SCHEDULE 14A
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: [ ] 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 ss.240.14a-11(c) or ss.240.14a-12
Provident Bancorp, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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2) Aggregate number of securities to which transaction applies:
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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)
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[ ] 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 identity 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.
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<PAGE>
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 May 15, 1997, at 9:00 a.m., Eastern Time, on the 3rd floor of the
Provident Tower, One East Fourth Street, Cincinnati, Ohio. The meeting will be
held for the following purposes:
1. To amend the Articles of Incorporation to change the name of the
Company to Provident Financial Group, Inc.;
2. To amend the Articles of Incorporation to increase the number of
common shares authorized from 60 million to 110 million shares;
3. To vote on the adoption of a Stock Option Plan;
4. To elect Seven Directors; and
5. 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 4, 1997, 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.
Sincerely,
Allen L. Davis
President
Cincinnati, Ohio
April 14, 1997
<PAGE>
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. to be voted at the
Annual Meeting of Shareholders to be held at 9:00 a.m. Eastern Time on May 15,
1997, 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 or by voting in person
at the meeting. 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 14, 1997.
VOTING AT THE MEETING
RECORD DATE; VOTING
Only shareholders of record at the close of business on April 4, 1997 are
entitled to notice of and to vote at the meeting. On that date there were
41,027,352 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. 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, except they will have the same effect as a "no" vote on the
proposals to amend the Articles of Incorporation.
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, 1997:
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent of Class (a)
---------------- -------------------- --------------------
American Financial Group, Inc. 6,476,279 (b) 15.4%
Carl H. Lindner 3,036,322 (c) (d) 7.4%
Carl H. Lindner III 1,925,526 (c) (e) 4.7%
S. Craig Lindner 2,071,473 (c) (f) 5.0%
Keith E. Lindner 2,067,363 (c) (g) 5.0%
One East Fourth Street
Cincinnati, Ohio 45202
Robert D. Lindner 2,431,651 (h) 5.9%
3955 Montgomery Road
Cincinnati, Ohio 45212
Lou Ann Flint 2,587,198 (i) 6.3%
49 East Fourth Street
Cincinnati, Ohio 45202
<PAGE>
(a) 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 4.0%, 5.0% and 5.9%, 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.
(b) Includes 5,488,079 shares held by subsidiaries of American Financial
Group, Inc. ("AFG") and 988,200 shares issuable upon conversion of the
Company's Series D Convertible Preferred stock held by an AFG
subsidiary. 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 45% of
AFG's common 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.
(c) Excludes 6,476,279 shares of Common Stock beneficially owned by AFG.
(d) Includes 2,405,724 shares held by his spouse and 80,583 shares held by
a foundation over which he has voting and dispositive power.
(e) Includes 4,732 shares held by his spouse individually and as trustee.
Includes 304,164 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.
(f) Includes 4,732 shares held by his spouse individually and as trustee,
329,404 shares held by his spouse as custodian for their minor
children and 32,937 shares held by a foundation over which he has
voting and dispositive power. Includes 45,000 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.
(g) Includes 5,609 shares he holds as custodian for his minor children and
340,381 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 349,164 shares (described in
footnotes (e) and (f) 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.
(h) Includes 366,585 shares held by his spouse and 14,032 shares held by a
foundation over which he has voting and dispositive power.
(i) Includes 2,586,748 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 450
shares held by Ms. Flint as custodian for her minor children.
<PAGE>
PROPOSAL TO AMEND ARTICLES OF INCORPORATION
TO CHANGE COMPANY'S NAME
The Board of Directors is proposing that the Company's Articles of
Incorporation be amended to change the name of the Company to Provident
Financial Group, Inc. The Board believes the new name better describes the
evolution of the Company from a bank holding company to a diversified provider
of financial services.
