,962 75,000 5,000 74,139
Vice President & 1994 135,048 60,000 ---- 35,372
Chief Financial 1993 126,635 50,000 5,000 33,067
Officer
</TABLE>
(a) The named executives did not receive any other annual compensation in excess
of the lesser of 10% of his compensation or $50,000.
(b) For the fiscal year 1995, Messrs. Davis, Myers, Hoverson and Grace each
received contributions of $14,762 and Mr. Farrenkopf received $12,795 pursuant
to the Employee Stock Ownership Plan. Employer contributions made pursuant to
other benefit plans were as follows: 401 (k) Plan: Messrs. Myers, Hoverson and
Grace, $2,310 each and Mr. Farrenkopf, $2,155; the Employee Stock Purchase Plan:
Mr. Grace, $746 and Mr. Farrenkopf, $1,163; the Excess Benefit Plan: Mr. Davis,
$57,568, Mr. Myers, $35,144, Mr. Hoverson, $43,103 and Mr. Grace, $11,163; the
net premiums paid on the Company's Split Dollar Life Insurance Plan: Mr. Davis,
$37,303, Mr. Myers, $62,993, Mr. Hoverson, $26,940, Mr. Grace, $37,189 and Mr.
Farrenkopf $3,518; the Deferred Compensation Plan: Mr. Davis, $216,759, Mr.
Myers, $73,441, Mr. Hoverson, $86,153, Mr. Grace, $28,392 and Mr. Farrenkopf,
$54,508.
<PAGE> 12
STOCK OPTIONS
Table 1 below sets forth information concerning grants of options to
purchase the Company's Common Stock made to the named executives in 1995. All
grants were made at 95% of the market price for the Company's Common Stock on
the date of grant. Table 2 sets forth information regarding the number of
exercisable/unexercisable options as of December 31, 1995. See footnote (a) for
material terms of the Options.
TABLE 1
OPTIONS GRANTED IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
Percent
Number of Total
of Options
Shares Granted Exercise
Under- to or Potential Realizable Value
lying Empl. Base at Assumed Annual Rates of
Options in Price Stock Price Appreciation
Granted Fiscal Per Expiration for Option Term
Name (a) Year Share Date 0%($) 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C> <C>
Allen L. Davis 20,000 7.52% $ 30.89 3/01/05 32,200 440,982 1,068,133
Philip R. Myers 7,500 2.82% $ 30.89 3/01/05 12,075 165,368 400,550
Robert L. Hoverson 12,500 4.70% $ 30.89 3/01/05 20,125 275,613 667,583
Jerry L. Grace 5,000 1.88% $ 31.59 5/18/05 8,300 112,854 273,260
John R. Farrenkopf 5,000 1.88% $ 31.59 5/18/05 8,300 112,854 273,260
</TABLE>
(a) All options were granted pursuant to the 1988 Stock Option Plan which
provides that options may be granted at exercise prices from 95% to 110% of the
market price on date of grant, for periods of from one to ten years. The right
to exercise the options shown vests at 20% per year. All options granted are
non- qualified, although the Plan provides for incentive options. There are no
provisions in the grants that would cause the exercise price to be lowered or
adjusted under a prescribed formula or standard.
<PAGE> 13
TABLE 2
AGGREGATED OPTION EXERCISES IN 1995/OPTION VALUES AT 12/31/95
<TABLE>
<CAPTION>
Number of Dollar
Shares Value of
Number Underlying Unexercised
of Unexercised In-the-Money
Shares Options at Options
Acquired Dollar 12/31/95 at 12/31/95.
on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Allen L. Davis None None 150,000 4,263,735
65,000 1,494,990
Philip R. Myers None None 85,600 2,438,792
30,900 702,813
Robert L. Hoverson None None 100,000 2,842,490
42,500 983,235
Jerry L. Grace None None 52,000 1,508,965
18,000 403,910
John R. Farrenkopf None None 17,000 436,413
15,500 324,700
</TABLE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
In November, 1993, the Board of Directors adopted a Supplemental Executive
Retirement Plan ("SERP") to provide a supplemental retirement benefit to key
management or highly compensated employees of the Company who may be designated
from time to time by the Compensation Committee ("Participant"). Payments under
the SERP are paid from the general revenues of the Company and have no effect on
the existing retirement plans. Company owned life insurance contracts will be
used to fund the Company's SERP obligations.