The text of the proposed amendment is as follows:
RESOLVED: that Article First of the Company's Articles of
Incorporation be amended to read, in its entirety, as follows:
FIRST: The name of the corporation shall be Provident Financial Group,
Inc.
Approval of this amendment requires the affirmative vote of two-thirds of
all outstanding shares of common stock entitled to vote at the meeting.
PROPOSAL TO AMEND ARTICLES OF INCORPORATION TO INCREASE AUTHORIZED SHARES
The Board of Directors is proposing that the Company's Articles of
Incorporation be amended to increase the number of common shares authorized from
60 million to 110 million shares. The Company presently has 41,027,352 common
shares issued and outstanding and 9,282,678 shares reserved for issuance under
the Company's various Stock Option Plans and outstanding convertible preferred
stock. The Company does not have any plans for issuance of the additional shares
to be authorized under this proposal, but the Board believes it prudent to have
additional shares available in the event such shares are needed for stock
splits, acquisitions, or other business purposes, without the need for a special
shareholders' meeting for that purpose. An increase in authorized shares may, in
some cases, make a change in control of a publicly held company more difficult
by allowing selective placement of newly issued shares.
The text of the proposed amendment is as follows:
RESOLVED: That Article Fourth, paragraph A(i), of the Articles of
Incorporation be amended to increase the number of authorized common
shares from sixty million (60,000,000) shares to one hundred ten
million (110,000,000) shares.
Approval of this amendment requires the affirmative vote of two-thirds of
all outstanding shares of common stock entitled to vote at the meeting.
APPROVAL OF 1997 STOCK OPTION PLAN
The Board recommends the approval of the 1997 Stock Option Plan under which
4,000,000 common shares would be reserved for issuance. The Plan was adopted by
the Board on March 31, 1997, subject to Shareholder approval. On April 7, 1997,
options were granted to executive officers having a term of 10 years and an
exercise price of $33.63 per share as follows: Allen L. Davis, 50,000 shares;
John R. Farrenkopf, 12,500 shares; Jerry L. Grace, 12,500 shares; Robert L.
Hoverson, 32,000 shares; Philip R. Myers, 19,000 shares; and all executive
officers as a group, 138,500 shares.
<PAGE>
The following is a summary of the Plan which appears in its entirety as Exhibit
A to this Proxy Statement.
The Plan provides that all options are to be granted with exercise prices of
not less than 95% of market value at the time of grant. The closing price
reported for Bancorp's Common Stock on March 31, 1997 was $35.25. Options may be
granted for varying periods of up to ten years. Options may be granted either as
Incentive Stock Options designed to provide certain tax benefits under the
Internal Revenue Code or as Non-Qualified Options without such benefits.
However, persons who beneficially own 10% or more of Bancorp's outstanding
Common Stock may not be granted incentive options for terms exceeding five years
and their exercise prices must be at least 110% of market value at the time of
grant.
The right to exercise options vests according to a schedule determined at
the time of grant which generally is at the rate of 20% per year commencing on
the first anniversary of the date of grant, with this right to exercise
cumulative to the extent not utilized in prior periods. Options granted under
the Plan do not become exercisable until one year from the date of grant. The
Stock Option Committee is empowered to grant options with different vesting
provisions. Options may be exercised for cash or for Bancorp common stock at its
fair market value on date of exercise. If the employment of a person holding an
option is terminated for any reason other than death, total permanent disability
or retirement, the option terminates.
If the Plan is approved by the Shareholders, the Compensation Committee will
administer the Plan. The Committee will evaluate the duties of employees and
their present and potential contributions to the Company and such other factors
as it deems relevant in determining key persons to whom options will be granted
and the number of shares covered by such grants. All employees of Bancorp and
its subsidiaries, approximately 1,700 persons, are eligible to be considered by
the Committee for the grant of options.
Persons who receive options incur no federal income tax liability at the
time of grant. Persons exercising Non-Qualified Options recognize taxable income
and the Company has a tax deduction at the time of exercise to the extent of the
difference between market price on the day of exercise and the exercise price.
Persons exercising Incentive Stock Options do not recognize taxable income until
they sell the stock. Sales within two years of the date of grant or one year of
the date of exercise result in taxable income to the holder and a deduction for
the Company, both measured by the difference between the market price at the
time of sale and the exercise price. Sales after such period are treated as
capital transactions to the holder and the Company receives no deduction.
The affirmative vote of a majority of votes cast at the meeting is required
to approve the adoption of the Plan.
ELECTION OF DIRECTORS
The nominees for election to the Board of Directors 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 directors of Bancorp. See "Information Concerning
Management" for information relating to the nominees.
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
meeting.
<PAGE>
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. If any nominee should be unavailable for election,
proxies may be voted for a substitute. The Company has no reason to believe that
any of the nominees will be unable to serve. 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.
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 votes cast at the
Meeting in person or by proxy for approval.
<PAGE>
INFORMATION CONCERNING MANAGEMENT
The following table presents information as of March 31, 1997 concerning the
directors, nominees and executive officers. 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
Name and Year Amount and Nature of Principal Occupation
Nominee First Beneficial Ownership For Last Five Years
Became a Director and Percent of Class and Other Information
----------------- -------------------- ---------------------
Jack M. Cook 14,062 (a) President and ChiefExecutive
(1992) Officer of Health Alliance of
Greater Cincinnati which
includes Christ, University,
Jewish and St.Luke Hospitals.
Age 52
Allen L. Davis 830,135 (a) President and Chief Executive
(1984) (2.0%) Officer of Bancorp and The
Provident Bank ("Provident").
Director, LSI Industries, Inc.
Age 55
Thomas D. Grote, Jr. 16,467 (a) President, Thomas J. Dyer Company
(1991) Company.
Age 42
Philip R. Myers 764,892 (a) Senior Executive Vice President
(1982) (1.9%) of Provident and Senior Vice
President of Bancorp.
Age 54
Joseph A. Pedoto 1,228,954 (a) (b) President, JLM Financial, Inc. a
(1980) (3.0%) financial consulting firm. Age 55
Sidney A. Peerless 61,478 (a) President of E.N.T. Associates.
(1980) Staff member at several
Cincinnati hospitals. Clinical
Professor, University of
Cincinnati. Director, Jewish
Hospital. Age 75
Joseph A. Steger 13,843 (a) President of the University of
(1992) Cincinnati. Director, Cincinnati
Milacron, Inc. Age 60
<PAGE>
EXECUTIVE OFFICERS WHO ARE NOT ALSO DIRECTORS
Amount and Nature of Principal Occupation
Beneficial Ownership and For Last Five Years
Name Percent of Class and Other Information
- ------------------ ------------------------ --------------------------
John R. Farrenkopf 114,019 (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 48.
Jerry L. Grace 203,044 (a) Vice President and
Treasurer of Bancorp since
August, 1992. Senior Vice
President and Treasurer
of Provident. Age 55.
Robert L. Hoverson 422,376 (a) Senior Vice President of
Bancorp since August, 1992
Executive Vice President
of Provident. Age 55.
Mark E. Magee 106,347 (a) Vice President, Secretary
and General Counsel of
Bancorp and Senior Vice
President, Secretary and
General Counsel of
Provident. Age 49.
All Directors & 3,775,617 (a)
Executive (9.2%)
Officers as a Group
(a) Including options to purchase common stock currently exercisable or
exercisable within 60 days from April 4, 1997 for Mr. Davis, 478,125
shares; Mr. Myers, 249,300 shares; Mr. Farrenkopf, 59,626 shares; Mr.
Grace, 148,500 shares; Mr. Hoverson, 304,875 shares; Mr. Magee, 50,175
shares; 12,375 shares each for Messrs. Cook, Grote, Peerless and Steger and
9,000 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, 105,581 shares; Mr. Myers, 85,277
shares; Mr. Farrenkopf, 39,616 shares; Mr. Grace, 32,157 shares; Mr.