<PAGE> 14
The purpose of the SERP is to assure that each Participant will receive an
annual retirement benefit starting at age 65, based on years of service, of up
to 50% of the average of his or her highest consecutive five years' annual
compensation during the ten years preceding the Participant's retirement,
disability, termination of employment or removal from the SERP plus the average
of the highest five years' bonuses during such ten years. ("Annual
Compensation"). When a Participant retires, the benefit he is entitled to
through the SERP is calculated, and then funds from the following sources are
deducted to determine the amount (if any) of the payment due from the Company
under the SERP; (i) one half of the Participant's monthly social security
insurance benefit and (ii) the Participant's accrued benefits attributable to
employer contributions to the Company's Employee Stock Ownership Plan, 401 (k)
Plan, Excess Benefit Plan, Deferred Compensation plan and any other qualified or
non-qualified pension or deferred compensation plans maintained by the Company
(together, the "Retirement Plans"). If the sum of the payments due under the
Retirement Plans exceeds the Participant's benefit computed under the SERP, then
no payment will be due from the Company under the SERP.
Table 3 below includes the assumed actuarial value of the Retirement Plan
benefits plus the amount of a SERP payment (if any) which, when taken together,
will result in a total retirement payment based on average compensation and
years of service. Assuming retirement at age 65, the number of years of service
for the five individuals named in the summary compensation table would be Allen
L. Davis, 23 years; Philip R. Myers, 41 years; Robert L. Hoverson, 23 years;
Jerry L. Grace, 23 years; and John R. Farrenkopf, 41 years.
TABLE 3
<TABLE>
<CAPTION>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Average Compensation Years of Service
10 15 20 25 30 35
<S> <C> <C> <C> <C> <C> <C>
$150,000........ $45,000 $52,500 $60,000 $67,500 $75,000 $75,000
250,000........ 75,000 87,500 100,000 112,500 125,000 125,000
400,000........ 120,000 140,000 160,000 180,000 200,000 200,000
500,000........ 150,000 175,000 200,000 225,000 250,000 250,000
600,000........ 180,000 210,000 240,000 270,000 300,000 300,000
800,000........ 240,000 280,000 320,000 360,000 400,000 400,000
1,000,000........ 300,000 350,000 400,000 450,000 500,000 500,000
1,200,000........ 360,000 420,000 480,000 540,000 600,000 600,000
1,400,000........ 420,000 490,000 560,000 630,000 700,000 700,000
1,600,000........ 480,000 560,000 640,000 720,000 800,000 800,000
</TABLE>
<PAGE> 15
DIRECTORS' FEES, RETIREMENT BENEFITS AND OPTIONS
Each director who is not also an officer of Bancorp or its subsidiaries
receives an annual fee of $10,000 plus $1,000 for each Board meeting attended. A
$1,000 fee is paid for each Committee meeting attended in person, or $600 if
attendance is by telephone or on a date on which a Board meeting is held. A fee
of $1,000 is paid for a meeting of any Special Committee established to advise
the Board on extraordinary matters. Directors who are also officers of Bancorp
serve on the Board without additional compensation. The 1992 Outside Director's
Stock Option Plan provides for the grant of stock options to Bancorp's Outside
Directors. Under the 1992 Plan, each Outside Director is granted an option to
purchase 1,000 shares of Common Stock upon his appointment and upon each annual
election as Director. All options are granted at an exercise price equal to the
average of the closing bid and ask prices on the last trading day prior to the
date of grant. Options vest six months after the date of grant and have a term
of 10 years.
In 1991, the Board of Directors approved a Retirement Plan for Outside
Directors of Bancorp to encourage and recognize services which contribute to the
success of the Company. An Outside Director is entitled to receive benefits if
he or she has ten or more years of service as a Director. The amount of the
annual retirement benefit is equal to the total amount of fees paid to the
participant during the 12 months immediately preceding the retirement date, with
payments to commence at the participant's retirement date or 65th birthday,
whichever is later. Retirement benefits will be paid for a period of years equal
to the number of the participant's years of service, divided by three.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors establishes salaries,
bonuses and stock option awards for executive officers on an annual basis. The
Compensation Committee also administers the 1988 Plan. The Committee's policy is
to encourage and motivate the Company's executive officers to achieve both
short-term and long-term business, financial and community goals, and thereby
build shareholder value on a steady but aggressive basis. The Committee believes
it important to provide competitive levels of compensation that will enable
Bancorp to attract and retain the most qualified executives and to provide
incentive plans that emphasize stock ownership, thus aligning more closely the
interests of management with those of shareholders.