Hoverson, 59,368 shares; and Mr. Magee, 33,069 shares.
(b) Includes 1,181,250 shares held in Trust under which Mr. Pedoto serves as
co-trustee with shared voting and dispositive powers.
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table presents the compensation paid to the Chief
Executive Officer and each of the other four most highly compensated executive
officers in 1996, during the last three years in which they served as an
executive officer.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION (a) COMPENSATION
-------------------------- -------------
SECURITIES ALL
NAME AND UNDERLYING OTHER
PRINCIPAL SALARY BONUS OPTIONS COMPENSATION
POSITION YEAR ($) ($) GRANTED (#) ($) (B)
========================= =========== ============= ============== ============== =============
<S> <C> <C> <C> <C> <C>
ALLEN L. DAVIS 1996 593,685 600,000 225,000 480,879
PRESIDENT & CEO 1995 567,242 525,000 45,000 326,392
1994 547,531 425,000 - - - - 145,308
- -------------------------------------------------------------------------------------------
PHILIP R. MYERS 1996 416,586 268,000 45,000 213,920
SENIOR VICE PRESIDENT 1995 396,586 240,000 16,875 188,651
1994 384,760 200,000 - - - - 71,343
- -------------------------------------------------------------------------------------------
ROBERT L. HOVERSON 1996 414,038 414,000 84,375 229,642
SENIOR VICE PRESIDENT 1995 391,731 365,000 28,125 173,269
1994 372,019 300,000 - - - - 73,690
- -------------------------------------------------------------------------------------------
JERRY L. GRACE 1996 186,635 188,600 22,500 90,910
VICE PRESIDENT & 1995 176,058 155,000 11,250 94,562
TREASURER 1994 169,337 125,000 11,250 31,055
- -------------------------------------------------------------------------------------------
JOHN R. FARRENKOPF, 1996 150,962 82,600 22,500 115,341
VICE PRESIDENT & 1995 140,962 75,000 11,250 74,139
CHIEF FINANCIAL 1994 135,048 60,000 - - - - 35,372
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 1996, Messrs. Davis, Myers, Hoverson and Grace each
received contributions of $14,927 and Mr. Farrenkopf received $14,307
pursuant to the Employee Stock Ownership Plan. Employer contributions made
pursuant to other benefit plans were as follows: 401 (k) Plan: Messrs.
Davis, Myers, Hoverson and Grace, $2,375 each and Mr. Farrenkopf, $1,599;
the Employee Stock Purchase Plan: Mr. Grace, $701 and Mr. Farrenkopf,
$1,659; the Excess Benefit Plan: Mr. Davis, $68,566, Mr. Myers, $40,611,
Mr. Hoverson, $50,969 and Mr. Grace, $14,820; the net premiums paid on the
Company's Split Dollar Life Insurance Plan: Mr. Davis, $18,000, Mr. Myers,
$28,808, Mr. Hoverson, $12,240, Mr. Grace, $8,171 and Mr. Farrenkopf
$1,650; the Deferred Compensation Plan: Mr. Davis, $350,925, Mr. Myers,
$126,827, Mr. Hoverson, $149,130, Mr. Grace, $49,914 and Mr. Farrenkopf,
$96,124.
<PAGE>
STOCK OPTIONS
The following tables present information concerning option grants and
exercises with respect to the named executives in 1996.
<TABLE>
OPTIONS GRANTED IN THE LAST FISCAL YEAR
<CAPTION>
Percent of Potential Realizable Vaule
Number of Total at Assumed Annual Rates of
Shares Options Exercise Stock Price Appreciation
Underlying Granted to or for Option Term
Options Employee in Base Price Expiration ---------------------------------
Name Granted Fiscal Year Per Share Date 0%($) 5%($) 10%($)
- ------------------- ---------- ----------- ---------- ---------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Allen L. Davis 225,000 19.78 $23.11 3/18/2006 3,270,095 8,287,062
Philip R. Myers 45,000 3.96 $23.11 3/18/2006 654,019 1,657,412
Robert L. Hoverson 84,375 7.42 $23.11 3/18/2006 1,226,286 3,107,648
Jerry L. Grace 22,500 1.98 $21.95 3/18/2006 26,100 353,109 854,806
John R. Farrenkopf 22,500 1.98 $21.95 3/18/2006 26,100 353,109 854,806
</TABLE>
AGGREGATED OPTION EXERCISES IN 1996/OPTION VALUES AT 12/31/96
NUMBER OF
SHARES DOLLAR VALUE
NUMBER UNDERLYING OF UNDERCISED
OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS
ACQUIRED DOLLAR 12/31/96 AT 12/31/96
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE($)
---- -------- -------- ------------- ----------------
ALLEN L. DAVIS NONE NONE 393,750/ 10,051,470/
315,000 4,501,586
PHILIP R. MYERS NONE NONE 218,025/ 5,574,467/
89,100 1,494,774
ROBERT L. HOVERSON NONE NONE 262,125/ 6,693,379/
142,875 2,255,996
JERRY L. GRACE NONE NONE 131,625/ 3,397,826/
48,375 851,749
JOHN R. FARRENKOPF NONE NONE 51,188/ 1,237,912/
44,438 753,252
<PAGE>
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. 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.
The purpose of the SERP is to assure that each participant receives 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. When a
participant retires, the SERP benefit is calculated, and then funds from the
following sources are deducted to determine 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.
If the sum of these payments exceeds the participant's benefit computed under
the SERP, then no payment will be due from the Company under the SERP.
The table below shows the assumed actuarial value of the retirement plan
benefits plus the SERP payment 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, 24
years; Philip R. Myers, 42 years; Robert L. Hoverson, 24 years; Jerry L. Grace,
24 years; and John R. Farrenkopf, 42 years.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AVERAGE
COMPENSATION YEARS OF SERVICE
- ------------ --------------------------------------------------------------
10 15 20 25 30 35
------- ------- ------- ------- ------- -------
$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
------- ------- ------- ------- ------- -------
<PAGE>
DIRECTORS' FEES, RETIREMENT BENEFITS AND OPTIONS
Each director who is not also an officer of Bancorp or its subsidiaries
receives an annual fee of $15,000 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.
Directors who are also officers of Bancorp serve on the Board without additional
compensation. Each Outside Director is granted an option to purchase 1,000
shares of Common Stock upon 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.
Outside Directors with ten years of service as a Director receive annual
retirement benefits equal to the fees paid during the 12 months immediately
preceding the retirement date, with payments to commence at retirement 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
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:
o Base Compensation
o Annual Bonuses
o Stock Option Grants
In establishing compensation levels for 1996, the Committee utilized
executive compensation surveys published by SNL Securities, Inc. and Cole
Banking Survey which the Committee believes are appropriate. In addition the
Committee reviewed compensation levels paid in 1995 by Midwest based bank
holding companies of similar asset size. 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 14.
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 is not deductible unless it is "performance-based" and
approved by shareholders. The Committee does not believe these limitations
should interfere with the application of policies which guide its compensation
decisions.
Base Compensation
In establishing base salaries for 1996 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 1995. The Committee
also took into account the recommendations of the President for executive
officers other than himself in establishing base salaries.
<PAGE>
Bonsues
Bonuses for 1996, other than for the President, were based primarily on
recommendations made by the President and the Committee's review of bonus awards
paid by the banking institutions included in the surveys. The bonus awards were
not tied to any specific or quantifiable performance objectives, but rather were
based on the Committee's subjective judgment of the Company's performance and
the relative contributions to that performance by the executive officers to whom
bonuses were awarded.