The Committee has established three primary components which it utilizes
in setting annual compensation levels, namely:
- Base Compensation
- Annual Bonuses
- Stock Option Grants
<PAGE> 16
In establishing compensation levels for 1995, the Committee utilized
executive compensation information published by SNL Securities, Inc., Cole
Banking Survey and the Sheshunoff Company which the Committee believes are
appropriate and, in addition the Committee also reviewed compensation levels
paid in 1994 by Ohio based bank holding companies that compete in Provident's
market (together, the "Surveys"). The Committee sets the levels of executive
compensation at the high end of the ranges described in the Surveys. The
Committee did not compare the Company's executive compensation with the levels
of compensation paid by the banks included in the Keefe, Bruyette & Woods 50
Bank Index, nor did the Committee attempt to correlate executive compensation
levels with the Company's relative performance as shown in the financial
performance graph on page 13.
Compensation in excess of $1,000,000 per year paid to the Chief Executive
Officer of a company as well as the other executive officers listed in the
compensation table will not be deductible unless the compensation is
"performance-based" and the related compensation is approved by shareholders.
This law applies to compensation paid in 1995. The Committee does not believe
that these tax limitations should interfere with the application of policies
which guide its compensation decisions.
BASE COMPENSATION
In establishing base salaries for 1995 the Company took into account and
gave equal weight to the particular executive officer's level of responsibility
and potential for future responsibilities, salary levels of competitors for
similar functions and the Company's results of operations in 1994. The Committee
also took into account the recommendations of the President for executive
officers other than himself in establishing base salaries. The Committee
believes that the executive officers' salaries which it established for 1995 are
in the high end of the range paid by similarly performing bank holding
companies.
BONUSES
Bonuses for 1995, other than for the President, were based primarily on
recommendations made by the President of the Company and the Committee's review
of bonus awards paid by the banking institutions included in the Surveys. The
amounts of the bonus awards were not tied to any specific or quantifiable
performance objective, but rather were based on the Committee's subjective
judgment of the Company's performance and the relative contribution to that
performance by the executive officers to whom bonuses were awarded. The
Committee believes that its bonus awards were at the high end of the range paid
by similarly performing banking institutions.
Awards of stock options are made by the Committee to motivate long-term
future performance and as a reward for past performance, consistent with the
purposes set forth in the shareholder approved 1988 Stock Option Plan.
<PAGE> 17
CHIEF EXECUTIVE OFFICER
In determining the compensation paid to the Company's President and Chief
Executive Officer, Allen L. Davis, the Committee first determined to utilize
each of the components described above for executive officers for his
compensation. In this regard, the Committee established his salary level based
on its subjective evaluation of not only the Company's financial results, but
also on the Committee's evaluation of Mr. Davis' creative abilities in planning
for and leading the Company during 1995, and setting the Company on a course of
aggressive, sustained and soundly managed growth and profitability. The
Committee similarly made its own evaluation of Mr. Davis' contributions to the
Company on a subjective basis, rather than against any quantifiable plan in
establishing the amounts of his bonus payment. The Committee believes that the
compensation levels established for Mr. Davis are at the high end of the range
as compared to midwest banks of similar asset size as reported in the Surveys.
Sidney A. Peerless, Chairman
Thomas D. Grote, Jr.
Joseph A. Pedoto
FINANCIAL PERFORMANCE
The graph below summarizes the cumulative return experienced by the
Company's shareholders over the years 1990 through 1995, compared to the NASDAQ
Index and the Keefe, Bruyette & Woods 50 Bank Index which is a
market-capitalization weighted bank stock index that includes all money-center
banks and most major regional bank holding companies, and is a widely available
index. The number of companies comprising the KBW 50 Index allows ready
comparisons of the Company's stock with an industry standard. The Company is not
included in the KBW 50 Index.
GRAPH DESCRIPTION
The total Return Analysis Graph depicts the total return an investor would
have realized on a $100 investment made in 1990 and held through 1995, compared
to a similar, but theoretical investment made in the NASDAQ index or the KBW 50
index. An investment in the Company's Common Stock would have been worth $414
after five years compared to $324 and $297 for investments in the KBW and NASDAQ
indexes, respectively.
<PAGE> 18
BOARD AND BOARD COMMITTEE ACTIONS: COMPLIANCE WITH SECTION 16 OF
THE EXCHANGE ACT
The Board held 13 meetings during 1995. All of the Directors attended at
least 75% of the meetings of the Board and at least 75% of the Committee
meetings of which they were members. Messrs. Davis, Myers and Grote served as
Executive Committee members in 1995. The Executive Committee is authorized,
under Ohio law and Bancorp's Code of regulations, to perform substantially all
of the functions of the Board of Directors. The Executive Committee took written
action on three occasions during 1995.
The Audit Committee consists of Messrs. Peerless (Chairman), Cook and
Steger, none of whom is an officer of the Company or its subsidiaries. The Audit
Committee had 6 meetings in 1995. The Committee's functions include reviewing
with the independent auditors the plans and results of the audit engagement of
the Company and reviewing the scope and results of the procedures for internal
auditing. The Committee is authorized generally to superintend the
administration of the Internal Audit Department, which has the responsibility to
perform internal audit functions for the Company and its subsidiaries. The
Company has a Compensation Committee whose functions are described elsewhere in
the Proxy Statement. The Compensation Committee had two meetings and took
written action on 15 occasions during 1995. The Company does not presently have
a Nominating Committee.
Section 16 of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who own more than 10% of a registered
class of the Company's equity securities to file reports of ownership and
changes in ownership. Based on a review of the copies of such forms received by
it, the Company believes that all of its executive officers and directors
complied with the Section 16 reporting requirements with the exception of the
1995 Stock Option grants to Messrs. Davis, Hoverson, Myers, Grace, Farrenkopf
and Magee which were reported on April 8, 1996.
CERTAIN TRANSACTIONS
Bancorp and its subsidiaries, in their normal course of business have had
and, to the extent permitted by applicable regulations and other regulatory
restrictions expect to continue to have, transactions with Bancorp's directors,
officers, principal shareholders and affiliates of such persons including
American Financial Group, Inc., ("AFG"), and United Dairy Farmers, Inc. and
their subsidiaries. All such transactions are and will be on terms no less
favorable to the Company than those which could be obtained with non-affiliated
parties.
<PAGE> 19
American Financial Corporation ("AFC"), a subsidiary of AFG, provides
security guard and surveillance services at Bancorp's main office for which
Bancorp paid $100,000 in 1995. Bancorp leases its main banking and corporate
office from a trust for the benefit of a subsidiary of AFG. During 1995, the
lease agreements were rewritten and extended to the year 2010, with Bancorp
receiving $1.2 million which represented the net present value of the difference
between payments of the old and current lease agreements. Bancorp paid rent
under the leases of $1,397,000 in 1995. Bancorp also leases branch locations,
ATM locations and certain equipment from principal shareholders and their
affiliates, for which it paid rentals of $306,000 in 1995.
Certain affiliates of the principal shareholders and the directors and
executive officers of Bancorp maintain investments in Bancorp commercial paper.
The highest combined commercial paper balances for such persons from January 1,
1995 through December 31, 1995 and at March 31, 1996 were as follows: Principal
shareholders, $18,496,900 and $4,378,350; directors and executive officers,
$114,400 and $320,900, respectively.
Loans and lines of credit have been extended by Provident in 1995 to
certain of Bancorp's executive officers, directors, principal shareholders,
affiliates of such persons and to members of their families. Management believes
that such loans and lines of credit were made in the ordinary course of
business, on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons and do not involve more than the normal risk of collectibility or
present other unfavorable features.
In connection with Bancorp's 1991 acquisition of Hunter Savings
Association (an AFC subsidiary), AFC made certain commitments to the Federal
Reserve with respect to its relationship to Bancorp following the acquisition.
Among other things, AFC and Bancorp agreed to discontinue their relationships
with respect to certain leases, purchases of commercial paper by AFC and
purchases of insurance by Bancorp from AFC. Furthermore, AFC agreed to limit its
business relationship in connection with deposits, office space, advertising,
securities brokerage and other areas generally to the levels prevailing at the
time. Bancorp does not believe that these restrictions have a material impact on
its business or results of operations.
INDEPENDENT AUDITORS
The accounting firm of Ernst & Young LLP served as the Company's
independent auditors for 1995. One or more representatives of that firm will
attend the Annual Meeting and will be given the opportunity to comment, if they
so desire, and to respond to appropriate questions that may be asked by
shareholders. No auditor has yet been selected for the current year, since it is
the practice of Bancorp not to select independent auditors prior to the Annual
Meeting of Shareholders.
<PAGE> 20
SHAREHOLDER PROPOSALS
If a shareholder desires to have a proposal included in the Proxy
Statement for the 1997 Annual Meeting, such proposal must be received by
Bancorp's Secretary at the office of the Company before January 1, 1997.
MISCELLANEOUS
Bancorp will send upon written request, without charge, a copy of the Company's
current annual report on Form 10-K to any Bancorp shareholder who writes to
Provident Bancorp, Inc., Investor Relations, 801 Linn Street, 855 E, Cincinnati,
Ohio 45203
The Management of Bancorp knows of no other matters to be presented at the
meeting other than those mentioned in the notice. If any other matter should be
presented at the meeting or any adjournment thereof upon which a vote properly
may be taken, it is intended that shares represented by proxies in the
accompanying form will be voted in accordance with the judgment of the person or
persons voting said shares.