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 Bancorp's 1988 Stock Option Plan.
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 1996, 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.
Sidney A. Peerless, Chairman
Thomas D. Grote, Jr.
Joseph A. Pedoto
<PAGE>
FINANCIAL PERFORMANCE
The graph below summarizes the cumulative return experienced by the
Company's shareholders over the years 1991 through 1996, 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.
The table below contains the data points used in the Performance Graph
which appears in the printed Proxy Statement:
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
Provident Bancorp, Inc. $100 $136 $191 $199 $275 $444
Peer Group 100 127 134 128 204 289
Nasdaq Market Index 100 116 134 131 185 227
BOARD AND BOARD COMMITTEE ACTIONS: COMPLIANCE WITH SECTION 16 OF THE
EXCHANGE ACT
The Board held 12 meetings during 1996. Each Director 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 1996. 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 2
occasions during 1996.
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 5 meetings in 1996. 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 3 meetings and took written
action on 9 occasions during 1996. The Company does not have a Nominating
Committee.
<PAGE>
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.
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.
American Financial Corporation ("AFC"), a subsidiary of AFG, provides
security guard and surveillance services at Bancorp's main office for which
Bancorp was charged $100,000 in 1996. Bancorp leases its main banking and
corporate office from a trust for the benefit of a subsidiary of AFG. Bancorp
was charged rent under the leases of $2,131,000 in 1996. Bancorp also leases
branch locations, ATM locations and certain equipment from principal
shareholders and their affiliates, for which it was charged rentals of $201,000
in 1996.
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,
1996 through December 31, 1996 and at March 31, 1997 were as follows: Principal
shareholders, $7,564,349 and $4,109,331; directors and executive officers,
$320,919 and $21,748, respectively.
Loans and lines of credit have been extended by Provident in 1996 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.
INDEPENDENT AUDITORS
The accounting firm of Ernst & Young LLP served as the Company's independent
auditors for 1996. 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.
SHAREHOLDER PROPOSALS
If a shareholder desires to have a proposal included in the Proxy Statement
for the 1998 Annual Meeting, such proposal must be received by Bancorp's
Secretary at the office of the Company before January 1, 1998.
<PAGE>
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, MS 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>
PROVIDENT BANCORP, INC.
THE UNDERSIGNED HEREBY APPOINTS ALLEN L. DAVIS AND MARK E. MAGEE OR
EITHER OF THEM, THE PROXIES OF THE UNDERSIGNED, EACH WITH THE POWER OF
PROXY SUBSTITUTION, TO VOTE CUMLATIVELY OR OTHERWISE ALL SHARES OF COMMON
FOR STOCK WHICH THE UNDERSIGNED WOULD BE ENTITLED TO VOTE AT THE ANNUAL
ANNUAL MEETING OF SHAREHOLDERS OF PROVIDENT BANCORP, INC. TO BE HELD MAY 15,
MEETING 1997, 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 PROXY WILL BE VOTED AS
RECOMMENDED BY THE BOARD OF DIRECTORS UNLESS A CONTRARY CHOICE IS
SPECIFIED.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS:
1. To amend the Articles of Incorporation to change the name of the
Company to Provident Financial Group, Inc.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. To amend the Articles of Incorporation to increase the number of
common shares authorized from 60 million to 100 million shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To approve the 1997 Stock Option Plan
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. 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.
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S), WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
(This Proxy is continued and is to be siged on the reverse side)
********************************************************************************
ROXY
FOR
ANNUAL
MEETING DATE: ----------------------------------
----------------------------------
(Important: Please sign exactly
as name appears hereon indicating,
where proper, official position or
representative capacity. In case
of joint holders, all should sign)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
<PAGE>
EXHIBIT A
PROVIDENT BANCORP, INC.