By order of the Board of Directors
Mark E. Magee
Secretary
<PAGE> 21
ANNEX 1
PROVIDENT BANCORP, INC.
AMENDED AND RESTATED
1988
Stock Option Plan
ARTICLE 1
OBJECTIVES
Provident Bancorp, Inc. ("Provident") has established this Stock Option
Plan effective June 1, 1988 as an incentive to the attraction and retention of
dedicated and loyal employees of outstanding ability, to stimulate the efforts
of such persons in meeting Provident's objectives and to encourage ownership of
Provident Common Stock by employees. This Stock Option Plan was amended and
restated on November 30, 1995.
ARTICLE 2
DEFINITIONS
2.1 For purposes of the Plan the following terms shall have the definition
which is attributed to them, unless another definition is clearly indicated by a
particular usage and context.
A. "Code" means the Internal Revenue Code of 1986.
B. The "Company" means Provident and any subsidiary of Provident, as
the term "subsidiary" is defined in Section 424(f) of the Code.
C. "Date of Exercise" means the date on which the Company has received
a written notice of exercise of an Option, in such form as is acceptable to the
Committee, and full payment of the purchase price or a copy of irrevocable
directions to a broker-dealer to deliver the Option Price to Provident pursuant
to Section 7.2 hereof.
D. "Date of Grant" means the date on which the Committee makes an
award of an Option.
E. "Eligible Employee" means any individual who performs services for
the Company and is treated as an Employee for federal income tax purposes. A
Director of the Company who is not an Eligible Employee described in the
previous sentence is an Eligible Employee with respect to the grant of a
Nonqualified Stock Option.
F. "Effective Date" means June 1, 1988.
<PAGE> 22
G. "Fair Market Value" means the average of the closing bid and asked
prices for a Share reported on any stock exchange or over-the-counter trading
system on which Shares are trading on the last trading date prior to a specified
date.
H. "Incentive Stock Option" shall have the same meaning as given to
that term by Section 422 of the Code.
I. "Nonqualified Stock Option" means any Option granted under the Plan
which is not considered an Incentive Stock Option.
J. "Option" means the right to purchase a stated number of Shares at a
specified price. The option may be granted to an Eligible Employee subject to
the terms of this Plan, and such other conditions and restrictions as the
Committee deems appropriate. Each Option shall be designated by the Committee to
be either an Incentive Stock Option or a Nonqualified Stock Option.
K. "Option Price" means the purchase price per Share subject to an
Option and shall be fixed by the Committee, but shall not be less than 95% of
the Fair Market Value of a Share on the Date of Grant in the case of a
Nonqualified Stock Option or less than 100% of the Fair Market Value of a Share
on the Date of Grant in the case of an Incentive Stock Option.
L. "Permanent and Total Disability" shall mean any medically
determinable physical or mental impairment rendering an individual unable to
engage in any substantial gainful activity, which disability can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than 12 months.
M. "Plan" means this 1988 Amended and Restated Stock Option Plan as it
may be amended from time to time.
N. "Share" means one share of the no par value Common Stock of the
Company.
ARTICLE 3
ADMINISTRATION
3.1 The Plan shall be administered by a committee (the "Committee")
designated by the Board of Directors of the Company. The Committee shall be
comprised solely of three or more directors each of whom shall be (i) a
"disinterested person" as defined under Rule 16b-3 of the Securities and
Exchange Act of 1934 (the "Act") and (ii) an "outside director" to the extent
required by Section 162(m) of the Internal Revenue Code ("Section 162(m)").
Notwithstanding the foregoing, to the extent relevant state law now or hereafter
permits, the Committee may be comprised solely of tow or more such directors.
Actions shall be taken by a majority of the Committee.
<PAGE> 23
3.2 Except as specifically limited by the provisions of the Plan, the
Committee in its discretion shall have the authority to:
A. Determine which Eligible Employees shall be granted Options;
B. Determine the number of Shares which may be subject to each Option;
C. Determine the Option Price;
D. Determine the term of each Option;
E. Determine whether each Option is an Incentive Stock Option or
Nonqualified Stock Option;
F. Interpret the provisions of the Plan and decide all questions of
fact arising in its application; and
G. Prescribe such rules and procedures for Plan administration as from
time to time it may deem advisable.
3.3 Any action, decision, interpretation of determination by the Committee
with respect to the application or administration of this Plan shall be final
and binding upon all persons, and need not be uniform with respect to its
determination of recipients, amount, timing, form, terms or provisions of
Options.
3.4 No member of the Committee shall be liable for any action or
determination taken or made in good faith with respect to the Plan or any Option
granted hereunder, and to the extent permitted by law, all members shall be
indemnified by the Company for any liability and expenses which may occur
through any claim or cause of action.
ARTICLE 4
SHARES SUBJECT TO PLAN
4.1 The Shares that may be made subject to Options granted under the Plan
shall not exceed 1,737,500 Shares in the aggregate. Except as provided in
Section 4.2, upon lapse or termination of any Option for any reason without
being completely exercised, the Shares which were subject to such Option may
again be subject to other Options.
4.2 The maximum number of Shares with respect to which options may be
granted to any employee during each fiscal year of the Company is 100,000. If an
Option is canceled, it continues to be counted against the maximum number of
Shares for which Options may be granted to an employee. If an Option is
repriced, the transaction is treated as a cancellation of the Option and a grant
of a new Option.
<PAGE> 24
ARTICLE 5
GRANTING OF OPTIONS
Subject to the terms and conditions of the Plan, the Committee may, from
time to time, prior to June 1, 1998, grant Options to Eligible Employees on such
terms and conditions as the Committee may determine. More than one Option may be
granted to the same Eligible Employee.
ARTICLE 6
TERMS OF OPTIONS
6.1 Subject to specific provisions relating to Incentive Stock Options set
forth in Article 9, each Option shall be for a term of from one to ten years
from the Date of Grant and may not be exercised during the first twelve months
of the term of said Option. Commencing on the first anniversary of the Date of
Grant of an Option, the Option may be exercised for 25% of the total Shares
covered by the Option with an additional 25% of the total Shares covered by the
Option becoming exercisable on each succeeding anniversary until the Option is
exercisable to its full extent. This right of exercise shall be cumulative and
shall be exercisable in whole or in part. The Committee in its sole discretion
may permit particular holders of Options to exercise an option to a greater
extent than provided herein. The Committee may establish a different exercise
schedule and impose other conditions upon exercise for any particular Option or
groups of Options.
6.2 The holder of an Option must remain continuously in the service of the
Company as an employee for a period of at least twelve months. Nothing contained
in this Plan or in any Option granted pursuant to it shall confer upon any
employee any right to continue in the employ of the Company or to interfere in
any way with the right of the Company to terminate employment at any time. So
long as a holder of an Option shall continue to be an employee of the Company,
the Option shall not be affected by any change of the employee's duties or
position.
ARTICLE 7
EXERCISE OF OPTIONS
7.1 Any person entitled to exercise an Option in whole or in part, may do
so by delivering a written notice of exercise to the Company, Attention
Corporate Secretary, at its principal office. The written notice shall specify
the number of Shares for which an Option is being exercised and the grant date
of the option being exercised and shall be accompanied by full payment of the
Option Price for the Shares being purchased.
7.2 Alternatively to exercise pursuant to paragraph 7.1, persons
exercising options may deliver a written notice of exercise to Provident,
Attention Corporate Secretary, accompanied by irrevocable instructions to
deliver shares to a broker-dealer and a copy of irrevocable instructions to the
broker-dealer to deliver the Option Price to Provident.
<PAGE> 25
ARTICLE 8
PAYMENT OF OPTION PRICE
8.1 In the sole discretion of the Committee, Payment of the Option Price
and any withholding taxes may be made in cash, by the tender of Shares, or both.
Shares tendered shall be valued at their Fair Market Value.
8.2 Payment through tender of Shares may be made by instruction from the
Optionee to the Company to withhold from the Shares issuable upon exercise that
number which have a Fair Market Value equal to the exercise price for the Option
or portion thereof being exercised.
ARTICLE 9
INCENTIVE STOCK OPTIONS AND NONQUALIFIED STOCK OPTIONS
9.1 The Committee in its discretion may designate whether an Option is to
be considered an Incentive Stock Option or a Nonqualified Stock Option. The
Committee may grant both an Incentive Stock Option and a Nonqualified Stock
Option to the same individual. However, where both an Incentive Stock Option and
a Nonqualified Stock Option are awarded at one time, such Options shall be
deemed to have been awarded in separate grants, shall be clearly identified, and
in no event will the exercise of one such Option affect the right to exercise
the other such Option.