1997
STOCK OPTION PLAN
ARTICLE 1
OBJECTIVES
Provident Bancorp, Inc. ("Provident") has established this Stock Option
Plan effective March 31, 1997, 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.
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. "Date of Exercise" means the date on which Provident 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.
C. "Date of Grant" means the date on which the Committee makes an award
of an Option.
D. "Eligible Employee" means any individual who performs services for
Provident and is treated as an Employee for federal income tax
purposes.
E. "Effective Date" means March 31, 1997.
F. "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.
G. "Incentive Stock Option" shall have the same meaning as given to that
term by Section 422 of the Code.
H. "Nonqualified Stock Option" means any Option granted under the Plan
which is not considered an Incentive Stock Option.
<PAGE>
I. "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.
J. "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.
K. "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.
L. "Plan" means this 1997 Option Plan as it may be amended.
M. "Provident" means Provident Bancorp, Inc. and any subsidiary of
Provident, as the term "subsidiary" is defined in Section 424(f) of
the Code.
N. "Share" means one share of the Common Stock of Provident.
ARTICLE 3
ADMINISTRATION
3.1 The Plan shall be administered by a committee designated by the Board
of Directors of Provident. The Committee shall be comprised of three or more
directors each of whom shall be (i) a "Non- Employee Director" as defined in
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 Code
("Section 162(m)"), as such Rule and Section may be amended, superseded or
interpreted hereafter. Notwithstanding the foregoing, to the extent Ohio law
permits, the Committee may be comprised of two or more such directors.
3.2 Except as specifically limited by the provisions of the Plan, the
Committee in its discretion shall have the authority to:
A. Grant Options on such terms and conditions consistent with this Plan
as the Committee shall determine;
B. Interpret the provisions of the Plan and decide all questions of fact
arising in its application; and
C. Prescribe such rules and procedures for Plan administration as from
time to time it may deem advisable.
3.3 Any action, decision, interpretation or 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.
<PAGE>
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 Provident for any liability and expenses which may occur from any
claim or cause of action.
ARTICLE 4
SHARES SUBJECT TO PLAN
4.1 The number of Shares that may be made subject to Options granted under
the Plan is 4,000,000. 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 Provident is 500,000. 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.
ARTICLE 5
GRANTING OF OPTIONS
The Committee may, from time to time, prior to March 31, 2007, 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 20% of the total Shares
covered by the Option with an additional 20% 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 may establish a
different exercise schedule and impose other conditions upon exercise for any
particular Option or groups of Options. The Committee in its sole discretion may
permit particular holders of Options to exercise an Option to a greater extent
than provided in such Option.
6.2 If the grantee of an Option dies or becomes subject to a Permanent and
Total Disability while employed by Provident, or within 90 days after
termination of employment for any reason, or terminates employment with
Provident (a) at or after age 65 or (b) at or after age 55 and before age 65
provided the grantee has been employed by Provident for at least 5 full years
(either of which terminations shall constitute "Retirement"), all Options
granted to such person shall become fully vested and immediately exercisable as
of the date of termination of employment.
<PAGE>
6.3 In the event of the dissolution or liquidation of Provident or any
merger, other than a merger for the purpose of the redomestication of Provident
not involving a change in control, consolidation, exchange or other transaction
in which Provident is not the surviving corporation or in which the outstanding
Shares of Provident are converted into cash, other securities or other property,
each outstanding Option shall automatically become fully vested and fully
exercisable immediately prior to such event. Thereafter the holder of each such
Option shall, upon exercise of the Option, receive, in lieu of the stock or
other securities and property receivable upon exercise of the Option prior to
such transaction, the stock or other securities or property to which such holder
would have been entitled upon consummation of such transaction if such holder
had exercised such Option immediately prior to such transaction.
6.4 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 Provident
or to interfere in any way with the right of Provident to terminate employment
at any time. So long as a holder of an Option shall continue to be an employee
of Provident, 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 Provident, 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 and any withholding taxes.
7.2 An Option may also be exercised by delivering 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 and any
withholding taxes to Provident.
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 Provident 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 and any withholding taxes.
ARTICLE 9
INCENTIVE STOCK OPTIONS AND NONQUALIFIED STOCK OPTIONS
9.1 The Committee in its discretion may designate whether an Option is to
be 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.
<PAGE>
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 plus 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
Provident, or (ii) a corporation that owns 50% or more of the total
combined voting power of all classes of stock of Provident, 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 Provident 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.
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 granted, 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
Nonqualified Options, establish or modify the terms of the Option to allow the
Option to be transferred at the request of the grantee of the Option to trusts
established by the grantee or as to which the grantee is a grantor or to family
members of the grantee or otherwise for personal and tax planning purposes of
the grantee. If the Committee allows such transfer, such Options shall not be
exercisable for a period of six months following the action of the Committee.
<PAGE>
ARTICLE 11
TERMINATION OF OPTIONS
11.1 An Option will terminate as follows:
A. Upon exercise or expiration by its terms.
B. If the grantee of an Option dies or becomes subject to a
Permanent and Total Disability while employed by Provident, or
within ninety (90) days after termination of employment for any
reason, such Option may be exercised at any time within one year
after the date of termination of employment. Options may be
exercised by that person's estate or guardian or by those persons
to whom the Option may have been transferred pursuant to Article
10 hereof.
C. If the grantee of a Nonqualified Option terminates employment
with Provident through Retirement, such Option may be exercised
at any time within two years after the date of termination of
employment.
D. If the grantee of an Option is terminated from employment with
Provident for cause, such Option shall terminate immediately.
"Cause" shall include, without limitation, the use of illegal
drugs, the commission of a criminal act, or willful violations of
Provident's policy prohibiting employees from disposing of Shares
for personal gain based on knowledge of Provident's activities or
results when such information is not available to the general
public.
E. In all other cases, upon termination of employment of the grantee
with Provident, the then-exercisable portion of any Option will
terminate on the 45th 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 Provident shall not be deemed to be termination of
employment.
11.2 The Committee, in its discretion, may as to any particular
outstanding Nonqualified Stock Option or upon the grant of any Nonqualified
Stock Option, establish terms and conditions which are different from those
otherwise contained in this Article 11, by, without limitation, providing that
upon termination of employment for any designated reason, vesting may occur in
whole or in part at such time and that such Option may be exercised for any
period during the remaining term of the Option, not to exceed three years from
the termination of employment.
11.3 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 grantee or his beneficiaries, heirs or assigns, 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>
ARTICLE 12
ADJUSTMENTS TO SHARES AND OPTION PRICE
12.1 In the event of changes in the outstanding Common Stock of
Provident 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.
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 this Plan.
ARTICLE 14
AMENDMENT OR TERMINATION OF PLAN
14.1 The Board of Directors of Provident may at any time amend, suspend,
or terminate the Plan; provided, however, that no amendments by the Board of
Directors of Provident shall, without further approval of the shareholders of
Provident:
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; or increase the maximum number of Shares with respect
to which Options may be granted to any eligible Employee of
Provident during any fiscal year;
C. Cause the Plan or any Option granted under the Plan to fail to be
excluded from the $1 million deduction limitation imposed by
Section 162(m) of the Code; or
D. Cause any Option granted as an Incentive Stock Option to fail to
qualify as an "Incentive Stock Option" as defined by Section 422
of the Code.
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.
<PAGE>
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 shall become effective on March 31, 1997, having been adopted
by the Board of Directors of Provident on such date, subject to approval by
shareholders by December 31, 1997.
ARTICLE 16
MISCELLANEOUS
16.1 Nothing contained in this Plan or in any action taken by the Board
of Directors or shareholders of Provident 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 Provident 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
Provident 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
Provident, 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 Provident securities may then be listed as well as
any other requirements of law.