9.2 Any option designated by the Committee as an Incentive Stock Option
will be subject to the general provisions applicable to all Options granted
under the Plan. In addition, the Incentive Stock Option shall be subject to the
following specific provisions:
A. At the time the Incentive Stock Option is granted, if the Eligible
Employee owns, directly or indirectly, stock representing more than 10% of (i)
the total combined voting power of all classes of stock of the Company, of (ii)
a corporation that owns 50% or more of the total combined voting power of all
classes of stock of the Company, then:
(i) The Option Price must equal at least 110% of the Fair Market
Value on the Date of Grant; and
(ii) The term of the Option shall not be greater than five years
from the Date of Grant.
B. The aggregate Fair Market Value of Shares (determined at the Date
of Grant) with respect to which Incentive Stock Options are exercisable by an
Eligible Employee for the first time during any calendar year under this Plan or
any other plan maintained by the Company shall not exceed $100,000.
9.3 If any Option is not granted, exercised, or held pursuant to the
provisions noted immediately above, it will be considered to be a Nonqualified
Stock Option to the extent that the grant is in conflict with these
restrictions.
<PAGE> 26
ARTICLE 10
TRANSFERABILITY OF OPTION
During the lifetime of an Eligible Employee to whom an Option has been
granted, such Option is not transferable voluntarily or by operation of law and
may be exercised only by such individual. Upon the death of an Eligible Employee
to whom an Option has been grated, the Option may be transferred to the
beneficiaries or heirs of the holder of the Option by will or by the laws of
descent and distribution. Notwithstanding the above, the Committee may, with
respect to particular Options, establish or modify the terms of the Option to
allow the Option to be transferred at the request of the holder of the Option to
trusts established by the holder or as to which the holder is a grantor or to
family members of the holder or otherwise for personal and tax planning purposes
of the holder. In the event the Committee allows such transfer, such Options
shall not be exercisable for a period of six months following the action of the
Committee.
ARTICLE 11
TERMINATION OF OPTIONS
11.1 An Option will terminate as follows:
A. Upon exercise or expiration by its terms.
B. Upon termination of employment, the then-exercisable portion of
any Option will terminate on the 90th day after the date of termination. The
portion not exercisable will terminate on the date of termination of employment.
For purposes of the Plan, a leave of absence approved by the Company shall not
be deemed to be termination of employment.
C. If an Eligible Employee holding an Option dies or becomes subject
to a Permanent and Total Disability while employed by the Company, or within 90
days after termination of employment, such Option may be exercised, to the
extent exercisable on the earlier of the date of termination of employment or
date of the occurrence of the event which triggers the operation of this
paragraph, at any time within one year after the date of such death or
occurrence of Permanent and Total Disability by the estate or guardian of such
person or by those persons to whom the Option may have been transferred by the
will or by the laws of descent and distribution.
11.2 Except as provided in Article 12 hereof, in no event will the
continuation of the term of an Option beyond the date of termination of
employment allow the Eligible Employee, or his beneficiaries or heirs, to accrue
additional rights under the Plan, or to purchase more Shares through the
exercise of an Option than could have been purchased on the day that employment
was terminated. In addition, notwithstanding anything contained herein, no
option may be exercised in any event after the expiration of ten years from the
date of grant of such option.
<PAGE> 27
ARTICLE 12
ADJUSTMENTS TO SHARES AND OPTION PRICE
12.1 In the event of changes in the outstanding Common Stock of the
Company as a result of stock dividends, stock splits, reclassifications,
reorganizations, redesignations, mergers, consolidations, recapitalizations,
combinations or exchanges of Shares, or other such changes, the number and class
of Shares for all purposes covered by the Plan and number and class of Shares
and price per Share for each outstanding Option covered by the Plan shall be
appropriately adjusted by the Committee.
12.2 The Committee shall make appropriate adjustments in the Option Price
to reflect any spin-off of assets, extraordinary dividends or other
distributions to shareholders.
12.3 In the event of the dissolution of liquidation of the Company or any
merger (other than a merger for the purpose of the redomestication of the
Company not involving a change in control), consolidation, exchange or other
transaction in which the Company is not the surviving corporation or in which
the outstanding Shares of the Company are converted into cash, other securities
or other property, each outstanding Option shall, without regard to any vesting
schedule or performance target and notwithstanding anything to the contrary set
forth herein, automatically and immediately become fully exercisable immediately
prior to such event.
12.4 All outstanding Options shall become immediately exercisable in full
if a change in control of the Company occurs, notwithstanding anything to the
contrary set forth herein. For purposes of this Agreement, a "change in control
of the Company" shall be deemed to have occurred if (a) any "person", as such
term is used in Sections 13(d) and 14(d) of the Act, other than (i) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or (ii) Carl H. Lindner or any member of his family, becomes the "beneficial
owner," as defined in Rule 13d-3 under the Act, directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power
of the Company's then outstanding securities; or (b) during any period of one
year (not including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board of
Directors and any new director whose election by the Board or nomination for
election by the Company's shareholders was approved by a vote of at least
two-thirds (2/3) of the Directors then still in office who either were Directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof.
<PAGE> 28
ARTICLE 13
OPTION AGREEMENTS
13.1 All Options granted under the Plan shall be evidenced by a written
agreement in such form or forms as the Committee in its sole discretion may
determine.
13.2 Each optionee, by acceptance of an Option under this Plan, shall be
deemed to have consented to be bound, on the optionee's own behalf and on behalf
of the optionee's heirs, assigns and legal representatives, by all terms and
conditions of the Plan.
ARTICLE 14
AMENDMENT OR TERMINATION OF PLAN
14.1 The Board of Directors of the Company may at any time amend, suspend,
or terminate the Plan; provided, however, that no amendments by the Board of
Directors of the Company shall, without further approval of the shareholders of
the Company:
A. Change the definition of Eligible Employees;
B. Except as provided in Articles 4 and 12 hereof, increase the
number of Shares which may be subject to Options granted under the Plan;
C. Cause the Plan or any Option granted under the Plan to fail to (i)
be excluded from the $1 million deduction limitation imposed by Section 162(m)
of the Code, or (ii) qualify as an "Incentive Stock Option" as defined by
Section 422 of the Code; and
D. Permit the granting of Options to the individuals who are then
members of the Committee.
14.2 No amendment or termination of the Plan shall alter or impair any
Option granted under the Plan without the consent of the holder thereof.
14.3 This Plan shall continue in effect until the expiration of all
Options granted under the Plan unless terminated earlier in accordance with this
Article 14; provided, however, that it shall otherwise terminate and no options
shall be granted ten years after the Effective Date.
ARTICLE 15
EFFECTIVE DATE
This Plan originally became effective as of June 1, 1988. This Amended and
Restated 1988 Stock Option Plan shall become effective as of November 30, 1995,
having been adopted by the Board of Directors of the Company on such date.
<PAGE> 29
ARTICLE 16
MISCELLANEOUS
16.1 Nothing contained in this Plan or in any action taken by the Board of
Directors or shareholders of the Company shall constitute the granting of an
Option. An Option shall be granted only at such time as a written Option shall
have been executed and delivered to the respective employee and the employee
shall have executed an agreement respecting the Option in conformance with the
provisions of the Plan.
16.2 Certificates for Shares purchased through exercise of Options will be
issued in regular course after exercise of the Option and payment therefor as
called for by the terms of the Option but in no event shall the Company be
obligated to issue certificates more often than once each quarter of each fiscal
year. No persons holding an Option or entitled to exercise an Option granted
under this Plan shall have any rights or privileges of a shareholder of the
Company with respect to any Shares issuable upon exercise of such Option until
certificates representing such Shares shall have been issued and delivered. No
Shares shall be issued and delivered upon exercise of an Option unless and until
the Company, in the opinion of its counsel, has complied with all applicable
registration requirements of the Securities Act of 1933 and any applicable state
securities laws and with any applicable listing requirements of any national
securities exchange on which the Company securities may then be listed as well
as any other requirements of law.
<PAGE> 30
PROVIDENT BANCORP, INC.
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<S> <C>
PROXY The undersigned hereby appoints Mark E. Magee and Leslie C. Nomeland or either of them, to vote the proxies of the
FOR undersigned, each with the power of substitution, to vote cumulatively or otherwise all shares of Common Stock which
ANNUAL the undersigned would be entitled to vote at the Annual Meeting of Shareholders of Provident Bancorp, Inc. to be
MEETING held May 16, 1996, at 9:00 a.m. (Eastern Time) as specified below on the matters described in the Company's Proxy
Statement and IN THEIR DISCRETION WITH RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS:
1. Authority to elect the 7 nominees listed below:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Jack M. Cook, Allen L. Davis, Thomas D. Grote, Jr., Philip R. Myers, Joseph A. Pedoto, Sidney A. Peerless
and Joseph A. Steger.
(INSTRUCTION: To withhold authority to vote for any individual nominee(s), write that nominee's name in
the space provided below.)
__________________________________________________________________________________________________________
2. To amend and restate the 1988 Stock Option Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(This Proxy is continued and to be signed on the reverse side)
PROXY
FOR
ANNUAL
MEETING
(continued)
Date: __________________________________________
__________________________________________
__________________________________________
(Important: Please sign exactly as name
appears hereon indicating, where proper,
official position or representative capacity.
In the case of joint holders, all should
sign.)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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